Children’s Hospitals Graduate Medical Education (CHGME)
Released: 2018-10-16T00:00:00

T he Children's Hospitals Graduate Medical Education (CHGME) program provides direct financial support to children's hospitals—those that treat primarily patients below the age of 18—to train medical residents and fellows. The program is administered by the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS) and is authorized in Section 340E of the Public Health Service Act (PHSA). CHGME receives annual discretionary appropriations, which are authorized through FY2023. The use of discretionary appropriations to fund CHGME differs from other federal sources of graduate medical education (GME) support. For example, Medicare—the largest source of GME payments—is mandatory. More information on other GME programs and how programs interact is available in CRS Report R44376, Federal Support for Graduate Medical Education: An Overview .

This report describes the CHGME program's (1) purpose and structure, (2) history, and (3) authorizations and appropriations. It also provides select program data, including the number of hospitals supported under the program, their location, the amount of funding they receive, and the number of residents trained. Finally, the report discusses alternative sources of GME funding available.

CHGME Purpose and Program Structure

As detailed in the text box below, the CHGME program provides direct financial support to children's hospitals to train medical residents and fellows.

The CHGME program provides GME funds to "free-standing children's hospitals," which are hospitals that have a patient population that is primarily under the age of 18. Free-standing children's hospitals specialize in treating children, but are not part of a larger hospital system. For example, a general teaching hospital may offer pediatric training as part of its integrated services, or perhaps as part of a dedicated children's center, but such a center would receive Medicare GME support as part of the larger hospital's GME programs. Such a center would not be considered to be a free-standing children's hospital, and, therefore, would not be eligible for CHGME.

Hospitals eligible to participate in CHGME must have a Medicare Provider Agreement, and must be excluded from the Medicare Inpatient Prospective Payment System (IPPS). In addition, CHGME-eligible hospitals must operate programs that train pediatricians, or pediatric medical or surgical subspecialists, and these programs must be accredited (see text box above for definitions). The 2013 program reauthorization, discussed below, expanded the program to make additional hospitals eligible for a subset of the program's appropriation. These newly eligible hospitals were defined as (1) free-standing; (2) having a Medicare payment agreement and being excluded from the Medicare IPPS; (3) having an inpatient population composed predominantly of individuals under 18 years of age; and (4) having an approved medical residency training program, but not one qualified to receive Medicare GME payments. The Government Accountability Office (GAO) examined the newly eligible programs and found that the new programs included one psychiatric hospital and three hospitals that had not previously participated in the program.

Program Origins

The CHGME program was created in the Healthcare Research and Quality Act of 1999 ( P.L. 106-129 ), which authorized payments to children's hospitals for FY2000 and FY2001 to support medical residency training. Medicare—which provides approximately $11.0 billion to support residency training —is the largest supporter of medical residency training, but the level of Medicare support at any hospital is based on the volume of services that the hospital provides to Medicare beneficiaries. Because the Medicare program is used primarily by people who are over the age of 65, and children's hospitals treat primarily people below the age of 18, children's hospitals have low Medicare patient volume and receive few Medicare GME payments.

Prior to the program's inception, 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. To operate an accredited training program, a hospital must have sufficient patient volume to ensure that residents receive the full measure of training in a given field. As such, children's hospitals are more likely to have the range of cases necessary to train pediatric subspecialists who focus on specific pediatric conditions or types of surgery in children. Since the CHGME program began, the size of the pediatric subspecialty workforce has increased. Despite these increases, some children lack access to pediatric subspecialty care (see text box). Moreover, some children's hospitals report physician vacancies and difficulties hiring in certain subspecialties. Researchers have found that some geographic areas have a shortage of pediatric subspecialists, leading some children to seek care with subspecialists who focus on adults, which may adversely affect the care the children receive.

HRSA's program data indicate that CHGME plays a significant role in training nearly half of the pediatric physician workforce. HRSA data show that the program provided financial support to more than 7,100 medical residents and fellows in the 2015-2016 academic year (the last year of final data available). Among those supported, 41% were pediatric residents, 33% were pediatric subspecialty residents or fellows, and 26% were residents training in other primary disciplines (e.g., family medicine).

