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3 GME Financing
Pages 61-106

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From page 61...
... The committee found few informative data on GME financing and its outcomes. As a result, the financial impact of residency training programs on teaching hospitals and other sponsoring organizations is not well understood.
From page 62...
... Perhaps even fewer people realize that two federal programs -- Medicare and Medicaid -- ­ distribute an estimated $12 to 14 billion each year to support teaching hospitals and other training sites that provide graduate medical education (GME)
From page 63...
... GME FINANCING 63 Federal Appropriations Payroll Insurance General Tax Premium Revenues Mandatory Discretionary Medicaid Matching DoD Medicare Medicare Private States VHA A B Payers HRSA DGME DGME Implicit in Various & IME Patient Care Medicaid Grants for Allocated Payments Payment Teaching Using Methods Health Centers Medicare Methods Grants for Primary Care and Geriatric Training Children's Teaching Community-based Medical Schools, Teaching Hospitals Training Sites Universities Hospitals Salary Faculty Revenues Teaching Salary Resident Physicians FIGURE 3-1 Current flow of GME funds. NOTE: DGME = direct graduate medical education; DoD = Department of Defense; HRSA = Health Resources and Services Administration; IME = indirect medical education.
From page 64...
... Children's Hospitals GME 2013 0.251 NHSC Loan Repayments 2011 0.096 Teaching Health Centers GME 2011 0.046 Title VII Primary Care Programs 2011 0.071 Other state funding NA Private insurers NA Other private sources NA NOTES: VA indirect payments include training of all health professionals. Medicaid includes federal and state shares.
From page 65...
... for acute care hospitals in 1983, two separate GME funding streams were established for teaching hospitals2: (1) Direct Graduate Medical Education (DGME)
From page 66...
... adjustment to PPS rates: • IME -- an adjustment to the PPS operating rate to account for the additional patient care costs associated with sponsoring residency programs. – Congress mandates an IME adjustment factor of 11.59 percent for each 10 percent increase in the institution's intern-and resident-to-bed ratio -- double the 5.795 percentage rate recommended by the U.S.
From page 67...
... • Direct graduate medical education (DGME) payment is modified to include some costs of training in certain ambulatory sites (including federally qualified health centers, rural health clinics, and Medicare+Choice organizations)
From page 68...
... – 30 percent of the unfilled slots go to teaching hospitals in the top 10 states with primary care shortages and rural areas. • New rules are established for the transfer of training slots from closed hospitals to other institutions.
From page 69...
... It established a floor and ceiling on 4  Only residency programs accredited by the Accreditation Council for Graduate Medical Education, Council on Osteopathic Postdoctoral Training, Commission on Dental Accreditation of the American Dental Association, or Council on Podiatric Medical Education of the American Podiatric Medical Association are eligible for Medicare, Medicaid, and other federal funding. Chapter 4 describes the role of accreditation in the governance of GME funding.
From page 70...
... In teaching hospitals, the DRG payment is increased by the IME adjustment factor.6 IME is one of several adjustments to Medicare DRG payments. Other adjustments address differences in local wages, disproportionate share of low-income patients, extraordinary high-cost cases, and other factors.
From page 71...
... Excludes 38 hospitals that had reported GME costs but did not receive direct graduate medical education payments based on a current year resident.
From page 72...
... Specialty Hospitals Specialty hospitals with GME programs -- including children's hospitals, psychiatric facilities, rehabilitation hospitals, long-term care hospitals, and critical access hospitals -- are eligible for Medicare DGME payments under the same rules as acute care teaching hospitals. However, the IME adjustment for specialty hospitals differs by the type of facility.
From page 73...
... population. As Figure 3-2 illustrates, Medicare-supported slots are most highly concentrated in the Northeastern states, as is most of Medicare GME funding.
From page 74...
... Though GME programs may be sponsored by a teaching hospital, medical school, or educational consortium, Medicare funds are paid to the sites where training occurs and those organizations have direct fiduciary control over the use of the funds, whether they are the sponsor of the GME program or serve as an affiliate that "hosts" resident rotations. Approximately 70 percent of Medicare GME funds are distributed 12  The 17,000 slots are for Accreditation Council for Graduate Medical Education– accredited positions; data on the growth in osteopathic and non-accredited training slots are not available.
From page 75...
... 15  The Accreditation Council for Graduate Medical Education (ACGME) defines a GME sponsoring institution as an "organization (or entity)
From page 76...
... TABLE 3-3 76 Number and Percentage of GME Sponsoring Institutions, by Institution Type, Multi-Program and Single-Program Sponsors, Academic Year 2012–2013 Programs Residents Sponsors Number Percent Number Percent Number Percent Multi-Program Sponsors All multi-program sponsors 9,276 100.0 112,780 100.0 437 100.0 General/Teaching Hospital 4,627 49.9 57,745 51.2 255 58.4 Medical School - LCME UMC 3,304 35.6 41,322 36.6 80 18.3 Other 526 5.7 5,475 4.9 21 4.8 Consortium of Hospitals 430 4.6 5,306 4.7 11 2.5 Children's Hospitals 231 2.5 1,972 1.7 11 2.5 Other Specialized Care 64 0.7 432 0.4 6 1.4 40 0.4 156 0.1 3 0.7 Other Specialized Hospital 17 0.2 225 0.2 13 3.0 14 0.2 13 0.0 13 3.0 Community Hospital or Independent Medical Center 7 0.1 85 0.1 9 2.1 Federally Qualified Health Center 1 0.0 29 0.0 1 0.2 Unknown 1 0.0 7 0.0 1 0.0
From page 77...
