Teaching hospitals, residencies win reprieve on Medicaid cuts

CMS has put a temporary halt to new rules that would slash billions from training budgets.

By Myrle Croasdale, AMNews staff. July 14, 2008.

Two proposed rules limiting Medicaid hospital payments, including contributions to graduate medical education, have been postponed until at least Aug. 1.

The rules were slated to take effect May 25, but a court ruling on one prompted the Centers for Medicare & Medicaid Services to voluntarily delay implementing both rules, which are closely linked.

At stake are billions in annual payments Medicaid makes to teaching hospitals.

"These regulations will seriously damage our nation's health safety net and have dire effects on patients," Darrell G. Kirch, MD, president and CEO of the Assn. of American Medical Colleges, said in a statement.

One of the rules is called the intergovernmental transfer, or IGT, which sets an upper limit on Medicaid payments and means an estimated annual $10 billion for teaching hospitals.

The other is a CMS rule change that would end federal Medicaid payments for graduate medical education. The government estimates this change would mean a $1.78 billion reduction in teaching hospitals' Medicaid payments over five years, but graduate medical education leaders say it could be that much annually.

Education experts estimate that New York, which trains 16,500 residents, the most of any state, would lose more than $1 billion a year if this rule change gets implemented.

Teaching hospitals recently won a lawsuit to block implementation of the IGT rule. In May, the U.S. District Court for the District of Columbia found that CMS violated a one-year congressional moratorium on the IGT rule when it issued a final regulation on it the same day the president signed the moratorium into law.