IOM recommends decade-long overhaul of Medicare GME funding program

July 30, 2014

An Institute of Medicine report revealed deficiencies in the Graduate Medical Education funding program and offers a roadmap for future improvements.

The results of a report commissioned in 2012 to review graduate medical education (GME) governance and financing reveal that while there are deficiencies in the GME program, continued Medicare support is warranted together with a roadmap for future improvement.

Tens of billions of dollars have been funneled into the GME program since Medicare and Medicaid were created in 1965, yet there is “a striking absence of transparency and accountability” in the GME financing system, according to the report.

Congress froze GME funding in 1997, and residency slots have not been maintained at an adequate number to support the number of medical school graduates, therefore contributing to the shortage of primary care physicians.

The majority of GME funding-$15 billion in 2012-comes from the Medicare program, which has been a stable and secure funding source for residency training for the last 50 years. However, outdated statutes and regulations governing GME financing funnel most of those payments to hospitals, because that was where the bulk of physician training took place in the 1960s. Now, more healthcare is delivered outside of the hospital, yet the Medicare GME payment system discourages physician training outside of hospitals, the report notes.

A 21-member Institute of Medicine (IOM) committee found that there is an “unquestionable imperative” to study and improve the effectiveness of the GME system.

The IOM committee outlined several goals including: the development of a physician workforce that is better prepared to help lead and improve an evolving healthcare system at lower costs; GME programs that are better designed toward achieving that goal; increased accountability for GME programs; clarification and increased oversight of GME use of public funds; using GME funds to maximize program goals; and to reduce unwanted negative effects of transitions in GME funding methods.

The American Medical Association (AMA) voted in June to support efforts to address physician shortages by adequately funding GME and increasing the number of residency slots for graduating medical students. AMA, however, cited frustration over the federal government’s handling of GME funds and the lack of power over specialty choice and location of physicians at the state level.

IOM recommends significant reforms to GME funding through legislative action, specifically urging Congress to amend Medicare regulations to allow for performance-based financing of GME programs. The recommendations center on a 10-year transition to the aforementioned goals, beginning with a continuation of Medicare GME funding at current levels that focuses on rewarding performance and accountability. Eventually, IOM recommends the current Medicare GME payment system to be phased out completely.