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1 1 (September 29, 2022)

handle is hein.crs/goveiyg0001 and id is 1 raw text is: Congressional Research Service Inforrning the leg slative debate since 1914 Updated September 29, 2022 Medicare Graduate Medical Education Payments: An Overview Medicare makes a significant investment in medical residency training (or graduate medical education, GME). It paid an estimated $16.2 billion in FY2020, primarily to hospitals. The Government Accountability Office found that Medicare is the largest federal source of GME funding, which also includes Medicaid, the Department of Defense, the Department of Veterans Affairs, the Children's Hospital GME, and Teaching Health Center GME programs. Given the prominence of Medicare in funding medical residency training, policies that alter Medicare GME can affect the future physician supply and could be used to address identified health care workforce priorities. This In Focus addresses Medicare GME payments to hospitals- specifically, eligibility for these payments, what and how Medicare pays for GME, how Medicare determines the number of residents it pays for, and the amount per resident. Eligibility for Medicare GME Payments To be eligible for Medicare GME payments, a teaching hospital, which is often affiliated with a medical school, must have an approved residency program in medicine, osteopathy, dentistry, or podiatry. Medicare regulations require that programs be accredited. For medical and osteopathy programs, the Accreditation Council for Graduate Medical Education (ACGME) is the single accreditation system. (The remainder of this In Focus addresses medical and osteopathy residency programs.) What Medicare GME Pays For Medicare GME payments cover Medicare's share of the costs of a hospital's approved medical residency program. These costs include direct costs of operating a residency program, such as resident stipends, supervisory physician salaries, and administrative costs. Medicare GME payments also cover indirect costs associated with residency programs that may result in higher patient care costs in teaching hospitals relative to non-teaching hospitals. For example, resident-provided care may be more expensive because of additional tests that residents may order as part of their training. In neither case is Medicare's payment intended to reflect the hospital's full cost of training. How Mediare Pays For GM E Medicare pays separately for direct and indirect GME costs. Medicare payments for direct costs of GME are called Direct Graduate Medical Education (DGME) payments. DGME payments are sometimes referred to as pass- through payments in that they are not an adjustment to a Medicare payment for an individual hospital discharge. Rather, DGME is an aggregate payment determined by a statutory formula. (See section on Determining Medicare GME Payment Amounts to Qualifying Hospitals.) Medicare payments for indirect GME costs are called Indirect Medical Education (IME) payments. IME payments are intended to cover the costs of inefficient care that may be provided by medical residents. However, since Medicare typically does not provide separate payment for such activities as additional testing, Medicare IME payments are provided as an adjustment or add-on to each Medicare inpatient prospective payment system (IPPS) per- discharge payment for qualifying teaching hospitals. IME payments are determined through a statutory formula. Both the IME and the DGME payment formulas generally are based on patient volume or the number of beds and number of residents. (See Figure 1 and Figure 2 for information about how each formula uniquely accounts for these factors.) Determining Medicare GME Payment Amounts to Qualifying Hospitals When Medicare was enacted in 1965, GME payments-like hospital inpatient services-were paid based on a hospital's reported costs, essentially an open-ended commitment by Medicare. Congress later capped Medicare GME payments for residency programs in medicine and osteopathy through limits on the number of resident full-time equivalents (FTEs) and per resident amounts (PRAs) it would support. FTEs that Medicare GME payments would support are capped at the number of FTE residents a hospital was training in 1996; the amount Medicare pays for an FTE is based on a hospital's costs for a resident FTE in a base year, usually FY1984 or FY1985, updated by the Consumer Price Index for All Urban Consumers, as compiled by the Bureau of Labor Statistics. Direct Graduate Medical Education DGME payments are the product of a hospital's total approved DGME costs (i.e., a three-year rolling average of FTEs, subject to the FTE cap, multiplied by the PRA) and a hospital's Medicare patient load percentage. A hospital's Medicare patient load is the proportion of Medicare beneficiary inpatient days relative to all-patient inpatient days for the year. The Medicare Part C (Medicare Advantage) portion of a hospital's Medicare patient load is reduced by a Centers for Medicare & Medicaid Services (CMS)-specified percentage to fund nursing and allied health education. The CMS-specified percentage can change each year. (See Figure 1.) In FY2020, Medicare paid $4.5 billion for DGME, supporting 88,247 FTEs.

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