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MEDICARE and MEDICAID REIMBURSEMENT for GRADUATE MEDICAL EDUCATION A REVIEW FOR COORDINATORS KAREN R. BORMAN, MD, FACS A REVIEW FOR COORDINATORS SCOPE OF GME ECONOMICS COSTS AND FINANCING SOURCES ROLE OF MEDICARE ROLE OF MEDICAID CONTROVERSIES AND CHALLENGES GMEC GMECONOMICS IS BIG BUSINESS!!! GME PAYMENTS ARCS STEERING COMMITTEE IME AGRETTO DME TOTAL GME PCP FTE 5270670 3044802 8315472 GUINTO 41789695 20352746 62142441 188.2 SCHULZ 10507318 6337737 16845055 FULBRIGHT 9460295 3639976 DEL COGLIN 20970154 OLENWINE PCP PRA SPEC FTE 2.8 96752 97235 304.9 92073 82.1 85520 116.7 80980 13100271 80.2 74742 65.8 70858 8106191 29076345 99.1 74381 104.3 70576 15858501 3962006 19820507 73.4 68359 41.6 64730 ST. PIERRE 42854191 11477698 54331888 205.9 67750 187.7 64229 CAMERON 15808970 5013549 20822519 90.7 64345 61 61001 5628496 1648711 7277707 27.6 50428 25.3 50428 CARTER 5.8 102177 SPEC PRA SOURCE: CMS, MEDICARE COST REPORT FILE GMECONOMICS BASICS: PROGRAMS ACGME PROGRAMS 2007 CORE SUBSPECIALTY 4008, 48% 4347, 52% PROGRAMS 8,400* GMECONOMICS BASICS: SPONSORS + AFFILIATES ACGME PROGRAMS SPONSORED 2007 ONE 54% MULTIPLE 46% SPONSORING INSTITUTIONS 700 PARTICIPATING INSTITUTIONS 2,900 GMECONOMICS BASICS: TYPES OF TEACHING HOSPITALS COTH DISTRIBUTION AMC VA OTHER 129, 32% 203, 51% 68, 17% AAMC COTH MEMBERS 400 GMECONOMICS BASICS: FACULTY TEACHING FACULTY ALL TYPES MEN WOMEN 33% 67% ALL COTH FACULTY 125,000 GMECONOMICS BASICS: RESIDENTS ACGME RESIDENTS + FELLOWS CORE SUBSPECIALTY 16776, 16% 89607, 84% ACGME APPROVED RESIDENTS 106,000* GMECONOMICS: DIRECT GME COSTS (DME) RESIDENT SALARY + BENEFITS SUPERVISING FACULTY PAYMENTS EDUCATION OVERHEAD EDUCATIONAL PRODUCTS + SERVICES SIMULATION ADMINISTRATION PROGRAM COORDINATOR + DIRECTOR ACCREDITATION FEES RECRUITING OTHER (e.g., PAGERS, COATS, TRAVEL) DME SALARY + BENEFITS SALARY + BENEFITS ALL PGY 2003-2007 PGY1 PGY2 PGY3 PGY4 PGY5 70000 65000 60000 55000 50000 45000 40000 2003 2004 RESIDENTS 2005 2006 106,000* 2007 GMECONOMICS: INDIRECT GME COSTS (IME) INEFFICIENT CARE BY RESIDENTS EMERGING TECHNOLOGY USAGE CASE MIX / SPECIALIZED SERVICES ?PAYER MIX (DSH) ?OTHER TRAINEES (TITLE VII) OPERATING EXPENSES EDUCATION RELATED FACILITIES CAPITAL EXPENSES GMECONOMICS: FINANCING SOURCES MEDICARE: DME + IME + DSH CHILDRENS’ HOSPITALS GME VIA HRSA DEPARTMENT OF VETERANS AFFAIRS (VA): DIRECT SUPPORT APPROPRIATION MEDICAID: PER DIEM / CASE RATES STATES LINE ITEM / GOAL-DIRECTED PRIVATE PAYERS: HIGHER INPT RATES MEDICAL