IOM Report Calls for Changes to Graduate Medical Education Funding
The panel was led by former CMS administrators Donald Berwick and Gail Wilensky.
Background on Current Funding Process
Although some residency slots are paid for by states and other sponsors, most are federally funded by Medicare or Medicaid. In 2012, Medicare paid $9.7 billion for physician training, while Medicaid paid $3.9 billion. In addition, the Department of Veterans Affairs contributed about $1.4 billion, and HHS' Health Resources and Services Administration contributed about $500 million.
IOM Report Findings
Even though funding largely is paid for by the federal government, new doctors "have no obligation to practice in specialties and geographic areas where they are needed or to accept Medicare or Medicaid patients once they enter practice," according to the IOM report.
Meanwhile, federal funding for residency positions was mostly capped in 1997. Since then, funding from other sources has increased the number of training slots by 17.5%.
The panel concluded that simply increasing the number of residency positions would not address issues related to geographic and specialty distribution. According to Wilensky, Medicare's graduate medical education funds are disproportionally awarded to New York, New Jersey and Massachusetts (Robeznieks, Modern Healthcare, 7/29).
"America's health care system is undergoing profound change as a result of new technologies, and the recent implementation of the Affordable Care Act will further increase the focus on primary and preventive care," Wilensky said, adding, "It's time to modernize how graduate medical education is financed so that physicians are trained to meet today's needs for high-quality, patient-centered, affordable health care" (Millman, "Wonkblog," Washington Post, 7/29).
Broadly, the IOM report recommends transitioning GME funding to a "performance-based system." Although the proposal does not call for changes in funding levels, it does recommend changing how the funds are distributed (Kaiser Health News, 7/29).
Specifically, the report outlines five ways to reform the payment system for physician training:
- Keep aggregate GME support at the existing level with yearly adjustments for inflation, but transition toward performance-based payments, ensure accountability, incent innovation and phase out the existing payment system for Medicare;
- Create an HHS GME Policy Council similar to the Medicare Payment Advisory Commission, which would direct policy for geographic distribution and specialty configuration of the doctor workforce;
- Establish one GME Medicare fund that would be split 90-10 between operations and innovation, with reforms gradually growing innovation to 30% of the fund;
- Direct funding to GME-sponsoring organizations based on a per-resident amount with geographic adjustments while implementing performance-based payments; and
- Keep Medicaid funding for GME at each state's discretion, but improve transparency and accountability with reforms similar to those implemented for Medicare funding (Modern Healthcare, 7/29).
Implementing the recommendations would require action from Congress.
The Association of American Medical Colleges said the proposal would amount to a 35% reduction in funding for teaching hospitals, which AAMC President Darrell Kirch said would "threaten the world's best training programs for health professionals and jeopardize patients, particularly those who are the most medically vulnerable" (Kaiser Health News, 7/29).
The Committee of Interns and Residents, an affiliate of the Service Employees International Union health care division, said it is examining the proposal to determine whether it promotes workforce diversity, quality improvement and the protection of safety-net facilities. The group said that teaching hospitals often are "financially tenuous institutions taking care of vulnerable populations" in underserved communities. It asked, "Will our hospitals and, consequently, our residency programs, survive the latest budget cuts?" (Modern Healthcare, 7/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.