Correcting the Technical Deficiencies

in the

Balanced Budget Act of 1997

Presentation to the COGME Ambulatory Programs and Financing Workgroup

December 16, 1998

Hope Wittenberg

Director, Government Relations

Organizations of Academic Family Medicine

The Balanced Budget Act of 1997 (BBA) was intended, in part, to remove statutory impediments to ambulatory, non-hospital based training. Although we support the intent of the provisions of the BBA, the reality of how they function has been detrimental to ambulatory training, particularly family medicine residencies.

We have devised technical amendments to the BBA that we hope COGME can endorse. Our amendments were introduced in the last session of Congress, and will be reintroduced early in the 106th session. We hope COGME will be able to play a role in protecting the promising intent of the BBA, while correcting the technical deficiencies that have come to light.

IMPEDIMENTS TO AMBULATORY, NON-HOSPITAL BASED TRAINING

CHANGES IN BBA THAT WERE INTENDED TO SUPPORT AMBULATORY TRAINING:

· Beginning October 1, 1997, the BBA explicitly allows for the payment of both IME and DME (prospectively) for residents training in an ambulatory setting. The way this is done is by allowing the counting of the ambulatory time in the FTE count, as long as the hospital incurs all or substantially all the costs.

· The BBA caps the FTE count at the number of residents "in the hospital" during the cost report period ending on or before December 31, 1996.

· The BBA explicitly gives HCFA authority to pay qualified non-hospital providers for the direct costs of medical education, if those costs are incurred in the operation of an approved medical residency training program. The BBA does not mandate such payments though it is permissive of them.

· For "new" residency training programs established on or after Jan. 1, 1995, HCFA should prescribe rules regarding the limitation on the number of residents; the Secretary should give special consideration to facilities that meet the needs of underserved rural areas. No new programs other than in rural areas, or in hospitals that have never had residents, would be able to receive GME funding.

HOW THE IMPLEMENTATION ACTUALLY PLAYS OUT:

· The juxtaposition of the "cap" set in 1996 (when ambulatory time was not counted if it was not a cost-center of a hospital) with the ability to count ambulatory training time after October 1, 1997 creates a Catch-22 for those programs already providing an ambulatory experience. They are harmed financially. Since family practice programs are the predominant specialty providing such ambulatory training time, family practice residencies are hurt disproportionately.

· Although most other specialties have the opportunity to expand within their hospital if other programs reduce their number, for just over 40% of family practice training programs which are the sole residency program in their hospital, that is not an option.

· A survey last summer of all program directors has found that 56 percent of programs responding who were in the process of developing new rural training sites have indicated they will either not implement those plans or are unsure about their sponsoring institutions' continued support. Twenty-one percent of respondents report planning to decrease residency slots in the immediate future. Finally, the vast majority of family practice residencies did not have their full residency FTEs captured in the 1996 cost reports upon which the cap is based, causing a loss of Medicare revenue compared to most other specialties that train almost exclusively in the hospital.

· Since family medicine, unlike most other specialties, was in a period of growth, the use of August 5, 1997 as a cut-off date for new programs disproportionately harmed family medicine. Approximately 10 family medicine residencies were affected by the arbitrary cut-off date for new programs. Since it takes approximately two years for a new program to achieve approval, we recommend changing the cut-off date for new programs from August 5, 1997 to September 30, 1999. This would allow programs already underway to achieve approval and GME funding.

Just a few examples… IOWA; PENNSYLVANIA; MAINE

Six of the seven programs I spoke to are not located in rural areas (possibly more, but the program directors weren't sure of whether the program was in a non-MSA). Two programs were exploring development of a separately accredited rural track, which under the BBA they can no longer do and still receive GME funds for the training. One has a rural track that cannot expand due to the BBA.

Five programs were able to provide information regarding the number of residents in their programs compared with the DME and IME caps based on the Medicare 1996 cost reports.

Name of Program	Positions Filled	IME FTE Count	DME FTE Count	Loss of IME FTE's	Loss of DME FTE's
North Iowa Mercy, Mason City	16	12.49	14.7	3.51	1.3
Broadlawns Family Practice, Des Moines	30	19.92	19.96	10.08	10.04
Iowa Lutheran, Des Moines	25	10.63	15.97	14.37	9.03
Northeast Iowa FPR, Waterloo	22	11.41	13.5	10.59	8.5
Cedar Rapids FP, Cedar Rapids	23	12.54	19.5	10.46	3.5

As you can see, just from the five programs we have data on, family practice programs lose a great deal of FTE's (and consequently reimbursement) because the cap is based only on time spent by their residents in the hospital. Most other specialties train almost exclusively in the hospital.