SCHOOLS: PRACTICE PLANS HOSPITALS: FROM TOTAL MARGIN GMECONOMICS: FINANCING SOURCES GME FUNDING SOURCES 2003 2007 16 OTHER OTHER GRANT 0.5 ENDOWMENT 0.2 3.3 OTHER FED 1.1 NIH 2 UNIVERSITY 2.3 FACULTY 7 VA 0.3 MGD CARE 3.2 STATE/CITY 64 REVENUES 0 10 20 30 40 50 60 87 70 80 90 100 GMECONOMICS: OPERATING BUDGET SALARY + BENEFITS AS MEDIAN % HOSPITAL OPERATING BUDGET BY HOSPITAL TYPE ALL STATE MED SCHOOL NON PROFIT 10 9 8 7 6 5 4 3 2 1 0 2003 2004 2005 2006 SOURCE: AAMC HOUSESTAFF REPORTS 2003-2007 2007 GMECONOMICS: OPERATING BUDGET RESIDENT PACKAGE AS % HOSPITAL OPERATIONS MEAN BY REGION ALL NORTHEAST SOUTH MIDWEST WEST 2007 2006 2005 2004 2003 0 5 10 15 SOURCE: AAMC HOUSESTAFF REPORTS 2003-2007 20 GME FUNDING: MEDICARE’S ROLE MEDICARE BECOMES LAW, 1965 (SOCIAL SECURITY ACT) GME FUNDING: MEDICARE’S ROLE “…educational activities enhance the quality of care in an institution, and it is intended, until the community undertakes to bear such educational costs in some other way, that part of the net cost of such activities (including stipends of trainees, as well as compensation of teachers and other costs) should be borne to an appropriate extent by the hospital insurance program” MEDICARE: PROGRAM PARTS SOURCE: MedPAC DATA BOOK, 2006 GME FUNDING: MEDICARE’S ROLE PART D: SUPPLEMENTARY MEDICAL INSURANCE Rx DRUGS GME FUNDING: MEDICARE’S ROLE PART B: SUPPLEMENTARY MEDICAL INSURANCE PROVIDERS FACULTY-GENERATED PATIENT CARE REVENUES GME FUNDING: MEDICARE’S ROLE PART A: HOSPITAL INSURANCE TRUST FUND GME FUNDING PART A: HI TRUST FUND PART A: HOSPITAL INSURANCE TRUST FUND ACUTE CARE HIPPS, HOPPS, PSYCHIATRIC, ASCs POST-ACUTE CARE SNF, IRF, LTCH, HOME HEALTH, HOSPICE OTHER DIALYSIS, CLINICAL LABORATORY GME FUNDING? PART A: HI TRUST FUND HOSPITAL INPATIENT PROSPECTIVE PAYMENT SYSTEM (HIPPS) GME FUNDING! DIRECT MEDICAL EDUCATION DME = PRA X FTE X % Medicare Days PRA = PER RESIDENT AMOUNT FTE = RESIDENT COUNT PRIMARY CARE VS OTHER PRA CORRIDOR 85-140% NATIONAL AVERAGE PART A: ORIGINS OF IME HOSPITAL INPATIENT PROSPECTIVE PAYMENT SYSTEM, 1983 CBO PREDICTED -7% TEACHING HOSPITALS / +7% NONTEACHING DIRECT GME EXCLUDED FROM PPS INDIRECT GME ADD ON TO BASE RATE 11.6 INDIRECT MEDICAL EDUCATION $ IME ADJUSTMENT STATUTORY FORMULA, OPERATIONS $ 90% PPS PAYMENTS $ IME % = 1.32 * [(1 + IRB) .405 - 1 ] x 100 $ IME ADJUSTMENT STATUTORY FORMULA, CAPITAL $ 10% PPS PAYMENTS $ AVG DAILY CENSUS INSTEAD OF IRB IME ADJUSTMENT HISTORY 1983 HIPPS 11.6% 1986 DSH 8.1% 1988 DSH EXPANSION 1997 BBA 7.7% TARGET 5.5% BY 2001 TARGET