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

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

GMECONOMICS IS BIG BUSINESS!!! GMEC

SOURCE: CMS, MEDICARE COST REPORT FILE GME PAYMENTS ARCS STEERING COMMITTEE IMEDME TOTAL GME PCP FTE PCP PRA SPEC FTE SPEC PRA AGRETTO GUINTO SCHULZ FULBRIGHT DEL COGLIN OLENWINE ST. PIERRE CAMERON CARTER

PROGRAMS 8,400* GMECONOMICS BASICS: PROGRAMS

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

AAMC COTH MEMBERS 400 GMECONOMICS BASICS: TYPES OF TEACHING HOSPITALS

ALL COTH FACULTY125,000 GMECONOMICS BASICS: FACULTY

ACGME APPROVED RESIDENTS 106,000* GMECONOMICS BASICS: RESIDENTS

 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) GMECONOMICS: DIRECT GME COSTS (DME)

RESIDENTS 106,000* DME SALARY + BENEFITS

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

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

GMECONOMICS: FINANCING SOURCES

SOURCE: AAMC HOUSESTAFF REPORTS GMECONOMICS: OPERATING BUDGET

SOURCE: AAMC HOUSESTAFF REPORTS GMECONOMICS: OPERATING BUDGET

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

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”

MEDICARE: PROGRAM PARTS SOURCE: MedPAC DATA BOOK, 2006

 PART D: SUPPLEMENTARY MEDICAL INSURANCE Rx DRUGS GME FUNDING: MEDICARE’S ROLE

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

 PART A: HOSPITAL INSURANCE TRUST FUND GME FUNDING: MEDICARE’S ROLE GME FUNDING

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

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

DIRECT MEDICAL EDUCATION  DME = PRA X FTE X % Medicare Days  PRA = PER RESIDENT AMOUNT  FTE = RESIDENT COUNT  PRIMARY CARE VS OTHER  PRA CORRIDOR % NATIONAL AVERAGE

 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 PART A: ORIGINS OF IME

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

 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 IME ADJUSTMENT HISTORY

IME ADJUSTMENT THE TRUTH ABOUT IME

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 IME 2.7%

THE TRUTH ABOUT THE CAP

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 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 SUBSIDIZING UNCOMPENSATED CARE” TRULY INDIRECT GME: DSH

DSH PAYMENTS % HOSPITAL BASE PAYMENTS

CARING FOR THE POOR ≠ DSH THE TRUTH ABOUT DSH

MOST DSH GOES TO TEACHING HOSPITALS THE TRUTH ABOUT DSH

TEACHING HOSPITAL MARGINS MAJOR TEACHING HOSPITALS LEAD OVERALL MEDICARE MARGIN CURVE

MAJOR TEACHING HOSPITALS TOTAL MARGINS ARE COMPETITIVE TEACHING HOSPITAL MARGINS

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

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

 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 GME FUNDING: MEDICAID’S ROLE

CHILDREN’S HOSPITAL GME FUNDING  CHGME AUTHORIZED 2000, REAUTHORIZED  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

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

 HUMAN RESOURCES ISSUES  WORKFORCE SHORTAGE  AAMC EXPANSION  BBA CAP CONTROVERSIES AND CHALLENGES

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

MEDICARE’S FUTURE: BABY BOOMERS

MEDICARE’S FUTURE: BANKRUPTCY

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

MEDICARE’S FUTURE: BENEFICIARIES

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

SOURCE: DODOO, 2007 RESIDENTS106,000* GME PAYMENTS AND COSTS PER RESIDENT * Medicare Medicaid Payments Costs ?Overage

 CONTROVERSIES AND CHALLENGES  WHY SHOULD MEDICARE PAY?  WHAT IS MEDICARE BUYING?  VALUE  QUALITY  WIDE VARIATION DME SUSPECT  MedPAC RECOMMENDS REDUCTION IME A REVIEW FOR COORDINATORS

 CONTROVERSIES AND CHALLENGES  RULE-MAKING SHARPLY ELIMINATES FEDERAL MATCHING DOLLARS FOR MEDICAID GME PAYMENTS 2007  MORATORIUM TO JUNE 2008  MORATORIUM EXTENSION PASSED HOUSE ENERGY AND COMMERCE SUBCOMMITTEE ON HEALTH APRIL 9, 2008 A REVIEW FOR COORDINATORS

 CONTROVERSIES AND CHALLENGES  PRESIDENT’S FY 2009 BUDGET ELIMINATES CHGME A REVIEW FOR COORDINATORS

? ALTERNATIVE FUNDING ? SPECIFIC APPROPRIATION ? OUTCOMES REQUIREMENTS ? ALL PAYER FUND ? REDUCTION RATES BY NON-GOVT PAYERS ? PROVIDER TAXES ? ALCOHOL + TOBACCO FEDERAL TAX A REVIEW FOR COORDINATORS

KAREN R. BORMAN, MD, FACS MEDICARE and MEDICAID REIMBURSEMENT for GRADUATE MEDICAL EDUCATION