Enhancing Flexibility 

in Graduate Medical 

Education

S E P T E M B E R 2007

COUNCIL ON GRADUATE MEDICAL EDUCATION

Nineteenth Report

COUNCIL ON GRADUATE MEDICAL EDUCATION

Nineteenth Report

Enhancing Flexibility 

in Graduate Medical 

Education

S E P T E M B E R 2007
ii NINETEENTH REPORT OF COGME

The views expressed in this document are soley those of 

the Council on Graduate Medical Education and do not 

necessarily represent the views of the U.S. Government.
NINETEENTH REPORT OF COGME iii

Table of Contents

The Council on Graduate Medical Education ................................................................................................v

Members of the Council ................................................................................................................................. vii

Executive Summary ...........................................................................................................................................1

Recommendations ..........................................................................................................................................1

Background ........................................................................................................................................................3

Recommendations

RECOMMENDATION 1: Align GME With Future Healthcare Needs ...............................................................7

RECOMMENDATION 2: Broaden the Definition of “Training Venue” .............................................................9

RECOMMENDATION 3: Remove Regulatory Barriers to Executing Flexible GME Training Programs .......12

RECOMMENDATION 4: Make Accountability for Public Health the Driving Force for GME ......................14

References .........................................................................................................................................................19
iv NINETEENTH REPORT OF COGME
NINETEENTH REPORT OF COGME v

The Council on Graduate Medical Education

The Council on Graduate Medical Education (COGME) was authorized by Congress in 1986 to provide 

an ongoing assessment of physician workforce 

trends, training issues, and fi nancing policies and to recommend appropriate Federal and private-sector efforts to 

address identifi ed needs. The legislation calls for COGME 

to advise and make recommendations to the Secretary of 

the Department of Health and Human Services (DHHS); 

the Senate Committee on Health, Education, Labor, and 

Pensions; and the House of Representatives Committee 

on Commerce. Since 2002, COGME has been extended 

through annual appropriations.

The legislation specifi es 17 members for the Council. 

Appointed individuals are to include representatives of 

practicing primary care physicians, national and specialty 

physician organizations, international medical graduates, 

medical student and house staff associations, schools of 

medicine and osteopathy, public and private teaching 

hospitals, health insurers, business, and labor. Federal 

representation includes the Assistant Secretary for Health, 

DHHS; the Administrator of the Centers for Medicare and 

Medicaid Services, DHHS; and the Chief Medical Director 

of the Veterans Administration.

CHARGE TO THE COUNCIL

The charge to COGME is broader than the name 

implies. Title VII of the Public Health Service Act, as 

amended, requires COGME to provide advice and recommendations to the Secretary and Congress on the following 

issues:

1. The supply and distribution of physicians in the United 

States;

2. Current and future shortages or excesses of physicians in 

medical and surgical specialties and subspecialties;

3. Issues relating to international medical school 

 graduates;

4. Appropriate Federal policies with respect to the 

matters specifi ed in items 1–3, including policies 

concerning changes in the fi nancing of undergraduate 

and graduate medical education (GME) programs and 

changes in the types of medical education training in 

GME programs.

5. Appropriate efforts to be carried out by hospitals, 

schools of medicine, schools of osteopathy, and accrediting bodies with respect to the matters specifi ed 

in items 1–3, including efforts for changes in undergraduate and GME programs; and

6. Defi ciencies and needs for improvements in databases concerning the supply and distribution of, and 

postgraduate training programs for, physicians in 

the United States and steps that should be taken to 

eliminate those defi ciencies.

In addition, the Council is to encourage entities providing GME to conduct activities to voluntarily achieve the 

recommendations of the Council specifi ed in item 5.

COGME PUBLICATIONS

Reports

Since its establishment, COGME has submitted the 

following reports to the DHHS Secretary and Congress:

• First Report of the Council (1988);

• Second Report: The Financial Status of Teaching 

Hospitals and the Underrepresentation of Minorities 

in Medicine (1990);

• Third Report: Improving Access to Health Care 

Through Physician Workforce Reform: Directions 

for the 21st Century (1992);

• Fourth Report: Recommendations to Improve Access 

to Health Care Through Physician Workforce Reform 

(1994);

• Fifth Report: Women and Medicine (1995);

• Sixth Report: Managed Health Care: Implications 

for the Physician Workforce and Medical Education 

(1995);

• Seventh Report: Physician Workforce Funding Recommendations for Department of Health and Human 

Services’s Programs (1995);

• Eighth Report: Patient Care Physician Supply and 

Requirements: Testing COGME Recommendations 

(1996);

• Ninth Report: Graduate Medical Education Consortia: Changing the Governance of Graduate Medical 

Education to Achieve Physician Workforce Objectives 

(1997);

• Tenth Report: Physician Distribution and Health Care 

Challenges in Rural and Inner City Areas (1998);

• Eleventh Report: International Medical Graduates, 

The Physician Workforce and GME Payment Reform 

(1998);

• Twelfth Report: Minorities in Medicine (1998);
vi NINETEENTH REPORT OF COGME

• Thirteenth Report: Physician Education for a Changing Health Care Environment (1999);

• Fourteenth Report: COGME Physician Workforce 

Policies: Recent Developments and Remaining Challenges in Meeting National Goals (1999);

• Fifteenth Report: Financing Graduate Medical 

Education in a Changing Health Care Environment 

(2000);

• Sixteenth Report: Physician Workforce Policy Guidelines for the United States, 2000–2020 (2005);

• Seventeenth Report: Minorities in Medicine: An Ethnic and Cultural Challenge for Physician Training, an 

Update (2006); and

• Eighteenth Report: New Paradigms for Physician 

Training for Improving Access to Health Care 

(2007).

OTHER COGME PUBLICATIONS

• Scholar in Residence Report: Reform in Medical 

Education and Medical Education in the Ambulatory 

Setting (1991);

• Process by which International Medical Graduates are 

Licensed to Practice in the United States (September 

1995);

• Proceeding of the GME Financing Stakeholders Meeting (April 11, 2001) Bethesda, Maryland;

• Public Response to COGME’s Fifteenth Report (September 2001);

• Council on Graduate Medical Education and National 

Advisory Council on Nurse Education and Practice: 

Collaborative Education to Ensure Patient Safety 

(February 2001);

• Council on Graduate Medical Education: What Is It? 

What Has It Done? Where Is It Going? 2nd edition 

(2001);

• 2002 Summary Report (2002).

COGME RESOURCE PAPERS

• Preparing Learners for Practice in a Managed Care 

Environment (1997);

• International Medical Graduates: Immigration 

Law and Policy and the U.S. Physician Workforce 

(1998);

• The Effects of the Balanced Budget Act of 1997 on 

Graduate Medical Education (2000);

• Update on the Physician Workforce (2000);

• Evaluation of Specialty Physician Workforce Methodologies (2000); and

• State and Managed Care Support for Graduate Medical Education: Innovations and Implications for Federal Policy (2004).

For more information on COGME, visit the Council’s 

Web site at:

http://www.cogme.gov or contact:

Council on Graduate Medical Education

5600 Fishers Lane, Room 9A-21

Rockville, MD 20857

Voice: (301) 443-6326

Fax: (301) 443-8890
NINETEENTH REPORT OF COGME vii

Members of the Council on Graduate 

Medical Education

Kendall Reed, D.O., F.A.C.O.S., F.A.C.S.

Dean and Professor of Surgery

Des Moines University

College of Osteopathic Medicine

Des Moines, Iowa

Earl J. Reisdorff, M.D.

Director of Medical Education

Department of Medical Education

Ingham Regional Medical Center

Lansing, Michigan

Vicki L. Seltzer, M.D.

Professor and Chairman

Department of Obstetrics and Gynecology

Long Island Jewish Medical Center

New Hyde Park, New York

Jason C. Shu, M.D.

OB / GYN, Pennsylvania State University

Montoursville, Pennsylvania

William L. Thomas, M.D., F.A.C.P.

Executive Vice President for Medical Affairs

MedStar Health

Columbia, Maryland

Leana S. Wen, M.D., M.A.

Merton College

University of Oxford

Oxford, United Kingdom

Statutory Members

Assistant Secretary for Health

Department of Health and Human Services

Washington, D.C.

Administrator

Centers for Medicare and Medicaid Services

Department of Health and Human Services

Washington, D.C.

Undersecretary for Health

Veterans Health Administration

Department of Veterans Affairs

Washington, D.C.

Chair

Russell G. Robertson, M.D.

Professor and Chair, Department of Family Medicine

Feinburg School of Medicine

Northwestern University

Chicago, Illinois

Vice Chair

Robert L. Phillips, Jr., M.D., M.S.P.H.

Director

The Robert Graham Center: Policy Studies in Family 

Medicine and Primary Care

Washington, D.C.

Denice Cora-Bramble, M.D., M.B.A.

Executive Director

Goldberg Center for Community Pediatric Health, 

Children’s National Medical Center

Washington, D.C.

Joseph Hobbs, M.D.

Professor and Chair, Department of Family Medicine, 

and Vice Dean for Primary Care and Community 

Affairs

School of Medicine

Medical College of Georgia

Augusta, Georgia

Mark A. Kelley, M.D.

Executive Vice President

Henry Ford Health System

Detroit, Michigan

Rebecca M. Minter, M.D.

Assistant Professor, Department of Surgery

University of Michigan

Ann Arbor, Michigan

Thomas J. Nasca, M.D., M.A.C.P.

Senior Vice President and Dean

Thomas Jefferson University

Jefferson Medical College

Philadelphia, Pennsylvania

Angela D. Nossett, M.D.

Edward R. Robal Comprehensive Health Center

Los Angeles, California
viii NINETEENTH REPORT OF COGME

Designee of the Assistant Secretary for Health

Anand Parekh, M.D., M.P.H.

Senior Medical Advisor

Offi ce of Public Health and Science

Offi ce of the Assistant Secretary for Health

Washington, D.C.

Designee of the Centers for Medicare and 

Medicaid Services

Tzvi M. Hefter

Director

Division of Acute Care

Centers for Medicare and Medicaid Services

Baltimore, Maryland

Designee of the Department of Veterans Affairs

Barbara K. Chang, M.D., M.A.

