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Financing
Graduate Medical Education in a Changing Health Care Environment
Continued
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b. Provide higher payments for training in community settings.
When training occurs in a community setting, the sponsoring institution continues to incur some supervisory physician and overhead costs. The community setting incurs some direct GME costs as well (for example, to compensate the community physician for teaching) even if the sponsoring institution continues to pay resident salaries and fringe benefits. As a result, total GME costs may be higher when residents rotate to community-based settings than when they remain in hospital-based settings. A higher payment for training in community-based settings would be appropriate if the net total costs (after taking any additional patient care revenue into account) are higher in the community-based settings. Research is needed to determine whether this is the case. To counter any disincentive that might currently exist for community-based rotations, a temporary policy might be to increase the component of the per resident amount attributable to teaching physician compensation by a fixed percentage, e.g. 25 percent. The higher payment could apply in all community settings even though the rationale for the payment is primarily applicable to settings off the hospital premises. This would provide an incentive for hospitals to turn training in ambulatory clinics into experiences that are more representative of community physician practices.
c. Provide incentive payment for meeting specific workforce and educational objectives.
In addition to the base per resident payment, there should be an incentive payment for meeting specific workforce and educational objectives. Programs that meet one or more of the objectives would be eligible for a bonus on the national average base payment. The incentive payment should be established as a fixed payment rather than a pool so that the benefits do not erode as additional programs meet the objectives and qualify for payment. The bonus payment could be awarded based on:
- Participation in a broad-based consortia of the sponsoring institution(s) for residency programs in an area, hospitals and community providers participating in GME activities, and community representatives. The consortia would have to be designated by the sponsoring institutions to receive all direct GME funds. Bonus payments would be made if the consortia has a formal process to identify the health care needs of the community, engage in workforce planning, and promote community-based training opportunities;
- Number of graduates that provide significant amounts of care to medically underserved populations;
- Percentage of time residents spend providing care to medically underserved populations; and,
- Quality of the residency program.
d. Research is needed to understand variation in direct GME costs by specialty and setting.
Most research regarding residency training costs was conducted at a limited number of sites and before the growth of managed systems of care. A better understanding of differences in the net costs of training across residency programs and training sites is needed to refine the payment allocation methodology. A generic financial model should be used to examine systematically issues such as:
- Whether there are significant differences in the amount of teaching physician involvement between primary care and non-primary care residency programs and between initial residencies and fellowships;
- Whether there are significant differences in impact on clinical productivity and net physician practice revenue when teaching occurs in ambulatory settings relative to inpatient settings and between initial residencies and fellowships;
- How direct GME costs are affected by the presence of students in other health professions at the training site and by residents teaching medical students; and,
- Factors that affect the efficiency and quality of the educational process.
RECOMMENDATION 5
CONTINUE THE BALANCED BUDGET ACT OF 1997 LIMITS ON THE NUMBER OF RESIDENTS WITH MODIFICATIONS.
In concept, the Balanced Budget Act of 1997 limits on the residents that will be recognized by Medicare are consistent with the goal of reducing the future physician workforce and should be carried over to eligibility for payments under the GME fund. However, hospital-specific limits are not an appropriate long-term way to deal with physician supply issues. The limits hamper a program director's ability to move residents among hospital programs for educational reasons. In geographic areas with physician shortages, the limits preclude expansions in needed residency programs.
a. Modify the caps to apply to sponsoring institutions rather than hospitals.
The sponsoring institution is to be held accountable for educational outcomes and workforce objectives. Therefore, the limits should apply to the number of residents in the programs sponsored by the institution rather than the hospitals serving as training sites for the program. This will provide the flexibility to move residents between hospitals and other settings. Consortia that meet certain workforce planning objectives should be able to work under an aggregate limit for multiple sponsoring institutions.
Applying the limit to sponsoring institutions is consistent with making direct GME payments to sponsoring institutions. However, it complicates IME payments to individual hospitals. One option would be to apply no limit for IME as long as the sponsoring institutions whose residents are training at the hospital are under their caps. An adjustment would be needed only if the total number of residents in programs at the sponsoring institution(s) exceeded an aggregate cap. The three-year rolling average and the one-year cap on the resident-to-bed ratio should continue to apply. The rolling average provides a form of transition payments to hospitals that reduce the number of residents and slows the recognition of new residents in the IME count.
b. Include residents in non-hospital settings regardless of who paid the resident's salary in the 1996 base year count.
Residents who were working in non-hospital settings were not included in a hospital's 1996 base year count for Medicare IME payments. They were included in the direct GME count only if the hospital incurred substantially all of the training costs. The limit applicable to a sponsoring institution should be adjusted to include all resident time in non-hospital settings regardless of who paid the resident's salary.
c. Allow adjustments in the Balanced Budget Act of 1997 limits to improve the distribution of physician workforce.
