MEDICARE and MEDICAID REIMBURSEMENT for GRADUATE MEDICAL EDUCATION

1. MEDICARE and MEDICAID REIMBURSEMENT for GRADUATE MEDICAL EDUCATION A REVIEW FOR COORDINATORS KAREN R. BORMAN, MD, FACS

2. A REVIEW FOR COORDINATORS • SCOPE OF GME ECONOMICS • COSTS AND FINANCING SOURCES • ROLE OF MEDICARE • ROLE OF MEDICAID • CONTROVERSIES AND CHALLENGES

3. GMEC GMECONOMICS IS BIG BUSINESS!!!

4. GME PAYMENTS ARCS STEERING COMMITTEE SOURCE: CMS, MEDICARE COST REPORT FILE

5. GMECONOMICS BASICS: PROGRAMS PROGRAMS 8,400*

6. GMECONOMICS BASICS:SPONSORS + AFFILIATES SPONSORING INSTITUTIONS 700 PARTICIPATING INSTITUTIONS 2,900

7. GMECONOMICS BASICS: TYPES OF TEACHING HOSPITALS AAMC COTH MEMBERS 400

8. GMECONOMICS BASICS: FACULTY ALL COTH FACULTY 125,000

9. GMECONOMICS BASICS: RESIDENTS ACGME APPROVED RESIDENTS 106,000*

10. GMECONOMICS: DIRECT GME COSTS (DME) • RESIDENT SALARY + BENEFITS • SUPERVISING FACULTY PAYMENTS • EDUCATION OVERHEAD • EDUCATIONAL PRODUCTS + SERVICES • SIMULATION • ADMINISTRATION • PROGRAM COORDINATOR + DIRECTOR • ACCREDITATION FEES • RECRUITING • OTHER (e.g., PAGERS, COATS, TRAVEL)

11. DME SALARY + BENEFITS RESIDENTS 106,000*

12. GMECONOMICS: INDIRECT GME COSTS (IME) • INEFFICIENT CARE BY RESIDENTS • EMERGING TECHNOLOGY USAGE • CASE MIX / SPECIALIZED SERVICES • ?PAYER MIX (DSH) • ?OTHER TRAINEES (TITLE VII) • OPERATING EXPENSES • EDUCATION RELATED FACILITIES • CAPITAL EXPENSES

13. GMECONOMICS: FINANCING SOURCES • MEDICARE: DME + IME + DSH • CHILDRENS’ HOSPITALS GME VIA HRSA • DEPARTMENT OF VETERANS AFFAIRS (VA): DIRECT SUPPORT APPROPRIATION • MEDICAID: PER DIEM / CASE RATES • STATES LINE ITEM / GOAL-DIRECTED • PRIVATE PAYERS: HIGHER INPT RATES • MEDICAL SCHOOLS: PRACTICE PLANS • HOSPITALS: FROM TOTAL MARGIN

14. GMECONOMICS: FINANCING SOURCES

15. GMECONOMICS: OPERATING BUDGET SOURCE: AAMC HOUSESTAFF REPORTS 2003-2007

16. GMECONOMICS: OPERATING BUDGET SOURCE: AAMC HOUSESTAFF REPORTS 2003-2007

17. GME FUNDING: MEDICARE’S ROLE MEDICARE BECOMES LAW, 1965 (SOCIAL SECURITY ACT)

18. GME FUNDING: MEDICARE’S ROLE “…educational activities enhance the quality of care in an institution, and it is intended, until the community undertakes to bear such educational costs in some other way, that part of the net cost of such activities (including stipends of trainees, as well as compensation of teachers and other costs) should be borne to an appropriate extent by the hospital insurance program”

19. MEDICARE: PROGRAM PARTS SOURCE: MedPAC DATA BOOK, 2006

20. GME FUNDING: MEDICARE’S ROLE • PART D: SUPPLEMENTARY MEDICAL INSURANCE Rx DRUGS

21. GME FUNDING: MEDICARE’S ROLE • PART B: SUPPLEMENTARY MEDICAL INSURANCE PROVIDERS FACULTY-GENERATED PATIENT CARE REVENUES

22. GME FUNDING: MEDICARE’S ROLE • PART A: HOSPITAL INSURANCE TRUST FUND GME FUNDING

23. PART A: HI TRUST FUND • PART A: HOSPITAL INSURANCE TRUST FUND • ACUTE CARE • HIPPS, HOPPS, PSYCHIATRIC, ASCs • POST-ACUTE CARE • SNF, IRF, LTCH, HOME HEALTH, HOSPICE • OTHER • DIALYSIS, CLINICAL LABORATORY GME FUNDING?

24. PART A: HI TRUST FUND • HOSPITAL INPATIENT PROSPECTIVE PAYMENT SYSTEM (HIPPS) GME FUNDING!

25. DIRECT MEDICAL EDUCATION • DME = PRA X FTE X % Medicare Days • PRA = PER RESIDENT AMOUNT • FTE = RESIDENT COUNT • PRIMARY CARE VS OTHER • PRA CORRIDOR 85-140% NATIONAL AVERAGE

26. PART A: ORIGINS OF IME • HOSPITAL INPATIENT PROSPECTIVE PAYMENT SYSTEM, 1983 • CBO PREDICTED -7% TEACHING HOSPITALS / +7% NON-TEACHING • DIRECT GME EXCLUDED FROM PPS • INDIRECT GME ADD ON TO BASE RATE 11.6

27. INDIRECT MEDICAL EDUCATION • IME ADJUSTMENT STATUTORY FORMULA, OPERATIONS • 90% PPS PAYMENTS • IME % = 1.32 * [(1 + IRB) .405 - 1 ] x 100 • IME ADJUSTMENT STATUTORY FORMULA, CAPITAL • 10% PPS PAYMENTS • AVG DAILY CENSUS INSTEAD OF IRB

