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Setup Instructions |
| Utah Links Federal
Funding for Graduate Medical Education to State's Physician Workforce Needs This publication
was produced for by Pat Taylor, Ph.D. under Contract # HHSH250200416005P Contents Chapter 1. Introduction to the Funding of the Graduate Medical Education of Physicians Chapter 3. The Early Years of the Utah Medical Education Council Chapter 4. Increase in Utah's Federal Graduate Medical Education Revenues Chapter 5. Utah Gets Medicare Graduate Medical Education Demonstration Chapter 6. Lessons for Other States Appendices Appendix I. Utah Statute Creating the Medical Education Council Appendix II. Utah's Clinical Healthcare Workforce: Achieving Balance Through 2020 Appendix IV. Utah Graduate Medical Education Demonstration Waivers Several National commissions have recommended greater public involvement in Graduate Medical Education (GME) policy to improve the specialty and geographic distribution of the future physician workforce. A few States are using the leverage of public GME funding to achieve some public accountability for the public monies supporting graduate medical education. The State of Utah's involvement in GME policy making is the most far reaching. Utah is engaged in an experiment to infuse public priorities into funding decisions on the education of advanced health care professionals. A state-chartered commission is linking Utah's graduate medical education funding and statewide physician workforce needs. A central element of this experiment is Utah's groundbreaking Medicare Graduate Medical Education demonstration. The state-chartered Medical Education Council now receives and disburses all Utah Medicare Direct Medical Education payments. The Council also has authority within the demonstration to receive all Medicare Indirect Medical Education payments and Medicaid Graduate Medical Education payments. One goal of the demonstration is to use a portion of graduate medical education monies for the public goal of increasing the number of graduating physicians who choose to practice in rural areas. Traditionally, graduate medical education funds, including Medicare and Medicaid monies, have been paid to teaching hospitals and it was they who then decided on the number and specialties of residency training programs. As nearly all teaching hospitals are located in cities, only a very small fraction of Medicare GME payments go to rural hospitals. There has been no Medicare or Medicaid requirement on teaching hospitals to take account of State or National physician workforce needs in their decisions on how many GME programs to support and in which specialties. Utah's Medical Education Council is changing this. Council efforts are focused on expanding physician residency programs in specialties in shortage, increasing the percent of graduating residents who stay in Utah to practice and increasing the number of graduating residents who locate in rural areas to practice. The Council staff has been successful in substantially
increasing Federal GME revenues flowing to Utah to fund graduate
medical education. In the course of its search for additional Medicare
GME revenues, the Council financial officer discovered that the
GME section of teaching hospitals' Medicare cost reports is more
accurate when compiled using a regional resident database rather
than the resident records of individual teaching hospitals. It was
found that in 1996 Utah's teaching hospitals had underreported GME
FTEs by approximately 10 percent on their cost reports amounting
to $2 million in Medicare GME earned but not claimed. Also the staff
have developed reliable data on the current health professions workforce
supply and projections for workforce need through 2020. In less than a decade, Utah has created a well-functioning structure and process for linking the funding of graduate medical education to rational planning to meet Utah's future physician workforce needs. The Council is managing all Medicare DME payments to Utah as well as additional monies provided by the State's teaching hospitals, being used to increase the number of residents in training. The Council is holding residency programs accountable for achieving public goals. The Council's achievements are remarkable in today's health policy environment in which health planning is in disfavor and competition is widely promoted as the means for solving problems of the health care system. There is growing concern among health policy experts that the Nation needs more effective means to assure the training of an appropriate complement of physicians. There is a chronic maldistribution of physicians across the Nation, an oversupply and concentration of specialists and a shortage of primary care physicians. Several government and foundation commissions have considered means by which to address these problems. (COGME, 1997, 1999, 2000a; Commonwealth, 1997; Pew, 1998). Their recommendations consistently include a larger role for government in the policy decisions shaping the graduate training of physicians. At present Federal and State governments bear a large part of the cost of graduate physician training, but have little input into decisions affecting the specialty mix of physicians to be trained or their practice locations upon completion of training. However, a few States are using the leverage of public funding for graduate medical education (GME) to further public physician workforce goals. (Henderson, 1998). The State of Utah's involvement in GME policy
making is the most far reaching. In order that the reader may understand the innovative character of this Utah experiment, we first describe the traditional method by which graduate medical education has been funded in the United States and, especially, how Medicare GME monies have been distributed. The traditional method of financing physician residency training programs, described below, evolved independently of any deliberate linking of the size and specialty of residency programs to community or regional physician workforce needs. This funding arrangement continues to the present in spite of the fact that Federal and State governments pay a substantial proportion of the costs of physician resident education. It has contributed to the long-standing shortage of generalist physicians, particularly in rural and inner city communities. Chapter 1. Introduction to the Funding of the Graduate Medical Education of Physicians 1 The clinical training of a physician in a field of specialization occurs in a residency training program. This level of physician education follows completion of medical school; it is termed graduate medical education (GME). The individual training programs are called residency programs or residency training programs and their graduate students are termed residents. First-year residents are often called interns. Graduate medical education has largely been funded from the patient care revenues of teaching hospitals and other clinical training sites. Historically, teaching hospitals treated GME costs as just another of the costs of "doing business," and included them in all patient care bills, including bills for Medicare and Medicaid insured patients. In the 1980s, Medicare and Medicaid changed from this indirect method of supporting graduate medical education to the method of making explicit payments for GME costs. Medicare makes the largest explicit payment for graduate medical education in the form of GME add-ons to hospitals' bills for Medicare inpatients. Medicaid makes the second largest explicit payment for GME costs, with most States making some explicit per patient payment for graduate medical education. Many State Medicaid agencies use a GME add-on payment method much like Medicare's. A minority of States make a separate direct payment to teaching hospitals for GME (Henderson, 2000). Private insurance companies also pay some of the costs of graduate medical education, indirectly rather than explicitly. GME costs are wrapped into the hospital bills of some privately insured patients treated at teaching hospitals. The government proportion of GME financing is estimated at 40 percent by Medicare, 10 percent by Medicaid and one percent by the Health Resources & Services Administration (HRSA), Bureau of Health Professions. The balance is funded by hospitals' patient care revenues from private insurers and faculty practice plan revenues. (Bivano, 2001). The Medicare GME payments to teaching hospitals have two components: Direct Medical Education payments (DME) and Indirect Medical Education payments (IME). DME payments are designed to reimburse teaching hospitals for Medicare's share of the costs of salaries and fringe benefits paid to medical residents, interns and supervising faculty, malpractice insurance for residents and administrative expenses. These expenses are typically borne by the teaching hospital utilizing the resident. A hospital's Medicare DME add-on to each inpatient bill is a fixed amount per resident based on its reported GME costs in 1984 adjusted for inflation and Medicare's share of inpatient days at the hospital. Indirect Medical Education costs (IME) are a substantial, but difficult to define, element of the hospital costs of resident training. These expenses are related to the higher costs associated with training, such as additional diagnostic tests ordered by residents learning how to make diagnoses, higher staffing ratios, and the higher percentage of patients in teaching hospitals with complex conditions that necessitate costly treatment (U.S. Congress, 1999, 106). Medicare IME is paid as an add-on to a teaching hospital's diagnosis-related payment (DRG) for care of Medicare inpatients. The greater the number of residents training in a teaching hospital, the larger the IME add-on to the basic DRG price. The formula for the add-on amount is principally a function of three factors: the basic payment for the patient's diagnosis times, the Congressionally-set IME adjustment percentage times, and the hospital's ratio of residents to beds. However the Congress has always set the IME adjustment percentage much higher than the actual indirect teaching costs of teaching hospitals – initially at double the empirical costs and currently at more than double the empirical costs (MedPAC, 2003, 56). For teaching hospitals with a high IRB ratio, the IME add-on can be very substantial. In FY 1999, 10 percent of hospitals received IME add-ons to their DRG payments of more than 29 percent (MedPAC, 1999, 7). Medicare's annual expenditure for graduate medical education amounts to a great deal of money; in FY 2002 it totaled more than $9 billion, with 30 percent for DME and 70 percent for IME (CMS, 2002, 5). Historically there was no limit on the number of residents for which a teaching hospital could receive Medicare GME payments. The Medicare IME add-on was a powerful incentive to teaching hospitals to increase the number of residents training in their hospitals, irrespective of regional or national workforce need. This incentive was ended by Congress in 1997 in the Balanced Budget Act (BBA) which capped the number of residents eligible for GME payments at each teaching hospital. The BBA halted the unlimited, continuous increase in the number of residents, but this did not reduce teaching hospitals' interest in maintaining their Medicare IME revenues. As noted above, these revenues are approximately twice as much as their actual indirect teaching costs for care of Medicare-insured patients. Also, and importantly, residents are inexpensive healthcare practitioners for teaching hospitals. Their salaries are paid in part by Medicare and they are less expensive and more flexible than full-priced physicians and nurses. Because GME monies have been paid to teaching hospitals, it is teaching hospitals and/or their health system owners that have decided on the number, size and specialties of residency training programs, subject to some accreditation constraints. Understandably, these decisions have been made in terms of what is best for the hospital. Most teaching hospitals are urban, tertiary care hospitals which provide complex treatments by highly specialized physicians. This specialized role of teaching hospitals has fostered a bias away from training generalist physicians and toward training specialists and sub-specialists. Also, in making GME program decisions in difficult financial times, a hospital may consider which physician specialties will most increase admissions, which types of admissions are most profitable for the hospital and which specialties are key providers of expensive inpatient care. These bottom-line considerations reinforce the bias toward training speciality physicians. The Medicare GME payment rules have further biased graduate medical education toward the training of hospital-based physician specialists and away from office-based generalist physicians. This is because the IME payments to teaching hospitals are tied largely to inpatient counts. In Medicare payments to teaching hospitals, the DME and IME add-ons are not separately identified, but rather are bundled with the inpatient DRG payments. Although hospitals could calculate and separately track the GME payments in their books, few if any do. Rather the total payments from Medicare (DRG + DME + IME) are entered as general operating revenues and the hospitals are under no obligation to use the GME payments for medical education. This payment arrangement is problematic for residency training programs which are usually operated by medical school departments, for example, departments of general internal medicine, obstetrics and gynecology, and cardiology. As the residency programs do not directly receive the Medicare DME payments, they must negotiate with the teaching hospitals for funding. The hospitals can allocate more or less to the residencies than the DME monies paid to them by Medicare. This arrangement puts residency programs in a vulnerable position vis-a-vis the teaching hospitals. This is especially the case for residency programs in the less profitable