Director of Medical and Dental Education

Offi ce of Academic Affi liations

VHA Central Offi ce (141),

Washington, DC and

Albuquerque, New Mexico

Staff, Division of Medicine and Dentistry, Bureau of 

Health Professions, HRSA, Department of Health and 

Human Services, Rockville, Maryland

Marilyn Biviano, Ph.D

Director, Division of Medicine and Dentistry

Lou Coccodrilli, MPH

Deputy Director, Division of Medicine and Dentistry

Jerald M. Katzoff

Executive Secretary and Designated Federal Offi cial 

for COGME

Eva M. Stone

Program Analyst and Committee Management Specialist 

for COGME

Anne Patterson

Secretary

Report Writing Group

Barbara K. Chang, MD, MA, F.A.C.P., Chair,

Denise Cora-Bramble, M.D., M.B.A.

Joseph Hobbs, M.D.

Mark A. Kelly, M.D.

Rebecca M. Minter, M.D.

Thomas J. Nasca, M.D., M.A.C.P.

Robert L. Phillips, Jr., M.D., M.S.P.H.

Kendall Reed, D.O.,F.A.C.O.S., F.A.C.S.

Renate Rockwell

Vicki L. Seltzer, M.D.

Contractor for Resource Paper Preparation

Insight Policy Research, Inc.
NINETEENTH REPORT OF COGME 1

Executive Summary

A central charge of the Council on Graduate Medical 

Education (COGME) is to make policy recommendations to the Nation with respect to the adequacy 

of the supply and distribution of physicians in the United 

States (US). This mandate includes recommendations on 

current and future shortages or excesses of physicians in the 

medical and surgical specialties and subspecialties. In its 

sixteenth report (2005), Physician Workforce Policy Guidelines for the United States, 2000-2020, COGME outlined 

a signifi cant gap between the expected physician supply, 

demand, and need for physicians. The nineteenth report 

builds upon the sixteenth report, which detailed the projected shortfall and need to expand the training pipeline 

for physicians in the US. The current report starts from 

the premise that, if our overarching goal is to adequately 

address the healthcare needs of the nation we need to

1) expand the number of graduate medical education 

(GME) trainees and 2) improve how GME is delivered. In 

order to address these issues, increased fl exibility is needed 

in terms of how GME training is structured, designed, accredited, and funded. A series of recommendations is proposed that would remove barriers to achieving an expanded 

and more appropriately trained physician workforce.

U.S. medical schools are increasing their enrollments 

in response to calls from COGME and the Association of 

American Medical Colleges (AAMC) to expand by 2015 

the number of graduating physicians by 15 and 30 percent, 

respectively. However, little expansion is planned for GME 

positions [1]. If medical school graduates are increased 

without a corresponding increase in GME positions, the 

result will be an increase in the number of US-trained 

physician residents without an increased production of 

independent physicians at the end of the medical education 

pipeline. Caps on the number of resident trainees imposed 

by Medicare (still the single largest funding agency for 

GME) restrict the number of physician residents and provide teaching hospitals with little fl exibility for expansion. 

Moreover, Medicare regulations regarding ambulatory and 

other nonhospital sites of training, governed by funding, 

have had the unintended consequences of concentrating 

GME training in limited modalities and settings. Numerous calls for reform of and innovation in GME have not 

been implemented due to these funding restrictions and 

resistance to change and tension between the provision of 

services and the educational goals of training programs. 

Thus, not only is the US providing too few training opportunities in GME, but current training models are not 

preparing physicians for the demands of future practice.

Flexibility is needed in curriculum, structure, funding, 

and accreditation of GME programs and positions. Specifi c 

recommendations address the need for greater fl exibility 

and how it may be achieved. The fi rst two recommendations 

are focused more on the content, structure, and setting of 

GME training, while the last two focus on funding mechanisms and regulations pertaining to these mechanisms.

RECOMMENDATIONS

RECOMMENDATION 1: Align GME with future 

healthcare needs

a. Increase funded GME positions by a minimum 

of 15%, directing support to innovative training 

models which address community needs and which 

reflect emerging, evolving, and contemporary 

models of healthcare delivery.

RECOMMENDATION 2: Broaden the 

defi nition of “training venue” (beyond 

traditional training sites)

a. Decentralize training sites

b. Create fl exibility within the system of GME which 

allows for new training venues while enhancing the 

quality of training for residents.

RECOMMENDATION 3: Remove regulatory 

barriers limiting fl exible GME training 

programs and training venues

a. Revise current Centers for Medicare & Medicaid 

Services (CMS) rules that restrict the application 

of Medicare GME funds to limited sites of care

b. Use CMS’s demonstration authority to fund innovative GME projects with the goal of preparing the next generation of physicians to achieve 

identifi ed quality and patient safety outcomes by 

promoting training venues that follow the Institute 

of Medicine’s (IOM) model of care delivery

c. Assess and rewrite statutes and regulations that 

constrain flexible GME policies to respond to 

emergency situations and situations involving 

institutional and program closure.

RECOMMENDATION 4: Make accountability 

for the public’s health the driving force 

for graduate medical education (GME)

a. Develop mechanisms by which local, regional or 

national groups can determine workforce needs, 

assign accountability, allocate funding, and develop 
2 NINETEENTH REPORT OF COGME

innovative models of training which meet the needs 

of the community and of trainees

b. Link continued funding to meeting pre-determined 

performance goals

c. Alter Title VII in order to revitalize support for 

graduate medical education.
NINETEENTH REPORT OF COGME 3

Background

medical school matriculants at a steady state, developing 

programs to encourage entry into primary care fi elds, and 

decreasing total GME positions with a 50/50 distribution 

of primary care/specialist training positions.

By 2000, it was evident that these earlier physician 

workforce predictions were not accurate. To date there is 

no evidence of a surplus of physicians. In fact, mounting 

analytical work has demonstrated that, barring unforeseen 

fundamental changes in either the need for or means by 

which healthcare is delivered, current trends will likely 

culminate in a signifi cant shortage of both primary care and 

specialist physicians within the next twenty years,.

Multiple factors have contributed to the marked shift 

in the predictions regarding the physician workforce. As 

outlined in COGME’s sixteenth report, the demographics 

of the aging population are anticipated to create a greater 

burden of chronic disease. The physician workforce is also 

aging, and while the number of physicians entering the 

workforce has been relatively constant, evidence suggests 

that these younger physicians will likely not work the same 

number of hours or as many years as their predecessors. 

These forces are expected to decrease the number of fulltime equivalent (FTE) physicians as compared to historic 

calculations.

In order to increase the current supply of physicians, 

an adequate number of GME training positions must be 

available. At present (academic year 2005-06), the number 

of Accreditation Council for Graduate Medical Education 

(ACGME)-accredited fi rst year residency positions is 

23,844, of which US medical school graduates fi ll about 

71% (allopathic , 64.4%; and osteopathic, 6.3%) and international medical graduates (IMGs) fi ll the remainder 

[5]. In 2006, osteopathic residency programs were fi lled 

by 1,300 new graduates (46% of all D.O. graduates, with 

the remainder in ACGME training positions) [6]. By the 

year 2019, the projected 21,500 allopathic medical school 

graduates and 5,500 osteopathic graduates will need a total 

of about 27,000 fi rst-year positions just to place all US 

graduating physicians. Assuming the number of international medical school graduates remains stable (in absolute 

numbers), there will be gap, relative to projected need, of 

about 10,400 fi rst-year positions.

Increasing the number of medical school graduates 

alone does not increase the supply of physicians, as 

completion of an accredited GME program is required 

to practice medicine. In order to increase the number 

of practicing physicians, there must be increases in 

GME positions. Moreover, if there is an increase in the 

number of US allopathic medical schools, there must be 

COGME’s sixteenth report, Physician Workforce 

Policy Guidelines for the United States, 2000-2020, 

outlined a signifi cant gap between the expected 

physician supply, demand, and need for physicians in 

the future [2]. COGME recommended three strategies to 

address this projected defi ciency: increase medical education and physician training capacity by 15% over the next 

decade; improve physician productivity; and establish a 

more rigorous and continuous assessment of the supply 

and demand for physicians in the United States. On the 

basis of the projected physician shortage, the Association 

of American Medical Colleges called for a 30% increase 

in enrollment in Liaison Committee on Medical Education (LCME) -accredited medical schools over the next 

ten years.

Coinciding with the imperative to increase the physician supply, dramatic changes have occurred within the 

graduate medical education (GME) and healthcare delivery 

systems with a shift towards outpatient and multi- or interdisciplinary care. However, the funding mechanisms for 

GME remain largely tied to hospital services. COGME’s 

fourteenth and fi fteenth reports sought to address the need 

for establishing a stable and more fl exible fi nancial model 

for supporting GME, but little change has occurred to date 

[3,4]. Unfortunately, current models of GME fi nancing 

often prevent the funding of innovative training models 

and expansion of GME positions outside of traditional inpatient settings. The gap in funding has widened the chasm 

between current models of training and future models of 

healthcare delivery which will likely be more outpatient 

and patient-centered in their approach.

The Council, therefore, recognizes three essential 

imperatives for establishing an adequate and well-trained 

physician workforce for the future: 1) the number of GME 

positions must be increased to address the future physician 

workforce needs of the United States public; 2) resident 

physicians must be trained in environments which are more 

refl ective of our evolving healthcare delivery system; and 

3) the fi nancing of GME must be realigned to achieve 

these goals.

A brief review of historical physician workforce recommendations provides an important perspective. In the 1980s 

and 1990s COGME and other workforce analysts predicted 

that by the beginning of the 21st century, the United States 

would experience an overall surplus of physicians but a 

shortage of primary care providers. In response to these 

predictions, COGME recommended reducing physician 

supply and increasing the production of primary care practitioners. The specifi c actions included holding the level of 
4 NINETEENTH REPORT OF COGME

 opportunity to create new funded graduate medical education programs, both in support of the undergraduate 

clerkships, as well as to absorb the increased numbers 

of US allopathic graduates.

Ensuring the adequacy and suffi ciency of GME positions to fulfi ll the needs of the public is dependent upon 

multiple factors. An adequate, stable, and fl exible funding 

source is critical. About 40% of current GME funding 

comes from the Medicare program, and all other positions 

are supported by alternate funding sources that vary by 

institution and state and are often subject to the vagaries 

of annual appropriations [7].

Apart from funding considerations, sponsoring institutions must provide appropriate patient and educational 

experiences as mandated by the Accreditation Council 

for Graduate Medical Education (ACGME) and American Osteopathic Association (AOA). Resources include 

adequate support for faculty supervision and teaching of 

residents, suffi cient patient experiences for training, and 

an ability to meet accreditation standards for both the 

individual training programs as well as the sponsoring 

institution. GME training should also provide training in a 

venue that is refl ective of future practice environments and 

healthcare delivery models. Both GME accrediting bodies (ACGME and AOA) have emphasized the importance 

of educational integrity, standardization of training, and 

development of innovative paradigms that refl ect future 

practice models. They also seek to dissociate service from 

education when possible.

