For many Americans, it is taking longer than ever to get an appointment with a doctor, if they can find one. Rural areas and economically disadvantaged populations are already feeling the impact of what has been described as a looming national physician shortage. As policy makers, healthcare systems, and families grapple with the implications of this shortfall, many are hoping that adjustments to the nation’s graduate medical education (GME) system can provide some degree of relief.
A looming crisis
According to the Association of American Medical Colleges, the U.S. will face a shortage of up to 124,000 physicians by 2034. The pandemic has exacerbated and highlighted the problem, as states relaxed medical licensing requirements and drafted both recent medical school grads and retired doctors into service in the face of a public health emergency.
However, many areas of the country felt the impact of a tightening healthcare workforce well before the onset of COVID, for the issue has long been one of both supply and distribution. Rural areas, minority populations, and lower-income regions have long had fewer primary care providers per capita—a measure directly related to increased mortality—than others.
It is easy to assume that where a doctor practices is an individual decision, but part of the current geographic distribution of physicians in the United States can be directly traced to federal GME policies enacted 25 years ago.
Federal funding of GME
GME is expensive. The annual cost of training an internal medicine resident has been estimated at between $181,737 and $209,999.
The federal government supports and funds GME through several agencies including the Centers for Medicare & Medicaid Services (CMS) through both Medicare and Medicaid programs, the Department of Defense, the Veterans Administration, and the Health Resources and Services Administration.
Medicare has been the largest funder of GME programs since its inception under the Social Security Amendments of 1965. For three decades, the Health Care Financing Administration (HCFA)—the precursor to CMS—readily funded the establishment and expansion of GME programs without restriction or seeming regard for cost.
Budget hawks ultimately characterized HCFA’s open-ended sponsorship of GME as unsustainable. And they were joined in their concern over GME growth by unlikely allies.
As remarkable as it may seem in retrospect, the Summary Report of the Graduate Medical Education National Advisory Committee prepared for the Department of Health and Human Services in 1980 predicted that there would “be 70,000 more physicians than required in 1990.” The committee called for significant reductions in medical school enrollment and “prompt adjustments in the number of residency training positions.”
By the mid-1990’s, the American Medical Association (AMA), the Association of American Medical Colleges, the American Osteopathic Association, the National Medical Association, and the Association of Academic Health Centers were all in agreement that the country was facing an oversupply of physicians. Changes in the model for federal funding of GME became all but inevitable.
The Balanced Budget Act of 1997 (BBA) [Pub. Law 105-33] effectively froze the nation’s total number of GME positions or “slots”. Under the BBA, HCFA was able to specify the terms under which funding would be made available for slots in newly established residency programs. The legislation allowed new GME programs a five-year window of growth before capping their number of residency slots. Just as significantly, the BBA also capped the total number of slots for existing programs at the number of residents reported in each program’s 1995 Medicare cost report.
The BBA did not prohibit GME programs from having slots over their HCFA caps and some residency programs have been able to expand with funding from other federal programs, clinical revenue, and/or philanthropic sponsorship. But establishing a GME program is a costly and resource-intensive proposition, requiring both infrastructure and personnel and conducted in one of the most highly regulated sectors. It can be an especially daunting task for new teaching or clinical institutions. GME caps and the imposition of a five-year growth window for what is a long-term process have severely restricted expansion in areas where such programs are likely to have the greatest impact.
Some 3,000 unused Medicare-funded slots were reassigned under the terms of the 2003 Medicare Modernization Act. Another 1,354 were redistributed under the Affordable Care Act. Adjustments have also been allowed for rural hospitals starting GME programs and urban hospitals starting GME programs that will include training time in rural areas.
Still, in 2017, the U.S. Government Accountability Office (GAO) found that residency slots were concentrated in the Northeast, just as they had been in 1997. Because physicians tend to remain in the general geographic area where they complete their residency, this concentration of residency slots has had important implications for the distribution of physicians in the United States.
Recent expansion
The Consolidated Appropriations Act of 2021 (CAA) [Pub. L. 116-260], which was signed into law in December of 2020, included three provisions that directly impacted GME.
(Read Applied Policy’s CMS finalizes policies for additional GME slots here.)
Section 126 of the act allows for the creation and distribution of 1,000 new permanent graduate medical education slots—the first expansion in Medicare-funded slots since 1996. The slots are to be added in a step process with no more than 200 slots released annually with the first round of slots effective in fiscal year 2023.
CMS predicts the expansion will cost $1.83 billion for FY 2023 – 2031. As implemented under CMS’s final rule and follow-up, no single hospital will receive more than 25 full-time equivalent (FTE) residency positions. Priority is given to rural hospitals, hospitals training in excess of current caps, programs established after January 1, 2000, and hospitals serving health professional shortage areas (HPSAs).
Assessment
Whether the addition of 1,000 GME slots will be sufficient to avert a national physician workforce shortage remains to be seen. The general assessment of the CAA by such groups as the AMA and the American Hospital Association (AHA) has been that it represented a “good start” but there has not been wide-ranging endorsement of the legislation as a long-term solution.
