Graduate Medical Education in the Cross-Hairs

Republican members of the House Budget Committee are said to be pondering options for offsetting about $30 billion in added spending that was approved late last year. Whether Congress finds the will to reform entitlement programs to help offset higher levels of discretionary spending seems politically toxic in an election year. But this year or not, ultimately, lawmakers will have to bite the bullet. The nation’s budget won’t get balanced on the back of discretionary programs that make up only about one-third of federal spending.

Whenever Congress decides to get serious about entitlement reform, the nation’s graduate medical education system, or GME, will most certainly be a topic of discussion.

GME is a multi-billion dollar enterprise, with Medicare alone spending over $10 billion annually to subsidize the cost of training medical school graduates. Not surprisingly, in an era of tight budgets, the governance and financing of a program this large has frequently come under scrutiny, especially in times of tight budgets. Most recently, a blue-ribbon panel convened by the prestigious Institute of Medicine (IOM) proposed a series of reforms designed to infuse the GME system with greater transparency, accountability, strategic direction and capacity to innovate.

A few weeks ago, President Obama sent Congress his eighth and final budget blueprint, including a proposal asking Congress to cut—by 10 percent—GME indirect cost payments to teaching hospitals. As rationale for the cut, the president cites the Medicare Payment Advisory Commission, which found that payments for indirect costs “significantly exceed” the actual added patient care costs these hospitals incur. If adopted, the change would save nearly $18 billion over the next decade.

The president also proposed that the HHS Secretary be granted the authority to set standards for teaching hospitals so as to encourage resident training in areas of emerging need, such as primary care and medication‐assisted treatment of substance use disorders, and to emphasize skills that promote high‐quality, high‐value health care.

That GME is on the minds of policymakers is neither new nor surprising. But if lawmakers are serious about reining in entitlement costs, meaningful GME reform should be on their to-do list.

Stay in the know

Sign up for CRD updates by email and never miss a post.