The Balanced Budget Act of 1997 created the Medicare Payment Advisory Commission (MedPAC) and the National Bipartisan Commission on the Future of Medicare. Both are designed to closely examine Medicare and make recommendations to Congress to preserve and reform the program. Among other issues, both Commissions plan to closely examine and possibly reform Medicare payments to Graduate Medical Education (GME). For that reason, GME is likely to see extensive activity this session of Congress.

National Bipartisan Commission on the Future of Medicare: The Commission’s 17 politically appointed members are instructed to provide recommendations to Congress on March 1, 1999. The Commission’s chairman, Senator John Breaux (D-LA), has publicly acknowledged that the report may be late. This was re-enforced by a February 2^nd letter to Sen. Breaux from seven of the members of the commission expressing their concern with the initial working document prepared by Sen. Breaux. A number of contentious issues remain that may hinder obtaining the necessary 11-member majority, including a possible extension of the Medicare eligibility age to 67 and a proposed mandatory prescription drug benefit.

In January 1999, following a series of briefings during the fall months, Senator Bill Frist (R-TN) presented the Commission’s draft recommendation for GME reform. Under Frist’s proposal, Direct Graduate Medical Education (DGME) payments would be removed from the Medicare trust fund and, instead, would be funded with discretionary dollars. Due to the size of the DME program and competing discretionary programs, this may place these payments in significant jeopardy.

On January 25, 1999, the member organizations of the Federation of Pediatric Organizations, including the PPC member societies, sent a letter to all members of the Commission. The letter recommended: an all-payer trust fund for GME as a more "equitable GME financing policy;" examining a voucher/certificate system for residents thus ensuring that reimbursement would follow the resident; and an interim solution to the long-standing funding problem for graduate medical education at independent children’s hospitals. In response to the serious concerns raised by the academic health community, Frist responded by publicly concurring that GME is a "public good" and raised the possibility of developing a mandatory funding mechanism for DME as an alternative to the Medicare trust fund. The PPC will continue to closely monitor this issue. For more information, please see the Commission’s web site at <medicare.commission.gov/medicare>.

MedPAC: Also required to provide recommendations to Congress, Medicare Payment Advisory Commission [MedPAC] must produce its report by August 5, 1999. Gail Wilensky, former Administrator of the Health Care Financing Administration [HCFA] serves as the chair of MedPAC and has publicly stated that she remains unconvinced that GME should be funded by federal subsidies. [Note: MedPAC replaces the Prospective Payment Assessment and the Physician Payment Review Commissions.] While MedPAC has yet to solidify its recommendations for GME funding, several Commissioners have hinted that now may be the time to "divorce" Medicare and the funding of GME. For more information, please see the Commission’s web site at <www.pprc.gov>.

Graduate Medical Education/Children’s Hospitals: Freestanding children’s hospitals, those that do not share a Medicare provider number with an adult health care institution, do not qualify for the substantial GME support afforded to teaching institutions through the Medicare program. Through to the National Bipartisan Commission on the Future of Medicare, the pediatric community has joined the National Association of Children’s Hospitals in seeking interim federal support for GME programs for freestanding children’s hospitals. Although Representative Bill Thomas (R-CA), co-chair of the National Bipartisan Commission, indicated last fall that such a temporary correction was unlikely, the tide may have changed on this issue. Members of the National Bipartisan Commission have indicated their interest in seeking a correction for this long-time inequity, although they have yet to produce a proposal on this issue.

Similarly, the Administration has offered a proposal in its FY 2000 budget submission to Congress to address the problem of underfunded graduate medical education programs in freestanding children’s hospitals. The President’s FY 2000 budget proposal included a $40 million temporary fix to provide GME payments to children’s hospitals as part of the Health Resources and Services Administration, Department of Health and Human Services. Under the President’s budget proposal this new program is funded with discretionary dollars [as opposed to the Medicare trust fund] and it appears that it may come at the expense of other valuable HRSA health professions training programs, such as Title VII. The PPC will closely monitoring this issue.

On February 8, 1999, Senators Bob Kerrey (D-NE) and Kit Bond (R-MO) along with nine other senators introduced S. 391 the Children’s Hospitals Education and Research Education Act of 1999. The bill would provide general revenues for graduate medical education for time-limited support for independent children’s teaching hospitals. The bill establishes a four-year fund "which will provide children’s hospitals with Federal teaching payments that are based on there per resident costs and the complexity of their patient population."

