I. Reduce the Number of Graduate Medical Education (GME) Positions
A. Eliminate both Medicare direct graduate medical education (DME) and indirect medical education (IME) payments for new exchange visitor (J-1 Visa) residents beginning the year following implementation of this provision. Fund new exchange visitor residents from alternative sources, such as home country financing or foreign aid. Continue to make DME and IME
payments for those exchange visitor residents who entered training prior to implementation.
COGME believes that Medicare GME payments should be available only to those residents expected to become part of the U.S. physician workforce. The original intent of the physician exchange visitor program was to strengthen international relations and further mutual understanding through educational and cultural exchange; the program was not intended to add physicians to the U.S. physician workforce. This recommendation would apply only to new exchange visitors; Medicare GME
payments would continue to be made for exchange visitor residents already in the training pipeline.
COGME believes that GME funding for exchange visitor residents should come from either foreign sources or U.S. provided non-Medicare sources such as foreign aid or private sector sponsored assistance. Funding from sources such as the Agency for International Development (AID) or the private sector can provide a continuing U.S. commitment to preserving the exchange visitor program.
B. Base hospitals' resident counts for both Medicare DME and IME payment determinations on a 3-year rolling average beginning with the two years prior to implementation of this provision. This would provide a temporary financial cushion and incentive to reduce the number of residents reimbursed by Medicare.
- On a hospital-specific basis, cap the total resident counts for both DME and IME payment determinations, and either
- cap the non-primary care resident count;
-or -
- maintain or increase the primary care proportion of residents,
at the level in the year prior to implementation of the cap, to limit further increases in the number of residents reimbursed by Medicare while protecting the number or proportion of primary care residents.
- Cap the individual resident-to-bed ratio (IRB) ratio on a hospital-specific basis at the level prior to implementation of the cap, to prevent the hospital's IRB ratio and IME payments from increasing because of a decrease in the hospital's inpatient bed capacity.
Computing Medicare payments on a three-year rolling average of annual residents would reduce payments proportionately less than the number of residents. The rolling average provides hospitals with a limited incentive to reduce the number of residents and enable a smoother transition toward reducing the number. COGME believes that this "cushion" will provide resources for hospitals to restructure their organizations more efficiently, be less dependent upon residents for services, and include the appropriate use of other health professionals. By tagging the payment response to changes in resident numbers, this recommendation also provides an incentive not to increase the number of residents. Capping residency counts eligible for DME payment facilitates market forces by removing the hospital's incentive to increase the number of residents. Capping the IRB ratio removes any incentive hospitals might have to increase the number of residents or decrease the number of beds in order to raise the ratio. Additionally, capping non-primary care positions prevents any resident reductions from impacting disproportionately primary care residents, and allows flexibility to expand the training of primary care residents.
C. If recommendations I.A. and I.B. are not enacted, encourage additional demonstrations analogous to New York GME Demonstration Project, especially in states with high resident per-capita ratios.
A small number of states are especially dependent upon service delivery by residents. Hospitals in these states may need additional support to make a transition to an ambulatory-based service and training environment. The New York Medicare GME Demonstration Project provides:
- incentives for hospitals to reduce the size of residency training programs in the state while providing transition funds to support the reorganization of service delivery and use of replacement personnel required, and
- a somewhat smaller required reduction in resident counts if hospitals agree to promote primary care or to participate in a formal consortia with coordinated GME programs.
D. If, within three years of implementation of these recommendations, significant progress has not been made toward reducing the number of first-year residency positions to 110 % of 1993 U.S. medical school graduates, consider stronger policies aimed at reducing DME and IME payments that would result in a decrease in first-year residency positions to 110 % of 1993 U.S. graduates.
COGME believes that the use of financial incentives, such as those proposed, is the preferred method to adjust the market production of residents, particularly at a time of rapid change in the health care industry. However, there is a need to reduce both the number of first-year residents and the cost of GME. If the combination of Recommendation I.B. and the market does not accomplish the necessary reduction in residency positions and produce a better balance between physician supply and future requirements as advocated by COGME's "110%" recommendation, other measures may need to be considered to accomplish that goal.
II. Support for Communities and Shortage Areas Affected by Loss of Residents
Use a portion of the savings from these recommendations to support programs such as Community or Migrant Health Centers and the National Health Service Corps, where a substantial decline in residents creates continuing severe service shortages.
A substantial decline in the number of physician residents in communities that rely heavily on their services may produce severe service shortages. Allocating a portion of medicare savings to community-based service delivery programs, particularly "safety-net "programs, will permit hospitals to move to a more appropriate service delivery environment for both training and care.
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