On July 29, 2014, the Institute of Medicine of the National Academies (IOM) released a report on Graduate Medical Education (GME), entitled Graduate Medical Education That Meets the Nation’s Health NeedsThe 2001 IOM report, Crossing the Quality Chasm: A New Health System for the 21st Century, sparked debate and policy changes on health care quality that initiated changes in the law and payment structures relating to the health care system. There is every reason to believe that the GME report will have a similar impact on academic medical centers and teaching hospitals.

The report is the result of an independent review of the governance and financing of the graduate medical education system in the United States.

The 21 member IOM committee found that despite billions of public dollars being spent on GME since its inception in 1965 ($15 billion in 2012 alone, approximately $9.7 of which came from Medicare), there is minimal transparency or accountability in the GME financing system for producing the types of physicians that the nation needs. The committee calls for reforms in the way Medicare GME funds are allocated and increased oversight and accountability.

To reform the Medicare GME system the committee recommends:

  • A 10 year transition.
  • Keeping funding at same level.
  • Rewarding performance.
  • Phasing out the current payment system.

The committee recommends establishing a GME Policy Council in the Office of the Secretary of the Department of Health and Human Services and a GME Center within the Centers for Medicare and Medicaid Services to respectively develop policy and manage operations.

The committee also recommends allocating Medicare GME funds to two distinct subsidiary funds:

  • A GME Operational Fund to finance ongoing resident training activities.
  • A Transformation Fund to finance development of new programs, infrastructure, performance methods, payment demonstrations and other priorities identified by the GME Policy Council.

Some additional takeaways:

  • Statutes and regulations governing GME date from the start of Medicare in 1965 and still focus on hospital-based physician training.
  • Rules do not reflect changes in health care system.
  • The system needs to change to support more training in settings outside the hospital in order to treat chronic disease and provide preventive care.
  • Legislative action is necessary to change GME financing.

The committee’s findings and recommendations present another strategic challenge (and opportunity) for academic medical centers and teaching hospitals in this dynamic health care era.

The review was initially requested by the Josiah Macy Jr. Foundation and was supported by the ABIM [American Board of Internal Medicine] Foundation, Aetna Foundation, The California Endowment, California HealthCare Foundation, The Commonwealth Fund, East Bay Community Foundation, Jewish Healthcare Foundation, Kaiser Permanente Institute for health Policy, Missouri Foundation for Health, Robert Wood Johnson Foundation, and UnitedHealth Group Foundation, Health Resources and Services Administration, the Department of Veterans Affairs, and 11 senators.

The report can be accessed on the IOM’s website.