CHGME Authorization and Appropriations

The program was created in the Healthcare Research and Quality Act of 1999 ( P.L. 106-129 ), which authorized payments to children's hospitals for FY2000 and FY2001 to support medical resident training. The program's appropriations were then reauthorized through FY2005 in the Children's Health Act of 2000 ( P.L. 106-310 ). That law also made changes to the program's payment methodology and reporting requirements. The program was unauthorized, but it received appropriations in FY2006. It was then reauthorized for a third time in the Children's Hospital GME Support Reauthorization Act of 2006 ( P.L. 109-307 ), which reauthorized the program from FY2007 through FY2011. It was subsequently reauthorized for the fourth time in 2013—in the Children's Hospital Reauthorization Act of 2013 ( P.L. 113-98 )—which authorized appropriations from FY2014 through FY2018. The 2013 reauthorization broadened the definition of hospitals eligible to participate to include children's psychiatric hospitals and hospitals that had not been able to participate in the program for technical reasons (i.e., those that HRSA had determined did not technically meet the statutory definition in PHSA Section 340E). Finally, the program was most recently reauthorized from FY2019 through FY2023 in 2018 in the Dr. Benjy Frances Brooks Children's Hospital GME Support Reauthorization Act of 2018 ( P.L. 115-241 ), which increased the amount of funding authorized and extended the period of the program's authorization of appropriations to FY2023. The reauthorization did not include substantive program changes.

The CHGME program has received funding since its inception, despite a lapse in authorization in FY2006, FY2012, and FY2013. Table 1 presents funding and authorizing history from FY2000-FY2023.

CHGME Reauthorization in the 115th Congress

On September 18, 2018, President Donald J. Trump signed into law the Dr. Benjy Frances Brooks Children's Hospital GME Support Reauthorization Act of 2018 ( P.L. 115-241 ). The law reauthorizes the program appropriations through FY2023 and increases the amount authorized to $325 million, allocating $105 million for Direct Graduate Medical Education Payments (DGME) and $220 million for Indirect Graduate Medical Education Payments (IME). It did not make substantive changes to the program.

FY2019 President's Budget Request

The President's budget for FY2019 proposed to eliminate funding for the CHGME program as part of a larger effort to consolidate and reduce the size of federal support for GME over time. Specifically, the proposal would combine Medicare, Medicaid, and CHGME GME spending in 2019 and redistribute these funds to hospitals based on the number of residents that the hospital trained (up to a hospital's existing Medicare or CHGME cap) and the proportion of the hospital's patients who are Medicare or Medicaid beneficiaries. This amount would increase for inflation over time, less than 1% annually. The new program would be jointly managed by HRSA and the Center for Medicare & Medicaid Services (CMS), which administers the Medicare and Medicaid programs. The proposal would also give the HHS Secretary the authority to modify a hospital's payment amount based on the amount of residents who are training in priority specialties as identified by the Secretary. This program would be funded out of the Treasury's general fund. Enacting this program would require new legislation that would amend the statute of the three component programs.

CHGME Payments

CHGME payments are structured similarly to Medicare GME payments. In both programs, hospitals receive two types of payments: direct and indirect. Direct payments are intended to cover the salary and benefits of residents and their supervisors, as well as other costs associated with operating a residency training program, including space and administrative support. Indirect payments are made to hospitals to offset the cost a hospital incurs from training residents; for example, for the extra tests they order as part of their training, and for the reduced productivity of hospital staff. The CHGME program uses formulas to derive hospital-specific payment amounts similar to those used in the Medicare program (see text box).

Despite similarities in the structure of Medicare GME and CHGME payments, there are two noteworthy funding differences between the two programs and a third difference in the reporting requirements for the two programs. First, the CHGME program is a discretionary program, with funds drawn from the Treasury. Congress must appropriate funds annually in order for hospitals to receive CHGME payments. In contrast, Medicare GME payments are mandatory and are drawn from the Medicare trust funds. As a result, Medicare GME funds do not need to be appropriated annually and do not need to be reauthorized.

