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October 1997
Volume 61 |
Number 10
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WASHINGTON REPORT
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| Cutbacks in Specialist
GME Encouraged by New Budget Act |
Michael Scott,
Director
Governmental and Legal Affairs
In the May
1997 issue of the ASA NEWSLETTER, Alan W. Grogono,
M.D., reported that for the first time in several years, the total
number of physicians accepting anesthesiology PGY-1 and CA-1 residency
positions increased over the prior year, as did the number of
such positions made available by teaching hospitals with graduate
medical education (GME) programs. Even so, however, the gap between
availability and acceptance remains formidable: out of 994 positions,
only half were filled, compared to a 75 percent acceptance rate
just five years ago.
It now appears that the federal government is about to put a
powerful incentive into place to improve the current ratio - not,
however, by encouraging more medical graduates to match into the
specialty of anesthesiology - but by encouraging teaching hospitals
to cut back on nonprimary care residency programs, including anesthesiology
programs. In essence, teaching hospitals will be paid not
to train specialist physicians, much in the way American farmers
have been paid to set aside acreage as a way to boost crop prices.
Genesis of the new federal subsidies is to be found in a Health
Care Financing Administration (HCFA) demonstration project, which
was announced last February, involving 41 New York City area teaching
hospitals. Under the plan, participating institutions agreed to
cut residency slots by 25 percent (20 percent for those participating
in educational consortia) over five years; in exchange, HCFA agreed
to pay the institutions a total of $400 million to cushion the
loss of direct medical education grants otherwise payable.
The demonstration, which did not require congressional approval,
nonetheless prompted considerable controversy at a time when the
Republican leadership of the new Congress was just beginning to
develop the framework for another effort at balanced budget legislation.
According to the Washington Post, Ways and Means Committee
Chair Bill Archer (R-TX) was particularly angered by a deal that
in essence pre-empted the deliberations of his committee over
GME funding. Senator Phil Gramm (R-TX), one of the Senate's leading
fiscal conservatives, characterized the deal as "one of the
stupidest proposals I have ever heard of in my life."
When the budget dust settled in August, however, the New York
demonstration had been extended by law to all the nation's 1,000-plus
teaching hospitals. Under the new law, if an individual hospital
with 750 or more residencies reduces the total number of its residents
over five years by 20 percent, while at the same time not
reducing the proportion of its primary care residencies, it will
be entitled to "hold harmless" payments from the federal
government. Similar formulas apply to smaller individual hospitals,
to two or more hospitals submitting a joint application, and to
hospital consortia.
The government "hold harmless" payment in the first
two years will equal just slightly less than the amount by which
a hospital's entitlement to direct medical education (DME) and
indirect medical education (IME) payments are reduced by virtue
of the reduced number of residencies, and in the final three years,
of 75 percent, 50 percent and 25 percent of that amount. Applications
for participation in the program must be made by November 1, 1999.
Important to note is the fact that the "hold harmless"
payments go to the hospital, not to the teaching faculty, which
must still find ways to provide quality care to the hospital's
population. Anecdotal reports reaching the ASA Washington Office
indicate that, at least with respect to anesthesia care, cutbacks
in the number of trainees, whether under the New York demonstration
or under individual hospital initiatives elsewhere, have placed
pressure on anesthesiology faculties to find trained replacement
physicians and to generate income from which to adequately compensate
those physicians, especially in major urban areas. As the new
national subsidy program gets under way, it seems likely that
this situation will replicate itself across the country.
Related Budget Provisions
In addition to creating a subsidy for the downsizing of specialist
residency programs, the Budget Act also includes a number of provisions
having direct or indirect impact on GME. First, the DME and IME
payments currently contained in Medicare payments to managed care
organizations will be phased out over a five-year period. Beginning
next year, each hospital under the prospective payment system
and maintaining a residency program will receive an IME payment
for each discharge under a risk-sharing contract; at the same
time, formula-based DME payments also will be made.
As expected, the new Budget Act progressively reduces IME payments
from 7.7 percent for FY 1998 to 5.5 percent in FY 2001 and subsequent
years for every 10-percent increase in a hospital's resident-to-bed
ratio. The Act also caps, however, the allowed number of full-time
equivalent residents at the pre-1997 level, as well as capping
the ratio of residents-to-beds at the level in existence during
the same cost-reporting period.
Practice Expense Exercise:
How Slippery Is the Slope?
In mid-August, HCFA announced the convening of so-called validation
panels, the purpose of which would be to further consider the
direct practice expense values assigned to some 350 reference
codes included in its June 18 proposed rule - proposed values
now rendered somewhat obsolete in view of Congress' decision to
postpone the effectiveness of resource-based relative value units
(RVUs) until January 1, 1999.
The panels, which are essentially comprised of practicing physicians,
including the various carrier medical directors, will attempt
to deal with various anomalies in HCFA's proposed values and,
perhaps, will also react to comments on the proposed rule filed
by the various specialties in mid-August. As of this writing,
ASA had submitted the names of three anesthesiologists, all members
of the ASA Committee on Economics, to serve on the two panels
considering anesthesia and RVU-based codes performed by anesthesiologists.
HCFA is expected to issue a new proposed rule in the early fall,
seeking comments on its plan (as yet undisclosed) for developing
new practice expense data in response to the mandate of the Budget
Act. Under the terms of the Act, HCFA must issue yet another proposed
rule in the spring of 1998, setting forth proposed revised values
yet again. Although the recent HCFA proposed rule projected the
specialty for a 4.4-percent increase in reimbursement if the values
published June 18 had gone into effect, it is not possible to
conjecture what new conclusions HCFA may reach after further study.
Manuel E. Bonilla Joins ASA Washington Staff
Manuel E. Bonilla, a 1989 graduate of Washington and Lee University,
Lexington, Virginia, has joined the ASA Washington Office as Federal
Affairs Coordinator. He replaces Janée Bonner, who resigned
the position in connection with the move of her family to Mobile,
Alabama.
From 1990 to 1993, Manuel was an aide in the office of former
Senator Robert Kasten (R-WI) and was then employed as a federal
representative by the American Academy of Ophthalmology.
In his new position for ASA, Manuel will assist in the Society's
federal legislative program and will also be responsible for the
administration of ASAPAC, ASA's affiliated political action committee.
The PAC's 1998 fiscal year began on October 1, 1997, and Manuel
will be directing PAC solicitations at the ASA Annual Meeting
in San Diego, along with members of the PAC Board and several
ASA officers and directors.
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