MedPAC Recommends New Performance-Based System for GME Funding

The Medicare Payment Advisory Commission, or MedPAC, has approved five recommendations aimed at improving graduate medical education, or GME, through Medicare payments to teaching hospitals. Its primary recommendation is that Congress should authorize HHS to establish a performance-based GME program that would start in three years.

According to a presentation made during MedPAC's April 1-2 meeting, (7-page PDF; About PDFs) funding for the performance-based GME program would come from removing $3.5 billion in indirect medical education, or IME, funding and redirecting that sum to the new performance-based GME program.

The $3.5 billion is an amount that exceeds what presenter Cristina Boccuti, M.P.P., a principal policy analyst for MedPAC, called the "empirically justified" amount intended to cover Medicare's share of higher patient care costs associated with teaching.

Thus, she said, no increase in Medicare funding would be required to implement the proposed program.

Currently, Medicare payments to teaching hospitals do not vary based on the performance of residency programs or their supporting institutions in fostering the workforce skills needed in a health care delivery system that holds costs in check while maintaining or improving quality.

"Medicare makes no distinction in its payments for low- or high-performing programs and institutions," Boccuti said during the meeting.

"The commission has discussed a need for Medicare payments to take a stronger role for encouraging delivery system reform," she added. "And that is where we are starting to pair this."

Incentive-based payments should evolve through consultations with representatives from education, insurer and provider communities and should be scaled to reflect performance levels, according to Boccuti.

Boccuti noted during the meeting that the Accreditation Council on Graduate Medical Education has been moving to increase emphasis on educational outcomes assessment as part of its accreditation process, specifically by integrating outcomes-based objectives into its core competencies.

However, a 2009 RAND Corp. working paper that assessed how internal medicine residencies are adapting their teaching to prepare physicians to practice within the current health care delivery system found that the residency programs have been slow to achieve these goals. One reason stipulated in the paper was varying levels of support from the residencies' institutional sponsors.

Scaling incentive-based payments to reflect performance levels of residency programs and their sponsoring institutions should help shore up that support, Boccuti said. Moreover, she added, delaying the launch of the new performance-based program for three years would allow time for HHS to develop standards for distributing the funds.

In addition to recommending the performance-based GME program, MedPAC recommended that HHS