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Published 4/1/2016
Augustine Saiz Jr, MD

Election Topic: GME Funding

This year, just like any other presidential election year, the candidates and the American public are faced with a myriad of issues. One that is unlikely to garner headlines—but that is critical to the future of health care—is Graduate Medical Education (GME) funding.

GME is the training that medical school graduates receive as residents in more than 1,000 different teaching hospitals nationwide. Overall support for GME comes from a number of separate public and private sources. The Department of Health and Human Services, through the Centers for Medicare & Medicaid Services (CMS), is the single largest funder of GME. Each year the government contributes approximately $9.5 billion from Medicare funds and $2 billion from Medicaid funds to help pay for GME. States also contribute to support GME; in 2009, more than 40 states paid $3.78 billion through Medicaid. Private shares also make up a small amount.

Medicare supports GME through two separate methodologies when it comes to calculating payments: direct payments, which pay the salaries of residents, and indirect payments, which subsidize other associated costs with running training programs. These payments are based on the number of residents the hospital trains and the number of Medicare patients the hospital treats.

The current state of GME
A record number of students have applied and enrolled in the nation's medical schools. In 2013, medical school applications grew by 6.1 percent to 48,014, surpassing the previous record set in 1996 by 1,049 students.

In response to the American Association of Medical Colleges (AAMC) initiative to avert future doctor shortages, since 2002 medical schools have increased the number of first year students by 21.6 percent. However, this has created a bottleneck, with more medical school graduates vying for a stagnant number of physician training spots.

Currently, there are approximately 115,000 residency positions, with 18,705 total graduates from U.S. medical schools in 2015. Federal support translates to about $100,000 per resident per year. Including state Medicaid payments and the length of time that residents spend in training, the public investment per physician is $500,000 or more.

Amid efforts to reduce federal spending, however, GME funding faces the possibility of continued cuts and changes. In 1997, the Balanced Budget Act placed a limit on the number of Medicare-supported GME residency spots, tied to the number of residency spots hospitals reported in 1996. This cap on Medicare-supported residency spots is still in place today.

In 2010, the National Commission on Fiscal Responsibility and Reform recommended reducing both direct and indirect GME payments, and in 2014, President Obama proposed targeted cuts to GME funding. Congress, however, did not act on either of these proposals.

Recent legislation
Training Tomorrow's Doctors Today Act (H.R. 1201) (Introduced in 2013):

  • Addresses both short- and long-term workforce demands by increasing the number of Medicare-supported residency positions.
  • Increases the number of Medicare direct graduate medical education and indirect medical education slots by 3,000 each year over the next 5 years.
  • Requires the HHS secretary to submit to Congress an annual report on Medicare GME payments.
  • Requires a Government Accountability Office (GAO) study identifying physician shortage specialties.
  • Requires a GAO study on strategy for increasing health professional workforce diversity.
  • Allows one-third of new residency slots to be available to teaching hospitals training over their cap; the remaining slots would go to programs below their cap.

The bill was introduced by Rep. Aaron Schock (R-IL) and Rep. Allyson Schwartz (D-PA).

Resident Physician Shortage Reduction Act of 2015 (S. 1148 and H.R. 2124):

  • Increases by 15,000 the number of Medicare direct graduate medical education and indirect medical education slots by 3,000 each year between 2017 and 2021.
  • Requires the National Healthcare Workforce Commission to submit its report to Congress by Jan. 1, 2018, identifying physician shortage specialties.
  • Requires a GAO study on strategy for increasing health professional workforce diversity.

The Senate version of the bill was introduced by Sen. Bill Nelson (D-FL), Sen. Charles Schumer (D-NY), and Sen. Harry Reid (D-NV). The House of Representatives version of the bill was introduced by Rep. Joseph Crowley (D-NY) and Rep. Charles Boustany Jr, MD (R-LA).

Although these bills are no longer in Congress, further legislation is expected.

With the growing elderly population, the demand for physicians has intensified and there are areas of the country already experiencing doctor shortages. The AAMC predicts that by the year 2025, the United States will face a shortage of 46,000 to 96,000 physicians. These shortages will be in both primary and specialty care, with specialty shortages being particularly large. Considering that it takes 5 to 10 years to train a doctor, these shortages pose a real risk for patients and need to be addressed now.

GME funding represents an important component of the multifaceted approach needed to address the impending physician shortage. It is estimated that additional federal support to train at least 3,000 more doctors a year is needed and can be achieved by lifting the cap on federally funded residency positions. Additionally, proposed cuts to federal support for major teaching hospitals would result in a loss of nearly 73,000 full-time jobs and $654 million in local and state revenue.

Patients in the future will require both primary and specialty care to optimize their health. It is important that we address the situation now and seek answers from our presidential candidates to prevent a decline in society's health due to lack of access to physicians.

Augustine Saiz Jr, MD, is a PGY-1 resident at UC Davis Medical Center. He can be reached at amsaiz@ucdavis.edu

A Short History of GME: From 1889 to Today
GME's history in the United States dates back to 1889 when Johns Hopkins Hospital opened the country's first residency program. In 1914, the American Medical Association (AMA) instituted a program of internship approval and published a list of hospitals approved for the education of physician interns. A follow-up document, known as the "Essentials of Approved Residencies and Fellowships," was published in 1928.

In 1939, the American College of Surgeons (ACS) published its own residency education standards. In 1953, the AMA and ACS collaborated to form the Next Conference Committee, which determined standards of residency.

The GME system as it is known today was created in 1965 when Congress established the Medicare Bill, which created public support for GME and made it a public policy issue. In 1981, the Accreditation Council for Graduate Medical Education (ACGME) was formed and became responsible for GME programs.


  1. Health Policy Brief: Graduate Medical Education. Health Affairs, August 16, 2012.
  2. The Complexities of Physician Supply and Demand: Projections from 2013-2025. AAMC, March 2015.
  3. Medical School Applicants, Enrollment Reaches All-time Highs. AAMC October 21, 2013.
  4. Rye B: Assessing the Impact of Potential Cuts in Medicare Doctor-Training Subsidies. Bloomberg Government Study February 28, 2012.
  5. Proposed Reductions in Medicare IME Payments to AAMC Teaching Hospitals: National and State Economic Impacts. AAMC February 2011.
  6. Centers for Medicare and Medicaid Services