Should Medicare Cap GME Funding at $150K Per Resident?

Researchers suggest that a cap on per-resident funding could rechannel money toward community-based physician training. 

Capping Medicare Graduate Medical Education funding at $150,000 per resident could free nearly $1.3 billion that could be used to alleviate physician shortages in underserved areas, a new study in JAMA Internal Medicine suggests.

"Our study suggests Medicare GME may be overpaying some hospitals up to $1.28 billion annually," study lead author Candice Chen, MD, MPH, said in comments accompanying the study.

"Those funds could be redirected and used to strengthen the physician workforce, especially in underserved areas," said Chen, an associate professor of health policy and management at the George Washington University Milken Institute School of Public Health.

The researchers looked at cost reports to calculate GME payments to hospitals from 2000 through 2015. They found that GME annual funding rates for teaching hospitals can vary by more than $75,000 per resident. In 2015, for example, 25% of hospitals receiving less than $105,761 while 25% received more than $182,233 per resident.

The researchers then calculated the savings if Medicare capped GME payments at $150,000 per year, which is the rate used for the Teaching Health Center Graduate Medical Education (THC) program, which trains residents in community health centers, and other community-based settings in underserved areas.

Chen said residents trained under the THC GME program are more likely to enter primary care, and practice in rural and underserved areas. Funding for the program dries up in mid-November unless Congress appropriates more money.

Medicare's current funding mechanisms for GME have resulted in some teaching hospitals – often located in urban areas – receiving a disproportionate share of the money. Residents who train at these big city hospitals tend to remain in urban settings, Chen said.

"Our study suggests that the savings produced by capping all hospitals at the THC GME rate would add up enough to expand the THC program by tenfold," Chen said.

Atul Grover, MD, PhD, executive vice president of the Association of American Medical Colleges, said his organization has "several concerns about this recommendation."

"The most critical being that the authors fail to adequately distinguish between the purposes of Medicare Direct Graduate Medical Education (DGME) and Indirect Medical Education (IME) payments and fail to recognize the impact of $1 billion in annual Medicare reductions," Grover said in an email exchange with HealthLeaders.

"These cuts would have a devastating impact on patients and communities, reducing access to the critical services teaching hospitals provide, such as trauma centers, burn units, neonatal intensive care units, and other specialized and standby services," Grover said.

"Additionally, while we agree that the Teaching Hospital Center (THC) GME program is an important, targeted tool for training physicians, HRSA estimates that the GME rate used for the THC GME program covers the full costs incurred by THCs when training residents," Grover said.

"Medicare DGME payments to teaching hospitals only cover 21% of the training costs. At a time when our growing and aging population is driving a physician shortage of up to 46,900 to 121,900 by 2032, it makes little sense to slash funding for vital care and services available almost exclusively at teaching hospitals and 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," he said.

Chen acknowledged that the study does not look at how much it actually costs to train residents at particular hospitals, or if some hospitals have characteristics that make it costlier to provide GME.

She called capping the Medicare GME payment rate "a limited reform."

"More comprehensive approaches to GME reform would involve restructuring payment and increasing accountability for these publicly funded training programs," she said.