Fireside Gchats: $11B Cut in Residency Funding?

by Adrianna McIntyre and Karan Chhabra

In addition to reading about, blogging about, and—at least in Adrianna’s case—formally studying health policy, the two of us sometimes actually chat about it, too. We want to try something new: “Fireside Gchats” will be a space for us to dump those conversations, to engage other people in the discussion. For the record, we’re (mostly) normal human beings and don’t actually fact-check ourselves as we chat—but we’ve edited in source links and lightly revised for style/content.

This chat’s about the $11B in cuts—$10.98B if we’re quibbling—over ten years to graduate medical education proposed in the budget President Obama released on Wednesday.

Haven’t heard about it? We hadn’t either, until Karan received a med student newsletter from the AMA. It’s detailed in the budget’s narrative about health spending on page 37 [1], and the line item can be found on page 196.

Karan: Oh boy. There’s an $11B cut in residency funding in the White House Budget. This was also one of the years with the highest (if not the highest) number of M4s who didn’t match. Which is great for, you know, doctor shortages.

Adrianna: I’m going to say something that you and medical students everywhere will find incendiary, just to toss it out there: if we cut from the specialties, thereby inducing more residents (proportionally) into primary care, is this so bad? Because we don’t have a doctor shortage. You know better. We have a primary care provider shortage and a maldistribution of the docs we do have.

Karan: Two things:

1) I don’t think the way to support primary care is to get more people to “settle” for it. People who don’t match will often do a year of research or “prelim” residency in another field till they can reapply the following year and get into the specialty they originally wanted. So, there’s no guarantee that you’d get any more people in primary care by making it harder to match into other fields.

2) It’s not just a PCP shortage. There’s a maldistribution of PCPs and specialists both. If someone wanted to practice a specialty in an underserved area, and can’t because they didn’t match into that residency, that’s much more damage incurred than the benefit of an additional PCP in an area that’s already medically well-served.

Adrianna: Yes, there’s a maldistribution of PCPs and specialists both, and I agree that the issue of how to incentivize docs to work in underserved regions is maddeningly tricky, but I’ve never heard someone say we have a shortage of specialists. I’m not trying to suggest that this is a net good. But it’s worth asking the question: how are we going to change our PCP-to-specialist ratio if we don’t change the residency slots?

Karan: I meant maldistribution of specialists more so than shortage, sorry. How do we change the ratio? Make primary care more attractive: improve reimbursement, shorten training, decrease medicolegal headaches. Get rid of the stigma that the best students are “too smart” for primary care. Train them as leaders of interdisciplinary teams.

Adrianna: But what does that do if, ultimately, they’re being sorted into the same old residency slots? I agree wholeheartedly that we need to make primary care more attractive, but I don’t think that’s enough to motivate a cultural shift in US medicine (she says with no data whatsoever).

Karan: Actually, despite the fact that people don’t match, there are still residency slots that go unfilled. Many in primary care. I think reimbursement changes attributable to Obamacare are making a difference; PCPs in private practice are reporting higher salaries these days, and very recently more students are entering the field.

Adrianna: Ah, I didn’t realize that about the unfilled slots. Interesting. Are there reimbursement updates besides the ones under Medicaid? Because those are designed to be phased out at the end of 2014—which isn’t mentioned often and isn’t going to be well-received (the implication seems to be that states can pick up the slack if they so desire after that).

Karan: Great question. From this link, looks like they boosted funding in Medicare too.

Adrianna: Yeah, I just caught that, too. What this really speaks to is just the fact that the feds are pretty limited in what they can do about reimbursement rates—for primary care or anything else—outside Medicare and Medicaid, though one might hope that trends in Medicare take hold in private insurance. But still, about those cuts. Oof.

To provide some necessary context, back-of-the-envelope calculations suggest that this represents a 7-10% cut in anticipated residency (also known as graduate medical education, or GME) funding for the next decade. The budget asserts that these are savings that can be achieved by “better align[ing] graduate medical education payments with patient care costs,” though we aren’t entirely certain what that means, even after reading the more comprehensive narrative offered (see footnote below). One question this forces us to grapple with is whether residency slots should be increasing in number, considering demand expected to follow the ACA’s coverage expansion—and if so, what this proposed cut to funding means.

Residency programs rely on funding from Medicare to operate, and they’re a major target of budget cuts and deficit reduction. A bill is in Congress to increase funding for residency spots, but it’s far from certain to pass. And this latest news on the cuts in Obama’s budget has gotten almost no press coverage whatsoever. Graduate medical education and the primary care shortage are both hugely important issues—and if we want to talk about policy solutions, it’s irresponsible to talk about either one in isolation; both are deeply entangled in each other and broader arguments about the future of our health care system.  We really ought to be having these conversations more often, and at a louder volume.


1. Excerpted from p. 37 of the budget: Better Align Graduate Medical Education Payments with Patient Care Costs. Medicare compensates teaching hospitals for the indirect costs created from residents “learning by doing.” The Medicare Payment Advisory Commission (MedPAC) has determined that these Indirect Medical Education (IME) add-on payments are significantly greater than the additional patient care costs that teaching hospitals experience. This proposal will modify these payments and save approximately $11 billion over 10 years. 

Further Reading: 


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Adrianna works in clinical research and is a graduate student in public policy & public health at the University of Michigan. Follow her on Twitter @onceuponA.

Karan is a first-year student at Robert Wood Johnson Medical School and Duke graduate who previously worked in strategic research for hospital executives. Follow him on Twitter @KRChhabra.


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