War Funding Bill Halts CMS Proposal to End Medicaid GME

A proposed CMS regulation that would slash $1.78 billion in federal support for Medicaid graduate medical education, or GME, funding during a four-year period has been derailed by legislation funding the war in Iraq and Afghanistan.

The CMS proposal would have prohibited states from using federal Medicaid funds for GME. The Bush administration proposed the regulation on May 23. A day later, Congress passed legislation to continue funding the war that contained a provision prohibiting HHS from promulgating or implementing "any rule or provisions restricting payments for graduate medical education under the Medicaid program" for one year.

The proposed rule, first mentioned in President Bush's 2008 federal budget, sent shivers through the medical education community. Forty-seven of 50 states use Medicaid to fund GME, and the program accounted for $3.2 billion in direct GME funds and indirect medical education, or IME, funds in 2005, according to Tim Henderson, director of outreach and education at the George Mason University Center for Health Policy, Research and Ethics, Fairfax, Va.

"Medicaid continues to be a major payer of DGME and IME costs," Henderson wrote in a prepublication copy (PDF file: 9 pages / 4 KB. More about PDFs.) of his November 2006 report, "Medicaid Direct and Indirect Graduate Medical Education Payments: A 50-State Survey." Ending Medicaid GME funding would mean the loss of millions of dollars to academic health centers, medical schools and residency programs at a time when the proportion of revenue from state appropriations has dropped from 23 percent to slightly less than 10 percent, according to the National Conference of State Legislatures.

States have used Medicaid funds to help finance medical education since Title XIX of the Social Security Act, which established Medicaid, was implemented in 1966. In its proposed regulation, CMS contends Title XIX does not authorize use of federal Medicaid dollars for GME. Given that interpretation of the law, the Bush administration says it can rightfully regulate an end to Medicaid GME support.

"Paying for GME is outside of Medicaid's primary purpose, which is to provide medical care to low-income individuals," according to President Bush's 2008 budget. (PDF file: 11 pages / 433 KB. More about PDFs.)