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Pursuant to a legislative requirement, GAO: (1) examined the factors responsible for the variations in patient costs and Medicare payments among teaching and nonteaching hospitals; and (2) estimated the adjustment needed to compensate teaching hospitals for the indirect cost of medical education.

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Matter for Congressional Consideration

Matter Status
Congress should reduce the teaching adjustment factors for fiscal years 1989 through 1995, and for 1996 and beyond, to levels shown by GAO analysis of Medicare costs. Should Congress wish to use the savings from the lower payments to teaching hospitals to reduce overall Medicare outlays, the legislation should specifically reflect that decision. Congress should also include provisions directing the Secretary of Health and Human Services to periodically reestimate the effects of graduate medical education on Medicare costs, based on the most current hospital cost data available at the time.
Closed - Implemented

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