IOM Questions Physician Shortages in GME Overhaul Plan

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Medical Education Feature — October 2014 

Tex Med. 2014;110(10):27-31.

By Amy Lynn Sorrel
Associate Editor

A new Institute of Medicine (IOM) report that recommends sweeping changes to graduate medical education (GME) has challenged organized medicine's calls for increased Medicare GME funding to address looming physician shortages, setting off a firestorm of debate over the future of the U.S. physician workforce. 

In its report, Graduate Medical Education That Meets the Nation's Health Needs, the IOM panel concludes that the current $15 billion GME financing system lacks transparency and accountability and is not producing the types of physicians the country needs. However, "simply increasing the numbers of physicians is unlikely to resolve workforce shortages in the regions of the country where shortages are most acute, and also unlikely to ensure a sufficient number of providers in all specialties and care settings," report authors write. 

To address the imbalances, the 21-member committee proposes overhauling Medicare GME financing to better align with workforce needs. The recommendations include more targeted research and policy development to produce the doctors the nation needs and where it needs them, and transitioning to a performance-based payment system that incentivizes those goals. That includes shifting money away from teaching hospitals to community-based settings where more people now seek care. (See "Prescription for Change.")

The IOM proposals would not take current Medicare funding away from GME. Nor would they add to it; instead, the proposals call for more transparency in how existing money is used. Meanwhile, the Texas Medical Association is evaluating the potential impact of the recommendations, which call for a variety of changes in how existing funds are allocated and leave a number of unknowns for Texas institutions. 

"We recognize we are recommending substantial change," said the IOM panel's Cochair Gail Wilensky, a health economist and former Centers for Medicare & Medicaid Services administrator. "We think it's key to justifying the continued use of public funds and to do so in a way that is more accountable, transparent, and consistent in producing a workforce better suited to the health care needs of the 21st century."

The recommendations require congressional approval and are likely to produce winners and losers, generating substantial noise — both cries and cheers — within the medical community over how a new system could impact GME programs. Nevertheless, physicians find common ground in the fact that regardless of how reform takes shape, failing to guarantee an adequate physician workforce is risky business. 

Kirk A. Calhoun, MD, president of UT Health Northeast (formerly UT Health Science Center at Tyler) and a consultant to TMA's Council on Medical Education, says there is "strong agreement" that the current GME system needs repair to remain sustainable. He also serves on the Council on Graduate Medical Education (COGME), an advisory board within the U.S. Department of Health and Human Services Health Resources and Services Administration.

"IOM reports do provoke change, and my expectation is that this IOM report will spark an awful lot of discussion and a great deal of consideration for change. It will help drive changes in curriculum; it will drive changes in transparency; and it will very likely drive some changes in how GME is paid for. But I hope and pray that the points of view of all the stakeholders — and not just that of what is a rather elite group of folks that made up the IOM committee — are taken into account and that we do this in a way that does not damage what is clearly a system producing high-quality practitioners for our country," he said. "The assumption that there is not a physician shortage comes at significant risk, and before we disrupt GME in the United States to a degree where we might actually be producing fewer physicians, we should evaluate that possible outcome very carefully."

Looming Shortages

The committee rejected calls for additional funding, noting that despite the cap Medicare imposed in 1997 on the number of residency slots it funds, training programs grew more than 17 percent between 2002 and 2012 without government help. 

Association of American Medical Colleges (AAMC) President and Chief Executive Officer Darrell G. Kirch, MD, says the report "could not come at a worse time," and it overlooks the organization's prediction of a national shortage of 130,000 physicians by 2025, split nearly evenly between primary care and other specialties. 

TMA Council on Medical Education Chair Rodney Young, MD, says the group will look closely at the IOM report, in consultation with the state's graduate medical education leaders, as it carefully considers any proposals that may affect GME policy nationally or at the state level as a result of the report.  

"We are very interested in ensuring a strong and diverse physician workforce for Texas," he said. While the current system has succeeded in many ways, "part of this proposal is to help us develop a GME system that is more responsive to the needs of the people and more accountable for all that public funding. We have to look at all available options for improving our delivery model. But a growing population will certainly also have a growing need for health care, and we need to plan now for how to best meet that need. An adequate supply of well-trained physicians will always be a key component of a successful system."

