Federal Support for Graduate Medical Education: An Overview
Released: 2018-12-27T00:00:00

A ccess to health care is, in part, determined by the supply of physicians available to provide treatment. Physician supply is a function of the number of physicians trained, how long they remain in practice, their productivity, and the hours they work. Policymakers have demonstrated a long-standing interest in access to care (in general and for specific populations). The federal government has identified certain health workforce concerns and creates programs that seek to address these concerns. Specifically, the Government Accountability Office (GAO) estimated that the Department of Health and Human Services (HHS) administers 72 health workforce programs. Among these programs are those that seek to increa se access to physician services, including programs that e ncourage people to enter primary care to address identified concerns that there are too few primary care physicians relative to the number of physician specialists.

Federal programs also exist to recruit and retain physicians in rural areas because o f concerns that the populations that reside in these areas lack access to care. Specifically, the federal government designates some areas as medically underserved or as health professional shortage areas (HPSA) and provides benefits (e.g., higher Medicare payment rates) to providers who practice in these areas. In addition to these programs and policies, the federal government provides support for medical residency training (a.k.a., graduate medical education [GME]). Specifically, through payments that are generally made to hospitals, the federal government pays some of the costs that hospitals and other health providers incur when training residents. Such costs include, but are not limited to residents' and supervisors' salaries, and the costs of extra medical tests that residents may order as part of their training.

The federal government makes a significant investment in GME—according to GAO, GME programs account for nearly three-quarters of HHS's health workforce expenditures —and GME may be a strong policy lever to impact access because the number of medical school graduates who obtain and complete a residency determines the size of the physician workforce, and the types of residencies they complete determine its specialty composition. Finally, where physicians complete their residencies often affects where they establish their practices. Given the influence of residency training on the physician population, policies that alter federal funding for GME may affect future physician supply and could be used to address identified workforce concerns.

This report provides an overview of federal GME support; it discusses whether a particular source of federal GME support is actively used to further workforce goals such as altering the geographic or specialty distribution of residents trained. A number of GME critiques have raised concerns about the data that the federal government collects on these programs; for example, whether the data available are sufficient to determine program effectiveness. This report details programmatic data gaps where they have been identified. It does not summarize recent GME critiques in detail; for readers interested in such critiques, Appendix A provides some sources for further reading.

Some federal programs use GME to support training for non-physician health providers; however, this report focuses only on the training of physicians. To be licensed to practice independently in a state, physicians in the United States must complete a minimum of three years of GME , with additional years required depending on their specialty. In Academic Year (AY) 2016-2017, approximately 124,000 individual residents were in training, including approximately 21,000 fellows —medical school graduates who have completed their initial residency training and are continuing their training in a fellowship in a subspecialty. (See text box for definitions.) GME generally takes place in hospitals that sponsor residency programs in specific specialties (e.g., pediatrics or surgery). Hospitals choose the number and specialties of the residents they train, but must meet accrediting body standards that attempt to assure that hospitals have the facilities, staffing, and patient load necessary to ensure that residents will receive adequate training in their chosen specialty (see text box). During their residency, residents rotate to outpatient facilities or other hospitals to gain experience treating different populations in different settings. Specific residency training requirements vary by specialty and are determined by the accrediting bodies .

Federal Role in GME

The federal government makes significant investments in GME funding through various programs. In FY2012, the last year of data available for all federal sources of GME payments, the federal government spent an estimated $15 billion on GME, which was the largest federal investment in the health care workforce. More recent data analyzed by GAO found that GME programs administered by the Department of Health and Human Services (HHS) and the Department of Veterans Affairs (VA) spent $14.5 billion on GME in 2015, but their work did not analyze Department of Defense GME spending. As such, 2012 remains the most recent year of a total federal GME estimate. Using their 2012 estimate, GAO found that 78% of government-wide health workforce funding was for GME; with Medicare payments accounting for 85% of this funding. Similarly, a GAO analysis of HHS programs in FY2014, found that HHS supported 72 health workforce programs, but that nearly three-quarters of all spending was from Medicare GME payments.

The federal government supports GME

through payments made by the Medicare and Medicaid programs, both administered by the Centers for Medicare & Medicaid Services (CMS) located in HHS; by training medical residents at Department of Veterans Affairs (VA) and Department of Defense (DOD) facilities; and by funding programs administered by HHS's Health Resources and Services Administration (HRSA) that support primary care training in outpatient facilities, rural GME program development, and training in children's hospitals.

The federal government's primary role in GME has been as a payer. In this role, it has a significant influence on the physician workforce, but this role has generally been passive, because, with some exceptions, the federal government has little involvement through its support of GME in the content of training, the specialties it pays for, or training locations. In addition, the government's role in GME has generally not been linked to other federal health workforce investments, such as investments made to train non-physician providers whose work could complement or, where appropriate, replace that of physicians and who could be trained at a lower cost.

These critiques have been raised particularly with regard to Medicare's GME support because it is the largest source of federal GME support, estimates of Medicare GME payments range from approximately $10.3 to $12.5 billion in FY2015. Medicare is also frequently discussed because, unlike other sources of GME support, it explicitly limits (i.e., caps) the number of residents it supports. Some argue that this limit makes increasing the number of residents and changing the locations where they train difficult. This argument generally does not take into account GME growth that occurred despite the Medicare cap. For example, recent work by GAO found that the number of residents in training grew by 22% over the 10-year period they examined (2005 to 2015), although the geographic areas where residents trained remained largely unchanged. Another analysis estimates that the number of residents in training grew by 27% during the 20-year period since the Medicare limit on GME support was enacted. This may be the case because the Medicare cap is not an absolute, and other sources—for example, other federal programs, state and local government funds, or hospital funds—can be used to expand or alter the number and types of residents in training. In addition, new hospitals can begin training residents and receive Medicare payment for doing so.

