Graduate Medical Education Financing Policy

Principle 1: Provide an adequate number of family medicine residency positions to allow capacity for meeting the "25% by 2030” goal for U.S. medical school graduates making a career choice of family medicine. This results in a goal of “10,000 by 2030” for PGY-1 family medicine GME positions and the need for ongoing support for the duration of training for those positions. (new)

Support for Principle 1: Effective health care systems have a physician workforce comprised of roughly 50% primary care and 50% subspecialty. The current U.S. physician workforce is 33% primary care. To achieve the overall goal of 50% primary care, it is imperative that at least 25% of U.S. medical school graduates choose family medicine by 2030. Based on the following information, the AAFP estimates a need for roughly 10,000 PGY-1 positions in family medicine by 2030 to meet workforce and capacity demands:

  • The Association of American Medical Colleges (AAMC) reported that there were 21,338 matriculants (MS-1) to Liaison Committee on Medical Education (LCME)-approved U.S. medical schools in 2017, which represents a 1.5% increase from the year before.
  • The American Osteopathic Association (AOA) reported that there were 7,197 matriculants (MS-1) to Commission on Osteopathic College Accreditation (COCA)-approved U.S. medical schools in 2017, which is a 6.9% increase over the year before.
  • According to the 2017 AAFP residency census, 3,658 medical school graduates matriculated into Accreditation Council for Graduate Medical Education (ACGME)-accredited family medicine residency programs as first-year residents in 2016. If the current rate of international medical graduates (IMGs) who are training in U.S. family medicine residencies is maintained, the AAFP anticipates that this number of PGY-1 residency positions will roughly need to triple by 2030.  

Principle 2: Establish accountability for federal GME payments to correct the historical maldistribution of federal GME financing by ensuring new positions are allocated to mitigate rural/urban and other geographic and specialty imbalances to reduce health professional shortage and medically underserved areas. (new)

Support for Principle 2: It is important to address the current maldistribution of the physician workforce because it is contributing to lower health care quality and health disparities. The type and location of GME training is predictive of eventual practice location. There is an opportunity to collaborate with stakeholders at the federal, state, and community levels to identify and share what is working well currently and to identify what would work if additional or redistributed investments through GME payment models were available. One successful example is the Teaching Health Center Graduate Medical Education (THCGME) model. In addition, because current federal policy is often a barrier to development of new rural residency programs, it is important to advocate for the federal government to further study how its GME investments are contributing to the health and socioeconomic status of people living and working in underserved rural and urban communities. There is also a need for development of an entity to create and monitor GME financing strategies to accomplish national workforce goals. This entity should establish accountability measures that would be utilized as a condition for sustained GME payments.

Principle 3: Create new funding collaborations between federal, state, and nongovernmental stakeholders investing in primary care GME to positively impact factors such as health disparities, primary care access, workforce maldistribution, health equity, infant mortality, and social determinants of health. (new)

Support for Principle 3: Many states have had success developing and supporting new primary care residency programs. In 2015, 42 states made Medicaid GME payments. Some of these initiatives used waivers, matching funding, and targeted programming to reduce maldistribution of physician workforce in the state. Creating and supporting the conditions to measure and share data on these programs was a critical element. In 2017, 110 participants from 33 states participated in the GME Initiative’s States Initiative Summit to identify ways to engage community stakeholders in investing in primary care residency training; leverage Medicaid GME; and utilize unique state funds and other assessments (e.g., tobacco taxes, hospital/insurance assessments, other grant programs). Many hospitals and health systems have committed to expanding family medicine GME as a foundational approach to addressing workforce concerns and population health. Fostering private funding streams for family medicine GME expansion may be necessary to augment public funding. Therefore, identifying and communicating successful innovations in GME financing are important complements to optimizing current federal investment in GME. Any newly created or local funding support should be additive and supplemental, not meant to replace or decrease federal support.

Principle 4: Make permanent and increase funding to the Teaching Health Center Graduate Medical Education (THCGME) program to ensure stability, growth, and long-term sustainability of the program. (new)

Support for Principle 4: The THCGME program was created under the Patient Protection and Affordable Care Act (ACA) and reauthorized through fiscal year 2019 to increase the number of primary care residents who train in community-based ambulatory patient settings. It is important that this program be permanently funded within the Medicare GME system and not be subject to periodic reauthorization and appropriated funding. Currently, the Health Resources and Services Administration (HRSA) awards funds to eligible teaching health centers for the purpose of covering both direct and indirect GME costs for new or expanded community-based primary care residency programs. The U.S. Department of Health and Human Services (HHS) is required by law to establish formulas for determining separate Direct Graduate Medical Education (DGME) and Indirect Medical Education (IME) payment formulas for the THCGME program. As of June 2018, HHS had not yet established rules on such payment formulas. Instead, it has been making payments using an interim annual payment rate of $150,000 per resident, with reductions when appropriated funding levels do not allow the full per-resident amount (PRA). Regarding the DGME payment formula, the statute provides that DGME payments must be equal to the product of the updated national PRA and the average number of full-time equivalent (FTE) residents in teaching health centers’ residency programs. Regarding the IME payment formula, the statute provides that HHS must evaluate the indirect teaching costs needed to support primary care residency programs in qualified teaching health centers and ensure that the aggregate payments for indirect and direct costs do not exceed the total amount appropriated for the THCGME program in each fiscal year. The payment rate for THCGME recipients may fluctuate over time, depending on available appropriations, the number of eligible applicants, and the number of FTE residents supported. THCGME awards can supplement GME payments from other federal sources, including Medicare, Medicaid, and the Children's Hospitals Graduate Medical Education (CHGME) program, but recipients generally cannot use funds to pay for the same portion of resident time that has been counted toward funding in these other GME programs. To maintain GME program stability and sustainability, it is imperative for THCGME funding to be predictable, secure, and reliable.          

Principle 5: Modernize GME financing by replacing Indirect Medical Education (IME)/Direct Graduate Medical Education (DGME) payments with a per-resident payment (PRP). (new)

Support for Principle 5: Modernizing GME payment methodology is necessary to make strategic investments that support a more equitable, rational physician workforce and support the development of training at non-hospital sites. Consistent with the IOM’s 2014 recommendation to replace rigid statutory formulas that were developed in an era when hospitals were the central site for physician training, the AAFP advocates for combining IME and DGME financing streams into a single payment, with funds distributed as a national per-resident payment. The PRP should be evidence based, transparent, and predictable.  

Principle 6: Support existing and expanded funding for family medicine residencies by refocusing existing Medicare GME funding to first-certificate residency programs. (carryover)

Support for Principle 6: If there is limited support for increasing the overall funding for additional GME positions for family medicine training, then an existing revenue source must be identified for first-certificate residency programs. A logical solution is to shift funding from existing fellowship training programs. The number of ACGME-accredited subspecialty fellowship programs increased by more than 30% from academic year 2003-2004 to academic year 2012-2013, and the number of fellows in subspecialty training increased by 40% during that time. Limiting the outsized growth of fellowships and other subspecialty training will temper increasing costs to the system that do not substantially benefit population health or achieve the Triple Aim. Shifting funding from existing fellowship training will allow for the development of additional first-certificate residency program positions. At least half of new positions should be in the primary care specialties of family medicine, general internal medicine, and general pediatrics. At least half of new primary care specialty positions should be in family medicine (i.e., 25% of all newly funded first-certificate residency program positions). The AAFP anticipates that there will be increased emphasis on innovation, use of GME outcome metrics to guide improvement, and redesigned training in first-certificate residency programs.

(July 2018 BOD)