Following medical school, GME training provides the clinical training required for a physician to be eligible for licensure and board certification to practice medicine independently in the United States. Physicians pursue GME training within a variety of specialties or subspecialties. Initially, these physicians, known as residents, go through GME training for a specialty—such as internal medicine, family medicine, pediatrics, anesthesiology, radiology, or general surgery. Of the specialties, family medicine, internal medicine, and pediatrics are generally considered primary care specialties. However, a resident who trained in a primary care specialty may not ultimately practice as a primary care physician. Some residents may choose to subspecialize and seek additional GME training. For example, a resident who completed an internal medicine GME training program may decide to subspecialize in cardiology. The percentage of residents who later subspecialize varies based on specialty type. To operate and maintain GME training programs, teaching sites, including hospitals, health centers, medical schools, and other settings, incur medical education costs that can generally be categorized into two groups—direct costs and indirect costs. Direct costs include, for example, residents’ salaries and benefits; compensation for faculty who supervise the residents; and overhead costs. Indirect costs are the portion of higher patient care costs that teaching sites are thought to incur as a result of training residents, such as increased diagnostic testing and procedures performed. (See table 1.) While they may generate costs, residents may also produce financial benefits for a teaching site. Teaching sites may incur lower personnel costs because residents perform services at lower pay than more experienced clinicians or other health care professionals. And, residents may have more flexibility to work long or irregular hours. For example, residents can provide on-call services in lieu of fully trained physicians at a much lower cost to the teaching site. Residents may also increase the efficiency and productivity of faculty with whom they work by, for example, enabling the faculty to increase the number of patient services for which they can bill. Within the federal government, funding of GME training is fragmented. Most federal GME funding is provided through five programs—Medicare GME payments, Medicaid GME payments, HRSA’s CHGME and THCGME payment programs, and the VA’s physician GME training programs. For most of the programs, the funding is formula-driven and essentially guaranteed if eligibility requirements are met. Each program uses a different methodology to determine the amount of payments to funding recipients, though there are some similarities between programs. GME training programs generally must be accredited by an independent organization in order to receive federal funding. Medicare—a federally financed program that provides health insurance coverage to people age 65 and older, certain individuals with disabilities, and those with end-stage renal disease—pays for GME training. It does so through two mechanisms—Direct Graduate Medical Education (DGME) payments and Indirect Medical Education (IME) payments—both of which are formula-based payments set by statute. These payments are made to reflect Medicare’s “share” of the costs associated with providing GME training. Medicare DGME payments are made to cover a hospital’s direct costs associated with GME training, such as stipends, supervisory physician salaries, and administrative costs. The payments are the product of a hospital’s weighted 3-year average number of FTE residents, subject to a cap; a per resident amount (PRA); and the hospital’s Medicare patient load—the portion of a hospital’s total inpatient bed days that were paid for by Medicare. In part to constrain spending, the Balanced Budget Act of 1997 capped, for most hospitals, the number of FTE residents that hospitals may count for DGME and IME payment at the number of FTE residents in place in 1996. Rather than reimburse teaching hospitals for actual direct costs incurred each year from training residents, DGME payments are calculated using a PRA. A hospital’s PRA is based on its direct costs and its number of FTE residents when the PRA was set in a base year, which is fiscal year 1984 for most hospitals, and is adjusted annually for inflation. Congress set a base year for calculating DGME costs that would incentivize local providers to keep down their costs and for local communities to assume a greater role in the costs of medical education. After fiscal year 1984, for hospitals that did not previously have any approved residency programs or did not participate in Medicare but began doing so, a PRA for the hospital is established using direct costs the hospital reported that it incurred on its cost report during its base year, which is generally the first cost reporting year it began training residents. In general, each hospital has two separate PRAs—a primary care PRA and a nonprimary care PRA—whereby teaching hospitals receive slightly higher payments for residents training in primary care specialties. Medicare IME payments, which are made to cover a hospital’s indirect costs associated with GME training, are an add-on to the hospital’s Medicare reimbursement for each discharge. IME payments are not based on teaching hospitals’ actual indirect costs. Rather, the adjustment is based on the number of FTE residents per hospital bed, referred to as the resident-to-bed ratio, and a statistically estimated factor that represents the incremental patient care cost due to providing GME training. Medicaid is a joint federal-state program that finances health care coverage for low-income and medically needy individuals. While there is no federal requirement for state Medicaid programs to fund GME training, states may elect to recognize GME training costs as a component of the overall costs incurred by hospitals. And, payment for these expenses is shared by the federal government through federal matching funds. GME training costs may be reimbursed as an add-on adjustment to the state’s payment rates to eligible providers or as an enhanced payment made as a lump sum supplemental to the initial payment rate. Because children’s hospitals treat very few Medicare patients and consequently receive few GME payments from Medicare, the CHGME Payment Program was created in 1999 and reauthorized through fiscal year 2018 to support pediatric and pediatric subspecialty GME training in freestanding children’s hospitals. Unlike Medicare GME, which is a mandatory spending program, the CHGME program relies on discretionary spending. And, the total amount of payments available to each hospital varies from year to year depending on the total amount of funding made available from annual appropriations and the total number of hospitals that participate. The CHGME program makes both DGME and IME payments where one-third of program funds are allocated for DGME payments and two-thirds for IME payments. Both payments are calculated using formulas similar to Medicare. For example, the program’s DGME payments are based, in part, on the number of FTE residents, subject to a cap, and an updated national standardized PRA. And, the IME payment is based, in part, on an estimated factor that represents the incremental patient care cost due to providing GME training, rather than the hospital’s actual indirect costs. The THCGME program was created under the Patient Protection and Affordable Care Act and reauthorized through fiscal year 2017 to increase the number of primary care residents who trained in community-based, ambulatory patient settings. HRSA awards funds to eligible teaching health centers for the purpose of covering both direct and indirect GME costs of new or expanded community-based primary care residency programs. HHS established an interim annual payment rate of $150,000 per resident until it establishes formulas for determining the payments. However, the payment rate for THCGME recipients may fluctuate over time, depending on available appropriations, the number of eligible applicants, and the number of FTE residents supported. THCGME awards can supplement GME payments from other federal sources, including Medicare, Medicaid, and CHGME, but recipients generally cannot use funds to pay for the same portion of resident time that they used to count toward funding in these other GME programs. GME training is a statutory requirement of VA to enhance the nationwide supply of health care professionals and assists VA in the recruitment and retention of staff at its medical facilities. Nearly all of VA’s GME training is conducted through academic affiliations with medical schools and teaching hospitals where residents from those institutions do clinical rotations at VA medical facilities. VA provides financial support for GME training at its facilities in two ways—disbursement payments to its academic affiliates and educational support payments for its VA medical facilities. VA reimburses academic affiliates through disbursement agreements to cover the costs of stipends