GME funding showdown looms in Washington

Many in organized medicine want more residency positions, but government officials have recommended reducing federal GME spending.

By — Posted Aug. 27, 2012

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For years, medical educators and others in academic medicine have warned of the need to expand federal funding for graduate medical education to stave off impending physician shortages.

Nationwide, work force shortages are expected to reach 62,900 physicians by 2015 and 91,500 by 2020, according to the Assn. of American Medical Colleges. More doctors will be needed due to an aging population, rising chronic disease rates and an influx of an estimated 30 million newly insured individuals over the next decade under the Affordable Care Act.

Despite those projections, there have been multiple proposals to slash GME funding as pressure mounts for Congress to reduce federal spending and prevent automatic, governmentwide cuts from taking effect starting in 2013. GME reductions as high as 50% have been recommended by the Medicare Payment Advisory Commission and the National Commission on Fiscal Responsibility and Reform, as well as President Obama’s budget proposal.

However, some physicians and others are backing a proposal to expand GME funding. Introduced Aug. 2 in the House, with a companion bill in the Senate, HR 6352 calls for Medicare to add 15,000 more residency slots over five years.

“The U.S. is already facing the reality of having a significant shortfall in trained doctors and medical professionals, and this shortage will only continue to grow if we don’t begin to address the problem now,” said Rep. Aaron Schock (R, Ill.), the bill’s sponsor.

Medicare funding for GME has been capped since the Balanced Budget Act of 1997, raising concerns that there won’t be enough residency positions to train an expanding pool of U.S. medical school graduates. Cutting those funds would be devastating, said Stephen Shannon, DO, MPH, president and CEO of the American Assn. of Colleges of Osteopathic Medicine.

“The shortage of physicians in our health care system, particularly in primary care, is nothing short of a national crisis,” he said.

The American Medical Association has supported lifting the 1997 funding cap. AMA policy says the Association will advocate to increase GME positions to address physician work force needs.

During the last several years, medical schools have responded to physician shortage projections by expanding class sizes and opening new allopathic and osteopathic schools for the first time in decades. But that growth hasn’t been mirrored in GME.

“There has been some growth, but it has been pretty marginal,” Dr. Shannon said. “There is increasing recognition that there is a squeeze coming. None of us wants to be graduating students who can’t go on to do their residency training to become physicians.”

Federal, state and private funds pay for GME. Medicare contributes the bulk, about $9.5 billion annually, while Medicaid pays about $2 billion, according to an Aug. 16 Health Affairs report. Of the Medicare portion, about $3 billion is for direct payments for the salaries of residents and supervising physicians, and $6.5 billion is for indirect payments to subsidize the costs of running a training program, such as longer hospital stays and more patient tests.

There are about 115,000 physicians in residency programs nationwide, says the Health Affairs report. About 23,000 physicians were assigned first-year residency positions for Match Day 2012, of which about 6,800 were non-U.S. citizens who graduated from international medical schools, according to the National Resident Matching Program. More than 95% of U.S. medical school seniors were matched to first-year positions.

Any effort to expand GME funding faces numerous obstacles, particularly with the presidential election Nov. 6, said Glen Stream, MD, president of the American Academy of Family Physicians.

The high cost of expanding GME is a major barrier. The projected cost of funding 15,000 new GME slots a few years ago was $12 billion to $15 billion over 10 years, said Len Marquez, AAMC director of government relations. There is no current estimate of the cost.

“It’s expensive, and we’re in the middle of very challenging fiscal times,” he said.

Without more federal money, many residency programs cannot grow to meet increasing demands, said Lisa Bellini, MD, vice chair for education in the Dept. of Medicine at the University of Pennsylvania Perelman School of Medicine.

“There are only so many sources of revenue for hospitals,” she said. “It just gets more and more difficult to expand or even maintain what you’ve got.”

Some argue that the federal government shouldn’t be investing so heavily in the training of physicians when it doesn’t make the same kind of contributions to train other health professionals, Dr. Shannon said. It’s a challenge to get Congress to consider the long-term picture.

