The Institute of Medicine’s Committee on the Governance and Finance of Graduate Medical Education released its report last summer(1), proposing major reform and prompting strong and divergent reactions from a number of stakeholders. Amid ongoing debate, Congress is now seeking broad input as it prepares to deliberate the IOM recommendations(2). Clearly, much is at stake.
Goals and Context
As a member of the IOM committee, I commend the Co-Chairs for bringing a diverse and sometimes divergent group of individuals to consensus about such complex and controversial issues. A key part of this process was gaining agreement on a set of goals that the committee wished to advance - goals that could then anchor discussions about potential recommendations. Our goals included producing a better-prepared physician workforce, encouraging innovation, providing transparency and accountability, clarifying the public policy goals for GME funding, optimizing the use of GME funds, and mitigating any negative effects of transition to a new system. The committee’s overarching objective was to support the “triple aim” of improving individual care and the health of populations at an affordable cost.
Developing a common understanding of the current context was also important. A number of observations were influential in shaping the recommendations, including the following:
- Forecasting the need for physicians is historically unreliable and further complicated by changing models of health care delivery. Experts draw different conclusions even about the sufficiency of today’s workforce.
- Factors and levers outside of GME could wield much greater influence on the specialty mix and geographic distribution of practicing physicians than GME itself.
- The decades-old statutory formulas determining Medicare GME payments are inflexible, inequitable, and exceedingly complex. They lack incentives or rewards for elevating the quality of GME beyond the threshold for maintaining accreditation.
- The net financial impact of GME programs on the institutions that sponsor them is not well understood. Despite a cap on Medicare-funded slots, the number of GME trainees in ACGME-accredited programs increased by 17.5% from 2003 to 2012, indicating that GME expansion isn’t completely dependent on additional federal funds.
- Entitlement funding for GME has been maintained for decades, but continues under increasing legislative threat. Two respected analyses indicated substantial “overpayment” of IME (vs. the “empirically justified” amount), and some economists have challenged the need and appropriateness of public funding for GME.
The Recommendations
The committee proposed fundamental changes linked to the idea that public funding can be used to leverage better outcomes of GME. Our core recommendation provides for preserving the current amount of funding (adjusted for inflation) for at least a decade, allowing time to make improvements and document value before another reassessment of funding is undertaken.
The second major recommendation is that GME funding should transition from a cost-based reimbursement to a performance-based payment model—gradually, and after an adequate foundation is laid. Paying for the “product” of GME, rather than the process, makes sense for several reasons: it aligns with trends in health care reimbursement overall, incents institutions to enhance both the quality and efficiency of GME, and provides a mechanism for addressing national or local needs (such as geographic and specialty distribution). Also, this approach encourages much needed innovation and research.
Other key elements of the proposal include updating the methodology for distributing GME funds, with phased implementation to mitigate negative impact on institutions that would sustain a funding cut. An “Operational Fund” would provide support to organizations sponsoring GME while a “Transformation Fund” distributes funds to incentivize, facilitate and support innovation. Knowledge gained from the resulting research and pilot programs would be essential for designing the outcomes-based funding methodology.
The committee’s proposal for governance involves a Policy Council housed in the Office of the HHS Secretary. This group would continually evaluate the impact of changes and results of new research, and determine necessary course corrections. A counterpart GME Center within CMMS would oversee funds distribution and data collection, technical support, and conduct of pilots and demonstrations.
The Vision: What Can These Recommendations Accomplish?
In the first phase, funding for Children’s Hospitals and Teaching Health Centers would become secure through incorporation into the Medicare payment model. A new payment methodology would achieve greater equity and simplicity, and its structure would make arguments about “empiric justification” for IME moot. Directing GME funds to the sponsoring organization (rather than to affiliate sites) would strengthen accountability and empower those responsible for program quality.
Unfortunately, teaching hospitals on average would experience a reduction in baseline revenue through the proposed “Operational Fund”, though some would likely receive increased funding as historic formula-based inequities are eliminated. “Transformation funds” would supplement the baseline “Operational Fund” allocations to many GME-sponsoring organizations and would support innovation, new slots (where clearly justified), and the development of empirical data to guide Phase II (including possible GME payment incentives). A critical task for Phase I would be determining the outcomes of GME that should be prioritized, and how to measure them.
In Phase II the “Operational Fund” would distribute performance-based payments to drive continuous improvement and better align GME with societal needs. Ongoing R&D supported by the “Transformation Fund” would guide improvements in GME. The system would be flexible, informed by a continuous stream of outcomes data, with the potential to adjust payment methodology as needed. Gradual shifts of positions across sponsors and specialties would occur in order to maximize outcomes.
What Next?
The current set of recommendations certainly isn’t perfect. Consensus processes, especially focused on such complex issues, are unlikely to result in anyone’s favorite set of recommendations. As a group we struggled with what is “desirable” vs. what is “possible”, and another committee might well have come up with something quite different. Nevertheless, we now have a carefully considered and extensively vetted set of ideas, informed by the available data.
Initial responses characterized by sharp rhetoric have fortunately given way to more constructive debate. Criticism of the IOM report has centered on the idea that a stable envelope of overall GME funding would force a significant reduction in hospitals’ current allocations in order to support R&D, Children’s Hospitals, and a new governance structure. Deep concern about potential revenue losses for teaching hospitals is understandable as growing financial pressures from several directions threaten to undermine core missions and constrain essential services. Could a temporary infusion of additional funds address this concern and provide a path forward to achieve the goals that so many stakeholders agree on?
Conclusion
To the extent that this IOM report is focusing greater attention on the importance of GME and stimulating ideas about how to improve GME, it has already added value. However, the real work in translating ideas into action and accomplishing positive change lies ahead.
The Macy Foundation provided a key stimulus (and considerable support) for the IOM GME committee, after sponsoring reports on GME in 2010 and 2011 that called for substantial reform. The Foundation is positioned to have a continuing impact on GME, especially since an important theme emerging from each of these conferences is the need for vigorous research and innovation in GME. As the only foundation exclusively devoted to advancing health professions education, Macy can play an important role—along with AAMC, ACGME and other organizations—in helping to catalyze the enormous body of work that needs to be done.
Note: Opinions expressed here represent a personal perspective and do not necessarily reflect the views of the Macy Foundation, Partners HealthCare, or Harvard Medical School.
Sources:
(1): http://www.nap.edu/catalog/18754/graduate-medical-education-that-meets-the-nations-health-needs
(2): http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/letters/20141208GMELetter.pdf