March 23, 2001
MedPAC Reviews Medicare Nursing and Allied Health Payments
At its March 15-16 meeting, the Medicare Payment Advisory Commission (MedPAC) had preliminary discussions on its upcoming report on Medicare payment policies for nursing and allied health education. The report, mandated by the Balanced Budget Refinement Act of 1999, will 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 and justify any difference among the various groups. The report is due by the end of May.
According to the staff presentation, Medicare has recognized clinical training costs incurred by hospitals since the program's inception. Since 1984, when the hospital inpatient prospective payment system (PPS) was implemented, clinical training and classroom costs for hospital-based training programs have been carved out of the PPS payment rates and paid as a "pass-through." To qualify for the pass-through payments, providers must directly control the curriculum and administration of the program, including tuition collection and employment of the teaching staff. In addition, they must provide and control both classroom instruction and clinical training. Medicare provides about $250 million annually in nursing and allied health payments to hospitals.
During their discussion, several commissioners related this issue to MedPAC's 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. Before considering any recommendations, the commissioners requested data on whether providers that train nurses and other allied health professionals have higher costs, which was not available at the meeting. The commission also asked MedPAC staff to investigate the grants provided by the Health Resources and Services Administration for non-physician education to see if there is any relationship between those grants and Medicare's nursing and allied health payments. In other areas, MedPAC reviewed the Health Care Financing Administration's (HCFA) proposed update to the sustainable growth rate (SGR) for physician services. HCFA is required to publish an estimate of the SGR in March and the commission is required to comment on the estimate in its June report. MedPAC staff noted correspondence from HCFA revising the March estimate. The largest revision in the new estimate is in the update adjustment factor, which changed from 0.4 to -1.5. While the Commission advocated replacing the SGR with an annual update in its March report, they agreed with HCFA's new estimate. In addition, they decided to restate their March recommendation on replacing the SGR in their comments.
The majority of the commission's March meeting was spent addressing health care issues in rural areas, which will be the focus of MedPAC's upcoming June Report. These issues included:
- Market conditions and the rates of health service use in rural areas;
- Access to care in rural areas including: telemedicine coverage, bonus payments in health professional shortage areas, rural and urban beneficiaries access and satisfaction;
- Emergency care in rural areas and ambulance payment policy;
- Payment provisions for inpatient hospitals in rural areas including;
- Existing special payment provisions, the wage index, DSH payments, cost and volume issues, lengths of stay and costs;
- Quality of care in rural areas;
- Expanding Medicare + Choice in rural areas;
- The impact of the Outpatient prospective payment system on rural facilities;
- Payment issues for rural home health agencies; and
- The proposed work plan for examining psychiatric facilities in rural areas.
Information: Karen Fisher, 202-862-6140, or Jeffrey Patyk, 202-828-0298, AAMC Division of Health Care Affairs.
