Funding for Graduate Medical Education Is Hotly Debated

Mark Crane

August 17, 2012

August 17, 2012 — With massive budget cuts looming for January 1 unless Congress intervenes, the financing of graduate medical education (GME) is becoming a hotly debated issue.

Looking for areas to cut in the federal budget, the Obama administration and some members of Congress want to reduce GME funding, a move opposed by many medical schools, hospitals, and professional associations, notes a new health policy brief from Health Affairs and the Robert Wood Johnson Foundation.

"As implementation of the Affordable Care Act continues and more Americans acquire health insurance, it is likely that more providers will be needed," according to a Health Affairs news release. "That prospect worries those who believe that a reduction in GME funding would conflict with efforts to expand the nation's physician supply."

At stake is whether the nation is training enough physicians, whether federal support for GME is too costly, and whether federal support should be tied to accountability measures designed to encourage successful achievements of specific outcomes.

Paying for education. Approximately 115,000 medical school graduates are trained each year through residency programs at more than 1000 teaching hospitals. Much of the financing comes from the Centers for Medicare & Medicaid Services, which contributes "nearly $10 billion in Medicare funds and $2 billion in Medicaid dollars annually to cover the costs associated with training, plus payments to children’s hospitals and a new program to prepare physicians for community-based ambulatory patient care," the news release notes.

More than 40 states contributed almost $4 billion in 2009 to support GME. "Since then, many states have reduced their support for advanced medical training. Private insurers, meanwhile, support GME to some degree through payments they negotiate with teaching hospitals," the brief notes.

Federal support amounts to about $100,000 per resident per year. "Adding in state Medicaid payments, and considering the length of time that residents spend in training, the public investment per physician comes to half a million dollars or more," the brief states. The Balanced Budget Act of 1997 placed a limit on the number of Medicare-supported residency slots. This cap has remained in place ever since, even though exemptions have permitted steady growth.

In 2010, the National Commission on Fiscal Responsibility and Reform (also known as the Simpson-Bowles Commission) recommended reducing both direct and indirect GME payments. Last year, President Barack Obama proposed reducing indirect Medicare GME support and cutting in half GME funding for children's hospitals. Congress has not acted on either of these proposals.

Physician supply. Several medical associations worry that cuts in GME funding "would conflict with efforts to expand the nation's physician supply, including plans to open up 18 new US medical schools," according to the brief.

"Some medical education leaders want to remove the 15-year-old cap on Medicare-funded residency slots," the brief continues. A bill was introduced last year to increase the number of positions by 15% but did not pass.

Primary care. "[T]he number of specialist physicians still outweighs the number of primary care physicians by about two to one," the report says. In many other countries, numbers are roughly equal. "The relatively weak role of primary care in US health care may explain why other countries achieve better and more cost-effective health outcomes than the United States," the brief notes.

"The American Academy of Family Physicians has argued that any increase in the number of Medicare-funded GME training slots should be dedicated to primary care. Specialty societies strongly oppose the idea, however," the report states. In turn, Congress has been reluctant to get involved in the divide between primary care physicians and specialists.

Geographic disparities. "Many people, especially in rural areas, do not have sufficient access to medical specialists," the brief states. "Large GME payments to teaching hospitals that are located primarily in urban areas may be exacerbating the maldistribution problem, because physicians tend to practice where they do their residencies," the brief notes.

"The National Health Service Corps encourages residents to work in underserved communities by providing either loan repayments or scholarships," the brief says. "Policy makers have also given residency cap exemptions to rural hospitals. Another idea is to create new residency slots in rural hospitals that are linked via telemedicine to urban hospitals."

Quality improvement. The GME funding provided by Medicare has no requirement to encourage residents to enter primary care. There also are no requirements concerning the "quality of training, performance of residents or their overall programs, or the outcomes of patient care," according to the brief.

In 2010, the Medicare Payment Advisory Commission recommended creating a "performance-based incentive program," which would tie a portion of the GME payments to successful achievement of specific outcomes. "Some of these goals would be to make sure that trainees had appropriate interpersonal and communication skills to care for patients and to operate in teams with other healthcare workers...and that they were trained to practice in systems where community-based ambulatory care was integrated with hospital care," the brief notes. "The cost of this performance-based incentive program would be covered by funds that teaching hospitals receive in excess of actual indirect costs."

A bill was recently introduced in Congress that would enable hospitals to compete for additional GME funding by linking their residency programs to performance goals, such as coordination of care and the use of health information technology. Another bill would expand the number of Medicare-supported residency training positions by 15,000.

"Congress faces a deadline of January 1, 2013, for making major cuts in all sectors of federal spending," the brief concludes. "Parties with stakes in GME funding are...advocating a variety of recommendations. Policy makers can expect to hear a wide assortment of opinions."

"Health Policy Brief: Graduate Medical Education." Health Aff. Published online August 16, 2012. Full text


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