As some hospitals are making deals to stem their Medicare losses, groups that represent teaching hospitals are fighting over a House bill provision that would redistribute about $250 million of teaching hospital payments largely from northeastern to western states.
Contained in legislation to roll back Medicare payment restraints imposed by the Balanced Budget Act of 1997, the provision has broken the unity of teaching hospitals, which were among the biggest backers of legislation to roll back payment restraints imposed by the budget law.
The provision would set reimbursement for "direct" reimbursement for graduate medical education-the share that can be attributed to the actual costs of running a teaching program-at the national average per-resident cost. Direct GME payments are estimated at $2.8 billion for federal fiscal 2000.
Today, hospitals with higher overhead and supervisory costs get a higher per-resident payment.
"(The provision) is an unnecessary distraction at a critical moment of the national effort to get (Balanced Budget Act) relief," said Kenneth Raske, president of the Greater New York Hospital Association.
Although many New York hospitals stand to lose money as a result of the measure, Raske said he didn't have a figure for that loss. Meanwhile, Greater New York has sent letters to teaching hospitals nationwide showing how much they would lose and comparing that loss with the status of other hospitals in their states.
The provision has national political ramifications. First lady Hillary Rodham Clinton has sought to befriend New York teaching hospitals as she pursues an open Senate seat for New York, and the White House has helped by favoring New York hospitals in its policymaking.
The Association of American Medical Colleges has come down on the side of higher-cost hospitals for now. AAMC President Jordan Cohen, M.D., said the group is lobbying the House to remove that provision and replace it with a reminder to HCFA that the budget law ordered the agency to study the reasons for variations in overhead costs by August 1998. That report has not been written.
Despite the AAMC's position, the California Healthcare Association continues pushing the House to retain the provision. Anne Nicoll, a CHA lobbyist, said it's worth $75 million over four years to California teaching hospitals.
"The formula has been skewed, in our view," Nicoll said. "(The provision) is rectifying a historically incorrect formula."