Some argue that Medicare's residency limit should be partially or fully removed to address physician shortages in certain geographic areas and medical specialties. And Members of Congress have introduced legislation that would do so. Others argue that expanding Medicare support, unless done in a way that is directive; for example, by explicitly allocating positions to hospitals in specific geographic areas or requiring hospitals to fund residency positions in certain specialties, would not address identified workforce issues such as too few physicians in certain areas or practicing primary care. GAO also found that although there are incentives within Medicare and other programs to increase training in rural areas, hospitals frequently did not take advantage of them.

GME Policy and Health Workforce Data

The federal government supports workforce data collection and projections of future needs; in addition, researchers and advocates also collect and disseminate such data. Such data are necessary inputs for GME policy but are not sufficient. Determining the appropriate GME policy is inherently challenging because training a new physician is a long process; as such, attempting to change the physician workforce through changes to GME requires a long time horizon and good initial data to project the future need for physicians. This process of projection is particularly challenging because policy changes may occur in the interim that alter the assumptions used in the projections.

Recent projections conducted by the National Center for Health Workforce Analysis, at HRSA, demonstrate the challenges of making projections concurrent with policy changes. In their 2013 projections, they projected that there would be a primary care physician shortage in 2020, but that the magnitude could vary greatly depending on assumptions about the role of non-physician providers. Specifically, they projected that the number of primary care physicians would grow by 8% between 2010 and 2020, but that the demand for their services would grow by 14%. They based this on the demand for services at the time of the study and assumptions about the future aging of the population, and the expected increase in insurance coverage driven by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended). These projections do not reflect more recent policy changes and stakeholder responses to the implementation of the ACA that may have affected insurance coverage and related demand for health services. The projections assumed that all states would expand Medicaid under the ACA, that full Medicaid expansion has not occurred, and that these projections also do not account for changes in federal policy related to the private insurance market. For example, beginning in 2019 individuals will no longer have to maintain insurance coverage or pay a penalty (i.e., the ACA's individual mandate), which experts predict will reduce insurance coverage. These policy changes may mean that HRSA's projected 2020 shortages may not occur or may be less than were estimated in 2013.

Another source of uncertainty in physician projections is the size and role of non-physician providers. Specifically, the HRSA model that predicted the most extreme shortages projected that there would be a shortage of 20,400 primary care physicians in 2020, while other HRSA models that include full use of nurse practitioners and physician assistants project that the shortage would be 6,400. Estimates commissioned by the American Association of Medical Colleges (AAMC)—a private, nonprofit organization that represents U.S.-accredited medical schools and some teaching hospitals—vary depending on assumptions made about the ability of nurse practitioners and physician assistants to augment physician supply. Specifically, in projections to 2030, the shortage of primary care physicians ranged between 7,300 and 43,100. Others have suggested that increasing the role of these providers and the use of new care models may be sufficient to avert shortages.

Experts also project geographic shortages both overall and of specific provider types and specialties. As noted, some areas are currently designated as being in shortage. GAO also found that there has been little change in the areas where GME training occurs, which may affect where physicians ultimately practice. As with general estimates of physician supply, the role of nurse practitioners and physician assistants may alter predicted geographic area shortages. It is also possible that targeted policy changes either already enacted or if enacted at the federal or state levels could alleviate geographic shortages in the areas they target.

The uncertainty inherent in projecting supply and demand under changing policy conditions demonstrates the need to regularly update these projections to incorporate the latest data and policy conditions. The general uncertainty about the future need for physicians makes it challenging to develop and implement GME policy. However, it is relatively clear that good data are needed both to examine the overall health workforce and to determine how GME investments can be better aligned to achieve overall health workforce goals. The need for improved data collection has also been recommended in several of GAO's recent reports that examine GME spending.

Federal GME Support

The federal government supports the health workforce generally , and the physician workforce specifically, through a number of programs, including those that provide loan repayment or scholarships to physicians. More than three-quarters of federal workforce support is through GME. The programs below are organized by relative size, as determined by the amount that the program spends annually. These programs are also briefly summarized in Appendix B .

Medicare

Medicare is by far the largest source of GME support. Medicare began supporting GME when the program was enacted in 1965. Congress stated that educational activities enhance the quality of care at a medical institution and therefore education costs should be borne by Medicare to an appropriate extent.

Medicare provides funding for GME, paying "its share" of costs. Medicare provides GME payments based on a number of factors, including a teaching hospital's full-time equivalent (FTE) residents. However, Medicare GME funding is not tied to a specific resident. Instead, multiple residents may occupy one FTE because not all time is counted for Medicare purposes (e.g., time spent at facilities operated by the VA would not be paid by Medicare). In FY2015, estimates of what Medicare provided in overall GME payments r ange from approximately $10.3 to $12.5 billion. Medicare GME payments are made under two distinct methods: direct graduate medical education payments (DGME) and indirect medical education payments (IME). Under these two payment methods, the number of FTE residents that a hospital may receive payment for is limited, or "capped."

CMS has not traditionally considered its role to be one of directing the physician workforce. Specifically, except for some statutory requirements related to the use of certain "redistributed" GME slots for primary care and for sparsely populated geographic areas, CMS generally does not direct hospitals to train certain types of residents, nor does it req uire training be in specific geographic areas, or dictate the content of training programs. Rather, CMS collects some GME related information from hospitals and uses it for payment calculation and auditing to ensure hospitals are paid according to GME statutes and regulations . CMS does not use this information to evaluate its GME investment or to otherwise direct the composition of the physician workforce .

The Medicare GME Cap

Medicare's GME support was initially open-ended, where Medicare would pay for additional FTE residents that hospitals trained. In 1997, graduate medical education stakeholders released a consensus statement arguing that the United States was on the verge of a serious oversupply of physicians and recommending limiting federal funding of GME positions to more align with the number of graduates of accredited U.S. medical schools. Congress enacted the Balanced Budget Act of 1997, ( P.L. 105-33 ), which limits Medicare's GME —most hospitals would receive DGME and IME support only for the number of allopathic and osteopathic FTE residents it had in training in 1996; in other words, each hospital was given a limit in terms of the number of positions or slots tha t Medicare would fund.

