The evolution of Medicare financing policy for graduate medical education and implications for PM&R: a commentary

Currently, the only explicit payers for graduate medical education (GME) in the United States are the federal and state governments. Of these, Medicare is by far the largest and most predictable payer. Through the prospective payment system, Medicare reimburses teaching institutions for both their direct and indirect costs associated with their GME programs. Because a well-educated workforce benefits patients covered by private, as well as public insurance, various proposals have been advanced to establish an all-payer pool to distribute the financial burden more equitably. Furthermore, Medicare policy affects physician supply. There is increasing recognition of potential physician oversupply, raising policy questions about the government's longstanding support of GME. In comparison with other specialties, physical medical and rehabilitation (PM&R) may receive more favorable treatment under future GME funding plans, for 2 reasons. First, under the formulas used by Medicare, PM&R training slots typically bring in more indirect revenue to teaching hospitals than is consumed in indirect expenses. This makes PM&R a relatively more attractive program to retain in the face of mandated reductions in training slots. Second, in many parts of the country, PM&R is not threatened by oversupply, making cuts less likely. Nevertheless, the high percentage of non-US medical graduates entering PM&R training may make the specialty vulnerable to future reductions in funded training slots.