specialties such as family medicine. The historically-based pattern of linking GME payments to inpatient care has been problematic for the financing of programs to train the office-based generalists who supply most rural health care – especially family practice physicians and, to a lesser extent, general internal medicine physicians. Only a very small proportion of Medicare GME monies are paid for resident training in ambulatory clinic sites, and this only since the 1997 Balanced Budget Act. After Medicare, Medicaid is next largest public payer of graduate medical education. A few States – most notably Michigan, Minnesota and Tennessee – have Medicaid GME initiatives that require residency programs to have accountability to public need (Henderson, 1998). There has been no Federal requirement on teaching hospitals to take account of State or National physician workforce needs in their decisions on how many residents to support and in which specialties. It is this decision-making calculus which Utah is changing – by shifting decision-making about GME programs from teaching hospitals and health systems to a State commission which can base these decisions in some part on Utah's current and future physician workforce needs. Graduate medical education and the training of rural physicians.2 Primary care physicians predominate in rural practice, especially in small towns. Family practice is the most common specialty for the physician workforce of rural areas: it comprises 41 percent of the physicians practicing in small rural towns of less than 10,000 people, the places in which physicians are in shortest supply (Larson, 2003). The decision of family practice physicians to practice in rural places is positively related to the curriculum and location of their residency training. A survey of 96 percent of all family practice residency programs suggests that a program being located in a more rural State, being located in a smaller population center, having an explicit mission for rural health and having a required rural rotation all increase the likelihood that graduates of a program would locate in a rural area. The larger a program's number of required rural months, the greater the likelihood of the graduates choosing rural practice. Nineteen family practice residencies with three to six months of required rural training responded to the survey; they reported approximately 50 percent of their graduates chose rural practice, compared to 25 percent of family practice residency graduates who had no required months of rural training (Bowman, 1998). A promising strategy for expanding the months of rural training was developed in family practice graduate medical education in the late 1980s – the rural training track (RTT). In these tracks, the residents spend their first year in a large urban teaching center and their second and third years in a family practice in a small, remote rural community with a community hospital. The subsequent practice locations of RTT graduates have been studied by Rosenthal and others who found 76 percent of RTT graduates were practicing in rural towns of less than 25,000 and 65 percent were providing obstetrical services. (Rosenthal, 2000). This is a very high yield of rural physicians. Unfortunately there are fewer than fifty RTT programs and many of them have had difficulty filling their resident openings. The urban concentration of Medicare GME payments. A teaching hospital is a hospital which provides clinical medical training to residents. Because nearly all teaching hospitals are located in cities, only a very small fraction of Medicare GME payments go to rural hospitals – in FY 1995, one percent went to rural hospitals and 99 percent to urban hospitals. Only $70.5 million of roughly $6.4 billion was paid to hospitals in nonmetropolitan counties, and only 1.5 percent of all residents trained in these hospitals (Slifkin, 1999). This rural-urban imbalance in GME programs and payments has policy significance because physicians trained in rural places are more likely to practice in rural places than those trained in cities. Chapter
2. Start of the Utah Initiative to Align Graduate Medical Education
and A. State health policy commission foresees health workforce crisis. In the early 1990s, the Governor of Utah created a health policy commission in order to focus attention on statewide healthcare problems and options for addressing them. The commission members, appointed by the Governor, included State legislators, business leaders and health care industry leaders. Each year the commission identified two statewide health care problems it would examine in depth. The Utah experiment described in this report grew out of the commission's 1995 decision to look into (1) the financial threats to the survival of Utah's only academic health center – the University of Utah Health Sciences Center which includes the University Hospital and the University Medical School's many residency training programs and (2) the adequacy of Utah's health care workforce. At that time, the rapid spread of managed care in Utah for both privately and publicly insured patients, was having an adverse financial impact on Utah's leading hospitals, which also were its teaching hospitals, especially the tertiary care University Hospital and Intermountain Health Care's (IMH) teaching hospitals. Managed care plans were under no obligation to support graduate medical education costs in their payments to teaching hospitals for patient care. Rather, University Hospital and other Utah teaching hospitals received only the payment amounts they could negotiate with these managed care plans. The teaching hospitals' costs made them uncompetitive with non-teaching hospitals: graduate medical education added about $600 per discharge to their costs. When the Governor's health policy commission challenged Utah HMOs to support graduate medical education through their payments to hospitals, they declined. This response from the HMOs was an impetus for the creation of the Utah Medical Education Council and its pursuit of a Medicare GME demonstration. A second impetus was the potential growth of Medicare managed care at-risk plans. In the mid-1990s, GME add-on payments were not carved out of Medicare payments to risk plans. (This was changed in the 1997 Balanced Budget Act.) Rather, Medicare's payments to risk plans included the GME monies, which the risk plans were under no obligation to pass on to teaching institutions as part of their payments for inpatient care of their Medicare-insured patients. In addition, Congress seemed likely to reduce Medicare IME payments in the near future. In 1996, the Congress was considering a proposal to reduce the IME adjustment from 7.7 percent to 5.0 percent, which change would reduce total IME payments to Utah by 35 percent (Osborn, 1996, 12) Loss of graduate medical education payments threatened Utah's teaching hospitals and its physician residency training programs. Any decrease in resident numbers would likely decrease the State's physician numbers. The health policy commission was also concerned about the lack of any system-wide planning for the State's future physician workforce needs. Because of Utah's high birthrate, the State's population was increasing much faster than the Nation's population. It seemed likely Utah hospitals and communities would experience increasing difficulty in recruiting enough physicians, and there was already a shortage of physicians in rural areas and inner cities. Determining the costs and revenues of advanced clinical education in Utah. The Governor's health policy commission was concerned with issues involving the education of health care professionals, but no one in Utah had any idea of how much money was being spent on health professions education. In 1996, the commission contracted with the Deloitte and Touche consulting group to determine both the cost and the revenue that was supporting graduate medical education, medical student education, nursing education, pharmacy education and physician assistant education in Utah. Deloitte and Touche found the total annual cost of these programs to be more than $130 million in 1998 dollars. Of the total amount, 66 percent was spent for graduate medical education, 14 percent for medical student education, 14 percent for nursing education, five percent for pharmacy education and one percent for physician assistant education. The annual training cost per physician resident was $215,000. This compared to per resident National average costs for family practice and pediatrics of $ 330,000 (Elison, 2003). Of Utah's per resident annual cost of $215,000 in 1996, $100,000 was funded by Medicare GME, $30,000 by Medicaid (with a 3 to 1 Federal / State match ratio) and the balance of $85,000 was absorbed by Utah's hospitals and institutions of higher learning (Elison, 2003). B. Utah seeks Medicare GME demonstration project. As the study of Utah costs and revenues for health professions education was getting underway, the health policy commission developed a plan for rationalizing graduate clinical education in Utah. This plan was fleshed out in a concept paper written by Dr. Lucy Osborn, Health Policy Commission member and Associate Vice President for Health Sciences at the University of Utah, and was endorsed by the Governor and the University of Utah (Osborn, 1996). The plan's central idea was that all funding in Utah for graduate clinical education would ultimately be controlled by a statewide health professions education consortium. Initially, the consortium would focus on graduate medical education since the Federal government, through Medicare, was the largest single funder of the largest cost item in health professions education, namely physician residency training. Consortium goals were to implement a State workforce policy so that an appropriate number and mix of physicians receive training, create an organization to accomplish this, and ensure appropriate preparation for future practice by shifting more training from inpatient to outpatient settings and to rural and inner-city training sites. The consortium members would represent all vested parties, including State government, educational institutions and health systems with physician residency training programs, community representatives and funders. The consortium, in conjunction with the State, would "determine the total number of graduate medical education positions available within the State, determine the mix of positions by specialty, and allocate resident positions to specific programs. The consortium would be responsible for funding all residency positions and for reimbursing health systems and facilities for the indirect costs associated with training" (Osborn, 1996). The initial funding would be all Medicare IME and DME payments to Utah institutions. In Spring 1996 Dr. Osborn began efforts to enlist CMS's, formerly HCFA, support for a five year demonstration to link Medicare GME funding with Utah's future physician workforce needs. In the proposed demonstration, all Medicare GME payments to Utah organizations would be paid directly to a Utah educational consortium. These payments would include all Medicare GME monies currently being paid to Utah teaching institutions as well as all GME monies currently included in payments to Medicare risk plans for Utah Medicare beneficiaries enrolled in such plans. CMS staff were interested in the proposal because it brought to their attention for the first time the large decrease in Medicare funding of graduate medical education programs nationwide which would be an unintended consequence of major proportion of a substantial increase in Medicare enrollments in managed care at-risk plans. CMS advised Dr. Osborn that, for the agency to entertain the concept of a demonstration of the carve-out of Medicare GME monies from teaching hospital and HMO payments and their redirection to a State graduate medical education consortium, the proposal would have to come to CMS in the form of an unsolicited demonstration proposal. Through the winter of 1996-97, members and staff of the Utah Health Policy Commission worked on a demonstration proposal. During this time period, a team from CMS headquarters visited Utah to learn more about the proposal. This team suggested the demonstration be carried out in a step-by-step fashion, and this suggestion was incorporated in the demonstration application submitted in April 1997. During the years, 1997 to 2000, Utah's experiment in shifting control over graduate medical education funding to a statewide organization moved ahead on other fronts. Certainly the decision and efforts to obtain a Medicare GME demonstration were influential in energizing important stakeholders to work toward systematic statewide planning and funding of graduate medical education. But a good deal was accomplished to strengthen graduate medical education planning in the years before the demonstration finally got under way. One accomplishment was the creation of a state organization to take charge of rationalizing graduate medical education in Utah. The Governor's health policy commission worked with the State legislature on this. C. The Utah Medical Education Council is born. In 1997, the State legislature created the Utah Medical Education Council (Appendix I). The Governor appointed the first members of the Council in Summer 1997, and the Council was formally in business although it would not have any paid staff until mid-2000. The Council's responsibilities were to: protect current funding of graduate medical education and seek additional revenue streams; obtain and manage Federal Medicare and Medicaid waivers so that these Federal graduate medical education funds are linked to addressing Utah's physician workforce requirements; build sound databases on Utah's current health care workforce; develop projections of future workforce needs; and develop strategies to ensure Utah has the needed number and mix of healthcare professionals. Quasi-governmental public commission. With forethought, the legislature created the Council as a quasi-governmental