Unfortunately, the current mechanisms for funding 

GME are largely disconnected from educational and 

professional ideals, and remain predominantly hospital-based and tied to delivery of inpatient patient-care 

services. Diffi culties in extending Medicare GME funds 

to outpatient settings and training venues, which are 

refl ective of current and future practice models, have 

created signifi cant tension. Institutions sponsoring GME 

must meet accreditation standards that emphasize a broad 

educational experience while maintaining the hospital’s 

bottom line, which has been historically dependent on 

resident service. This dilemma has raised the question of 

whether funding for GME programs should be directed to 

educational sponsors rather than to hospitals.

Regardless of how the current funding is directed, 

the Balanced Budget Act (BBA) of 1997 introduced a 

cap on funded GME positions. The BBA set the number 

of Medicare GME-funded resident positions to the number of approved positions the institution had in place in 

December 1996. Coupled with cuts to Medicare GME 

funding in the BBA of 1997 and the Balanced Budget 

Refi nement Act of 1999, sponsoring institutions and 

hospitals have found it diffi cult to expand their residency 

training programs even when they have suffi cient educational opportunities to support growth in their GME 

positions. Moreover, the BBA and subsequent regulations had other important effects on GME fl exibility. 

The BBA permitted indirect medical education (IME) 

funds be paid to select outpatient facilities; however, 

the law and particularly the regulations crafted by CMS 

(then HCFA) changed long-standing policy regarding 

GME payments for resident time in outpatient training. 

Until that time, training institutions could receive direct 

GME payments for outpatient training if they bore all, 

or substantially all of residents’ salaries and benefi ts. 

In 1998, the defi nition of “all, or substantially all” was 

changed to add the costs of the supervisory physician. 

This change created uncertainty and risk (audits), making 

outpatient training a less appealing option for hospital 

and training administrators.

This brings us to the crossroads of the public policy 

debate. With the accelerated pace of Medicare expenditures, GME funding has often been viewed as a target 

for federal cutbacks. Based on compelling data presented 

above, COGME believes that the physician workforce is 

in jeopardy and any cutbacks in GME funding could have 

serious repercussions for many years. The Council also 

understands that any additional funding for GME must 

be incorporated into the future plans for Medicare. Therefore, COGME proposes some innovative approaches to 

the current funding of GME programs.

The structure of GME funding, designed decades ago, 

has created barriers in training physicians for modern 

practice [8]. GME funds are tied to inpatient, hospitalbased care, while medical practice and education are 

shifting more to the ambulatory setting for both primary 

and specialty care services. With the growing mandates 

for competency and quality assessment of physician 

performance, curricula now require profi ciency-based 

training, utilizing both real and virtual patients and 

simulated patient experiences. While enhancing patient 

safety and care, these educational initiatives compete 

for patient care service time historically provided by 

resident physicians.

The future practice of medicine, and therefore 

training, should be coordinated, inter-disciplinary, and 

patient-centered, rather than fragmented among multiple 

unrelated providers and settings of care. Unfortunately, 

the current GME funding streams continue to perpetuate 

an outmoded style of medicine. Assigning residents to 

service-specifi c inpatient care roles leaves little room 

for the development of innovative GME programs featuring inter-disciplinary care, across all settings of care 

including the physician’s offi ce, hospital outpatient and 

inpatient services, nursing home, home, and communitybased care. If physicians continue to be educated in 

narrowly defi ned practice models, the future physician 

workforce will fall well short of society’s needs and 

expectations.
NINETEENTH REPORT OF COGME 5

In summary, the current funding and organizational 

structures for GME are ill-designed to meet the current and 

future needs of the public. Recognizing that this system is 

immense and extraordinarily complex, creative incremental 

or even transformative changes are needed to improve our 

GME system.. Moreover, alterations in both the funding 

and the administration of GME programs should be the 

result of carefully controlled demonstration projects, 

with evaluation of outlined outcome variables prior to 

widespread implementation of the innovative programs. 

To achieve the goal of enhancing the fl exibility of GME 

training and of assuring an adequate and well-trained physician workforce for the future, the Council recommends 

the following:

1. GME training must be aligned with future healthcare 

needs

2. The defi nition of “training venues” must be broadened 

to include non-traditional training sites

3. Regulatory barriers to executing fl exible GME training programs must be removed

4. Accountability for public health should be the driving 

force for GME.
6 NINETEENTH REPORT OF COGME
NINETEENTH REPORT OF COGME 7

Recommendations

scope of future needs of the population. In addition, GME 

is not uniformly educating residents/fellows in systems that 

will reduce medical errors.

The two problems (i.e., physician workforce shortage 

and training which must be more innovative to address the 

future needs of the population) can be approached with 

a solution that addresses both issues and strengthens the 

notion of GME support as a public good.

COGME’s present proposal is that funded GME 

entry-level slots be increased by a minimum of 15%, to 

accommodate COGME’s recommended 15% increase in 

graduating medical students (or begin to accommodate the 

30% increase recommended by the Association for American Medical Colleges (AAMC)) [15]. The entry-level 

positions would continue to be funded through incremental 

increases in resident caps that would follow the residents 

though the entire course of their core or primary specialty 

training (e.g., three to fi ve or more years). It is COGME’s 

intent that these positions should be actual new positions 

that are over and above the number currently being trained 

by an institution. For instance, if an institution is training 

residents beyond its CMS cap, then it could not apply additional funding to pay for existing resident positions—as 

the intent of COGME’s recommendation is to increase the 

number of GME positions as a way to increase the number 

of practicing physicians. Furthermore, we recommend that 

these funds be directed to programs that incorporate innovative training models which address community needs 

and which refl ect future models of healthcare delivery. 

In addition to payment for resident involvement in direct 

patient care, support of innovative training models should 

include funding for educational activities that are linked to 

improving patient care. We recognize that current mechanisms for funding GME cannot be abruptly changed, since 

this would likely have a dramatic adverse impact on the 

access to and the quality of healthcare that tens of millions 

of people receive. However, by providing funding for new 

programs and new positions in existing programs if they 

meet the new, required guidelines, an evolutionary process 

in GME funding as well as a major shift in the skill set of 

newly trained physicians may occur. The GME pilots may 

also have a ripple effect by developing and promoting new 

educational and clinical models.

We recommend that graduate medical education be 

increased by a minimum of 15% because there are some 

degree of uncertainty in the future physician workforce 

requirements. Moreover, we believe that the ageing 

population, physician retirement, and characteristics 

and practice patterns of new physician entrants ( working 

RECOMMENDATION 1: Align GME with 

future healthcare needs

a. Increase funded GME positions by a minimum of 

15%

i. to accommodate medical school expansion

ii. through support directed towards innovative 

training models which address community 

needs and which refl ect emerging, evolving, and 

contemporary models of healthcare delivery.

A physician workforce shortage is projected by 

COGME and others [9,10,11]. A complex array of factors will contribute to the shortage, including aging of the 

population (with its unique problems posed by multiple 

chronic conditions, complex treatment plans, multiple 

physicians, and an urgent need for improved communication, coordination, and continuity of care), an ever increasing availability of sophisticated diagnostic and treatment 

modalities, physicians working fewer hours, and a subset 

of physicians taking off extended periods of time during 

traditional working years or retiring earlier.

Several allopathic and osteopathic schools either are 

in the planning stages or have recently opened. In addition, several existing schools have recently increased or 

are planning to increase their class sizes. However, unless 

there is an increase in graduate medical education (GME) 

positions, the effect of an increase in the number of US 

schools and positions within US schools will be to increase 

in the percentage of GME slots fi lled by US medical school 

graduates, and an increase in the percentage of practicing 

physicians who are US medical school graduates. The current caps placed on GME positions limit the expansion of 

US allopathic medical schools to areas with existing GME 

programs, as GME programs in certain disciplines are essential components of the undergraduate medical education 

environment [12]. Expanding the number of US medical 

school graduates without expanding the number of GME 

positions will not have the desired effect of substantially 

increasing the number of physicians trained in US residencies who can enter the workforce, and may limit the settings 

in which medical school expansion may occur. To increase 

the number of practicing physicians in the US, there must 

be an increase in the number of GME positions.

In addition to a physician shortage, there is a consensus 

that defi cits exist in some aspects of current GME [13]. 

GME programs are not uniformly educating residents/fellows with all of the required skills to enable them to meet 

the array of future healthcare needs of their patients, nor the 
8 NINETEENTH REPORT OF COGME

fewer hours and retiring earlier) may require an even 

larger expansion.

To be eligible to apply for funding for new GME positions/programs under this proposal, program directors 

must demonstrate that they will educate their graduates 

to achieve and maintain profi ciencies in all six Residency 

Review Committee (RRC)/ACGME and AOA (American 

Osteopathic Association) core competencies [15] as 

well as in the fi ve core areas reviewed in the Institute of 

Medicine’s (IOM) Report, Health Professions Education: A Bridge to Quality (2003) [16]. These fi ve core 

areas are:

1. Delivering patient-centered care

2. Working as part of interdisciplinary teams

3. Practicing evidence-based medicine

4. Focusing on quality improvement

5. Using information technology.

An application for funding additional positions within 

an existing program or for a new program would need 

to demonstrate innovative education/preparation in all 

fi ve areas identifi ed by the IOM, as well as meeting all 

RRC/ACGME and AOA program requirements, with 

waivers as appropriate. Measurable outcomes would 

need to be identifi ed and approved in advance, both for 

funding the increased positions/new programs, and for 

regulatory approval. For funding and regulatory approval 

to continue, programs receiving positions would need to 

demonstrate that they are achieving their stated and agreed 

upon goals.

Potential examples of innovative educational programs 

may come from sources such as the residency demonstration initiative in family medicine: P4 – “Preparing the Personal Physician for Practice” [17]. Five categories of likely 

innovation training programs identifi ed by the P4 Steering 

Committee included: content and scope of training, duration of training (for instance shortening by overlapping 

with the fourth year of medical school or with the future 

attending practice site), type of location where a greater 

portion of the training takes place, structure of the training 

(including coordination of care among multiple specialties, interdisciplinary teams, and various institutional and 

community-based settings of care), and measurement of 

competency, as well as other innovative initiatives.

