Graduate Medical Education
GME Primer
The Medicare program provides direct graduate medical education (DGME)
payments to hospitals to cover costs directly related to educating residents and
fellows. Medicare also provides indirect medical education (IME) payments to
teaching hospitals to account for the higher costs of care for the complex patients
teaching hospitals treat and the specialized care provided.
The DGME payment compensates teaching hospitals for a share of the costs
directly related to the training of residents, including the time of supervising
physicians. Medicare does not make payments related to the clinical education of
medical students. The added direct costs of GME incurred by teaching hospitals
include: stipends and fringe benefits of residents; salaries and fringe benefits of
faculty who supervise the residents; other direct costs; and allocated institutional
overhead costs, such as maintenance and electricity. Other direct costs include
the cost of clerical personnel who work exclusively in the GME administrative
office.
Funding
Funding for GME is provided through mandatory appropriations, as is the case
with most of the federal government’s entitlement programs. Each year,
however, there are calls to reduce GME funding and use the savings to finance
other government programs. This was especially true in early 2014 as Congress
worked to address Medicare physician payment reform. GME funding has also
been a target for reduction in the President’s budget.
Currently, the majority of funding for GME comes from the federal Medicare
budget with funds additionally being contributed by the Department of Veteran’s
Affairs, state, and private funds. The federal government contributes $9.5 billion
Medicare dollars and $2 billion Medicaid dollars to the training of physicians
annually.
Residency Slots and Anticipated Physician Shortages
The Balanced Budget Act of 1997 imposed significant caps on the number of
federally funded residency slots. Limiting the number of slots limits the funding a
teaching hospital can receive, as the funds are directly determined by the number
of residents. The current number of residency slots is maintained at the 1997
level. With an aging population of health care recipients as well as physicians
who will retire, a significant shortage of physicians is imminent.
The Association of American Medical Colleges (AAMC) reports that:
- By 2025, there will be a 49 percent growth in number of Medicare
beneficiaries
- More than 25 percent of doctors are over age 60 and likely to retire in the
next decade
- By 2017, 25 million uninsured individuals will have obtained coverage
under the Affordable Care Act
- Although demand is increasing, supply is not increasing at the same pace
because of a cap Congress imposed on Medicare GME support.
The physician shortage is being created by patient and physician demographics,
not a lack of medical students. Thousands of baby boomers will be turning 65,
entering the Medicare program, and doubling the number of older Americans by
2039. Enrollment into medical school programs is higher than ever and many
medical schools have increased their enrollment, but without a corresponding
increase in growth of federally funded residency programs, these graduates will
not have hospitals in which to complete their training and practice. The AAMC
projects there will be a shortage of 65,800 primary care physicians by 2025,
resulting in a huge loss of preventive care services, and 64,800 specialists, leaving
patients with heart failure and strokes, cancer, Alzheimer’s disease, arthritis, and
other ailments without immediate access to health care.
Institute of Medicine Calls for GME Reforms
The Institute of Medicine (IOM) recently issued a highly controversial report that
recommends reform in the funding of GME. Responsibly, IOM wants hospitals
and Medicare to be held more accountable for their spending; however, many
believe the report calls for drastic reforms likely to do more harm than good.
The IOM has stated six goals for an improved GME financing system. These goals
shaped its recommendations for reform.
1. Encourage production of a physician workforce better prepared to work in,
help lead, and continually improve an evolving health care delivery system that
can provide better individual care, better population health, and lower cost.
2. Encourage innovation in the structures, locations, and designs of GME
programs to better achieve Goal 1.
3. Provide transparency and accountability of GME programs, with respect to the
stewardship of public funding and the achievement of GME goals.
4. Clarify and strengthen public policy planning and oversight of GME with respect
to the use of public funds and the achievement of goals for the investment of
those funds.
5. Ensure rational, efficient, and effective use of public funds for GME in order to
maximize the value of this public investment.
6. Mitigate unwanted and unintended negative effects of planned transitions in
GME funding methods.
However, the IOM’s methods for achieving said goals are what many feel
endanger integral investments in GME. In a press statement dated July 29,
2014, the AAMC responded to the IOM’s recommendations with the following:
“By proposing as much as a 35 percent reduction in payments to teaching
hospitals, the IOM’s recommendations will slash funding for vital care and
services available almost exclusively at teaching hospitals, including Level 1
trauma centers, pediatric intensive care units, burn centers, and access to
clinical trials. In addition to hurting patient care, these cuts will limit critical
training settings for future physicians, nurses, and other health professionals.
While the current system can and is being improved to train more doctors in
non-hospital settings, these immediate cuts will destabilize a system that has
produced high-quality doctors and other health professionals for more than 50
years and is widely regarded as the best in the world.”
“The AAMC and its member institutions believe that a modest increase in the
number of federally supported graduate medical education training slots, as has
been proposed in legislation (with bipartisan support from nearly 120 members
of Congress), would help alleviate the physician shortage and allow time to
develop new models of care that will make better use of all the members of the
health care team. We also support legislation creating accountability and
transparency measures for GME funding received by teaching hospitals (H.R.
1201, Training Tomorrow’s Doctors Today Act).”
It is not expected that Congress will address the IOM recommendations this year,
but the potential exists for legislation to be introduced during the 114th Congress.
HFSA will work with AAMC and the House of Medicine to help synthesize and
support efforts for responsible GME reforms.