entity, under a special section of the Utah code. This status has been critical to the successful functioning of the Council. For example, the GME payments to the Council are exempt from appropriation by the State, to protect the Council's revenue stream. Otherwise, the legislature would have been able to re-appropriate GME monies for another purpose it might deem of higher importance. This exemption would enable the Council to guarantee to CMS that all Medicare GME monies which it received would be used only for graduate medical education and to ensure that none of these funds could be directed elsewhere by the State legislature. Additionally, the Council is exempt from the State pay scale, and so is able to pay market rates to hire expert staff. For contracting purposes, the Council does not have to operate using the State's bidding process, which enables the Council to act quickly when this is important. Finally, the Council was given clear statutory authority to collect data and handle proprietary and confidential information. This enables the Council to use governmental authority to collect data, some of which is proprietary and confidential, without being in violation of antitrust law. Council membership and structure. The Medical Education Council's structure and processes are typical of public commissions. The Governor-appointed Council is the decision-making body. Council actions are based largely upon the recommendations developed by its standing committees which are supported by the professional staff. All the key organizational stakeholders are represented on the Council and on the standing committees. At each level, any differences among stakeholders are identified early and so are understood by all, which has facilitated the development of a consensus. The Council is appointed by and answers to the Governor. Its permanent chair is the dean of the University of Utah's School of Medicine and its nine voting members are appointed by the Governor. All the key stakeholders in Utah graduate medical education policy have a seat on the Council. The voting members include one representative from each of the four institutions that sponsor an accredited graduate medical education program, a representative of Utah's health care insurance industry and four representatives of the general public. Any additional institution sponsoring a new residency program will automatically be given a seat on the Council and an additional representative of the general public will be appointed. Three of the sponsoring institutions also have teaching hospitals: the University of Utah and the Veterans Administration (VA) Salt Lake City Health System have one each; Intermountain Health Care has four. The VA receives separate funding for its residency training programs and is not a recipient of Medicare or Medicaid GME funds. (UMEC, 2000, 24). The Council's composition is central to its ability to make changes in the allocation of graduate medical education funds. Because all the key institutional players in graduate medical education in Utah have seats on the Council and committees, their concerns are addressed as policies are being developed. This feature of its membership has been important to the Council's success in making decisions which have put statewide interests and concerns above those of individual institutions. It may also have limited the options considered by the Council, because the Council seeks solutions that will not have negative impacts on any sponsoring institution. This has proven positive as members have voluntarily offered multiple ways of addressing the overall statewide requirements even when this required some compromise by their institutions. With unanimity on the solutions, there has been good follow through in the implementation phase. Committees. The Council's committees are appointed to serve until their charge has been accomplished. Committees bring together experts with those who have a vested interest in the committees' areas of responsibility. The Finance Committee has been in place since the Council's beginning. Its members include second-level finance executives from the large teaching hospitals who answer directly to the chief financial officers, as well as a representative of the State's Medicaid agency. This committee was established to recommend policies and procedures for financing graduate medical education in Utah. It reviews all matters which make any changes to the process, amount or methods for transferring funds for GME. The Workforce Committees are appointed by profession to oversee the surveys and produce reports with projections of workforce requirements and the mix between professions. Once these reports are completed, implementation committees are appointed by profession to develop strategies to achieve the projected workforce requirements. The Physician Workforce Committee, the Advanced Practice Nurse Committee, and Physician Assistant Committee produced the Council's Year 2000 report, discussed below. With their charges completed, these committees were dissolved. A PharmD. Workforce Committee produced a separate report which addressed pharmacy requirements at the retail level and at the hospital level. The Physician Implementation Advisory Committee (PIAC) was formed when the report on the physician survey was completed. PIAC's responsibility is to recommend by specialty the number of physicians needed, allocate training slots supported by funds controlled by the Medical Education Council, and suggest graduate medical education program changes according to changing statewide needs. As discussed below, this committee has been actively involved in the implementation of the Medicare GME demonstration. In 2004, a new group of committees was appointed to analyze the results from a second round of surveys conducted in 2003 for physicians, nurse practitioners, and physician assistants. These committees will look at the change during the four years in such areas as retention and recruiting by specialty, urban and rural requirements, and future capacity in areas of high population growth. Broadened perspective of GME stakeholders. It is worth remembering that, in 1997 when the Council was created, few of the stakeholders in graduate medical education in Utah or in the Nation were viewing their GME interests and concerns in the light of their responsibilities toward meeting regional health workforce needs. Many of the Council and committee members have now been thinking and working on GME funding and supply issues from a statewide perspective for more than five years. From the content of the Council's discussions and decisions, it can be seen that many members now have a statewide perspective on these matters. At the same time, they continue to be concerned to protect the interests of their institutions as they weigh institutional concerns against statewide concerns. Their public support as Council members for Utahns' legitimate interest in these issues has also likely influenced their own thinking and perspectives. Transparent decision-making process. The existence of the Council has brought a much more open process to decision-making on graduate medical education programs, with the decisions being made explicitly to address statewide physician workforce needs. This replaces the previously closed processes for each teaching hospital in which residency programs were established or expanded. Experience in collaborating. The membership of the Council and its committees has been highly stable. Most of the Council members have now been working together for more than five years. Over these years, they have formed new working relationships in the course of doing council work, which seem likely to facilitate future joint efforts. They have experienced the benefits for Utah and their own institutions which can come from cooperating with traditional competitors. In group interviews, they enunciated their positive feelings about the successes of their collaborative efforts. Council staff. Staffing of the Council had a slow start-up. For its first three years, 1997 to 2000, the Council had no paid staff of its own. Its Executive Director was on loan from the State Health Department and its finance expert was a full-time employee of the University of Utah Academic Health Center. It was mid-2000 before the Council was able to employ these two people – as its first two full time professional employees: Gar Elison, Executive Director, and David Squire, financial officer. The experience and training which they brought to the Council and their deep personal commitments to the Council's goals have been critical in important achievements of the Council. Both are familiar with all the geographic reaches of this large state. Both have worked in health care policy in the State capital for a number of years and have a wide circle of professional acquaintances in State government, academic health care organizations, health care insurers and hospital management in Utah. The Council staff remains small. In summer 2004, the Council had only five full-time professional employees and an administrative assistant. It also had several part time interns from University of Utah and Brigham Young University graduate programs. Despite it's size, the staff has made a number of important contributions to the strengthening of graduate medical education in Utah. One major contribution has been providing assistance to the Council and committees in developing work agendas and decision-making processes. Other contributions stem from the very fact of having expert staff working full time on the Council's mission. Staff are alert to opportunities for expanding residency programs and funding and to threats to existing residency programs. One example is the "rescue" of the St. Mark's family medicine residency which has 15 percent of Utah's family practice training capacity. In the late 1990s, a national for-profit hospital chain decided to end the sponsorship of all residency training programs by its hospitals, including the one at Salt Lake City's St. Mark's Hospital. Council staff assisted this residency program in moving to its own nonprofit foundation. When the residency was later threatened with a crushing financial deficit, Council members and staff convinced State legislators to appropriate $500,000 to stabilize the residency on the basis it was in the State's interest to have a well-trained workforce. Without these funds, the program would likely have closed. The Council's financial officer has been alert to other revenue sources for this residency program. (UMEC, 2000b) For example, he suggested that Veterans Administration podiatry residents could do rotations in St. Mark's model family practice clinic. This would give the podiatry residents experience with a wider range of pathologies, and would financially benefit the family medicine residency program by virtue of VA GME payments for the training provided to its residents. A second example is their assistance to the small graduate dental residency program at the University of Utah academic health center. The Council financial officer recognized that this program had financial support for expanding. Because dental residencies were not included in the 1997 BBA cap on residency positions, the dental program would be eligible for additional Medicare and Medicaid GME payments if it were to add residents. This one-year program has expanded from six to 10 residents. It was encouraged by the Council to have its residents do a rural rotation and, with its added revenues, the program could afford to do this. It added a required one-month rotation to a very rural clinic serving American Indians. This collaboration between the Council staff and the University Hospital's dental training programs has also led to discussions within the ‘world of dentists' in Utah about starting a dental school in Utah to alleviate the shortage of dentists, especially in rural areas and inner cities. Chapter 3. The Early Years of the Utah Medical Education Council A. Building the databases for health workforce planning and policymaking From the outset, as the Governor's health policy commission was developing the concept of a State Council in charge of linking the planning and funding of health workforce education in Utah, it intended for the Council's decisions to be based on sound empirical data. The new Council would start its work by determining the characteristics of the present health workforce. This information would be used to develop projections of the State's future workforce needs, and then the Council would assess Utah's training capacity for meeting these needs. The health policy commission and the legislature wanted special attention paid to the adequacy of the physician workforce for rural areas, both in the present and the future. In 1997, the Council executive director, aided by University of Utah public administration interns, began by tracking down existing data on the physician workforce in Utah, and found that several Utah State agencies and national organizations had data on Utah's health workforce. However, when the data from these several sources were compared, they were found to vary over a wide range, as has been found by others making similar comparisons (Ricketts, 2000). The American Medical Association reported 4,190 patient care physicians practicing in Utah in 1998, the U.S. Department of Health and Human Services, Health Resources and Services Administration, reported 3,280 and the Utah Department of Workforce Services reported 7,680. The Council members understood the importance of having trustworthy data for their work, and when they learned of these widely differing estimates, they realized the Council would need to do its own data collection. During 1998 and 1999, Council staff worked with other State officials and hundreds of health care leaders in Utah to complete surveys of Utah's licensed physicians, advanced practice nurses, physician assistants and doctors of pharmacy. These surveys established the number of FTEs in each of the professions, their age distribution, their geographic