Ch. 15 - Education as the New Battleground
Kenneth Kim, MD; Carolina Ornelas-Dorian, MD, MPH
Graduate Medical Education (GME) and its funding have always been an important consideration in health policy in America. From the capping of public GME funding in the 1980s to the recent surge in residency program growth, understanding the history of GME and how this history informs current trends will help us in our path to securing the future of resident and patient-focused GME moving forward.
The changing landscape of GME funding offers opportunities for us, as emergency physicians and as a specialty, to advocate for consistent standards for the training and educational mission across emergency medicine residency programs.
Why It Matters to EM and ME
GME funding and the trends within residency and fellowship education can have far-reaching effects on the practice of emergency medicine as a whole. Expansion of GME funding has implications for the EM workforce supply and retention, residency practice settings, quality of residency training, and long-term GME financial sustainability.
Since 2010, EM residencies have grown across the U.S. due to changes in the accreditation process, expansion of existing programs, increases in newly accredited programs, and increases in privately funded programs.1 EM residency spots in Florida have increased 200% compared to 20% across all other specialties. The long-term impact is yet to be determined, but workforce projections have forecast an oversaturation of EM clinicians in urban areas while the need for EM staff increases in rural areas. Privately funded residency programs, for example, could address or exacerbate workforce needs, depending on their location in the United States and the eventual practice locations of their graduates.2
Some new GME programs propose they are helping to develop pipelines to practice and drive retention in communities in need. Kaiser Southern California states that a main driver of their residency program is to recruit excellent faculty through teaching opportunities. About 50% of Kaiser So-Cal residents remain after graduation.3 HCA Healthcare, which has 300 residencies in 16 states, notes that up to 78% of EM graduates practice in the state where they trained.1 Kaiser’s GME programs include retention practices focused on fostering mentorship and belonging, incorporating direct feedback, increasing feelings of control over one’s environment, and providing recognition and rewards.4 These organizations advocate that their programs are not simply a matter of short-term economics of a cheaper labor force, but about long-term human resource development.
Expanding sources of GME funding could diversify clinical sites where residents practice and learn. Given the focus on inpatient hospital reimbursement, current GME funding has led to gaps in funding for residency time spent in non-hospital settings, like a poison control center.1 With broader sources of funding that are not restricted to hospital settings, residents may gather more diverse clinical exposure to different EM practice settings. Several studies have shown that exposure to rural programs increases the odds of practicing in a rural environment.5 Given that federally funded GME residency spots are disproportionately concentrated in the Northeast,6 other sources of funding could improve dynamic access to care to underserved and rural populations that better reflect current needs.
A benefit of government-funded residency spots is the consistency of funding and educational standards. More private funding may lead to less regulation, less standardization, and poorer quality control if there is little or no oversight from organizations like the ACGME. Similarly, the actual reimbursement for residents could change — leading to higher or lower wages.7 GME Medicare funding is well established and a long-term source of funding. Non-Medicare sources of funding rely on short-term grants, community resources, and other sources that are not necessarily guaranteed over time. Guaranteeing financial security is important for EM residents to have a financially stable program to complete their residency training.
How We Got to This Point
Funding for GME in America comes from a variety of sources, including public entities such as Medicare, Medicaid, state governments, Veterans Affairs (VA), and Health Resources and Services Administration (HRSA), with some component of private funding that is difficult to measure. Medicare makes up the largest portion of public funding, and its formulas and regulations have been largely static for more than 20 years, which has led to demand for alternative sources of residency funding in a vastly different society and health care market today.8
Since its inception in 1965, Medicare, as part of the program’s structure, has included payments to teaching hospitals to subsidize the cost of training physicians. It continues to provide the majority of federal funding for residencies today: 71% of federal GME funding comes from Medicare, vs. 16% from the federal share of Medicaid and 10% from the VA.9 When this funding was established, the goal was to provide high-quality care to Medicare patients, not necessarily to fund the cost of teaching residents in the care of non-Medicare patients. The payment formula reflects this and incorporates the number of residents, “reasonable hospital costs” per resident, and percentage of the hospitals’ patients who are covered under Medicare. Hospitals that do not care for a large Medicare population (eg, children’s hospitals, safety net hospitals) are at a disadvantage in receiving Medicare funding.8 These discrepancies are only partially addressed by the Medicaid program’s GME funding and the Children’s Hospital GME Payment Program (a program run by HRSA specifically designed to cover the gap in funding for children’s hospitals), the latter of which only receives ~2% of GME funding, nationwide.9
Current Medicare GME funding is divided into two parts. The first is direct medical education expenses (DME), which include direct costs related to supporting residency programs, such as resident and faculty salaries, costs of classrooms and teaching materials, and overhead administrative fees. The second is indirect medical education (IME), which includes payments for the higher costs a hospital may incur in the course of patient care due to the fact that trainees are present. Examples of these costs could include the cost of running additional tests that trainees might order, caring for high-acuity and highly specialized patients, maintaining trauma center status, and increased technological expenses.10 Hospitals are allocated IME funds to use at their discretion, and there is minimal standardization or tracking. States may supplement Medicare funding for GME with additional state funds, though there are no federal guidelines for how much or even whether states must contribute, leading to variability in funding across the U.S. There is also little to no data on the outcomes or uses of GME funding, leading to further opacity in the entire GME funding process.11
In 1997, Congress, with the support of the AMA and AAMC, passed the Balanced Budget Act (BBA), which “capped” the total number of residency spots that CMS would fund at 1996 levels in an effort to address increasing Medicare expenses and concern for a projected oversupply of physicians.11 This meant that Medicare would not provide additional GME funding for more residency slots to any teaching hospital that was training residents at that time. This initially caused a chilling effect in the growth of residency programs, with the number of residents increasing only ~0.1% between 1997 and 2002.11 However, there were almost 50,000 more residency slots in 2021 than in 1997, representing a near 50% increase. This increase arises from new teaching hospitals, “above the cap” positions, and extra funding for rural and critical access residencies.
