The Medical Education Futures Study Blog

Recently I’ve heard arguments suggesting Medicare should increase the number of funded graduate medical education (GME) positions because as U.S. medical schools expand, U.S. medical graduates will no longer get into their chosen residency positions.  This sentiment is often echoed in medical student blogs and chat rooms, with students arguing that there aren’t enough of specific specialty residency positions.

But these arguments beg the question – what demand are we meeting through our federal support of GME?

Supply and demand is a basic tenet of a marketplace economy and it is a concept that Americans generally believe in.  In this situation supply is the number of GME positions, but what demand are we meeting?  Certainly there is a demand generated by medical students for certain kinds of residency positions.  But is Medicare paying hospitals an average of $90k per resident to meet medical student demand for choice residency positions?

Or is demand that of hospitals for cheap labor?  An interesting research study came out this week indicating hospitals are favoring specialty GME positions over primary care positions, with a resultant shift in Medicare funding supporting more specialty training over primary care training.  Hospitals, as a result, are essentially getting a larger workforce for the health care services that are the most highly reimbursed and Medicare is subsidizing the staffing demands of hospitals to increase the provision of costly high intensity, specialty care.

What demand is Medicare meeting through its support of graduate medical education?  I would suggest the demand we should be meeting is that of the nation for the number and kinds of physicians that will produce the most cost-effective, high quality, accessible health care system.

Our country is mired in a physician workforce crisis with more than 56 million Americans lacking access to a primary care physician. Coverage expansion efforts in Massachusetts, a state boasting the strongest primary care workforce in the nation, exposed gaping holes in primary care networks. Current projections suggest a shortage of more than 40,000 primary care providers by 2025.

Recently key Democratic Senators led by Bill Nelson (D-FL) have introduced an amendment (SA 2909) to revive previously abandoned efforts to lift the Medicare graduate medical education (GME) “cap” as part of comprehensive health care reform legislation. The cap, adopted as part of the Balanced Budget Act of 1997, was instituted to control the quickly escalating costs of GME. By restricting the ability of teaching hospitals to receive funding for additional residency “slots,”, the number of trainees eligible for Medicare payments for most programs was fixed at 1996 levels. Thirteen years later, in the face of a dire shortage of primary care physicians, lifting the cap would seem to be an obvious answer to a daunting workforce supply problem.

The answer to the primary care shortage is not, however, lifting the GME cap - and especially not with a distribution scheme modeled after Sen. Nelson’s Resident Physician Shortage Act of 2009 (S. 973). As previously argued, this bill contains pro-primary care language camouflaging a clandestine specialty-driven agenda. Much like the redistribution of unused cap in the Medicare Modernization Act of 2003, residency positions would be allocated according to malleable preference criteria with the Centers for Medicare and Medicaid Services (CMS) afforded significant discretion to determine which institutions are awarded additional slots. It is particularly concerning that one-third of new slots would be “set aside” for current “overcap” programs. According to data from Salsberg et al, an overwhelming majority of recent position increases have been subspecialty trainees. Further, it is important to note that the number of first year residency (PGY1) positions each year (~26,000) far exceeds the number of U.S. medical graduates (~21,000). Any true increase in residency positions thus necessarily confers a 1:1 increase in the number of international medical graduates (IMGs) training in American teaching hospitals; the devastating consequences of brain-drain on source countries has been well documented. At the current growth rate of medical school class sizes, it will take at least a decade to close the graduate-resident gap.

The primary driving force behind lifting the cap is the Association of American Medical Colleges (AAMC) and specialty-professional organizations. While academic medical centers serve an essential function in our post-graduate medical education system, ignoring their contribution to steepening the cost curve and perpetuating the primary care access crisis would be myopic. By educating young physicians among the sickest and most complex patients in the country, academic medical centers perpetuate an implicit hierarchy that, compounded by pay disparities pervasive throughout medicine, incentivizes specialty training and oppresses primary care. From 1998 to 2007, the number of internal medicine residents interested in careers in primary care declined from 54 percent to 23 percent. We must reverse this trend. But the solution to our primary care crisis, despite insistence by the AAMC to the contrary, is not to arm specialty strongholds with more residency slots and the flexibility to deploy these spots to the detriment of primary care. Instead, it is time for us to engage in an earnest dialogue around restructuring our system of graduate medical education by infusing accountability to the populations and communities that residency programs are tasked with training physicians to serve. Guidance, accountability and performance standards for the generous federal Medicare GME funds teaching hospitals receive must be central to this culture shift.