In late 2006, the Association of Program Directors 

in Internal Medicine concluded that redesigning resident 

education in internal medicine would require an emphasis 

on alterations in the educational environment, curriculum, 

oversight, reward system for the faculty, and funding 

[18,19]. Their suggestions, along with those from others 

who have advocated new strategies for reform [20], could 

spur numerous ideas for new programs or program modifi cations, which would then make the programs eligible to 

apply for the proposed 15% additional GME positions and 

concomitant new funding.

One example and possible model for implementation 

is the Educational Innovations Project (EIP) of the Internal 

Medicine Residency Review Committee (RRC) of the ACGME. The EIP initiative was open to all internal medicine 

training programs with exemplary accreditation track records that applied for, met criteria for innovation, and were 

accepted in response to a request for applications that was 

launched in December 2005, with the fi rst programs being 

notifi ed of acceptance in September 2006 [21]. Although 

the ACGME’s EIP program did not increase the complement of residents in a program, programs had an incentive 

to apply in order to maintain a 10-year accreditation site 

visit cycle. In return, programs are required to fi le a brief 

evaluation form every year describing the outcomes of their 

innovations and any changes in the program. As the EIP 

program is somewhat experimental in nature, standardized 

evaluation tools are being developed to assess whether the 

goals of fostering innovative approaches to teaching and 

attaining competency are being achieved.

ACGME is also attempting to promote innovation in 

the learning environment and in accreditation practices 

through its Committee on Innovation in the Learning Environment (CILE), which was chartered in 2004 to move 

beyond duty hours to other ways to improve the educational 

environment [22]. The fi rst CILE report was presented to 

the ACGME board in 2007. The CILE report recommends 

a number of initiatives to foster greater fl exibility and 

improvements in how duty hours are implemented and to 

improve development of the ACGME core competencies 

in ways that integrate quality education with quality improvement in patient care, while at the same time applying 

industrial and human engineering concepts to the training. 

Projects include a study of ‘exemplary’ institutions to see 

what factors foster innovation and optimal clinical and 

training milieus. As noted, ACGME’s efforts in educational 

innovation are not linked to increased complements of 

trainees.

One area in need of increased fl exibility is the ACGME’s approval process for the number of trainees in a 

program. The approval process is administered through 

the Residency Review Committees or ‘RRCs’ and is timeconsuming at best and at worst frequently a major barrier 

that must be negotiated in order to expand the number of 

trainees in any accredited program. Moreover, RRCs vary 

considerably in their receptivity to requests to increase 

complements and their criteria for granting increases are 

not standardized.

The Department of Veterans Affairs (VA) is also innovating. In 2006, the VA invited VA teaching facilities, 

in collaboration with their academic affi liates, to apply for 

additional residency training positions through the VA’s 

“GME Enhancement” initiative, a fi ve-year plan to increase 
NINETEENTH REPORT OF COGME 9

the number of VA-funded resident physician positions by 

about 2,000 [23]. A competitive application process was 

used to allow facilities to request additional positions under 

one of three requests for proposals (RFPs). The Critical 

Needs/Emerging Specialties RFP permits VA facilities to 

address locally-identifi ed needs for existing or emerging 

specialties. VA’s New Affi liations and New Sites of Care 

RFP seeks to expand training sites in non-traditional locations such as VA community-based outpatient clinics, and 

its Educational Innovation program awards positions based 

upon willingness to change current educational systems 

[24]. Educational Innovation, open to core residencies in 

internal medicine, general surgery and psychiatry, asks programs to redesign medical education and, where appropriate, the related patient care delivery systems. The program 

requires that facilities enhance existing educational infrastructure (including attention to faculty development) to 

support the innovation(s) proposed. The eligibility criteria 

for Educational Innovation were modeled on those used for 

the ACGME’s EIP effort in internal medicine. Successful 

applicants are required to demonstrate how the proposed 

innovations are amplifi ed throughout a training program 

or post-graduate level. Thus, for example, the addition of 

one position may mean that 12 residents each have a onemonth experience in quality improvement, patient safety, 

or a simulation lab. Such additional positions, although 

few in number, can have dramatic impacts on the ability of 

programs to offer innovative educational experiences in an 

environment in which duty hours have been restricted and 

coverage of clinical rotations may be diffi cult.

Applied to CMS-funded positions, the innovations 

model would provide funding for educational activities that 

are linked to improving patient care, but not restricted to direct patient care activities. Innovations could infl uence:

• The content or curriculum of training (i.e., instructional design);

• The clinical environment of training (innovations that 

focus on patient safety and patient-centeredness), the 

need for collaborative care delivery (i.e., inter-professional or inter-disciplinary models); or

• The use of educational technology (e.g., simulation).

Criteria for evaluation of the requests for proposals 

(RFPs) or applications (RFAs) and for evaluation of implementation would need to be developed (e.g., COGME or 

other professional groups could participate in this effort 

as federally-appointed advisors to CMS). An NIH-type 

study section or the VA model of proposal or application 

review could be used to evaluate the application according 

to criteria established in the RFA or RFP. If the proposed 

15% increase in entry-level residency positions consists 

of innovative programs which are very thoughtfully and 

carefully developed and executed, not only will there be 

an increase in the number of practicing physicians, but 

also GME (and hence, healthcare) in the United States 

can be transformed. Aligning GME expansion with the 

IOM recommendations for improving quality and safety 

will enhance the role and perception of GME funding as 

a public good.

Recommendation 2: Broaden the 

defi nition of “training venue” 

(beyond traditional training sites)

a. Decentralize training sites

b. Create fl exibility within the system which allows 

for exploration of new training venues while enhancing the quality of training for residents.

Graduate medical education (GME) has traditionally 

been sponsored by and centered in the associated hospital 

systems of academic health centers and community teaching hospitals. The traditional role of hospitals in GME 

has evolved because of their access to adequate patient 

populations and case mix to support the requirements of 

resident education training and external funding to facilitate 

a mutually benefi cial service and educational relationship. 

At one time, the hospital infrastructure contained a patient 

population with broad healthcare needs ranging from the 

evaluation and management of chronic disease to urgent, 

emergent and critical care. Many of these hospitals possessed diverse fi nancial and administrative resources that 

supported unfunded GME requirements, which added 

greater stability to the GME infrastructure and thus permitted long-range educational planning and development.

Although teaching hospital-sponsored GME has served 

the public well, changes in healthcare delivery and management have had an undesired impact on the effectiveness 

of resident education in these settings. Diagnostic and 

therapeutic technological advances, fi nancial constraints, 

and expanding regulatory control have shifted, and decentralized traditional hospital care to non-hospital clinical 

venues. This decentralization has resulted in a more subspecialized hospital environment, more expertly focused 

on a narrower portion of the disease spectrum, albeit more 

acute, unstable, and complex. These and other changes 

(e.g., decreased lengths of stay, fl uctuating inpatient census, 

and narrower case mix) have made clinical experiences, 

exclusively in these inpatient settings, relevant to a smaller 

portion of the overall clinical experiences required to 

train most physicians in response to the comprehensive 

needs of today’s and future healthcare delivery systems 

[25,26,27,28].

Changes in the healthcare delivery system have affected 

the care provided in non-hospital settings. A larger number 

of problems traditionally managed in hospital settings, now 

present in non-hospital venues. Likewise, the distribution 

of medical technological advances has resulted in the diagnostic and therapeutic management of more complex, 
10 NINETEENTH REPORT OF COGME

urgent, and chronic clinical problems in these expanding 

patient care environments. These changes in healthcare 

delivery and the growing emphasis on prevention, wellness, 

patient/family-centeredness and population health, coupled 

with the needs of an aging patient population, have created additional layers of complexity in an already complex 

ambulatory primary and subspecialty care system.

Many of the changing and emerging non-hospital 

clinical environments have been developed in response to 

needs other than those of GME and may lack planning and 

resources necessary to support an effective resident training interface even when an appropriate patient population 

exists for training [29]. Potential clinical venues for new 

teaching site development exist in the teaching and nonteaching hospital-based clinical services, private medical 

practice setting, health maintenance organizations, and at 

community health centers (CHCs) among others. However, relegating resident education to the least-supported 

and organized clinical setting in any organization with 

exclusive exposure to a contracted spectrum of patients 

(e.g., uninsured) may respond to specifi c service needs, but 

would be counter-productive to the appropriate preparation 

of residents for future practice [30].

The current concentration of GME in teaching hospitals 

and related venues is inconsistent with the decentralization of many aspects of healthcare to non-hospital settings 

because of cost and demonstrated clinical effi cacy. The 

production of appropriately prepared physicians to provide 

healthcare services to meet the public’s healthcare needs 

requires GME models be created and adapted that ensure 

residents receive relevant educational experiences in clinically effective contemporary healthcare delivery settings. 

Extensive changes in curriculum and faculty development 

will be required to interface GME appropriately with 

changing and newly emerging clinical venues to achieve 

desired educational outcomes.

GME has depended on an appropriate interface of 

education and service in healthcare environments where 

the service priority often adversely infl uences the quality 

of learning experiences. The linkage of service and GME 

can make the transition of aspects of resident training to 

more educationally relevant teaching venues diffi cult, 

especially given the constraints imposed by current GME 

funding policies. The educational defi ciency produced by 

training in settings which are not contemporary examples 

of effective clinical care delivery has been noted by resident 

graduates of traditional GME systems and their postgraduate employers as impediments to appropriately functioning 

in today’s healthcare environment [31,32,33,34,35,36]. The 

regulations of accrediting bodies often are not aligned with 

the needs for educational reform, which could permit more 

resident training in more relevant non-hospital settings. As 

hospital care is transformed, the management needs of the 

most unstable patients and the complexity of the ambulatory 

care environment increases, this service and educational 

linkage is likely to affect the training in new teaching venues 

without substantial GME fi nancing reform [37,38].

The effective training of physicians to meet the needs 

and realities of today’s clinical practice environment requires realignment of GME experiences with a diversity of 

models and/or settings of effective contemporary healthcare delivery. To ensure that GME occurs in clinical settings 

capable of supporting appropriate resident training requires 

a reassessment of the educational relevance of the clinical 

services and systems of care present in existing, new, and 

planned hospital and non-hospital based settings. Academic 

health centers and traditional community teaching hospitals 

need to develop external clinical affi liations with entities 

to expand and diversify teaching resources available to 

promote more effective and relevant GME.

