"All-Payer" GME
Trust Fund Legislation
On April 6, Senator Jack Reed (D-R.I.), along with Senators
Hillary Clinton (D-N.Y.) and Chuck Schumer (D-N.Y.) introduced
S. 743, entitled the "Medical Education Trust Fund Act of
2001" to establish a Medical Education Trust fund to support
medical schools and teaching hospitals. Modeled after legislation
introduced by Senator Daniel Patrick Moynihan in 1999, the
bill recognizes that all sectors of the health care system
should share the responsibility to fund medical education.
While Medicare and Medicaid would continue its contribution
to financing medical education via transfers to the fund,
the legislation also requires private payers - through a 1.5
percent assessment of all health insurance premiums-to pay
into the fund.
Within the trust fund, five accounts would be created: the
Medical School Account; the Medicare Teaching Hospital Direct
Account; the Medicare Teaching Hospital Indirect Account;
the Non-Medicare Teaching Hospital Indirect Account; and the
Non-Medicare Teaching Hospital Direct Account. The Medical
School Account would be funded from the other four accounts
at a specified level: $200 million in FY 2002; $300 billion
in FY 2003; $400 billion in FY 2004; $500 million in FY 2005
and $600 million in FY 2006. Medical schools would apply to
the account for money to help assist in "maintaining and developing
quality educational programs." Funding would be allocated
based on an interim payment designed by the Secretary of Health
and Human Services.
Teaching hospitals would also apply to the Secretary of Health
and Human Services for funds related to direct and indirect
costs of graduate medical education. Payments to teaching
hospitals from the Medicare accounts would be based on Medicare's
current formula for direct and indirect graduate medical education
payments. Payments to teaching hospitals from the Non-Medicare
accounts would use Medicare's same formula for determining
direct and indirect graduate medical education payments, but
would substitute the hospitals' Medicare volume with the hospital's
non-Medicare volume.
The bill also establishes a Medical Education Advisory Commission
to study and report to Congress on operations of the Medical
Education Trust Fund; alternative and additional sources of
medical education funding; alternative methodologies for financing
graduate medical education; the role of medical schools in
graduate medical education; and policies designed to expand
eligibility for graduate medical education payments to children's
hospitals that operate graduate medical education programs.
Representative Ben Cardin (D-Md.), along with 11 original
cosponsors, introduced the "All Payer Graduate Medical Education
(GME) Act,"HR
2178, on June 14. The bill establishes a trust fund to
finance private payers' contributions to GME while continuing
the Medicare, Medicaid and veterans' health care programs'
commitments to physician training through their current GME
financing mechanisms. Overall, the bill would increase net
hospital revenue by an estimated $4.5 billion.
Specifically, the bill creates an all payer fund by assessing
private health plans a one percent premium tax. The income
from the premium tax, estimated to be $4.0 billion, would
be used to provide direct graduate medical education (DGME)
and indirect medical education (IME) payments. A new per resident
formula would use the national average of resident salaries
and fringe benefits, adjusted for inflation and wage indices.
The private payers' share of GME costs would be based on the
ratio of a hospital's private payer revenues to total revenues.
Once the DGME payments are determined, the remainder of the
total trust fund's monies would be distributed as IME payments
based on Medicare's IME formula.
The bill continues Medicare's contribution to GME, using
the above stated methodology based on a hospital's ratio of
Medicare revenues to total revenues instead of Medicare inpatient
days to total hospital days. Because all payers would be making
IME payments, the bill would reduce Medicare's IME formula
from 5.5 percent to 4.8 percent, starting in FY 2003.
The bill's changes to the Medicare DGME and IME payments
would save Medicare an estimated $1.5 billion. However, $300
million of the $1.5 billion in Medicare savings would be used
to reimburse payments for graduate education for non-physician
health professionals.
The bill also reforms disproportionate share hospital (DSH)
payments by including the cost of uncompensated care. DSH
payments would be redistributed accordingly. Moreover, the
bill pays DSH monies to eligible hospitals when they treat
Medicare+Choice plan enrollees, as currently hospitals do
not receive any DSH dollars when they treat Medicare+Choice
enrollees.
The bill directs the Secretary of Health and Human Services,
in concert with the AAMC and other affected community representatives,
to develop and implement a plan to reduce the number of residency
training positions to 110 percent of American medical schools
graduates by 2007. In addition, the bill directs the Secretary
to consider the financial impacts of residency reductions
to hospitals and allow a portion of the money saved by the
residency reductions to be used to support affected hospitals.
The AAMC supports both bills, as the framework reflects the
AAMC's advocacy position that all payers should contribute
to the costs of graduate medical education and that Medicare
should maintain its historic commitment to the support of
GME.
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