Graduate Medical Education Payments

I thought errands presentation was really good and there's a couple places that i'm going to try specifically to connect to it and then i also hope there's some issues on QA we can get to that i don't have time to to tease out but i think that she's raised but because it was so good what I'd like to do from a housekeeping point of view is right next to my name if you could just take your out and Mark excellent get it off your mind and just decide and the world will all be good so what the forum asked me to do is to explain the gme environment in medicare to you in terms of you know funding and that type of thing and then several years ago you know with some degree of frustration to talk about we talked about reforming the GM environment the good thing about it is many academics and more recently the IOM have come up with you know other ways of reforming but they've tracked pretty carefully are pretty closely to the things that mid back said many years ago so maybe there's some hope but there is a lot and we should talk about this on QA which is if there are all these ideas floating around if there's these people doing this kind of research why doesn't anything change and on Q&A I think we should probably get into that anyway I have a typical slide here where a congressional agency we act independently we support both sides of the aisle we do analysis we make recommendations to Congress that kind of thing I think most people have a sense of who we are we're very small though you know 35 people person staff and then I have 17 commissioners that I report through to the Congress okay so I'm supposed to tell you about graduate medical education I don't consider myself an expert in these matters although I come up to them every every once in a while as our work comes up to it but there's a little bit of history here that I think is important to keep in mind as you consider this issue so you know Medicare was created in 1965 private sector was not interested in ensuring you know elderly and ultimately disabled people because they actually use care and so there was definitely a market failure and Medicare was created to try and address that and as part of those discussions people said well you know we trained physicians physicians are a public good shouldn't Medicare pay for that and there was a decision at the creation of Medicare and ultimately as Medicare went through its payment system changes which I'll give you a feel for as we go forward but the thought process was Medicare shouldn't be the only and permanent solution to this problem if you think about this this is a public good you train a physician a physician can see an uninsured person a privately insured person and Medicaid person a Medicare person it can also and I believe aaron was making this point at the end of it they can also not see that person you can publicly train from your paycheck every two weeks out of Medicare a physician and then that physician after he or she has received all of their training can choose not to see a Medicare patient as the case may be and so some people said you know the way you should do this is create a fund or a trust fund that is about Graduate Medical Education it's not connected to Medicare it's not connected to GME and fund the training of a physician because that's a public good and then maybe that money should come from general revenue or attacks on insurers or something like that but the main thing I want to do before I drag you through all the medicare stuff which is going to be incredibly interesting is to keep you in mind keep in mind there were other ways to approach this and in fact in the conference report that created it they said Medicare should be a temporary solution and shouldn't be the only funding source for GM e it isn't but it is the major game in town ok so that's a little bit of history so how does medicare GME work Graduate Medical Education work so the first part of it that I want to get across to you have is called direct Graduate Medical Education payments this is three billion dollars and what this is is keep in mind the way Graduate Medical Education has evolved is and I'm starting to make some broader points here is the money is all driven through the hospital and the true so ultimately ten billion dollars and drives out of Medicare through the hospital and training programs consequently have historically been housed in hospitals and that's going to become an issue that I'm going to lay out for you so we're talking about three billion dollars it travels to the hospital and this particular three billion dollars does the following when you're in a hospital and you have a training program have a bunch of interns and residents running around we have to pay them salaries and then you have to have some administration to pay them and schedule them and make sure that what this training program actually works and so you have a payment that is to cover the salaries and the administrative costs associated with that intern and resident let me just say this and actually Aaron had a nice slide which which you took from the IOM this is the process where the student has left Medical School and now has entered a residency program in a hovel largely in a hospital setting where they're getting trained by other physicians to do the thing that they have chosen to do internal medicine orthopedic surgery whatever the case may be okay so that's the the place in the education that we're talking about payment system works like this there's a cost report from the hospital it says the per person cost of this intern and resident is X there's a set of factors that you adjust that by based on whether the person is full time or part time that's really determined by how long a residency program is so if i have a four-term 4-year residency program i am full time for that for years but if my residency program goes beyond five years that i'm full time for that five years and then considered part time for the remainder so if i had a seven year residency program i would be considered part time to have a dollar figure you adjust by whether the person is full time or part time in any given year and then you adjust that payment further by what proportion of the days in the hospital are Medicare versus total and so in a sense you're saying I'm calculating how much it costs to support this resident and then I'm adjusting it for their full or part-time status and how much Medicare represents in that hospital and on net three billion dollars is spent this way through the hospital to the hospital okay everybody with me like I said going to be really interesting okay then there's a second concept called indirect medical education and it works like this so here's the the intuition if you will it says you know if you teach someone there's a certain inefficiency or cost to that and I don't mean that in a pejorative way if somebody if your boss came to you and said for the next two weeks i want you to Train somebody to do your job you would be a bit less efficient at your job you would be telling them why they do things you would just be showing them where to go and get information to do it there would be a certain loss there in terms of you sort of trying to teach that person to do things and the intuition was well if you're running a hospital