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Graduate Medical Education

PERSPECTIVE

Another Alternative For Financing Graduate Medical Education

Newhouse and Wilensky also highlight several issues perceived by policymakers as in need of correction: escalating GME expenditures, difficulty accounting for education related costs, financial incentives that have raised the number of residents employed by hospitals, and extraordinary variation in payments to teaching hospitals, to name a few. COGME shares these concerns and provides considerable background information related to these issues in its fifteenth report, Financing Graduate Medical Education in a Changing Health Care Environment (December 2000).

These and other concerns have raised the level of interest in GME policy and have led Congress to seek guidance from various bodies, including the Medicare Payment Advisory Commission (MedPAC) and the time-limited Bipartisan Commission on the Future of Medicare. Remarkably different proposals have emerged from these two commissions.

Reform Proposals

 
MedPAC. MedPAC’s proposal for GME reform is basically as described by Newhouse and Wilensky—to maintain Medicare financing, but through a simplified method. It proposes merging currently used dual accounts to pay teaching hospitals—one for direct medical education (DME), and one for indirect medical education (IME) costs. The authors provide interesting economic rationales, perhaps the most compelling being the difficulty academic health centers (AHCs) and teaching hospitals have in accounting for and distinguishing between the two sources of GME funds.

Bipartisan Commission. The Bipartisan Medicare Commission draft report (consensus was not reached) included a recommendation for federal support from funds other than Medicare, through a "dedicated trust," perhaps to shield it somewhat from the unpredictability of the annual appropriations process. The specifics of this proposal are beyond the scope of this paper but merit mention given the important policy implications to medical education, and to the Medicare program, if this were adopted.

Neither the Bipartisan Commission’s proposal (published in 1998) nor MedPAC’s report (published in 1999) has proved to be popular, at least not yet with Congress. The following is a brief description of COGME’s recently published proposal, representing a different point of view.

COGME’s Proposal

Top Reform Proposals COGME's Proposal NOTE

 
COGME’s fifteenth report on GME, perhaps its most ambitious project to date, provides an overview of current financing policies, an analysis of residency training programs in various community settings, and a comparative review of current proposals for reform. In preparing the report, COGME built upon recommendations in previously published reports, specifically the thirteenth report, Physician Education for a Changing Health Care Environment (March 1999), and the fourteenth report, COGME Physician Workforce Policies: Recent Developments and Remaining Challenges in Meeting National Goals (March 1999). Clearly, COGME members differ with Newhouse and Wilensky in their view of the "role the federal government should play in shaping the makeup of the workforce." This is not surprising, given that COGME members include by statute representatives from academic medicine, physician organizations, and a medical resident, as well as hospital, payer, and government representatives.

To understand COGME’s proposal, and why it differs greatly from the Newhouse/Wilensky proposal, it is necessary to understand some of COGME’s fundamental assumptions. First, an adequate number of high-quality physicians to meet the nation’s health care workforce needs is a public good, that is, the product of this investment benefits our nation as a whole, and the cost of training should therefore be borne by the public. (This interpretation of "public good" is admittedly much broader than the economist’s definition used by Newhouse and Wilensky.) Second, funding for such training should be stable, sufficient, and fairly distributed to teaching programs throughout the country. Third, adequate support should be provided for training programs in ambulatory settings and community-based programs, as well as in traditional hospital-based residencies. Finally incentives should be provided to meet special workforce needs. General goals would be established nationally, but specific problems related to the number and type of physicians trained would need to be determined and addressed at the local or regional level.

Given consensus on these assumptions, COGME’s reform proposal includes an array of recommendations intended to translate these shared values into public polices. Public funds would be used to establish a stable and sufficient source of funding for GME and to address certain related policy problems. To accomplish this, COGME recommends that some GME funds be used as a lever to influence the makeup of the physician workforce.

Specifically, COGME calls for (1) creating a GME fund that supplements federal funding to support GME with "all-payer" funds, a modest surcharge, or private health insurance premiums; (2) allowing IME accounts to pay hospitals and other clinical training sites as appropriate for the indirect costs of educational activities; (3) directing GME payments to program sponsors, or their designees, for direct GME costs; (4) establishing a national average per resident payment for direct GME costs; (5) continuing the 1997 Balanced Budget Act (BBA) limits on the number of residents, with modifications to address geographic maldistribution; (6) establishing an account for funding special projects and programs directed at building high-quality community-based training capacity or achieving specific workforce goals; (7) modifying the Medicare rules for teaching physicians, related to supervision and documentation; and (8) providing additional support for hospitals and community-based training sites that serve a disproportionate share of low-income patients.

Each recommendation is accompanied by considerable discussion of its rationale, how it might be implemented, and in some cases acknowledging the need for research or improved data to proceed with implementation. While ambitious in scope and weighty in detail, the report is intended to make a constructive contribution to the debate.

Contrast with MedPAC proposal. In part, the COGME proposal stands in stark contrast to GME changes proposed by Newhouse and Wilensky because it attempts to tackle different problems. It does not recommend specific changes to funding mechanisms. Although I cannot speak for COGME, I believe that merging the current accounts for DME and IME as proposed by Newhouse and Wilensky makes some sense—for the sake of simplification and achieving more uniformity. I cannot agree, however, that doing so somehow better justifies public financing of training doctors. Although I acknowledge the authors’ expertise in economics, their recommending that we consider residents as "no different than senior physicians" seems to undermine historical payment distinctions under Medicare that residents are in circumscribed training; that they are salaried employees of the hospital or program; and that they do not bill for services rendered.

In my opinion, however, long-term public support for GME may require bolstering traditional arguments that have been based on education, service to the medically underserved, and to some extent clinical research conducted in our AHCs. We should also explicitly attempt to train a physician workforce appropriate for our citizens’ needs—an adequate number, likely to practice where needed, and reflecting the cultural diversity of our changing population. Whether or not such issues will be addressed through the process of financing GME will depend on how Congress perceives the importance of these issues. Clearly, the debate about paying for GME goes on and likely will continue for some time.

Editor's Notes

 
David Sundwall is chair of the Council on Graduate Medical Education (COGME) and president of American Clinical Laboratory Association in Washington, D.C. Health Affairs invited him to respond to the paper by Joseph Newhouse and Gail Wilensky, which precedes this Perspective.

The author gratefully acknowledges Stan Bastacky and Larry Clare for their assistance in preparation of this paper.

NOTE

Top Reform Proposals COGME's Proposal NOTE

 

1. COGME was authorized by Congress in 1986 to provide an ongoing assessment of physician workforce trends, training issues, and financing policies, and to recommend appropriate federal and private-sector efforts to address identified needs. The legislation calls for COGME to address and make recommendations to the secretary of the Department of Health and Human Services (DHHS), the Senate Committee on Labor and Human Resources, and the House Committee on Commerce. The Health Professions Education Partnerships Act of 1998 reauthorized COGME through 30 September 2002.

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