Responding to this need, health care reform legislation in Senate calls for a Workforce Commission to collect and analyze data and develop recommendations therein to build a comprehensive, evidence-based strategy to revolutionize residency training and our physician workforce. We must recognize that however attractive lifting the cap may seem at face value, it will undermine larger reform goals and continue to suppress primary care in this country, crippling efforts to expand coverage and access to all Americans. Instead, we should invest in more innovative approaches starting with tackling the primary care-specialty pay gap, fully funding teaching health centers, expanding fiscal incentives for primary care such as loan-repayment and tuition reduction, and coupling of Medicare GME expansion with U.S. medical graduate class sizes.

Elizabeth Wiley, JD, MPH
National Student Life Coordinator, American Medical Student Association
MS II, The George Washington University School of Medicine

Iyah Romm
National Co-Chair, Health Care for All Steering Committee, American Medical Student Association
MS II, Boston University School of Medicine

Yesterday evening, the Teaching Health Centers (THC) language in the Senate Finance Chairman’s Mark came under fire due to jurisdictional issues.  Senator Enzi (R-WY) argued the portion of the language that would provide start-up grants to new THC residency programs or expanding existing programs infringed on the jurisdiction of the HELP committee.  Senator Bingaman (D-NM) argued for the importance of THCs and that the legislation had been approved by the HELP Committee.  In the end, Senator Enzi withdrew his amendment.  Despite the amendment to strike, Senator Enzi specifically stated he has “no problem” with the substance of the legislation and Senator Baucus called the THCs a “very good program.”

Watch Senator Bingaman’s argument for THCs:

Amidst the debates on insurance market reforms, Medicaid expansion, and maintaining benefits for Medicare beneficiaries, graduate medical education is getting attention in this round of health care reform legislation.  And we’ve created a crib sheet of the Senate Finance legislation:

Chairman’s Mark (9-16-09)

• Redistributes 80% of unused resident slots.  Hospitals must 1) maintain its number of primary care residents and 2) 75% of positions must be in primary care or general surgery.  The Secretary would take into account the likelihood that a hospital would 1) fill the positions in the first 3 years, 2) take part in innovative delivery models, and 3) have a rural training track.  The Secretary would distribute based on 1) hospitals in states with resident to population ratios in the lowest quartile, 2) hospitals in the top 25 states in terms of ration of population living in a HPSA and 3) hospitals in rural areas.  Limit per hospital is 75 FTE positions.  IME would be paid at 50% of current IME.
• “All or substantially all costs” previously defined as 90% of resident stipends and fringe benefits and costs associated with a supervising physician, in terms of the costs that must be incurred by a hospital training in a non-hospital setting is changed to mean only the costs of the resident stipends and fringe benefits during the time spent in that setting.
• Countable FTE - when calculating DGME certain non-patient activities in non-hospital settings will be included in countable FTE; when calculating IME certain non-patient care activities (e.g. didactic conferences but not research) that occurs in the hospital will be countable.
• Closing or acquire hospitals - establishes rules for the redistribution of resident cap positions in this priority order: 1) hospitals located in the same or contiguous statistical area, 2) hospitals in the same State, 3) hospitals in the same region and 4) the priorities set in the redistribution of unused slots.

Amendments to Chairman’s Mark (9-19-09)

• Bingaman #D-2 - Ensures 50% of the GME slot redistribution is prioritized for rural and underserved communities.
• Bingaman #D-8 - Establishes 1) a grant program to provide Teaching Health Centers funding to establish primary care residency programs and 2) a program to provide direct and idirect GME payments for Teaching Health Centers to run primary care residency programs, funded at $250 million for FY11 to FY15.
• Stabenow-Snowe #D-18 - Allows residency training programs receiving initial accreditation by the ACGME or a new program number by the AOA from Jan. 1, 1995 to Dec. 31, 2006 to be treated as new programs with an adjustment to the hospital’s resident limit.
• Cantwell #D-2 - Establishes a loan program for hospitals starting new residency training programs in the following specialties: family medicine, internal medicine, emergency medicine, Ob-Gyn, general surgery, preventative medicine, pediatrics and behavioral and mental health.
• Nelson-Schumer-Cantwell-Kerry #D-6 - Increases the current cap in Medicare GME funded slots by 10,000.  1/3 of new positions would be distributed to hospital training more residents than their resident limit.  2/3 will be distributed on the following criteria: 1) likelihood of filling ths positions within 3 years, 2) primary care and general surgery positions, 3) training in community health centers or community-based settings, 4) states with more medical students than residency positions and with smaller resident to medical student ratios, 5) states with low resident to population ratios and 6) limit 50 FTE residency positions.  Also the IME will be paid at the full IME adjustment.
• Nelson #D-7 - Adds an additional number of new slots equivalent to $250 million in federal spending.  Slots will be available to hospitals in the ten states with the lowest resident to population ratio.  IME will be paid at full IME adjustment.

