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Academic Medical Center

An Academic Medical Center is a healthcare organization whose mission centers around training of medical students and research. It is an accredited, degree-granting institution that is comprised of a medical school, hospital, and faculty.

Two issues of particular relevance to Academic Medical Centers are reimbursement and clinical research issues.

Reimbursement

The Centers for Medicare & Medicaid Services (CMS) reimburses academic medical centers and teaching hospitals under the Medicare program for the costs incurred in training resident physicians through its direct graduate medical education (DGME) payment and indirect medical education (IME) adjustment.

See Balanced Budget Act of 1997, 42 U.S.C. § 1395w-21 et seq. CMS places two institution-specific limitations on the extent of such Medicare graduate medical education (GME) reimbursement, based on the number of residents in training and on the dollar amount payable per resident. The Patient Protection and Affordable Care Act (PPACA), Pub. L. No. 111-148 (2010), enacted on March 21, 2010, introduced a variety of changes to this particular area of the GME landscape that may have a direct impact on a hospital’s Medicare GME reimbursement rates.

The PPACA made changes in the areas of resident cap reduction and redistribution, calculating resident time, and preservation of cap slots from closed hospitals, among other things.

Excerpt from Nili S. Yolin, Esq., Healthcare Reform and the Deficit Reduction: What Academic Medical Centers Need to Know about Medicare GME Reimbursement, Legal Issues Affecting Academic Medical Centers and Other Teaching Institutions (American Health Lawyers Association Jan. 2012).

Clinical Research

Participation in clinical research activities presents a host of issues for academic medical centers.

One of the biggest challenges facing academic medical centers and other teaching and research institutions is trying to determine how best to balance the competing demands of meeting the needs for ensuring innovation in research and technology resulting in the development and commercialization of new products and therapies, while at the same time maintaining objectivity and integrity of research programs. Indeed, a new potential drug discovery or technological breakthrough does little to help the public at large unless there is some means and mechanism to enable that discovery or breakthrough to make its way to the commercial market. The means for achieving such commercialization has become increasingly challenging for institutions when individual financial and institutional conflicts of interest arise. On August 25, 2011, the Department of Health and Human Services (HHS) promulgated final rules affecting individual financial conflicts of interest in Public Health Service (PHS) funded research. 76 Fed. Reg. 53,256 (Aug. 25, 2011).

In addition, the OIG issued a report in January of 2011 on institutional conflicts of interest. In that report, OIG recommended that the NIH “[p]romulgate regulations that address institutional financial conflicts of interest.” Dept. of Health and Human Servs., Office of Inspector General, Institutional Conflicts of Interest at NIH Grantees, Jan. 2011, available at http://oig.hhs.gov/oei/reports/oei-03-09-00480.pdf [hereinafter OIG Report].

Excerpt from Deborah Farringer, FINALLY - THE NEW CONFLICT OF INTEREST REGULATIONS! NOW WHAT? Managing Conflicts in an Era of Commercialization, Legal Issues Affecting Academic Medical Centers and Other Teaching Institutions (American Health Lawyers Association Jan. 2012).

The Physician Payment Sunshine Act

The Physician Payment Sunshine Act, incorporated into the healthcare reform law as section 6002 also affects academic medical centers and teaching hospitals.

The Act requires applicable manufacturers of drugs, devices, biological or medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program (CHIP) to report annually to the Secretary of HHS certain payments or other transfers of value to physicians and teaching hospitals. On December 15, 2011, the Centers for Medicare & Medicaid Services (CMS) issued its much-awaited proposed rule implementing the Act’s provisions.

The proposed reporting requirements for research are complicated and will likely create challenges in implementation. CMS has proposed “to limit the research category to bona fide research activities, including clinical investigations that are subject to both a written agreement between the applicable manufacturer and the organization conducting the research, as well as a research protocol.” 76 Fed. Reg. 78749 (Dec. 19, 2011). Noting the "complexities in the flow of research payments"—i.e., large payment amounts spread across numerous activities and payments not provided directly to a covered recipient, but to a clinic, hospital or institution administering the research—the agency has further proposed to separate the classification or research payments into “direct” and “indirect” payments. Id.

Excerpt from Dawn R. Crumel, Issues In Transparency, Legal Issues Affecting Academic Medical Centers and Other Teaching Institutions (American Health Lawyers Association Jan. 2012).