Complexity and uncertainty in financing graduate medical education

The current sources and structure of graduate medical education (GME) financing policies are being challenged. To foster understanding of these challenges, the author explains the current GME financing system and explores the impacts that various policy changes and legislation under consideration would have on residency programs and the health of already financially stressed teaching hospitals. Specifically, the wide variety of revenue sources (mostly third-party payers) are discussed, particularly the present Medicare direct graduate medical education (DGME) payments and indirect medical education (IME) adjustment payments, and their policy implications. The author concludes that a serious problem in advocating a new approach to the financing of GME (which would focus on changes in Medicare support) is the absence of a common vision, not only among policymakers but also within the academic medical community. Too much energy has been expended on how GME and the special missions of teaching hospitals should not be funded, and not enough attention focused on how to achieve a dependable source of revenue to help finance them. The public policy challenge is how to sustain Medicare's traditional support for GME in the face of intense pressure to "save" Medicare through fundamental reforms.