“We’re always dealing with the short-term issues and not the long-term,” he said. “The politics is pretty thick in this on a lot of levels, and it is a lot of money, but it is a major need.”

The Institute of Medicine also is examining issues surrounding GME. An 18-member committee has been appointed to look at the regulation, financing, governance and organization of GME. The group is charged with developing recommendations by the spring of 2014 on how to increase the physician work force to meet current and future needs.

More than adding residency slots

HR 6352, also known as the Resident Physician Shortage Reduction and Graduate Medical Education Accountability and Transparency Act, would do more than expand Medicare funding for an additional 15,000 GME slots. It also would require academic medical centers to meet new performance standards or risk payment reductions.

Dr. Bellini supports any proposal that helps to expand the pool of physicians. But the bill is unclear whether it would expand GME positions through new funding or a restructuring of the existing approach. “It needs to be a combination of both,” she said.

The American Medical Student Assn. would like to see more focus on ensuring that any expansion of funding is tied to meeting society’s health care needs, particularly through training more primary care physicians, said AMSA President Elizabeth Wiley, MD, MPH.

Representatives of the AMSA and the AAFP are concerned that the bill would allocate a portion of Medicare GME money to pay for residency positions that already are funded by other sources, such as hospitals.

“They would have the federal government pay for positions that already exist,” Dr. Wiley said.

The bill also emphasizes hospital-based residency programs at a time when there needs to be more focus on training physicians in community-based clinics and health centers, Dr. Stream said. “It doesn’t make sense that all of the funding has to flow through teaching hospitals,” he said.

Another bill, HR 3667, calls for a budget-neutral pilot program to test community-based residency training models. It emphasizes primary care training in rural and other medically underserved communities, and allows for more flexibility in training models while also requiring accountability, Dr. Stream said.

“There is a lot of concern about the nearly $10 billion that the federal government spends on GME every year, and what is it getting for that,” he said.

Meeting future health care needs

While debate continues about how best to fund and structure GME, many agree that proposals to cut GME funding suddenly would be devastating to the system.

After surveying GME programs, the Accreditation Council for Graduate Medical Education estimated in a 2011 report that a 50% reduction in Medicare GME funding would result in the closing of 2,551 residency and fellowship programs nationwide and the loss of 33,023 GME positions.

Such cuts would result in some U.S. medical school graduates losing their chance to complete training, said Dr. Wiley, of the AMSA. Cuts also would hit teaching hospitals, which rely on physicians-in-training to help care for patients at less cost than attending physicians.

“It’s a recipe for disaster,” she said.

At the same time, the AMSA doesn’t agree that there needs to be an expansion of GME funding — at least not yet. Under the current system, there are more residency positions than there are U.S. medical school graduates, and the country relies on international medical graduates to fill the remaining positions.

The AMSA supports federal funding to ensure only that there is a sufficient number of positions for U.S. medical school graduates, Dr. Wiley said.

“We don’t think it’s necessary to lift the cap yet,” she said. “We think it’s more important to focus on ensuring that medical schools are producing enough graduates to meet our needs.”

Dr. Stream said the focus needs to be on expanding the number of primary care physicians.

“Not a lot has been done to expand our training capacity for family medicine and primary care,” he said. “Our concern is that any expansion of GME positions needs to take into consideration the physician work force needs of the country. We don’t just need to produce more people with MD after their name. We need to produce people who will meet the health care needs of America.”

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External links

“Health Policy Brief: Graduate Medical Education,” Health Affairs, Aug. 16 (link)

Resident Physician Shortage Reduction and Graduate Medical Education Accountability and Transparency Act, HR 6352, (link)

Primary Care Workforce Access Improvement Act of 2011, HR 3667 (link)

“The Potential Impact of Reduction in Federal GME Funding in the United States: A Study of the Estimates of Designated Institutional Officials,” Accreditation Council for Graduate Medical Education, October 2011 (link)

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