and benefits for the period of time that a resident serves in a VA medical facility. Reimbursement is based on the number of FTE residents completing a VA rotation and the approved per diem rate of the academic affiliates’ stipend and benefit costs by residents’ postgraduate year level of training. In addition, VA allocates a portion of VA-wide funding for educational support using a formula that accounts for the number of FTE resident positions and a per resident cost factor. According to VA officials, the funding is used to pay for compensation of faculty and other staff, overhead costs, and other costs necessary to host and manage the GME training at VA medical facilities. Like its funding, federal oversight of programs that fund GME training is fragmented. Federal agencies are responsible for the management and oversight of their respective GME training program or programs. For Medicare, CMS uses regional contractors—MACs—to process and audit payments for health care items and services submitted by enrolled Medicare providers on their annual cost report, including Medicare DGME and IME payments. For example, MACs audit the number of FTE residents that hospitals report on their annual cost report by reviewing relevant rotation schedules. Hospitals claiming reimbursement for GME training are also required to submit Intern and Resident Information System (IRIS) files that provide data on each resident that the hospital trained, including the resident’s specialty type, postgraduate year, and proportion of time spent on rotation at each training site. CMS is responsible for broad oversight of the Medicaid program, while states are responsible for the daily administration of their individual Medicaid programs, including program integrity activities. In its broad oversight role, CMS develops guidance and provides assistance to the states. However, state Medicaid programs are not required to make GME payments, and CMS has not established requirements or guidance specifically related to Medicaid GME payments. Instead, CMS reviews states’ Medicaid payments to providers, including GME payments, as part of its review of Medicaid state plans. HRSA is responsible for the management and oversight of the CHGME and THCGME programs. Specifically, it is responsible for determining applicants’ program eligibility, making payments, and auditing those payments. HRSA is also responsible for collecting information about, and reporting on, the performance of the CHGME and THCGME programs. Oversight of GME training at VA medical facilities is shared between the VA medical facilities and their academic affiliates. Through affiliation agreements, academic affiliates provide for the central administration of residents’ stipends and benefits. Academic affiliates are also responsible for the overall quality of the GME training program, monitoring all resident educational activities, obtaining and maintaining accreditation, developing educational objectives and curriculum, selecting residents, creating resident rotation schedules, and submitting residents’ schedules of educational activities to VA for reimbursement. VA has the responsibility of overseeing and managing clinical training in VA medical facilities, and must ensure that there are sufficient patient care opportunities, educational infrastructure, and qualified teaching physicians to accommodate trainees from the affiliates. Each VA medical facility must also track the educational activities of all residents, including the amount of time the resident spent training at its facility. Federal agencies and state Medicaid agencies spent over $16.3 billion on GME training in 2015 to support direct and indirect costs of training. The amount spent per FTE resident varied across programs, and the largest variation across payment recipients and regions was within Medicare due to variation in the values of factors used to calculate Medicare payment amounts. Almost half of participants received payments from more than one program, and the designs of federal programs may reduce the potential for duplicate payments. Federal agencies and state Medicaid agencies spent over $16.3 billion on GME training in 2015 through five federal programs and 45 state Medicaid agencies. Of this, the federal government spent $14.5 billion through Medicare, Medicaid, VA, the CHGME program, and the THCGME program. (See table 2). Most spending on GME training came from Medicare, accounting for 71 percent of federal spending, with over $10.3 billion in payments to teaching hospitals. Medicaid spending accounted for 16 percent of federal spending on GME training, or $2.4 billion. These federal Medicaid funds matched an additional $1.8 billion that Medicaid agencies in 45 states spent on GME training in 2015. (For information about state Medicaid agency and other non-federal sources of funding on GME training, see appendix I.) These payments supported both direct and indirect costs associated with GME training, though data were limited for some programs. We calculated that about one-third of Medicare payments were made to cover the direct costs of GME training. Similarly, HRSA reported that one-third of CHGME payments were made to cover direct costs. For the VA GME program, we calculated that 44 percent of payments were made to academic affiliates to reimburse them for resident salaries and benefits, a category of direct costs. HRSA does not separate payments for direct costs from those for indirect costs under the THCGME program. And, the data we received from state Medicaid directors did not separate them, though 8 of 45 states specifically reported paying providers for indirect costs in addition to direct costs. Providers in all 50 states and the District of Columbia received payments for training GME residents, but some regions received a notably higher amount compared to others. In particular, federal agencies spent $5.47 billion ($97 per-capita) in the Northeast region, which represents 38 percent of total federal spending, compared with the West where federal agencies spent $1.83 billion ($24 per-capita or 13 percent of total federal spending). (See table 3). State Medicaid agencies in the Northeast also spent significantly more on GME training than did agencies in other regions. Agencies in the Northeast spent $1 billion ($18 per-capita), whereas agencies in the West spent $120 million ($2 per-capita). Notably, New York accounted for about half (48 percent) of nationwide state Medicaid agency spending on GME and 86 percent of spending in the Northeast. Overall, GME spending was somewhat more concentrated in the Northeast than was the number of GME residents; in a May 2017 study, we found that 31 percent of GME residents were located in the Northeast. The Northeast was the only region for which the percentage of the GME spending in the region was higher than the percentage of GME residents. Available data show that almost all spending on GME training (99 percent) went to recipients located in urban areas. However, it is likely that more than 1 percent of spending was used to support training in rural areas; data limitations in HHS and state Medicaid agency data preclude calculation of the amount of spending on GME training in rural areas. The data we received from HHS listed only the direct recipient of the payments, such as a hospital or a medical school, which can arrange rotations at other teaching sites that may be located in rural areas. Data limitations also preclude calculation of the overall amount of spending on GME resident training in specific specialties, such as primary care. With data that were available, we found: Of the 10,367 FTE residents that VA funded, 53 percent were training in a primary care specialty. We also estimated that 52 percent of VA’s spending supported primary care training. The THCGME program is intended to train residents in primary care, with 100 percent of the $76.3 million used to support 630 primary care residency positions. HRSA reported that 43 percent of the 11,667 trainees supported by CHGME funds trained in general pediatrics or combined pediatrics programs. HRSA did not report how much it spent on primary care training, or the number of FTE residents training in primary care specialties. Of the 87,980 FTE residents that Medicare funded, 44 percent were denoted as primary care residents. However, Medicare is likely supporting more residency positions than these data indicate, and these residents are unlikely to be training in primary care. The program counts each resident pursuing additional training, such as a resident training in a subspecialty, as half of an FTE when calculating DGME payments. We found that in 2015, the average amount that a program paid per FTE resident ranged from $34,814 for Medicaid GME payments to $137,491 for the VA GME program. (See table 4.) Programs use different methods to calculate how much to pay providers on a per resident basis, thus payment amounts are not comparable across programs. For example, Congress appropriated funding for the THCGME program for each of the fiscal years 2011 through 2017 and eligible entities received the same amount per FTE resident. In