Letter on Nebraska Medicaid
GME Proposal
July
23, 2002
Department of Health and Human Service Systems
Regulation and Licensure
Regulatory Analysis and Integration Division
301 Centennial Mall South
P.O. Box 95007
Lincoln, NE 68509
RE: July 25 Hearing on Medicaid, Title 471, Chapter 10
The Association of American Medical Colleges (AAMC) welcomes
this opportunity to comment on Nebraska's Department of Health
and Human Services Finance and Support's proposed changes
to Nebraska Administrative code regulations that would eliminate
direct graduate medical education (DGME) and indirect medical
education (IME) payments to teaching hospitals under the Nebraska
Medical Assistance program.
Representing the nation's 125 accredited allopathic medical
schools, approximately 400 major teaching hospitals and health
systems, 98 professional and academic societies representing
over 100,000 faculty, and the nation's medical students and
residents, the AAMC writes to express strong opposition to
the proposed elimination of these payments.
We strongly believe that all payers- Medicare, Medicaid and
private payers- should contribute to helping pay for the training
of future physicians and other important teaching hospital
missions. Medicare and the vast majority of state Medicaid
programs have long recognized the need to make additional
payments to teaching hospitals. These payments help offset
additional costs these hospitals incur as a result of their
special missions of educating physicians and caring for patients
who require more intense and complex care.
The Medicare program makes two special payments to teaching
hospitals known as direct graduate medical education (DGME)
payments and the indirect medical education (IME) adjustment,
and many state Medicaid programs in addition to Nebraska have
followed Medicare's lead and have implemented similar types
of payments.
In fact, according to a 1998 survey conducted by the National
Conference of State Legislatures for the AAMC, all states
(except Illinois) in which medical schools are located and
the District of Columbia make some level of special payments
to teaching hospitals under the Medicaid program. Since Nebraska
has followed Medicare's lead and has been using Medicare's
payment methodology as a basis for determining Medicaid direct
graduate medical education and indirect medical education
payments, we believe it important to make you aware of the
rationale underlying these payments by the Medicare program.
The following committee report language accompanied the original
federal legislation authorizing the Medicare program:
Medicare Direct Medical Education Payments
When Congress established Medicare in 1965, it recognized
that:
educational activities enhance the quality of care
in an institution, and it is intended, until the community
undertakes to bear such education costs in some other way,
that a 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 program1.
Medicare Indirect Medical Education Payments
The Medicare Indirect Medical Education (IME) payment carries
a "medical education" label, but its purpose, as
stated by Congress when it created the Prospective Payment
System (PPS) in 1983, is much broader:
This adjustment is provided in light of doubts...about
the ability of the DRG case classification system to account
fully for factors such as severity of illness of patients
requiring the specialized services and treatment programs
provided by teaching institutions and the additional costs
associated with the teaching of residents...The adjustment
for indirect medical education costs is only a proxy to account
for a number of factors which may legitimately increase costs
in teaching hospitals2.
The reasons to maintain Nebraska's current level of Medicaid
support for teaching hospitals are compelling. Teaching hospitals
are where the nation's doctors, nurses and other health care
professionals receive the sophisticated training and experience
that has made the quality of America's health care first in
the world. Medicaid funding is vital to this medical education
mission-a complex, multi-year process that absolutely depends
on reliable, long-term financial support to ensure the highly
skilled physician workforce Americans need. Each year, more
than 100,000 resident physicians are being trained in numerous
medical specialties at teaching hospitals around the country.
In Nebraska, more than 500 residents in training hone their
clinical expertise each year and go on to practice medicine
and advance health care in Nebraska and the nation.
As the nation's proving grounds for medical innovation and
discovery, teaching hospitals are inherently more expensive
to operate than other hospitals. And precisely because teaching
hospitals are where medicine advances, these institutions
are also where the sickest patients are admitted for care.
Comprising only six percent of America's hospitals, this country's
major teaching hospitals conduct approximately two-thirds
of all highly specialized surgeries and treat nearly half
of all patients with highly specialized diagnoses.
Teaching hospitals also serve as essential centers of traditional
care for their local communities. The typical teaching hospital
conducts nearly 9,000 surgeries each year, more than four
times the number conducted at non-teaching hospitals. Similarly,
the average teaching hospital also provides services for more
than 30,000 annual emergency room visits, nearly three times
the number of its non-teaching counterparts. Teaching hospitals
house almost 80 percent of all burn beds, 73 percent of all
of neonatal intensive care unit beds and 78 percent of all
Level 1-trauma centers. Specialized and standby services such
as these form the security and safety nets for our country
in the event of a national emergency. Teaching hospitals fully
recognize the key role they must play if such an event does
occur and are committed to being prepared and ready to respond.
Moreover, teaching hospitals have the lowest total margins
of all hospitals (2.4 percent versus 4 percent for "non-teaching"
and "other teaching" hospitals in 1999)3.
Medicare is scheduled to reduce its IME payments in FY 2003
and beyond; private payers are reducing their reimbursements
to hospitals; and teaching hospitals are grappling with nursing
shortages and intense pressure to ensure our readiness for
the possibility of future terrorist attacks. Nebraska's proposal
to eliminate Medicaid support for physician training and teaching
hospitals' specialized services comes at a particularly demanding
and painful time for Nebraska teaching hospitals.
In light of the missions and important services offered by
teaching hospitals, as well as their financial fragility,
we urge you to continue paying direct graduate medical and
indirect medical education payments to Nebraska's teaching
hospitals. With their commitment to high-quality patient care,
advanced clinical education for physicians, nurses and other
health professionals, and essential community services, teaching
hospitals are the bedrock upon which the American health care
system has built its reputation for excellence. In the post
9/11 world, teaching hospitals must also be ready to respond
to the truly unpredictable. Now is not the time to weaken
one of the greatest strengths of our health care system.
Sincerely,
Jordan J. Cohen, M.D.
1 House Report,
Number 213, 89th Congress, 1st session 32 (1965) and Senate
Report, Number 404 Pt. 1 89th Congress 1 Session 36 (1965).
2 House Ways and
Means Committee Report, No. 98-25, March 4, 1983 and Senate
Finance Committee Report, No. 98-23, March 11, 1983.
3 1999 Data from
the Medicare Payment Advisory Commission. These figures include
income received from investments.
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