Why Medicaid May Soon Be Affecting You

Posted by at 11:21AM

Update from the Chronicle of Higher Education (5/30/2007): “Teaching hospitals that stood to lose at least $1.8-billion in Medicaid funds from a regulatory change proposed last week received a one-year reprieve on Friday in budget legislation approved by Congress.” (article in the CHE is by K. Mangan)
Hopefully the AMA, AAMC, and others will make their voices heard on the issues.-EB

From the Federal Register May 23, 2007:
This proposed rule would clarify that costs and payments associated with Graduate Medical Education programs are not expenditures for medical assistance that are federally reimbursable under the Medicaid program
The Centers for Medicare & Medicaid Services (CMS), US Dept. of Health and Human Services (HHS) have released a new rule proposal which would disallow Graduate Medical Education (GME) as an expenditure that is federal reimbursable by Medicaid.
Medicaid is a federally and state funded program designed to provide a safety net to low income parents, children, seniors, and individuals with disabilities.
“So what?” you may be asking.
Many medical schools and hospitals, including Stanford Med School and Stanford Hospital, are dependent on direct and indirect federal reimbursement of graduate medical education (the training of interns and residents) from both Medicaid and Medicare to help pay for the costs of running a teaching facility.

When asked to comment on the effect the proposed changes would have on teaching institutions Donald A. Barr, M.D., Ph.D. in the HumBio Dept stated:
It is the case that Medicare is the principal payer of the costs of GME. However, as hospitals include the cost of GME in calculating charges for other private insurers, it only makes sense for them to do it for Medicaid also.
…starting in 1966, Medicare paid hospitals on a cost-reimbursement basis. Medicare paid hospitals a fractional share of the cost of providing care, depending on how many Medicare patients the hospital treated. That formula changed in 1983 with the DRG system of payment for hospital care.
However, in 1966, GME was considered to be part of “providing medical care” in the hospital context. If it was good enough for Medicare, why isn’t it good enough for Medicaid?

The American Association of Medical Colleges (AAMC) in a letter opposing this move stated, “Medicaid has an important responsibility to support care for patients in the safety-net institutions that participate in graduate medical education. This funding supports the additional cost of providing care to patients with more complex health care needs in a teaching setting.”
Teaching hospitals in the U.S. provide a disproportionately high level of healthcare services for Medicaid beneficiaries and the uninsured. According to the AAMC, in 2004 (the latest available data), while teaching hospitals in the U.S. represent only 6% of all hospitals, they were responsible for 25% of all Medicaid discharges from hospitals. Teaching hospitals also maintain a higher intern/resident-to-bed ratio than most hospitals.
Many teaching hospitals, such as Stanford, are also the sites of major medical research, and as such, they often take on complex medical cases and help to research medical advancements.
Calls to the news offices of the AMA, Stanford University and an email to Stanford Hospital’s news office on Friday asking if these organizations had submitted statements to CMS regarding this proposal were not returned. However, as this wass the beginning of a long weekend, people are probably out of the office, and I will update this post as comments arrive.
There are always two sides to every story. Medicare and Medicaid are facing increasing costs which have outpaced earlier predictions. Medicaid funding has become a major budget issue for states (who are facing budget deficits), and as the U.S. population ages Medicaid is faced with increased costs for long term care. However, if states begin to follow federal examples, teaching hospitals will face further cuts to funding.
Healthcare in general in the U.S. is facing systemic problems of which Medicare and Medicaid issues are just a symptom. Technological costs have gone up, people are living longer, the worker to retiree ratio is shifting, and we operate our healthcare system using a for-profit model. Furthermore, as many are aware, governmental spending priorities do not focus on healthcare and the U.S. government is incurring a large spending deficit due to the war in Iraq.
If you’re not concerned about problems with health care in the U.S. or about maintaining the social safety net we have in place for the poorest of our society, then you should be concerned about these regulations out of pure self-interest:

  • Medicine is one of the largest career interests on campus. If you are a premed, this directly affects your ability to gain a residency after medical school.
  • Furthermore, if you are a member of cardinal care, your health insurance premiums reflect the cost of going to Stanford Hospital. If this funding is taken away, the hospital may have to respond by raising the price of the (heavily discounted) services they provide to students



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