Creating GME experiences with targeted impact such 

as increased healthcare access, appropriate specialty distribution, and care for vulnerable patient populations remains 

a desired but diffi cult task. Simply moving GME into 

non-hospital venues may not result in a greater production 

of the number and types of well-trained physicians to respond to legitimate workforce needs. The multiple venues 

of ambulatory care (e.g., physicians’ offi ces, community 

health centers, hospices and extended care, long-term care, 

procedural, and rehabilitation venues) may provide access 

to educationally relevant patient populations, but present 

major challenges for physicians teaching and training in 

these settings [39,40]. The educational processes used in 

traditional clinical teaching settings may be ineffective in 

environments that are mostly ambulatory with short periods 

of actual physician-patient and supervising faculty-trainee 

contact. For example, approaches to effective continuity and 

comprehensive clinical care may require instruction over extended periods using multiple patient encounters which may 

include face-to-face, direct telephone, tele-health instruction, 

e-mail, coordination with interdisciplinary teams who are 

actually seeing the patient and providing direct care between 

physician contacts, coordination with case managers, and 

patient and family instruction in self-management.

New approaches to clinical education must emphasize 

healthcare systems, health of populations, patient/familycentered care, continuous care, prevention, and wellness as 

well as the use of point-of-service, evidence-based clinical 

information in settings where patients have access to a 

medical home to promote understanding and coordinating 

of the complex interactions between various levels of care. 

Moreover, changes in the approach to education, as noted 

above, are required for residency training in specialties with 

the greatest experience in ambulatory instruction. These 

predominately ambulatory specialties also face fi nancial 

and regulatory constraints that impede the development of 

needed educational innovations to effectively teach for a 

rapidly evolving system of clinical care.
NINETEENTH REPORT OF COGME 11

New training venues, both in hospital and non-hospital 

settings, will require considerable investment to develop 

more effective and relevant educational experiences and 

infrastructure, while not adversely impacting patient care 

(especially in traditional non-teaching environments). 

Physicians with appropriate educational skills must be 

present to teach residents in evolving models of clinical 

practice and to evaluate their competencies. Emergent and 

new GME venues must be committed to education and have 

an infrastructure appropriately resourced and to support 

these novel educational endeavors. The GME curriculum 

should be designed to create an adequate balance between 

service and education, encompassing ever-changing residency review committee (RRC) requirements for various 

specialties. Medical information systems should be present 

to support the coordination of clinical care, provide access 

to current medical information, facilitate the assessment 

of quality of care delivered to individual patients and to 

populations, and provide online access to ‘real-time’ decision support. Training occurring in these settings should 

use, or be willing to experiment with, new models of care 

that incorporate concepts such as patient-centered care, 

population health, IT facilitated patient communications 

beyond hospitalization and offi ce visits, quality assessment, 

and healthcare access for vulnerable populations.

GME training venues should provide access to appropriate numbers and types of patients refl ecting the demographics and healthcare needs of the general population to 

facilitate competencies to manage appropriately frequently 

occurring medical and surgical problems. In response to 

healthcare access problems and medically-underserved populations, training opportunities must be created in clinical 

settings that serve vulnerable populations to ensure residents 

develop skills and understand concepts necessary to provide 

care in these settings [41,42]. A compelling need for greater 

GME fl exibility should include training in venues created 

in response to specialty distribution, need for community 

healthcare advocacy, and physician workforce needs as it 

relates to underserved and at risk populations [43].

Clearly, traditional GME sponsors, the teaching 

hospitals, must make fundamental changes to ensure the 

appropriate resources required to support comprehensive 

GME reform are present. Traditional GME sponsors must 

develop additional educational venues in clinical environments outside the hospital and with non-affi liated services 

and organizations to increase the diversity of educational 

experiences available for residents. Restrictive requirements that impede the creation of new training affi liations 

with non-related clinical service entities must be removed 

to facilitate educational reform [44].

Although expanded teaching venues may provide 

access to a larger number and more appropriate mix of 

patients, use of alternative venues must be associated with 

the creation of an educational process that maximizes 

resident learning and complements patient care activities. 

Exploring such partnerships could be the subject of newly 

authorized Title VII and other programs such as the P4 Initiative (i.e., “Prepare the Personal Physician for Practice”) 

[45], which will identify best practices for the education of 

future physicians. Evaluation systems aimed at determining 

the educational benefi ts and potential of these expanded 

non-hospital clinical venues and non-academic clinical 

settings should be planned from the outset.

Boosting the production of well-trained physicians to 

serve the diverse communities requires greater fl exibility 

in the defi nition of a GME sponsor, which traditionally has 

been a teaching hospital or medical school. Non-teaching 

hospital-based entities (e.g., managed care organizations, 

public and private healthcare consortia) that are capable 

of assembling all the resources for effective GME to address healthcare access, quality, costs and workforce needs 

should be strongly considered as primary sponsors of 

GME. Such sites should have access to external fi nancial 

resources or support that now funds traditional GME. Alternatively, such sites may participate in GME as affi liates of 

the sponsoring institution in order to provide more limited, 

but highly valuable clinical rotations [46].

Cooperative activities between various healthcare delivery systems and medical schools linked to addressing 

healthcare workforce needs provides an opportunity to train 

primary care physicians in settings where the healthcare 

need may be most critical. This corporate relationship could 

range from a loose confederation of healthcare and medical 

education organizations to a centralized state-sponsored 

GME consortium. Educational emersion in the community 

may improve the likelihood that greater numbers of resident 

graduates choose to practice in these settings and, if not, 

at least will leave with a heightened awareness of these 

medically disadvantaged communities [47]. Nonhospitalbased entities that could serve as GME sponsoring units 

may include networks of community healthcare centers 

managed by non-hospital agencies (e.g., corporate and 

private) and managed care systems.

As new GME venues develop in response to future 

practice needs, ongoing assessments need to address effective provision of competency-based training in a variety of 

clinical settings. New teaching venues must also address 

more general GME problems such as resident duty hour 

restrictions, erosion of hospital or other sponsoring unit 

support for GME, GME reliance on volunteer faculty, and 

educational cross-subsidy [48].

The pressure to increase GME positions in response to 

the increased production of physicians by American medical schools provides an opportunity to experiment with 

new systems of education in evolving healthcare delivery 

systems. Potential changes in the participants in GME 

provide further opportunities to develop training models 

that respond to unique workforce needs.
12 NINETEENTH REPORT OF COGME

Greater fl exibility in the numbers and types of clinical 

venues used to enhance training relevancy and physiciantraining capacity in response to the healthcare needs of the 

nation can be accomplished by the following:

• Decentralize GME using a variety of clinical venues to 

expose physician residents to more diverse patient populations and systems of care that mirror the contemporary 

and evolving American healthcare delivery system.

• Implement competency-based education in new and 

emerging teaching settings associated with appropriate learning and assessment tools to ensure consistent 

quality of education.

• Include resident participation in interdisciplinary, 

collaborative care models;

• Expose residents to diverse clinical care settings and 

populations to improve geographic and specialty 

distribution based on workforce needs.

• Augment resident training opportunities in clinical 

settings serving vulnerable populations as a strategy 

to increase the number of physicians who ultimately 

practice in these settings.

• Integrate patient/family-centeredness into GME to ensure residents understand the important role patients can 

play in assessing the adequacy of healthcare delivery 

and as partners in their own healthcare management.

• Enhance use of information technology to facilitate pointof-care access to medical information and documentation to ensure quality healthcare and patient safety.

• Incorporate into resident education an increased use 

of clinical practice assessments to defi ne healthcare 

defi ciencies and to create and measure interventions 

for quality improvement.

• Remove the funding disincentives for the diversifi cation of resident training venues to include both public 

and private entities to enhance GME relevancy.

• Expand capacity of GME in response to increased 

production of physicians by U.S. medical schools.

• Facilitate the development of service and educational 

relationships between traditional sponsors of GME 

and networks of federally qualifi ed community healthcare centers.

Recommendation 3: Remove 

regulatory barriers to executing 

fl exible GME training programs and 

expanding training venues

a. Address several of the limitations that currently 

exist within the Centers for Medicare & Medicaid 

Services (CMS) rules for expanding application of 

Medicare GME funds to nonhospital sites of care.

b. Invite CMS to use its demonstration authority 

to fund innovative GME demonstration projects 

with the goal of preparing the next generation of 

physicians to achieve identifi ed quality and patient 

safety outcomes by promoting training venues that 

follow the IOM’s model of care delivery.

c. Assess and rewrite statutes and regulations that 

constrain flexible GME policies to respond to 

emergency situations and situations involving 

institutional and program closure:

✧ To ensure the continued training of displaced 

residents; and

✧ To permit fi ve-year affi liation agreements (as 

opposed to the current three-year) in the case of 

abrupt hospital closure to permit suffi cient time 

for damaged hospitals to be repaired; and

✧ To require review of the impact of the loss of 

training positions on the community (e.g., to 

consider how best to preserve, sustain, or reconstitute local/regional physician workforce) 

in situations where a hospital is not able to resume training at previous levels due to natural 

disasters or unforeseen circumstances which 

result in the abrupt interruption, closure, or 

discontinuation of training programs, and the 

transfer of positions made permanent; and

✧ To provide hospitals receiving residents due to 

emergency closure of another hospital a temporary FTE cap adjustment and be allowed to 

exempt displaced residents from the three-year 

rolling average; and

✧ To clearly defi ne ‘displaced resident’ and who 

is eligible for reimbursement under this new 

rule, so there is no ambiguity.

The Social Security Act (the Act), as amended, and 

its associated regulations establish a methodology for determining payments to hospitals for the costs of approved 

graduate medical education programs. Section 1886(h)(2) 

of the Act, as added by COBRA, sets forth a methodology 

for paying hospitals for Medicare’s share of the direct costs 

of a GME program at the hospital. The direct costs include 

the residents’ salaries and fringe benefi ts, the teaching 

physicians’ salaries and fringe benefi ts, and the program’s 

overhead costs [49].

Hospitals that have residents in one or more approved 

GME programs also receive a payment to refl ect the higher 

indirect patient care costs of teaching hospitals relative to 

non-teaching hospitals. For example, teaching hospitals 

typically offer more technologically advanced treatments 

to their patients, and therefore, patients who are sicker 

and need treatment that is more sophisticated are more 

likely to go to teaching hospitals. Furthermore, there are 
NINETEENTH REPORT OF COGME 13

additional costs related to the presence of ineffi ciencies 

associated with teaching residents that result from the additional tests or procedures ordered by residents and the 

demands put on physicians who supervise, and staff who 

support the residents.

The Balanced Budget Act (BBA) of 1997 (Pub. L. 

