A federal advisory panel is recommending a prospective payment system for Medi-care's share of graduate medical education spending and a national medical education trust fund that would receive money from both Medicare and the private sector.
The Institute of Medicine's medical education financing committee also called for a uniform per-beneficiary amount to be paid to training programs for the "direct" share of medical education costs, which pays for residents' salaries and administrative costs.
The committee's report, released last week, calls for the direct medical education reimbursement to be distributed to any organization providing training to residents, not just teaching hospitals.
But the "indirect" share-which pays for the wider range of technology, more acutely ill patients and the expensive tests and services ordered at a teaching hospital-would be retained by teaching facilities under the IOM committee's recommendations. However, the panel also called for a study of ways to distribute that reimbursement more widely.
In addition, the committee recommended basing half of indirect reimbursement on the existing formula-which uses a ratio of residents to beds-and half on historical payments.
Such an arrangement would reduce teaching hospitals' incentive to expand residency programs-which has led to an oversupply of physicians-as well as keep training programs in specialty-intensive inpatient settings rather than primary-care-oriented ambulatory settings.
The panel's report affirms some of the findings of other commissions convened by both the private and public sectors. But because the commission was created by a request of Congress, it may carry more weight in the debate within Congress and the White House on how to reform medical education financing.
Under the existing medical education funding system, Medicare is expected to pay about $7.1 billion in teaching costs in fiscal 1997, which ends Sept. 30. Of that, $4.6 billion is reimbursement for indirect teaching costs.