Graduate Medical Education: Reflection of Past and Present Trends

Presentation by: Danielle Maholtz, COSGP National Medical Education Representative, Gabrilelle Rozenberg, COSGP National Legislative Affairs Representative, and Fritz Stine,  OMS-II UP-KYCOM
Written by: Daniel Krajcik, OU-HCOM

Brief History         

Federal funding of GME first started when the GI Bill was enacted in 1944, but was officially transitioned into a payment through Medicare in 1965, where a retrospective cost-based reimbursement for inpatient stays was enacted. This funding of GME was never intended to last long term, and was initially intended to only cover costs associated with Medicare patients. In this initial model, only Direct GME costs (DGME) were covered by Medicare – this includes resident salaries and is now calculated based on a per-resident amount (PRA). This model was modified in the 1980’s when the Indirect Medical Education (IME) funding stream was developed. The theory behind the development of IME costs is that teaching hospitals incur additional costs just by being a teaching hospital and having residents. IME was intended to help offset some of these additional costs to the hospitals. Both of these Medicare funding streams are tied to the institution’s Medicare patient volume.  These streams were developed at a time when hospitals served as the main site for physician training and GME monies are still primarily distributed to teaching hospitals, meaning most residents are trained in hospitals despite the fact that many go on to work in outpatient facilities. Also at this time, the switch to large health system focused training led to the development of OPTIs, where Osteopathic Medical Education was, and still is, run in consortiums with Osteopathic Medical Colleges, hospitals, and community based healthcare facilities.

The Balanced Budget Act (BBC) of 1997 was a major milestone in GME, where allopathic and osteopathic residency slots were capped at 1996 levels, meaning no more additional slots would be paid for by Medicare beyond what they had at the time (Note slots are still limited by this law today). Hospitals could, however, form entirely new residency programs where their cap would be limited by the maximum amount of residents within a five-year period at the end of their first five years in existence. It is also important to know that payment through Medicare severely limited the amount of funding to children’s hospitals, but this was partially fixed through the Children’s Hospital GME (CHGME) Program in 1999 and later the State Children’s Health Insurance Program (sCHIP).


In 2014, the Affordable Care Act (ACA) created a $230 million Teaching Health Center GME program in an effort to expand primary care training. In total, the annual federal spending exceeds $15 billion with Medicare and Medicaid as the largest contributors ($9.7 and $3.9 billion dollars, respectively) followed by the Veterans Health Administration and HRSA.  Despite the cap imposed in 1997, many hospitals have expanded their teaching programs and added nearly 17,000 slots since then, through private donations and grants found outside the usual government beneficiaries.

In 2012 the Institute of Medicine (IOM) Committee on Governance and Financing of GME was chartered to address several current issues: including, but not limited to, mismatch between the health needs of the community and the specialty make-up of the physician workforce, the geographic maldistribution of physicians, and the growing gap between new physician’s knowledge and the competencies required for modern medical practice. Recommendations were made to continue using Medicare as a primary source of funding, but to also modernize the GME system to answer these growing issues we face today.

Moving forward from here, despite the cap, we still see first year residency spots growing steadily. Importantly, there are roughly 7000 more residency spots than applicants each year, but this still doesn’t address resident’s choice to practice in primary care or underserved areas. Medicare is still directly funding teaching hospitals, where only about 50% of primary care residents train. The Health Resources and Service Administration (HRSA), further backed by the ACA, is currently assessing workforce needs on a long-term basis to make recommendations both to congress and the senate.

There may be LOTS of changes that we see over the next few years coming from medical schools, GME programs, and the government. Government mandates in the near future will strongly influence where and what type of residency programs are formed, while 12 medical schools (one of which is Osteopathic, 11 are AMA Transformative Medical Schools) are starting to look into new ways to transform Undergraduate Medical Education (Competency-based systems) to meet the needs of the American population today and the future.