Alternative Medicare Payment Methodologies for the Costs of Training Medical Residents in Nonhospital Settings

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EXECUTIVE SUMMARY:

OIG will issue a final report on December 8, 2004 to the Congress and to the Centers for Medicare and Medicaid Services (CMS) entitled, 'Alternative Medicare Payment Methodologies for the Costs of Training Medical Residents in Nonhospital Settings.'  Section 713 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 mandated that the OIG conduct a study and report to the Congress on alternative Medicare payment methodologies for the costs of training medical residents in nonhospital settings.  This final report identifies and describes five alternative methodologies for paying the training costs of such residents.  Each of the five payment options has both positive and negative aspects.  Therefore, before implementing any option, we are recommending that CMS work with Congress to:  (1) further analyze the current financial arrangements and incentives among teaching hospitals, nonhospital settings, and supervisory physicians in nonhospital settings, (2) study the potential impact of any revisions to the current policy, and (3) clarify the definition of 'all or substantially all' of the costs associated with training residents in nonhospital settings.