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1. Michelle LefkowitzTechnical AdvisorDivision of Acute CareCenters for Medicare & Medicaid Servicesmiechal.lefkowitz@cms.hhs.gov212-616-2517

2. http://thismakesmesick.typepad.com/this_makes_me_sick/2005/12/index.htmlhttp://thismakesmesick.typepad.com/this_makes_me_sick/2005/12/index.html

4. Medicare’s Role in Financing GME “Many hospitals engage in substantial educational activities, including the training of medical students, internship and residency programs, the training of nurses, and the training of various paramedical personnel. Educational activities enhance the quality of care in an institution and it is intended, until the community undertakes to bear such education costs in some other way, that a part of the net cost of such activities (including stipends of trainees as well as compensation of teachers and other costs) should be considered as an element in the cost of patient care, to be borne to an appropriate extent by the hospital insurance program” (emphasis added, S. Rep. No. 404, 89th Cong., 1st Sess. 36 (1965); H.R. No. 213, 89th Cong., 1st Sess. 32 (1965)).

5. What does Medicare pay for? Under Current Law-- • “Approved” medical residency training programs are • Accredited, and/or • Lead to board certification • ACGME, AOA, ADA, CPME, ABMS

6. 2 Types of Medicare GME Payments • Direct GME Payments (DGME) • Partially compensates for residency education costs • Salaries of staff, residents, and other direct costs • Indirect Medical Education (IME) Payments • Partially compensates for higher patient care costs due to presence of teaching programs • It’s a percentage add-on payment to basic Medicare per case (DRG) payment

7. Direct GME Payment Formula For each hospital: • DGME payment = $PRA x FTE residents x Medicare utilization • Per Resident Amount (PRA) is cost per resident in a 1984 base year updated for inflation.

8. IME Payment Formula • The IME adjustment is based on statistical analysis using intern and resident-to-bed ratios (IRB) • % per case add-on = • DRG Payment X Multiplier X ((1 + IRB)0.405 - 1) • For FFY 2011, multiplier is 1.35 • Short hand for IME: Hospitals getting about a 5.5% increase in DRG payments for every approx. 10% increase in the IRB ratio

9. Medicare GME Spending • Estimated Federal Fiscal Year 2010: • DGME Payments = $2.66 billion • IME Payments = $6.53 billion • Total = $9.19 billion • Source: CMS Office of the Actuary • Note-totals include Capital IME payments and direct GME and IME payments for Medicare Advantage enrollees

10. Medicare Resident Caps • 1996 FTE RESIDENT CAP—There is a limit to the number of FTE residents for which Medicare will pay each hospital • Excludes dental and podiatry residents • Consider: Congressional debates, more cuts to GME funding • Incentives to train primary care residents

11. Nursing & Allied Health Programs • A program must be “provider-operated” in order for the hospital to qualify for pass-through reasonable cost payment • Historically paid for hospital-operated diploma nursing and other allied health programs

12. Provider-operated means • Directly incur the costs • Directly control curriculum • Control administration and day to day activities of the program • Employ the teaching staff • Provide and control both classroom and clinical training (if there is both a classroom and clinical component).

13. N&AH Funding • This model is increasingly rare! • Some examples are . . . • Current statute is binding • What is Medicare’s or the government’s role? • General revenues (e.g., HRSA) vs. Medicare (CMS)