Limiting Medicare education funds will free up more than $1 billion: study

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A public health researcher found that limits on Medicare funding in graduate medical school education could repurpose about $1.3 billion.

A researcher in the Milken Institute School of Public Health found that a cap on medical school education Medicare funds could free up more than $1 billion.

Candice Chen, an associate professor of health policy and management, said limiting Medicare funds for post-medical school training at $150,000 per medical resident can clear about $1.3 billion to address doctor shortages within medical specialties and in underserved regions in the United States. Health policy experts said the extra funding can be used elsewhere in medicine, but the limit on education funding could result in underfunded teaching services.

“Capping the [graduate medical education] payment at the level of $150,000 per resident per year could make up to $1.28 billion available to invest in other health workforce programs to meet the needs of underserved communities,” Chen said in an email.

Chen said Congress is required to direct the surplus in funding to the Teaching Health Center Graduate Medical Education program, which financially supports individuals in primary care residence programs.

Chen said using additional funds to support the education program will increase the number of primary care physicians and dentists who work in rural and medically underserved areas. She said 64 percent of Teaching Health Center graduates practice primary care compared to 33 percent nationally, and 58 percent of Teaching Health Center graduates practice in rural and underserved regions.

She added that redirecting funds could be “challenging” for residency programs in teaching hospitals because some institutions receive less Medicare funding per medical resident.

“[Graduate medical education] reform that reduces existing funding needs to be done carefully to minimize negative outcomes,” Chen said.

Graduate medical education payment rates varied significantly in 2015. About 25 percent of hospitals received less than $105,760, and 25 percent of hospitals received more than $182,230 per medical resident. Nearly half of teaching hospitals received more than $150,000 per resident, the study found.

Health policy experts said the Medicare program has never capped funds, making predictions about the effects difficult.

Michael Gusmano, an associate professor of health behavior, society and policy at Rutgers University, said capping funds could lead to a “minor” increase in Medicare funding dedicated toward increasing health care access in underserved areas.

“$1 billion – which sounds like a lot of money when you start spreading it out across a large country – turns out not to be a lot of money,” Gusmano said.

He added that the disparity between students entering specialized fields and those entering general medicine is the result of “bias” against general primary care.

Gusmano said extra funding for training within medical specialties will incentivize medical residents to enter specialized fields like cardiology instead of practicing general medicine, decreasing the number of physicians who provide primary care services.

“There are plenty of critics of the existing graduate medical education program who feel that it reinforces some of the unfortunate biases in the current workforce in the United States, which places a tremendous emphasis on specialty care and subspecialty care in comparison with other countries,” Gusmano said.

Atul Grover, the executive vice president of the Association of American Medical Colleges, said payment cuts for graduate medical education can present a “devastating” impact on patients and communities. He said the cuts would result in decreased access to health care services – like trauma centers, burn units and neonatal intensive care units – that teaching hospitals provide.

“We have several concerns about this recommendation,” Grover said in an email.

Grover said the study does not “adequately distinguish” between the purposes of Medicare Direct Graduate Medical Education – a program that pays for Medicare’s direct share of graduate medical education costs – and Indirect Medical Education, which compensates hospitals for costs related to teaching activities and caring for low-income patients.

Grover said Medicare Direct Graduate Medical Education payments to teaching hospitals only cover 21 percent of the costs of training medical residents. He said cutting funding for medical residents’ education is unwise because the aging U.S. population’s need for medical care is exacerbating physician shortages.

“It makes little sense to slash funding for vital care and services available almost exclusively at teaching hospitals and destabilize a system that has produced high-quality doctors and other health professionals for more than 50 years and is widely regarded as the best in the world,” Grover said.

Lia DeGroot contributed reporting.

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