105-33) established a limit on the number of residents that 

a hospital may include in its resident count for payment 

purposes—simplifi ed, it is the institution’s resident count 

on or before December 31, 1996 [50]. Although hospitals 

have the fl exibility to train residents above or below their 

caps, they do not receive funding beyond their cap.

The statute provides that payments are based on the 

average of the number of FTE residents reported in the 

current year, the prior year, and the penultimate year, 

subject to their cap. If a hospital increases its number of 

FTE residents, as a result of the three-year rolling average 

rule, the hospital would be able to count only one-third of 

the additional FTE residents in that year, two-thirds of the 

additional FTEs for the next year, and the full number in 

the third year, assuming there are no other changes in the 

number of FTE residents training in subsequent years. The 

same rule applies if a hospital decreases the number of its 

FTE residents. There are certain exceptions to the rolling 

average rule such as for newly accredited programs or when 

residents train at a host hospital from a closed hospital or 

closed residency program.

In addition to training in hospitals, residency training 

may also occur at nonhospital sites such as physician offi ces 

or community health centers. Under some conditions, for 

purposes of direct GME payments, hospitals have been able 

to count the time residents spend training in nonhospital 

sites [51]. Before October 1, 1997, for indirect medical education payment purposes, hospitals could not count the time 

residents spend training in nonhospital settings. While the 

BBA allowed hospitals to count time residents spent training 

in nonhospital sites for indirect medical education purposes, 

Medicare regulations redefi ned “all or substantially all of the 

costs for the training program in the nonhospital setting” as 

the residents’ salaries and fringe benefi ts (including travel 

and lodging where applicable), and the portion of the cost 

of teaching physicians’ salaries and fringe benefi ts attributable to direct GME [52]. Therefore, post-1999, hospitals 

had to include payment of off-site supervisors even if they 

voluntarily participate in teaching—creating a disincentive 

to expand training in nonhospital settings. Requiring that 

these volunteers are paid from direct graduate medical 

education (DGME) funds means that resources are diverted 

from other important educational initiatives. A regulatory 

change that recognized voluntarism (i.e., that did not require 

direct payment of voluntary faculty) would improve fl exibility in training sites.

Another mechanism to address the issue of innovation in GME, including alternative, including nonhospital 

training sites, would be to grant waivers to selected sites 

as described in Recommendation 1 of this report. According to COGME’s proposal, institutions receiving an 

increase in their cap would have to demonstrate innovative education/preparation in all fi ve areas identifi ed by 

the IOM, as well as meeting all RRC/ACGME ‘necessary’ 

requirements, with waivers as appropriate. By focusing 

on innovative approaches to medical education, which 

would teach, for example, advanced clinic access, chronic 

disease management, inter-disciplinary care, informatics and patient-centered care, long-term savings would 

be realized by CMS through reduced inpatient services. 

Importantly, for such innovations in education of physician residents to be approved and monitored, performance 

measures would have to be developed and agreed upon 

prior to implementation, and ongoing evaluation of 

achievement of educational and clinical goals built into 

the program guidelines. Continued funding of the additional resident positions would be linked to achievement 

of performance goals.

GME Flexibility in Situations of Emergency 

and Institutional Closures

In the wake of the devastating effects of hurricanes in 

Louisiana in 2005, the physician workforce in New Orleans and much of southern Louisiana was devastated and 

residents displaced. For example, the closure of Charity 

Hospital alone forced the redistribution of more than 500 

resident physicians and the State could ill-afford the loss 

of large numbers of training positions. The disruption and 

redistribution was made more diffi cult by lack of GME 

policies covering emergency situations and institutional 

closure. Temporary GME transfers under existing policies 

addressed the need to permit residents transferred to local 

hospitals to complete their training but did not provide for 

national redistributions to preserve training positions vital 

to local communities. The transfers also created fi nancial 

hardships for accepting institutions because the CMS GME 

payments were put on a three-year rolling average schedule, which meant that hospitals received only one-third of 

payments in year one and will not get full reimbursement 

for transferred positions until the third year. While CMS 

issued a regulation that suspended the three-year rolling 

average in emergency situations, it was in place only for 

the Katrina emergency and applied only for the time period 

from August 29, 2005 to June 30, 2006.

Continuing uncertainty leaves institutions that receive 

additional residents in the uncomfortable position of not 

knowing if they should invest further in their educational 

infrastructure to accommodate the transferred positions. 

Moreover, the failure to develop effective policies now to 

deal with these sorts of dislocations is likely to signifi cantly 

impact medical residents, training institutions, and the 

broader public when future exigencies arise.
14 NINETEENTH REPORT OF COGME

Recommendation 4: Make 

accountability for the public’s 

health the driving force for graduate 

medical education (GME)

a. Develop mechanisms by which local, regional or 

national groups can determine workforce needs, 

assign accountability, assign funding, and develop 

innovative models of training which meet the needs 

of the community and of trainees

b. Link continued funding to meeting pre-determined 

performance goals.

Graduate medical education (GME) is a public good 

funded by billions of dollars from state and federal public 

funds as well as private payers, yet it is insuffi ciently accountable for its product [7]. In COGME’s opinion, the ultimate accountability of GME is to the health of the public. 

Without an agreed upon set of overarching principles to 

guide GME, each provider of GME funding could become 

more parochial in their goals—e.g., CMS may wish to focus on the health of Medicare benefi ciaries and their ability 

to access care; state funders may have specifi c interest in 

the production of particular physician specialties or their 

distribution; and the VA may become more interested in 

expansion and innovations in training that only advance the 

health of veterans and other benefi ciaries. Private payers 

might be focused on adequate access or on educational 

innovations that stress cost-effectiveness. Recent evidence 

suggests that few people, even within training institutions, 

understand the GME payment process or purposes [53]. 

Without a specifi c sense of the shared undertaking in part, 

sponsors of training programs are free to focus solely on 

their own workforce needs, well-reimbursed procedural 

specialties, and prestige—within the constraints imposed 

by accrediting bodies. Moreover, the current situation 

leaves little incentive to operate physician training in the 

broader public interest and also means that there is little 

reason to do meaningful evaluation of outcomes. In this 

report, COGME recommends that the public good GME 

represents should be made explicit, accountable, and subject to regular and rigorous evaluation and management. 

The evaluation and management function will need fi nancial leverage, including control of some funding of GME 

within states or regions. Active evaluation and management 

will also require a national vantage point to recommend 

and promote GME policy.

GME is a multi-billion dollar enterprise that produces 

a key workforce for a $2 trillion healthcare industry. However, from a national perspective, the production of this 

important professional pipeline is relatively unsupervised. 

Many states have GME committees or advisory boards, but 

few states actively analyze, specify, or manage this production relative to the needs of their state. A few, such as 

Utah and Minnesota, have analytic and strategic planning 

capacities plus some critical fi nancial leverage over their 

GME pipeline. Similarly, at the national level, COGME has 

contracted for analytic capacity and produced many reports 

about managing this pipeline, but it holds no data, has no 

monitoring partnerships with states, and remains advisory, 

without any real capacity to directly infl uence GME. For 

such an expensive pipeline with important outputs for 

our country, COGME fi nds it remarkable that GME, like 

healthcare in general, remains a ‘non-system.’

COGME has long advocated that the outcome of 

public funding for GME should “achieve the number and 

specialty mix of physicians needed by the nation” [54]. 

This goal has been circumvented by competing fi nancial 

needs of hospitals [55], fragmented governance of GME 

both within hospitals and regionally [56], a lack of tightly 

integrated and mutually supportive interventions [57], and 

antiquated fi nancing policies [58]. Options exist for relieving the last issue—e.g., fi nancing of GME—that would 

increase both fl exibility and accountability of GME to the 

American public.

Regional and State-level initiatives

Identifi cation of individual state and regional 

needs regarding workforce numbers, distribution 

and specialty mix should be addressed at the 

level of the state or region, preferably by an 

appointed commission.

Workforce issues regarding specifi c specialty needs 

and distribution of that workforce might be considered, 

in signifi cant part, the responsibility of individual states 

since most workforce issues are local or regional, rather 

than national. Governor-appointed commissions, e.g., a 

Medical Education Commission, could identify issues 

specifi c to individual states. All states and stakeholders 

must realize that the recent national call to increase medical 

school graduates by 15-30% over the next 10 years will not 

translate automatically into the individual states having an 

adequate number, distribution or specialty-mix of physicians. Physicians are more likely to ultimately practice 

in a state in which they originally lived, went to medical 

school, and/or completed GME training. Some states can 

focus more on ‘growing’ their own physicians by attracting 

more students from the state to their own medical schools 

and development of a wider diversity of GME training opportunities within those states specifi cally focused on state 

workforce needs. Some states, with historically strong and 

numerous GME programs will continue to produce physicians for other states. A combination of new and expanded 

programs, recognizing the role that some states play as ‘net 

exporters’ of physicians, will be critical to the successful 

expansion of GME.

Considerable variation exists in the processes for and 

extent to which states currently fund GME [59]. Funding 

new or expanded GME programs must become, at least 
NINETEENTH REPORT OF COGME 15

in part, the responsibility of the individual states through 

appropriations of state funds raised through taxes paid into 

a designated medical education fund. A medical education 

fund could and probably should be unconnected to state 

Medicaid funds. The determinants of how much money 

is needed to sustain this fund annually would be made 

by a Governor-appointed Medical Education Commission and would be a recurring state appropriation. Such 

commissions could be state-based or be regional with a 

consortium of states supporting them depending on geographic proximity, referral patterns, or existing patterns 

whereby some states are net producers and exporters of 

training and others are importers. Experiences in some 

states suggest that such commissions do not necessarily 

increase costs or bureaucracy and can increase funding and 

fl exibility [60]. The commissions operating in at least two 

states, Utah and Minnesota, are instructive, but may not 

be readily transferable to other states. They offer working 

examples of what can be accomplished, structural models, 

and process examples.

The Medical Education Commission should include 

representation by a wide variety of constituents and 

stakeholders including representatives from all state medical schools, academic health centers, teaching hospitals, 

physician specialty societies, state legislature, public 

health, major healthcare insurers, lay public, state health 

policy leaders or any other contributors identifi ed by the 

states. The Commission should meet regularly, dependent 

on state needs and could make recommendations to the 

Governor on an annual basis. The Medical Education 

Commission could consider applications submitted by 

sponsoring institutions for new programs or expansion of 

existing programs based upon state needs which have been 

identifi ed by the Commission’s ongoing work. Decisions to 

fund could be based on innovative aspects of the program, 

appropriateness of the application, potential for success, 

sustainability and whether the application met the identifi ed workforce needs.

