April 20, 2001

Stakeholders Discuss COGME Report on GME Financing

At its April 11-12 meeting, the Council on Graduate Medical Education heard from panels of stakeholders commenting on its 15th report, "Financing Graduate Medical Education in a Changing Health Care Environment." The report sets forth these policy objectives for GME funding:

• Provide a stable mechanism that is responsive to the community yet consistent with national workforce objectives.
• Enable health care institutions to compete on price and quality by subsidizing higher costs attributable to educational activities and uncompensated care.
• Create adequate support and appropriate incentives for developing community-based educational programs.
• Encourage effective and efficient educational models.
• Foster mechanisms to stabilize the total number of physicians while improving distribution.
• Hold recipients of federal and state funds accountable for producing needed public goods.

To attain these objectives COGME makes eight recommendations:

• Create a GME fund that combines all federal GME funding with all-payer funds.
• Establish indirect medical education (IME) accounts from the fund to pay hospitals and other clinical training sites for the indirect costs of educational activities.
• Establish direct GME accounts from the fund and make GME payments directly to institutional sponsors or their designees.
• Establish a national average per resident amount for direct GME costs.
• Continue the Balanced Budget Act (BBA) 1997 limits on the number of residents but apply the caps to institutional sponsors rather than hospitals.
• Establish an account of at least 10 percent of the fund from which to support special projects and programs directed at building community-based training capacity or achieving specific workforce goals.
• Modify the Medicare rules related to teaching physicians to emphasize the teaching physician's overall responsibility for the management of a patient's care and to reduce the importance of documentation.
• Provide additional support for hospitals and community-based training sites that serve a disproportionate share of low-income patients.

AAMC Senior Vice President for Health Affairs Bob Dickler noted the Association finds much in the report with which to agree, including the need to implement an all-payor mechanism to fund GME costs, the potential need to revise the Medicare teaching physician documentation requirements, and the need to focus special attention on providers that serve a disproportionate share of low-income patients.

He mentioned four areas of concern:

• The council's definition of "all-payer" is unclear and it is uncertain whether COGME is assuming a substantial reduction in the level of funding currently provided by Medicare. The objective of melding all existing federal funds into a single pool and then segmenting them in expenditure categories also is unclear; is the primary intent to merge or to reallocate the funds? Most importantly, the report is not explicit on whether other recommendations were contingent on the prior establishment of an all-payor fund.
• The 15th report is unclear about whether both DGME and IME are included in "GME Fund" and is inconsistent about the purpose of the Medicare Indirect Medical Education adjustment to DRG payments. It states that "Medicare's adjustment should be based on the higher costs attributable to teaching activities." In the 1983 report of the House Ways and Means and Senate Finance Committees about establishing the IME adjustment, the committees stated, however:

"This adjustment is provided in light of doubts…about the ability of the DRG case classification system to account fully for factors such as severity of illness of patients requiring the specialized services and treatment programs provided by teaching institutions and the additional costs associated with the teaching of residents…the adjustment for indirect medical education is only a proxy to account for a number of factors which may legitimately increase costs in teaching hospitals."

Any shift in focus for IME is of concern because of potential declines in teaching hospital margins that already are low.

• Mr. Dickler observed that the practicality and feasibility of recommendations may not have been evaluated. For example, in recommendation
• COGME suggests that DGME amounts be based on the net costs of an "appropriately sized workforce," but previous efforts to determine net costs have failed and this recommendation seems contrary to the desire to shift the emphasis of residency training from service to education.
• While the 15th report acknowledges the need to re-examine past COGME conclusions and recommendations on the size and composition of the physician workforce, many of its recommendations appear to assume that the workforce is too large and the composition needs to be redirected toward generalists. Mr. Dickler expressed the hope that COGME would look at its past conclusions and recommendations and examine the real value of national projections and prospective planning in comparison to market forces.

Senior MedPAC Analyst Craig Lisk reviewed the commission's position that residents are trainees bearing their own costs of education by working for less than their market value. He reiterated the recommendation that DGME payments should be folded into the DRG base rate because they are payments for the patient care services provided by residents. As patient care payments, these funds are not appropriately to be used for workforce objectives.

Tim Henderson of the National Association of State Legislatures suggested that Medicare should insist upon more accountability, not less, for the physician workforce, while Olga Jonassan, M.D., of the American College of Surgeons observed that GME funds should be used for workforce goals only if the goals are data driven.

At the end of the meeting, COGME decided to publish the day's proceedings, including COGME responses to some of the comments.

In other actions, Carl Getto, M.D., dean and provost, Southern Illinois University School of Medicine, assumed the chair of COGME at this meeting. Jo Ivey Boufford, M.D., dean of the Robert F. Wagner Graduate School of Public Service, New York University, is the new vice chair. Crystal Clark, M.D., M.P.H., acting chief of the Policy and Special Projects Branch of HRSA's Bureau of Health Professions, is the new acting executive secretary to COGME.

Information: Sunny Yoder, AAMC Division of Health Care Affairs, 202-828-0497.