Transcript Slide 1

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