BEING REACHED 2008 RESIDENT CAPS THE TRUTH ABOUT IME IME ADJUSTMENT 1984 - 2008 14 IME adjustment percentage 12 10 8 6 4 2 0 1984 1987 1990 1993 1996 Fiscal y ear 1999 2002 2005 2008 RESIDENT FTE “SLOTS” / “CAPS” / “THE COUNT” USED IN DME AND IME FORMULAS BASE YEAR 1996 THREE YEAR ROLLING AVERAGE INITIAL ELIGIBILITY PERIOD = 1.0 FTE / ALL ELSE = 0.5 FTE HOSPITAL VS AMBULATORY REDISTRIBUTION 2003 2500 SLOTS @ IME 2.7% THE TRUTH ABOUT THE CAP TRULY INDIRECT GME: DSH DISPROPORTIONATE SHARE FUNDING (DSH) HOSPITAL-SPECIFIC ADD-ON TO OPERATING AND CAPITAL PAYMENTS MEDICAID DAYS/TOTAL PATIENT DAYS + DUAL ELIGIBLE PATIENT DAYS/TOTAL MEDICARE PATIENT DAYS MINIMUM THRESHOLD - >100% MULTIPLE FORMULAS BY HOSPITAL SIZE AND LOCATION TRULY INDIRECT GME: DSH DISPROPORTIONATE SHARE FUNDING (DSH) INTRODUCED 1986, EXPANDED 1988 “POOR PATIENTS ARE MORE COSTLY TO TREAT” COST SHIFT TO MEDICARE PATIENTS TEACHING HOSPITALS LESS COMPETITIVE “PUBLIC GOOD SUBSIDIZING UNCOMPENSATED CARE” DSH PAYMENTS % HOSPITAL BASE PAYMENTS 14 12 Percent 10 8 6 4 2 0 1987 1989 1991 1993 1995 1997 Fiscal year 1999 2001 2003 THE TRUTH ABOUT DSH 40 Group's share of uncompensated care costs Group's share of DSH pay ments Group's share of IME pay ments 35 30 Percent 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Equal-sized group based on uncompensated care costs as percent of total costs CARING FOR THE POOR ≠ DSH THE TRUTH ABOUT DSH MOST DSH GOES TO TEACHING HOSPITALS 20 IME add-on DSH add-on Percent 16 12 8 4 0 Urban Rural Major teaching Other teaching Non-teaching TEACHING HOSPITAL MARGINS MAJOR TEACHING HOSPITALS LEAD OVERALL MEDICARE MARGIN CURVE OVERALL MEDICARE MARGIN 2002-2005 BY HOSPITAL GROUP 15.0 All 10.0 5.0 0.0 Major teaching Other teaching -5.0 Nonteaching -10.0 TEACHING HOSPITAL MARGINS MAJOR TEACHING HOSPITALS TOTAL MARGINS ARE COMPETITIVE GME FUNDING: MEDICARE’S ROLE DME $ 2.6 BILLION 2004 IME $ 5.3 BILLION 2004 DME + IME = $ 7.9 BILLION DSH $ 7.7 BILLION 2004 IME + DSH = 14% ALL ACUTE CARE HOSPITAL PPS PAYMENTS TOTAL TO GME $ 15.6 BILLION GME FUNDING: MEDICAID’S ROLE MEDICAID BASICS CREATED WITH MEDICARE IN 1965 VOLUNTARY PARTICIPATION BY STATES (ALL SINCE 1982) FEDERAL GUIDELINES MATCHING FEDERAL DOLLARS STATE-ADMINISTERED DEFINE ELIGIBILITY AND BENEFITS LOW INCOME + SPECIAL NEED ON AVERAGE, 22% OF STATE BUDGETS GME FUNDING: MEDICAID’S ROLE MAKING GME PAYMENTS IS OPTIONAL FOR STATES 47 + DC MAKE PAYMENTS (IL, TX, ND) FORMULAS VARY BY STATE USUALLY PAID VIA PER CASE/PER DIEM MOST ARE MATCHED BY FEDERAL DOLLARS