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AAMC Responds to IOM’s Proposed Changes in GME Financing and Governance

August 1, 2014—The Institute of Medicine (IOM) Committee on the Governance and Financing of Graduate Medical Education (GME) July 29 released the report, “Graduate Medical Education That Meets the Nation’s Health Needs.” The 21-member committee provides an “initial roadmap” for making a “substantial change in how GME funds are allocated and distributed.”

Upon release of the report, AAMC President and CEO Darrell G. Kirch, MD, issued a statement appreciating the committee’s prioritization of long-term, stable funding for physician training and its vision of achieving a high-performing health care system. “Medical schools and teaching hospitals,” he states “are rapidly changing how and where physicians are trained to achieve those same goals.” However, he warns that the proposal’s major cuts to patient care “will slash funding for vital care and services available almost exclusively at teaching hospitals.”

Dr. Kirch also expresses strong concern that Medicare dollars would be “siphoned off to care for non-Medicare patients (and create new government bureaucracies) at a time when there is increasing concern about the trust fund’s solvency.”

The authors call for a freeze in the current level of Medicare GME support, with annual inflationary updates over the next ten years. During those ten years, the current GME payment system “should be phased out” and replaced by a new “performance-based” payment model.

They propose that the current pool of direct and indirect medical education (DGME and IME) payments be combined and then distributed to two new “subsidiary funds.” Between 70 and 90 percent of the combined pool would go to a “GME Operational Fund” to make per-resident payments to sponsoring organizations in support of Medicare-eligible slots. In general, the per-resident amount would equal the amount in the GME Operational Fund, divided by the number of eligible slots (with a geographic adjustment).

The balance of the combined payments (10-30 percent) would support a “GME Transformation Fund.” In addition to redirecting Medicare dollars to support positions currently not eligible for Medicare GME (e.g., community-based programs with low Medicare volume), the Transformation Fund also would underwrite the development of the new performance-based payment system for GME. That includes the creation of a new “GME Policy Council” in the Office of the Secretary of Health and Human Services (HHS) and a new “GME Center” within the Centers for Medicare and Medicaid Services (CMS).

According to the report, the proposal would reduce GME support for teaching hospitals by as much as 35 percent. Hospitals in the lowest Medicare share quartile would see a 31 percent increase in GME payments, and those in the lowest Medicare discharge quartile would see a 58 percent increase in GME payments.

AAMC Interim Chief Health Care Officer Janis Orlowski, M.D., expressed similar concerns during two IOM-sponsored sessions held in conjunction with release of the GME report. She also pointed out that the committee identified no alternative for supporting the unique patient care costs incurred by teaching hospitals, and their apparent lack of concern for the physician shortage that has resulted from the rapid aging of the country’s population.


Christiane Mitchell
Senior Director Health Care Affairs
Telephone: 202-828-0461

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Senior Legislative Analyst, Govt. Relations
Telephone: 202-903-0806