contrast, Medicare GME payments to eligible entities are determined according to formulas that take many factors into account, including the share of a hospital’s patients that are covered under Medicare. Consequently, the amount that Medicare pays recipients varies widely based on variation in the values of factors used to calculate payments. Nationwide, hospitals received $116,997 on average from Medicare for each FTE resident, and the middle 50 percent of hospitals received between $85,478 and $150,610. Given the wide variation in overall Medicare per FTE resident payment amounts by hospital, we examined variation among regions and states. Regionally, the average total Medicare per FTE resident payment ranged from $127,503 in the Midwest to $87,172 in the West. (See table 5.) Across individual states, the average total Medicare per FTE resident payment amount ranged from $65,672 in California to $170,591 in New Hampshire. (See fig. 1.) Some of this variation is due to significant variation in the values of certain factors used to calculate Medicare DGME payments—specifically, the PRA and Medicare patient load. (See table 6.) The Medicare PRA varies among recipients and across regions, though to a lesser degree than the overall per FTE resident payment. For example, the average PRA for the middle 50 percent of primary care residents ranged from $87,962 to $117,144 per FTE resident, compared to $85,478 to $150,610 for the overall per FTE resident payment. The PRA also varied by region and, as with the overall payment amounts, the average PRA was lowest in the West. However, in contrast to the nationwide average per FTE resident payment, which was highest in the Midwest, the recipients in the Northeast had the highest average PRA. The Medicare patient load also varies across regions, which affects DGME payments. Medicare DGME payment recipients in the West reported an average Medicare patient load of 24 percent, which is significantly lower than the 34 to 36 percent reported in other regions. A hospital’s Medicare patient load also affects Medicare IME payments per FTE resident. A hospital’s IME payment is calculated by increasing Medicare’s payments for inpatient services to a hospital by an IME adjustment factor. Therefore, a hospital that received more Medicare payments for inpatient services will receive a larger IME payment. Over half (51 percent) of providers that participated in any of the five GME programs received payments from more than one federal program. For example, 69 percent of providers that participated in Medicare also participated in another program, and 84 percent of CHGME awardees participated in another program. However, in each case, these programs provided most of these recipients’ total funding (74 percent and 66 percent respectively). In contrast, recipients of Medicaid or VA payments also generally participated in another program, but received only 22 percent and 10 percent of their total funding for GME training through Medicaid and VA, respectively. (See table 7.) Though the high portion of providers that receive payments from multiple sources creates the potential for providers to receive duplicate payments, this risk of duplication is reduced by the programs’ designs. The CHGME program was established for children’s hospitals because they did not traditionally receive significant Medicare GME payments. The THCGME program provides payments to outpatient facilities, whereas residency training has been, in general, hospital based. VA only pays for residents’ time spent training at a VA medical facility, and not for time residents spent training in non-VA settings that may receive other federal payments for GME training. Medicare adjusts all DGME payments by the ratio of a hospital’s patients covered under Medicare. CMS has not established requirements or guidance specifically related to Medicaid GME payments, including how the payments are to be calculated. However, 10 states adjust payments by the ratio of a teaching site’s patients covered under Medicaid. GME training costs vary by program characteristics, such as size, type, training setting, and age, and some training costs are more prone to variation than others. Challenges exist in measuring and comparing GME training costs due to a lack of standard cost methodologies across teaching sites and some training costs being difficult to measure. Further, little is known about how GME training costs relate to federal GME funding. According to literature we reviewed and experts we interviewed, GME training costs vary by residency program characteristic, and some costs, such as faculty teaching time, are more prone to variation than others. Specifically, variation in training costs can be explained by one or more of the following program characteristics: Program size: Larger residency programs may be more cost efficient than smaller ones in that fixed costs, such as infrastructure and program administration, can be spread out over a larger number of residents. Therefore, adding another resident increases variable costs, but lowers per resident fixed costs. Type of Specialty: Residency training in some specialties costs more than others, and accreditation requirements are one of several factors driving this variation. For example, compared to internal medicine programs, accreditation standards for family medicine programs require more hours of faculty involvement and higher faculty-to- resident ratios. Therefore, these residency programs may incur higher per resident costs. The complexity of a specialty program also affects its training costs—for example, subspecialty programs, such as vascular surgery or gastroenterology, require additional GME training or specialized equipment and will thus incur more training costs. In addition, costs can be affected by variation in faculty compensation. According to a 2013 analysis of available data on residency training costs, the median compensation for attending physicians in academic health centers ranged from $163,319 for family medicine to $336,136 for radiation oncology. Further, malpractice insurance premium costs can vary based on the degree of surgical involvement, with primary care specialties having the lowest premium costs and general surgery physicians the highest. Type of Training Setting: GME training in outpatient settings, such as community-based clinics, is considered less efficient and more expensive than in inpatient hospital settings, according to reviewed literature and experts we interviewed. One reason for this may be differences in the models of teaching used in each of these settings. According to one group of experts we interviewed, residents in inpatient settings are part of teams that do rounds together, where much of the teaching time involves one clinical teacher and a team of residents, nurses, and other affiliated professionals. This method of teaching may not be feasible in outpatient settings where teaching is more often provided on a more expensive one-to-one basis. Outpatient settings, particularly smaller ones, may also have to incur more fixed costs relative to inpatient settings that may have more facility space and other resources in place to meet accreditation requirements. Location: Geographic location also drives the variation in training costs. For example, resident salaries vary based on general salary patterns across the United States. According to one group of experts we interviewed, there is a range of compensation packages for residents, and base salaries can vary from $35,000 to $55,000 per year. Malpractice insurance may also vary by geographic location. Further, rural training sites may incur higher costs because their training may have to utilize multiple training sites—such as community hospitals or rural health clinics—in order to meet accreditation requirements for resident rotations and patient case-mix. The added administrative work of coordinating with other sites to provide these resources can be a challenge. Age of the program: Newer residency programs may have higher costs than older, more established programs. According to some GME experts we interviewed, the first year a teaching site operates a residency program is more expensive because new programs may be smaller and cannot spread out fixed costs. In addition, it can be expensive for a new GME program to meet accreditation requirements, such as required infrastructure and minimum faculty. Studies estimating GME training costs show these costs vary by program characteristics. For example, we identified 10 studies that estimated GME training costs; however, these studies were not comparable because they focused on discrete programs with different characteristics, utilized different methodologies, were conducted at different points in time, and did not examine the same cost elements. Further, these studies are not generalizable due to limitations in study methodology, such as small sample sizes. And, given the age of some of these studies, they may not be reflective of current GME training costs. Across the 10 studies we reviewed, estimates of costs ranged from $35,164 to $226,331 per resident. (See table 8.) The Medicare cost