Overview:

Congress addressed the difference in Federal graduate medical education (GME) funding between freestanding children’s teaching hospitals and other teaching hospitals by passing, on December 6, 1999, the Healthcare Research and Quality Act (Public Law 106-129). This Act established the Children’s Hospitals Graduate Medical Education Payment Program (CHGME PP). The CHGME PP law authorized $280 million for both direct medical education (DME) and indirect medical education (IME) payments in fiscal year (FY) 2000, $285 million in FY 2001, and for each of FY’s 2002 through FY 2006 “such sums as necessary”.  In October 2006, the Children’s Hospital GME Support Reauthorization Act of 2006 was enacted to reauthorize support for GME programs in children’s hospitals for a period of five years (Public Law 109-307). The reauthorization is for $330 million for DME and IME.  Congress appropriated $40 million for the CHGME PP in FY 2000, $235 million in FY 2001, $285 million in FY 2002, $290 million in FY 2003, $303 million in FY 2004, $303 million in 2005 and in 2006. In FY 2000, the CHGME PP awarded $37.5 million to 56 freestanding children’s hospitals located in 31 states. In FY 2001, $226.8 million was awarded to fifty-seven (57) children’s hospitals located in 30 states. In FY 2002, $276.2 million was awarded to fifty-nine (59) children’s hospitals located in 30 states. In FY 2003, $276.5 million was awarded to support 61 freestanding children’s teaching hospitals located in 32 states. In 2004 and 2005, $290 and $286 million was awarded to 61 children’s hospitals in 32 states. In 2006, nearly $285 million was awarded to 61 children’s hospitals in 32 states. The CHGME PP payments supported over 4,300 residents receiving training in hospitals funded by the CHGME PP.

Public law requires the CHGME PP to utilize a national per resident amount (NPRA) to compute DME payments for the CHGME PP (Public Law 106-129).  Section 340(F) of the 1999 Public Health Service Act requires the Secretary to annually update the per-resident amount for each children’s hospital.

As previously indicated, the NPRA is used in the calculation of DME payments. The CHGME PP statute specifies the calculation of a baseline NPRA using FY 1997 data. The CHGME PP Federal Register notice published in March 1, 2001 indicated that the national average per resident amount for cost reporting periods ending in FY 1997 is $67,688. The amended statute specifies that this baseline amount should be updated annually using the estimated percentage increase in the consumer price index (CPI) for all urban consumers during the period beginning October 1997 and ending with the midpoint of the Federal FY for which payments are made. The NPRA is supposed to be updated annually beginning with FY 2002 using the methodology included in the statute. The updated NPRA is posted on the CHGME PP website. The updated figure for 2007 was determined by applying the percent increase in CPI from October 1997 to March 2007 to the baseline NPRA from FY 1997.

The following table shows the baseline and updated figures from 1997 through March 2007:

Baseline and Updated Estimates for National Per-Resident Amount (NPRA)

1. *Consumer price index. Bureau of labor statistics series id: CUUR0000SAO Website:  www.bls.gov;
2. Increases are computed relative to the CPI-U for the baseline year.

Methodology of Worksheet:

The NPRA is updated annually for the calculation of DME payments. The updated figure is determined by applying the percent increase in CPI from October 1997 to April 2007 to the baseline NPRA from FY 1997.

The numerator (individual hospital portion) and the denominator (sum of all hospitals portions) has been the same #’s used to determine DME payments. It does not affect payments.

The following is the breakdown of calculations of the increase in NPRA:

1997 Base year = $67,688

2001  Increase in the CPI-U: 176.2-161.6 x 100 = 14.60% 161.6
NPRA Updated ($67,688 x 1.0146) = $68,676

2002 Increase in CPI-U: 178.8-161.6 x 100 =  17.20% 161.6
NPRA Updated ($68,676 x 1.0172) = $69,857

2003 Increase in CPI-U: 184.2-161.6 x 100  = 22.60% 161.6
NPRA Updated ($69857 x 1.0226) = $71,436

2004 Increase in CPI-U: 187.4-161.6 x 100 = 25.80% 161.6
NPRA Updated ($71,436 x 1.0258) = $73,279

2005 Increase in CPI-U: 193.3-161.6 x 100 = 31.70% 161.6
NPRA Updated ($73,279 x 1.0317) = $75,602

2006  Increase in CPI-U: 199.8-161.6 x 100 =38.2% 161.6
NPRA Updated ($75,602 x 1.0382) = $78,490

2007  Increase in CPI-U: 205.352-161.6 x 100 = 27.1% 161.6
NPRA Updated ($78,490 x 1.0271 = $80,617