Hospitals that have not previously been teaching hospitals are referred to as “GME-naive” and are not subject to the 1997 Medicare GME cap. Instead, if a GME-naive hospital becomes a teaching hospital, their GME cap is calculated and implemented in the 5th year of their new training program. These “GME-naive” hospitals have a strong incentive to increase the number of residents at their site within 5 years of starting because CMS calculates their training cap after the fifth year; however, this rapid growth can be difficult for many nascent programs.12 Many “above the cap” positions have been added since 1997, with hospitals self-funding residency slots or obtaining other funding, such as state grants or private endowments. While Medicare-funded spots still greatly outnumber “above the cap” positions, there are around 15,000-20,000 “above the cap” positions, representing 10-14% of the total number of residency spots.13,14
The ACA in 2010 attempted to improve rural access to GME funding by establishing rules for redistributing unmatched residency spots for primary care and residency programs with low resident-to-population ratios.15 However, these efforts have led to minimal impacts on rural areas thus far.8
Many opponents of the GME cap argue that the financial and demographic factors that were represented in GME funding in 1996 are vastly different from those in the modern day. When capped, a majority of teaching hospitals (and thus residency spots) were located in the Northeast, and the cap has limited the expansion of medical education to other parts of the country. Critics of the current system of GME also argue that much training and health care is provided through sites other than traditional hospitals and that funneling most GME funding through Medicare hospital payments places non-hospital specialties and practice environments at a distinct disadvantage.
In order to increase residency spots, there has been an increase in private GME funding. One example is Hospital Corporation of America, a for-profit organization that currently advertises offering more than 300 residency programs in 16 states.16 Other examples include Kaiser Permanente, a private health care system, that trains approximately 6% of the GME graduates and 11% of primary care graduates in California.4 Kaiser has teaching affiliations with many academic health centers throughout California, including the University of California system. The monetary value of such private GME funding, as well as that of “above the cap” residency slots at more “traditional” teaching hospitals, is hard to truly know, as much of this funding outside of direct resident salary is mixed into general operational costs, and GME funding data is not clearly reported.
Current State of the Issue
There were 283 ACGME-accredited EM residency programs as of April 2023. This represents a 30.2% growth in the prior 5 years compared to 2015. For reference, the specialties of internal medicine and general surgery saw a 24.9% and 23.7% increase, respectively. The only specialty with more growth was family medicine, at 31.5%. Compared to prior years, the proportion of programs sponsored by for-profit institutions during this period has increased from 4% to 37%.17 For further context, the ACEP Workforce Report estimated an approximately 8,000 EM physician surplus by 2030, assuming a 2% GME growth rate annually.18
Of note, this trend in the growth of residency positions and EM residents is fluid. In the 2022 Match, 219 PGY-1 positions involving 69 programs were initially unfilled in the Main NRMP Match®, in contrast to 14 unfilled PGY-1 positions involving 9 programs in the 2021 Match.19,20 The 2023 NRMP Match® initial results were exponentially worse, with 554 spots initially unfilled.21 While this change seems significant in the face of prior years’ growth and has been concerning to some medical educators, there are numerous confounding factors, including the COVID-19 pandemic and the reaction to the 2021 ACEP Workforce Report. It will be important for educators and trainees alike to monitor these trends in the coming years to ensure GME within EM continues to attract the best and brightest to our specialty.
The changing landscape of GME funding offers opportunities for us, as emergency physicians and as a specialty, to advocate for consistent standards for the training and educational mission across emergency medicine residency programs, no matter the funding source, and to limit profit-motivated interference in emergency medicine practice and training. Obstacles to these efforts include private interests lobbying for independence in oversight and regulation. Strategies to mediate this opposition could include unified efforts from national organizations such as EMRA and ACEP.
