Funding Graduate Medical Education

In the spirit of writing about seemingly boring (ok, maybe really boring!) but important policy topics I am going to talk about the funding of Graduate Medical Education (GME). First some background (may be TMI, but you gotta know this to understand the issues). GME, commonly known as “residency training” is where medical school graduates, after receiving their MDs, go to really learn how to be doctors in their specialty of choice. While most (but not all) states still allow physicians to be licensed with only one year of post-graduate training (“internship”), one can only sit for specialty boards (become “board-certified”) after completing an entire residency. These core residencies range from 3 years (for internal medicine, family medicine, psychiatry, pediatrics) to 5 years (for surgery). In addition, there are “fellowships” of 1-3 years that prepare graduates of core residencies to become subspecialists (e.g., cardiology, gastroenterology, endocrinology in internal medicine or pediatrics, or thoracic and cardiac surgery, etc.).

Currently, most GME is funded through Medicare, with supplemental payments to hospitals that train residents. The amount varies by hospital based on two characteristics: what percent of patient bed-days are Medicare (easy to understand; if you would get $X per resident if all your hospital bed days were Medicare, you get 50% of $X if 50% of your bed days are Medicare). The other, what is $X for your hospital, is virtually impossible to understand, as it is has its origins in the cost-reports submitted by hospitals in 1985, two years before the legislation established GME support was approved. The important point is that there is a wide variation in what $X is between hospitals, with public hospitals tending to be on the low side and NYC teaching hospitals at the top. The skew was so great that the lowest were brought up a few years ago, but the balance, bringing down the top, did not happen. Furthermore, GME $ are divided into two pots, Direct GME (DGME), intended to pay for resident salaries and benefits and the teaching time of faculty, and Indirect ME (IME) expenses, intended to pay for something, which varies by who is explaining it. I will append my explanation at the bottom[i] to not get any farther afield, but will note that the IME $ are often twice the DGME $, and so are no small issue.

In addition to the problems identified above (why is there skew between hospitals in what the core support of residents would be, and what the heck is IME and what is it for?), there are two other big problems: What sense does it make to have Medicare $ funding GME, and why do all the $ go to hospitals? Regarding the first, since all doctors who care for all people have to be trained, why should Medicare be the only payor to pay for it? Why not other insurers? It is not unimportant, since, as noted, the larger the percent of Medicare patients the larger the GME payments. This is a second characteristic discriminating against public hospitals; in addition to their $X being worse because of the 1985-cost-report issue, public hospitals are more likely to take care of a smaller % of Medicare patients for two reasons: 1) Medicare patients have more choice, while uninsured younger people do not, and 2) a disproportionate percent of younger people who need to be in the hospital, because of lack of medical care that would be able to prevent hospitalization and because they are more likely to be exposed to violence, drugs, etc., are poor, uninsured, and thus not admitted to non-public hospitals. It makes absolutely no sense to not have GME funded by a separate educational appropriation not tied to Medicare – except for politically. As long as it is tied to Medicare, funding is more likely to be assured; if it was a separate appropriation, it would be an easier target for congressional budget cutters. Think back on de-institutionalization of the mentally ill. It made perfect sense to close the frequently-inhumane warehouses that were public mental hospitals because drug therapy meant that patients could be cared for effectively in the community by community based mental health centers. Except we closed the hospitals, and then have continually cut the funding for community-based mental health centers. Voilà! Large numbers of untreated homeless mentally ill people on the streets! Medical educators are very leery of this repeating in the GME arena if it is no longer tied to Medicare.

The other big issue, why GME $ go to hospitals, is one that definitely should be addressed. This blog, and many other places, have pointed out repeatedly the shortage of primary care physicians to meet the access and quality health needs of our population. Yet GME rules allow hospitals only to declare the time of residents spent in the hospital, or in hospital-owned clinics. Many of the ambulatory practices that family medicine and other primary care residents are trained in are not owned by the hospital – they may be owned by the medical school, a practice group of faculty, or a non-profit corporation. In addition, if the residency sees the best training to involve rotations with community-based primary care or specialty physicians, or in public health settings, the hospital cannot get GME $. Therefore, it is in the interest of the hospital to keep the residents in hospital settings, not necessary where they will get the best training to be community-based doctors working primarily in ambulatory settings. Hospitals would prefer to use GME $ to fund training of residents and fellows that perform services that bring in revenue to the hospital’s bottom line; for example, training more cardiology fellows who extend the amount of these highly-profitable services that can be done by the supervising physicians. There MUST be a change in policy so that GME $ from Medicare for family medicine and other primary care residency training goes directly to the training program, not to a hospital. The training program can then pay the hospital (or multiple hospitals), or community doctor, or public health venue, as appropriate for the time spent in resident training.

Each hospital has a GME “cap” of the number of positions it can have funded by Medicare. There have been repeated calls from organizations such as the Association of American Medical Colleges to lift, or raise, the caps, by as many as 15,000 positions per year. The argument in favor is that simply increasing the number of doctors produced (by creating new medical schools and increasing class size in those that exist) will not increase the number of physicians if the GME slots are not increased; US grads will simply occupy slots currently filled by international medical graduates (IMGs). This is a VERY wrong proposal. Absent changes that will make entering primary care residency training more attractive to US medical students (read $: both in loan repayment and increased payment for primary care), it will just further skew the balance of physicians toward subspecialists. For one thing, as noted above, those are the specialties hospitals wish to fund. For another, many US graduates entering primary care are doing so because it is easier to get into these residencies because there are limited numbers of “slots” in the more lucrative specialties. If the number of residency positions in those specialties are increased, it will decrease the percent of US medical graduates entering primary care, which is already at crisis levels. (see “More primary care doctors or just more doctors?”, April 3, 2009.) The evidence shows that even without raising the cap, hospitals are funding more positions from their own money – and these are absolutely NOT primary care. In recent years subspecialty residency slots have increased almost 30% while primary care positions have decreased almost 3%!

GME funding needs to be reformed, and the first step is to directly fund primary care residencies. This needs to be accompanied by payment reform to make careers in primary care less unattractive compared to subspecialty care. And it needs to happen now, as part of health reform.

[i] OK, IME. Hospitals – who want to keep the money rather than spending it on resident education – say it is for making up their cost because residents order more tests. Maybe, but if there were no residents, there would be no IME $, and they’d have to hire someone else to do the work. Obviously, senior physicians would be prohibitively expensive, but even Nurse Practitioners or Physician’s Assistants would cost nearly 4x as much. Residents work about twice as many hours for about half the salary of NPs or PAs. And, as physicians, they have a broader scope of practice. They are certainly the most “cost-effective” employees in a hospital. A better argument for IME is that hospitals with residency programs – university hospitals, public hospitals, and large not-for-profits – get sicker patients (which they do, both because these are the safety-net and tertiary care hospitals, and because the residents mean there are round-the-clock doctors). Thus, IME is another form of disproportionate share funding for such hospitals.