Psychiatr News August 17, 2007
Volume 42, Number 16, page 5
© 2007 American Psychiatric Association
Plan to End Medicaid Payments Threatens Teaching Hospitals
Mark Moran
CMS estimates that if the rule to bar Medicaid funds from being used for
graduate medical education is implemented it would save hundreds of millions
of dollars. APA maintains, however, that care could suffer.
APA is strongly protesting a proposed rule by the federal Centers for
Medicare and Medicaid Services (CMS) that would eliminate Medicaid payments
for graduate medical education at teaching hospitals.
A proposed rule published May 23 in the Federal Register would
prohibit states from receiving federal funds under the Medicaid program in any
manner that could be construed as payment related to a provider's graduate
medical education (GME) costs.
By CMS's estimates, implementation of the rule would save the federal
government hundreds of millions of dollars over the next five years (see
chart).
But in comments submitted to CMS, APA said that these savings would come
out of the budgets of the nation's teaching hospitals, many of which treat the
poorest patients while training future doctors.
APA also stated that CMS is trying to assert statutory authority in
prohibiting states from seeking Medicaid GME payments, despite the fact that
the government has been allowing such payments for years.
"The position articulated within this proposed rule represents an
unsupported 360-degree turnaround in CMS's longstanding policy of approving
payment under Medicaid to compensate providers for GME-related costs,"
APA said. "While CMS poses a variety of rationales for this complete
reversal to Medicaid GME payments, none are legally supported or persuasive.
The clear intent of the proposed rule is simply to cut out providers'
GME-related payments to gain substantial cost savings. CMS estimates the cuts
at $290 million for the first full fiscal year, 2009, and much more
thereafter."
In a letter from APA Medical Director James H. Scully Jr., M.D., APA
pointed out that "it is teaching hospitals that will lose this money
that has been used to help offset the many expenses associated with teaching
medical students." Teaching hospitals commonly serve inner-city
populations with large Medicaid and Medicare caseloads, as well as large
proportions of nonpaying patients, he continued, and the substantial funding
cut that would result from the proposed rule would adversely affect the
financial welfare of any hospital that has been able to offset its teaching
expenses with Medicaid GME payments.
"Since many inner-city hospitals have for years experienced
considerable financial strains that have resulted in closures, an additional
cut to their Medicaid payments is counter to public policy," Scully told
CMS.
GME Payments Hard to Track
In the proposed rule, CMS states that GME "is not a health service
that is included in the authorized coverage package. Nor is GME recognized
under the Medicaid statute as a component of the cost of Medicaid inpatient
and outpatient hospital services."
CMS referenced a 2003 state survey conducted by the Association of American
Medical Colleges (AAMC) that found that 47 states and the District of Columbia
reported using Medicaid funds to make GME payments. "Of these, 35
indicated that the payments were included in their perdiem inpatient hospital
rates, and 15 started using supplemental or a combination of supplemental and
per-diem payments to make GME payments," CMS stated.
"This same report.. .indicates that while states view these Medicaid
GME payments as critical to state GME policy implementation, they generally do
not track these payments," CMS said.
"In large part, this inability to track Medicaid GME payments is due
to the way in which these payments are made," CMS asserted.
"Basically, payments are made through increases in the rates paid for
covered Medicaid services. This methodology assures federal participation, but
does not provide clear accountability. Funding intended by the states to
support GME often becomes subsumed within [managed care organization] or
hospital rates (including supplements to these rates) or inpatient
disproportionate share hospital (DSH) payments. As a result, it is difficult
to quantify Medicaid GME payments or monitor and measure the effect of
Medicaid payments on GME programs."
If the proposed rule is implemented, CMS estimates that it would reduce
federal Medicaid outlays by $140 million in Fiscal 2008, $290 million in
Fiscal 2009, and as much as $460 million by Fiscal 2012.
APA Suggests Alternative
APA, however, urged CMS to consider alternatives, including promulgation of
rules that would enhance the accountability of states to track and monitor
GME-related expenses. "Many federal programs support states in their
education and training of upcoming physicians because this is an essential
activity needed to preserve national public health and welfare."
The AAMC also has registered a protest against the proposed rule.
"Many major teaching hospitals share a special mission in treating
large numbers of Medicaid and uninsured patients," stated Robert
Dickler, senior vice president of the AAMC's Division of Health Care Affairs,
in a letter to CMS. "Representing only 6 percent of all hospitals, major
teaching hospitals are the sites for approximately a quarter of all Medicaid
discharges. Indeed, our nation's teaching hospitals provide large amounts of
ambulatory care in poor communities, often acting as the 'family doctor' in
areas where few individual practitioners exist, accept Medicaid as a form of
payment, or provide charity care.
"Eliminating Medicaid GME payments would significantly threaten the
ability of teaching hospitals to continue these activities," Dickler
stated. "The result would be to severely undermine the infrastructure of
the American health care system."
The proposed rule is posted at
<http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/07-2576.htm>.
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