GME Finance What everyone in program leadership needs to know

• None of the panelists has any conflicts of interest to disclose.

GME Finance: Panelists • Adam Pallant, MD, PhD, Program Director, Brown University/Hasbro

Children’s Hospital • James D. Baumberger, MPP, Assistant Director, Department of Federal

Affairs, American Academy of Pediatrics • Ann Langley, President, Health Policy Strategies • Susan Guralnick, MD, Associate Dean, Graduate Medical Education

and Student Affairs, DIO, Winthrop University Hospital • Mary Ottolini, MD, Vice Chair of Education and DIO, Children’s

National Medical Center, Washington, DC • Robert Vinci, MD, Program Director, Boston Combined Residency

Program and Chief of Pediatrics, Boston Medical Center • Dena Hofkosh, MD, MEd Program Director, Children’s Hospital of

Pittsburgh of UPMC

GME finance • Current status of GME funding • Future of GME funding

– What is being proposed by MedPAC, COGME, IOM committee on GME finance?

– How can Program Directors be effective advocates? • CHGME funding present and future

– How does CHGME work for “free standing” children’s hospitals?

– What are the future threats to CHGME and what are the alternatives?

• How do funds flow within your institution? How are decisions made?

How Does the Money Get to Our Trainees?

CMS Speak 101-DME

Direct Medical Education Payments

(also DGME) This is the Medicare determined payment for each resident.

• PRA The “Per Resident Amount”

• FTE Full Time Equivalent

How is it calculated?

PRA FTE (weighted) Medicare share of inpatient

days.

This rate was frozen 12/31/96

CMS Speak 201- IME

What the?????????????

Translation Please?

• DME-goes to resident salary, benefits, and

program support. It is a fixed amount based upon number of residents, and number of Medicare patients

• IME payment is dependent upon your number of residents and a congressionally determined IME multiplier.

Freestanding Children’s Hospitals

a group at particular risk?

Children’s Hospital GME Payment Program

Freestanding children’s hospitals don’t have a significant Medicare source of funding

Congress appropriated over $300 million dollars for ONE year of GME funding including DME/IME

The amount of money appropriated to CHGME

is debated by congress and “at risk” every year.

What’s the Bottom Line for the USA?

American DGME & IME payments: estimates for fiscal year 2010

DGME Payments = $3.0 billion IME Payments = $6.54 billion Total = $9.54 billion

CME Speak-Resident CAP

• BBA-Balanced Budget Act of 1997

– Capped (froze) total

number of GME residency and fellowship training positions on December 31st, 1996

– Also decreased IME payments to hospitals

Money Comes in, and Money Goes Out

• How much does it cost to teach?

• Time for faculty effort when

they’re not billing? • Teaching Rounds, direct

supervision, Observed H&P, didactics, advising, remediation, program directorship, procedural training, CCC, etc

• Ancillary staff • Coordinator, chiefs, assistants,

DIO, etc.

"Goodwill" Benefits of Training Programs

• What about the intangibles and “goodwill”?

• Academic medical centers

often have potent advantages in – grants – research support – up to date providers – recruitment of specialists – intellectual stimulation – community prominence – youthful exuberance

Alternative Sources of Funding-part 1

• Redistribution of vacated “cap slots”

– Prior to Accountable Care

Act-vacated slots disappeared

– ACA Section 5506-

Redistribution of slots that meet certain criteria.

CMS=Center for Medicaid Services

• Criteria include – Other hospitals in the same or

contiguous “Core Based Statistical Area”

– Hospitals in states with the

lowest ratio of residents to hospitals

– Some slots dedicated to top 10

states in Health Professional Shortage Area (HPSA) or rural setting

Alternative Sources of Funding-part 2

• CHGME-Funding for GME to children’s hospitals is a separate line item in the annual presidential budget

• THCGME-Teaching Health

Center Graduate Medical Education

• THCGME- – $230 million over 5 years

authorized by ACA – Eligibility requires

“community-based ambulatory patient care centers”

– federally-qualified health centers; community mental health centers; rural health clinics; Indian Health Service, an Indian tribe or tribal organization, entities receiving funds under title X of the Public Health Service Act.

Alternative Sources of Funding-part 3

• State-based initiatives and partnerships

• Philanthropy • Foundations • Industry sponsorship • Foreign government

sponsorship • Individuals offering to

work without payment • Parents offering to pay

Many Possible Futures

GME Threats, Reform and Advocacy

Advocacy Challenges

• Hard to explain how GME money is allocated and how institutions actually use it

• Shrinking but still large federal deficit, desire to cut costs

• ACA puts new focus on NPs and Pas to meet increased demand for primary care

Criticisms

• Costs too much, burden on taxpayers • Uncertainty about accuracy and variability of

IME payments • Current system works to meet workforce

needs of the hospital, not necessarily the community

• Bias towards subspecialties in adult medicine

Pediatric Advocacy Challenges

• High pediatric match rate confuses policymakers. What’s the problem???

