Medicaid seeks to cut contribution to GME funding

Teaching hospitals' training budgets could be cut between 15% to 30% if a proposed Centers for Medicare & Medicaid Services rule change goes into effect.

The Dept. of Health & Human Services wants to end federal matching of state Medicaid graduate medical education reimbursements.

The government estimates that its revised policy would cost teaching hospitals $1.78 billion spread out over five years, but GME leaders say it actually could be that much per year.

"This would cripple the financial ability of our institutions to train tomorrow's doctors," said Kenneth E. Raske, president and CEO of the Greater New York Hospital Assn., whose hospitals train 16% of medical residents in the United States.

Teaching hospitals escaped the cut this year. Congress passed a one-year moratorium on the cut as part of a military spending bill approved May 25.

"We're going to fight very hard to prevent the implementation of this rule," said Lynne Davis Boyle, assistant vice president, Office of Governmental Relations, for the Assn. of American Medical Colleges.

The American Medical Association also opposes the proposed cut.

HHS argues that paying for medical education is not justified under the Medicaid statute. While CMS previously allowed states to include resident education costs as a component of patient care costs, the Medicaid statute does not expressly authorize this practice, HHS said. Education is not part of the cost of treating a patient, it argues, and the proposed rule change would eliminate this practice.

The argument is a huge turnaround for the government, Boyle said, because Medicaid has helped pay for GME since Medicaid's creation more than 40 years ago.

Teaching hospital leaders say the proposed cuts would strangle resident training and play havoc with the care they can provide for all patients.

In New York, which trains more residents than any other state, Raske said the loss of federal matching funds would slash in half New York's annual $1.2 billion in Medicaid GME dollars, leaving hospitals with $600 million from the state Medicaid coffers.

Most of New York's hospitals are break-even operations, Raske said. A cut of this size would force them to downsize patient services and training programs at a time when they ought to be ramping up to offset an anticipated physician shortage by 2020.

Meanwhile, in Utah, a largely rural state with a fraction of the residents New York trains, the consequences of a federal Medicaid GME cut would be just as dire. Utah stands to lose $40 million if the cut goes through. That is equivalent to salaries of 670 of the 800 residents and fellows in the state, said David Squire, executive director of the Utah Medical Education Council.

Many of the state's residencies operate at the minimum number of residents allowed by the Accreditation Council for Graduate Medical Education. So losing one resident would mandate closing the entire program.

David Bjorkman, MD, dean of the School of Medicine at the University of Utah, Salt Lake City, the only medical school in the state, said cutting Medicaid reimbursements would put undergraduate medical education at risk. "The impact of what we would have to do is draconian," he said. "It would dramatically decrease our ability to train physicians not just for Utah and its rural communities, but for the entire western United States."

The only alternative for Utah's hospitals and for teaching hospitals across the nation, Squire said, would be to pass along the cost to the sick. "The debate should not be around how much the government should pay, but who should pay."