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Medical education sequester cuts may aggravate physician shortage

Mary Mosquera

Possible cuts in Medicare funding for graduate medical education (GME) that could start as soon as next month come at a critical time when the industry is trying to find solutions to a physician shortage that promises to accelerate through 2020.

The nation will be short about 90,000 physicians across a number of specialties by the end of this decade, said Atul Grover, MD, chief public policy officer at the Association of American Medical Colleges, who spoke Tuesday at the American Medical Association National Advocacy Conference. That shortage will be the result of a number of factors, including the expansion of insurance coverage under the Affordable Care Act starting in 2014 and the aging and growing boomer population.

Medicare makes $3.2 billion annually in direct payments for GME, or about 21 percent of overall direct costs, Grover said, thereby making Medicare the most consistent payer. In 1997, the number of residency positions funded by Medicare was capped. Reduced Medicare support for GME caused by the sequestration cuts could create a bottleneck to residency for medical school graduates, Grover said.

Training more physicians has been considered the main solution to the shortage problem, but if Medicare funding for GME is reduced, there will not be enough residency spots to accommodate medical school graduates, he said.

The healthcare community has not put all its eggs in the Medicare-funded GME basket, Grover noted. The industry will continue to test payment models and delivery systems, such as accountable care organizations (ACOs) and patient-centered medical homes, to make care more coordinated and efficient.

The healthcare sector can also help matters by improving physician distribution. “We need to leverage clinical reimbursement to look at other ways to use members of the team – for telemedicine, telehealth – and to improve patient engagement,” Grover said.

And there are other sources of funding besides Medicare that can be tapped to support GME, noted Thomas Ricketts, managing director of Cecil Sheps Center for Health Services Research at the University of North Carolina. 

“States can support GME programs, divert DSH (disproportionate share hospital) payments and move Medicaid funds,” he said. Individual communities, too, can develop their own incentives and programs.

Congress can also offer incentives by offering resident applicants the option to pay for some of their GME or pay through a trade-off of service in physician-underserved areas and health system markets can develop health services that support graduate medical training, Ricketts said.

Currently there are not enough residency positions for all the of young graduated medical students in the U.S. In fact there are only two positions for every three candidates for that position. Approximately 1/3 of all candidates trying to find a residency position in the U.S. will fail, due to a lack of positions. This will cause two major issues.
1. Not enough physician to provide necessary health care.
2. Increase of student loan defaults for medical students.
Without a residency a physician cannot get a license, without a license he or she cannot pay back the $180,000 plus student loans that were accumulated during medical school. Congress could minimize this (medical) student loan default rate by giving U.S. citizens with federally subsidized student loans first priority for the limited number of primary care residency positions available. To help minimize this problem, this solution only takes a policy change. With additional funds, Congress could increase the number of available residency positions to meet the need, this solution takes money. I strongly recommend both solutions be implemented.
The American Medical Association (AMA) was pleased to host Dr. Grover as a speaker at the AMA National Advocacy Conference; AMA policies on graduate medical education (GME) align with those of the AAMC. The AMA recognizes that potential Medicare budget cuts caused by sequestration may impact funding for GME at a time when these residency slots are already in short supply. In fact, the number of Medicare funded GME slots has been frozen by the federal government since 1997. Without more funding for GME positions, the physician workforce cannot grow to meet the nation's needs. The AMA is urging Congress to protect the existing federal funding for GME and to lift the cap on Medicare-supported GME slots to protect patient access to care and address physician shortages in undersupplied specialties and underserved areas.


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