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Contact: Media Relations Officer, (202) 828-0975.
AAMC Troubled By MedPAC's Failure to Explicitly Recognize Medicare's Historical Committment to GME
MedPAC reconfirms the unique and essential services provided by teaching hospitals
Washington, D.C., August 6, 1999--The Association of American Medical Colleges (AAMC) is deeply concerned with the Medicare Payment Advisory Commission's (MedPAC) report because it fails to recognize the explicit and historically indispensable role played by Medicare in the financing of graduate medical education (GME) over the past 30 years. By the same token, the AAMC acknowledges and appreciates MedPAC's reconfirmation that teaching hospitals necessarily incur higher costs because they provide enhanced, technologically sophisticated patient care to Medicare beneficiaries.
"MedPAC's report sends a very troubling message to Congress and our nation's teaching hospitals by concluding that Medicare should no longer explicitly support physician training," said AAMC President Jordan J. Cohen, M.D. "The AAMC believes that Medicare has, and should continue to, set the standard of support for all payers of graduate medical education in the United States."
In MedPAC's report transmitted to Congress, the Commission asserts that the distinction between Medicare's current direct and indirect GME payments is an "accounting artifact" that should not guide Medicare's future payments to teaching hospitals. To address this issue, the Commission recommends that Medicare recategorize the direct GME costs as patient care costs and combine the two historic funding streams (DGME and IME) into an "enhanced patient care" adjustment to the payments Medicare makes to teaching hospitals for services to program beneficiaries. MedPAC's proposal appropriately recognizes the valuable patient care services provided by teaching hospitals but, unfortunately, discounts the critically important role teaching hospitals play in graduate medical education.
Although a precise understanding of the impact of MedPAC's recommendations on GME awaits further details, presumably forthcoming in the Commission's March 2000 report, the AAMC is worried about the adverse, long-term effect this fundamental change would have on the funding of teaching hospitals. While MedPAC states that their recommendation "is not intended to achieve budgetary savings," the complexity of the proposed changes raises important fiscal questions.
"Since its inception, Medicare has promoted quality graduate medical education and has acknowledged that residents are students, not apprentices hired for the sole purpose of providing health care services," said Dr. Cohen. "MedPAC's newly proposed framework would go a long way toward eroding these core principles, which have resulted in a physician workforce universally regarded as the best in the world."
For the past several years, the AAMC has advocated strongly for the reform of GME financing. Specifically, the AAMC supports the creation of trust funds that are supported by all payers of health care services, including Medicare, that benefit from physician training and from the other valued contributions of teaching hospitals. Bills to establish all-payer GME trust funds have been introduced in the House and Senate.
Compounding the concerns raised by the Commission's recommendations themselves is their timing; they are coming at a time when the nation's teaching hospitals are reeling financially from a number of marketplace pressures and, most immediately, from the severe Medicare cuts authorized by the Balanced Budget Act of 1997 (BBA). The AAMC is calling for a halt to those BBA cuts that are GME-related and those that affect disproportionate share payments to teaching hospitals. "MedPAC's proposal to recategorize Medicare's dedicated and time-honored support of GME could severely aggravate the financial uncertainty many teaching hospitals currently face," said Dr. Cohen.
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The Association of American Medical Colleges represents the 125 accredited U.S. medical schools; the 16 accredited Canadian medical schools; some 400 major teaching hospitals, including 74 Veterans Administration medical centers; 87 academic and professional societies representing nearly 88,000 faculty members; and the nation's 67,000 medical students and 102,000 residents.
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