reports that hospitals submit annually to CMS, though they have certain limitations, also suggest variability in residency training costs. For example, according to the cost reports, in 2015, direct costs varied from $56,998 to $333,565 per resident (excluding outliers). (See table 9.) However, these costs are limited to direct GME costs specified in Medicare guidance, and they have other limitations due to their collection and reporting. We found that there is no standard method or tool across teaching sites for identifying and capturing GME training costs. One expert told us that, therefore, the reporting of costs depends on how each teaching site, and the individuals at each site, are tracking and defining those costs. Another group of experts who conducted a study to estimate GME training costs in teaching health centers told us they were unable to identify a common instrument and had to develop their own instrument to standardize costs. According to literature we reviewed and experts we interviewed, Medicare GME guidance for reporting training costs is not always clear, and differences in how teaching sites define costs can lead to inconsistent measurement. One expert told us that Medicare GME payment rules are subject to interpretation, and thus there is variation between teaching sites in how costs are reported on Medicare cost reports. Other GME experts told us that many teaching health center residency programs rely on in-kind benefits, such as building space donated by organizations, but health centers vary in how they account for the costs of these benefits. Some teaching health centers will score them as in-kind contributions, others will provide a square footage cost amount, and others may not track and report these costs at all. While one group of experts suggested there be national guidelines to ensure all teaching sites are using the same rules to define and report costs, one expert cautioned that a common tool would make it impossible to reflect the unique characteristics of each program. Factors specific to teaching sites may affect how they identify their training costs. The varying relationships and financial arrangements between the teaching site, its partners, and its faculty affect how it allocates and reports training costs. For example, a teaching site may have various educational partners, such as medical schools and community-based training sites, and be affiliated with multiple hospitals, each of which tracks costs differently. Teaching sites differ in how they share training costs with these partners. In addition, faculty arrangements vary. For example, in some cases faculty are employees of the teaching site and in other cases, faculty bill for their services independently. Moreover, facilities vary in the experience of their personnel responsible for identifying GME training costs. For example, program directors may not have the financial experience needed to identify costs, and some teaching sites may use outside consultants to identify costs. Turnover in the staff responsible for tracking costs, lack of communication between program staff and the accounting departments, or a change in ownership of the teaching site may add to the challenge of accurately identifying costs. According to studies we reviewed and experts we interviewed, some GME training costs are difficult to accurately identify and measure. For example: Faculty Costs: Faculty responsibilities are spread out across education, research, administrative, and patient care activities, and the time spent in each activity is not always clear. The only allowable faculty costs on Medicare cost reports are those for education-related activities, such as the clinical supervision of residents. For example, if a faculty member performs a procedure while doing rounds with residents, the teaching site must determine how much of that time was for patient care and how much was for education. However, making this determination can be challenging for teaching sites. One group of experts told us that while most teaching sites have a formula to calculate these education costs, they are most likely an undercount. However, another expert said that officials preparing the cost reports are not systematically splitting faculty time between education and patient-care activities and are most likely guessing. Facility Costs: MAC officials told us that facility costs that hospitals report on their cost reports should be allocated based on square footage, building depreciation, and utility costs, but there is some variation in how teaching sites calculate their square footage. Further, as previously described, donated building space may not be accurately identified by teaching sites. Experts who conducted a study to estimate teaching health center program costs told us that several centers in their study were not accustomed to thinking of donated space as a residency program expense. Indirect Medical Education Costs: There is not a clear and consistent definition of the indirect medical education costs, and there may be variability in these costs. Furthermore, there is little incentive for teaching sites to accurately identify these costs because Medicare does not require them for purposes of determining IME payments, according to one reviewed study. As a result, it is unclear what indirect costs the Medicare IME payment adjustment is meant to cover. Additionally, experts told us that it is difficult to measure the extent to which costs associated with the unique services that teaching sites provide, such as stand-by services or their role as a safety net provider, are attributable to GME training. Resident benefits for teaching site costs and productivity: The benefits that residents provide can generate cost savings and revenue for the teaching site, yet the extent of these benefits can be difficult to calculate. According to one study we reviewed, the value that residents provide cannot be measured directly; rather, the value is reflected in the teaching site’s patient care costs and on the clinical productivity of attending physicians. One expert we interviewed said that identifying when residents move from a cost to a financial benefit is complicated and depends, for example, on a resident’s year of training and residency program requirements. Also, the value of resident services can vary by specialty. For example, residents in general surgery or internal medicine provide more on-call services than residents in dermatology or radiation oncology. Although the cost savings and revenue generated by residents has an effect on the net costs of GME training, it is typically not accounted for when estimating costs. In addition to these challenges, federal agencies do not systematically collect and standardize cost information at the national level, according to literature we reviewed and experts we interviewed. For example, a HRSA study identified training costs in teaching health centers, but the study only captured costs over one year and did not include all THCGME programs. Further, in addition to inconsistencies in how teaching sites collect data for Medicare cost reports, the data do not include the revenue impact and actual indirect costs associated with training residents and cannot be broken down by specialty programs. In addition, they are not a comprehensive source of training costs because they are limited to teaching sites that received Medicare GME payments. It does not include other teaching sites, such as medical schools, teaching health centers, and teaching hospitals that may have only received other federal funding for GME training, such as VA GME payments. Finally, because Medicare cost report data are not generally used to calculate GME payments, they are not reviewed or audited by contractors except when new teaching sites establish their base year PRA. Further, teaching sites may not have accurately reported costs used to calculate Medicare DGME payments. According to experts we interviewed, at the time that most teaching sites established the base year PRAs used to calculate DGME payments, teaching site accounting practices and their varying financial relationships with affiliated education partners may have led them to over-report or under-report their costs. As a result, there is variation in sites’ PRAs, which may not reflect actual variation in direct costs. To identify how the PRA compares to reported direct training costs, we compared teaching site PRAs with the direct training costs that they reported for 2015 (though reported costs may not accurately reflect all GME training costs, as previously noted). For teaching sites in the median range, their Medicare DGME payment covered 67 percent of their reported direct training costs in 2015. However, we found wide variation across teaching sites—the PRA ranged from 31 to 157 percent (excluding outliers) of teaching sites’ reported direct costs. (See table 10.) In addition to the challenges of identifying and comparing costs, little is known about their relationship to federal GME funding. Some studies have analyzed federal GME funding relative to GME training costs but do not consistently indicate whether federal