distribution, their years and types of education and the location of educational institutions attended, years of active work remaining before likely retirement age, specialty, among others. Once the survey data were in hand, the Council staff worked on the large and complex task of assessing the adequacy of the current workforce and projecting the State's future workforce requirements for these professions.3 They found the current clinical workforce in Utah to be marginally adequate in comparison with national ratios of these practitioners to population. The rural supply of primary care practitioners was difficult to quantify. With 96 percent of Utah's land mass and 24 percent of its population in rural counties, some rural communities had sufficient practitioners while others had a critical shortage. Population growth in Utah was found to be the major determining factor in the State's future clinical workforce requirements. Utah's population growth rate was well above that of the Nation, and the State's population was expected to increase by 48 percent between 2000 and 2020. Holding other factors constant, the total workforce increase needed to serve these additional millions of Utahns was projected to be a 50 percent increase in the number of physicians (an additional 1,800), advanced practice nurses (an additional 342) and physician assistants (an additional 124). Providing care for the large increase by 2020 in dependent populations – the 0-14 age population and the population 65 and older – would require similar numbers of additional physicians, advanced practice nurses and physician assistants. On top of the effect of these factors on the need for health care practitioners, projected retirement rates in the next 20 years would require the recruitment of as many physicians as were now in practice in Utah and 80 percent as many advanced nurse practitioners and physician assistants. Health care workforce databases. As a result of these data collection efforts, Utah started the 21st century with an accurate, detailed picture of its health care workforce. The Council currently has workforce databases for the following health professions in Utah: physicians, advanced practice nurses, registered nurses, licensed practical nurses, physician assistants, pharmacists and podiatrists. These health care workforce databases are available for analysis to other organizations interested in the characteristics of Utah's health care workforce. B. Setting Workforce Goals: the Utah Medical Education Year 2000 Report With information in hand on Utah's present clinical workforce of physicians, advanced practice nurses, physician assistants and pharmacists, future clinical workforce requirements and the State's clinical training capacity, the Council was in a position to weigh policy options for meeting the State's projected clinical workforce requirements through 2020. Their deliberations had an urgency driven by projections showing Utah was on the verge of a crisis in its health care workforce. The Council decided to concentrate most of its energies on options for increasing the physician workforce. One option was to expand the training capacity of the University of Utah School of Medicine, which had remained constant since 1972 with a yearly enrollment of 100 students. Analysis showed that, just to meet Utah's current physician workforce need, the medical school's capacity would have to be doubled. Even then, the State would be slipping behind the population growth curve. Both financially and clinically, a doubling of the medical school's capacity would be difficult, requiring sustained funding for faculty and support staff, capital funds for construction of training space, and locating the necessary number and variety of patients for its training programs. The other options considered by the Council were maintaining and increasing the size of Utah's existing residency training programs, facilitating the start of new residency programs in needed specialties which had no residency program, and retaining in Utah a higher proportion of residents graduating from the State's residency training programs. The choice of these options was influenced by the Council's survey findings that completion of residency training in a Utah program was the single most important determinant of choosing to practice in Utah. The Council's executive director stated, "If we expand our residency programs and can retain 60 to 70 percent of graduating residents, we can meet our workforce requirements in a number of specialties." These strategies made economic sense in light of the relative cost of training residents in Utah and, postgraduate retention to practice in Utah. To address Utah's chronic shortage of physicians and other health care professions in rural areas, in particular, the Council decided to increase the amount of training underway in rural places, focusing on ambulatory sites and hospitals. Council activities to increase the amount of training taking place in rural locations include The Utah Medical Education Council's goals, objectives and action plans are detailed in its 2000 report: Utah's Clinical Healthcare Workforce: Achieving Balance Through 2020 4 and the development of the healthcare workforce databases. These activities were essential groundwork for the Utah Medicare Graduate Medical Education Demonstration which began in July 2003. Chapter 4. Increase in Utah's Federal Graduate Medical Education Revenues A core purpose for which the Medical Education Council was created was to increase the monies for GME. Through efforts by the Council staff, Utah's Medicare cap on resident numbers and the resulting Medicare and Medicaid GME payments to Utah's teaching hospitals were increased substantially, both retroactively and into the future. By these very early achievements, the Council's professional staff was able to demonstrate its usefulness to the teaching hospitals. A. Council financial officer discovers $2 million annually in earned but unclaimed Medicare GME payments David Squire, the Council's financial officer, came to the Council with the question of whether Utah teaching institutions had been collecting all the Medicare GME funds to which they were entitled. From his work in the finance department of the University of Utah academic health center, Squire knew the university was training about twice as many residents as it was reporting on its Medicare cost reports. Squire began to examine the 1996 cost reports of all Utah teaching hospitals. GME claims on the 1996 cost reports were of special interest because it was these reports which CMS used to determine the maximum number of residents and interns for which Medicare would henceforward pay training costs, that is, to determine each teaching institution's cap on the number of residents to be supported with Medicare GME payments. For all of the approximately 625 residents training in Utah in 1996, Squire compared records of their 1996 rotation schedules with the training time claimed for them on 1996 cost reports. It was found that a substantial number of Medicare graduate medical education FTEs had been omitted from Utah FY1996 cost reports. Subsequently, the Medicare fiscal intermediary acknowledged Squire's findings to be the more accurate FTE number and accepted it as the official one for Utah's aggregate pool of Medicare GME FTE positions. The Medicare DME FTE cap was increased by 28 resident positions, a 9 percent increase; the Medicare IME FTE cap was increased by 51 resident positions, a 13 percent increase. The teaching institutions, using the corrected GME FTE information provided to them by the Medical Education Council, revised all their non-final cost reports. These institutions were able to recoup nearly $2 million additional in Medicare GME monies for 1996 and similar amounts for the 1997, 1998 and 1999 fiscal years. The resulting increases in Utah's allowed number of Medicare DME and IME slots have meant that Medicare GME payments to Utah have been higher every year since then and will continue at that rate. The GME undercount on teaching hospital cost reports stems from the fact that there is no coordination of the GME FTEs reported to Medicare by the multiple teaching institutions through which interns and residents rotate in a year. The principal reporting problem occurs when residents move from one rotation location to another. Residents' weekends and vacation time between rotations were often not counted on the cost reports, in accord with Medicare GME cost-reporting regulations. In order to get correct counts, Squire developed a retrospective database of all residents' medical education time for FY 1996, and later extended the retrospective count through FY 1999 cost reports. These data were used by the teaching hospitals to revise their non-final cost reports for these four years. The Utah Resident Review Information data base is now maintained by Council staff as part of their regular work. This data base is key to the completeness and accuracy of the GME elements in Utah teaching institutions' Medicare cost reports. It houses information on the rotation blocks for all residents training in Utah, accounting for their location for all the days of the year. B. Council facilitates annual multi million dollar increase in Medicaid GME monies Another early undertaking of the Council's finance officer was to initiate a collaboration of the Council with the Utah Medicaid office in an analysis of Federal Medicaid regulations. The goal of this collaboration was to identify whether additional Medicaid support for graduate medical education could be put in place in Utah. As the Federal rules regarding Medicaid funding for GME are complex, the Council finance officer and the State Medicaid staff invested more than a year in mastering these rules and then exploring options for increasing Medicaid support for GME. The culmination of this collaboration was a three-step plan for increasing the Federal Medicaid match for Utah's graduate medical education. The first step was to amend the Utah Medicaid plan on file with CMS to allow more GME to be paid by the Federal government, depending upon the availability of a State match. The second step was to identify the appropriate amount to be devoted to GME out of fee-for-service Medicaid payments and develop the formula for determining the appropriate amount of a ‘GME carve out' from the State's payments to Medicaid managed care organizations, with both these amounts to be earmarked for the State's Medicaid GME pool. Finally the State of Utah increased its Medicaid match. As a result of these efforts, Utah received additional Federal Medicaid revenues of $11 million in 2002, $14 million in 2003 and an estimated $19 million in 2004. These new Medicaid GME monies have been paid out by the State's Medicaid agency to the teaching hospitals. In this section of the report, we have described how the efforts of Council staff have increased Utah's Medicare GME payments by about $2 million annually and Federal Medicaid GME payments by about $19 million in the most recent year. Clearly this amount of new GME money coming in annually to Utah is sufficient for a substantial expansion of graduate medical education training in the State. The ways in which these new Federal GME monies are being spent is addressed later in this report. Chapter 5. Utah Gets Medicare Graduate Medical Education Demonstration The Medicare demonstration described in this chapter is just one facet of the Utah graduate medical education experiment. In early 2000, Utah and CMS signed a five-year cooperative agreement which provided funding to revise the application and prepare to implement the demonstration, and authorized Utah to request the Medicare waivers necessary for the demonstration. The Council resubmitted its demonstration application in September 2000 (UMEC, 2000). In Spring 2002, the Office of Management and Budget approved the Medicare waivers required for the demonstration (Appendix I). In Summer 2002 the CMS and the Council agreed upon the special terms and conditions for the demonstration (Appendix IV). In Summer 2003, seven years after Utah's initial conversations with CMS and submission of its original demonstration proposal, the Council received the first payment of all Utah-bound Medicare DME funds. A. Demonstration Design The purpose of Utah's demonstration was to test the feasibility of linking graduate medical education funding policies to the State's physician workforce needs. The demonstration design proposed to change a number of elements of Medicare's GME funding arrangements. The Medical Education Council was to receive all Utah Medicare DME and IME monies. Agreements between the Council and the hospitals would specify the methodologies by which the Council would pay hospitals and other providers for the direct and indirect costs of their training programs. The proportion of Medicare IME payments which were over and above the teaching hospitals' actual IME costs were to be a revenue source for expanding residency training in specialties in critical shortage. They would also fund special Council initiatives such as establishing a rural-based primary care residency program and paying the extra expenses of required rural rotations. DME to be paid directly to residency programs. The Medicare DME funds were to be paid by the Council directly to individual residency programs, rather than to the teaching hospitals. This change would give the residency programs much greater certainty and control over their finances, and increased independence from teaching hospitals as the once exclusive domain of physician training. It would allow GME payment for training in locations other than teaching hospitals' inpatient units and outpatient clinics, such as freestanding ambulatory care clinics and in shortage settings such as rural hospitals and clinics and inner-city clinics. The GME funding would follow the residents and support their training wherever it needed to occur. This provision would enable the Council to encourage and finance physician training in diverse settings, for