GME Comment Letter

June 22, 2007

Leslie Norwalk, Esq.
Acting Administrator
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W., Room 445-G
Washington, DC 20201

Re: (CMS-2279-P) Medicaid Program; Graduate Medical Education (Vol. 72, No. 99), May 23, 2007

Dear Ms. Norwalk:

On behalf of its 500+ member hospitals and health systems, the Texas Hospital Association offers comment on the Centers for Medicare & Medicaid Services’ proposed changes to Medicaid policy regarding federal reimbursement for graduate medical education. The proposed rule is subject to a year-long moratorium secured by P.L. 110-28, and the moratorium should preclude CMS from soliciting comments. THA recommends that CMS withdraw this proposed rule.

Since CMS has chosen to continue the rulemaking process, THA wishes to express its endorsement of a compelling comment letter already submitted to you by the American Hospital Association (AHA).

AHA argues that the proposed rule departs from long-standing Medicaid policy by no longer permitting matching federal dollars, otherwise known as federal financial participation (FFP), for hospitals’ GME costs. The proposal reverses 40 years of agency policy recognizing GME as a covered medical assistance cost.

The agency’s recent conclusion that FFP is unavailable to offset hospitals’ GME costs is based primarily on the fact that (1) GME is not listed as a service in the Medicaid statute. CMS maintains that GME cannot be considered part of “hospital services” because (2) it is not included in the rates paid to hospitals for services under the Medicare inpatient prospective payment system. The agency’s analysis is flawed on both counts

The preamble to the proposed rule states: “The care and services that may (or in some cases, must) be included within the scope of medical assistance under a Medicaid state plan are generally set forth in section 1905(a)…. Graduate medical education (GME) is not included in this list of care and services within the scope of medical assistance…. we do not believe that it is consistent with the Medicaid statute to pay for GME activities either as a component of hospital services or separately. GME is not a health service that is included in the authorized coverage package….”

The Medicaid statute, in Section 1905(a), defines the term “medical assistance” and lists the types of populations and services for which Medicaid will pay all or part of the costs. CMS’ implementing regulations at 42 C.F.R. Part 440 expand upon this list of services.
The fact that FFP is available for other expenses not referenced in the Medicaid statute contradicts CMS’ position that FFP is unavailable for GME because it is not listed in the statute. CMS has singled out GME because it is a convenient budget-saving strategy.

Even if CMS were correct in reasoning that FFP should be available only for the items and services listed in the Medicaid statute, FFP still would be available for GME because it is part of inpatient and outpatient hospital services. CMS acknowledges that the Medicaid statute permits states flexibility to develop methods and standards for determining payment requirements for covered hospital services within reasonable estimates of what Medicare would pay for the services. Medicare pays for GME as a hospital service. CMS’ contention that 42 C.F.R. 412.2(2)(e) excludes GME from the inpatient PPS payment is inaccurate. GME is not on the list of “excluded costs.” GME is found in C.F.R.412.2(f) on the list of “additional payments to hospitals” along with other patient care-related costs. Hospitals receive Medicare payment for GME because it is a patient-related cost. As AHA argues, the fact that the GME payment is independent from the PPS payment is irrelevant to whether GME is reimbursable under Medicare. For example, capital costs are paid outside the inpatient operating PPS, and no one would argue that they are not reimbursable by Medicare.

CMS approves hospital payment methodologies as a condition of receiving federal funds At least 47 states and the District of Columbia provide direct GME and/or indirect medical education payments under approved Medicaid programs. CMS’ past approval of state plan amendments providing for GME calls into question the current CMS proposal.

THA respectfully encourages CMS to withdraw the proposal. Texas is a growing state. Public policy should encourage, not punish, hospitals for supporting medical education programs that help train the medical leaders of tomorrow.