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Policy update: Graduate Medical Education funding. Jeffrey R. Jaeger, MD, FACP University of Pennsylvania Health System. Outline. How is GME funded? What’s wrong with this picture Supercommittee Primer Potential scenarios Advocacy opportunities. Graduate Medical Education (GME) funding.

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Policy update graduate medical education funding

Policy update: Graduate Medical Education funding

Jeffrey R. Jaeger, MD, FACP

University of Pennsylvania Health System


  • How is GME funded?

  • What’s wrong with this picture

  • Supercommittee Primer

  • Potential scenarios

  • Advocacy opportunities

Graduate medical education gme funding
Graduate Medical Education (GME) funding

  • GME is funded through Medicare (CMS)

  • Since 1980’s: 2 “funding streams”: Indirect and Direct

  • Indirect Medical Education expenses:

    • Factored in as an adjustment to Medicare billings:

      • Varies based on resident/bed ratio, capped at 5.5% add on

      • Example: If usual Medicare DRG is $10000, we get $10550

    • Intended to cover:

      • Sicker patients

      • More complex patients

      • More advanced diagnostic and therapeutic modalities

      • Longer lengths of stay and additional testing

Gme funding cont
GME Funding (cont.)

  • Direct Medical Education expenses:

    • Intended to cover salaries, benefits, administrative costs, overhead, malpractice, faculty teaching time

    • Hospital-specific per-resident amount (PRA) based on costs to educate residents in 1983

      • PRA adjusted for inflation but not work hours reform, competencies, oversight rules

    • Hospitals’ DME reimbursement = (# of residents*) x (PRA**) x (% of hospital’s business attributable to Medicare)

*Capped at 1997 numbers of residents

** Large variations between hospitals

Gme funding cont1
GME Funding (cont.)

  • IME > DME for most hospitals treating adult patients*

  • DME + IME = $9 billion+ annually for 100000+ residents and fellows nationally

  • Estimates are that current funding just about covers costs (Steinmann, Annals, 2011)

* Pediatrics has a separate funding stream also through Medicare

What s wrong with this picture
What’s wrong with this picture?

  • From Washington:

    • 2010 Deficit Commission: Charged with making proposals to address the debt / deficit

      • Recommendation 3.3.5: “Reduce excess payments to hospitals for medical education”

      • There’s a sense that someone other than CMS / taxpayers (profession, hospitals, other insurers) should be funding training

      • Proposal: Fix DME at 120% of salary and cut IME to 2.2% = $6 billion a year saved

    • Did not gain enough consensus to make it to Congress

What s wrong with this picture 2
What’s wrong with this picture? (2)

  • From multiple sources (lay press, academia, politicians):

    • If GME is going to be publicly funded, then public priorities should inform GME

    • Might we structure GME funding to achieve some agreed-upon policy goals?

      • Impact workforce?

      • Bend the cost curve?

      • Speed changes in healthcare delivery?

Supercommittee primer
Supercommittee Primer

  • Joint Select Committee on Deficit Reduction

  • 12 Congressmen and –women

    • 6 Senate, 6 House; 6 Dems, 6 GOP

    • Must come to consensus on cutting $1.2 trillion over 10 years or automatic cuts go into effect for things near and dear to both parties

  • GME again in the crosshairs with this group

Impact of gme cuts
Impact of GME cuts

  • Some hospitals will fold their residencies

  • Those that do not:

    • Most will have to find alternative ways to fund resident education

    • Many will make cuts:

      • Administration

      • Teaching supplements

      • Benefits

      • Numbers of residents?

Impact of gme cuts cont
Impact of GME cuts (cont.)

  • Fewer residents means fewer man-hours available for inpatient care

    • Hospitals will need to hire more extenders or shift rotations from elective/outpatient to inpatient

  • But… Internal Medicine (IM) residents need to spend 1/3 of their time in outpatient, and 130 half-days in continuity clinic

    • Will the ACGME change the rules for the health of hospitals?

    • Or will they stand pat?

What about a legislative fix
What about a legislative fix?

  • What might we see?

    • No change?

    • All-payer funding of GME?

    • $$$ shifted to programs training PCP’s?

      • It’s already in Healthcare Reform law (PPACA)

      • Will it include IM?

      • Who would pay to train specialists?

    • Support for development of new specialties?

What does it mean in the medium term anyone s guess
What does it mean in the medium term? Anyone’s guess…

  • AMC’s and hospitals positioned to compete for funding directed at primary care education will be in better shape

  • AMC’s and hospitals positioned to find internal funding for GME will be in better shape

  • ACGME and ABIM may be under pressure to create paths to practice that more reliably produce the docs the nation thinks it needs

Pathways to advocacy
Pathways to advocacy

  • Call your Representative and/or Senators and ask to speak to the staffer for health care or education

  • Find contact information at http://www.usa.gov/Contact/Elected.shtml

  • Especially important if your Congressman or –woman is on the Supercommittee

Supercommittee membership
Supercommittee Membership

  • House of Representatives:

    • Rep. Jim Clyburn (D-S.C.)

    • Rep. Xavier Becerra (D-Calif.)

    • Rep. Chris Van Hollen (D-Md.)

    • Rep. Jeb Hensarling (R-Texas)

    • Rep. Dave Camp (R-Mich.)

    • Rep. Fred Upton (R-Mich.)

  • Senate:

    • Sen. Max Baucus (D-Mont.)

    • Sen. John Kerry (D-Mass.)

    • Sen. Patty Murray (D-Wash.)

    • Sen. Jon Kyl (R-Ariz.)

    • Sen. Pat Toomey (R-Pa.)

    • Sen. Rob Portman (R-Ohio)

Advocacy cont
Advocacy (cont.)

  • ACP Capwiz has links facilitating advocacy on GME: http://capwiz.com/acponline/home/

When you write or call
When you write or call

  • Make it clear that you are a physician, caring for patients on Medicare, and that you support preserving funding for Graduate Medical Education

  • Personalized letters with stories about patients are the best

  • It’s important to acknowledge the reality that everyone is going to have to pitch in


  • GME funded mainly through CMS

  • Current solution to debt/deficit presents likely cuts to GME funding

  • Outcomes and impact remain unclear

  • Advocacy from academic medicine and from actual residents is critical