payments accurately reflect training costs. For example, both the Medicare Payment Advisory Commission and HHS found that the Medicare IME payment adjustment exceeds the actual indirect costs that teaching sites incur from operating GME programs. The studies recommended modifying the IME payment adjustment. However, another study found that indirect medical education costs and other costs, such as stand-by services, add to patient care costs in teaching hospitals, and concluded that a reduction in the Medicare IME payment adjustment could result in insufficient Medicare payments to cover these costs. Other studies found that federal funding is lower than actual program costs. For example, one study estimated the per resident training cost in teaching health centers in fiscal year 2017 to be $157,602, compared to the $95,000 per resident that was being provided in federal funding. Another study found that their average $183,138 per resident cost estimate for internal medicine programs of 120 residents exceeded Medicare DGME payments in 2012 by approximately $160,000 per resident, and noted that other sources of funding, including Medicare IME payments, subsidized training costs. The relationship between training costs and federal GME funding is complicated by the nature of how most GME payments are made. For example, with respect to Medicare GME payments, the largest source of federal GME funding, payments are not based on actual costs, and there are no reporting requirements for how teaching sites use the payments. Specifically, teaching sites distribute these payments depending on their needs and the needs of their affiliates, making it difficult to understand the relationship between GME funding and training costs. Agencies generally collect information to manage their respective programs, ensure the accuracy of payments, and reduce the potential for duplicative payments within or across federal programs that fund GME training. However, HHS does not have sufficient information available to comprehensively evaluate the federal programs that fund GME training, identify gaps between federal GME programs’ results and physician workforce needs, and make or recommend to Congress changes in order to improve the efficient and effective use of federal funds. Federal agencies generally collect information to manage their respective programs and ensure the accuracy of payments. To manage their programs, agencies use information, such as the total number of FTE residents and training costs, to calculate payments. For example, VA medical facilities use information that academic affiliates report about the costs of their resident salaries and benefits to set payment rates used to reimburse the affiliates. And, information about individual residents is used to verify that recipients accurately reported, according to resident counting rules, the number of FTE residents used to calculate payments. For example, MACs use IRIS data about residents’ number of years completed in all types of GME training programs to verify that residents who have completed their initial residency period were only counted as half (50 percent) when determining the DGME payment amount. (For a summary of the information that agencies collect for each of the five programs we reviewed, see appendix II. See table 11 for a summary of how agencies use the collected information.) In contrast to the other programs, states establish and administer Medicaid GME payment policies and CMS generally collects limited information about states’ Medicaid GME payments. CMS does not use this information except to determine the amount of federal matching funds for each state. While state Medicaid agencies report the aggregate amount of GME supplemental payments they make to CMS, there are no federal requirements that states or teaching institutions report information about supplemental payments at the provider level, the aggregate or provider-level amount of add-on adjustments to the state’s payment rates for GME training, or how these payments support GME training. Rather, CMS officials said that states have the option to collect information about Medicaid GME payments. However, of the 45 state Medicaid agencies that reported on our survey that they paid for GME training, less than half (20 states) indicated that they require funding recipients to report any information related to Medicaid GME payments, such as the number or type of residents supported. While the risk of duplication is reduced by each program’s design, federal agencies also use the information collected to identify duplicative payments within and between most of the federal programs, with the exception of Medicaid. For example, IRIS data is used to identify whether more than one hospital claimed the same resident’s time for purposes of Medicare GME payments. Also, according to HRSA officials, contractors conduct assessments of the FTE resident counts reported by recipients of CHGME or THCGME program funding to identify duplication with FTE residents reported for Medicare GME payments. For example, HRSA officials told us that its combined academic years 2012-2013, 2013-2014, and 2014-2015 FTE assessment of the 59 teaching health centers in the THCGME program identified 6 centers, from 3 unique organizations, that had a combined total of 6.63 FTE residents that were duplicative with Medicare FTE resident claims, out of over 1,000 FTE residents reviewed over that 3-year time period. In addition, HRSA has worked with CMS to maintain data for this assessment. For example, at HRSA’s request, CMS added a field to the cost reports to check whether any residents from a teaching health center rotated to the hospital and, if so, the number that rotated from a teaching health center. However, these agencies do not have procedures in place to identify potentially duplicative payments between their programs and Medicaid GME payments, which totaled $2.3 billion in federal Medicaid spending in 2015. There is no federal requirement that CMS identify potentially duplicative payments between Medicaid GME payments and other federal GME programs. And, without better data collected about Medicaid GME payments, there is limited information available to identify potentially duplicative payments between, for example, HRSA’s GME programs and Medicaid GME payments. HRSA and VA, which combined provided 13 percent of total federal GME funding in 2015, use the information collected for ongoing program performance measurement and program evaluation. HRSA evaluates the performance of its payment programs. To do so, HRSA collects information on program outcomes, such as whether supported residents received training in, or went on to practice in, a medically underserved area, a primary care setting, or rural area. HRSA uses these performance measures for ongoing evaluations, for internal and congressional reporting, and in its budget justification. In addition, HRSA is authorized to implement a quality bonus system for the CHGME program, which it plans to do by fiscal year 2019. VA issues a survey to VA residents to assess, among other things, a resident’s likelihood of considering a future employment opportunity at a VA medical facility. VA medical facilities are required to collect detailed records of residents’ participation in assigned educational activities and they must evaluate each resident according to accrediting body requirements, such as patient care and medical knowledge. VA medical facilities are also required to produce an annual report on each GME training program that includes, among other things, the accreditation status of its GME training programs, its response to results of the resident satisfaction survey, and opportunities for improvement in residents’ education. CMS, however, does not use the information it collects for Medicare or Medicaid to evaluate the performance of these programs toward meeting physician workforce goals, even though they accounted for 87 percent of federal GME spending in 2015. As noted, Medicaid programs are administered at the state level. For Medicare, CMS officials said that their goal is to ensure hospitals are paid according to the GME statutes and regulations. It does not use information collected to evaluate the performance of Medicare GME payments, such as evaluating the number of residents supported by specialty or whether residents went on to practice in rural areas, primary care, or in medically underserved areas. The officials further noted that Medicare is an insurance program, and not among the health care workforce programs that are under the purview of HRSA. Although CMS officials told us that they coordinate with HRSA regarding Medicare GME payments, HRSA does not conduct research to inform GME policy related to CMS’s GME payments. Also, in a 2015 report, we found that HHS lacks performance measures of Medicare GME payments that are directly aligned with areas of health care workforce needs identified in HRSA workforce projections. Information that agencies collect is not always complete, especially information about Medicaid GME spending. As previously noted, CMS collects limited information about the amount of