• Pediatric primary care not considered shortage area by COGME, but pediatric subspecialty is

• Pipeline of pediatric subspecialists depends on pediatric residency slots

• Misguided belief that all subspecialties are overabundant and overpaid

Budgeting and Reform: The Players

• White House OMB/HRSA • Congress • Council on Graduate Medical Education

(COGME) • Medicaid Payment Advisory Commission

(MedPAC) • Institute of Medicine (IOM) • Teaching hospitals • Advocates

Threats to GME Funding

Type of Funding

Potential Threat

Proposals to Cut

Medicare GME Potential “grand bargain” deficit reduction package

President Obama’s budget

CHGME Annual appropriations process Sequestration

President Obama’s budget

Medicaid GME Federal deficit reduction AND state-level budget decisions

Bush administration proposed rule Medicaid block grants

Reform Proposals

• Increase transparency, address variability of IME costs?

• Increase accountability: tie funding to performance measures, use funding to prioritize underserved/rural areas?

• Move to all-payer system? • Increase number of slots? 15,000? • Will unique needs of children be considered?

Pediatric Advocacy Opportunities

• Policymakers want to do well by children and the institutions in their districts/states

• Messages: – Healthy children are a good

investment – Children need access to both primary

care and subspecialty pediatricians to meet their medical needs

– Importance of medical education at your own institution

Pediatric Advocacy Opportunities • Asks:

– Preserve funding for Medicare GME – Reauthorize and fully fund CHGME – Protect Medicaid

Pediatric Advocacy Opportunities • Advocacy tactics:

– When in Washington, meet with your congressional offices (call us in AAP Washington Office for help)

– Invite your members of Congress to your institution

– Engage residents through advocacy activities

Children’s Hospitals GME

Provides freestanding children’s hospitals with federal GME support,

similar to Medicare (except for the $)

Why Did Congress Enact CHGME

• Surprised that freestanding children’s hospitals didn’t get Medicare GME

• Positive response to the “equity” principle –

bipartisan support, whether pro or con GME

• Concern about unintended consequences of federal GME policy and impact on freestanding children’s hospitals and pediatric workforce

How did CHGME Get Enacted Advocacy and Politics

• Campaign, start to enactment 1997 – 1999 – Bill introduction, 1998 – Signed into law, 12/1999

• Advocacy, expanding the # of advocates essential

– 55 eligible children’s hospitals at most, only in 30 states and urban House districts

– Children’s hospitals doctors and nurses, patients, communities

– Broad pediatric community support (AMSPDC, AAP, pediatric specialty organizations) and hospital groups

Advocacy and Politics, cont.

• Deal struck to move the bill – from directed appropriation (ongoing $) to discretionary appropriation (annual $)

• Impact of “the case” (equity with Medicare) and “the deal” – Medicare rules, formulas for allocating DGME and IME

funds, residency caps – Cap on funding, annual need to lobby for $

(President’s budget and Congress), sequestration – Reauthorization

Successes and Challenges

• Growth in CHGME hospitals residents and programs (30% of all pediatric residents in 1999, 49% of all pediatric residents in 2012)

• Difficult budget climate – current CHGME

funding down 20% from FY 2010 levels

• In FY2002, CHGME per resident = 86% of Medicare GME, in FY2011 68%

Outlook

• Still strong bipartisan Congressional support – cuts from FY2011 budget negotiations, sequestration

• Mark-up of Senate CHGME reauthorization bill

next week, goal enactment this year

• Sequestration not sustainable for discretionary appropriations programs

Current Goals

• Enact new 5 year reauthorization of CHGME

• Raise the appropriation level

• New and current supporters essential

Other questions to consider

• Replacing residents with mid-level providers-cost/benefit?

• Should residents be trained for specific workforce needs: subspecialty/physician scientist/primary care for the underserved?

• Should program or resident outcomes be used to justify funding?

• Do we have enough GME slots for medical students in the pipeline?

Who Will Pay For All of the Training?

Huge numbers in the medical student pipeline

• Medical schools awarded 16,468 MD Degrees in 2009 and 17,364 in 2011

• A total of 19,157 students entered medical schools in 2012

• AAMC and COGME calling for increase in students to offset projected physician shortages