S lots may be occupied by residents or fellows. Slots do not directly correspond to a specific resident or fellow because residents or fellows may spend periods of a given year at different facilities, or doing research. During these times, residents are not counted by the sponsoring hospital. Residents may not be counted simultaneously for payment by two government programs.

This "cap" on the number of FTE residents Medicare will support is calculated for each hospital . However, the cap is not absolute— Medicare provides GME funding to new hospitals that previously did not have residency programs—either newly constructed hospitals or existing hospitals that develop new training programs—and the GME cap is not calculated and implemented until the new teaching programs' fifth year. Since the Medicare cap was enacted, hospitals have expanded the number of residents they are training by using non-Medicare sources of support (such as, hospital revenue or state and local funds). Specifically, in the 20 years since the cap was enacted, the number of residency slots has increased by 27%. Generally, these increases have been in subspecialties (i.e., for fellowship training); subspecialty services tend to generate higher revenue or impose lower cost burden on hospitals. In addition, Medicare GME slots have been redistributed since the cap was enacted; for example, the ACA included two redistribution programs—the first redistributed unused slots, and the second continually redistributes slots from closed hospitals.

Medicare DGME Payments

In FY2015, Medicare provided $3.68 billion in DGME payments to teaching hospitals, supporting approximately 85,700 FTE residents. Medicare DGME payments reimburse teaching hospitals for the Medicare portion of approved program costs directly incurred with residency programs, such as resident stipends, supervisory physician salaries, and administrative costs. However, Medicare does not reimburse the teaching hospital for the actual costs incurred by the residency program, but is instead the product of the total approved DGME costs and the hospital's Medicare patient load percentage (see Figure 1 ). Under this methodology, Medicare pays for its share of the approved program costs associated with the residency program, whereas non-Medicare payers (e.g., a private insurer) would theoretically cover the remaining costs of the residency program based on their patient share at the teaching hospital.

In general, the total approved DGME cost is based on a teaching hospital's approved weighted FTE count, subject to a cap, and a prospectively determined per-resident amount. Residents in their initial residency period (IRP) are weighted as 1.0 for the FTE count, whereas residents past their IRP are weighted as 0.5 for the FTE count. The hospital's approved FTE count is a rolling average of the hospital's FTE count over the past three years. The per-resident amount is a dollar value based on the amount of costs of the hospital's residency program for each FTE resident in a base period (a hospital's cost reporting period beginning on or after October 1, 1983, but before October 1, 1984) and is updated each year. The product of these two figures represents Medicare's total approved DGME amount for a teaching hospital in a given year. The Medicare patient load is based on the teaching hospital's number of Medicare Part A inpatient days out of the total inpatient days plus 86% of Medicare Part C (Medicare Advantage) inpatient days out of the total inpatient days.

Medicare IME Payments

In FY2015, Medicare provided $7.38 billion in IME payments to teaching hospitals, supporting approximately 85,600 FTE residents. Medicare IME payments support the indirect costs associated with residency programs, such as the higher patient care costs from additional testing that residents may order as part of their training. Because Medicare's inpatient payment method, the Inpatient Prospective Payment System (IPPS), does not typically provide separate payment for additional testing, teaching hospitals may be disadvantaged by training residents under this payment method. To adjust for this possibility, Medicare IME payments are provided as a percentage increase to Medicare's IPPS payment (a sum payment amount of separate operating and capital components) for each discharge based on a statutory payment formula.

Medicare's formula for IME payment adjustment to the operating component of the IPPS payment is explicitly constructed in statute and is based primarily on an intern and resident-to-bed (IRB) ratio (see Figure 2 ). The IME operating adjustment is the percentage increase to Medicare's IPPS operating per-discharge payment.

IPPS payments also include a relatively smaller component that reflects the capital costs of the hospital. CMS constructed the IME capital adjustment formula and uses a residents-to-average daily census ratio (RADC) (not to exceed 1.5) to increase the teaching hospital's capital payment component under the IPPS (see Figure 2 ). Residents are counted in the same manner as in the IME operating adjustment formula. The addition of the IME percentage increases to Medicare IPPS operating and capital per-discharge payments amounts reflects Medicare's IME payments.

Medicaid

Medicaid provides the second-largest source of GME support. Medicaid is a joint federal-state program. States must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute's basic framework. The federal statute does not require states to make Medicaid GME payments, but states are allowed to make Medicaid GME payments, and most states have historically made these payments.

Unlike for Medicare or other federal GME payment systems, there is no federal guidance for Medicaid GME, so, states have significant flexibility in designing and administering their Medicaid GME payments. As a result, states' Medicaid GME payments vary substantially. States make Medicaid GME payments through the fee-for-service (FFS) delivery system, managed care delivery system, or both systems.

Data for Medicaid GME payments are limited. CMS began collecting information about Medicaid GME payments made through the FFS delivery system in FY2010 through the CMS-64 data. Other information about Medicaid GME payments is available from the AAMC and GAO. AAMC conducts a 50-state survey about Medicaid GME payments every two to three years. GAO recently released a report on federal sources of GME payments that includes a survey of states regarding Medicaid GME payments. The information from these three sources varies and each source has limitations.

Table 2 shows the information about Medicaid GME payments from the three sources for a similar timeframe (i.e., federal fiscal year 2015 and state fiscal year 2015). The CMS-64 data reported only FFS GME payments, while the AAMC and GAO data included total GME payments including both FFS and managed care payments.

With respect to the number of states with Medicaid GME payments, Table 2 shows the AAMC and GAO surveys reported a similar number of states making Medicaid GME payments, with AAMC reporting 43 states for SFY2015 and GAO reporting 45 states for FY2015. The CMS-64 data differed from the AAMC and GAO data because it showed only 31 states with Medicaid GME payments. The CMS-64 data only included information about FFS GME payments, but the AAMC and GAO data reported 41 and 44 states, respectively, with FFS GME payments.

