Are we limiting the number of primary care physicians for the future?

In late December of 2016, the Congressional Budget Office (CBO) outlined 18 options to reduce the deficit for 2017 to 2026. Number 12 is an opportunity to consolidate mandatory federal spending at teaching hospitals for Graduate Medical Education (GME) into a grant program that would grow along with inflation. What does this mean for an existing teaching hospital? A brief analysis of the proposed changes and some suggestions to help limit the possible detrimental effects are offered.

Background

As a nation, we collectively understand, that our health care system’s needs are expanding despite the need to cut costs. Currently, Medicare and Medicaid distribute GME funding to hospitals with teaching programs. The CBO estimates total spending in 2016 was more than $10 billion. Medicare finances approximately 90 percent with Medicaid financing the other 10 percent. The federal government matches a portion of what state Medicaid programs pay for GME (CBO, 2016, p. 257).

The Proposal

Option 12 would consolidate the existing combined Medicare and Medicaid amounts into one grant program for GME at teaching hospitals. Total funding would then grow with inflation. Payments would be allocated according to the number of residents (up to its existing cap) and the portion of the hospital’s inpatient days accounted for by Medicare and Medicaid patients. CBO predicts the option would reduce mandatory spending by $32 billion between 2018 and 2026. They further estimate that by 2026, the annual savings would represent about 30 percent of projected federal spending for GME under the current law. Over that period, most of the savings would stem from the slower growth in GME funding over time. (CBO, 2016, p. 257).

Arguments for Option 12 The Medicare Payment Advisory Commission (MedPAC) believes that the IME adjustment is inflated and about one-third its actual amount. Reducing the funding would not harm the teaching activities and may dissuade hospitals from accepting too many residents in exchange for payments. According to Chandra, Khullar, & Wilensky (2014),

“The evidence is consistent with the view that residents bear the cost of their own training, which would mean that GME funds are treated as general monies going to their institutions; in fact, these funds are often used in ways that are difficult to trace, assess, and justify.” (p. 2359).

Without adequate oversight, tracking the costs is challenging, and this proposal also would cut down on administrative costs of the GME funding program.

Arguments Against Option 12 Some teaching hospitals focus their attention on the more lucrative specialized resident programs rather than primary care curricula. Decreasing the subsidy might push teaching hospitals to increase this practice and; therefore, reduce the number of primary care physicians. Teaching hospitals also may shift increased costs directly to the residents making it even more challenging to become a physician. Finally, some hospitals use part of the GME payments to offset costs incurred while caring for the uninsured; a reduction in payments will make it even more difficult to care for these patients.

Conclusion

Adjusting indicators to match inflation is challenging. It will be the responsibility of teaching hospitals and the residents to keep teaching programs solvent. Experts suggest effective communication between residency programs and the hospitals’ reimbursement specialists to remain informed of the current trends to maximize claims (Sanner & Voorhees, 2017, slide 29). Option 12 focuses on changing how the government pays teaching hospitals and alters the government’s role in payments. The government believes the care will be more appropriate and efficient. It will be up to the teaching hospitals and future physicians to make it work. The patients are the passive participants in option 12; however, indirectly they are the most affected.

References

AAMC. (2017). The complexities of physician supply and demand 2017 update: projections from 2015 to 2030. Retrieved from https://aamc-black.global.ssl.fastly.net/production/media/filer_public/a5/c3/a5c3d565-14ec-48fb-974b-99fafaeecb00/aamc_projections_update_2017.pdf

CBO. (2016, Dec). Options for reducing the deficit: 2017 to 2026. Retrieved from https://www.cbo.gov/publication/52142

Chandra, A., Khullar, D., & Wilensky, G. (2014, June 19). The economics of graduate medical education. N Engl J Med. Retrieved from https://www.nejm.org/doi/pdf/10.1056/NEJMp1402468

Sanner, L., & Voorhees, K. (2017, March). Medicare GME payments: Background and basics. Retrieved from https://www.aafp.org/dam/AAFP/documents/events/rps_pdw/handouts/res-57-sanner.pdf