HEALTH CARE PROVIDER MODEL
The health care provider model links payments for clinical training to patient care activities. This is the approach Medicare uses. It treats clinical training costs as patient care costs as opposed to educational costs. It is the most appropriate model for the indirect costs of clinical training since these costs reflect the impact of the teaching activity on the patient care costs of the site where the training takes place. The health care provider model provides no support for training that does not occur in patient care settings. Residency programs in preventive medicine would typically receive little funding through this model.
There are several options regarding which entity should receive direct GME payments for training in community-based settings:
- Consistent with Medicare's current rules, payment could flow to the hospital or the community training site depending on which entity bears substantially all the training costs for the resident's time at the site, i.e. pays the resident's salary and reasonable compensation for teaching.
- An alternative would be for funding to follow the resident to the community site regardless of which entity bears the cost.
- Another option would be to pay pro rata amounts to the hospitals and the community-based ambulatory sites participating in the residency program based on their relative shares of GME program costs. One approach would require the affiliated hospitals and community-based training sites to agree on their relative shares of program costs. A variation would be to designate a fixed percentage of the payment to hospitals for training in community settings.
EDUCATION MODEL
The education model treats direct GME costs as an educational cost as opposed to a patient care cost. It should give educational needs more weight in deciding what and where residency training occurs. The model is appropriate for direct GME costs only. Payment would flow to a single entity that would be accountable for how the funds were expended. This could be to a medical school or program sponsor. There is potential to introduce other elements into the allocation formula, such as program quality or meeting specific educational objectives or workforce priorities. Making direct GME payments to medical schools would emphasize most strongly that Federal GME funds are to support education rather than patient care. However, funding through the medical schools for residency programs that are sponsored by community-based hospitals would require a major shift in program accountability and funding. Another alternative, giving vouchers to residents, adds value only if there is a regulatory apparatus to determine the number of positions to be funded and which residents should receive funding.
PLANNING MODEL
Under the planning model, the GME funds would flow through a GME planning and coordinating body. This is an entity whose primary functions would be to assess the health care needs of the community and allocate funds based on local workforce considerations. Funding allocation decisions could support local health care needs more readily than distributions directly to health care providers or program sponsors based on national allocation formulae.
The funds could be distributed to GME consortia or to the States. Payment to consortia could be either a natural outgrowth of paying the program sponsor or could result from deliberate policies to encourage consortia. Experience to date suggests that providing payment only to consortia would be premature. Many States have established commissions or task forces related to GME and physician workforce. Some are permanent groups with the structure and expertise that could become physician workforce planning bodies in their State.
PERFORMANCE MODEL
The performance model would link payment to achieving specific performance measures or objectives. Payment could be formula-driven based on meeting specific educational or workforce objectives. These objectives could be in the area of curriculum content and quality, training opportunities, or workforce objectives. Alternatively, there could be support for specific projects or demonstrations needed to support infrastructure development or workforce goals. Examples of the types of programs that could be funded include the targeted Public Health Service grants for primary care residency programs, support for developing academic-community partnerships to serve medically underserved populations, consortia development, and faculty development programs for clinician-educators in the community.
The performance model is more suitable as a mechanism for making supplemental payments than as a primary payment mechanism. Educational quality measures and workforce priorities are not sufficiently defined to be used to determine all fund allocations. Also, if all funding were predicated on meeting specific performance measures, significant year-to-year fluctuations in funding could occur that would be inconsistent with the need for stable GME funding.
RECOMMENDATIONS FOR GME FINANCING REFORM
COGME's 14th Report called for a stable, all-payer financing mechanism for graduate medical education (GME) that would provide adequate funding for training in ambulatory settings. This report builds on the 14th Report by recommending how the all-payer GME funds should be distributed. The recommendations are based on COGME's policy goals for GME funding.
RECOMMENDATION 1
CREATE A GME FUND THAT COMBINES FEDERAL FUNDING TO SUPPORT GRADUATE MEDICAL EDUCATION WITH ALL-PAYER FUNDS.
To assure financing policies are consistent across Federal programs and reflect national workforce priorities, the various Federal funding streams for GME that is provided by non-Federal institutions (i.e., excluding DoD and DVA) should be combined into a single fund and supplemented with all-payer funds obtained through a modest surcharge of private insurance premiums. The GME fund would include amounts that would otherwise be paid under current formulae for Medicare for direct GME and indirect payments to teaching hospitals, the Federal portion of Medicaid payments that are implicitly GME payments, and the Children's Hospital GME fund. In addition, the HRSA Title VII grants for GME, e.g., primary care residency training grants, would be included in a set-aside fund for specific workforce goals.
Within the general GME fund, five separate accounts should be established for:
- Medicare direct GME payments;
- non-Medicare direct GME payments;
- Medicare IME payments;
- non-Medicare IME payments; and,
- targeted payments to support specific workforce and educational objectives.
The separate Medicare and non-Medicare accounts are needed as a transitional measure. They would assure full funding on behalf of Medicare patients if contributions from other payers are not sufficient. Also, since the Medicare funds are currently being paid, changes in the allocation of the Medicare funds should be phased-in or offset by additional funding from the non-Medicare accounts. A transition may not be needed for the non-Medicare funds. To the extent they represent new funding streams, funds in the non-Medicare accounts should be allocated consistent with preferred policies from the outset.
While the GME fund would not include funding for residency training in DoD and DVA sponsored programs, the Federal budget for those programs should be consistent with the policy objectives for the GME fund. Residency training in these programs has significant impact on the size and specialty composition of the physician workforce.
a. GME should be broadly supported by all-payers.
Explicit funding for GME should be spread more broadly across all sectors of society. A permanent and stable funding source, such as premium contributions from all health insurance plans, should supplement current Federal funding for GME. In the long run, Medicare and Medicaid's contribution to the GME fund should be proportionate to the percentage of insured population represented by their enrollees.
b. Funding from all sources should be sufficient to support high-quality, efficient training of an appropriately sized physician workforce.
Total aggregate funding should be sufficient to support the efficient training of an appropriately sized physician workforce. Together with payments from other sources (primarily patient care revenues and State funds), GME funding should be adequate to train the number of physicians required to meet current and future national health care needs. Additional funding would not be in the public interest since it could contribute to a continuing surplus of physicians.
In the past, COGME has recommended that the total number of physicians entering first year residency should not exceed the number of U.S. medical school graduates in 1993 plus 10 percent. The Council's 14th Report found that a reduction of 3,386 first year positions in 1997-1998 was needed to meet the 110 goal. In view of recent changes in the health care delivery system since its initial recommendations were issued, COGME plans to review the 110 goal and its target of a 50/50 mix of primary care and other specialists.
Most of the increase in the total number of residents in recent years is attributable to an increase in the number of graduates from medical schools outside the United States. Support should be discontinued for new exchange visitors (J-1 visa) residents. As COGME has previously recommended, exchange visitor residents should be funded by alternative sources, such as home country financing or foreign aid.
A conceptual framework should be used to establish an appropriate level of Federal support for funded residency positions. Because GME is a joint product with patient care services, patient care revenues cover some direct GME costs. Consideration also needs to be given to issues such as maintenance of effort for current State funding through the Medicaid program and grant programs and whether all resident activities required for accreditation in an approved program should be funded. Under Medicare, only resident time spent in patient care activities is supported.
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