A total of 49.01 FTE's did not receive IME Medicare reimbursement for their training; with the average IME payment of $46,000 for family practice residents, a loss of $2.26 million per year for those programs. 32.37 FTE's did not receive DME reimbursement - and this is just five out of nine family practice programs in Iowa.

PENNSYLVANIA

We were able to reach almost all of the 36 family practice programs in Pennsylvania. Some of the data however (particularly the IME and DME counts) was not entirely accurate.

Thirteen of the Pennsylvania programs are the sole program in the hospital.

Seven of the programs are located in rural areas (possibly more, but the program directors weren't sure of whether the program was in a non-MSA). Two programs were exploring development of a separately accredited rural track, which under the BBA they can no longer do and still receive GME funds for the training.

Below are some examples of programs in Pennsylvania that are harmed by not being able to include all their residents in the cap in 1996. I've included information regarding the number of residents in their programs compared with the DME and IME caps based on the Medicare 1996 cost reports.

Name of Program	Positions Filled	IME FTE Count	DME FTE Count	Loss of IME FTE's	Loss of DME FTE's
Montgomery Fam. Prac., Norristown	17	13	14.24	4	2.76
Wyoming Valley, Kingston	24	16.3	20.5	7.7	3.5
Lancaster General, Lancaster	39	36.10	37.89	2.9	1.11
Guthrie, Sayre	17	7.9	11.6	9.1	5.4
Hamot FPR, Erie	18	14.88	17.13	3.12	.87

As you can see, these five programs alone lose a great deal of FTE's (and consequently reimbursement) because the cap is based only on time spent by their residents in the hospital. Most other specialties train almost exclusively in the hospital. A total of 26.82 FTE's did not receive IME Medicare reimbursement for their training, an annual cost of $1.23 million; 13.64 FTE's did not receive DME reimbursement.

MAINE

· Maine-Dartmouth in Augusta has lost their 4th year chief resident slot because of the caps. Although they are a 9-9-9 residency, (27 total), they receive only 23.5 FTEs of DME and 21.5 FTE's for IME. The program director has staved off a reduction down to 8-8-8, a loss of three residents, only by the promise of our technical amendments. If the BBA is not fixed this year, his hospital board has told him he will loose those slots.

· The residency in Portland, a tertiary care environment, has been able to sustain itself under the BBA. Since its cap includes numerous specialties, the residency was able to maintain its numbers by a shifting of slots within the hospital's cap.

· The Central Maine Medical Center residency in Lewiston exemplifies some of the concerns we have over the BBA implementation. During the time that the cap was set, the residency had 15 residents, with 12.4 DME FTEs and 12.2 IME FTEs. They were in the process of expanding to 18 residents. The strategy their hospital board has adopted is to give them a two year period to try to recover the lost revenue - in other words, shift their revenue from GME dollars to alternative funding sources to support the fundamental infrastructure of the residency. They are being asked to increase their productivity by 40%, just to keep their 15 resident slots. They mainly are doing that by increasing the numbers of patients seen by both residents and faculty. It causes a catch-22 situation because as they aggressively market themselves and increase their patient load, they damage their relations with their preceptors. In other words, they need to steal patients from their preceptors. They expect to not be able to meet the increased productivity requirements, and over the next five years loose residency slots.

WHAT OUR TECHNICAL AMENDMENTS WOULD DO:

1. Recalculate the IME and DME caps based on the number of interns and residents who were appointed by the approved medical residency training programs for FY 1996, whether they were being trained in the hospital or in the community. Currently only programs prospectively introducing ambulatory training will be allowed to have those positions supported by Medicare. This recalculation would also allow all residencies to count as slots for the purposes of the cap, any situation where a resident FTE was lost for a period of time due to illness, maternity leave, or other disability.

2. Change the cut-off date for adjusting the DME funding cap to September 30, 1999. Approximately 10 family medicine programs were "in the pipeline" for ACGME accreditation at the time of passage of the BBA. We believe that very few programs other than these would also fall into this window, since family medicine was one of very few specialties that were in a growth cycle.

3. Expand the exception to the funding caps to include programs with separately accredited rural training tracks even if the sponsoring hospital is not located in a rural area, and for residency programs which are the only one offered in a hospital. For those programs that exist alone in a hospital, we have revised the bill language to allow only limited, not open-ended growth.

REQUEST:

We ask that COGME support our GME technical amendments.