(Feb. 11, 2009) On January 8, MedPAC, the panel that advises Congress on Medicare issues, met to discuss Medicare payment updates and other issues. During its meeting, the committee voted to decrease the current 5.5 percent indirect medical education (IME) adjustment by one percentage point to 4.5 percent and to redirect the funds to support implementation of a value-based purchasing (VBP) system. VBP requires that a portion of a hospital’s reimbursement be dependent on the hospital’s performance in pre-defined quality measures. The reduction of IME was introduced based on the committee’s findings that there was only a 2.2 percent cost increase for every 10 percent increase in teaching intensity in a hospital, whereas the current payments showed a 5.5 percent increase for every 10 percent increase in teaching intensity. The direct impact of this reduction in medical education has not been evaluated overall, but several teaching hospitals are very concerned about what this 20 percent reduction in IME payments will mean for the future. The state of New York estimates that its teaching hospitals will lose more than $200 million a year if these new recommendations are implemented.
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