Academic Medicine and Federal Policy The National View AIAMC

Atul Grover, M.D., Ph.D. Chief Public Policy Officer March 22, 2013

üJan. 1: American Taxpayer Relief Act of 2012 (H.R. 8) approved: § Short term SGR fix until December 2013

− 26.5% Medicare pay cut for physicians avoided ($26.5B/10 yrs cost, CBO)

§ Sequestration pushed off until March 2013

üMar. 1: White House released sequester report and ordered cuts

• Mar. 27: Sequestration takes effect & Continuing Resolution (CR) expires

• May 2013 Debt Ceiling limit

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Fiscal Cliff…

• $1.6 billion budget reduction to NIH (5.1% cut) • $350 million budget reduction for CDC

Source: Report on Sequestration by House Appropriations Committee Democrats (February 13, 2013)

Estimated Losses for All Major Teaching Hospitals – Baseline Reductions in Medicare

Revenue From ACA Implementation

Source: AAMC Analysis of Medicare Cost Report Data, FY2009 (March 31, 2011 Release)

Estimated Losses to Academic Medicine

Alternative Best Case

Source: AAMC Analysis of Medicare Cost Report Data, FY2009 (March 31, 2011 Release)

Sequestration

Sequestration v. Alternative Scenarios for Academic Medicine (Rough Estimates)

Scheduled Cuts + Sequestration VBP (2%) + Readmission (3%) + DSH (25%)

+ 2% Medicare Cut + NIH ($750M)

= Estimated Loss Under Sequestration

- $1.8 Billion - $4.7 Billion -$6.5 Billion

Scheduled Cuts + Alternative VBP (2%) + Readmission (3%) + DSH (25%)

+ IME (60%) + HOPD E/M ($450M) + Other Medicare /Medicaid Cuts

= Estimated Loss Under Alternative Scenario

- $1.8 Billion - $3.5 Billion to $7.5 Billion

-$5.6 Billion to $9.3 Billion

Source: AAMC Analysis of Medicare Cost Report Data for FY 2017, FY2009 (March 31, 2011 Release)

Impact Analysis for Six Sample COTH Institutions

Gross Hospital Revenue

Net Hospital Income

HOPD/IME (2.2%) Cut

Sequestration -2% Medicare Cut

Hospital

Sequestration -2% Medicare Cut Practice Plan

NIH (5%) (2012)

$1,280,090,000 $181,190,000 -$31,969,189 -$5,020,047 - $6,586,086 -$18,034,952

$1,268,506,000 $182,768,098 -$23,353,758 -$4,039,820 - $3,819,147 -$9,259,583

$1,247,981,544 $138,652,412 -$23,304,031 -$4,740,292 - $2,801,450 -$2,483,138

$1,274,317,490 $52,900,470 -$27,338,709 -$6,152,489 - $4,243,359 -$18,514,244

$840,548,861 $151,655,253 -$19,127,894 -$3,194,450 -$2,988,754 -$8,956,005

$1,796,574,135 $149,108,211 -$33,006,499 -$6,162,714 - $5,488,652 -$25,021,854

Potential cuts to Medicaid & other Medicare funding are not reflected in this table.

Source: AAMC Analysis of Medicare Cost Report Data, FY2009 (March 31, 2011 Release); AAMC FPSC Payer Mix Analysis - CY2009 - Executed May 2010; AAMC IPPS Data Analysis; NIH RePORT.

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Projections of Equal Shortages in PC & Non-PC

Source: The Impact of Health Care Reform on the Future Supply and Demand for Physicians Updated Projections Through 2025 (June 2010), AAMC Center for Workforce Studies.

(IM, FM and Peds)

Residency Positions v. Applicants

Source: NRMP 2012 10

M.D. and D.O. Student Growth Outpacing GME Growth

3,211 New D.O. Enrollment by

2016

No physician can practice without residency training!

11 Source: Results of the 2011 Medical School Enrollment Survey. Center for Workforce Studies, AAMC (May 2012)

Regional Access: Univ of CO

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Deficit Reduction Plans—GME

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Reduce the Shortage

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Bill Nelson (D-Fla.)

Charles Schumer (D-N.Y.)

Harry Reid (D-Nev.)

S.1627: Resident Physician Shortage Reduction Act of 2011 A bill to amend title XVIII of the Social Security Act to provide for the distribution of additional residency positions, and for other purposes 112th Congress, 2011–2012

• Introduced by Sens. Nelson (D-FL), Schumer (D-NY), and Reid (D-NV)

• Increases # of residency slots by 15k over 5 years (3k annually)

• Half of new slots must be used to train residents in a shortage specialty residency programs

• Specifies the process for distributing positions – including priority for states with new medical schools

• Directs the National Health Care Workforce Commission to study the physician workforce

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S. 1627, The Resident Physician Shortage Reduction Act of 2011

AAMC Physician Workforce Policy Recommendations 1. “The number of federally supported GME training

positions should be increased by at least 4,000 new positions a year to meet the needs of a growing, aging population and to accommodate the additional graduates from accredited medical schools. The medical education community will be accountable and transparent throughout the expansion.”

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Goal: Address less than half of expected physician shortage through increased training capacity

AAMC Policy Rec’s (con’t) 2. “Current and future targeting of funding for new

residency positions should be planned with clear attention to population growth, regional and state-specific needs, and evolving changes in delivery systems. Today, approximately half (2,000) of these additional positions should be targeted to primary care and generalist disciplines; the remainder should be distributed across the dozens of the approximately 140 other specialties that an aging nation relies upon. Attempts to increase physicians in targeted specialties by reducing training of other specialists will impede access to care.”

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AAMC Policy Rec’s (con’t)

3. “In addition to expanding support for GME, policy makers should leverage clinical reimbursement and other mechanisms to affect geographic distribution of physicians and influence specialty composition.”

4. “The federal government should continue to invest in delivery system research and evidence-based innovations in health care delivery.”

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Need more efficient health care delivery models and increased physician training positions

A Bipartisan Issue!

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