The Medicaid GME payments (including both the FFS and managed care payments) from the AAMC and GAO surveys were similar, with AAMC reporting $4.3 billion in Medicaid GME payments for SFY2015 and GAO reporting $4.2 billion for SFY2015.

The $1.6 billion in FFS Medicaid GME payments reported in the CMS-64 data for FY2015 is somewhat higher than the $1.4 billion in FFS Medicaid GME payments reported in the AAMC survey for SFY2015. However, the CMS-64 reports 31 states, and the AAMC data reports 41 states with FFS GME payments.

AAMC and GAO provided additional information about Medicaid GME payments that is not included in the CMS-64 data. For instance, both sources have information about how the Medicaid GME payments were calculated. Some states used the Medicare methodology or a similar method, while other states used a per-resident payment based on the teaching site's share of total Medicaid revenues, costs, or patient volume. A few states paid a fixed amount per Medicaid discharge.

AAMC and GAO reported information about the types of professions eligible for Medicaid GME payments. Most states supported training programs for physician residents, and some states supported training programs for other health professions, such as nurse practitioners, nurses, physician assistants, dentists, podiatrists, and allied health professionals.

GAO collected information about the activities states intended the Medicaid GME payments to support, which include the salaries and benefits of residents and/or faculty, costs of administering the training program, and indirect medical education costs.

Department of Veterans Affairs (VA)

Training health care professionals—including physicians—is part of the VA's statutory mission. It does so to provide an adequate supply of health professionals overall and for the VA's health system. In general, each year approximately 43,000 individual physician residents receive their clinical training by rotating through about 11,000 VA-funded physician FTE residency positions at VA medical facilities. In FY2017, the VA spent approximately $1.78 billion for GME, which was 80% of all VA stipend support for clinical training programs. The VA estimates it spent $0.89 billion in direct GME costs and the same amount ($0.89 billion) on indirect medical costs and an estimated $138,000 per FTE resident, which was higher than Medicare (and other programs) amount spent per resident.

Generally, the VA does not operate its own GME programs because accrediting bodies require that medical residents see a diverse population in terms of age, sex, and medical conditions throughout their training, which the VA's patient population generally does not provide. Instead, the VA partners with teaching hospitals, and residents from those hospitals' training programs rotate to a VA medical facility for a period of time. About 99% of VA's GME programs are sponsored by academic affiliates. The VA estimates that it partners with over 2,000 ACGME accredited programs in 80 different specialties or subspecialties. When the VA partners with a teaching hospital that operates a residency program, it shares the costs of faculty and residents when the residents are training at the VA medical facility. During the time that residents are at a VA facility, they are not counted for the purposes of the Medicare GME cap (and are not paid using Medicare funds). This permits hospitals to train additional residents above their Medicare FTE cap to account for the time that residents are at VA facilities and therefore being paid by the VA.

Unlike Medicare and Medicaid, the VA does control the type of residents it trains and where these residents are located. Each VA medical facility may determine its staffing needs and the types of programs it partners with academic affiliates to operate. As a result, the VA has data on the residents it trains and makes attempts to track whether its physician employees spent part of their residency training at the VA.

The Veterans Access, Choice, and Accountability Act of 2014 ( P.L. 113-46 , as amended), among other things, included a requirement for the VA to expand the number of residents it trains by up to 1,500 positions in primary care, mental health, and other high-priority areas for the VA over a period of five years; however, subsequently the Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 ( P.L. 114-315 ) extended this time period to be 10-years (i.e., to 2024). The VA intends to allocate the new residency positions by 2023. This expansion began in academic year (AY) 2015, when the VA allocated 204.3 new VA positions; the largest number of positions were from primary care (73.8 positions) and mental health care (57.8 positions). Positions were allocated to 82 facilities in 38 states (positions were also allocated to facilities in the District of Columbia and Puerto Rico). As of July 1, 2015, about 162.9 of the 204.3 allocated positions were filled. To support residents training beginning in AY2016, the VA allocated 167.99 new VA positions and 175.2 positions to support residents beginning training in AY2017, for a cumulative three-year total of 547.41. The largest number of positions overall were from internal medicine (191.42) and psychiatry (117.17). Positions were allocated in 38 states.

The recently enacted John S. McCain III, Daniel K. Akaka, and Samuel R. Johnson VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018, or the "VA MISSION Act of 2018" ( P.L. 115-182 ), included a provision to establish a new pilot program for GME in underserved areas. The program has not yet been implemented. The new pilot program will create the medical residency positions authorized under the Veterans Access, Choice, and Accountability Act (38 U.S.C.§ 7302 note) at facilities operated by the Indian Health Service, or by Indian Tribes, a federally qualified health center (FQHC), a DOD facility, or another facility that the VA Secretary deems appropriate. During the pilot program, the Secretary is required to place no fewer than 100 residents in these facility types or at facilities located in areas that are deemed underserved by criteria established in the VA MISSION Act of 2018. The pilot program authorizes the VA Secretary to pay resident stipends and benefits regardless of whether the resident has been assigned to a VA facility. For facilities that establish new residency programs, the VA will pay for the costs associated with doing so including curricula development, faculty salaries, faculty and resident recruitment, costs associated with the program becoming accredited, and resident educational expenses. This pilot program will terminate on August 7, 2024.

Health Resources and Services Administration

The Health Resources and Services Administration (HRSA) supports GME primarily through two programs: Children's Hospital GME program (CHGME) and the teaching health center GME (THCGME). The CHGME program trains both general pediatricians and pediatric subspecialists, while the THCGME trains residents in outpatient settings in primary care and psychiatry. In addition to these ongoing programs, in FY2019, HRSA received appropriations to support two GME related programs. Under the first, the agency received $25 million to provide grants to public institutions of higher education in states with primary care provider shortages to expand or support GME. These grants will be for five years (as of this report's publication, no funding announcement has been released). Under the second program, HRSA received $10 million to support the Rural Residency Development program, which provides funds to award to entities, such as rural hospitals or FQHCs to develop "rural training tracks." This funding builds on an FY2018 appropriation of $15 million to support this program. Rural training tracks are residency programs where residents spent a portion of their early training at an urban hospital and then complete their training in a rural area. Programs meeting certain criteria may be exempt from the Medicare GME cap, but GAO noted that entities interested in starting these programs may not do so because Medicare funds are only available after residents begin training. This grant program provides start-up funds for entities to develop the GME programs.

