Medicare Resident Limits
Background
Medicare provides an important source of funding that helps
offset some of the costs associated with educating residents,
caring for patients who require more intense and complex care,
and the other special missions of teaching hospitals.
The Balanced Budget Act of 1997 (BBA) limited the number
of allopathic and osteopathic medical residents that would
be counted for purposes of calculating Medicare indirect medical
education (IME) and direct graduate medical education (DGME)
reimbursement to the unweighted number on each hospital's
most recent cost report as of December 31, 1996 (BBA Section
4621). Effective October 1, 1997, to the extent the number
of allopathic or osteopathic residents being trained at a
teaching hospital exceeds the 1996 limit, teaching hospitals
receive no additional IME or DGME payments; podiatry and dental
residents are excluded from the resident limits.
The Balanced Budget Refinement Act of 1999 (BBRA) increased
the limit for rural teaching hospitals to equal 130% of each
rural teaching hospital's 1996 resident count (BBRA Section
407).
Resident Limits Are Impeding Teaching Hospitals' Educational
Mission
The BBA resident limits have imposed significant limitations
on the ability of teaching hospitals and medical schools that
sponsor and conduct graduate medical education programs to
respond to the needs of the communities they serve. Over time,
the current policy is beginning to impede the continued development
of the educational mission at many teaching institutions.
Medicare reimbursement for additional residents and/or new
residency programs at teaching hospitals are needed for a
variety of reasons, including:
- Rapid population growth in some areas of the United States.
The current limits constrain the ability of hospitals and
medical schools that sponsor graduate medical education
programs to increase the magnitude of residency training
activity to help assure adequate and appropriate numbers
of physicians within that geographic area.
- Shortages in certain medical specialties. It is not uncommon
for shortages to arise in certain specialty areas of medicine
due to changes in medicine, technology and practice. In
these instances, some areas of the country may have a shortage
of training positions for these specialties due to the dynamics
of the medical marketplace and the longitudinal development
of teaching programs.
- Development of new specialties. Medicine is evolving
at a very rapid pace. Driven in large part by the rapid
increases in new knowledge arising from research and other
activity at medical schools, pharmaceutical firms, technology
firms, and research institutes, there is a need to continually
consider the development of new specialties. These new specialties
provide the leadership to assure that these new capabilities
are available to the public. Staff of the Accreditation
Council for Graduate Medical Education (ACGME) have noted
that the current resident limits are impeding even preliminary
discussions about the establishment of new residency programs.
There are other problems associated with the resident limits,
including the fact that the BBA provision is based on a snapshot
of activity, essentially "freezing" the status of
residency education at a random point in time-1996. A number
of institutions were undergoing transitions during that time
such that 1996 was an anomaly in terms of residency counts.
For these institutions, the resident limits can have profound
effects on their educational missions.
The resident limits have now been in place for over four years.
In other areas, decisions to impose a "freeze" are
temporary in nature. In health care, and in Medicare
in particular, the AAMC is unaware of policies that
have not factored in the need for modifications after
a certain period of time. In fact, the BBRA increased the resident limit
for rural teaching hospitals to 130 percent of their 1996 resident counts.
It is essential that additional flexibility, in terms of
residents trained, be provided to teaching hospitals and medical
schools so that they can respond to the dynamics inherent
in a changing population and in medicine.
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