Medicaid GME payments and how these payments support GME training, such as the number or type of residents supported. In addition, agencies did not collect or use the following information, with some exceptions, to understand the federal investment in GME training: Payment Amounts by Recipient Characteristics: With the exception of HRSA’s CHGME and THCGME programs, agencies do not collect information on payment amounts to training programs with specific characteristics, such as payment amounts by the type of training programs supported. This information would be needed, for example, to compare the payment rates of each program to the costs of training residents in the teaching sites supported. GME Costs and Revenues: Agencies did not collect information about funding recipients’ indirect costs or revenue generated from resident activities, with the exception of HRSA’s THCGME program. Also as previously noted, the costs that hospitals are required to report annually on their Medicare cost report may not be complete or consistent, nor, according to CMS officials we interviewed, is this information audited and used except in limited cases. No information is collected by CMS about direct or indirect training costs incurred by recipients of Medicaid GME payments, and only eight state Medicaid agencies reported on our survey that they require recipients to report information about their direct costs. Output or Outcome Measures: Unlike HRSA and VA, CMS does not collect information for the GME training programs that it supports through Medicaid to assess outputs or outcomes related to health care workforce planning. In addition, while CMS uses IRIS to collect information on the number and type of residents and their number of years completed in all types of GME training programs of residents supported by Medicare GME payments, it does not use it to understand the output of such spending or for health care workforce planning. CMS also does not collect information on the outcomes associated with Medicare GME payments, such as whether residents who were supported by Medicare went on to practice primary care specialties or in rural or medically underserved areas. Further, although HRSA collects data about the outcomes of its CHGME and THCGME programs, this information is self-reported by funding recipients. However, HRSA officials told us that it has taken steps to validate the information reported. For example, it has started to collect residents’ national provider identifiers for residents supported by the CHGME and THCGME programs, which is used to validate resident FTE counts and reported outcomes, such as whether residents went on to practice in primary care. Quality Measures: Agencies generally require that GME training programs be accredited in order to receive funding, and accrediting bodies are responsible for evaluating the educational quality of GME training programs. In addition, HRSA and VA collect some information about the learning experiences of residents in GME training programs supported, such as whether residents received training in certain topic areas. HHS and its advisory bodies have proposed tying federal funding to the performance of the programs. For example, the President’s budget proposals for fiscal years 2015, 2016, and 2017 for HHS proposed to Congress that it be allowed to set standards for teaching hospitals that receive Medicare GME payments to emphasize skills that promote high quality and high value in health care. In addition, the National Academy of Medicine has called for improved measures of the performance of GME training programs, and as of October 2017, it had an initiative to identify quality and other measures, such as residents’ competency or patient outcomes of care provided by residents. Information is also not always consistently collected within programs or standardized across programs. For example, VA medical facilities report information centrally to VA about their total payments to academic affiliates, but they inconsistently used accounting codes to report the total amount that they spent and did not report the amount they paid each academic affiliate, limiting the reliability of data VA collects on the total amount spent on GME. Additionally, VA medical facilities are required to report annually to VA their approved payment rates that each affiliate charges, but VA was unable to provide payment rate schedules for all affiliates in fiscal year 2015. Across all agencies, information about the number of FTE residents supported was collected at, and for, generally different points in time and through different reporting systems. (See table 12.) For example, HRSA generally collects FTE resident information through applications or supporting documentation prior to and at the end of a fiscal year, while VA collects such information in monthly or quarterly invoices throughout an academic year. And, CMS collects similar FTE resident information through cost reports and IRIS files based on each hospital’s own cost reporting period, which can vary by hospital. In addition, the five federal programs do not consistently use the same unique identifiers for their funding recipients, such as a hospital’s Medicare provider identification number, or individual residents supported, such as their national provider identifier, which limits the ability to link data across programs. In some cases, data collection may vary across the various GME programs based on program requirements. Additionally, GME funding recipients may be required by law to report certain types of information for some programs, but not for others. For example, THCGME recipients are required to report on the number of residents trained at the health centers who completed their residency and care for vulnerable populations living in underserved areas. Relatedly, CHGME funding recipients are required to report the number of residents trained at the hospital who completed their residency training and care for children within the service area of the hospital or state in which the hospital is located. No similar requirements apply to Medicare GME recipients. Because the information that agencies collect is not always complete or consistent, HHS does not have sufficient information available to comprehensively evaluate the federal programs that fund GME training. As a result, HHS cannot identify problems and make or recommend changes to Congress in order to improve the efficient and effective use of federal funds. Under leading practices we derived from GPRA and GPRAMA and federal standards for internal controls, agencies should identify and collect complete and reliable information needed to evaluate the performance of federal programs, while balancing the administrative costs of such efforts. In addition, agencies should use that information to monitor performance of programs in order to identify problems and make changes or recommendations to Congress for improvements. Improvements in the performance monitoring can enhance and sustain collaboration and reduce fragmentation within and across federal agencies that administer programs that fund GME training. However, because of limitations with the information agencies collect, HHS does not have information available to comprehensively understand across all programs that fund GME training, for example, the: 1. Total amount that the federal government spends on GME training that includes total Medicaid GME spending and the total amount VA medical facilities paid to academic affiliates; 2. The amount the federal government paid each recipient for GME training, such as the amount paid to each VA academic affiliate; 3. Distribution of funding—that is, the amount of funding by GME training program characteristics, including program type; 4. Extent to which the net cost of training residents, including the variation in costs along different factors that were previously discussed, are accurately represented by formulas used to calculate payments; 5. Output and outcomes of GME training funded by federal programs— that is, how many and what type of residents the federal government supports, where those residents trained and went on to practice, and whether those residents will help address future health care workforce needs; and 6. Quality of GME training programs that are supported by the federal government, such as whether residents participated in certain educational activities or the practice readiness or competence of residents who completed GME training programs supported. HHS’s advisory bodies and stakeholders have made calls for improvements in the accountability and transparency of federal programs that fund GME training. For example, the Medicare Payment Advisory Commission recommended greater accountability and transparency for Medicare GME payments by making information about Medicare GME payments and teaching costs available to the public. And, the National Academy of Medicine recommended that a GME Center within the Centers for Medicare & Medicaid Services be created to be responsible for, among other things, data collection and detailed reporting to ensure transparency in the distribution and use of Medicare