and you don't have a teaching program you might have one cost but if you're running a teaching program then that would add cost and if you do an empirical analysis and kind of try to explain cost variation across hospitals it turns out there is truth to that statement and so the decision was made and this is not a really good decision the decision was made to say there will be an increased payment for every admission in a teaching hospital there's about a thousand teaching hospitals two to three hundred major teaching rest of them are called you know other teaching or minor teaching they don't like being referred to as minor just mention that but have smaller teaching teaching programs and so every time in a mission occur admission occurs in any of these teaching hospitals Medicare is paying on average eleven or twelve thousand dollars per admission but there's an add-on in the teaching hospital and these add-ons can be big if you have a large teaching program this can be a 30-percent add on to every admission that occurs in your hospital and the way the formula works is you have an intern and resident to bed ratio and then you have a multiplicative factor that says here's how much I'm going to adjust each of your emissions based on the side eyes of your teaching program this is the big money this is six to seven billion dollars this is the money people track on very carefully so six and a half billion dollars here now it turns out that ime page payments are set too high and there's a couple of reasons for this so in 1983 medicare shifted from a charge and cost based payment system to a prospective payment system which is a session in itself you're just going to have to trust me we're going to move on and in part of that it said okay i'm going to do this adjuster in this payment adjuster that I just went went through it the empirical analysis suggested an add-on of about six percent but at the time the legislation passed it was arbitrarily doubled and so basically if the analysis said add this much on twice that was added to it over many years the legislation has kind of come back in and tried to lower that and from 11.8 to about 5.5 which is what the current multiplier is but we in the meantime have several times r es timate additional cost is and we believe the factor is still overstated by half it's now 2.2% so we think that of the six or seven billion dollars about half of that is not justified by the additional costs that the hospital is incurring now let me just check my slide here what hospitals will say is you know teaching hospitals will say is you know they've not disputed this particular number but what they'll say is actually what this money is for is my patients are more severe and so you will hear this argument what I want you to understand is this in about two thousand eight we also did some work on severity we recommended changes to the payment system to pay more accurately for more severe patients those payments were or that that was implemented the teaching hospitals benefited from that and yet they are still getting this Adam so you should be aware because you will hear that argument moving on this is a summary slide so I've told you about direct GME about three billion dollars this is to pay the residents salary and the administrative costs you have six and a half billion dollars on this indirect medical education concept the cost of having teaching while you're trying to provide care we think about three of it about half of it is justified the other half is not justified I'm going to great pains to point out this number because that extra three and a half billion dollars is going to come back into the talk in just a minute okay so write that number down while you're marking excellent on your evaluation forms okay oh I already told you this yeah this is a sliders telling you you'll hear the severity argument I've got out of sequence here sorry guys this is a severity argument I've taken you through it there's now a severity adjuster in the payment system the teaching hospitals benefited from okay now the next thing you're going to hear when you know people come to your offices and I think Aaron's stuff becomes you know comes deeply into into play here is the first thing you're going to hear is look this is simple we have a shortage we need more physicians and you need to increase the numbers of funded slots that are in GME okay and that's that's all that needs to happen here now of course this costs money and so you can you also have to pay attention to the deficit and the debt that this country is facing but that's what the basic argument right now medic they're probably and Aaron probably knows this much better than me there's probably 100 100 plus thousand slots in the country Medicare subsidizes 90 x of those and then the hospital's pay you know just outright for another ten to fifteen thousand of those so in other words Medicare does limit the number of slots it subsidizes there's great pressure right now from the teaching industry to keep to to increase those slots there's a couple of reasons you should think very carefully about this beyond the fact that you have a deficit that you're facing number one as aaron has said is there a shortage and I really appreciate her analysis and you're going to see some stuff later that that connects to it because when we were going through this analysis we were saying nobody's done with an objective point of view an assessment of what the needs are just the total number but then what kinds of professionals and if you have differences either in location or kinds of professionals you might say even within the current subsidies you might subsidize different specialties differently because you might not need a whole bunch of X you may want some more of why the other thing to keep in mind is remember the hospitals benefit from these interns and residents you have a bunch of low-cost labor running highly educated low-cost labor running all around your hospital so as a government how much you should subsidize that is a question because they're getting a benefit from it some of these residency programs generate revenue not all of them but cardiology orthopedic surgery you talk to a CFO those programs can actually generate net revenue to the hospital so again if you have a scare subsidy dollar you should really be asking about where you targeted so anyway I think that's that particular slide ok so now I'm shifting gears and I'm telling you less about GMA and Medicare and telling you about what med pack said to reform it a few years back now couple points i want to just kind of start to get into your heads that you can agree or disagree with but the money drives through hospitals and we think that that has resulted in residency programs that are highly focused on the inpatient setting when in fact care is moving out of the hospital surgery even enlarged you know percentages is moving out of the hospital and think about the population in question here we're talking about the elderly and disabled encounter to these people in their home encounter these people in the office you encounter these people in rehab and nursing types of settings and the training programs often don't reach to those particular settings we also think the training in those programs is very focused on clinical care and not