A second difference is that CHGME spending is limited by the size of the annual appropriation. Given this, if CHGME appropriations do not increase, adding new hospitals to the program would result in a reduction in the amount of funds that existing hospitals receive. Conversely, Medicare GME funds flow to a hospital based on the size of its approved residency training programs, the number of Medicare-recognized residents, and its Medicare inpatient volume. Distributing Medicare GME funds to one hospital does not affect the Medicare GME funds paid to another.

A third difference between Medicare GME and the CHGME program is that, in statute, hospitals that receive CHGME support are required to report to HRSA the number of residents they train by specialty; such hospitals may be penalized—in the form of reduced DGME payments—for failure to report. In contrast, the Center for Medicare & Medicaid Services (CMS)—which administers the Medicare program—does not require its programs to report data on the trainees supported with Medicare funds. Additionally, HRSA is required by the CHGME statute to aggregate the data it receives from GME programs and report on

1. the types of residency training programs (by specialty); 2. the number of residents supported in each specialty; 3. the training programs that hospitals operate that provide care to diverse and underserved children; 4. changes in training programs from the prior year (including curricula changes); and 5. the number of graduates of a hospital's residency training programs that practice within the service area where they trained.

CMS does not have similar reporting requirements for Medicare GME, nor does CMS generally collect the component data that would be required to compile such a report. The 2013 CHGME reauthorization also included authorization for a quality bonus system, whereby hospitals that meet established standards are eligible for additional payments. This system is currently under development; in FY2019, programs are to submit baseline data about resident involvement in hospital quality initiatives (e.g., integrated care models and social determinants of health). These data are to be used as baseline to establish standards for implementation in FY2021. No similar system exists for Medicare GME payments; however, expert groups, including the Institute of Medicine (now National Academy of Medicine), recommend that some Medicare GME be awarded based on program performance.

CHGME Eligible Hospitals and Payment Distribution

As discussed above, the CHGME program provides GME funds to free-standing children's hospitals. According to HRSA, when the program first began in FY2000, there were 60 hospitals eligible. In FY2001, the program supported residents training at 57 of these 60 hospitals. In FY2017, the most recent year of final data available, the program supported training at 58 free-standing children's hospitals located in 29 states, the District of Columbia, and Puerto Rico. (See the Appendix for a list of hospitals that received CHGME and the amount of payments they received.)

More than half of states have an eligible free-standing children's hospital that receives CHGME payments. These states are geographically dispersed. Residents in states with no CHGME-funded hospitals may benefit from the program by traveling to receive services at a CHGME-supported hospital or by receiving treatment from a pediatrician or a pediatric subspecialist who trained at one. The extent to which this occurs is unknown.

The 10 states receiving the highest amount of CHGME payments in FY2017 were generally states with large populations. Among the 10 states, all had at least one large children's hospital that received more than $5 million annually in CHGME payments (e.g., Children's Hospital of Philadelphia in Pennsylvania and Boston Children's Hospital in Massachusetts). Table 2 presents the 10 states that received the highest payment amounts under this program.

CHGME Residents Trained

Table 3 presents the number of residents that received CHGME support since the program's inception in FY2000. The number of residents trained has steadily increased, but the program's appropriation has varied over time. Given this, the amount of funding awarded to support each individual resident has also varied. In addition, the table shows that the number of hospitals that participate in the program has fluctuated over time; in some years, CHGME funds are awarded to fewer hospitals that, on average, are training more residents. Note that the 2013 reauthorization added new hospitals to the program, but it reserved a portion of the program's appropriation for these new hospitals to mitigate decreases in payment amounts for hospitals that were already participating in the program.

Other Sources of GME Funding for Children's Hospitals

CHGME funds are one source of medical residency training support at children's hospitals. Other sources exist, including patient care or other revenue, Medicaid, state and local funds, and private donations. However, CHGME payments are the only source for which a specific amount can be quantified.

