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Medicare Payment Advisory Commission (MedPAC)

			Related Resources MedPAC AAMC Documents AAMC letter to MedPAC Commissioners AAMC Summary and Analysis of August 1999 MedPAC Report

Background

The Balanced Budget Act of 1997 (BBA) included a provision creating MedPAC. MedPAC is charged with reviewing payment policies under the Medicare fee-for-service and managed care programs and making recommendations to Congress. It merges the functions of, and replaces the Prospective Payment Assessment Commission (ProPAC) and the Physician Payment Review Commission (PPRC). Glenn M. Hackbarth, J.D., chairs MedPAC. Robert D. Reischauer, Ph.D, is vice-chair of the Commission. The composition of MedPAC reflects the BBA's requirement that members be national experts in areas such as health finance, health facility management, and health plans. Physicians and other providers of health services, as well as representatives of consumers and the elderly are also included. Murray Ross, Ph.D., is the Executive Director of the Commission.

The Balanced Budget Refinement Act of 1999 (BBRA) requires MedPAC to conduct a number of studies, those related to GME include:

• Medicare payment policy toward professional clinical training of different types of non-physician health care professionals (nurses, allied health professionals, etc); and

• the appropriateness of continuing to set the initial residency period for child neurology training programs at the initial residency period for pediatrics plus two years.

Other studies required by the BBRA include:

• the need for additional payments under the Skilled Nursing Facility Prospective Payment System (PPS) for facilities in Alaska and Hawaii;

• the Medicare+Choice program including: specific legislative changes that would make Medical Savings Accounts a viable option under the program, the new risk adjustment methodology, appropriate quality improvement standards for each plan, integration and transition of the Social HMO program into an option under Medicare+Choice, and the development of a Medicare+Choice payment methodology for the frail elderly;

• the appropriateness of and method for including certain rural and cancer hospitals under the Outpatient PPS;

• the cost-effectiveness of covering services of a post-surgical recovery center;

• the regulatory burdens placed on all classes of providers under fee-for-service Medicare and the associated costs;

• the feasibility and advisability of excluding rural home health agencies and beneficiaries living in rural areas from the home health PPS;

• the appropriateness of special categories and payment methodologies under Medicare for rural hospitals and their impact on beneficiary access and quality.

MedPAC's GME Report

The BBA required MedPAC to submit a report to Congress making recommendations concerning whether, and to what extent, Medicare payment policies and other Federal policies regarding teaching hospitals and Graduate Medical Education (GME) should be changed. The mandate requires the Commission to comment on the following areas:

• possible methodologies for making payments for GME and the selection of entities to receive such payments, including issues regarding children's hospitals and approved medical residency programs in pediatrics, and whether and to what extent payments are being made (or should be made) for nursing and other allied health professions training;

• federal policies regarding international medical graduates;

• the dependence of medical schools on service-generated income;

• whether and to what extent the needs of the U.S. regarding physician supply in the aggregate and in different specialties will change during the ten-year period beginning on October 1, 1997, and whether and to what extent any such changes will have significant financial effects on teaching hospitals; and

• methods for promoting an appropriate number, mix, and geographic distribution of health professionals.

On August 6, 1999, MedPAC released its report entitled "Rethinking Medicare's Payment Policies for Graduate Medical Education and Teaching Hospitals." The report, recommended that it would be more appropriate to recognize the inpatient costs traditionally categorized as Direct Graduate Medical Education (DGME) as necessary costs in producing a teaching hospital's output, which is patient care. Since the Indirect Medical Education (IME) adjustment is also associated with patient care costs; it would be more appropriate to incorporate the DGME costs into the IME financing mechanism. The result would be a Teaching Hospital Adjustment (THA) to DRG payments that hospitals receive. The Commission remained silent on other issues in the BBA mandate, including: children's hospitals and approved medical residency training programs in pediatrics, and payments for nursing and other allied health professional training. Other BBA-mandated issues the Commission did not comment on directly included the dependence of medical schools on service-generated income, federal policy regarding international medical graduates, and the impact of the changing mix of physicians on teaching hospitals. Further detailed analysis of the Commission's proposal were included in its June 2000 annual report.

AAMC Action

AAMC staff monitor MedPAC's activities, particularly as they relate to GME. AAMC staff has and will continue to meet with MedPAC analysts as they discuss issues regarding GME. The AAMC also issued a press release on MedPAC's GME report. The Association has also written a letter to MedPAC Commissioners, voicing the AAMC’s displeasure with MedPAC’s approved changes to Medicare’s DGME and IME methodologies. The letter also included a summary and analysis of MedPAC's August 1999 report on GME.

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