Medicare:

Graduate Medical Education Payment Policy Needs to Be Reexamined

HEHS-94-33: Published: May 4, 1994. Publicly Released: May 12, 1994.

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Pursuant to a congressional request, GAO reviewed Medicare financing for graduate medical education (GME), focusing on: (1) how Medicare compensates hospitals for GME costs; and (2) the extent of Medicare's support for primary care and nonprimary care physicians' GME.

GAO found that: (1) Medicare pays for about 29 percent of total GME direct costs, which totalled $1.46 billion in 1992; (2) although Congress modified Medicare's payment methodology in 1985 and 1986 to promote primary care training programs, Medicare funds are mostly used to support nonprimary care training; (3) the extent to which Medicare pays for primary and nonprimary care training has never been analyzed; (4) 60 percent of interns and residents received training in nonprimary care fields and 55 percent of Medicare GME payments were associated with nonprimary care training costs; (5) 40 percent of interns and residents received training in primary care fields and 45 percent of Medicare GME payments were associated with primary care training costs; (6) when it accounted for physicians who trained in primary care and entered nonprimary care fields, the proportion of nonprimary care physicians rose to 75 percent; and (7) the authority of hospitals to determine community needs and Medicare GME payment allocations may need to be reassessed as the need for primary care physicians increases.

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