GME payments. The federal government is an important source of funds for GME training, and through its funding and workforce planning efforts, HHS, as the largest funder of GME training, has an important role in ensuring federal programs are meeting the nation’s workforce needs. For HHS to carry out the comprehensive planning approach that we recommended in 2015, complete and consistent information on GME training is important. However, the information currently collected is insufficient for this purpose. For example, HHS lacks comprehensive information on the total number and specialty type of residents supported by all of the federal programs that fund GME training. But, HHS may have the opportunity to improve the information that its component agencies collect about how federal funding is used to support GME training to determine whether these programs are meeting these needs. New data collection efforts could potentially increase certain administrative costs for the federal government and providers. However, unless HHS collects more complete and consistent information, it will be limited in its ability to conduct comprehensive, ongoing evaluations of the federal government’s $14.5 billion annual investment in GME training. Such evaluations could allow HHS and other federal agencies to make programmatic changes, or make recommendations to Congress if legislative authority is needed, to improve the cost effectiveness of current federal funding. In addition, collecting more complete information could help HHS and other federal agencies better manage fragmentation in spending, management, and oversight of federal programs that fund GME training. We are making the following two recommendations to HHS: The Secretary of HHS should coordinate with federal agencies, including VA, that fund GME training to identify information needed to evaluate the performance of federal programs that fund GME training, including the extent to which these programs are efficient and cost-effective and are meeting the nation’s health care workforce needs. (Recommendation 1) The Secretary of HHS should coordinate with federal agencies to identify opportunities to improve the quality and consistency of the information collected within and across federal programs, and implement these improvements. (Recommendation 2) We provided a draft of this product to HHS and VA for comment. In its comments, reproduced in appendix III, HHS concurred with our two recommendations to identify and improve information collected to evaluate the performance of federal GME programs. HHS noted that the President’s fiscal year 2019 budget for HHS, released on February 12, 2018, proposed consolidating federal spending from Medicare, Medicaid, and the CHGME Payment Program into a single grant program for teaching hospitals. The proposed program would be jointly operated by CMS and HRSA and grant HHS authority to modify GME payment amounts based on criteria, including addressing health care workforce shortages. HHS stated that the program would allow the department to set priorities, reward performance, and align reporting metrics across its GME efforts. HHS indicated that, if the Congress adopts this proposal, it could work toward addressing both recommendations. It is important to note, however, that the recommendations in this report stand on their own and are separate from any efforts to modify how federal GME funds are distributed. Whether or not legislation is enacted to implement a consolidated federal GME grant program, HHS still needs to take actions to improve the information that agencies collect about how federal funding is used to support GME training. Such actions are important for HHS to assess the cost effectiveness of federal efforts to help meet the nation’s physician workforce needs. HHS also provided technical comments, which we incorporated as appropriate. In its comments, reproduced in Appendix IV, VA said that it has significant relationships with other federal funders of GME, including HRSA. In addition, VA said it looks forward to further dialogue with other agencies to better share GME information. VA did not provide technical comments. As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 20 days from the report date. At that time, we will send copies of this report to the Secretary of Health and Human Services and the Secretary of Veterans Affairs. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix V. In addition to federal funding, state governments—including state Medicaid agencies—and private sources also support graduate medical education (GME) training. However, little is known about these other sources. Therefore, we analyzed Medicare cost report data to determine the extent to which teaching hospitals were operating above their FTE resident caps in 2015—an indication of the extent to which hospitals may receive other sources of GME funding, such as state or private sources. We also surveyed state Medicaid Directors from 50 states and the District of Columbia to collect information on how and the extent to which states paid for GME training through Medicaid payments, and the states’ related reporting requirements and oversight activities. As part of our interviews with experts from research and industry organizations, we asked about state and private sources of funding for GME training and what is known about the amount of such funding. Teaching hospitals likely utilize state and private sources of funding, as well as other federal funding, to pay for residents beyond those paid for by Medicare—the largest federal funder of GME training. Hospitals have continued to add residents over time even though for most hospitals Medicare capped funding based on their number of full-time-equivalent (FTE) residents in 1996. In 2015, about half of teaching hospitals that receive Medicare GME payments had expanded their GME training programs above their Medicare FTE cap, and the extent to which they operate above their cap varied by hospital. We found that 47 percent of teaching hospitals were operating their GME training programs above their Medicare FTE cap on direct GME (DGME) payments. These hospitals had an average of 30.8 additional FTE residents above their DGME cap, ranging from 1.0 to 284.3 additional FTE residents. Most states (45) paid for GME training through their Medicaid programs in 2015; however, states varied in the payment model that they used to make Medicaid payments for GME training, though most used fee-for- service payments, including supplemental payments. Of the 45 state Medicaid agencies that paid for GME training, 25 states did so through fee-for-service payments only; 19 states did so through both fee-for- service and managed care payments; and 1 state (New Jersey) made managed care payments only. Of the 44 states that paid for GME through Medicaid fee-for-service payments, 21 states paid as an add-on to its fee-for-service rate, and 31 states paid through lump sum supplemental or other payments. Of the 20 states that made Medicaid managed care payments for GME, 12 paid teaching sites directly and 10 states made GME payments through managed care plans. Of the 19 states that paid for GME through both Medicaid fee-for- service and managed care, fee-for-service GME payments made up 48 percent of all Medicaid GME payments, on average, while managed care payments made up 52 percent. (See table 13.) While some states followed the Medicare formula for calculating GME payments, most have deviated from this method. Of the 43 states that responded about how they calculated the amount of GME payments, 10 states reported that they followed the Medicare GME payment formula to calculate Medicaid fee-for-service payments for GME training. In addition, two states followed Medicare’s formula for making managed care payments for GME training. Most states (32) followed another method. Medicaid GME payments per FTE resident varied by state and within states, even after adjusting for geographic differences in labor costs. Specifically, the average combined federal and state payment per FTE resident ranged from $2,108 in Rhode Island to $100,587 in Arizona. (See table 14.) The payment per FTE resident also varied within states. The Medicaid payment per FTE varied the most within Ohio, where the state reported payments ranging from $1,415 per FTE to $453,098 per FTE. About half of the states (22 of 45) reported that they specified the type of expenses that its Medicaid GME payments were intended to cover. Of these 22 states, payments were intended to cover the costs of residents’ salaries and benefits (14 states), faculty salaries and benefits (11 states), program administration costs (10 states), or indirect medical education costs (8 states). Some state Medicaid agencies have tied their payments to incentives to expand the physician workforce. Of the 45 states that reported Medicaid GME payments in 2015, 4 states—Alabama, Montana, New Mexico, and South Dakota—reported that they restrict payments to the training of primary care physicians only. (See table 15.) An additional 9 states required that the funding recipient have a primary care residency program. In addition, according