More on Reimbursement

Medicare overpayments for graduate medical education could total $1.28 billion annually

Savings produced by capping the teaching health center graduate medical education rate would allow the THC program to expand tenfold, research shows.

Jeff Lagasse, Associate Editor

If Medicare capped funds for graduate medical education at the rate of $150,000 per resident, the move would free up more than $1 billion a year -- and Medicare could use the savings to address the doctor shortages by specialty and in certain parts of the country.

That's the main finding of a JAMA Internal Medicine study published this week, which placed Medicare overpayments at up to $1.28 billion annually. The authors said the funds could be redirected and used to strengthen the physician workforce in underserved areas.

They examined cost reports to calculate the graduate medical education, or GME payments to hospitals from 2000 through 2015. They also calculated the potential savings to Medicare if GME payments were capped at the rate of $150,000 per resident -- the GME rate used for the Teaching Health Center Graduate Medical Education (THC) program.


ME payment rates to hospitals in 2015 varied significantly, with 25 percent of hospitals receiving less than $105,761 while 25 percent received more than $182,233 per resident, the study revealed.

Nearly half of teaching hospitals received more than the $150,000 per resident rate; and in 2015, Medicare paid out an estimated $1.28 billion in payments that exceeded the teaching health center graduate medical education rate.

The teaching health center program was established to help ease shortages in primary care doctors and dentists in underserved areas. The program trains residents in community-based settings, such as community health centers. Residents trained using this model are more likely to remain in primary care and practice in rural and underserved regions of the U.S.

A previous study by the same team of researchers found that Medicare GME policies have led to imbalances, with many urban teaching hospitals in certain parts of the country receiving a disproportionate share of GME funding. Many residents who train in these big city teaching hospitals remain in urban settings -- but that has left rural and underserved areas struggling with physician shortages.

The current research suggests that savings produced by capping hospitals at the THC GME rate would allow the THC program to expand tenfold. It's an especially pressing concern, since the THC program will run out of funding on Nov. 21.

The authors acknowledge the limitations in the study, which did not look at how much it actually costs to train residents, or hospital characteristics that might make it more expensive to provide GME. More comprehensive approaches to reform would involve restructuring payment and increasing accountability for the programs, they said.


In November 2018, a federal audit conducted by the Department of Health and Human Services' Office of the Inspector General found that hospitals are fraudulently claiming GME funds.

The agency uncovered $4 million in excess Medicare GME reimbursement, mostly among teaching hospitals that claimed reimbursement for residents at other hospitals. Some hospitals also counted residents twice.

According to a report earlier that year commissioned by the Association of American Medical Colleges, a 1997 cap on Medicare support for GME has stymied the necessary commensurate increases in residency training, creating a bottleneck for the physician workforce.

Twitter: @JELagasse

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