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Graduate Medical Education Update September 2012

This is the latest of periodic updates I have been sending out regarding Graduate Medical Education funding issues.

Politics and the Federal Budget Proposed GME reductions/changes The AADPRT/ADMSEP/APA Task Force on GME Reductions

What is happening on the GME funding front lately? Not very much. Actually, it is certain that nothing will happen until the election is decided. Then, things should heat up likely in the lame duck session of Congress. First I will discuss some of the political issues pushing us toward something happening in GME, then examine some of the proposed legislation that gives us some idea what might happen.

Politics and the Federal Budget

Two major issues override all others regarding the Federal Budget, overall termed “the fiscal cliff”:


You may recall that Congress, after they couldn’t agree on the Simpson-Bowles commission recommendations or do anything else intelligent about our deficits, decided to pass legislation (The Budget Control Act of 2011) mandating a roughly 1.2 trillion dollar cut in spending over 9 years. This works out to about 109 billion per year with 55 billion coming from defense and 55 billion from other “discretionary spending”. This is important, because large portions of the Federal Budget are mandated spending, for example, Social Security, retirement programs, veterans benefits Medicaid and the Children’s Health Insurance Program to name a few. The biggies here are Social Security and Medicaid. What about Medicare? You are shocked that it is not exempted? Well, it almost is. Medicare cannot be cut by more that 2%.

The end of the Bush tax cuts. These cuts were enacted early in the Bush presidency and were a primary contributor to huge deficits during the Bush presidency. They were scheduled to end in 2010 but were extended in consideration of the Great Recession. Now, they also end at the same time as the sequester goes into effect. These will decrease deficits by about 950 billion over 10 years. Sounds good.

However, we have a withdrawal of Federal spending (the sequester) and big tax increases occurring at the same time. The net effect is to withdraw a huge amount of money from the economy at a time when we still have high unemployment and a low economic growth rate. Most economists believe this will push us into yet another recession, with another contraction of the economy.

Faced with this, many observers believe that when the crisis hits, the two parties will find some way to compromise that will include some tax increases and some decreases in spending.

GME and the impending shortage of training positions.

At the same time as all this is going on, we know that we will soon have as many and then more US MD and DO graduates as we have training positions. What will happen when graduates with huge debt levels can’t find residency positions is anyone’s guess. However, opening up more positions is expensive. The projected cost to add 15,000 positions is upwards of 15 billion dollars at a time when we are looking at decreases, not increases in Medicare which is the funder for almost all residency positions.

GME Consequences

With that as background, let us take a look at what this might have to do with:

1) GME cuts if the sequester goes into effect

First, GME funding mostly comes out of the Medicare Budget. Of total Medicare spending of about 550 some billion dollars, GME totals about 9 billion. However, what politician wants to cut into entitlements? If they can cut some other portion of Medicare it results in lower cuts to direct payments supporting medical care for seniors, who after all, vote in large numbers. Thus, it seems inevitable that Medicare GME funds will be cut to some extent. What exactly that will be is not known at this time. Recall that Medicare will take a 2% cut or about 11 billion dollars. Just for comparison, it looks like discretionary spending programs in a variety of agencies are being cut from 7.5 to 9.5%. A 9% cut to GME would be about 810 million dollars. So now, consider what a 9 or 10% cut in your GME funding would do to your program.

2) how GME might fare in some deficit reduction deal between the parties.

Legislation for the longer term

Over the long term, one hopes we will have some deal about deficit reduction that doesn’t hammer the economy. Again, GME funding reductions will be a part of this. A couple of pieces of legislation have been introduced related to GME that address both the need for increased numbers of training positions and make some reforms in training.

The specific pieces of legislation are below along with an AAMC website that outlines specific provisions of each:

The Resident Physician Shortage Reduction Act of 2011 (S. 1627) Graduate Medical Education Reform Act of 2012 (S. 3201) Resident Physician Shortage Reduction and Graduate Medical Education Accountability and Transparency Act (H.R. 6352) AAMC website.

All of these bills have in common one very important thing: They all call for more accountability in GME and developing the ability of the Federal Government to reward and penalize institutions based on performance on a variety of measures. Why? Since there is no money anymore suddenly everyone is very interested in where it goes and how effectively the existing dollars are spent. Moreover, not only do we have a physician shortage, we have both geographic maldistribution and a heavy over-production of specialists and underproduction of generalists. Therefore, the Federal Government is suddenly interested in spending it’s care resources in ways that it thinks are in its interest. These are quality medical education and producing the mix of specialists/generalists that is most going to benefit the country. We are about to see the development of “value based purchasing” in GME.

