A proposal to begin paying Medicare's share of graduate medical education subsidies and disproportionate-share payments with general revenue funds rather than paying them out of the Medicare Part A trust fund is gaining momentum in Washington.
A day after a House GOP leader suggested such a move last week, Sen. Phil Gramm (R-Texas), head of the Senate Finance health subcommittee, said he would like to phase Medicare GME and so-called DSH payments out of the trust fund by 2000 and make them part of the traditional budgetary appropriations process.
GME payments reimburse teaching hospitals for training medical students. DSH payments reimburse hospitals that treat a disproportionate share of Medicare beneficiaries.
"(GME and DSH) benefit the general public, and they should be paid for with general revenues," Gramm said. "They don't have anything to do with the (Medicare Part A) trust fund."
Gramm said both the GME and DSH programs would continue to be funded at their current level of about $10 billion a year in total.
After upward adjustments in future years, such a transfer would save the trust fund between $70 billion and $80 billion over a five-year period. Coincidentally, that's about the same amount as would be moved under the White House's controversial home health spending shift. That plan would move spending for any home health visit after the first 100 visits from the Medicare Part A trust fund to Medicare Part B, which is paid by general government revenues.
Republicans have criticized the home health shift as a gimmick. Transferring GME and DSH instead may be a compromise acceptable to both sides.
Bruce Vladeck, HCFA administrator, gave the proposal a favorable review. But several liberal Democrats said they were concerned that if GME and DSH become line-item budget entries, they would become easier targets for spending reductions.
"Once you put (DSH) out there all by itself, it isn't going to survive," said one Democratic staffer. "I sure hope I never have a heart attack downtown."