Most hospitals train more physicians residents than Medicare funds, leaving many providers to either offset the expense themselves or deal with fewer physicians in their workforce, according to a new report by the Congressional watchdog.
Approximately 70% of hospitals in 2018 that offered graduate medical education programs trained more physician residents than what Medicare paid, according to a Government Accountability Office report. Only 20% of hospitals were under the amount funded.
Medicare is the single largest source for physician residency programs, paying $15 billion in 2018. But many contend the limits Medicare places on how many physician residency “slots” it will pay for teaching hospitals to have are based on outdated formulas that limit efforts to increase the number of physicians.
Medicare provides teaching hospitals with two types of payments for both direct graduate medical education costs, such as resident salaries, as well as indirect costs to cover the higher costs associated with treating a disproportionate share of sicker patients who tend to visit those facilities.
The report found a total of 18% of residents trained in 2018 were not funded by Medicare, which meant the costs were supplemented by other funding sources for resident training that include Medicaid, the Veterans Affairs Department and commercial insurers.
Support for GME from commercial payers are included in higher rates for service paid to teaching hospitals, but those costs can also be passed on to patients in the form of higher out-of-pocket spending from increased deductibles and co-pays.
Hospitals that were training residents before the enactment of the Balanced Budget Act of 1997 had their caps set to the number of residents that were in their programs in 1996. The majority of providers until recently have not had an increase in Medicare GME training in more than two decades.
In December, Congress passed the Consolidation Appropriations Act which paid for an increase the number of physician residency slots by 200 a year beginning in 2023 through 2027. Additionally, a bipartisan group of senators introduced in March the Resident Physician Shortage Reduction Act, which if passed, would provide up to 14,000 new Medicare graduate medical education slots over seven years.
But many stakeholders argue that lack of a substantial increase in slots coupled with a steady rise in medical school enrollment over the two decades has created a bottleneck in the doctor pipeline that’s causing a shortage.
Most recent projections from the Association of American Medical Colleges estimate a primary care physician shortage of 17,800 to 48,000 by 2034.
According to the report, stakeholders want an extension to the five-year period Medicare allows starting physician residency programs before setting a cap on slots.
“Stakeholders whom GAO spoke with thought that if hospitals that are starting graduate medical education programs are given more years to establish their Medicare cap before those caps are set, it could help—depending on how it’s done—to better target Medicare funding for training programs and help improve the funding for training providers going forward,” said Michelle Rosenberg, acting director of healthcare at GAO.