MedPAC Recommends New Performance-Based System for GME Funding

System Would Be Funded Through Existing Excess IME Payments

April 14, 2010 03:45 pm News Staff

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(, 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.

Recognizing Superior Performance

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.

Increasing Emphasis on Outcomes

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.

Additional Recommendations

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

  • annually publish a report that shows Medicare medical education payments received by each hospital plus each hospital's associated costs;
  • conduct a workforce analysis to determine the number of residency positions needed in the United States, broken down by specialty;
  • report to the Congress on how residency programs affect the financial performance of their sponsoring institutions, whether programs in all specialties should be supported equally, and whether certain residency programs are sustainable without federal support; and
  • study strategies to increase the diversity of the health professional workforce -- including the proportions of underrepresented rural, lower-income and minority community members -- and report which strategies will achieve this pipeline goal.