Charles P. Clayton
In its proposed fiscal year 2010 Medicare inpatient perspective payment system changes, the Centers for Medicare & Medicaid Services (CMS) signaled its intention to eliminate the indirect medical education (IME) adjustment presently used to increase payments for capital expenses to teaching hospitals. The Association of American Medical Colleges estimates this elimination will reduce Medicare payments to teaching hospitals by $360 million annually, in the aggregate. The Alliance for Academic Internal Medicine (AAIM) encourages its members to write CMS by June 30, 2009, to voice their opposition to this cut.
Medicare pays hospitals for the costs they incur in caring for patients as well as Medicare’s portion of the costs hospitals incur for their capital infrastructure. The IME adjustment factor has been applied to both payments in recognition of the additional expenditures teaching hospitals make in fulfilling their educational mission. In its proposed rule, CMS argues that increasing capital payments by the IME adjustment overpays teaching hospitals, resulting in higher than average financial margins on their Medicare business. The agency further argues that Congress’ intent in establishing the Medicare capital payment system was for payments to closely mirror actual expenses. CMS argues removing the IME adjustment inflating capital payments to teaching hospitals will meet this congressional intent.
Advocates for teaching hospitals argue these hospitals have lower overall margins than non-teaching hospitals. Therefore, the capital IME payment plays a large role in their overall viability. This viability is necessary as teaching hospitals provide services not otherwise available in their communities. Increases to capital IME payments are also justified, advocates argue, because teaching hospitals incur unique capital expenses.
The comment period on the proposed rule ends June 30, 2009. AAIM encourages its members to write CMS in opposition of the elimination of the IME adjustment to capital payments. Comments may be submitted online to www.regulations.gov. Members may find the below text useful in developing input to CMS.
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Kerry Weems
Acting Administrator
Centers for Medicare & Medicaid Services
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Attention: CMS-1406-P
Dear Administrator Weems:
As [your position] at [your institution], I write to voice my opposition to the Centers for Medicare & Medicaid Services (CMS) proposed rule to eliminate the indirect medical education (IME) adjustment from the calculation of Medicare capital payments to teaching hospitals.
Eliminating the IME adjustment from the calculation will reduce Medicare funding to teaching hospitals by $360 million annually, a move that may well cripple many of these institutions in the difficult financial times the nation faces. In doing so, CMS runs the risk of damaging the health of Medicare and Medicaid beneficiaries, and all other patients, in the areas these hospitals serve. Teaching hospitals are the main provider of uncompensated care and also serve as major trauma centers, regional referral centers for transplantation and burns, and front-line responders in the event of biological, chemical, or nuclear attacks. Eliminating the IME adjustment from capital payments threatens the hospitals’ ability to continue to provide these services as well as fulfill their educational and research missions.
CMS proposes to strip funding from these hospitals based on the agency’s interpretation of congressional intent regarding Medicare capital payments. However, CMS’s argument that Congress intends these payments to exactly mirror expenses is at odds with the intent Congress expressed in establishing special payments to teaching hospitals. When Congress established these payments, it did so with the understanding that Medicare should continue to be the prime supporter of medical education until such time that other insurers paid their share of costs for developing future generations of health care providers. As other insurers have still not filled this role, Medicare must continue to support the special costs teaching hospitals incur. Fulfilling this role means that Medicare margins at teaching hospitals should be higher than at other hospitals, especially as overall margins at teaching hospitals are lower than for non-teaching hospitals.
Continuing to apply the IME adjustment to Medicare capital payments is the right thing to do for the health of our communities now and in the future. I urge CMS to refrain from finalizing its proposal to eliminate this critical payment.