On March 1, the Medicare Payment Advisory Commission released its 2007 report to Congress on Medicare payment policy. Of particular importance to the academic medical community is MedPAC's recommendation that Congress reduce the indirect medical education payment adjustment by 1 percentage point, concurrent with the implementation of a system for adjusting diagnosis-related group payments to better reflect patient severity of illness. Because it generally would result in higher DRG payments for more complex patients, implementation of a severity system would ameliorate the IME cut for teaching hospitals, which treat more complex patients than other hospitals. In addition, the report recommends that savings from an IME payment reduction be used to fund a quality incentive payment pool, rather than be returned to the Medicare trust fund. For more information, please visit http://www.aamc.org/advocacy/library/washhigh/2007/030207/start.htm#5 or http://www.medpac.gov.