The American Medical Association renewed its call on Congress and state legislatures for additional GME funding to protect access to care, and Immediate Past President Ardis Dee Hoven, MD, chastised the IOM committee for providing "no clear solution to increasing the overall number of GME positions to ensure there are enough physicians to meet actual workforce needs." 

COGME member and former IOM President Kenneth I. Shine, MD, of Austin, says the panel's recommendations for better accountability and stable Medicare GME funding could help counter Congress' express intent over the past five years to cut that part of the budget. But the 17-percent growth in residency positions outside the Medicare cap does not close the gap on the roughly 30-percent increase in medical school class sizes, particularly in Texas, says the UT System's special advisor to the chancellor and former executive vice chancellor for health affairs.

Speaking on his own behalf, Dr. Shine considers the overall report "long overdue," but calls the recommendation against increased funding "mistaken. They should be lifting the cap. It's still a zero-sum game as far as money is concerned. And while it's true there might be a reallocation and some change in the distribution, they propose to take the total expenditures divided by eligible residents and come up with a per-resident allotment. You don't increase the number of residency positions when you do that." 

On one hand, Texas could benefit from a redistribution, Dr. Shine says. On the other hand, a relatively small proportion of the roughly 7,000 residency slots in the state are eligible for additional Medicare funding because of the cap, "which is a real problem." 

Nor did the committee discuss other potential sources of GME funding, he says, posing another problem for Texas, where the legislature has taken nearly $100 million out of Medicaid-supported GME positions since 2003. 

Fortunately, state lawmakers authorized loan repayment programs and new state grants to fund additional training positions. But if the IOM report closes the door on additional Medicare support, "we need to continue to focus on state solutions," Dr. Shine said.

Winners and Losers?

The institute panel acknowledges its recommendations alone — which focus only on financing — will not resolve every shortfall. Members do, however, recognize that "repurposing and redesigning GME funding will be disruptive for teaching hospitals and other GME sponsors accustomed to receiving Medicare GME monies in roughly the same way for nearly 50 years." 

They propose a phased implementation over 10 years to help hospitals adjust to a new financing structure that directs an increasing share of money away from the teaching hospitals to a new GME Transformation Fund for innovative programs and priority areas.

Hospital groups such as AAMC warn the potential 35-percent reduction in payments would slash funding to vital hospital services available almost exclusively at teaching hospitals and limit training opportunities. AAMC's Dr. Kirch says predicted shortages could worsen under the recommendations, "as teaching hospitals will be forced to make difficult choices between training more physicians for the future needs of the nation and maintaining lifesaving clinical services for their communities."

The report also ignores the fact that teaching hospitals have long supported training in nonhospital settings, he says.

Dr. Calhoun adds the proposal could disadvantage smaller hospitals, in particular, making it difficult for them to continue supporting GME programs. UT Northeast, for example, has medical school graduates from around the state rotate through its primary care residency programs, and the school partners with rural community hospitals in the area to sponsor other training programs.

He agrees with the need to shift funding to alternative sites, encourage innovation, and promote transparency to ensure money goes directly to the cost of training. 

"My question is how accessible those funds will be to some of the community [hospital] programs. If a significant amount is tied to successful grant writing, as the IOM suggests, there are places that can thrive. But I'm not sure some of our programs and smaller communities would have the same capacity to compete for grants and continue to receive adequate support for GME in their communities."

Not only do those hospitals support local health care systems and contribute to advances in medicine, he adds, but also the sponsoring institutions such as UT Northeast have oversight responsibilities in terms of quality and accreditation that alternative sites would have to assume. 

"When all is said and done, it's the organizational capacity of our teaching hospitals that allows us to have such a robust GME system, so we don't want to put that in jeopardy," he said. "There is a way to do this, yet still preserve the important roles those hospitals and sponsoring institutions have invested in to support GME in their communities."  

Like many, his institution already supports residency slots above and beyond the Medicare cap. And even though the 2013 Texas Legislature set aside money for the development of new GME positions — with the intent they ultimately would qualify for Medicare support — Dr. Calhoun says the IOM recommendations could jeopardize the effort if hospitals can no longer count on adequate GME support. 

"If we do anything to inspire a more severe physician shortage, it will hurt patient access, it will hurt quality of care, and it will drive up costs."

Incentivizing Innovation

Other physician groups welcome the opportunity to directly access funds community-based programs missed out on over the years because of formulas that favored hospitals.