HRSA also supports residency training through several smaller programs that do not focus explicitly on residency training but permit residency support as one of the allowable uses of funds. Through these programs, in AY2016-2017, HRSA supported 2,098 primary care residents and 130 preventive medicine residents. In addition to these programs, some residents may receive training in community-based settings supported by the Area Health Education Center (AHEC) Program or may receive specialized training in geriatrics through the Geriatric Workforce Enhancement Program. Data on the number of medical or dental residents trained through the AHEC and geriatrics program are not available; rather, available data are on all post-graduate health professionals trained in these programs.

Children's Hospitals GME104

The Children's Hospitals GME (CHGME) payment program is a discretionary program created in 1999 and most recently reauthorized through FY2023 in P.L. 115-241 . The program received an appropriation of $325 million in FY2019 to provide direct financial support to 58 free-standing children's hospitals to train pediatricians and pediatric subspecialists. CHGME was created because children's hospitals typically received little, if any, Medicare GME payments because Medicare's GME payments are made based on a hospital's Medicare patient volume, which is generally low at children's hospitals because Medicare beneficiaries are individuals aged 65 and over, individuals receiving Social Security Disability Insurance benefits, and individuals with end-stage renal disease (i.e., permanent kidney failure).

At the time the CHGME program was created, advocates argued that the lack of direct federal support for GME in children's hospitals impeded the development of the pediatric workforce because children's hospitals, rather than general hospitals, are more likely to have the patient volume necessary to train pediatric subspecialists. Since the CHGME program's creation, the overall size of the pediatric and pediatric subspecialty workforce has increased, whereas it had been declining in the 1990s before the program began. Advocates argue that this reverse can be attributed to the CHGME program, because nearly half of all pediatric residents and nearly two-thirds of all pediatric subspecialty fellows train at children's hospitals. Others argue that children's hospitals do not need these subsidies because they have fewer uninsured patients than do general hospitals so they should be able to support training without these subsidies.

The CHGME program makes both DGME and IME payments to children's hospitals for residents and fellows in training. It allocates one-third of its appropriation to DGME payments and the remaining two-thirds to IME payments. During academic year 2016-2017, the program supported 7,164 FTE residents. This includes support for 5,017 general pediatric residents, including residents from combined pediatrics programs (e.g., internal medicine/pediatrics). In addition, the program supported training 2,713 pediatric medical subspecialty residents, 285 pediatric surgical subspecialty residents, and 365 pediatric dentistry residents. The program's funds also supported 3,120 adult medical and surgical specialty residents, such as those training in family medicine residents who rotate through children's hospitals for pediatrics training.

The program must make payments to all children's hospitals that meet the program's definition and have an eligible training program. Therefore, as the number of children's hospitals or eligible training programs increases, the program will provide lower payment levels per resident, unless the amount of funding appropriated to the program increases. This also means that HRSA does not have the authority to use this program to affect the geographic distribution of pediatric trainees.

Unlike CMS programs, HRSA does require CHGME funding recipients to report data on a number of program elements. They are required to report financial data; specifically, they must detail the support they receive from other sources to prevent duplication of payment and programs are required to return duplicate payments. CHGME programs are also required to report programmatic data including data on the number of residents they train, the specialties they train in, and whether individuals who complete their training care for children within the hospital's service area or state. HRSA also uses these data to track former trainees as they progress in their careers to examine outcomes such as whether these trainees serve patients who are covered by Medicaid.

The 2013 program reauthorization also includes a new authority for HRSA to develop a quality bonus system where a percentage of the program's appropriation is reserved and then allocated to hospitals that meet specified quality targets. The program is collecting baseline data in FY2019 about CHGME resident involvement in hospital quality initiatives (e.g., integrated care models and social determinants of health). These data will be used as a baseline to establish standards for implementation in FY2021.

Teaching Health Center GME

HRSA administers the teaching health center GME program (or THCGME), which provides payments to outpatient facilities to support the training of primary care medical and dental residents at these facilities. Because residency training has been, in general, hospital-based, experts have raised concerns that physicians are not prepared to treat patients in outpatient settings, where care is increasingly being delivered. Under the THCGME program, HRSA provides DGME and IME payments to outpatient facilities, such as federal health centers (a.k.a. FQHCs), to support the costs associated with residency training. The program started in FY2011, supporting residents who began their training in AY2012. The program has been funded by direct appropriations enacted in three successive laws: (1) the ACA, which provided funding from FY2011-FY2015; (2) the Medicare Access and CHIP Reauthorization Act of 2015, which provided funding for FY2016 and FY2017 ( P.L. 114-10 ); and (3) the Bipartisan Budget Act of FY2018 ( P.L. 115-123 ), which provides funding for FY2018 and FY2019. The most recent extension included expanded program funding to both increase the number of training programs operating and the number of trainees supported at existing programs. Table 3 shows the program's funding and number of residents trained since its inception.

HRSA awards THCGME funds to all facilities eligible for payments under the statutory definition of a teaching health center. In statute, the program's funds must be used to support primary care residents (defined as residents training in family medicine, internal medicine, pediatrics, combined training in internal medicine-pediatrics, obstetrics and gynecology, psychiatry, general dentistry, pediatric dentistry, or geriatrics). Programs were paid $150,000 per FTE under the ACA funding, and $95,000 per FTE using the MACRA funds. This decrease occurred because there are now more residents in training than when the program began. The program's per resident funding level under BBA 2018 is not yet known; however, a 2015 survey of active programs by HRSA indicate that the cost of training a resident at a teaching health center was $157,602 per resident. This amount is higher than estimated in other programs, in part, because THGME programs are small, which lessens economies of scale and because the programs estimate higher costs for training in outpatient facilities. To determine the cost of training at THCs, HRSA contracted with George Washington University to develop a THCGME cost reporting instrument to better reflect the costs that THCs incur when operating GME programs. The instrument includes both the costs that THCs incur while training and the revenues that residents generate. Though some THCs had challenges reporting all of the data elements, this information provided a more comprehensive accounting of costs than are available for most federally support GME programs.