to experts we interviewed, states have been considering how to target Medicaid GME payments to meet state workforce needs. For example, one expert said some states have used Medicaid payments to expand GME training of physicians in outpatient, ambulatory care settings. However, Medicaid GME payments generally go to hospitals. Specifically, 44 of the states reported making payments to hospitals and 7 states paid other teaching sites, such as teaching health centers. The one state that did not make payments to teaching hospitals directed all Medicaid payments for GME training to medical schools. Further, one expert we interviewed told us that it is difficult for states to change their GME financing models to direct funding to specific workforce goals because hospitals are reliant on state GME payments to support certain residency positions. Instead, states have used a moderate approach, such as providing additional funding targeted to specific training, rather than a complete funding overhaul that would redistribute existing funds. Despite the significant investment in GME training by state Medicaid agencies, which is matched by the federal government, the extent of state oversight of Medicaid GME spending varied by state. As previously mentioned, less than half of the states (20 of 45) required teaching sites that received Medicaid GME payments to report information to the state. (See table 16.) Among these 20 states, 16 required recipients to report information on the number of residents or FTE residents, 8 states required information about direct medical education costs, 6 states required information about the GME training program specialties supported, and 4 states required recipients to report information about the residents’ characteristics, such as their post-graduate year. Of the 10 states that made Medicaid GME payments to managed care plans, 4 states—Kansas, Kentucky, Michigan, and Minnesota—set the methodology or base rate that managed care plans were required to use to calculate GME payments. None of the states reviewed and approved payments. Further, 44 of the 45 states were able to provide at least some information on the total amount the state spent on Medicaid GME payments, but the amount of information they were able to provide varied. While most states (38) were able to provide data on all GME payments by recipient, 4 states could provide data on some but not all payments, and 2 states could not provide data on the amount of GME payments by recipient. And, less than half of the states (18 of 45) were unable to provide data on either the number of FTE residents or resident counts at teaching entities that received Medicaid GME payments. (See table 17.) Experts we interviewed identified other sources of state and private funding for GME training. Hospitals and health systems: Hospitals may rely on their own funding to support their residency programs. One expert we interviewed said that hospitals that sponsor GME residency programs provide funding for certain specialty residency programs that make money for the hospital. State government grant or other funding: Aside from GME funding through Medicaid, one expert told us that some states make direct grants to residency programs, mostly primary care residency programs, or through state appropriations specifically for GME training. For example, Florida created an $80 million fund to support state training in outpatient or community-based programs. And, one expert told us that some states have developed innovative funding mechanisms. This was the case in Georgia, which established a hospital coalition that funded 400 new residency slots to meet the needs of medically underserved populations. Private health insurers: Experts said GME funding from private health insurers is generally thought to be provided through higher reimbursement rates to teaching hospitals than nonteaching hospitals, including through Medicare reimbursement. While private insurers fund GME training through their contracts with individual hospitals, one expert told us that those contracts do not likely differentiate the amount of funding that is used toward GME training versus other activities. However, one expert raised concerns that private insurers are not paying their share of GME costs. Another expert noted that there have been some state-level efforts to require all payers, including private insurers, to have some responsibilities in paying for the education of the health care workforce, even beyond physician GME training. Other: Experts also identified other possible sources of private funding. For example, one expert told us that, while the amount of funding from pharmaceutical or medical device companies has not been identified in existing studies, anecdotally there is a growing use of these funding sources. Experts also said that some funding is provided by philanthropic organizations or medical schools that are affiliated with residency programs. Appendix II: Information that Federal Programs Collect about Funding for Graduate Medical Education Training Medicaid Services (CMS) Administration (HRSA) Affairs (VA) Medicaid Services (CMS) Administration (HRSA) Affairs (VA) In addition to the contact named above, William Hadley, Assistant Director; Christine Brudevold, Assistant Director; Katherine Mack, Analyst-in-Charge; A. Elizabeth Dobrenz; Maggie G. Holihan; Daniel Lee; and Todd Anderson made key contributions to this report. Also contributing were Sam Amrhein, Muriel Brown, Lisa Opdycke, and Jennifer Whitworth.

Summary: An adequate, well-trained physician workforce is essential for providing access to quality health care. While a number of factors affect the supply and distribution of physicians, GME is a significant determinant. A significant portion of GME training funds come from federal programs and states. This report (1) describes the amount and distribution of federal government and state Medicaid agency spending on GME; (2) describes what is known about GME costs; and (3) examines the extent to which the federal government collects information to understand its investment in GME. GAO reviewed reports, agency websites, and interviewed agency officials to identify federal programs that fund the clinical training of residents and were authorized through 2017. GAO analyzed 2015 data—the most recent data available at the time of GAO's analysis—including from a state survey. All 50 states and the District of Columbia responded to the survey. GAO reviewed literature, interviewed experts from seven organizations knowledgeable about GME costs, and analyzed Medicare data. GAO also reviewed documentation from HHS and the Department of Veterans Affairs (VA) and interviewed agency officials. Federal agencies and state Medicaid agencies spent over $16.3 billion in 2015 to fund graduate medical education (GME) training for physicians—commonly known as residency training. The federal government spent $14.5 billion through five programs, and 45 state Medicaid agencies spent $1.8 billion. About half of teaching sites that received funding—such as teaching hospitals—received funds from more than one of the five programs. GME training costs vary due to the characteristics of teaching sites, such as the number of residents trained and their specialty, which can make it difficult to compare training costs across sites. Further, challenges exist in measuring training costs because some costs, such as faculty teaching time, are difficult to identify. Also, there is no standard method for identifying and capturing training costs, and each teaching site may vary in how it does so. While federal agencies generally collect information needed to manage their individual programs, this information is not sufficient to comprehensively understand whether the federal investment in GME training meets national physician workforce needs. The information agencies collect is not always complete or consistent within or across programs. For example, national data on GME training costs are not systematically collected, and some agencies lacked data to understand the total amount spent, or the outcomes of their programs, such as where supported residents went on to practice. GAO recommended in 2015 that the Department of Health and Human Services (HHS) develop a comprehensive planning approach to identify and address areas of health care workforce need. HHS concurred and identified steps it could take. While HHS has yet to take these steps, the information currently available is also insufficient for such planning. Comprehensive information is needed to identify gaps between federal GME programs and national physician workforce needs—particularly the distribution of physicians geographically or across specialties—and to make or recommend to Congress changes to improve the efficient and effective use of federal funds to meet those needs. GAO recommends that HHS coordinate with federal agencies, including VA, to (1) identify information needed to evaluate federal GME programs, and (2) identify opportunities to improve the quality and consistency of information, and implement these improvements. HHS concurred with both recommendations.