American Academy of Family Physicians (AAFP) President Reid Blackwelder, MD, called the recommendations "long overdue." As family physicians, "we practice on the front lines of health care and see most of our patients outside of a hospital in an ambulatory, office-based setting. Ensuring that more training takes place in these environments is key to preparing our future physician workforce."

Roland Goertz, MD, is a former AAFP president and chief executive officer of Heart of Texas Community Health Center in Waco. The federally qualified health center has few avenues to access federal funding to support its family medicine residency program without help from local hospitals or other outside sponsors. Fortunately, the clinic and hospitals partnered together to develop their own funding formula that evenly distributes federal money based on the actual cost of training residents in the hospital versus the community center. 

But Dr. Goertz says that's more the exception than the rule. As a representative of the National Association of Community Health Centers, he provided testimony to IOM on the data — or lack thereof — available on per-resident training costs, as well as funding models used by community health centers. Texas is one of a handful of states that formally tracks some of that information for family medicine residency programs through the Texas Higher Education Coordinating Board. 

"Any time you recommend sweeping change — and there's no question this is the definition of sweeping change — there's going to be pushback from those that are winners already. Teaching hospitals have historically controlled the vast majority of the $10 billion currently funded, and that led to huge disparities in workforce production. It's time for that to change," Dr. Goertz said.

The past TMA Council on Medical Education member recognizes hospitals' concerns that neither the federal government nor the states adequately fund GME, and additional Medicare payments helped make up the difference. But Dr. Goertz says outdated formulas have kept the system from changing and from directing money to programs that meet community needs.

"This [report] actually is an effort on IOM's part to give to those who actually run the programs the option to be innovative. Now the way funding is received, we don't have a chance to do that," he said. That includes more investments in primary care.

For the most part, Dr. Goertz says the IOM recommendations are "spot on," adding that they also fall in line with the move toward greater accountability in GME training and accreditation through competency-based systems. "So this is not doing much more than emphasizing that change that is already under way."

But he agrees the committee's disavowal of physician undersupply is one area IOM got wrong. "In Texas, there's a shortage. No question about it."

Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.


Prescription for Change

As the major funder of graduate medical education (GME), Medicare pours $10 billion per year into physician training. Medicaid contributes another $4 billion nationally — although Texas has cut Medicaid GME funding significantly — with other monies coming from the Health Resources and Services Administration and the Veterans Health Administration.

But in its report on GME, the Institute of Medicine committee sharply criticized "a striking absence of transparency and accountability" for how those funds are spent. Despite those investments, they pointed to ongoing problems also documented in earlier GME studies. These include:   

  • Poor geographic distribution of physicians in relation to population needs; 
  • An overly specialized workforce and not enough primary care physicians; and 
  • A gap between newly trained physicians' knowledge and skills and the competencies required for current medical practice, like care coordination, team-based care, cultural competence, and quality improvement.  

Committee members also take issue with old formulas that direct nearly all Medicare GME money to teaching hospitals and remain heavily tied to Medicare inpatient care, despite the fact that all patients benefit from GME, and current delivery system changes favor lower-cost outpatient settings and more efficient care. Nor is GME funding tied to any set of goals or measures, the report finds.

The committee spelled out five recommended changes in its final report, Graduate Medical Education That Meets the Nation's Health Needs. They are:  

  • Maintain current Medicare GME funding, while taking steps to modernize payment methods based on performance, ensure program oversight and accountability, and promote innovation.
  • Build a GME policy and financing infrastructure that includes a new GME Policy Council under the Department of Health and Human Services to research workforce issues and inform funding decisions; and a new GME Center within the Centers for Medicare & Medicaid Services to oversee reporting on fund distribution and use, and innovation demonstrations.
  • Create one Medicare GME fund with two subsidiary funds: a GME Operational Fund to distribute ongoing support for currently funded residency training positions and a GME Transformation Fund to finance innovations and priority areas.
  • Modernize Medicare GME payment methodology by combining the current dual structure — known as direct and indirect payments — into a flat, per-resident payment that includes a geographic adjustment. The payment would go directly to the organization sponsoring the GME program to encourage training at a variety of sites.
  • Keep Medicaid GME funding in the hands of individual states but require the same level of proposed transparency and accountability required of Medicare GME. 

IOM committee members propose a 10-year transition to phase in implementation of the recommended changes to help hospitals adjust. 

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Last Updated On

June 02, 2016

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