State involvement in GME analysis, planning, and 

funding should be viewed as supplementing other efforts 

to address needs ‘closer to home.’ However, if a state or 

region does become involved, then two things should happen if they appropriate money to GME:

• Monitoring of quality outcomes; and

• Providing assurance that the state-provided DGME 

funding is managed in a rigorous and responsible 

manner.

Monitoring quality and oversight of DGME funding 

are somewhat poorly performed at the federal level. Each 

Medical Education Commission would be responsible for 

assuring that these two requirements are met within their 

jurisdictions. The state commission would need to develop 

specifi c details regarding appropriate outcome measures 

for their state. The states might eventually transition into 

becoming the intermediary between sponsoring institutions and CMS. If they were to do so, states performing in 

an outstanding manner could potentially become eligible 

for larger appropriations from CMS if and when funding 

becomes available in the future.

Another appropriate role for regional- or state-based 

initiatives might be the development of generous loan 

repayment programs to attract physicians to states. Student/

resident debt has become an increasingly important factor 

not only in the specialty choice, but also in determining 

the location in which physicians ultimately practice. The 

trend of high-indebtedness infl uencing practice location 

and specialty is unlikely to change unless other action is 

taken. As states try to address their individual needs, the 

development of well-funded loan repayment programs 

could potentially draw physicians to their states. States 

may also wish to consider funding such programs through 

their state-supported medical schools (e.g., in the form of 

tuition waivers, named scholarships), insurance programs, 

charitable organizations, and individual philanthropy.

National-Level Initiatives

Recognition that GME support should be the responsibility of all payers in the current multi-payer system would 

help create consensus about the purposes and accountability of GME training programs and should make all-payer 

support more acceptable. COGME has previously proposed 

the establishment of a national medical education fund, 

which would be formed by proportionate contributions 

from all payers, including Medicare, Medicaid, the Department of Veterans Affairs, military health system, private 

insurers, and individuals who self-insure/self-pay [61]. 

COGME recognizes that, in the absence of a national allpayer system, a de facto all-payer GME system currently 

exists, as reimbursement for healthcare indirectly supports 

GME [7]. Moreover, GME support is provided by CMS, 

the VA, states, and philanthropy—although, as previously 

mentioned, the current arrangements do not foster accountability in GME. Creation of a National GME Trust Fund 

would be one method for administering and distributing the 

fi nancing GME as a public good that would increase the 

public accountability. An all-payer funding option could 

reduce the burden on Medicare for fi nancing GME and 

void many of the antiquated policies that are imbedded in 

Medicare policy—which is designed primarily as a method 

of paying for healthcare and not education.

The fundamental idea is that there should be the participation of the entire population in securing for itself the 

public good of GME. While members of Medicare Payment 

Advisory Commission [62] do not regard GME as a public 

good [63], COGME continues to join many others, including Congress, in advocating that GME should be regarded 

as a public good [64,65]. Other economists have noted 
16 NINETEENTH REPORT OF COGME

that, while GME may not meet the economist’s defi nition 

of ‘public good,’ it may be considered a private good with 

positive externality and worthy of public fi nancing [66]. 

Perhaps most noteworthy, Adam Smith once admonished 

that “society cannot safely subject physicians to the stringent fi scal discipline of freely competitive markets” [67]. 

Training programs and institutions care for a disproportionate amount of uninsured and underinsured patients [68]. As 

Gbadebo and Reinhardt have noted, “The nation’s politicians have saddled academic medicine with an important 

social mission that is not asked of their peers in any other 

nation: the provision of and fi nancing of a social safety 

net that has, so far, kept the United States in the Club of 

Civilized Nations.”

One of the purposes of COGME’s endorsement of 

greater GME fl exibility is to further enhance this particular public good by permitting more educational service in 

settings where care to the underserved occurs. Learning in 

such settings helps young physicians appreciate the needs 

of underserved populations, helps residents learn to work in 

teams to provide care, and, potentially, to develop a passion 

for caring for less advantaged populations after training. 

As Medicare policy drives residents back into hospitals, a 

number of desirable outcomes will become less possible 

(as discussed under Recommendation 2).

If public accountability was a recognized principle, 

then viewing GME as a public good would gain larger acceptance. The distribution of payments from the National 

GME Trust Fund would be predictable exclusively for the 

purposes of GME, rather than as a byproduct of patient 

care payments. Educational payments could be made to 

entities held accountable for disbursing them to respond 

to the healthcare workforce requirements of a substantial, 

defi ned population.

Defi ning and establishing a state or regional disbursement mechanism for National GME Trust Fund money is 

the second consideration. As outlined above (under “Statelevel Initiatives”), state- or region-based Medical Education 

Commissions or similarly-structured and appointed Graduate Medical Education Centers; could direct national trust 

fund dollars to support states’ physician workforce needs, 

and also be the accountability agent. A similar model has 

worked well in Utah where, under a Medicare waiver, the 

Utah Medical Education Committee (UMEC) has served 

in just such a role. The national contribution to these funds 

could be based on audited national averages of expenditures per trainee prorated to the population for which the 

Medical Education Commission accepts responsibility. The 

Medical Education Commissions or Centers might cover 

more than one state and could augment their GME fund, 

perhaps in response to incentives from the National GME 

Trust Fund or based upon state funding as described earlier 

in this section. However, in order to be fairly administered 

across the country, the Medical Education Commissions 

could not reduce or redirect funding earmarked for GME 

away from the education and training of an appropriate 

physician workforce.

A defi nition of what types of training programs or 

sponsoring institutions might qualify to participate in the 

nation’s GME funding would be necessary. The National 

GME Trust Fund could establish broad guidelines that 

avoided over-specifi cation as the allocation methodology 

might be best left to local/regional decision-making. At 

a state or regional level, the Medical Education Commission could place additional stipulations and defi ne 

allowable and desirable variations that make sense to 

them. Incorporation of other health professional students 

and trainees would be encouraged as part of a coherent 

educational strategy. The commission could work with 

institutions sponsoring GME to ensure that residency 

training programs that qualifi ed for funding could receive: 

(1) base payments that would be automatic (to the sponsoring institution) as long as the training program qualifi ed, subject to annual adjustments according to market 

circumstances; and (2) optional payments based on the 

program or the sponsoring institution’s priorities and their 

ability to respond to these priorities.

To prevent healthcare providers who participate in 

GME from being unfairly disadvantaged in the healthcare 

marketplace, providers could receive reimbursement from 

the Medical Education Commission responsible for their 

jurisdiction for costs that they incur in support of GME. 

Such reimbursement would help avoid the problems raised 

by CMS’s recent policies about volunteer preceptors, 

which were envisioned to help offset expenses incurred 

by community-based educators, but which may represent 

either potentially undesirable fi nancial transfers to teaching 

hospitals or a diversion of needed resources that could be 

used to support educational initiatives. Participating GME 

providers could include hospitals, multi-specialty medical 

practices, single specialty practices, schools, hospices, 

nursing homes, community health centers, and perhaps 

other entities.

Another option for fl exibility in improving training 

programs is Title VII of Section 747 of the Public Health 

Service Act, which is currently administered through the 

Health Resources and Services Agency (HRSA). Title 

VII addresses more than just GME but all of Title VII is 

relevant and important to GME. This report endorses the 

recommendation of COGME’s 18th report, New Paradigms 

for Physician Training for Improving Access to Healthcare

that a modern reinvigorated Title VII scheme for funding 

GME appropriate for the 21st century be implemented. 

Moreover, we caution that the goals of GME and Title VII 

should not be overlooked as the nation prepares again to 

consider reform of the healthcare system.

Like Title VII, along with the nation’s Community 

Health Centers and the VA, the National Health Service 
NINETEENTH REPORT OF COGME 17

Corps (NHSC) has been effective in bringing health care to 

some of the neediest areas of the country. The continuing 

disparities in both health and health care that trouble the 

nation require further attention, with plausible roles and 

collaboration between GME and the NHSC. The NHSC 

could be further aligned with GME programs through their 

sponsoring institutions to enhance training and unite training and service in underserved areas. Such a relationship 

could greatly enhance the success of GME in meeting its 

public accountability objectives. Just as NHSC clinicians 

could be united with residency training programs as core, 

community-based faculty, at Community Health Centers 

and elsewhere. The NHSC could deploy its workforce as 

agents of change to incorporate into revised residency 

training using innovative principles and strategies (see 

Recommendations 1 and 2) necessary for personalized, 

integrated care for people of every background and circumstance. Such deployments could represent a renewable 

workforce, particularly for primary care residencies that 

aspire to help relieve health and healthcare disparities. 

Nevertheless, lack of suffi cient numbers of qualifi ed 

faculty in remote areas may be a limiting factor. As appropriate (i.e., whenever educational infrastructure is 

in place) incorporating residents into community-based 

outpatient clinics (as is being promoted and funded by 

the VA) would expose young physicians to mentors and 

role models essential to achieving confi dence in caring 

for the underserved.

To be strategic and responsive to both local and national 

needs, the National GME Trust Fund and the Medical 

Education Commissions across the nation would require 

objective and representative information about what is 

going on at a national and state level. This would include 

information on the health of the public, the performance 

of the healthcare system, progress or lack thereof toward 

national and state objectives, emerging opportunities, and 

results of pertinent experiments concerning healthcare and 

GME. The interests of the different professions, accrediting 

agencies, and licensing and certifying boards can create 

a cacophony in which public good or the perception of 

public good can be, and indeed often has been, lost. Thus, 

the capacity to answer important questions in a relevant, 

timely, and targeted way would be a crucial competency 

for the National GME Trust Fund and the Medical Education Commissions.

Just as MedPAC assists CMS, a newly-created National 

Healthcare Workforce Commission could enable GME 

decision-making. Such a commission could be created by 

Congress and report to relevant committees in the House 

and Senate and to the Secretary of Health and Human Services. Support of the commission could be staffed by HHS 

and have a relatively narrow charge in two areas:

(1) To make recommendations concerning the number of 

GME positions to be funded, the rates at which payers 

fund GME training, and rates at which payments are 

made to residency training programs; and

(2) To conduct regular assessments of important healthcare workforce issues (not confi ned to the physician 

workforce), including commissioned research to 

answer critical questions for which necessary information is lacking.

