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Medicare Legislation to Ameliorate Reductions to Indirect Medical Education Payments

			Also on Government Affairs GME & IME Payments MedPAC Related Resources P.L. 108-173 S.899 H.R.1710 House Republican Letter to Medicare Conferees in Support of Restoring the IME Senate Letter to Medicare Conferees in Support of Restoring the IME AAMC Documents Summary of Medical Prescription Drug Law (PDF, 32 pages - 92KB) IME Overview

Current Status

Section 502 of the ''Medicare Prescription Drug, Improvement and Modernization Act of 2003,'' which was signed into law (P.L. 108-173) on December 9, 2003, increases the Medicare Indirect Medical Education (IME) adjustment from 5.5 to 6.0 percent on April 1, 2004; 5.8 percent in FY 2005; and 5.55 percent in FY 2006. In FY 2007, IME payments are reduced to 5.35 percent before being set at 5.5 percent in FY 2008 and beyond. (See table). It is estimated that this provision will provide $400 million to teaching hospitals over ten years.

IME Add-On Percentage As Set Forth by P.L. 108-173
''Medicare Prescription Drug, Improvement and Modernization Act of 2003''

Congressional Action

The June 27, 2003 House-passed Medicare bill (H.R. 1) failed to include any relief for teaching hospitals, while the June 27 Senate-passed bill (S.1) provided a modest $300 million in increased IME payments over 10 years. Section 418 of S. 1 increased the IME adjustment from 5.5 to only 5.53 percent in FY 2004 and beyond, providing $300 million in additional IME payments to teaching hospitals over 10 years.

In support of the AAMC's position, forty-seven House Republicans sent a letter on Sept. 16, 2003 to House and Senate Republican Medicare conferees and the House leadership urging them to ensure that the final Medicare agreement include relief for teaching hospitals. The letter, led by Rep. Chris Shays (R-Conn.), specifically urged the conferees to restore Medicare Indirect Medical Education (IME) payments to 6.5 percent for several years. Forty Senators also sent an Aug. 1, 2003 letter to the House and Senate Medicare conferees urging them to improve upon the Senate's IME provisions and restore the Medicare Indirect Medical Education (IME) payment to 6.5 percent for 10 years. The letter, circulated by Sens. Kay Bailey Hutchison (R-Texas) and Edward Kennedy (D-Mass.), expressed concern that the unique services teaching hospitals provide will "be compromised if the IME cuts are not reversed."

AAMC Activity

In 2003, the AAMC advocated restoring IME payments to 6.5 percent, as set forth in bipartisan legislation, S. 899/H.R. 1710, "The American Hospital Preservation Act" sponsored by Sens. Hutchison (R-TX) and Bayh (D-IN) and Reps. Foley (R-FL) and Neal (D-MA). During the House and Senate conference to the Medicare legislation, the AAMC urged the House and Senate conferees to: 1) Improve the Senate's Medicare IME provision and 2) Restore Medicare's teaching hospital payment to 6.5 percent. In 2004 and beyond, the AAMC will work with Congress to improve upon the IME provisions included in the Medicare Prescription drug law.

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