Some have suggested that the availability of other sources of GME funding lessens, or obviates, the need for the CHGME program. For example, the Office of Management and Budget in a 2003 CHGME Program Assessment stated that the program was performing adequately, but noted that the program is "fundamentally duplicative of other Federal, state, and private efforts." The assessment went on to say that children's hospitals have higher profit margins than other hospitals, which could lead to more revenue available to support training programs. The assessment concluded with a recommendation to more closely track the accountability of children's hospitals receiving payments under the program and to assess whether the program should be continued.

More recent data suggest that children's hospitals are still operating at higher profit margins than other hospital types. These data also suggest that despite these hospitals having tax-exempt status, some provide little charity care. Given that profits in a nonprofit hospital are intended to be reinvested in the hospital, these funds are a potential source of GME support. However, no systematic data exist on the use of hospital revenue to support GME. Given that these data do not exist, the Congressional Research Service cannot determine whether, and to what extent, hospitals use their own revenue to support GME. Despite data showing the impact of the CHGME program on pediatric residency training, it is not clear whether the pediatric workforce would have increased without the program's explicit support, because many of the available funding sources existed prior to the program's inception. Similarly, it is not possible to know whether the increased workforce size could be attributable to training supported by other funding sources available to children's hospitals.

Another source of GME funding for children's hospitals is Medicaid reimbursements, but data are limited regarding the extent to which these funds are used. Medicaid is a joint federal-state program in which states operate their own program under federal oversight. States may choose to use Medicaid funds to support GME, but not all states choose to do so. Data on states' use of Medicaid funds to support GME are scarce. There are two sources of information about Medicaid GME payments: the Association of American Medical Colleges (AAMC) and CMS-64 data. The information from these two sources is significantly different, and both sources have limitations.

AAMC—the organization that represents medical schools and teaching hospitals—conducts a biannual survey of state Medicaid program GME payments. The most recent survey, released in 2016, examined 2015 payments and found that 42 states and the District of Columbia provided payments for either direct or indirect GME under Medicaid. The survey found that the number of states providing this support had declined since 2005, but that the same number of states provided support in 2013 as in 2015. The actual dollar amount, estimated at $4.26 billion, had increased since 1998, when it was between $2.3 billion and $2.4 billion. The analysis was not specific to children's hospitals, so the total amount awarded to children's hospitals would be less than the $4.26 billion total.

CMS administers the Medicaid program, and its data differ from that of AAMC. CMS started collecting expenditure data for Medicaid GME payments in FY2010 in the CMS-64 data. According to these data, 30 states and the District of Columbia reported making Medicaid GME payments through the fee-for-service delivery system in FY2016, and those payments totaled $1.9 billion, with the federal government paying 61% of that amount. These expenditure data are lower than those that AAMC found. This discrepancy may occur for a number of reasons. For example, CMS-64 data include only fee-for-service payments and do not include payments made through state-managed care plans. In contrast, the AAMC survey indicates that 17 states (and the District of Columbia) made payments under managed care, and AAMC includes these data in state totals.

Concluding Observations

Appropriations for the CHGME program were reauthorized in 2018 through the end of FY2023. Though the reauthorization did not include substantive changes, policy changes to the program have been included in various policy proposals that would consolidate GME support (e.g., " FY2019 President's Budget Request "). Given this, the program and its role in the complement of federal GME support may remain an area of congressional interest.

The CHGME program collects and reports a number of data elements on the residents trained. This differs from other and larger sources of federally supported GME program (e.g., Medicare). As such, the CHGME program data may be useful for Congress to examine to determine whether such data are sufficient and whether it would be useful for other programs to collect such data elements. The CHGME program is also implementing a quality bonus system and providing additional payments to programs that provide data and eventually meet set targets. The implementation of this system is unique among GME programs and is in line with the recommendations of expert groups (e.g., the Institute of Medicine). As such, the implementation of this system and its potential application to other GME programs may be an area for future congressional oversight.

Appendix. Children's Hospitals that Received CHGME

Table A-1 presents the most recent data on hospitals that participate in the program, the state in which they are located, and the amount of CHGME funding they received.