the best mix of educational experiences. Over the course of the demonstration, the Council would undertake a study of the actual direct costs of residency training. The Council would then change DME payments to residency programs from a formula based on historic costs adjusted for inflation to actual cost reimbursement. Aggregate Statewide pool of resident slots. The Council, by agreement with all the sponsoring institutions, already controlled a statewide pool of all Utah Medicare GME FTE positions. In the demonstration, it would be authorized to reallocate slots between programs and institutions. This would enable the Council to adjust training locations to ensure the quality of training experiences. For example, if a teaching institution were to misuse residents the Council could remove or reduce the number of residents rotating to this institution. The Council also would be able to change the allocation of funds for residency positions between primary and specialty care on a statewide basis, rather than hospital by hospital, with the allocation tied to State workforce plans. Additionally, the Council would be authorized to determine the total number of GME positions and specialty mix to be supported by public funds. Additional Payment Design. The State Medicaid agency agreed to seek a Federal waiver to permit payment of the Medicaid GME funds to the Medical Education Council. In the absence of a waiver, the State Medicaid agency is required by Federal law to pay the GME monies to teaching hospitals. The demonstration was to be budget neutral for Medicare. GME payments to the State were not to exceed what they would have been without the demonstration. Additionally, the Council would the develop a strategy for bringing new dollars into the GME funding pool, over and above Medicare and Medicaid funds. For example, it might seek an appropriation from the legislature. It would also seek GME funding from private sector health insurance companies. The Demonstration Application. The demonstration application committed the Council to: providing funding for training in outpatient settings and with rural and underserved populations; expanding the amount of interdisciplinary training, when funds became available. B. Implementation of the demonstration This demonstration is a complex undertaking in which some elements were scheduled for immediate implementation and others were to be phased in over the 5-year period of the demonstration. This section describes accomplishments in one year of preparation time and one year of responsibility for Medicare GME monies. The Council accomplished a good deal of essential, if unexciting, groundwork in the development of decision-making criteria and processes including the development of its criteria for allocating resident positions, the principles and objectives to be used for funds allocation, and a process for receiving and transferring DME funds. The DME funds are now paid by the Council directly to the GME directors at the institutions sponsoring the residency programs rather than, as before, to the teaching hospitals. Additionally, the Council has developed an appeal process that any party can use if it disagrees with a Council decision and the disagreement is not settled through negotiation. The appeal goes to an independent reviewer for binding arbitration. At the start of the demonstration, Utah already had a number of residency programs – about 60 programs and 625 interns, residents and fellows. The physician implementation advisory committee found that none of these residency programs were producing physicians in specialties that were in surplus supply in the State. This finding made the Council's work easier as it would not have to decrease funding or slots to any existing residency program. Hence, the Council's starting point was its decision to maintain the Medicare DME funding to all of these programs, which would consume essentially all of its first-year revenues. Modifying existing residency programs. The Council has come up with an innovative strategy for modifying the existing residency programs in directions desired by the Council. The Council may withhold 10 percent from its annual payment to a residency program. Release of the amount withheld is contingent on evidence of a program's progress toward the Council's statewide workforce objectives for training programs. Annually, each residency program is to submit a plan to the Council detailing specific steps it will take toward achieving the Council's objectives. In FY 2004 and FY 2005, the Council's objectives for residency programs are: (1) operate the program at its current number of residents, (2) increase the percentage of program graduates who stay in Utah to practice, (3) increase the amount of training done in rural places, and for specialties in very short supply, (4) start work on expanding the program – by applying to the Council for additional funding and to the specialty's residency review committee for permission to admit additional residents. FY 2004 was the trial year for this strategy, both to give the residency programs and their sponsoring organizations an opportunity to learn the process and give all involved some time to think together on means to achieve some of the objectives. It has proved especially difficult to come up with concrete steps toward the objective of increasing the percentage of graduating residents who stay in Utah to practice. The Council hired a new staff member who is to work with the residency programs on ways to increase retention. At the suggestion of the residency programs, the new staff member has created a system to identify all current and some expected physician openings in Utah and make this information easily available to the programs and the residents. All current openings are now posted on the Council's new web page, www.utahmec.org. In addition, the retention specialist is contacting all University of Utah Medical School graduates now enrolled in out-of-State residency programs. The graduates are asked if they are interested in returning to Utah to practice when they complete their residencies, and offered assistance if interested in practicing in Utah. Also, job information and assistance with help in linking graduates to temporary practice positions in Utah during vacations is available. Stabilizing, expanding and adding residency programs. The physician implementation advisory committee (PIAC) developed criteria and a methodology for prioritizing its recommendations for funding specific specialty residency programs. The methodology is somewhat complicated, but both the PIAC and the Council members consider it rational for deciding on the State's greatest needs for physicians by specialty. The first group of residency programs considered for expansion were those specialties which are needed in every hospital, including rural community hospitals. The Council is particularly attuned to the staffing needs of rural hospitals. Starting early in calendar 2003, the PIAC reviewed and ranked a total of 13 residency programs in these specialties. The one program which was at risk of closing, the child and adolescent psychiatry residency, received the top rank. Eleven others were ranked for expansion, though only eight of these requested funding for additional positions. None of the four family practice residency programs requested expansion funding because of the difficulty of filling slots, a nationwide problem for family practice residencies. One new residency program was proposed – in emergency medicine -- but it did not rank within the funding range. The Council unanimously accepted the PIAC recommendations and approved the addition of these new resident positions to those for which the Council was already committed to provide funding. This decision was a sentinel accomplishment in view of the fact that some specialist physicians on PIAC and the Council voted against the interests of their own specialties. The Council now had a ranked list of new resident positions to be funded, but no funds. Currently, in the second year of reviews, the residency program directors are interacting with the PIAC in a more helpful fashion. They have come to meetings with the PIAC more prepared to explore options and to present information to help the committee arrive at recommendations for the next two decades, and with more honest assessments of the limitations of their faculty and clinic settings for providing quality educational experiences. If an institutional sponsor of a residency program has some internal objective and wants to fund GME program expansion beyond what the Council determines is required to meet statewide requirements, that sponsor can proceed, but there is no promise of future funding through the Council for those slots. This arrangement has the advantage that the Council looks at statewide needs, and the teaching institutions are free to accomplish their objectives if they have the funds. In practice it has produced new partnerships. One example is the collaboration of the University of Utah and Intermountain Healthcare to jointly sponsor and fund a new residency program in emergency medicine. Another example is the collaboration of a rural community hospital, a rural educator and a family practice residency program to seek grant funding for Utah's first rural residency training track program in family practice. Increasing funding for graduate medical education. Achievements in the area most important to the Council's success – expanding the GME funds controlled by the Council – have proved the most difficult. The Council has experienced serious setbacks in this area as those who historically have controlled these monies have proved reluctant to cede control to the Council. However, the Council has achieved one notable success which may lead to further ones. The demonstration application specified that all Federal Medicare and Medicaid GME payments to Utah would be channeled through the Medical Education Council, including both DME and IME for Medicare. The Council had projected that these funds would be sufficient to support all existing residency training programs at current levels, expand some programs and start additional new programs, thereby meeting a larger proportion of the State's physician workforce needs. However, only the smallest of these three Federal payments is being paid to the Council – Medicare DME, about $7.5 million in 2004. The teaching hospitals have not agreed to have the Medicare IME payments go to the Council. One reason may be their desire to retain control of that half of their Medicare IME payments which is over and above their actual IME costs (MedPAC, 2003, 57). Total Medicare IME payments to Utah in 2004 were about $21 million and are projected to be about $21.8 million in FY 2005. Nor has the State's health department requested a waiver from CMS to enable the State to carve out GME funds from its Medicaid payments to Utah hospitals in order to channel these funds to the Council. In the absence of a waiver, Federal regulations require the State to pay the Medicaid GME monies directly to the teaching hospitals. The State and the Council have limited means of holding the hospitals accountable on how the Medicaid GME funds are actually used. The waiver from CMS would ensure that these monies were used for GME, but the State Medicaid agency has not put a high priority on seeking a waiver. While some hospitals have dropped these funds to their bottom line, others have used the funds to accomplish some of the Council's GME workforce objectives. For example, the University of Utah used its Medicaid GME funds to fully fund all residents' salaries and put the remaining money into creating a total of 41 new resident positions in programs that are priorities for the Council. St. Marks Hospital has used the Medicaid GME monies to stabilize the financially fragile family practice residency program. Some Council members had expected the teaching hospitals to voluntarily channel the increased Medicare and Medicaid GME monies to the Council. However, this has not yet occurred and the hospitals are under no legal obligation to make the transfer. Some hospital executives regard the additional Medicare and Medicaid GME revenues as earned compensation for the Federal government's decreased Medicare IME payments and payback to the hospitals for their subsidization of Medicaid patient care over the years. The Council, on the other hand, has said GME is for training physicians and if that is not occurring then no GME payments should be made. The Council is working on how to have more of the Federal GME monies come directly from CMS to the Council. Recently the Council has begun to examine the uses to which teaching hospitals put their Medicare and Medicaid GME payments. The Council has asked all the organizations sponsoring residency programs in Utah and all the hospitals receiving Medicare and Medicaid GME funds directly to report to the Council how the funds were used – broken out by Medicaid GME and Medicare IME. This information will be requested annually starting in FY 2004. If the council is successful in obtaining the data it will be the first time anywhere in the nation that this information is known for a whole region. Such information could strengthen whatever case the Council subsequently makes in asking the teaching hospitals for additional GME funds. Interestingly, the Medicare Payment Advisory Commission (MedPAC) is weighing the recommendation of a similar policy – that teaching hospitals be required to demonstrate that any Medicare IME funds above their actual costs are being used for graduate medical education (MedPAC, 2003, 59). If such a MedPAC recommendation were to become law, it would bring to teaching hospitals nationwide the same transparency in the use of GME monies which the Utah Medical Education Council is now seeking. Another approach taken by the Council to obtain more GME funding is to go directly to the teaching hospitals. In June 2004, the Council and all the teaching hospitals reached a five-year agreement which may be renewed.