The AMA has faulted the final rule for giving “preferential treatment” to HPSAs, which they say was contrary to legislative intent. Both the AMA and the AHA have noted that HPSAs regularly fluctuate, making them inconsistent markers. In a letter to CMS, the AHA said that the methods for the assignment of slots “do not reflect statutory intent and are operationally complicated.”
Some argue that the entire system needs to be revamped. Robert Orr, a policy analyst with the Niskanen Center, a think tank in Washington, D.C., has written that the nation’s “doctor shortage won’t be solved until the per-hospital residency cap is lifted and existing funding streams are consolidated into a uniform per-resident payment, available regardless of where the training occurs.” But where residents train has direct implications for the distribution of physicians.
Ultimately, the federal government has a crucial role to play in shaping where medical training occurs and important leverage in deciding how to allocate GME funding. Any regulations or legislation, including the CAA, must be part of a larger broad-base policy that recognizes the repercussions of past decisions and the potential impact of future ones.
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An Applied Policy backgrounder: What is GME?
GME—what is generally referred to as residency, but which includes internship and may include fellowship—is the period of physician training following completion of medical school. Lasting from three to five years depending upon medical specialty, it includes rendering of patient care in an accredited program under the supervision of experienced physicians. Completion of a minimum of one year of graduate medical education is specified as a requirement for medical licensure in each of the fifty states.
According to the most recent numbers from the Accreditation Council for Graduate Medical Education (ACGME), there are currently 149,000 residents or fellows participating in 12,420 accredited residency and fellowship programs housed by 862 sponsoring institutions across the United States. As explained below, these numbers are largely the result of federal funding policies.
A medical student’s choice of specialty and residency program has long-ranging consequences.
For today’s medical students, the residency process may start with a search for programs matching their professional interests through the American Medical Association’s (AMA) FREIDA database of ACGME-accredited residency and fellowship programs. After completing steps 1 and 3 of their United States Medical Licensing Examination, medical students in their third or fourth year of medical school can use the Electronic Residency Application Service (ERAS) to manage applications to multiple residency programs.
GME programs invite their shortlisted candidates for interviews, which are typically conducted from November through January. Before COVID, interviews were almost always held in person and onsite, frequently at the applicant’s expense. Since the onset of COVID, many programs have conducted interviews virtually, a trend which the AMA believes will continue and which has given rise to academic research on the values and variables of web-based interviews in residency selection.
GME programs list their openings or “slots” through the National Resident Matching Program (NRMP or The Match) and subsequently list their preferred candidates in rank order. Applicants submit their program choices in rank order. NRMP “uses a mathematical algorithm to match applicants and programs to their most preferred ranked choices to make the best possible match for all participants.”
Each March, medical schools host Match Day ceremonies, consequential and often emotional events at which fourth year medical students learn if they have “matched” with their top choices and where they will conduct their residencies. Applicants who haven’t been matched by the system are typically notified in advance of Match Day and have to opportunity to apply for one of any unfilled slots through the Supplemental Offer and Acceptance Program (SOAP).
Importantly, there are annually more graduates of U.S. medical schools than there are open GME slots. This gap is widened by the residency eligibility of both U.S. citizens who have completed programs at foreign medical schools and foreign national graduates of foreign medical schools who have been certified by the Educational Commission for Foreign Medical Graduates/Foundation for Advancement of International Medical Education and Research. In 2021, 4,356 foreign national graduates of foreign medical schools were matched with U.S. residency programs.
According to a Medscape survey, nearly three quarters of U.S. medical students will finish medical school with student debt, with the median amount estimated at $200,000. The average first year (PGY-1 for post-graduate year 1) resident can expect to earn $64,000. In the context of such figures, it is not surprising that 40% of medical students say that potential future earnings are a factor in their choice of a specialty.
Where a physician completes their graduate medical education can have important consequences for their professional and personal future. It also directly impacts the nation’s healthcare system. Studies show that physicians tend to remain in the general geographic area where they complete their residency. In 2017, the GAO found that residency slots were concentrated in the Northeast, a fact that doesn’t bode well for medically underserved areas and populations (MUAs and MUPs) in the rest of the country.
GME is a complicated system with important implications. A report by the UME-GME Review Committee of the Coalition for Physician Accountability recognized the challenges presented by “increasing financial costs to students as well as opportunity costs to programs associated with skyrocketing application numbers.”
Where does GME take place?
The term medical residency typically evokes images of a white-coated cohort in the larger setting of an urban hospital. While nearly 70% of residents will complete GME in hospital-based programs, residencies can also take place in other environments, including research programs. Under the Teaching Health Center Graduate Medical Education program established by the Affordable Care Act, an increasing number of residents will complete their residencies in ambulatory patient care centers such as federally qualified health centers, community health centers, and Indian Health Services clinics.