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Washington Highlights

MedPAC Recommends Performance-based System for IME Payments

April 2, 2010

At its April 1 meeting, the Medicare Payment Advisory Commission's (MedPAC) work on how to improve the medical education system through Medicare payments to teaching hospitals culminated with five recommendations, three of which are for studies that will be included in MedPAC's June Report to the Congress. The commission has been discussing medical education issues since September 2008, and its June 2009 report included an introductory chapter on the topic [see Washington Highlights, June 19].

MedPAC Chair Glenn Hackbarth opened the discussion by noting that the U.S. graduate medical education is outstanding in a number of aspects and viewed as a model around the world, but that it also has some deficiencies. For example, while the technical training is exceptional, there is not enough focus on teaching other skills such as practicing evidence-based medicine, coordination of care and shared decision-making. He also identified the need to improve the mix of physician specialists, as well as the diversity and geographic distribution of the physician workforce. Chairman Hackbarth also pointed out a need to better address the mix of other healthcare professionals, which could help deploy physician resources in a more effective and efficient manner.

The first, and primary, recommendation would ask Congress to authorize the Secretary of Health and Human Services (HHS) to establish a "performance based" GME program. The program would distribute approximately $3.5 billion in indirect medical education (IME) payments above the so-called "empirical level" that MedPAC estimates to be around 2.2 percent; the IME adjustment is currently set at 5.5 percent. Recognizing that Medicare should not prescribe GME curricula, the recommendation states that HHS should establish standards for distributing these funds after consultation with various groups, including accrediting organizations, training programs and health care organizations, as well as patients and purchasers. Chairman Hackbarth noted that the standards should follow the core competencies established by the Accreditation Council for GME (ACGME) and that the purpose of the recommendation is to use Medicare IME funds as a "lever" to accelerate the adoption of those competencies.

Several commissioners raised the issue of cutting IME payments to the empirical level, but this idea was rejected in favor of the performance program.

The other recommendations would have the Secretary of HHS:

  • Annually publish a report that shows the direct GME and IME payments received by each hospital, the number of residents trained, and Medicare's share of the associated costs incurred by the hospital;
  • Conduct workforce analyses to determine the number of residency positions needed in the U.S by total and by specialty;
  • Report to the Congress on how residency programs affect the financial performance of sponsoring institutions and whether all residency programs should be supported equally by the Medicare program; and
  • Study strategies for increasing the diversity of the health professional workforce (e.g., increasing the shares of underrepresented, rural, lower-income and minority communities) and report on what strategies are most effective.

Chairman Hackbarth noted that the commission's work on GME should not be construed as criticism of the system, but rather as a way to address issues that will achieve the long-term goals of the Medicare program of providing high quality and high value care in an efficient manner.


Karen Fisher, J.D.
Senior Policy Counsel, AAMC Health Care Affairs
Telephone: 202-862-6140

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