Issue: Indirect Medical Education (IME)

As mandated under current law, in October 2002, IME payments were cut 15 percent (from a 6.5 percent to 5.5 percent level), bringing the total cuts from 1997 to 28.6 percent. IME payments are critical to the financial viability of teaching hospitals. The nearly 30 percent IME payment reduction is one of the largest, if not the largest, reduction (in percentage terms) that was mandated by the Balanced Budget Act. The most recent reduction is coming at a time when teaching hospitals are facing other payment reductions from the Medicare program, including reductions in Medicare outlier payments as a result of a 65 percent increase in the Medicare outlier threshold, changes to the calculations of the wage index, and a less-than-inflation update. In addition, major teaching hospitals are faring more poorly under the Medicare outpatient system than other hospital groups. Teaching hospitals are also dealing with other daunting challenges, including payment cuts in Medicaid programs, workforce shortages, increasing emergency and stand-by preparedness, and the financing of cutting edge technologies. In addition, the recent growth in the number of uninsured persons (charity care) is placing additional financial pressures on many of the se institutions because of their role as safety net providers. Recommendation: The Medicare program’s support for teaching hospitals through the IME adjustments must be maintained if we are to avoid dismantling this important component of the health care system—a scenario that would be difficult, if not impossible, to reverse in the future.

Current Action by NJCTH:
On the federal level, NJCTH has been working with the AAMC (Association of American Medical Colleges and AHA (American Hospital Association) on the (IME) funding issue.

For more information:

From Sister Organizations:
American Hospital Association Website