Chairman’s Mark V2

• Accepts Bingaman #D-2, adding reserved slots meet the additional criteria of being in a state among the top 10 in terms of the ratio of the population living in a HPSA.
• Accepts Bingaman #D-8, funded at $230 million for FY11 to FY 15 for the direct and indirect GME payments.
• Accepts Nelson #D-6 with modification - “allocates an additional number of new residency training slots for redistribution by adjusting the percent of unused slots that would be included in the pool for redistribution to 65%.  Slots allocated under this amendment will be available to hospitals located in the ten states with the lowest resident-to-population ratios.” IME will be reimbursed at the full IME adjustment factor.

So Magic 8 Ball - What’s the future for GME?

Answer: Ask again later… Senate Finance mark up is ongoing.

A recent research brief examining Community Health Centers (CHCs) in Indiana indicates financial investment in CHCs will ultimately result in savings for health care systems – totaling $473 million for Indiana in 2007.  These savings come from the lower cost of health care in ambulatory settings and reduced spending on preventable emergency room visits and hospital admissions.

These savings offer a glimmer of hope in the current health care reform discussions and there is every indication that Congress plans to capitalize on this system by increasing funding to expand Community Health Centers.  The House Tri-Committee bill entitled America’s Affordable Health Choice Act increases CHC funding from the FY09 $2.19 billion authorization to $6.4 billion in FY19.

But these investments often ignore one critical issue – health centers are already struggling to recruit and retain the necessary primary care physicians to provide the health care services that increase access and lead to cost savings.  In fact, primary care is struggling across the practice spectrum.  Medical student interest in Family Medicine is at an all time low and more and more Internal Medicine residents are choosing to specialize rather than go into primary care.

Thankfully, Congress hasn’t been blind on this issue.  In the House Tri-Committee Bill, there are a number of pieces to strengthen primary care – including primary care bonus payments, expansion of primary care focused medical home demonstration projects, increased funding for primary care training programs, and the creation of a new Medicare Teaching Health Centers (THCs) project.  The THC model brings together components which will both strengthen the current CHC system and build the future primary care workforce.  

THCs would increase residency training in community-based ambulatory settings by directly funding health centers to run residency programs.  The current model of Federal support for residency training directs Medicare Graduate Medical Education (GME) payments to hospitals, who sponsor residency programs which are heavily weighted towards the needs and specialty-based culture of most hospitals.  Providing funds directly to health centers would promote the establishment and support of residency programs focused on the community-based primary care culture of most health centers.

Placing residency programs in health centers would immediately augment the current workforce as residents provide service.  Teaching increases buy in and retention for health center physicians and THC graduates are much more likely to continue practicing in health centers and in primary care.  THCs also have an added benefit when located in CHCs which provide care to the uninsured pre-Medicare population – without health care these individuals will ultimately cost Medicare much more than if their medical conditions were well treated prior to Medicare entry.

All in all, an investment in Teaching Health Centers will lead to a more robust Community Health Center system, cost savings for the entire health care system and a primary care workforce that will be needed to care for the growing and aging American population.

In the June 8 Roll Call, Atul Grover of the AAMC asks –

If you or someone you love were gravely ill, where would you turn?

He suggests the best answer is America’s teaching hospitals and without an expansion of government funded graduate medical education, these hospitals will fade away. I agree that teaching hospitals provide service above educating the nation’s future physicians.  Innovation, research, standby services and charity care are all products of the academic health center.  However, the majority of these services are specifically funded by the government – through NIH funds and disproportionate share payments to hospitals which serve large uninsured populations.

Currently the crumbs of the piece of the pie that is GME likely do contribute to the other missions of teaching hospitals.  MedPAC estimates Medicare inpatient costs increase only 2.2% for every 10% increase in resident to bed ratio (also known as indirect GME or IME).  Yet Medicare pays IME at 5.5%.  Opponents to adjusting the IME rate argue the extra payments fund the other missions of teaching hospitals.  Whether this is the case or not, as we look to shoring up these missions, why would we continue to do it through a convoluted system whose goals are not those that we seek to satisfy.  If the government plans to increase support for the missions of innovation, research, standby services and charity care then it should do it with funding specifically directed at those missions.

Today’s teaching hospitals overwhelmingly turn out specialist physicians who are contributing to the extremely costly and disjointed health care system described by Dr. Gawande in his New Yorker article.  Dumping more money into the same system will only exacerbate the problem.  And dumping more money into the system in the hopes that the crumbs that fall off will support the other missions of teaching hospitals is expensive and bad policy.