The Council is also moving forward on its demonstration commitment to develop a broadly based funding pool. In 2003, it created a GME funding subcommittee and charged it with identifying funding mechanisms through which additional stakeholders would contribute their fair share to the costs of training physicians in Utah to meet the needs of the population. These additional stakeholders might include the private health insurers and the State government. The creation of this subcommittee, whose members have contacts in the legislature and professional associations, is a rational beginning on this commitment. If stakeholders were to agree, a broadly based funding pool could operate without CMS approval or waivers. Some Council members consider such a voluntary agreement among all major stakeholders to participate in a GME funding pool to be a realistic possibility. If it were to come about, no Medicare demonstration or Medicare or Medicaid waivers would be needed for Utah's GME planning and funding initiative to continue indefinitely. Other Council members are less sanguine that Utah's private health insurance industry will make voluntary contributions to GME funding. The weight of National commissions which have recommended all-payer GME funding is on their side. The all-payer proposals of COGME, the Pew Health Professions Commission and the Commonwealth Fund Taskforce on Academic Health Centers have all included mandated contributions by private health insurers.(COGME, 2000a, 49-51). Building health workforce data bases and conducting workforce analyses. Although the constrained funding for Council staff limits its capacity in this part of its responsibilities, its ongoing accomplishments in workforce data collection and analysis are noteworthy. In 2004, it will publish survey-based reports on Utah's 2003 workforces of physicians, advanced practice nurses, physician assistants and podiatrists, as well as reports based on information gleaned from data bases in three State agencies for medical laboratorians and radiology technologists. Increasing residents' rural training experiences. The Council and Council staff are committed to increasing the amount of resident training which takes place in rural places. Although family practice physicians are the predominant specialty in small towns and are in short supply in Utah's rural areas, it has proved difficult to increase the number being trained in Utah and also to increase the amount of rural training of family practice residents. None of the four existing family practice residency programs in Utah currently have plans to expand. This is principally because of the short supply of applicants and the difficulty in recruiting well-qualified students. In the 2003 match, only 1,200 U.S. medical school seniors matched into the 3,000 family medicine slots. This is a National problem which cannot be solved in any one State. As an alternative, the Council considered starting a 3-year family practice residency program in a rural town. The Council and the Utah Area Health Education jointly evaluated seven rural Utah communities for suitability as sites for 3-year rural family practice residency programs. Only one community was judged suitable (Catinella, 2003), but it does not have funds or local physician educators interested in this considerable undertaking. The Council is now focusing its efforts to increase rural training of family physicians on use of the rural training track (RTT) residency program model. Planning of Utah's first rural training track program is well-advanced and seems likely to come to fruition. In an RTT, the resident's first year is spent in an urban-based residency program, completing such specialized rotations as pediatrics and obstetrics and gynecology. The second and third years of the residency are done in a rural community, where the resident lives and works. RTTs have the best track record (76 percent) of any variant of family practice residency programs in graduating physicians who locate in rural areas. An RTT needs to recruit only one new resident a year, a feature of importance in light of the difficulty of recruiting family practice residents. A rural community hospital and a family practice educator in Sanpete County and a family practice residency program in Provo -- about 60 miles south of Salt Lake City and 60 miles north of Sanpete County -- are collaborating to establish Utah's first rural training track (RTT) residency program. The Council is assisting with the planning. If this RTT is successfully started, it may be the first of several. Other rural communities which have learned of the RTT plans have already asked whether they, too, might be RTT sites. The University of Utah's graduate dental residency program has added a one-month mandatory rural rotation. The Medical Education Council had encouraged the residency to add this rural rotation experience. The rural experience for these dental residents is especially important in light of the shortage of dentists in rural areas. This residency's experience in adding rural rotations also sheds light on some of the reasons this can be difficult for other residency programs to emulate. This dental rural rotation program is first described and then analyzed to understand how the program directors solved problems which have been barriers to its replication by other residency programs in the State. Every dental resident now spends one month at the remote rural clinic in Montezuma Creek (a PHS 330 Community Health Center) serving American Indians. The residency program pays for residents' housing and transportation costs. The rural clinic is 300 miles from Salt Lake City – a full day's drive in one direction. The residents are supervised by the clinic's staff dentist who has been given a faculty appointment in the residency program. This dentist is now fulfilling his National Health Service Corps obligation and plans to continue at the clinic after completing his Corps obligation. The director of the University of Utah's dental program was already acquainted with the CHC's staff dentist whose educational progress he had tracked from pre-dental training through dental school. There is a good partnership between the residency program in Salt Lake City and the rural clinic. The clinic's staff dentist and the resident at the remote site can link electronically to the Salt Lake City program via a two-way audio-visual connection. Through this connection, they are able to participate in the dental residency program's regular Wednesday afternoon didactic session in Salt Lake City. Two times a year, the dental residency program pays the transportation costs for the faculty member to come up to Salt Lake City to attend the Wednesday seminar in person and meet with the residency program director. The program director has made two site visits to the Montezuma Creek Clinic, each of which requires the program director to be away from the residency program in Salt Lake City for three days. The dental residency program has sufficient funds for the expenses of its rural rotation. Some funds have come from the rural clinic, which pays a stipulated amount to the residency program. Some funds were available as the result of the residency program's expansion which increased its Medicare and Medicaid GME revenues. Several factors are requisite for the addition of a rural rotation to a residency program, and all were present for the University of Utah dental residency program.
Seven residency programs located in Salt Lake City have told the Council they are interested in adding rural rotations. Most have been stopped by the lack of funds for the additional costs of rural rotations. The Council is trying to identify a funding source for these expenses. As one option, the Council has approached the State legislature for an appropriation to fund a ‘rural incentive pool.' The general surgery residency program is very interested in adding rural rotations, and has already identified general surgeons in four rural communities around the State who are willing to host two-month rotations. To date, the program has not been able to start rural rotations because their residents' time is already fully committed for coverage of various departments in their home hospitals, such as the trauma department. These commitments mean that residents cannot be absent from Salt Lake City for one or two-month rural experiences. A new emergency medicine residency program which will have required rural rotations of at least two months is being started. Funding for it has already committed by the University Hospital and Intermountain Health Care's LDS Hospital. As Intermountain Health Care is also the owner of a number of rural hospitals, there is a good chance the rural rotations will become a reality. Need for new strategies for meeting Utah's health workforce needs. The Council's initial strategy for meeting the State's future physician workforce needs was to expand its existing residency programs. It is now apparent that these residencies cannot be expanded enough to meet the State's needs for subspecialists. One new strategy being investigated is the provision of augmented training by subspecialists to existing physicians to enhance the number of procedures they can perform. The primary care specialties of family practice, pediatrics, obstetrics and general surgery are being considered for augmented training. This strategy will require funding for fellowships for the practicing physicians who would receive this training. Another strategy being considered is to increase the number of nurse practitioners and physician assistants providing direct patient care. This search by the Council for new strategies for accomplishing its goals illustrates its maturation in health workforce planning. These are the Council's activities and achievements to date toward the objective of increasing the amount of physician training which takes place in rural areas. It seems a good beginning, but only time will tell how much is achieved. Chapter 6. Lessons for Other States Utah's GME planning initiative may serve as a model for other States. It seems especially appropriate for States that have only one or two medical schools and a small number of teaching hospitals who currently recruit many of their physicians in the National market. Several States with these characteristics have studied the Utah model, and two of them have started to emulate it. The Hawaii and Nevada State governments have enacted legislation creating a State Medical Education Council. Their legislation is modeled on Utah's, including a grant of authority to the State Medical Education Council to apply to CMS to receive and disburse Medicare and Medicaid GME monies. Nevada's Medical Education Council held its first meeting in late 2004 and, as the first step in its planning activities, has begun to gather health workforce data. States not interested in statewide GME planning may want to adopt one or more of the elements of the Utah model. A State might choose to pursue an increase in Medicare and Medicaid GME payments to the State by the methods used by Utah. As a first step, a State agency or a nonprofit organization with no financial interest in the teaching hospitals could investigate whether the teaching hospitals are claiming all of the Medicare GME monies to which they are entitled. Utah's investigation into this matter revealed that about 10 percent of the GME monies earned in this State were not being claimed. Utah has developed a detailed template for this investigation and is willing to share it. Also, a State could look into options for increasing Federal Medicaid GME payments. Utah's experience could be helpful in understanding how this might be done. Most States could benefit from having good information on their health profession's workforce, including its current adequacy and projected need. This information will be useful to the State legislature and State administrative agencies, as well as to its universities and colleges which train health professionals. Utah is just one of a number of States which maintain this information. As part of its planning activities, the Utah Medical Education Council has built databases on a wide range of health professions and developed projections of future need. States with a persistent shortage of health professionals in rural areas might create a Council to develop and implement strategies for alleviating these shortages, giving it control over some funds and input into the State appropriations for public universities and colleges. Utah's Medical Education Council has some responsibility for addressing rural shortages in the health workforce, and is in the early days of tackling this assignment. Another State, Wisconsin, has just started a Council for the purpose of addressing its shortage of rural physicians. In the fall of 2004, the Wisconsin Rural Medical Education Advisory Committee came into being, charged with increasing the number of its medical school's graduates who practice in rural Wisconsin communities. The Council's "primary responsibility will be to develop a proposal for a ‘school within a school' program, the Wisconsin Academy for Rural Medicine, aimed at rural physician training at the University of Wisconsin Medical School." 