October 26, 2001

AAMC Concerned About GME Payments under Medicaid Managed Care

The Centers for Medicare & Medicaid Services (CMS) Aug. 20 published a proposed rule on Medicaid managed care programs [66 Federal Register 43614]. Subsequently, the AAMC learned that one of the proposed regulations (42 C.F.R. §438.60) entitled "Limit on payment to other providers" could preclude state Medicaid programs from making payments directly to teaching hospitals that are under contract with Medicaid managed care plans.

Similar to the Medicare program, many state Medicaid fee-for-service programs make payments to teaching hospitals to help offset the additional costs these facilities incur as a result of their special missions of educating physicians and caring for patients who require more intense and complex care. A number of state Medicaid managed care programs also provide additional payments directly to teaching hospitals. A study, commissioned by the AAMC in 1999, indicated that 16 states made these payments, totaling over $200 million.

On Oct. 19, the AAMC along with the American Hospital Association, the National Association of Public Hospitals, and the National Association of Children's Hospitals, submitted a joint letter requesting that the final Medicaid managed care rule clarify that section 438.60 does not affect the special payments made by state Medicaid programs to teaching hospitals. Numerous teaching hospitals and state hospital associations submitted comment letters with a similar message. It is unclear when a final rule will be published.

Contact: Karen Fisher, AAMC Division of Health Care Affairs, 202-862-6140.