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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Matching Medical School Seniors to Residency Slots... For Now

March 16, 2012

Today is Match Day, a day of anxious celebration for medical school seniors as they find out where they will spend the next three to seven years of their professional training. I can remember thinking on my Match Day that it was the final “hurdle” before becoming a doctor, but then the reality of how much more I had to learn set in as I dove into internship and truly began my path to independent practice.

This year, 38,377 applicants applied for 26,772 residency positions—training they need in order to practice in a variety of specialties. While it’s good news that there was a slight increase in residency positions overall, Medicare needs to resume paying its fair share of the costs of residency training if we are going to avert a serious shortage of physicians in the United States. Otherwise, with a growing and aging population, and 32 million people finally getting insurance through the Affordable Care Act (ACA), we could soon find that having an insurance card isn’t the key to getting health care.

So, why does the president insist on cutting funding for doctor training?

Why the Administration’s Plan to Cut IME Will Diminish ACA’s Access Gains

The president’s FY 2013 budget repeats his September 2011 proposed 10 percent cuts to indirect medical education (IME), citing past findings of the Medicare Payment Advisory Commission (MedPAC) that IME payments are higher than justified by regression analysis. Never mind that MedPAC has found repeatedly that Medicare pays teaching hospitals less than their actual costs when all payments are considered. In fact, MedPAC has taken more of a “big picture” view since 2010 and no longer recommends these cuts.

The IME payment was authorized by Congress in 1983 when lawmakers created a prospective payment system that just wasn’t refined enough to capture teaching hospitals’ higher costs of care due to their sicker patients, the provision of standby/special services, and the extra expense of creating a place where medical discovery could flourish. As Congress pointed out , IME is a patient care adjustment specifically for teaching hospitals “…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...” (emphasis added).

Since then, IME has been cut in half to balance budgets, and the cuts have been “justified” or rationalized by fragmented citations of IME’s true purpose, such as the one in President Obama’s FY 2013 budget proposal: “Medicare compensates teaching hospitals for the indirect costs stemming from inefficiencies created from residents ‘learning by doing.’” The truth is, IME is how Medicare partially compensates teaching hospitals and faculty physicians for doing things that every community wants but no one seems willing to pay for—ensuring that somebody will take care of you when no one else can.

IME Cuts Would Limit Access to Care

The president’s proposal of an annual 10 percent cut will total about $10 billion over the next 10 years—starting with an $830 million cut in 2014 and ending with a $1.34 billion cut in 2022. Meanwhile, IME payments already are stretched thin at teaching hospitals, which are operating at negative overall Medicare margins and are constantly trying to do more with less to fund their unique and complex missions. All the while, our training programs have invested in simulation and team-based learning to improve outcomes, and we’ve more than doubled the number of physicians we train across specialties in the nation as the knowledge base has grown and patients have lived longer with more chronic illness.

These unique missions can’t lose yet more support and be expected to thrive. Any reductions to IME payments will effectively decrease access to care. Teaching hospitals will be forced to offer fewer specialized services, like burn units and 24/7 trauma centers, and will train fewer doctors—certainly less the 10,000 extra residents now being entirely self-funded by teaching hospitals. Paradoxically, the very individuals who are supposed to benefit from the ACA’s coverage expansion will be the ones suffering from limited access to specialized services and physicians.

Senators John Kerry (D-Mass.) and Jon Kyl (R-Ariz.), in an expression of bipartisanship on this issue, sent a letter to President Obama last week expressing concern about the “deep cuts to teaching hospitals” included in his 2013 budget proposal. They noted that “even if we fund medical education at the same levels we do today, we will face a severe crisis in access to medical care. The budget’s proposed cuts to teaching hospitals will only exacerbate this looming crisis by resulting in even less physicians being trained and threaten the unique services provided by these institutions.”

The Administration Should Read a More Recent MedPAC Report

In June 2010, MedPAC recommended preserving the current IME adjustment to support training of physicians who are able to lead a new, “high-performing” health system. As policymakers consider the proposed budget, they should think about what a great job their own primary care provider has done taking care of them and their families, and whether she’ll have anyone to replace her in a few years. And they should remember what it was like when, if they or their loved ones had to deal with medical tragedy, there was a teaching hospital to care for them…back when we thought those things were important.

So, looking ahead to next year’s Match Day, I hope we see more residency positions and fewer funding threats. It’s the only way our patients are going to get the health care they deserve.

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About the Author

Atul Grover, MD, PhD AAMC Executive Vice President

Atul Grover, MD, PhD
AAMC Executive Vice President

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@AtulGroverMD



For More Information

Peters Willson
Sr. Specialist, Policy and Constituency Issues
Telephone: 202-862-6029
Email: pwillson@aamc.org