The THCGME program is required to collect data on various aspects of the residents it trains and the BBA 2018 included additional data collection requirements. Specifically, it required HRSA to report on (1) the number of patients treated by THC residents; (2) the number of visits by patients treated by THC residents; and (3) the number of THC residents who completed a residency in the reporting year, and the number and percentage of these residents who (1) entered primary care practice and (2) entered practice at a health care facility in a HPSA or a rural area. Finally, the law requires the HHS Secretary to submit a report to Congress, by March 31, 2019, on the costs that THCs incur while training residents.

The first THCGME class completed it training in 2014; as such, outcomes associated with the program are preliminary. HRSA's data suggest that the program is successful at training residents who enter primary care and that its graduates are more likely to enter into primary care practice at safety net facilities (such as the facility types that are eligible to sponsor a THCGME program). Follow-up studies showed that 69% of all THCGME graduates were currently practicing in a primary care setting and 55% were in a medically underserved community and/or rural setting.

Department of Defense (DOD)

The Department of Defense (DOD) trains residents who have acquired a uniformed service obligation through a DOD physician training program. Examples include the Uniformed Services University of the Health Sciences (USUHS) and the Health Profession Scholarship Program. USUHS students enter active uniformed service as medical students, receive the pay and benefits of an officer at the O-1 level, and incur a seven-year service obligation upon graduation. Under the scholarship program, DOD pays tuition and fees, plus a monthly stipend for students enrolled in civilian medical schools. In return, the students incur an obligation to serve a year of active duty service for each year of benefits received, with a two-year minimum obligation. Upon graduation, most scholarship program participants (regular program participants) go on active duty and begin GME in military hospitals. Other scholarship program participants (deferred program participants) are granted deferments while they pursue civilian GME.

In FY2017, DOD administered residency programs at 26 DOD hospitals and trained an estimated 1,455 FTE residents in over 100 specialties. DOD residency programs are accredited by ACGME and managed by each respective military service. The military services generally partner with civilian teaching hospitals, where residents rotate for training in areas or populations not seen at a DOD hospital. Residents from civilian partner facilities may also rotate to DOD facilities. DOD exercises control over the type of residents it trains and the facilities where they train. Specifically, each of the military services determines its workforce requirements and then coordinates with the DOD Comptroller to ensure adequate funding.

Within the Army, the GME Program Office in the Medical Education Directorate of the Office of The Surgeon General develops policy, manages the tri-service Medical Occupation Data System GME database, serves as the Army primary point of contact for GME, and coordinates the Army responsibilities for an annual selection board. The number, specialty, and location of specific training program slots are specified in an annual school year plan approved by the Surgeon General of the Army that serves as a blueprint for the Joint Services GME Selection Board (JSGMESB). This board convenes annually to select trainees for all programs.

Within the Air Force, the number and specialty type of training slots are determined through the Air Force Health Professions Education Requirements Board (HPERB). This annual process models expected attrition, identifies health care workforce needs, and plans and programs for GME needs. The HPERB receives GME training requests from medical commands each March. Since Air Force medical billets are frequently integrated into sister service facilities, the Air Force commands collaborate with the other services in developing these requests.

Within the Navy, the Chief of the Navy Medical Corps determines the number and specialty of training slots during an annual training plan meeting. Input from manpower and personnel planners, clinical specialty leaders, and the Office of the Chief of the Navy Medical Corps are used in developing the annual Training Plan. Similar to the other services, the process culminates in selections made at the annual JSGMESB.

Because many DOD training programs are either integrated or collocated, the service GME chiefs collaborate throughout the year to ensure the integrity, efficiency, and quality of the military GME process. This involves aligning training slots to DOD hospitals that have adequately large and diverse patient populations to sustain the training requirements.

GME is funded through the annual DOD appropriation in the Defense Health Program budget account under Operations & Maintenance in the Education and Training budget activity group. For FY2018, Congress appropriated $692.6 million for DOD health care education and training. While the GAO estimated in FY2012 that DOD spent $16.5 million on GME, the military departments report that attempts to determine the actual cost of GME have been unsuccessful. The military departments agree that the data necessary "to do a valid calculation are not available." This assessment is consistent with data collection variances in non-DOD administered GME programs.

Concluding Observations

The federal government funds a number of programs that support medical residency training. These programs are operated by different departments across the federal government, and each has its own stated program goals. The rules governing these programs and the purposes of federal support vary. These programs have generally not been examined in conjunction with one another and may have goals that are contrary, duplicative, or otherwise not aligned. For example, in a 2015 report, GAO specifically noted that CMS's GME programs (i.e., Medicare and Medicaid) do not target areas that HHS has identified as workforce needs, nor do they align with workforce goals included in HHS's strategic plan. A 2018 report GAO issued reconfirmed this finding. The Council on Graduate Medical Education (COGME), the federal advisory group tasked with examining GME policy, also noted a lack of alignment across programs and in its 2017 report called for "a national strategic plan for graduate medical education" to be created by a non-partisan strategic planning committee.

