RD202 - Enhancing Direct Medical Education and Indirect Medical Education Payments - August 30, 2011


Executive Summary:
In a recent study, the Joint Commission on Health Care (JCHC) identified workforce shortages affecting the delivery of and access to health care in Virginia. Based on this study, the JCHC made several recommendations directed at increasing the number of physicians practicing in the specialties with shortages in Virginia, including a request to the Department of the Medical Assistance Services (DMAS). That request asked that DMAS outline a methodology and furnish a cost estimate for enhancing direct medical education (DME) and indirect medical education (IME) payments to graduate medical education programs in Virginia for the specialties identified with shortages in primary care, general surgery, geriatrics, psychiatry, and emergency medicine.

For state fiscal year (SFY) 2009, DMAS reimbursed over $36 million in indirect medical education (IME) and direct medical education (DME) to private hospitals. Although DMAS also reimburses state teaching facilities and for paramedical costs, this report will focus on the payments for interns and residents made to private hospitals and will estimate the cost of enhancing their graduate medical education payments. This report will clarify the definition of DME and identify the assumptions necessary to develop a methodology to enhance reimbursement. An estimate of the cost associated with incentivizing training in programs with shortages will require data from the entities that authorize the various residency training programs.

Based on the assumptions and methodological options outlined in this report, enhancing payments for graduate medical education programs to address the workforce shortages in Virginia may cost between $1.07 million and $2.17 million in total funds. This estimate relies on information from Medicaid cost reports reported by facilities that participate with the Medicaid Program and residency program data from the entities that accredit national residency programs. Additional costs may arise from the out-of-state residency programs and new programs expected to begin in 2011.