Residency slots reallocated to relieve doctor shortages

Some 2,000 to 3,000 positions could be shifted by the federal government.

By Myrle Croasdale — Posted Sept. 27, 2004

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In an effort to address the uneven distribution of physicians in the United States, the Centers for Medicare & Medicaid Services, which heavily subsidizes graduate medical education, is tracking down unused resident positions and reallocating them to hospitals it deems the most in need of more physicians.

This won't change the supply of physicians in the United States, since the number of resident slots will stay capped at the 1996 level of 98,000. But it should ease the pressure some hospitals are experiencing and bring more doctors to underserved regions.

The redistribution is expected to be completed before the next residency training year starts July 1, 2005.

The Assn. of American Medical Colleges, however, said the health care system would be better off if the cap were lifted so hospitals could respond to the needs of their communities, such as adding a new cardiology program or expanding emergency medicine. It's unclear though, what this would cost. The federal government, through CMS, spends roughly $8 billion a year on graduate medical education or $80,000 per resident.

The AAMC said the rules CMS has set up for the audit will unfairly penalize some hospitals.

Karen Fisher, associate vice president for health care affairs at the AAMC, explained that if Medicare's administrative requirements are not met precisely, not every resident is counted, which lowers the amount of federal money the program gets.

"In the past, this would mean a year when you weren't paid for a resident," Fisher said. "The next year you could fix it." During this audit year, that mistake is permanent.

For example, if Medicare says Hospital A is using only 90 positions though it really has 100 residents -- allowed under the cap -- the cap is then reduced by 75% of the difference, to 92.5 residents. If the audit is appealed and found to be incorrect, Medicare would pay back the missed subsidies, but it would not restore the hospital's cap. Funding would be permanently set at 92.5.

Fisher said the reallocation of unused slots might be a short-term solution for producing more doctors in some states, but the hospitals that lose slots won't have the flexibility to respond to future work force needs in their communities.

An AAMC survey found 2,000 to 3,000 capped slots are not being used. Fisher said the unused slots did not fit into a geographical pattern. Half of respondents said they were above their caps, suggesting demand may be greater than supply.

Who will be considered?

To decide who will get these coveted positions, Medicare will only consider hospitals that are either starting a new residency program, expanding an existing one or already exceeding their caps. All of this suggests that the programs that will benefit will be those that have found dollars to grow despite the federal caps.

Within this group, Medicare said it will give rural hospitals top priority, then hospitals in small urban areas with less than 1 million people and lastly, large urban hospitals. Though rural hospitals are at the top of the list, they aren't expected to be big winners.

"I don't think many rural hospitals are going to take advantage of this," Fisher said. "I think most [slots] will go to big teaching hospitals in small urban areas."

Deborah McPherson, MD, assistant director of medical education for the American Academy of Family Physicians, said the changes actually could hurt underserved areas.

"On a macro level, it's not going to have that great of an impact," Dr. McPherson said. "On a micro level, it will disadvantage those places that need physicians the most. For rural areas, at best you are going to be treading water to keep the slots you have. Rural slots are the hardest to fill, but these are the areas that need them the most."

One program's wish list

A typical program in a region short on physicians that could benefit from new federally funded resident positions is Southern Illinois University School of Medicine in Springfield. The majority of the university's 14 residency programs and nine fellowship programs are at two hospitals in Springfield. Family medicine programs are also based in Quincy, Decatur and Carbondale, and there are satellite clinics in southern Illinois.

Karen Broquet, MD, assistant dean for graduate medical education at SIU School of Medicine, said the Springfield programs regularly exceed their cap of 200 slots and could easily use the maximum 25 positions per institution allowed under the redistribution, which will be funded at half the rate of current resident positions.

To help pay for graduate medical education, the government makes direct and indirect payments to the hospitals through Medicare. After a period of rapid growth in the 1990s, CMS froze the number of residents it would subsidize at the 1996 level of 98,000, forcing hospitals that exceed their share of the cap to do so without federal support. The redistribution comes as a result of the 2003 Medicare Prescription Drug Improvement and Modernization Act.

Dr. Broquet said SIU has been successful in its mission to train physicians who are committed to working in downstate Illinois -- to date 580 out of its 1,536 graduating residents have stayed -- but there is also a need for the elevated level of care subspecialists provide.

She said the university is tentatively planning to apply for new slots. With the Dec. 1 deadline looming, SIU and its affiliated hospitals may request slots for past expansions or for the new child psychiatry program Dr. Broquet said is desperately needed. "Right now it would just be nice to get breathing room to cover what we do have."

If there were no caps, Dr. Broquet said SIU would immediately look at creating an emergency medicine program with six residents. It would also look at expanding radiology, dermatology and gastroenterology -- specialties in demand by medical students and patients.

David Steward, MD, chair of the department of general medicine at SIU, said if the caps were lifted, the school could add fellowships in gastroenterology, pulmonology/critical care, cardiology and hematology/oncology, which would bolster the care already being given via existing fellowships in endocrinology, pulmonology and infectious diseases.

"The need seems to be big, and the mission of the school is to serve the health care needs of these people," Dr. Steward said.

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Where the residents are

Where medical residents train is a good indication of where they will practice, according to past studies. The Balanced Budget Act of 1997 capped the number of resident positions the government would subsidize at 1996 levels, leaving states with rapidly growing populations limited options for expanding physician training. While the average for 2003 was 34 medical residents per 100,000 people, there was striking variance.

per 100,000
District of Columbia 292
New York 78
Massachusetts 73
Rhode Island 65
Connecticut, Pennsylvania 54
Illinois 43
Maryland, Michigan,
Missouri, Ohio
Minnesota 40
Louisiana 38
Vermont 37
Hawaii 34
Nebraska 33
North Carolina, Tennessee,
West Virginia
Texas 29
New Jersey 28
Wisconsin 27
Delaware, Virginia 26
California, Iowa,
New Hampshire, New Mexico
Alabama, Utah, Washington 24
Arkansas, Colorado,
Kentucky, South Carolina
Georgia, Indiana, Kansas 21
Arizona, Maine, Oregon 20
Oklahoma, Puerto Rico 18
Florida, Mississippi 17
North Dakota 16
South Dakota 12
Nevada 8
Wyoming 7
Alaska 4
Idaho 3
Montana 2

Source: Graduate Medical Education, Appendix II, Table 2, Journal of the American Medical Association, Sept. 1, data based on the 2003 national Graduate Medical Education Census and 2003 U.S. Census Bureau state information

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Use it or lose it

The Centers for Medicare & Medicaid Services will be tallying unused resident positions this year and reallocating them to hospitals it determines need them most.

  • Applications to gain slots are due Dec. 1, 2004.
  • Unused slots are to be allocated by July 1, 2005.
  • The redistribution is a one-time deal. There are no plans to continue auditing and reallocating unused slots.
  • Appeals can be made, and if the hospital wins an appeal over a lost slot, it will get back pay for it from CMS. It will not get the position reinstated, however. All caps set by CMS will be final as of July 1, 2005.

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Terms of approval

Hospitals vying for unused residency slots must demonstrate that they have:

  • Approval for starting a new residency in 2005.
  • Approval to expand existing programs.
  • Exceeded their caps in the past.

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