The HMOs want each academic medical center to document exactly how much it spends on education, so educational costs can be excluded when HMOs set prices for patient care. A task force of Medical School faculty and administrators is trying to identify the true costs of educating medical students and house officers, which is what the U-M calls residents or new M.D.s, who spend three to eight years specializing in their chosen field. The task force's job will not be easy. For example, third-year medical students now spend about half their time working with house officers and faculty physicians in 30 outpatient health centers in southeast Michigan. Medical students don't treat patients, but they do take medical histories and observe patient visits.
Residents treat patients, but only under the direct supervision of a faculty physician.
Also, there are additional demands on nurses who train residents in basic hospital or clinic procedures, and on support staff who handle the extra scheduling and paperwork. Medicare supports residency training Since its establishment in 1965, the tax-funded federal Medicare program has paid academic medical centers a share of the costs of training the nation's 102,000 medical residents. Medicare's share is determined by the percentage of a hospital's patients who are covered by Medicare. IME payments are designed to help teaching hospitals cover the higher costs incurred from treating sicker patients who need more complex and expensive medical care. The exact amount varies from hospital to hospital, because of a complicated adjustment formula written into the Medicare statute.