AAMC's View on MedPAC's August
1999 Report on Graduate Medical Education
March 7, 2000
Gail R. Wilensky, Ph.D., Chair
Medicare Payment Advisory Commission (MedPAC)
Project HOPE - Center for Health Affairs
7500 Old Georgetown Road, Suite 600
Bethesda, MD 20814-6133
Dear Dr. Wilensky:
I write to convey the views of the Association of American
Medical Colleges (AAMC or the Association) on MedPAC's August,
1999 Report entitled "Rethinking Medicare's Payment
Policies for Graduate Medical Education and Teaching Hospitals"
(August Report) and subsequent Commission discussions.
At the outset, let me express our appreciation both to the
MedPAC staff and Commissioners for your dedicated exploration
of the issues related to the Medicare payments with an education
label. We also appreciate the opportunities afforded AAMC
staff to address the Commission and to meet with MedPAC staff.
While the attached document provides our detailed analysis
of the August Report, in this letter I would like to emphasize
several specific concerns. Briefly, we believe there must
be a more thorough examination of a) the perceived flaws in
the current direct graduate medical education (DGME) payment
methodology that would justify an overhaul of the current
system, and b) the implications and consequences of the framework
proposed in the August Report for residency education and
the related educational missions of teaching hospitals.
As you are aware, since its inception the Medicare program
has included financial support for the additional costs that
teaching hospitals incur as a result of educating residents,
treating more severely ill patients, providing important regional
and standby services, fulfilling other aspects of their educational
commitments, and caring for the poor and uninsured. Medicare
has shared in the support of these missions through three
targeted payments: DGME payments, the indirect medical education
(IME) adjustment, and the disproportionate share (DSH) adjustment.
These payments are critical to the financial viability of
teaching hospitals. As you know, major teaching hospitals'
total margins are the lowest of any major hospital group.
To a large degree, the DGME, IME, and DSH payments represent
the difference that permits these hospitals to maintain their
valuable missions.
In the Balanced Budget Act of 1997 (BBA), Congress requested
that MedPAC study, among other items, Medicare payments for
graduate medical education (GME). In response, MedPAC put
forth a new conceptual framework that would recharacterize
DGME costs as patient care costs and combine two historically
separate funding streams --DGME and IME--into a single adjustment
to Medicare diagnosis related group (DRG) per case payments.
While this was initially called an "enhanced patient
care" adjustment, the Commission has subsequently renamed
it the "teaching hospital adjustment."
Despite MedPAC's sincere efforts to examine Medicare payments
for teaching hospitals, we believe the conceptual framework
is fundamentally misguided, and we urge the Commission to
reconsider its current position.
MedPAC's approach abandons Medicare's long-standing rationale
to explicitly fund its share of the costs of educating residents
on the controversial premise that residents incur these costs.
The attached document questions the validity of this premise.
However, irrespective of the underlying premise, we believe
that it is the explicit recognition by Medicare of
its responsibility to help fund residency education costs
through the DGME mechanism that has contributed enormously
to sustaining the high quality of graduate medical education
in this country. This education has helped to ensure that
Medicare patients have access to a physician workforce universally
regarded as the best in the world.
It is our position that the fundamental flaw of the current
system lies not within Medicare, but in the failure
of other payers in an increasingly price competitive marketplace
to accept and pay for their fair share of the costs arising
from the educational and other missions of teaching hospitals.
We believe the way to fix this flaw is for all payers of health
care services to adopt Medicare's rationale and explicitly
contribute the funding necessary to educate residents, as
well as to sustain the other differential missions of teaching
hospitals. We urge the Commission to discuss this option and
give serious consideration to adopting it as a recommendation.1
I would like to underscore that the AAMC is not opposed to
considering changes in Medicare GME policy. We have proposed
and supported changes, including the creation of an all payer
fund. But we believe that any such changes must recognize
an explicit role for Medicare to pay its share of the costs
necessary to educate this county's future physician workforce,
and to support the other unique functions of providers that
provide services in an education environment.
Specifically, we urge the Commission to consider carefully
the following issues before it concludes that advancing the
framework in the August Report is in the best interests of
the Medicare program and the nation as a whole:
Examination of the Current DGME Methodology
We respectfully suggest that the Commission has yet to delineate
flaws in the current system that are of a magnitude sufficient
to justify discarding the entire DGME payment structure. The
supposition that the current DGME payment system is the result
of an"accounting artifact" does not fairly or accurately
depict the current system, and is not an argument for overturning
a payment system that has worked effectively for nearly 20
years. If the Commission identifies flaws in the current DGME
methodology, we believe it should consider how these flaws
could be addressed directly, rather than through an overhaul
of the entire system.