One of the major challenges for GME policymakers is that data to evaluate programs are lacking. This lack of program transparency has been a consistent theme in a number of recent GME evaluations. In the 2018 GAO report noted above, GAO found that HHS and VA GME programs did not collect sufficient data to properly evaluate the federal government's GME investments. This report did not evaluate DOD GME. GAO recommended that HHS and the VA identify information needed to evaluate their GME investments and improve the quality and consistency of data collected. Their study found among HHS and VA GME programs that the data collection was generally done at the individual program level and was generally collected to determine hospital compliance with program statute and were not sufficient to determine program costs. In addition, because the data collected were to determine compliance with different program statutes, these data were not consistent across programs. GAO did state that collecting GME data may be difficult because some aspects of the costs of GME training are difficult to quantify (e.g., faculty teaching salaries) and that GME costs vary by site (e.g., costs would differ between a hospital and a clinic where residents rotate for training). Despite these challenges, GAO has consistently recommended better data collection for GME programs. The HRSA THCGME supported the development of a data collection instrument to quantify both teaching costs and revenue generated by residents. As part of this analysis, they surveyed THC programs to attempt to identify these data elements (including services and space that were donated to programs). Overall, they found that most programs were able to quantify the expenses associated with training, but that examining the revenue generated was more difficult. Despite these challenges, the data collection instrument because of its scope might be useful to better quantify the costs of residency training at other facility types and by other payers.

Although efforts are underway to improve data collection, they are largely at beginning stages and are not coordinated across programs. As mentioned, the CHGME program is collecting baseline data to develop quality measures for its program. As part of the development of standards, HRSA sought public comments. In general, the commenters noted that there were no generally accepted standards for measuring residency program quality, and that the lack of accepted measures made it difficult to judge relative program performance or change over time. As such, the agency is collecting baseline data, including detailed curriculum data, in FY2019 and is focusing on hospital quality initiatives that have direct resident involvement. Another effort in its early stages is being undertaken by the National Academy of Medicine, which sought expert input about how to develop metrics to evaluate individual residency program outcomes at a meeting held in 2017. Although workshop participants overall agreed that GME quality measures are needed, most noted that developing and collecting these measures would be challenging. For example, if one of the outcomes of interest is the quality of care that a training program's graduates provide, it is difficult to attribute whether a program graduate's ability to provide quality care is due to the training received during medical school, residency, or from peers while in practice. Some academic research has been undertaken in this area, which has shown that residency training can affect the quality of care its residents deliver and the cost of that care. Despite progress in this area, efforts are generally preliminary and data available are limited.

The current lack of data (overall or for specific programs) makes it difficult for policymakers seeking to amend GME payments, because data are not available to evaluate the relative success or weakness of the current payment systems. This may be particularly challenging for those who wish to expand payments, because the limited data that do exist indicate that payments—in particular, Medicare's IME payments—are higher than can be empirically justified. As such, some argue that Medicare payments should be reduced; this was suggested by the National Commission on Fiscal Responsibility and Reform, by CBO in their Options for Reducing the Deficit, and in various years of the President's budget, including a proposal in the FY2019 President's Budget. Others argue that payments should be expanded to reduce or avert physician shortages, though such shortages themselves have been debated.

Congress may consider using federal GME support to encourage training in specific specialties and may consider doing so by amending how payments are allocated through existing federal programs, as some of these programs (e.g., Medicare and Medicaid) exercise little control over the specialties they support. Researchers have found that when hospitals expand residency training, they tend to do so in specialties where the benefits derived from residents' labor exceed the cost of their training (i.e., it is profitable for the hospital to train additional residents). Current data collected on federal programs make it difficult to determine when a hospital requires an incentive (e.g., a payment from a federal program) to operate a residency program or when it is profitable for a hospital to train residents without an incentive. Recent research found that it may be cheaper for a hospital to use resident services than to hire nonphysician providers to replace resident labor and that the outcomes provided by resident were similar or better.

Congress could pursue policy options to encourage additional training in specific specialties, as it has in the past. These options have not always been successful because incentives are generally given to the hospital and often measure the specialty when the resident begins training, which may miss residents who choose to subspecialize. Designing policies to affect the specialty composition of the future workforce may be also challenging, because residents may move to a different hospital to pursue further training, because GME incentives are given to the hospital but not to residents, and because current specialty needs, shortages, and surpluses may change.

A related challenge is that currently most federal programs pay the same amount for residents across specialties and by year of training (with the exception of fellows). Some have speculated that a hospital's cost of training a resident may differ by specialty or by the year that the resident is in training. The relative cost to a hospital for operating a residency program may also vary by a number of factors, such as the size of the residency program, the specialty of the program, the total number of residency programs that the hospital operates, and the availability and cost of alternative providers who would be needed to replace the resident's labor. Residents may also generate revenue for a hospital directly (e.g., because they provide additional labor) or may do so indirectly (e.g., because the prestige of a teaching hospital may make it more attractive for some patients). Determining these "costs," should they exist, is challenging. In some cases, federal GME program payments may undercompensate a hospital while in other cases program payments may exceed the hospital's costs. GAO attempted to examine the cost of training in a 2018 report and found that measuring these costs was difficult and that some costs were difficult to identify. They also noted that the current data collected were not sufficient to identify these costs or to compare them across GME programs. In general, the data collected are not sufficient to determine if or when these scenarios occur nor are data available to determine the factors that may affect hospital training costs. Better data on these "costs" may be useful to better target federal GME support.

Congress may also consider policy options that seek to influence the geographical distribution of residents. Such strategies have been pursued in the past; for example, the ACA's redistribution of Medicare-funded residency slots gave preference to hospitals in states with health professional shortage areas and low resident-to-population ratios. Successfully implementing policy options to achieve geographic distribution goals have a number of the same challenges that policy options that seek to target the specialty composition of the physician population do. For example, proposed policy changes generally target hospitals and not the residents themselves, which may be not be effective when the desired outcomes are determined by where the residents ultimately choose to practice. In addition, geographic distribution policies may face challenges because some areas that have traditionally trained residents may lose their current levels of support. For example, prior critiques have raised concerns that where current residents are trained is not reflective of where the current population is located. For example, GAO notes that "Medicare GME funding is disbursed based on historical patterns. Therefore, the Medicare-supported residency slots, supported by this Medicare GME funding, are most highly concentrated in northeastern states." GAO confirmed this finding in a 2017 report, which examined residency training from 2005 through 2015 and found that the locations remained largely unchanged despite uneven population growth across regions during this time period. Given that training sites have been largely static, successful policy options would either need to add total residents (i.e., expand overall support) or would need to implement a drawdown in support, which may be unpopular and may also be a lengthy process because some residents are currently supported in training programs that last a number of years.