TOTAL GME PAYMENTS BY STATES IN 2006 $3 BILLION CHILDREN’S HOSPITAL GME FUNDING CHGME AUTHORIZED 2000, REAUTHORIZED 2006-2011 HEALTH RESOURCE SERVICES ADMINISTRATION ANNUAL APPROPRIATIONS FUNDING IN LABOR-EDUCATION-HHS BILL 1/3 DME USING NATIONAL AVG PRA 2/3 IME FORMULA WITH CASE MIX, VOLUME, TEACHING INTENSITY $ 300 MILLION 2004 TO 61 HOSPITALS GME FUNDING: GOVERNMENT’S ROLE DME $ 2.6 BILLION 2004 IME $ 5.3 BILLION 2004 DSH $ 7.7 BILLION 2004 MEDICAID $ 3 BILLION CHGME $ 0.3 BILLION TOTAL ANNUAL GOVERNMENT FUNDING TO GME $ 18.9 BILLION CONTROVERSIES AND CHALLENGES HUMAN RESOURCES ISSUES WORKFORCE SHORTAGE AAMC EXPANSION BBA CAP CONTROVERSIES AND CHALLENGES FUTURE GOVERNMENT FUNDING MEDICARE SUSTAINABILITY MEDICAID MATCHING CHGME CONTINUATION DECLINING PART B FACULTY REVENUES PART D EFFECT MEDICARE’S FUTURE: BABY BOOMERS MEDICARE’S FUTURE: BANKRUPTCY Table 4.5 Medicare Trustee’s Report: Part A Income and Expenses, 1970-2015 Dollars in Billions Actual Income Projected Income $400 $375 $350 $325 $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 Actual Expenditures Projected Expenditures Actual Projected 1970 1980 1990 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Calendar Year . Source: CMS, Office of the Actuary.Trustees Report, 2006. Projected Expenditures First Exceed Projected Income in 2011 MEDICARE’S FUTURE: BENEFICIARIES PART D: Rx DRUGS SOURCE: MedPAC DATA BOOK, 2006 GME PAYMENTS AND COSTS PER RESIDENT 2001 2002 2003 2004 2005* 81258 84746 82058 87744 63917 24508 26811 28363 29814 31235 105766 111557 110421 117558 95152 85858 92219 94614 96370 87414 19908 19338 15807 21188 7738 Medicare Medicaid Payments Costs ?Overage SOURCE: DODOO, 2007 RESIDENTS 106,000* A REVIEW FOR COORDINATORS CONTROVERSIES AND CHALLENGES WHY SHOULD MEDICARE PAY? WHAT IS MEDICARE BUYING? VALUE QUALITY WIDE VARIATION DME SUSPECT MedPAC RECOMMENDS REDUCTION IME A REVIEW FOR COORDINATORS CONTROVERSIES AND CHALLENGES RULE-MAKING SHARPLY ELIMINATES FEDERAL MATCHING DOLLARS FOR MEDICAID GME PAYMENTS 2007 MORATORIUM TO JUNE 2008 MORATORIUM EXTENSION PASSED HOUSE ENERGY AND COMMERCE SUBCOMMITTEE ON HEALTH APRIL 9, 2008 A REVIEW FOR COORDINATORS CONTROVERSIES AND CHALLENGES PRESIDENT’S FY 2009 BUDGET ELIMINATES CHGME A REVIEW FOR COORDINATORS ? ALTERNATIVE FUNDING ? SPECIFIC APPROPRIATION ? OUTCOMES REQUIREMENTS ? ALL PAYER FUND ? REDUCTION RATES BY NON-GOVT PAYERS ? PROVIDER TAXES ? ALCOHOL + TOBACCO FEDERAL TAX MEDICARE and MEDICAID REIMBURSEMENT for GRADUATE MEDICAL EDUCATION KAREN R. BORMAN, MD, FACS