June 22, 2001
Cardin Introduces All Payer GME Legislation
Rep. Ben Cardin (D-Md.), along with 11 original cosponsors, introduced the "All Payer Graduate Medical Education (GME) Act," H.R. 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 indicies. 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 school 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.
AAMC President Jordan Cohen, M.D., hailed Rep. Cardin for his leadership on GME and pledged to work with him to pass all-payer legislation. The bill 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. While the AAMC supports the concepts in the legislation, the Association is concerned that the actual cost of GME currently exceed the funds provided in the legislation.
The 11 original cosponsors include Reps. Ken Bentsen (D-Texas), William Coyne (D-Pa.), Darlene Hooley (D-Ore.), William Jefferson (D-La.), Jerry Kleczka (D-Wis.), Sander Levin (D-Mich.), John Lewis (D-Ga.), Pete Stark (D-Calif.), Karen Thurman (D-Fla.), Edolphus Towns (D-N.Y.), and Henry Waxman (D-Calif.).
Information: Richard Knapp, 202-828-0410, or Lynne L. Davis, 202-828-0526, AAMC Office of Governmental Relations.