focused on other objectives like care coordination working in teams that type of things so we think that this linkage to the ho and by the way once the dollar and Aaron made a quick reference to this once the dollar hits the hospital nobody knows what happens with that dollar there is no accountability in Medicare to know did that dollar actually go to teaching once it hits the hospital it can go anywhere salaries building new things buying equipment whatever the case may be I thought it was very interesting that Aaron said that they're trying to get some accountability in Medicaid which I've you know stop talking about because I've just lost that argument but maybe I'll start talking about it again okay another thing that we were concerned about it made a quick reference to this is curriculum and so we did some work with ran several years ago looked at curriculum and this is not high science and representative we went to selected programs and just tried to look at what was going on and felt that there was curriculum that was being missed on coordination working in teams working with IT being aware of cost working with quality metrics and trying to drive you know patient care to a high quality outcome that type of thing and so we felt that this curriculum was or Creek many curriculum across the country were lacking and in a sense the thought process goes like this everybody wants a reformed payment system that focuses on coordination focuses on quality and contains cost and we're out here as policy people trying to change the payment system and measure quality and up at the beginning of the pipeline the training that's a marine doesn't focus on any of that and then we suddenly have a professional that doesn't think about and work within a system like that and so the thought processes get upstream and start to inject some of that into the training program so and I think that's what this slide just was about right so you're looking for coordination and reform drive it upstream in the pipeline to try and start to build into your graduate medical education programs okay we're coming to the finish line here not too much more so you know hang on I know this is like really interesting but okay this is kind of the big thing medpac said this is the thing that just about everybody hates okay so you want to focus on this one and then that we have some technical things that come out after this and one I think crosses nicely or erin has nicely crossed over into and I'm going to make that point okay so the first recommendation we said is look the Congress should direct the secretary to create a performance-based teaching program if you will so what you're looking for here are programs who inject this change in the criteria or curriculum into their programs programs that are either located or encompass out of hospital training when we were talking about this there was a physician on the Commission who said I remember my first day of going to my office to be a physician I realized as i sat in my office I had never actually been trained to deal with this situation all of my training was in the hospital I was dealing with sick patients and complicated diseases and surgeries and then I left and I sat in my office and I'm going to be a primary care physician and I have never done this in money my training and so the idea is to inject the curriculum changes into it and to inject more sites of care where the training occur so I'm training and a nursing home i'm training in an outpatient clinic i'm training an office setting that type of thing we would set up a pan all in order to advise the secretary about how to arrange these criterion we've written some of the criteria at least objectives up up in our reports but this panel should not just be the Graduate Medical Education community it should also be insurers provide obviously the provider society's beneficiaries in other words it was something like Aaron is saying where well we want accountability there's certain value we want to extract from our education process if we're going to set up these criteria let's get input from everybody who's involved in that not have the criteria set exclusively by the societies in the GME accreditation organizations you starting to see why people were unhappy about this I soon number two the money doesn't just go to a hospital if you set up a program that's not hospital-based the money can travel to you and the last point is what money are you talking about I told you to write this down I'm talking about the three and a half billion dollars that we think is actually to pay too much as a multiplier that block of money would be a sense be pulled aside and said it is only allocated to programs that meet these criteria okay into the finish line here we also said you should give a report to the GME you know community if you will detailing what dollars travel to their hospital for DME direct and indirect Graduate Medical Education and the counts of interns and residents I don't necessarily view the Graduate Medical Education community broadly as for reform or change there is a lot of entrenched kind of behavior there but there are people who say they're very frustrated by the fact that these dollars flow into the system and they don't particularly see them that the dollars don't end up going to education and we thought that this was a way at least to start a healthy conversation or in Erin's view a hockey fight about where the dollar is that came in to the hospital and then finally we have three studies and focus on and because we didn't feel like we were particularly the best you know experts to do this this is complicated stuff and I'm very encouraged by aarons were we said people need and we felt that it was kind of a hearse a responsibility people need to start doing estimates of workforce needs and do it from a disinterested point of view and to use different assumptions are we talking about our current system are we talking about a reformed system that has a lot more focused on the you know the professional like PA NPS and nurses and is much more you know team oriented in that kind of environment what do you need and I think some of the stuff that Erin's doing is starting to move in that direction we also said there needs to be and we tried to do some of this and with mixed success which specialties are revenue generators for hospitals which specialties are not because again if you have limited dollars you may want to support some types of training and not others and then finally and this really exits into the herschel world we found that the workforce there was real issues of diversity a lot of the physicians in this country come out of families in the highest income brackets they often come from families where there are already physicians for example and we think there are issues both in terms of income diversity raised our ethnic diversity and urban and rural and there are different ways that they try and capture people literally out of high school and get them into the pipeline that you know ultimately to end up in practice this is not Medicare's turf but we commented on it that there are programs that exist in her so I am no way an expert in that but maybe that begins to segue into the last presentation so thank you for that you

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