5 In less than a decade, Utah has created a structure and process for linking the funding of graduate medical education to rational planning to meet Utah's future physician workforce needs. The Medical Education Council was created by the legislature in 1997 and has grown steadily stronger in the subsequent years. The key GME stakeholders in Utah are all active participants on the Council. The Council successfully applied for a groundbreaking Medicare demonstration of State GME planning, to link the funding to statewide physician workforce needs. It has demonstrated its ability to manage Medicare GME monies. It has successfully solicited additional, voluntary contributions from the teaching hospitals to its GME pool. The Council staff has found ways to substantially increase Federal payments to Utah for graduate medical education. The teaching hospitals' participation in Council activities has led them to collaborate on GME initiatives beyond the Council's scope. The Council and the State government now have good data on the current workforce situation of many health professions as well as projections of future supply and shortages. Up to this point in time, each year has seen additional accomplishments for the Council. Further accomplishments seem likely. However, the Council has fallen short of the centerpiece of its Medicare demonstration to control all Medicare and Medicaid GME payments, with flexibility to use them to improve the current and future physician supply in needed specialties. The lack of funds has limited the Council's ability to undertake a number of initiatives which could improve the State's supply of health professionals. Nevertheless, Council members and staff are pleased with the progress they have made in gaining control of some additional monies beyond Medicare DME funds and believe they will be able to make further progress. The Council has so far failed to get the Board of Regents to pay close attention to the workforce recommendations, especially to assure that the allied health field will grow to support the expanded physician training. The Council has shown that laboratory workers and radiology technicians are in critically short supply and must be increased or the support staff to do the diagnostic testing for physicians won't be adequate to get the work done in a timely manner. The whole workforce needs to be expanded concurrently. Otherwise, the strength of the health care system will be limited to that of the profession in the shortest supply. Challenges remain on other fronts as well as there remains understandable tensions between major stakeholders who are business competitors. This said, the Council has some notable achievements. They are remarkable in today's health policy environment in which health planning is in disfavor and competition is widely promoted as the means for solving problems in the health care system. The successes of Utah's GME planning initiative are more than sufficient for it to be considered by other States as a model for health workforce planning, including graduate medical education planning. If the Council should succeed in gaining control over additional GME monies, it is ready and able to accomplish a great deal more. Biviano, M. (2001). "National Center for Health Workforce Information and Analysis: Research Agenda," slide presentation for the NCSL Forum for State Health Policy Leadership, Lake Tahoe, California, April 26-27, 2001, 23. As cited in Karen Matherlee, Federal and State Perspectives on GME Reform, National Health Policy Forum Issue Brief, 2001. Washington DC: National Health Policy Forum. Bowman, RC, Penrod, JD. (1998). Family practice residency programs and the graduation of rural family physicians. Family Medicine, 30(4), 288-92. Bureau of Health Professions, HRSA, DHHS. (2000) Graduate Medical Education and Public Policy: A Primer. Rockville, MD Catinella, AP, Magill, MK, Thiese, SM, et al. (2003). The Utah rural residency study: a blueprint for evaluating potential sites for development of a 4-4-4 family practice residency program in a rural community. J Rural Health 19:2:190-198. Centers for Medicare and Medicaid Services. (2002) Health Care Industry Market Update: Acute Care Hospitals, Volume II, Appendix: Medicare Payment Systems, November 12, 2002. www.cms.hhs.gov/reports/hcimu/hcimu_04292002_append.pdf Commonwealth Fund Task Force on Academic Health Centers. (1997). "Leveling the Playing Field: Financing the Mission of Academic Health Centers." The Commonwealth Fund Council on Graduate Medical Education. (1997) Ninth Report: Graduate Medical Education Consortia: Changing the Governance of Graduate Medical Education to Achieve Physician Workforce Objectives. Washington DC: US DHHS, HRSA. __________. (1999). Fourteenth Report: COGME Physician Workforce Policies: Recent Development and Remaining Challenges in Meeting National Goals. Washington DC: US DHHS, HRSA. __________. (2000a) Fifteenth Report. Financing Graduate Medical Education in a Changing Health Care Environment. Washington DC: US DHHS, HRSA. __________. (2000b) The Effects of the Balanced Budget Act of 1997 on Graduate Medical Education: A COGME Review. Crump, WJ, Barnett, B & Fricker, S. (2004) A sense of place: rural training at a regional medical school campus. J Rural Health 20:1: 80-84 (Winter). Elison, Gar. (2003) Presentation, Graduate Medical Education Seminar, October 29-31, 2003. Salt Lake City, Utah. Larson, EH, et al. (2003) State of the Health Workforce in Rural America: profiles and comparisons. Monograph. WWAMI Rural Health Research Center, Seattle WA. Geyman, JP, et al. (1999) Physician Education and Rural Location: A Critical Review. WWAMI Rural Health Research Center, University of Washington School of Medicine. Working Paper #49. Henderson, TM. (2000) Medicaid's role in financing graduate medical education. Health Affairs 19:1: 221-229. Henderson, TM. (1998). Medicaid Support for Graduate Medical Education: Should There Be a National Policy? A Policy Issue Brief, Center for Health Professions, University of California, San Francisco. Koenig, L, Dobson, A, et al. (2003). Estimating the Mission-Related Costs of Teaching Hospitals. Health Affairs 22:6:112-125. MedPAC. (1999). Report to the Congress: Rethinking Medicare's Payment Policies for Graduate Medical Education and Teaching Hospitals. Washington, DC. ________ (2003) Report to the Congress: Medicare Payment Policy. Washington, DC. Osborn, Lucy M. (1966). Proposal to the Health Care Financing Administration for a Utah Graduate Medical Education Consortium. University of Utah Health Science Center. Pew Health Professions Commission. (1998). Report of the Pew Federal Policy Taskforce. Beyond the Balanced Budget Act of 1997: Strengthening Federal GME Policy. San Francisco. Saver, BC, Bowman, R, Crittenden, RA, Maudlin, RK and Hart, LG. (1998) Barriers to Residency Training of Physicians in Rural Areas. WWAMI Rural Health Research Center, University of Washington School of Medicine. Working Paper #46. Shirk, C. (2003) Shaping public programs through Medicare, Medicaid, and SCHIP waivers: the fundamentals. National Health Policy Forum. Background paper. Washington, D.C. Slifkin, RT, Popkin, B & Dalton, K. (1998). The impact of Medicare graduate medical education funding on rural hospitals. North Carolina Rural Health Research and Policy Analysis Center. Working Paper # 56. Slifkin, RT and Dalton K. (1999). Medicare Graduate Medical Education Payments to Rural Hospitals. Findings Brief. North Carolina Rural Health Research and Policy Analysis Program, University of North Carolina at Chapel Hill. Chapel Hill, NC. Squire, David F. (2003). UMEC Chief Financial Officer. Correspondence, 12/16/2003. Ricketts, TC, Hart, L.G. and Pirani, M. (2000). How many rural doctors do we have? J Rural Health. 16:3:198-207. Rosenthal, TC (2000). Outcomes of rural training tracks: a review. J Rural Health 16:3:213-216. U.S. Congress, House of Representatives, Committee on Ways and Means. (1999). Medicare and Health Care Chartbook. Government Printing Office. Washington DC. Utah Medical Education Council. (2000a) Utah Waiver application to HCFA for a Demonstration Project to Rationalize Graduate Medical Education Funding. Salt Lake City, Utah. September 28, 2000. ___________________. (2000b). Utah's Clinical Healthcare Workforce - Achieving Balance Through 2020. Salt Lake City, Utah. December 2000. Utah Statute Creating the Medical
Education Council HB 141 (Enrolled) MEDICAL EDUCATION PROGRAM AN ACT RELATING TO STATE AFFAIRS IN GENERAL; CREATING THE MEDICAL EDUCATION PROGRAM AND COUNCIL; DEFINING TERMS; EXEMPTING EMPLOYEES OF THE COUNCIL FROM THE STATE PAY PLAN; ENUMERATING THE DUTIES AND POWERS OF THE COUNCIL IN SECURING FEDERAL FUNDING FOR GRADUATE MEDICAL EDUCATION THROUGH A DEMONSTRATION PROJECT; DETERMINING THE TRAINING NEEDS OF HEALTH CARE PROFESSIONALS; AND DISTRIBUTING FUND MONIES. This act affects sections of Utah Code Annotated 1953 as follows: AMENDS: Be it enacted by the Legislature of the State of Utah: Section 1. Section 63C-7-101 is enacted to read: CHAPTER 7. MEDICAL EDUCATION PROGRAM 63C-7-101. Definitions. As used in this chapter: (1) "Accredited clinical training program"
means a clinical training program that is accredited by an entity
recognized within medical education circles as an accrediting body
for medical education, advanced practice nursing education, physician
assistance education, or doctor of pharmacy education. Section 2. Section 63C-7-102 is enacted to read: 63C-7-102. Medical Education Program. (1) There is created a Medical Education Program
to be administered by the Medical Education Council in cooperation
with the Division of Finance. Section 3. Section 63C-7-103 is enacted to read: 63C-7-103. Medical Education Council. (1) There is created the Medical Education Council
consisting of the following members appointed by the Governor: Section 4. Section 63C-7-104 is enacted to read: 63C-7-104. Duties of council. The council shall: (1) submit an application in accordance with Federal
law for a demonstration project to the Health Care Financing Administration
before December 31, 1997, for the purpose of receiving and disbursing
Federal funds for direct and indirect graduate medical education
expenses; Section 5. Section 63C-7-105 is enacted to read: 63C-7-105. Powers of council. The council may: (1) conduct surveys, with the assistance of the
Division of Occupational and Professional Licensing within the Department
of Commerce, to assess and meet changing market and education needs; Utah's Clinical Healthcare Workforce:
Prepared by Medical Education Council,
State of Utah Executive Summary 1. Utah is on the verge of a crisis in the clinical healthcare workforce. Unless something is done to avert this crisis, Utah citizens will no longer be able to access the quality healthcare that they deserve. 2. There is a chronic maldistribution of primary care clinicians among urban and rural settings. 3. There are some statewide specialist shortages developing. At present there is a statewide shortage of emergency room physicians, adult and child psychiatrists in public settings, pediatric and adult endocrinologists, nephrologists, neurologists, rheumatologists, anesthesiologists, and gastroenterologists. 4. Healthcare providers are highly influenced to practice in locations where advanced clinical training was received. This has implications for both Utah in general and for rural locations. 5. National policy to reduce the number of medical residency training slots throughout the nation will reduce the pool of fully trained physicians from which Utah will compete. This is expected to hamper the maintenance of Utah's physician workforce. The demand for advanced practice nurses and physician assistants will continue to grow as a result of the possibility of increased shortages of physicians. 6. As Utah faces physician shortages, it should be noted that enrollment at the University of Utah Medical School has not increased since 1972 (and cannot without additional funding and facility expansion). Advanced practice nursing programs would likewise require added funding for expansion and the State's physician assistant program would need both funding and facility expansion. Section II. Workforce Requirements (Demands and Needs) 1. Population Growth over the next 20 years will require, at current provider ratios, that Utah increase its clinician workforce by 1,880 physicians, 362 advanced practice nurses, and 124 physician assistants by 2020. 2. In addition to maintaining current ratios, the projected retirement rate will require that Utah recruit: 3,540 physicians, 583 APNs, and 191 PAs to replace those retiring by 2020. 3. The aging of the population is expected to increase the projected minimum of physicians by 20 per 100,000 total population over the next 20 years.6 4. As the demographic composition of Utah's physician workforce changes Utah will need to add between three and seven percent more physicians in order to provide a minimum level of services. Physician assistants will likewise need to increase by one to two percent. Data for advanced practice nurses are not conclusive. 5. Due to the changing models of care delivery, an increase in demand of five percent of the number of advanced practice nurses and physician assistants over the next ten years is likely. 6. Over the next twenty years, Utah will be even more dependent upon the recruitment of clinicians, especially physicians from outside of the State, to meet Utah's future healthcare requirements. 7. To avoid being excessively dependent upon out-of-State recruitment, Utah's current clinician training programs must, at a minimum, be maintained at current production capacity. Section III. Actions to Achieve Workforce Requirements 1. Institute a clinical environment that fosters the development and evolution of integrated workforce models. 2. To meet projected workforce requirements, Utah is going to need to expand its physician, advanced practice nurse, and physician assistant clinical training capacity commensurate with population growth. 3. Utah will need to utilize multiple Utah hospitals and ambulatory sites that have the capacity to expand healthcare clinical training. 4. Create an interState compact for intermountain States to combine resources in order to train clinicians in certain specialties and subspecialties for which single State demand is not sufficient to accommodate the cost of supplying such specialty training by one State alone. 5. Explore options for a reallocation of Federally supported residency slots to more nearly match Federal residency training support to the geographic workforce requirements. 6. Policy recommendations and decisions should be data driven. This will require the collection of quality information elements, analysis completed using sound methods and procedures, maintaining existing quality data resources, and continually updating the data to keep them chronologically current. Appendix
