Capping resident payments could save Medicare more than $1.2B
Medicare may be shelling out an extra $1.2 billion in overpayments for graduate medical education (GME), which trains medical residents, according to a study published in JAMA Internal Medicine. Some of those savings could be shifted to address a shortage of physicians in some areas, according to study authors from George Washington University.
Researchers reviewed Medicare hospital cost reports from 200 to 2015 to calculate GME payments per resident full-time equivalent (FTE) for each of 1,623 teaching hospitals. In 2015, Medicare made $12.5 billion in GME payments to teaching hospitals.
There are two ways Medicare provides payments for GME: direct payments, based on Medicare patient load, and indirect payments, which supports the highest cost of patient care associated with teaching based on inpatient reimbursements. Despite this structure, there are shortages in primary care and rural areas, the study pointed out.
The findings come at a time when reforms to GME are being recommended and considered, such as from the Institute of Medicine, which suggest consolidating GME payments into one and putting 30% of the payments into a transformation fund.
Researchers looked at the potential savings if a $150,000 FTE cap to hospital payments was put in place at 2015 levels. The proposed cap is the same recommended by the Teaching Health Centers GME.
From 2000 to 2015, the mean per-resident GE payment rose from $117,323 to $138,938, with the increase largely coming from indirect payments. According to the researchers, Medicare GME payments per resident FTE rose nearly 20% over the time period. The Medicare patient load was about the same, but inpatient costs rose. In 2015, 573, or 47%, of teaching hospitals received more than $150,000 per FTE.
“This raises the question of whether linking GME payments mechanically to inpatient reimbursements without assessing the association with teaching costs is sensible policy,” first author Candice Chen, MD, MPH, of the Milken Institute School of Public Health at George Washington University, and colleagues wrote. “If Medicare GME were capped at the $150 000 rate of the Teaching Health Centers program, $1.28 billion would have been available for redistribution to address other US health workforce needs.”
However, the cap is merely a “limited reform,” the researchers noted, and more comprehensive solutions in GME payment structures should be considered.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."