28. IME ADJUSTMENT HISTORY • 1983 HIPPS 11.6% • 1986 DSH 8.1% • 1988 DSH EXPANSION 7.7% • 1997 BBA • TARGET 5.5% BY 2001 • TARGET BEING REACHED 2008 • RESIDENT CAPS

29. THE TRUTH ABOUT IME IME ADJUSTMENT 1984 - 2008

30. RESIDENT FTE • “SLOTS” / “CAPS” / “THE COUNT” • USED IN DME AND IME FORMULAS • BASE YEAR 1996 • THREE YEAR ROLLING AVERAGE • INITIAL ELIGIBILITY PERIOD = 1.0 FTE / ALL ELSE = 0.5 FTE • HOSPITAL VS AMBULATORY • REDISTRIBUTION 2003 2500 SLOTS @ IME 2.7%

31. THE TRUTH ABOUT THE CAP

32. TRULY INDIRECT GME: DSH DISPROPORTIONATE SHARE FUNDING (DSH) • HOSPITAL-SPECIFIC ADD-ON TO OPERATING AND CAPITAL PAYMENTS • MEDICAID DAYS/TOTAL PATIENT DAYS + DUAL ELIGIBLE PATIENT DAYS/TOTAL MEDICARE PATIENT DAYS • MINIMUM THRESHOLD - >100% • MULTIPLE FORMULAS BY HOSPITAL SIZE AND LOCATION

33. TRULY INDIRECT GME: DSH • DISPROPORTIONATE SHARE FUNDING (DSH) • INTRODUCED 1986, EXPANDED 1988 • “POOR PATIENTS ARE MORE COSTLY TO TREAT” • COST SHIFT TO MEDICARE PATIENTS • TEACHING HOSPITALS LESS COMPETITIVE • “PUBLIC GOOD SUBSIDIZINGUNCOMPENSATED CARE”

34. DSH PAYMENTS % HOSPITAL BASE PAYMENTS

35. THE TRUTH ABOUT DSH CARING FOR THE POOR ≠ DSH

36. THE TRUTH ABOUT DSH MOST DSH GOES TO TEACHING HOSPITALS

37. TEACHING HOSPITAL MARGINS MAJOR TEACHING HOSPITALS LEAD OVERALL MEDICARE MARGIN CURVE

38. TEACHING HOSPITAL MARGINS MAJOR TEACHING HOSPITALS TOTAL MARGINS ARE COMPETITIVE

39. GME FUNDING: MEDICARE’S ROLE • DME $ 2.6 BILLION 2004 • IME $ 5.3 BILLION 2004 • DME + IME = $ 7.9 BILLION • DSH $ 7.7 BILLION 2004 • IME + DSH = 14% ALL ACUTE CARE HOSPITAL PPS PAYMENTS • TOTAL TO GME $ 15.6 BILLION

40. GME FUNDING: MEDICAID’S ROLE MEDICAID BASICS • CREATED WITH MEDICARE IN 1965 • VOLUNTARY PARTICIPATION BY STATES (ALL SINCE 1982) • FEDERAL GUIDELINES • MATCHING FEDERAL DOLLARS • STATE-ADMINISTERED • DEFINE ELIGIBILITY AND BENEFITS • LOW INCOME + SPECIAL NEED • ON AVERAGE, 22% OF STATE BUDGETS

41. GME FUNDING: MEDICAID’S ROLE • MAKING GME PAYMENTS IS OPTIONAL FOR STATES • 47 + DC MAKE PAYMENTS (IL, TX, ND) • FORMULAS VARY BY STATE • USUALLY PAID VIA PER CASE/PER DIEM • MOST ARE MATCHED BY FEDERAL DOLLARS • TOTAL GME PAYMENTS BY STATES IN 2006 $3 BILLION

42. CHILDREN’S HOSPITAL GME FUNDING • CHGME AUTHORIZED 2000, REAUTHORIZED 2006-2011 • HEALTH RESOURCE SERVICES ADMINISTRATION • ANNUAL APPROPRIATIONS FUNDING IN LABOR-EDUCATION-HHS BILL • 1/3 DME USING NATIONAL AVG PRA • 2/3 IME FORMULA WITH CASE MIX, VOLUME, TEACHING INTENSITY • $ 300 MILLION 2004 TO 61 HOSPITALS

43. GME FUNDING: GOVERNMENT’S ROLE • DME $ 2.6 BILLION 2004 • IME $ 5.3 BILLION 2004 • DSH $ 7.7 BILLION 2004 • MEDICAID $ 3 BILLION • CHGME $ 0.3 BILLION • TOTAL ANNUAL GOVERNMENT FUNDING TO GME $ 18.9 BILLION

44. CONTROVERSIES AND CHALLENGES • HUMAN RESOURCES ISSUES • WORKFORCE SHORTAGE • AAMC EXPANSION • BBA CAP

45. CONTROVERSIES AND CHALLENGES • FUTURE GOVERNMENT FUNDING • MEDICARE SUSTAINABILITY • MEDICAID MATCHING • CHGME CONTINUATION • DECLINING PART B FACULTY REVENUES • PART D EFFECT

46. MEDICARE’S FUTURE: BABY BOOMERS

47. MEDICARE’S FUTURE: BANKRUPTCY

48. Table 4.5 Medicare Trustee’s Report: Part A Income and Expenses, 1970-2015 Actual Projected . Source: CMS, Office of the Actuary.Trustees Report, 2006. Projected Expenditures First Exceed Projected Income in 2011

49. MEDICARE’S FUTURE: BENEFICIARIES

50. PART D: Rx DRUGS ? SOURCE: MedPAC DATA BOOK, 2006