III. Special Terms and Conditions
Preamble. The Utah Graduate Medical Education Demonstration aims to reallocate residency positions in the State according to health professions work force planning. The Office of Management and Budget approved waivers of Medicare law for the project on March 26, 2002. The approval follows upon a cooperative agreement dated February 18, 2000, which authorized the development of an application for the project and request for waivers. The terms and conditions that were approved at that time still hold. This set of terms and conditions contains the requirements for the project in its implementation, operational, and close-out phases. In the demonstration, the fiscal intermediaries will subtract direct and indirect medical education payments from each hospital's Medicare payments and pay these amounts to the State of Utah Medical Education Council. The terms and conditions govern the payment of Medicare graduate medical education dollars to the Medical Education Council, the reallocation of residents in the State, and the close-out of the project. Standard terms and conditions that accompany all CMS grants and demonstrations are also Stated. 1. The Utah Graduate Medical Education demonstration will be conducted from July 1, 2002 through June 30, 2007. Both CMS and the Utah Medical Education Council have the option to terminate the project, as described below. The State of Utah Medical Education Council will implement an agreement with each participating hospital or hospital system. These contracts will specify the length of time (a minimum of one year) for which Medicare direct and indirect medical education funds that would otherwise be paid to the hospital(s) will be paid to the Council. The effective date and the length of time must be identical for each hospital or hospital system. Each contract must be executed at least two months prior to the effective date. Once a contract is effective, the hospital will not be allowed to request payment of direct or indirect medical education funds from CMS. These agreements between the Medical Education Council and the hospitals will be subject to CMS's approval. CMS will have the right to determine each year, prior to the implementation of these contracts, whether it chooses to continue the demonstration. Similarly, the Medical Education Council will be able to end the demonstration following a contract year. Either CMS or the Medical Education Council must provide notice to terminate the project at least six months prior to the implementation of the next demonstration year. 2. These agreements between the Medical Education Council and the hospitals shall specify methodologies according to which the Medical Education Council will pay hospitals and other providers for the direct and indirect costs of their training programs. The methodologies must be agreed upon by all participating hospitals in consultation with the officials responsible for residency and other types of training at the hospitals, and they must be approved by CMS before the demonstration is implemented. 3. Within 60 days of the date of agreement on the terms and conditions of the demonstration, the State of Utah Medical Education Council will submit to CMS for its approval a complete operational plan for the demonstration. This plan shall outline all proposed residency programs and positions under the demonstration, including rotations and the length of time for each residency program, and the payer source. As part of the plan, the Council shall provide a detailed description for concluding the demonstration. The plan will outline payer sources for any residency programs that will extend past June 30, 2007, the demonstration's concluding date. The plan will include a discussion of how the awardee will implement any management and staffing needs for the demonstration. 4. The operational plan will be subject to review and approval by CMS before implementation of the demonstration. The demonstration operational plan will show that all residency positions financed through Medicare funds are for the types of residency training that are currently approved for Medicare funding. 5. The awardee agrees to fully cooperate in the coordination of demonstration activities with the Medicare fiscal intermediary and carrier, and to promptly resolve any issues or questions as identified by the CMS project officer. The Medical Education Council will keep all documents pertaining to residency training at hospitals and other sites. In the case of the withdrawal of a teaching hospital from the project, the Council will forward these documents to the fiscal intermediary for its use and record keeping. The Council will develop other necessary contingency plans in the case of termination of a demonstration. These plans will be contained in the operational plan of the demonstration. 6. For all participating hospitals, Medicare Northwest will conduct settlement of cost reports for one year to determine base year values of factors that will in part determine Medicare GME payments under the demonstration. This year will be the most recent year for which settled cost reports are available, to be agreed upon by the fiscal intermediary, the Medical Education Council, and CMS. 7. The Medical Education Council will receive annually a total payment equal to the sum of the amounts determined for direct graduate medical education (DGME) according to the demonstration methodology. According to this methodology, a count of weighted residents is determined from the base year cost report. This value is to be multiplied by the hospital-specific per resident amount updated to the respective year by inflation, and the respective year's Medicare patient load. (In calculating amounts for DGME, the weighted number of residents will be fixed at the level of the base year noted in #6, whereas the respective year's value for Medicare patient load, as calculated from the current year's cost report will be used.) 8. The Medical Education Council will receive an annual payment for operating indirect medical education equal to the sum of the IME payments for each participating hospital. Under the demonstration, operating IME payments for each hospital will be calculated using the formula specified by then current legislation. The calculation will use the appropriate multiplier, as specified by then current legislation and then current DRG payments as reported to the fiscal intermediary, but will fix the intern-and-resident-to-bed ratio according to the base year. 9. Annual capital IME payments will be made according to the formula specified by current law, but holding the capital indirect medical education adjustment factor constant to the factor defined for the base year. The number of residents, the average daily census, and, thus the capital IME adjustment factor, will be held constant at these base year values. The following table summarizes the components that will be fixed for the demonstration, and those that will be allowed to vary and be calculated for each respective year.
10. The demonstration payment methodology for the operating year will change to any modification to the formulas for calculating Medicare direct and indirect medical education payments, so that payment to the Medical Education Council will remain budget neutral. 11. Payment for residency programs started after the base year will be made according to the payment methodologies Stated in #7, #8, and #9, since the resident counts for these programs are not included in that of the base year. 12. Participating hospitals training residents in "rural track" or "integrated rural track" programs, started after the base year, will have Medicare payment for these residents and eligibility determined by CFR 413.86. 13. Medicare direct and indirect graduate medical education payments will be made to the Medical Education Council through interim payments by the fiscal intermediary. The amount and frequency of these payments will be specified by the fiscal intermediary in accordance with the State's financial system and subject to CMS approval. The total annual amount of these payments will equal the amount calculated for direct and indirect GME payments under #7, #8, and #9. 14. For each hospital, the fiscal intermediary will subtract an appropriate amount of money from each interim payment over the year, so that the total amount deducted will equal the direct and indirect medical education payments calculated in #7, #8, and #9. If necessary, the fiscal intermediary will conduct a year-end settlement for differences that arise between the total of interim payments and DGME and IME as calculated, according to the methodology State in #7, #8, and #9. 15. The fiscal intermediary will calculate GME payment to the Medical Education Council on the basis of hospital cost reports, covering specified year long intervals. Because teaching hospitals participating in the demonstration have different end dates to their cost report years, the Council will negotiate with participating hospitals to assure that the schedule of payment from the Council to the hospitals is acceptable to them given the different cost report periods. These agreements shall be included in the contracts between the Council and the teaching hospitals, and approved by CMS. 16. The Medicare monies received by the UMEC are to reimburse the hospitals for the costs incurred for Graduate Medical Education. As such these funds are outside of the scope of the Federal Single Audit Act and the Federal Cash Management Improvement Act. Once the reimbursement is received by the UMEC any interest earned would accrue to the hospitals. 17. At the end of the demonstration, payments for graduate medical education in the State will be governed by then current Federal law. 18. Medicare funds paid through the demonstration will not be allowed to be counted for Medicaid Federal matching. 19. Medicare Northwest and Mutual of Omaha, the fiscal intermediary, will handle separate from the overall system the changes necessary to send DGME and IME funds directly to the Medical Education Council. 20. CMS and the Medicare fiscal intermediary will determine answers to issues that may be raised by the Medical Education Council in determining the base year amounts to be paid from cost reports. However, once base year values for resident count are determined, the fiscal intermediary will have the right to refuse requests for re-openings. 21. A task force consisting of representatives of CMS, the Medical Education Council, and the fiscal intermediary will develop by December 1, 2002 a process to mediate disputes that might arise about payment of Medicare GME funds to the Council. Payment and administrative rules for the demonstration are subject to clarification by the CMS project officer, which must be in writing. 22. The Medical Education Council has presented a time line of steps leading to the National Residency Match in January 2003. The Council will inform CMS of a general strategy of its allocation among the various specialties by July 2002 and its decision on allocations by September 2002. Each future year of the demonstration will be approved under the condition that the Medical Education Council provides information on its allocations, and the allocations are approved. 23. The Medical Education Council may revise its resident allocation decisions prior to the respective year's National Residency Match. These revisions must be submitted to CMS to assure continued compliance with Federal laws and regulations. 24. The State Medical Education Council will track rotations among the participating hospitals. The Medical Education Council will provide to CMS all data on Medicare patient days, resident counts, and the allocation of funds to each hospital. These data must be provided as soon as possible in the process for determining residency allocations. 25. If there is a Medicare + Choice plan established in Utah during the period of the demonstration project, a committee consisting of the representatives of CMS, the Medical Education Council, and the fiscal intermediary will determine how to include Medicare + Choice DGME and IME payments in the demonstration project. Utah Graduate Medical Education Demonstration Waivers The following are specific waivers for the demonstration:
Notes 1. An introduction to the basics and issues in graduate medical education funding is Graduate Medical Education and Public Policy: A Primer, a publication of the Bureau of Health Professions, HRSA, DHHS –. December 2000. Rockville, MD. 2. The Summer 2000 issue of The Journal of Rural Health is devoted to rural-based graduate medical education. 3. Projections of clinical workforce requirements and findings of the UMEC surveys of Utah's present clinical workforce are compiled in the UMEC report, Utah's Clinical Healthcare Workforce: Achieving Balance Through 2020, dated December 2000. The executive summary of the report is Appendix II of this report. The full UMEC report can be viewed at www.utahmec.org. 4. See Appendix II, Section III. 5. Eye on Health, October 1, 2004. Newsletter of the Rural Wisconsin Health Cooperative. 6. The number of needed APNs and PAs is also expected to increase due to population aging, however, specific numbers are difficult to quantify from current provider based data. |
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