Limitations on The Number of Residents Recognized by Medicare
The Balanced Budget Act of 1997 limits the number of residents that are counted for Medicare payment purposes to the number working at the hospital during its cost reporting period ending in 1996. The limits are in line with COGME's goal to reduce the number of residents (COGME, 1999b). However, hospital-specific limits impede the ability of program directors to shift residents for educational reasons. The limit is also problematic in population growth areas where expanding residency programs would improve the geographic distribution of physicians. The Balanced Budget Refinement Act of 1999 allows a 30 percent expansion in rural residency programs and recognizes that urban hospitals may operate a rural residency track. Although it is too early to assess its overall impact, the 30 percent tolerance allows for only negligible expansions in relatively small residency programs.
Payments For Residency Training in Non-Hospital Based Settings
The Balanced Budget Act of 1997 made several significant changes in Medicare payment for residency training in ambulatory settings. First, the legislation authorized direct payments to be made to entities other than hospitals. Medicare-participating Federally qualified community health centers, rural health clinics, Medicare+Choice organizations, and other entities designated by Medicare may be paid for direct GME if the provider incurs all or substantially all of the costs of training at the site. It is too early to determine the effect these provisions may have on support for community-based training.
Second, the law allows the hospital to include in their IME resident count (as well as direct GME resident count) the time residents spend in patient care activities at non-hospital settings if the hospital incurs all or substantially all of the training costs at the ambulatory site. Since the time residents spent in non-hospital settings could not be included in the hospital's resident count prior to the BBA, the residents who were training at ambulatory sites in 1996 are not represented in the hospital's resident limit for IME payments. Hospitals that had already developed community-based training sites by 1996 receive no benefit from the change unless there are reductions in other residency programs at the hospital. By contrast, hospitals that developed community-based training sites after the BBA was enacted, could include those residents in their IME count after moving them into community-based settings.
Teaching Physician Services
The direct GME payment is intended to cover the hospital's compensation to teaching physicians for time spent on GME program administration and general teaching and supervision of residents. In addition, payment may be made under the Medicare physician fee schedule for professional services furnished by the physician or by a resident under the medical direction of the teaching physician. To avoid paying for the same service twice, Medicare rules were revised in 1996 to require that the teaching physician be present during the key portion of a billable service. For evaluation and management services and minor procedures, the teaching physician's presence must be the same as it would be had the teaching physician personally performed the entire visit or procedure. Some teaching institutions believe the policy is inconsistent with the educational goal of encouraging progressively independent decision-making. Additional documentation requirements and heightened attention to compliance has resulted in more time spent on documentation and less time on teaching.
MEDICAID PAYMENTS
Under the Medicaid law, States have considerable flexibility to determine what services will be covered and the payment methodologies that will be used to pay for covered services. Federal matching funds apply to the State's expenditures. States spent about $2.3 billion through Medicaid patient funds in 1998, or approximately 7 percent of Medicaid inpatient hospital expenditures, to support GME (Henderson, 1999). Most Medicaid programs support GME in their payments for inpatient hospital services following Medicare-like methodologies. However, some States have approval from HCFA to link some or all of Medicaid GME payments to specific State workforce objectives. These programs provide funding models that should be considered within the context of GME financing reform. For example:
- Michigan and New York have established separate incentive pools to achieve specific workforce objectives.
- Tennessee and Oklahoma make GME payments to medical schools.
- In Minnesota, advanced nursing, pharmacy, dental and physician assistant training programs as well as medical and dental schools are eligible for medical education payments.
- Utah is seeking a State plan amendment for Medicaid GME funds to flow to a consortium consisting of the State, the single university medical school in the State, hospitals and community-based providers, and private payers. A waiver request is also under development for Medicare funds to flow to the consortium.
RESIDENCY TRAINING IN COMMUNITY-BASED SETTINGS
The growth of managed care has been accompanied by reductions in hospital utilization and a shift of services from inpatient to ambulatory settings. The shift to ambulatory settings makes it increasingly important for residency programs to provide training opportunities in community settings that are representative of the environment in which residents will eventually practice. To practice effectively in the changing health care environment, residents in all specialties need a comprehensive range of experiences that include opportunities to follow the patient across each component of an integrated delivery system. Community-based settings such as health centers and clinics, physician offices, schools and workplaces, nursing homes, hospices and home care, community hospitals, and managed care organizations can offer essential experiences to complement those at academic health centers.
There is general agreement that training experiences in the community are important and should be expanded. However, as evidenced by the lack of specific requirements for community training by the accrediting organizations for most specialties, there is no consensus on what constitutes the appropriate balance between traditional and community-based experiences. For most specialties, training opportunities will be expanded as needed to maintain an adequate patient base for teaching. However, without the impetus from the accrediting organizations to move training into the community settings, financial and other considerations at the hospital as well as the community site may outweigh the educational goal of providing community-based training experiences.
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