It’s crucial that national EM organizations continue their work to secure appropriate GME funding in order to match workforce needs without oversaturating the market. It is important to note that for many years there was previously a projected shortage of physicians across specialties, including in EM, especially in rural and less desirable regions. Due to the need for better access to well-trained physicians, the preservation and expansion of GME funding has been a top priority for many resident organizations, including EMRA, in the past.1 Only in recent years has a concern for oversaturation of the labor force in EM led the specialty to reassess our full-throated support of GME funding expansion. It will be important to balance calling for adequate Medicare GME funding without the overexpansion of programs and positions. With an increase in diversity of GME funding sources, it is also critical to promote further transparency in both sources of GME funding and the allocation of funds.
EMRA supports sponsoring institutions securing adequate federal funding of GME and supports independent financing without replacing currently funded GME positions or violating the Match process to train emergency medicine residents. EMRA believes the primary purpose of residency is education before service; therefore, EMRA opposes the sale or commoditization of CMS residency slot funding.22
- A majority of GME funding comes from Medicare; however, GME funding has expanded to include private sources (eg, Kaiser Permanente and HCA).
- Having GME training programs at a hospital increases reimbursement for the hospital, even in the absence of residency positions directly funded by Medicare, and this funding has been a major factor leading to the expansion of EM residencies.
- Expanding beyond Medicare funding can diversify clinical residency training sites (eg, poison control centers) and promote innovation in retention/ recruitment.
- Increases in GME funding and number of training positions can impact the EM workforce both positively (by addressing gaps in care for rural and underserved populations) and negatively (by oversaturating the market with EM physicians).
- Future advocacy efforts should include ensuring standardized residency training and educational mission (no matter GME funding source), limiting profit-motivated interference in residency training and patient care, promoting transparency in GME funding sources and allocation, and ensuring EM workforce needs are met without oversaturating the market.
- Haddad V, Gupta P. Graduate Medical Education Funding. EMRA. Published 2019. Accessed June 2, 2022.
- Haas MRC, Hopson LR, Zink BJ. Too Big Too Fast? Potential Implications of the Rapid Increase in Emergency Medicine Residency Positions. AEM Educ Train. 2019;4(Suppl 1):S13-S21.
- Rittenhouse D, Ament A, Grumbach K, et al. Guide to Graduate Medical Education Funding in California. California Health Care Foundation. Published 2018. Accessed May 20, 2022.
- King H, Speckart C. Ten Evidence-Based Practices for Successful Physician Retention. The Permanente Journal. 2002;6(3). Accessed May 15, 2022.
- MacQueen IT, Maggard-Gibbons M, Capra G, et al. Recruiting Rural Healthcare Providers today: A systematic review of training program success and determinants of geographic choices. J Gen Int Med. 2017;33(2):191-199.
- Mullan F, Chen C, Steinmetz E. The geography of graduate medical education: imbalances signal need for new distribution policies. Health Aff (Millwood). 2013;32(11):1914-21.
- AAEM RSA. Lay Corporations Running Residency Programs. Published 2018. Accessed May 10, 2022.
- Eden J, Berwick D, Wilensky G. Graduate Medical Education That Meets the Nation's Health Needs. Washington, DC: National Academies Press; 2014.
- Office USGA. Physician workforce: HHS needs Better Information to comprehensively evaluate graduate medical education funding. Published May 12, 2020. Accessed June 6, 2022.
- Institute of Medicine (US) Committee on Implementing a National Graduate Medical Education Trust Fund. On Implementing a National Graduate Medical Education Trust Fund. Washington (DC): National Academies Press (US); 1997. Overview of Graduate Medical Education and the Distribution of a Trust Fund. Available from: https://www.ncbi.nlm.nih.gov/books/NBK233558/.
- Salsberg E. US residency training before and after the 1997 Balanced Budget Act. JAMA. 2008;300(10):1174.
- California Healthcare Foundation. Medicare GME Funding 101 - California Health Care Foundation. Accessed June 7, 2022.
- AAMC 2021 Report on Residents - Table B3. number of active residents, by type of medical school, GME specialty, and sex. Accessed June 6, 2022.
- Office USGA. Physician workforce: Caps on Medicare-funded graduate medical education at teaching hospitals. U.S. GAO. Accessed June 6, 2022.
- Congressional Research Service. Federal support for Graduate Medical Education: An overview. Accessed June 7, 2022.
- Hospital Corporation of America. Graduate Medical Education. Accessed at https://hcahealthcare.com/physicians/graduate-medical-education/.
- ACGME Data Resource Book. Accessed June 6, 2022.
- Marco CA, Courtney DM, Ling LJ, et al. The Emergency Medicine Physician Workforce: Projections for 2030. Ann Emerg Med. 2021;78(6):726-737.
- Main Residency Match Data and Reports - Results and Data: 2022 Main Residency Match. Accessed June 7, 2022.
- Match Data & Report Archives. Accessed June 7, 2022.
- Advance Data Tables 2023 Main Residency Match. Accessed at https://www.nrmp.org/wp-content/uploads/2023/03/2023-Advance-Data-Tables-FINAL.pdf.
- Policy Compendium. Published 2021. Accessed May 20, 2022.