Title I-Health Care Workforce Trust; Payments to Teaching Hospitals

Subtitle A–Establishment and Financing of Fund

• Creates an all-payer trust fund, with a 1% assessment on all health plan premiums and self-insured plan funds. Medicare, Medicaid, and Veterans' health care programs are excluded from the fee.

• Reserves $300 million from savings in Medicare GME payments.

Subtitle B–Additional Payments to Teaching Hospitals

• Funds direct GME costs through a new formula that uses a "national average FTE training amount." This amount is calculated by adjusting the costs of resident salaries by changes in the CPI and area wage indices.

• New direct GME formula for payments to hospitals from the all payer trust fund:

(# of residents) (adjusted national average FTE training amount) (private insurance hospital revenues)/(total hospital revenues)

• Maintains the alternative rule for safety-net hospitals that qualify under Section 1861(b)(7). Directs the Secretary of HHS to study how this rule should be continued.

• Distributes remaining trust funds to hospitals for indirect GME costs according to IME formula for Medicare.

Subtitle C–Conforming Changes in Medicare Payment for Direct Costs of GME

• Current Medicare formula for direct GME:

(# of residents)(hospital-specific costs)(Medicare inpatient days) (total inpatient days) *hospital specific costs include resident salaries, overhead, and supervision based on cost reports

• New Medicare direct GME payment formula:

(# of residents)(adjusted national average FTE training amount)(Medicare hospital revenues)/ (total hospital revenues)

• Directs the Secretary of HHS, in collaboration with IOM and AAMC, to study the appropriateness of documentation levels required of teaching physicians.

Title II–Health Workforce Priorities

• Directs HHS, in collaboration with medical community representatives, to develop and implement a plan to reduce residency training positions to 110% of American medical school graduates by 2007. Provides reasonable exceptions from resident caps for hospitals assigning residents to serve in rural and underserved areas. Instructs HHS to monitor the distribution of resident specialty training positions to ensure access to health care for underserved populations. Directs HHS to consider the financial effect of residency reductions and allows a portion of the funds saved by residency reductions to be used in support of affected hospitals.

Title III–Modification in Medicare Payments for IME and DSH

• Reduces the multiplier for indirect GME formula for Medicare and trust fund expenditures to 4.8 from the 5.5 for FY2003 established in BIPA.

• Directs HHS, in collaboration with medical community representatives, to develop and implement a plan for hospitals receiving indirect GME funds to report annually on their contributions to education, research infrastructure and community services, and improvements in clinical services.

• Expands the definition of "low-income share" in the disproportionate share formula to include indigent and Medicaid-eligible patients in addition to patients on Medicaid and SSI.

• Carves out disproportionate share payments from Medicare+Choice plans.

Title IV–Additional Payments for Graduate Medical Education for Nursing and Allied Health Professionals

• Allocates $300 million annually to nursing and allied health GME.

• Directs HHS, in collaboration with health professions organizations, to develop a plan to distribute these funds to institutions providing graduate training to nursing and allied health professionals.