... TABLE 3-3 Continued Programs Residents Sponsors Number Percent Number Percent Number Percent Single-Program Sponsors All single-program sponsors 369 100.0 5,322 100.0 313 100.0 General/Teaching Hospital 183 49.6 3,573 67.1 154 49.2 Other 66 17.9 536 10.1 62 19.8 26 7.0 143 2.7 23 7.3 Children's Hospital 19 5.1 295 5.5 7 2.2 Other Specialized Hospital 17 4.6 225 4.2 13 4.2 14 4.0 13 0.0 13 4.0 14 3.8 13 0.2 13 4.2 Medical School - LCME UMC 14 3.8 241 4.5 11 3.5 Federally Qualified Health Center 1 0.3 29 0.5 1 0.3 Unknown 1 0.3 7 0.1 1 0.3 NOTE: LCME UMC=Liaison Committee on Medical Education University Medical Center. SOURCE: Data drawn from ACGME, 2013.
From page 78...
... . Data from previous years are available from AAMC.18 Medicaid GME Spending In 2012, 43 state Medicaid programs19,20 distributed approximately $3.87 billion to support local graduate medical education, primarily sponsored by teaching hospitals (Henderson, 2013)
From page 79...
... , Medicaid GME funding exceeded Medicare GME funding.21 Spending in other states ranged from $375,000 in Alaska to $90 million in New Jersey. Some of the non-participating states have GME programs sponsored by other state agencies.
From page 80...
... All but one of the HRSA GME-related funding programs -- the Children's Hospitals Graduate Medical Education (CHGME) program -- focus on expanding residency training in primary care.
From page 81...
... . CHGME Payment Methodology Unlike Medicare GME, the total CHGME funding is determined by annual discretionary appropriations.
From page 82...
... 2000 $40.0 2001 235.0 2002 285.0 2003 290.1 2004 303.2 2005 300.7 2006 297.0 2007 297.0 2008 301.7 2009 310.0 2010 317.5 2011 268.4 2012 265.1 2013 251.2 SOURCES: HRSA, 2013b,c. National Health Service Corps Although the NHSC does not provide direct funding for residency training, it is an important source of financial support for the training of physicians and other health professionals and a potentially effective lever in directing physicians toward primary care practice in health professional shortage areas.
From page 83...
... The program is a 5-year initiative intended to expand the number of residents in primary care medicine and dentistry training in community-based, ambulatory care settings. Eligible GME programs include family medicine, internal medicine, internal medicine-pediatrics, obstetrics and gynecology, psychiatry, geriatrics, and general and pediatric dentistry (HRSA Bureau of Health Professions, 2012)
From page 84...
... . In contrast to Medicare, which distributes GME funds directly to teaching hospitals, HRSA distributes the THC funds to the community-based training sites.
From page 85...
... In FY 2012, the VHA paid its academic affiliates an estimated $621 million in direct GME payments and distributed $816 million in funding to VHA medical centers for the indirect costs of training physicians and other health professionals (see Table 3-1)
From page 86...
... VA Affiliation Agreements VHA affiliation agreements with medical schools and sponsoring organizations accredited by the Accreditation Council for Graduate Medical Education (ACGME) are central to the funding and operations of residency training in VHA facilities (VHA Office of Academic Affiliations, 2009)
From page 87...
... This dearth of information exists, in part, because CMS requires only minimal reporting from teaching hospitals as a condition of receiving funding, despite the nearly $10 billion annual Medicare investment in GME. Federal GME regulations are nearly silent regarding transparency and accountability for use of Medicare GME funds.
From page 88...
... Because GME funds are not regarded as sufficient to cover costs, administrators see little value in tracking the GME dollars, which will be supplemented from other sources. • GME financing arrangements vary across not only institutions but also programs within institutions.
From page 89...
... . The study, described by the researchers as "exploratory" because of the data limitations, provides important insights and a useful framework for examining how residency programs affect direct GME and patient care costs.
From page 90...
... varies according to individual affiliation agreements. Labor Costs • Salaries, stipends, and fringe benefits for trainees, faculty, graduate medical education (GME)
From page 91...