The National Healthcare Workforce Commission could 

enlist the help of state or regional Medical Education Commissions to assure a balanced and adequate assessment of 

the entire nation’s healthcare workforce situation. Utah’s 

UMEC has functioned in this capacity as well, monitoring 

the health and workforce needs of the state to determine 

training needs and funding fl ow. The National Healthcare 

Workforce Commission would require independence 

suffi cient to assure credibility of their fi ndings and open 

debate of issues and options, similar to the Government 

Accountability Offi ce.

Transitioning from the existing GME funding system 

to another would not be easy or without cost or risk. The 

gradual implementation of an all-payer fund was also a 

prior recommendation of COGME [69,70]. A transition 

consultation program could assist GME programs to 

understand new requirements, align professions, develop 

curricula, and secure critical partnerships.

Just as NHSC physicians may represent a new source of 

faculty for GME, Federally Qualifi ed Health Centers could 

take on a much larger role as GME training platforms. 

Increasingly, Federally Qualifi ed Health Centers are gaining interest in GME as potentially appropriate sites to train 

and recruit their future workforce. Aligning GME funding 

with community health center funding would enhance the 

capacity and success of both the health centers and GME 

in terms of their accountability to specifi c outcomes and 

the public good. Other innovative models of training, such 

as those funded by the VA, could serve as ways to expand 

GME programs and physician residents in order to meet 

high priority public goals, while providing excellent training venues [71].

In summary, COGME is re-iterating its call for consideration of an all-payer funding mechanism that requires 

active involvement at the state, regional, and federal levels. 

However, recognizing that all-payer funding of GME is 

unlikely in the current political climate, COGME recommends, in lieu of all-payer funding, that the states take 

a more pro-active role in healthcare workforce analysis, 

planning, and funding, using examples such as the Utah 

Medical Education Committee. Despite this recommendation, COGME realizes that the state-based model of planning and oversight of GME might not easily be replicated 

or even emulated in other states or regions. Nevertheless, 

as state-level planning is currently the exception rather 
18 NINETEENTH REPORT OF COGME

than the rule, we encourage other states and/or regions to 

become more actively involved in the analysis and planning 

to meet their healthcare workforce needs.

We contend that GME should be considered and funded 

as a public good, but at the same time held accountable 

to meeting public healthcare needs as the primary driver 

of the distribution and type of training positions. By making funding of post-graduate medical training linked to 

the achievement of education goals instead of the direct 

provision of patient care, education would have greater 

fl exibility to develop innovative and appropriate models 

to meet the healthcare needs of all Americans.

In order to move the recommendations forward, 

COGME proposes that it serve as a convening body to bring 

together key representatives of states and major funding 

agencies of GME. COGME should stimulate discussion at 

the state/regional levels and research in areas of healthcare 

workforce planning. For example, COGME could host a 

collaborative meeting or conference with state representatives to discuss various models of healthcare workforce 

planning. Further review of state/regional assessments 

of healthcare workforce issues are needed as, apart from 

the few exceptions cited, little is known about planning 

processes and little research has been accomplished to 

support such efforts.
NINETEENTH REPORT OF COGME 19

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49. The statute provides for the determination of a hospitalspecifi c, base-period per resident amount (PRA) that is 

calculated by dividing a hospital’s allowable costs of 

GME for a base period by its number of residents in 

the base period. The base period is, for most hospitals, 

the hospital’s cost reporting period beginning in FY 

1984 (that is, the period from October 1, 1983, through 

September 30, 1984). The base year PRA is generally updated each year for infl ation. Medicare direct 

GME (DGME) payments are calculated by multiplying the PRA times the weighted number of full-time 

equivalent (FTE) residents working in all areas of the 

hospital (and nonhospital sites, when applicable), and 

the hospital’s Medicare share of total inpatient days.

Hospitals that have residents in one or more approved 

GME programs also receive a payment to refl ect the 

higher indirect patient care costs of teaching hospitals relative to non-teaching hospitals. For example, 

teaching hospitals typically offer more technologically 

advanced treatments to their patients, and therefore, 

patients who are sicker and need more sophisticated 

treatment are more likely to go to teaching hospitals. 

Furthermore, there are additional costs related to the 

presence of ineffi ciencies associated with teaching 

residents that result from the additional tests or procedures ordered by residents and the demands put on 

physicians who supervise, and staff who support the 

residents. Indirect medical education (IME) payments 

are made as a percentage add-on adjustment to the 
NINETEENTH REPORT OF COGME 21

per-discharge Hospital Inpatient Prospective Payment 

System (IPPS) payment, and are calculated based on 

the hospital’s ratio of FTE residents to available beds. 

More specifi cally, the statutory formula for calculating the IME adjustment is c x [(1+r).405 – 1], where 

“r” represents the hospital’s ratio of FTE residents to 

beds, and “c” represents the IME multiplier, which is 

set by the Congress.

50. Under section 1886(h)(4)(F) of the Act, a hospital’s 

unweighted FTE count of residents may not exceed the 

hospital’s unweighted FTE count for its most recent 

cost reporting period ending on or before December 

31, 1996. Under section 1886(d)(5)(B)(v) of the Act, 

the limit on the FTE resident count for IME purposes 

is effective for discharges occurring on or after October 

1, 1997. A similar limit is effective for direct GME 

purposes for cost reporting periods beginning on or 

after October 1, 1997.

Rural teaching hospitals can start new residency training programs and receive an increase in their cap. In addition there are provisions for ‘borrowing’ caps that are 

not being utilized. However, under current legislation, 

an urban hospital may not receive a further permanent 

cap increase once its caps have been established. In 

addition, teaching hospitals that were training residents 

below their caps in 2002 received a reduction of 75 

percent of the difference between their actual FTE 

resident count and their cap. These reclaimed billets 

were redistributed by CMS in the following order fi rst 

to rural hospitals, second to urban hospitals not located 

in large urban areas, third to hospitals training residents 

in a program that is the only program in the state, and 

fi nally to all other urban hospitals. The provision was 

effective for cost reporting periods beginning on or 

after July 1, 2005.

51. Section 1886(h)(4)(E) of the Act, requires that the 

Secretary’s rules concerning computation of FTE residents for purposes of direct GME payments “provide 

that only time spent in activities relating to patient care 

shall be counted and that all time so spent by a resident 

under an approved medical residency training program 

shall be counted towards the determination of full-time 

equivalency, without regard to the setting in which the 

activities are performed, if the hospital incurs all, or 

substantially all, of the costs for the training program 

in that setting.”

52. Section 4621(b)(2) of the Balanced Budget Act (BBA) 

revised section 1886 (d)(5)(B) of the Act to allow hospitals to count time residents spent training in nonhospital sites for IME purposes, effective for discharges 

occurring on or after October 1, 1997. Specifi cally, 

section 1886 (d)(5)(B)(iv) of the Act was amended to 

provide that “all the time spent by an intern or resident 

in patient care activities under an approved medical 

residency program at an entity in a nonhospital setting 

shall be counted towards the determination of full-time 

equivalency if the hospital incurs all, or substantially 

all, of the costs for the training program in that setting.” 

Section 413.75(b) redefi ned “all or substantially all of 

the costs for the training program in the nonhospital 

setting” as the residents’ salaries and fringe benefi ts 

(including travel and lodging where applicable), and 

the portion of the cost of teaching physicians’ salaries 

and fringe benefi ts attributable to direct GME.

53. National Organization for Research at the University 

of Chicago (NORC), Graduate Medical Education: 

What Are We Paying For? [October 13, 2006, presented 

to Lynn Nonnemaker, Department of Health and Human Services; available at: http://aspe.hhs.gov/health/ 

reports/06/GradMedicalEdu/index.html]

54. Recommendation to Improve Access to Health Care 

Through Physician Workforce Reform, COGME 

Fourth Report, 1994 (available at http://www.cogme.

gov/rpt4.htm).

55. COGME Fourth Report, 1994, op. cit.

56. Patient Care Physician Supply and Requirements, 

COGME Eighth Report, 1996 (available at http://www.

cogme.gov/rpt8.htm).

57. Graduate Medical Education Consortia: Changing 

the Governance of Graduate Medical Education to 

Achieve Physician Workforce Objectives, COGME 

Ninth Report, 1997 (available at http://www.cogme.

gov/rpt9.htm).

58. Financing Graduate Medical Education in a Changing 

Health Care Environment, COGME Fifteenth Report, 

2000 (available at http://www.cogme.gov/rpt15.

htm).

59. Henderson TM. Medicaid Direct and Indirect Graduate 

Medical Education Payments: A 50-State Survey. October, 2003. National Conference of State Legislators 

(for the Association of American Medical Colleges 

(AAMC) http://www.aacn.nche.edu/MembersOnly/

pdf/Henderson1.pdf).

60. Minnesota Medical Education and Research Costs 

(MERC), at: http://www.health.state.mn.us/divs/hpsc/

hep/merc/index.html accessed June 17, 2007; Utah 

Medical Education Council at: http://www.utahmec.

org/ accessed June 17, 2007.

61. COGME Physician Workforce Policies: Recent Developments and Remaining Challenges in Meeting 

National Goals, COGME Fourteenth Report, 1999 

(available at http://www.cogme.gov/rpt14.htm). See 

also, COGME Fifteenth Report, op. cit.
22 NINETEENTH REPORT OF COGME

62. MedPAC Reports, 1999 and 2000 (available at http://

www.medpac.gov/publications/publicationlinks.cfm).

63. According to the NORC Report (Op. cit., 2006), “Opponents of the view of GME as a public good argue that 

residents and fellows willingly undertake training and 

accept low salaries and long work hours in exchange 

for the much higher income expected after completion 

of the training, and that training institutions willingly 

engage in GME because these residents provide an 

inexpensive labor pool that produces more in patient 

revenue than the costs involved in training. Therefore, 

in this view, the market will work without government 

intervention and without government subsidies.”

64. Financing Graduate Medical Education in a Changing 

Health Care Environment, COGME Fifteenth Report, 

2000 (available at http://www.cogme.gov/rpt15.htm).

65. Sundwall DN Health Affairs 2001;20(2):156-158.

66. Gbadebo AL, Reinhardt UE. Health Affairs. 

2001;20(2):148-152.

67. Quoted from Gbadebo and Reinhardt, op. cit.

68. MedPAC Report, op. cit.

69. COGME Fourteenth Report, 1999, op. cit.

70. Sundwall DN Health Affairs. 2001;20(2):156-158, 

Muller RW, Sheldon GF, Snyderman R. Health Affairs. 

2001;20(2):153-155

71. See “GME Enhancement RFPs for 2007” (available 

at http://www.va.gov/oaa/).