Other GME Legislation: Representative Ben Cardin (D-MD) plans to introduce a legislative proposal to fund graduate medical education through an all-payer fund. Similar to Representative Cardin’s bill from the 105^th Congress, this legislation would fund GME through both the Medicare system and through a separate trust fund, with a 1% tax on all health care plans. The bill would also revise the payment formula to employ a national weighted average DME payment, in an effort to eliminate the wide variation in DME payments across hospitals. Members of MedPAC reportedly found Representative Cardin’s legislation from the 105^th Congress an interesting proposal. Staff will continue to work with Representative Cardin’s staff to craft a much-needed all-payer system for GME payments.

On January 19, Senator Patrick Moynihan (D-NY) introduced S. 210, the Medical Education Trust Fund Act of 1999, also in an effort to produce a viable education trust fund for GME. At this time, this legislation has no cosponsors. It has been referred to the Senate Finance Committee. The bill proposes to establish a Medical Education Trust Fund. From this source, payments could be made to Medical Schools, Teaching Hospitals and non-Medicare Teaching Hospitals. A new 1.5% tax would be levied on health insurance policies to provide necessary funds. In addition, the legislation would mandate a transfer of funds from Medicare to the new Education Trust Fund. Finally, the bill would establish a Medical Education Advisory Commission to develop new and innovative ways to train medical school graduates. It is unclear at this time if this legislation will move on its own or as part of another legislative vehicle.

Council on Graduate Medical Education (COGME): Both the September and December meetings of COGME addressed two critical issues: increased training of residents in ambulatory settings and the growing pressure on the physician workforce from the nonphysician workforce. In discussing the Council’s 15^th Draft Report at the December meeting, the Council determined that an in-depth look at training in ambulatory settings was required. In contrast to the Bipartisan Commission and MedPAC, COGME members stated their belief that GME was an obvious public good. It is unclear at this time what role COGME will play in the GME policy debate on the horizon. The next meeting of the Council is April 14 and 15, 1999.

Title VII – Health Professions Training Grants --Reauthorization: In the flurry of activity at the conclusion of the 105^th second session, Congress passed and the President signed S. 1754, the Health Professions and Education Partnership Act of 1998 [PL 105-392]. The bill reauthorized several public health service programs, including Title VII, health professions training and education. Among other reforms, the legislation clusters the primary care disciplines together, including family medicine, general internal medicine, general pediatrics, physicians assistants, general dentistry, and pediatric dentistry and legislates a funding level "floor" for each member of the cluster. As a result, appropriators can not fund a member of the cluster below the FY 1998 funding levels. For general pediatrics/general internal medicine, the floor rests at $17.7 million.

Members of the pediatric community, AMSPDC, the Ambulatory Pediatric Association, the Association of Pediatric Program Directors and the Academy, continue to actively be engaged in discussions with the Division of Medicine, Bureau of Health Professions, at Health Resources and Services Administration [HRSA] on the implementation of PL 105-392. Along with the general internal medicine community, the pediatric community has and will continue to participate in on-going conversations with the Division of Medicine to address such issues as: (1) how should the Division direct the limited funds for general internal medicine and general pediatrics; (2) how should the Division implement a number of newly mandated funding "priorities"; (3) what should be the charge to the new Advisory Committee on Primary Care Medicine and Dentistry. The pediatric community will continue to insure that Title VII is implemented in the most effective means possible.

Appropriations: In FY 1999, despite the Senate’s efforts to cut funding, the health professions training and nursing education programs [Titles VII and VIII] received a moderate increase to $304 million.

Working with the Health Professions and Nursing Education Coalition, the pediatric academic societies recommend $316 million in FY 2000, a modest 4 percent increase above current level funding. Unfortunately, in President Clinton’s FY 2000 budget proposal, Title VII received a substantial cut, including zero funding for the primary care medicine/dentistry and public health workforce development "clusters." The primary care cluster includes general pediatrics training dollars. Staff is currently exploring other options with members of Congress to protect Title VII from such a devastating cut.

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Last Modified: March 14, 2001