April 20, 2001

MedPAC Approves Nursing, Allied Health Recommendations

At its April 12-13 meeting the Medicare Payment Advisory Commission (MedPAC) finalized recommendations for its upcoming report on Medicare payment policies for nursing and allied health education. The report is mandated by the Balanced Budget Refinement Act of 1999 (BBRA), which requires the commission to examine payment policies for the professional clinical education of different groups of non-physician health care providers, such as nurses, allied health professionals, physician assistants, and psychologists. In addition, the BBRA requires MedPAC to report if there is a basis for any difference in treatment among groups of non-physician health care providers. The report is due by the end of May.

Clinical training costs for nursing and allied health education have been recognized since Medicare's inception. However since the implementation of the hospital inpatient prospective payment system (PPS) in 1984, the costs have been carved out of the PPS payment rates and paid as a "pass-through." Commissioners discussed the draft recommendations presented by MedPAC staff in terms of their view on the relationship between the Medicare program and Medicare direct graduate medical education payments. That is, they believe that the non-physician trainees, not the hospitals, are incurring the costs of their training by paying tuition. The issue then becomes a) whether institutions with these trainees have higher patient care costs and b) if they have higher costs, do they provide some value to the Medicare program to justify paying them additional amounts.

Given their view and the minimal data available on the issue, commissioners agreed Congress should use specific targeted programs supported by general revenues, instead of Medicare, to affect the number, mix, and geographic distribution of health care professionals. They also agreed the Secretary of Health and Human Services should collect data on the number and types of non-physician health professionals receiving training in clinical settings. In addition, the secretary should study whether providers that participate in such training have higher patient care costs and provide enhanced patient care.

The commissioners also approved recommendations for the June report to Congress. Regarding hospital payment, they agreed that in fiscal year 2002, Medicare should fully implement the policy of excluding from the hospital wage index salaries and hours for teaching physicians, residents, and certified nurse anesthetists. Currently, the exclusion of these costs is being phased out over time, with full exclusion by 2003. In addition, MedPAC will recommend that the secretary should reexamine the costs included in the labor shares for Medicare's prospective payment systems to ensure that each labor share only includes costs for resources that are purchased in local markets. The commission also agreed to warn Congress that the 0.1 percent cut in the target spending level for physicians could increase as more economic data are collected.

Other issues addressed at the meeting included:

• Medicare in rural areas including quality of care, home health services, access to care, the Medicare Plus Choice program, payment for inpatient hospital care, and the outpatient prospective payment system (OPPS);
• payment for skilled nursing facilities in Alaska and Hawaii; and
• assessing the impact of the OPPS on access and quality.

Information: Karen Fisher, 202-862-6140, or Jeffrey Patyk, 202-828-0298, AAMC Division of Health Care Affair.