Examination of the Consequences of the Framework
If implemented, MedPAC's proposed framework would have far-reaching
impact. We believe that the Commission has yet to fully address
these potential consequences. Specifically, MedPAC has not
explored whether its framework would diminish the quality
and availability of residency education and the related educational
activities undertaken by teaching hospitals and medical schools.
Consequently, before the concept in the August Report is further
advanced, we believe the Commission should explore thoroughly
both the nonfinancial and financial results that adoption
of its framework is likely to yield.
A decision to rescind a distinct payment associated with
education could signal to current and future policymakers,
and possibly providers, that educating physicians should not
be a primary mission of teaching hospitals. This is a dangerous
message that could have serious consequences, especially when
teaching hospitals are facing inordinate pressures to reduce
the level and quality of their multiple missions to be price
competitive.
In addition to this overarching issue, we also believe that
any discussion of consequences must include the potential
impact of the August framework on residency education in ambulatory
and rural sites. Medicare's current payment system has recently
added policies that are designed to encourage resident education
in ambulatory sites, and over the past several years, there
has been increasing focus on the importance of these educational
sites. Any major change to the current payment system would
almost certainly affect the balance of educational activity
between inpatient and other settings.
Careful prospective analysis of this impact is essential
to avoid unintended consequences for the quality of medical
education.
We do appreciate the considerable time the Commission is
spending on examining the financial consequences of the August
framework on payments to teaching hospitals. We believe strongly
that any changes to the current system should not reduce Medicare
payments to teaching hospitals. Accordingly, we are dismayed
that the analysis presented at the Commission's January meeting
indicates that the methodology used to model the conceptual
framework would result in Medicare payments increasing for
nonteaching hospitals.2
Such an outcome seems entirely at odds with both MedPAC's
original thinking and the embodied intentions of the BBA mandate.
In addition, the methodology addresses only residents being
taught in inpatient settings; costs associated with residents
in outpatient settings and education payments for nursing
and allied health programs would continue to be paid under
the current system for at least the short term, and likely
for much longer. The result would be multiple payment methodologies
for costs associated with the same or similar educational
missions.
We believe that a staff document that addresses the potential
consequences of the framework in the August Report would help
the Commission determine whether to advance it. Even if MedPAC
chooses to retain its conceptual framework, such a document
would be useful to other policymakers as they assess the potential
merits and drawbacks of MedPAC's position.
Summary
We hope the issues raised above will help inform the discussions
the Commission will have regarding whether the August framework
should continue to be advanced by MedPAC. If the Commission
should decide to retain its conceptual framework for now,
we ask you to not include specific recommendations on GME
in MedPAC's June Report.
Both Commissioners and staff have repeatedly emphasized that
additional work is needed on the methodology of the framework.
We agree, and appreciate the magnitude of this effort. Without
a full analytical development and subsequent discussion on
this methodology, however, it does not seem prudent to approve
recommendations that go beyond the conceptual framework announced
in August. We believe that if the Commission wishes to continue
to explore the August framework, a more appropriate course
of action would be for MedPAC's June Report to contain a description
of the Commission's GME work plan and discussions to date.
This discussion should emphasize that more analysis is needed
before the Commission will endorse a payment policy premised
on this framework.
Thank you for this opportunity to express our views. We look
forward to the Commission's discussions of the issues raised,
and continuing dialogue on this important topic.
Sincerely yours,
Jordan J. Cohen, M.D.
cc:Murray Ross, Ph.D.
Robert Dickler
1.This recommendation is relevant
even if MedPAC decides to retain the conceptual framework
set forth in the August Report.
2.This appears to be the result of labeling
DGME costs as "patient care costs" which, according
to the DRG payment methodology, requires that they be included
in the calculation of the standardized base DRG payment amount.
This results in higher payments for all DRG cases regardless
of whether they are treated in a teaching or nonteaching hospital.
This concept is similar to including DGME and IME payments
in the calculation of Medicare managed care capitation rates.
Such a concept was expressly rejected by Congress in the BBA
when it mandated that DGME and IME payments be "carved
out" of the capitation rates and paid directly to teaching
hospitals because those are the hospitals that incur the costs
covered by these payments.
|
