As the Bipartisan Commission on the Future of Medicare considers recommendations to assure the long-term solvency and viability of Medicare, one of the most important issues involves Medicare's payments to teaching hospitals for services to Medicare beneficiaries. These proposals include removing Direct Medical Education funding and DSH funding from the Medicare Trust Fund while turning them into domestic discretionary accounts, and changing the formula for Indirect Medical Education funding. Since two-third of DSH funding goes to teaching hospitals, the two programs are closely related.
Teaching hospitals play a vitally important role in the nation's health care delivery system.
In addition to the mission of patient care that all hospitals fulfill, teaching hospitals serve as the pre-eminent setting for the clinical education of physicians and other health professionals. Teaching hospitals also provide the environment in which clinical research and health services research can flourish. Because they offer highly specialized health care, teaching hospitals provide care for the most severely ill patients in our society. Access to the highly sophisticated care that teaching hospitals provide is especially important to senior citizens, because of their often complicated health problems. In light of the extra costs associated with fulfilling these missions, teaching hospitals are particularly vulnerable to private payment reductions and managed care.