IOM report, AUA at odds over GME funding solutions

August 4, 2014

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The federal system for financing physician training and residency programs needs to be overhauled to ensure that the United States is producing the physicians that the nation needs, according to a new Institute of Medicine (IOM) report that the AUA says makes recommendations that would have a negative effect on teaching hospitals and fails to acknowledge a doctor shortage across all specialties.

Current financing, provided largely through Medicare, “requires little accountability, allocates funds independent of work force needs or educational outcomes, and offers insufficient opportunities to train physicians in the health care settings used by most Americans,” the report says.

Medicare and Medicaid provide more than 90% of federal funding for physician residency training, with Medicare providing $9.7 billion per year, according to the report.

“Public financing of this training should remain at its current level for now, but Congress should amend Medicare laws and regulations to move to an accountable, modernized financing system over the next decade that rewards performance and spurs innovation,” said the committee that wrote the report.

The committee said it focused primarily on Medicare because as the largest funder graduate medical education (GME), it provides the most leverage.

Committee Co-Chair Gail Wilensky pointed out the “profound” changes in health care resulting from new technologies and the implementation of the Affordable Care Act, the latter of which will “further increase the focus on primary and preventive care.”

“It’s time to modernize how graduate medical education is financed so that physicians are trained to meet today’s needs for high-quality, patient-centered, affordable health care,” Wilensky said.

The majority of GME funding-$15 billion in 2012-comes from the Medicare program, which has been a stable funding source for residency training for 50 years. However, outdated statutes and regulations governing GME financing funnel most of those payments to hospitals, because that was where the bulk of physician training took place in the 1960s. Now, more health care is delivered outside of the hospital, yet the Medicare GME payment system discourages physician training outside of hospitals, the report notes.

Regarding the physician work force, the report says the current mix of training slots trains a disproportionate number of specialists when the demand for generalists is greater and is not increasing the number of physicians willing to locate to rural or underserved areas.

Instead of increasing Medicare funding for physician training, it recommends the establishment of two new government agencies: a Graduate Medical Education Policy Council, housed within the office of the Health and Human Services secretary, to oversee policy and decision making; and an office within the Centers for Medicare & Medicaid Services to oversee fund distribution.

In addition, two distinct funds-an operational fund to finance ongoing residency training activities and a transformational fund to finance new training slots where needed, provide technical support, and support much needed research and innovative pilot programs-should be provided.

Next: AUA responds quickly

The AUA quickly issued a statement in response to the report, applauding the Institute of Medicine “for studying the governance, finance, and regulation of graduate medical education in the United States.”

“However, we are concerned that the IOM’s report fails to provide recommendations that acknowledge that there is a physician work force shortage across all of medicine,” said AUA Public Policy Council Vice Chair Christopher Gonzalez, MD, MBA. “We have concerns over replacing indirect GME (which provides additional funding to teaching hospitals to help offset higher patient care costs) and direct GME funding with one single funding stream. Such consolidation may negatively impact teaching hospitals in their mission to take care of our sickest patients and to safely train medical residents.

The AUA is also concerned about the creation of two new federal agencies to oversee GME funding, “which runs the risk of merely creating bureaucracies and delaying the training of new physicians needed to care for the growing patient population,” Dr. Gonzalez said.

“There is a physician work force shortage across all of medicine,” he added. “Reform must include plans to expand and increase funding for residency slots in needed and underserved areas of medicine. Primary and specialty care must form a united front to advance legislative reform of the GME system. Together with our colleagues across the health care space, we look forward to sharing perspectives on how to advance reform to ensure that our country has a sufficient physician work force to meet patient demand.”

The AUA statement outlines the current work force shortage in urology, including an HHS projection that 14,000 urologists will be needed by 2015 and 16,000 by 2020. Currently there are less than 10,000 urologists practicing in the United States, “an unsustainable number required to care for an aging and growing population,” Dr. Gonzalez said.