It is little known that the Patient Protection and Affordable Care Act of 2010 (ACA), the most significant health care legislation passed in a generation, put the foundations of greater control and influence over GME into place. The ACA put into place a National Health Workforce Commission. This new body was assigned the job of developing workforce projections and making recommendations to Congress regarding needs. It is not a great leap to a national healthcare workforce policy with which the Federal Government will attempt to leverage GME dollars, payment policy and incentives/disincentives to promote what it considers a more ideal mix of generalists/specialists and quality.

As an example, let’s look at the latest bill, the Resident Physician Shortage Reduction and Graduate Medical Education Accountability and Transparency Act (H.R. 6352):

(This material comes from the AAMC website)

Calls for increasing GME positions by 15,000 with 50% going to shortage specialties introduces performance criteria:

“HHS Secretary will establish measures of “patient care priorities” in GME that demonstrate the extent of training provided in”:

The delivery of evaluation and management (E/M) or other cognitive services;

A variety of settings and systems; The coordination of patient care across various settings; The relevant cost and value of various diagnostic and treatment options; Inter-professional and multidisciplinary care teams; Methods for identifying system errors and implementing system solutions; The use of health information technology.

“The patient care priorities measures must”:

Be adopted or endorsed by an accrediting organization such as the Accreditation Council for Graduate Medical Education (ACGME) or the American Osteopathic Association (AOA); and Be developed through a consensus-based process, and may include measures submitted by teaching hospitals and medical schools.

Performance Standards and Reporting of Measures

The Secretary will establish performance standards for the measures discussed above. Beginning in FY 2017, each hospital that does not report patient care measures will have its IME payments reduced by 0.5 percent. Starting in FY 2018, hospitals that fail to achieve the new performance standards established by the Secretary will have their IME payments reduced by up to two percent (to be determined by the Secretary).

Increasing Graduate Medical Education Transparency

Within two years of enactment, the Secretary must begin to issue an annual report on Medicare GME payments, which shall include the: DGME and IME payments made to each hospital; DGME costs of each hospital, as reported on the annual Medicare Cost Reports; Number of full-time-equivalent residents (FTEs) at each hospital that are counted for DGME and IME purposes; Number of FTEs at each hospital that are not counted for DGME and IME purposes; and Factors contributing to higher patient care costs at each hospital, including the: Costs of trauma, burn, other stand-by services; Provision of translation services for disabled or non-English speaking patients; Costs of uncompensated care; Financial losses with respect to Medicaid patients; and Uncompensated costs associated with clinical research.

Summary: what we have here is an attempt at both value based purchasing and a national workforce policy. Get used to being measured and judged by results because it is coming.

GME Reduction Task Force

Finally, AADPRT, AACDP (chairs group), ADMSEP (medical student education directors) and the APA have put together a task force to examine GME reductions and other regulations as they appear. We intend to help those who are impacted understand the financial and regulatory issues and make recommendations regarding strategies. We also hope to become a clearing house for “best practices that we can disseminate to the field.

Task Force Members


Jed Magen, DO, MS

Chairperson, Associate Professor
Department of Psychiatry

College of Human Medicine/College of Osteopathic Medicine

Michigan State University

A-223 East Fee Hall

East Lansing, MI 48824-131

AACDP members:

Ondria Gleason, MD

Professor and Chair

Department of Psychiatry

University of Oklahoma College of Medicine

4502 E 41st Street

Tulsa, OK 74135-2512

Gregory W. Dalack, MD

Department of Psychiatry

University of Michigan Health System

1500 East Medical Center Drive
F6327, MCHC)

Ann Arbor, MI 48109-5295

AADPRT representatives

Michael May, MD

Training Director

Psychiatry Residency

Samaritan Health Services
Psychiatry Residency Program

3509 NW Samaritan Drive

Corvallis, OR  97330

Sheldon Benjamin, MD

Vice Chair For Education

Dept. of Psychiatry

University of Massachusetts Medical School

55 Lake Avenue North

Worcester, MA  01655

APA representative

Sandra B. Sexson, MD

Director, Child & Adol Psychiatry

Dept. of Psychiatry & Behavioral Sciences

Georgia Health Sciences University

997 St. Sebastian Way

Augusta, GA  30912-3800

ADMSEP representative

Tamara Gay, MD
Director of Medical Student Education
Department of Psychiatry
University of Michigan Health System

APA representative

Nicholas Meyers
Director of Department of Government Relations
American Psychiatric Association
1000 Wilson Boulevard
Arlington, VA  22209

Questions or comments?