Although prior critiques have focused on Medicare's GME support because it is the largest source of GME support, program challenges are not limited to Medicare, as other federal sources of GME support have limited data available and some programs have little flexibility in how payments are used. As these programs all seek to train physicians and are, at times, training the same physicians, policymakers may be interested in examining these programs in concert to minimize duplication and maximize program alignment.

Appendix A. Additional Resources

Below are resources for readers interested in specific critiques and policy options suggested to reform Graduate Medical Education (GME). Resources are organized alphabetically by the group that has issued the report.

Council on Graduate Medical Education (COGME)

Federal executive branch advisory council that provides ongoing assessment of physician workforce trends and training. For all reports, see http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/index.html .

Relevant Reports

Council on Graduate Medical Education, Towards the Development of a National Strategic Plan for Graduate Medical Education , Twenty Third Report, Rockville, MD, April 2017, https://www.hrsa.gov/sites/default/files/hrsa/advisory-committees/graduate-medical-edu/reports/April2017.pdf .

Council on Graduate Medical Education, The Role of Graduate Medical Education in the New Health Care Paradigm , Twenty Second Report, Rockville, MD, November 2014, http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/Reports/22report.pdf .

Council on Graduate Medical Education, Improving Value in Graduate Medical Education Twenty-First Report, August 2013, http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/Reports/22report.pdf .

Council on Graduate Medical Education, Enhancing Primary Care, Twentieth Report, December 2010, http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/Reports/twentiethreport.pdf.

Council on Graduate Medical Education, Enhancing Flexibility in Graduate Medical Education Nineteenth Report, September 2007, http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/Reports/nineteenthrpt.pdf .

Council on Graduate Medical Education, Financing Graduate Medical Education in a Changing Health Care Environment , Fifteenth Report, http://www.hrsa.gov/advisorycommittees/bhpradvisory/cogme/Reports/fifteenthreport.pdf .

Government Accountability Office (GAO)

Federal legislative branch agency that evaluates federal programs including those that finance health care and support the physician workforce. For all reports, see www.gao.gov .

Relevant Reports

U.S. Government Accountability Office, Physician Workforce: HHS Needs Better Information to Comprehensively Evaluate Graduate Medical Education Funding , GAO-18-240, 2018, https://www.gao.gov/assets/700/690581.pdf .

U.S. Government Accountability Office, Physician Workforce: Expansion of the Children's Hospitals Graduate Medical Education Payment Program , GAO-18-66R, 2017, https://www.gao.gov/assets/690/688072.pdf.

U.S. Government Accountability Office, Physician Workforce: Location and Types of Graduate Training Were Largely Unchanged, and Federal Efforts May Not Be Sufficient to Meet Needs, GAO-17-411, May 5, 2017, https://www.gao.gov/assets/690/684946.pdf.

U.S. Government Accountability Office, Health Care Workforce: Comprehensive Planning by HHS Needed to Meet National Needs , GAO-16-17, December 11, 2015, https://www.gao.gov/assets/680/674137.pdf .

U.S. Government Accountability Office, Health Care Workforce: Federally Funded Training Programs in Fiscal Year 2012, GAO-13-709R, August 15, 2013, https://www.gao.gov/assets/660/656960.pdf .

U.S. Government Accountability Office, Graduate Medical Education: Trends in Training and Student Debt, GAO-09-438R, May 4, 2009, http://www.gao.gov/new.items/d09438r.pdf .

Medicare Payment Advisory Commission (MedPAC)

Federal legislative branch advisory commission that evaluates Medicare payment policy, including Medicare's financing of physician training. For all reports, see www.medpac.gov.

Relevant Reports

MedPAC, "Does It Cost More to Train Residents or to Replace Them?" September 2013, http://www.medpac.gov/docs/default-source/contractor-reports/sept13_residents_gme_contractor.pdf?sfvrsn=0 .

Medicare Payment Advisory Commission, Graduate Medical Education Financing: Focusing on Educational Priorities, Report to the Congress: Aligning Incentives in Medicare, Washington, DC, June 2010, Chapter 4, at http://www.med http://www.medpac.gov/documents/reports/Jun10_Ch04.pdf?sfvrsn=0 pac.gov/documents/Jun10_EntireReport.pdf.

Medicare Payment Advisory Commission's June 2009 Report to Congress: Improving Incentives in the Medicare Program, Chapter 1, at http://www.medpac.gov/documents/reports/Jun09_Ch01.pdf?sfvrsn=0 .

National Academy of Medicine (Previously Institute of Medicine)

The National Academies of Sciences, Engineering, and Medicine are private, nonprofit institutions that aim to provide expert advice on pressing domestic and international challenges. Work can be funded by government and non-governmental entities. For all reports, see http://www.nationalacademies.org/ .

Relevant Reports

Board on Health Care Services, Health and Medicine Division, The National Academies of Sciences, Engineering, and Medicine, Graduate Medical Education Outcomes and Metrics: Proceedings of a Workshop, Payal Martin, Mariana Zindel, and Sharyl Nass, Rapporteurs (Washington, DC: National Academies Press, 2018).

Committee on the Governance and Financing of Graduate Medical Education; Board on Health Care Services; Institute of Medicine, Graduate Medical Education That Meets the Nation's Health Needs, ed. Jill Eden, Donald Berwick, and Gail Wilensky (Washington, DC: National Academies Press, 2014).

Committee on Implementing a National Graduate Medical Education Trust Fund, Division of Health Care Services, Institute of Medicine, On Implementing a National Graduate Medical Education Trust Fund . (Washington, DC: National Academies Press, 1997) .

Appendix B. GME Program Information