Medicare program; limit on payments for direct medical education costs--HCFA. Proposed rule.

We believe that Medicare's policy of basing its reimbursement on 100 percent of the reasonable direct costs of approved educational activities results in payment for some costs that are not necessary in the efficient delivery of health services to Medicare beneficiaries. Therefore, we propose to establish a limit on these costs. This proposal would impose a limit on the amount Medicare reimburses providers for their direct medical education costs for cost reporting periods beginning on or after July 1, 1985 but before July 1, 1986. The limit would be tied to Medicare utilization and would be based on the lesser of a provider's allowable costs of approved medical educational activities during a cost reporting period or during a base year. The base year would be the provider's cost reporting period beginning on or after October 1, 1983 but before October 1, 1984.