I Need a Doctor: A Critique of Medicare Financing of Graduate Medical Education

Table of ContentsI. Introduction 2432II. The Physician Workforce Debate: A Brief History 2440III. Regional and State Physician Workforce Data 2446IV. The Relationship Between Graduate Medical Education and Physician Supply and Distribution 2458V. Medicare Financing of Graduate Medical Education 2464A. Payments for Direct Graduate Medical Education Costs 24711. The Per Resident Amount 24712. The Number of Residents 24763. Medicare Patient Load; Summary 2483B. Payments for Indirect Medical Education Costs 2485VI. Proposals 2491VII. Conclusion 2509I. IntroductionThe United States has thousands of communities that are plagued by physician shortages.1 In some of these communities, patients wait months for routine medical appointments.2 Other patients travel long distances to obtain health care services that are unavailable or inaccessible in their hometowns.3 Still other patients wait until they are really sick and then seek care in the emergency department where they cannot be turned away.4The nation's doctor shortages should not come as a surprise. The United States has a growing population, an aging population, and an increasing number of residents with health insurance coverage as a result of the Affordable Care Act.5 The shortages are especially problematic in the American South and West,6 which have experienced higher than average population growth over the last several decades.7With the hope of producing physicians who will stay and practice medicine, many southern and western states have recently opened or are planning to open new medical schools. In 2009, the University of Central Florida welcomed its first class of medical students in a new school in Orlando.8 In 2013, the University of California, Riverside School of Medicine admitted its first class of medical students.9 In 2015, the Edward Via College of Osteopathic Medicine will open a new medical campus in Auburn, Alabama.10 In 2016, the Dell Medical School at The University of Texas at Austin is scheduled to admit its first class of medical students.11 And, in May 2014, the University of Nevada, Las Vegas, appointed a Planning Dean who is responsible for developing a vision for the UNLV School of Medicine, which will be the first allopathic medical school in southern Nevada.12Even with these new medical schools, states with physician shortages are severely limited in their ability to retain and train graduate medical residents, who would be very likely to practice medicine in that state.13 These limitations exist because Congress in 1997 permanently capped the number of Medicare-financed residency slots at the number of residents reported by teaching hospitals on their 1996 Medicare cost reports.14 These limitations also exist because the Centers for Medicare and Medicaid Services (CMS) in 2012 set the number of years non-rural teaching hospitals have to grow new medical residency training programs to an outside limit of five years from the date of the hospital's first new medical residency program.15 Unlike many of the prestigious east coast teaching hospitals, which had decades to carefully plan and build out multiple specialty training programs,16 today most new residency programs are forced to build themselves out as quickly as possible within a five-year period17 without regard to whether a longer build-out period would have yielded higher numbers of more desirable residents and more qualified teaching faculty, a stronger and more efficient administrative base, and a broader range of higher-quality specialty training programs.18This Article challenges these and other rules that govern Medicare payments to teaching hospitals for the costs associated with providing graduate medical education (GME). This Article proceeds as follows: Part II investigates the historical debate regarding the optimal size and shape of the U.S. physician workforce. …