... TABLE 3-6 Residency Review Committee Faculty Staffing Requirements for Selected Specialties Administrative Faculty Clinical/Core Faculty Minimum Ratio of Minimum Ratio of Specialty Minimum Hours Faculty to Residents Minimum Hours Faculty to Residents Internal Residency program director: Assistant directors: 15 hours per week 4 for up to 60 residents medicine 20 hours per week  • 1 for 24–40 residents 1 more faculty person for (IM)  • 2 for 41–79 residents Assistant directors: 20 hours every 1-15 additional residents  • 3 for 80–119 residents per week  • 4 for 120–159 residents Additional specialty educa  • 5 for 160 or more residents tion coordinators are required in 11 IM subspecialties Cardiology Program director: 20 hours Not specified 2 clinicians who devote at If more than 5 fellows: per week (average)
From page 92...
... (which conducts annual surveys of teaching hospitals regarding trainee compensation and fringe benefits)
From page 93...
... SOURCE: AAMC, 2012a. Indirect Costs of GME The extent to which residents have an indirect financial impact on teaching hospitals -- and the net direction of this impact -- is an unresolved question.
From page 94...
... 94 TABLE 3-8 Direct GME Costs by Hospital Characteristics, 2008 Total GME Total GME Costs: Facility Percentiles Number of Number of Costs Per Hospital Characteristic Hospitals Residents Resident 25th 50th 75th All hospitals 1,141 97,577 $141,240 $95,403 $134,803 $177,674 Geographic location Large urban 690 71,787 $142,391 $95,382 $133,369 $171,239 Other urban 391 24,603 $137,583 $95,403 $137,971 $190,157 Rural 60 1,186 $147,485 $100,604 $125,786 $189,824 Number of FTE residents Less than 10 319 1,314 $145,697 $75,075 $117,199 $197,090 10 to 24 231 3,963 $153,938 $103,270 $142,627 $189,405 25 to 99 313 15,888 $142,077 $106,914 $137,971 $170,703 100 or more 278 76,412 $140,331 $104,128 $136,578 $171,054
From page 95...
... Percentage of residents in primary care training Less than 25% 165 3,525 $161,779 $77,511 $116,626 $180,391 25 to 49 239 59,802 $132,956 $92,982 $124,292 $154,419 50 to 74 242 22,720 $154,753 $107,448 $139,548 $171,487 75 or more 426 11,082 $153,162 $107,772 $150,490 $199,507 GME affiliations Academic health center 828 88,342 $141,269 $98,976 $137,323 $180,336 Community based 292 8,779 $140,073 $88,935 $126,457 $169,777 NOTE: FTE = full-time equivalent.
From page 96...
... As uninsurance rates decline nationwide, the separate DSH payments will be reduced. Indirect Benefits of GME for Teaching Hospitals The financial benefits of GME are not tracked or reported, and they are rarely acknowledged when the costs of GME are examined.
From page 97...
... They may also lead to additional GME-related revenues. GME-related revenues include the explicit payments that hospitals and their educational partners receive for graduate medical education training, such as from Medicare and Medicaid and HRSA.
From page 98...
... CONSEQUENCES AND CONCLUSIONS It is not surprising that the Medicare GME payment system, fixed in statute, has concerned researchers, policy makers, and stakeholders for decades (ACP, 2011; COGME, 2004, 2007; Dower, 2012; Iglehart, 2011; IOM, 1989; Johns, 2010; Ludmerer and Johns, 2005; Macy Study Group on Graduate Medical Education, 1980; MedPAC, 2010; Morris, 1993; Rich et al., 2002; Weinstein, 2011)
From page 99...
... TABLE 3-9 Relative Financial Impacts of Program Characteristics of Training Programs in Internal Medicine, Cardiology, Family Medicine, Dermatology, General Surgery, Urology, and Radiation Oncology Relative Financial Impact by Specialty Internal Family General Radiation Program Characteristic Medicine Cardiology Medicine Dermatology Surgery Urology Oncology Residents provide on-call services that benefit both the hospital and attending physicians Residents teach more junior residents and medical students Some specialty programs have a larger cost impact on inpatient NA NA costs than others after controlling Resident training increases the cost of ambulatory care NOTE: Program characteristics that are likely to increase costs per resident are shown with up arrows; those that are likely to reduce costs are shown with down arrows. The relative magnitude of the direction is reflected in the shading.
From page 100...
... population growth toward other delivery organization regions of the country. in 1996 NOTE: DGME = direct graduate medical education; DRG = diagnosis-related group; IME = indirect medical education; PRA = per-resident amount.
From page 101...
... The cap on Medicare-supported training slots is also problematic -- not because it limits Medicare GME funding in the aggregate but because the slots that receive financial support are frozen where they existed almost two decades ago. This perpetuates inequities in the geographic distribution of training slots and ignores changes in the geography and demography of the U.S.
From page 102...
... 2013. Children's Hospital Graduate Medical Education Payment Program (CHGME)
From page 103...
... 2001. Direct graduate medical education payments to teaching hospitals by Medicare: Unexplained variation and public policy contradictions.
From page 104...
... 2012. Teaching Health Center Graduate Medical Educa tion (THCGME)
From page 105...
... 2001. Chapter 10­ Treatment of the -- initial residency period in Medicare's direct graduate medical education payments.
From page 106...
... 2002. Analysis of Children's Hospital Graduate Medical Education Program fund allocations for indirect medical education costs.


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