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Resident Physician Forum
April 28, 1999

Commission Reviewing GME Funding Disbands Without a Proposal

Author Affiliations

Prepared by Ashish Bajaj, Department of Resident and Fellow Services, American Medical Association.

JAMA. 1999;281(16):1556B. doi:10.1001/jama.281.16.1556

Currently, the Medicare program is the primary funding source for graduate medical education (GME). Because many analysts expect the Medicare Trust Fund to be bankrupt within the next 15 years, Medicare reform has recently been the subject of much political discussion. Proposals for reforming Medicare are expected to include substantial changes in GME funding mechanisms. To prepare residents and others for the debate regarding these changes, the next several Resident Physician Forum columns will explain some of the details of GME funding, proposed changes, and the composition and perspectives of those groups studying GME and presenting proposals.

In March of this year, the National Bipartisan Commission on the Future of Medicare disbanded without being able to forward its recommendations to Congress. The Commission, created by the Balanced Budget Act of 1997, was charged with studying the Medicare program, including funding for GME, and making recommendations that would strengthen and ensure the solvency of Medicare for future recipients.

The Commission's 17 members were appointed by President Clinton and Congressional leaders. Congress required that a supermajority (11 out of 17 votes) on the Commission was needed for any proposal to be forwarded to the House of Representatives; the final proposal received 10 votes. Although the proposal failed, the Commission's chairs, Sen John Breaux (D, La) and Rep William Thomas (R, Calif) have stated that they will rewrite the proposal as legislation and introduce it to Congress. The chairs of the Senate Finance Committee and House Ways and Means Committee said that they would hold hearings on the final proposal.

Medicare pays teaching hospitals for residency training through 2 payment streams. Direct medical education (DME) payments cover resident, fellow, and faculty salaries and benefits as well as other tangible educational expenses. The indirect medical education adjustment (IMEA) compensates teaching hospitals for higher operating costs associated with the presence of a residency program.

Although the Commission's proposal for GME funding was not highly detailed, it did recommend that DME payments be carved out of the Medicare Trust Fund. It recommended that DME either be funded through a separate entitlement program or through multiyear discretionary appropriations. The Commission's proposal supported continued Medicare funding of the IMEA. However, the proposal also acknowledged the difficulty of accurately calculating how much higher the operating costs are at a teaching hospital.

Prior to his presentation of the final proposal, Senator Breaux had released more details regarding GME funding. He recommended that DME payments also be made to teaching institutions, such as children's hospitals, that are currently ineligible for Medicare GME funding. In addition, he recommended that the methods for calculating IMEA be revisited to ensure appropriate funding.

As mentioned above, the Commission's chairs have stated that they would introduce these proposals as legislative bills to Congress. We will continue to monitor and report on this issue as it develops.