Further research is needed to understand the impact of the Balanced Budget Act of 1997 limits and to develop policies that will result in a better geographic balance in the physician workforce while encouraging an overall reduction in the number of physicians. Appropriate indicators of adequate distribution by specialty are needed. As an interim measure, the limits should not apply to rural residency training tracks if their graduates practice predominately in rural areas. In addition, the limits should not apply to primary care residency programs whose graduates practice predominately in those States with low physician-to-population ratios.
RECOMMENDATION 6
ESTABLISH AN ACCOUNT FOR FUNDING SPECIAL PROJECTS AND PROGRAMS DIRECTED AT BUILDING HIGH-QUALITY COMMUNITY-BASED TRAINING CAPACITY OR ACHIEVING SPECIFIC WORKFORCE GOALS.
At least 10 percent of the GME fund should be set aside to support specific projects and programs directed at building high-quality community-based training or achieving specific workforce priorities. The types of projects and programs that should be funded include:
- Primary care residency program grants;
- Faculty development grants to support training of community clinician teachers;
- Information technology infrastructure development to link patient care records at teaching hospitals
and community sites within organized systems of care;
- Incentive programs to reward residents that focus their practice on medically underserved populations;
- Transition funds to cover residency replacement costs in hospitals with high uncompensated care patient loads; and,
- Demonstration projects involving development of broad-based consortia.
RECOMMENDATION 7
MODIFY THE MEDICARE RULES RELATED TO TEACHING PHYSICIANS TO EMPHASIZE THE TEACHING PHYSICIAN'S OVERALL RESPONSIBILITY FOR THE MANAGEMENT OF THE PATIENT'S CARE AND TO REDUCE THE IMPORTANCE OF DOCUMENTATION.
The Medicare rules pose two challenges to graduate medical education: 1) the supervision rules make it more difficult for residents to become progressively independent, and 2) the documentation requirements detract from the amount of time available for teaching and resident supervision. There is some evidence that the rules may adversely affect the willingness of community physicians to participate in teaching programs. The rules should be revised to address these concerns.
a. Establish different rules for residents in fellowship programs.
HCFA's rationale for its teaching physician rules rests on: 1) making payment only when there is an identifiable physician service to an individual patient and 2) avoiding duplicate payment for the physician's supervisory time. Duplicate payment should not be an issue with residents who are beyond their initial residency period. These residents count as only .5 FTE and resident salaries and fringe benefits comprise only 43 percent of the per resident amount.
The rules on teaching physician supervision should be revised for residents who are beyond their initial residency program to permit Medicare billing if:
- the teaching physician is immediately available;
- reviews with each resident during or immediately after the visit the patient's medical history and care; and,
- documents his or her participation in the review and direction of services.
Accreditation standards for the residency program should be relied upon to determine issues regarding supervision requirements for specific services and resident-to-preceptor ratios.
An alternative would be to allow residents beyond their initial residency period to bill for services furnished in the hospital if an election is made to forego a direct GME payment for the resident's time.
b. Evaluate the impact of the teaching physician rules.
The issue of when physician billing is appropriate for care provided by residents is not limited to the Medicare program. It will remain relevant under an all-payer fund. There is a need to evaluate formally the administrative and teaching burden associated with the current Medicare rules and their impact on the quality of clinical training and patient care. Particular attention should be paid to the effect in hospital ambulatory clinics and community-based settings where there is a low resident-to-preceptor ratio.
c. Develop clear and reasonable documentation requirements.
There is need for additional guidance and common understanding of what constitutes adequate documentation of a teaching physician's participation in the care of patients involving residents. HCFA should work with the academic physician community and the Office of Inspector General to develop reasonable standards that do not compromise high quality clinical education. The standards should provide a reasonable means for documenting the teaching physician's involvement in the care of the patient and assuring appropriate payments without imposing undue administrative burden. They should be tested in a variety of teaching settings and specialty programs before implementation.
RECOMMENDATION 8
PROVIDE ADDITIONAL SUPPORT FOR HOSPITALS AND COMMUNITY-BASED TRAINING SITES THAT SERVE A DISPROPORTIONATE SHARE OF LOW INCOME PATIENTS.
In the absence of national health insurance, "safety net" providers should be provided with additional funding to cover uncompensated care costs. Major teaching hospitals provide substantial uncompensated care. Faculty practice plans also furnish charity care. Uncompensated care is not an educational cost. However, it affects the training site's ability to provide high quality educational experiences. More importantly, teaching institutions that furnish high amounts of uncompensated care rely on current GME funding to support their charity care. As changes are made in the IME payment methodology, the current level and distribution of DSH payments should be examined to assure the funds are well targeted to subsidize uncompensated care. The subsidies should apply to hospitals for both inpatient and outpatient services and to community-based providers. Without additional support, GME is not sustainable in community-based training sites with a high volume of uncompensated care. These sites cannot generate the patient care revenues needed to support their educational activities.
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