Background GME Training Following medical school, GME training provides the clinical training  required for a physician to be eligible for licensure and board certification  to practice medicine independently in the United States. Physicians  pursue GME training within a variety of specialties or subspecialties.  Initially, these physicians, known as residents, go through GME training  for a specialty—such as internal medicine, family medicine, pediatrics,  anesthesiology, radiology, or general surgery. Of the specialties, family  medicine, internal medicine, and pediatrics are generally considered  primary care specialties. However, a resident who trained in a primary  care specialty may not ultimately practice as a primary care physician.  Some residents may choose to subspecialize and seek additional GME  training. For example, a resident who completed an internal medicine  GME training program may decide to subspecialize in cardiology. The  percentage of residents who later subspecialize varies based on specialty  type. To operate and maintain GME training programs, teaching sites, including  hospitals, health centers, medical schools, and other settings, incur  medical education costs that can generally be categorized into two  groups—direct costs and indirect costs. Direct costs include, for example,  residents’ salaries and benefits; compensation for faculty who supervise  the residents; and overhead costs. Indirect costs are the portion of higher  patient care costs that teaching sites are thought to incur as a result of  training residents, such as increased diagnostic testing and procedures  performed. (See table 1.) While they may generate costs, residents may also produce financial  benefits for a teaching site. Teaching sites may incur lower personnel  costs because residents perform services at lower pay than more  experienced clinicians or other health care professionals. And, residents  may have more flexibility to work long or irregular hours. For example,  residents can provide on-call services in lieu of fully trained physicians at  a much lower cost to the teaching site. Residents may also increase the  efficiency and productivity of faculty with whom they work by, for example,  enabling the faculty to increase the number of patient services for which  they can bill. Funding of GME Training  through Federal Programs  and State Medicaid  Agencies Within the federal government, funding of GME training is fragmented.  Most federal GME funding is provided through five programs—Medicare  GME payments, Medicaid GME payments, HRSA’s CHGME and  THCGME payment programs, and the VA’s physician GME training  programs. For most of the programs, the funding is formula-driven and  essentially guaranteed if eligibility requirements are met. Each program  uses a different methodology to determine the amount of payments to  funding recipients, though there are some similarities between programs. GME training programs generally must be accredited by an independent  organization in order to receive federal funding. Medicare GME Payments Medicare—a federally financed program that provides health insurance  coverage to people age 65 and older, certain individuals with disabilities,  and those with end-stage renal disease—pays for GME training. It does  so through two mechanisms—Direct Graduate Medical Education  (DGME) payments and Indirect Medical Education (IME) payments—both  of which are formula-based payments set by statute. These payments  are made to reflect Medicare’s “share” of the costs associated with  providing GME training. Medicare DGME payments are made to cover a hospital’s direct costs  associated with GME training, such as stipends, supervisory physician  salaries, and administrative costs. The payments are the product of a  hospital’s weighted 3-year average number of FTE residents, subject to a  cap; a per resident amount (PRA); and the hospital’s Medicare patient  load—the portion of a hospital’s total inpatient bed days that were paid for  by Medicare. In part to constrain spending, the Balanced Budget Act of  1997 capped, for most hospitals, the number of FTE residents that  hospitals may count for DGME and IME payment at the number of FTE  residents in place in 1996. Rather than reimburse teaching hospitals for actual direct costs incurred  each year from training residents, DGME payments are calculated using  a PRA. A hospital’s PRA is based on its direct costs and its number of  FTE residents when the PRA was set in a base year, which is fiscal year  1984 for most hospitals, and is adjusted annually for inflation. Congress  set a base year for calculating DGME costs that would incentivize local  providers to keep down their costs and for local communities to assume a  greater role in the costs of medical education. After fiscal year 1984, for  hospitals that did not previously have any approved residency programs  or did not participate in Medicare but began doing so, a PRA for the  hospital is established using direct costs the hospital reported that it  incurred on its cost report during its base year, which is generally the first  cost reporting year it began training residents. In general, each hospital  has two separate PRAs—a primary care PRA and a nonprimary care  PRA—whereby teaching hospitals receive slightly higher payments for  residents training in primary care specialties. Medicare IME payments, which are made to cover a hospital’s indirect  costs associated with GME training, are an add-on to the hospital’s  Medicare reimbursement for each discharge. IME payments are not  based on teaching hospitals’ actual indirect costs. Rather, the adjustment  is based on the number of FTE residents per hospital bed, referred to as  the resident-to-bed ratio, and a statistically estimated factor that  represents the incremental patient care cost due to providing GME  training. Federal and State Medicaid  GME Payments Medicaid is a joint federal-state program that finances health care  coverage for low-income and medically needy individuals. While there is  no federal requirement for state Medicaid programs to fund GME training,  states may elect to recognize GME training costs as a component of the  overall costs incurred by hospitals. And, payment for these expenses is  shared by the federal government through federal matching funds. GME  training costs may be reimbursed as an add-on adjustment to the state’s  payment rates to eligible providers or as an enhanced payment made as  a lump sum supplemental to the initial payment rate. CHGME Payment Program Because children’s hospitals treat very few Medicare patients and  consequently receive few GME payments from Medicare, the CHGME  Payment Program was created in 1999 and reauthorized through fiscal  year 2018 to support pediatric and pediatric subspecialty GME training in  freestanding children’s hospitals. Unlike Medicare GME, which is a  mandatory spending program, the CHGME program relies on  discretionary spending. And, the total amount of payments available to  each hospital varies from year to year depending on the total amount of  funding made available from annual appropriations and the total number  of hospitals that participate. The CHGME program makes both DGME  and IME payments where one-third of program funds are allocated for  DGME payments and two-thirds for IME payments. Both payments are  calculated using formulas similar to Medicare. For example, the  program’s DGME payments are based, in part, on the number of FTE  residents, subject to a cap, and an updated national standardized PRA.  And, the IME payment is based, in part, on an estimated factor that  represents the incremental patient care cost due to providing GME  training, rather than the hospital’s actual indirect costs. THCGME Program The THCGME program was created under the Patient Protection and  Affordable Care Act and reauthorized through fiscal year 2017 to increase  the number of primary care residents who trained in community-based,  ambulatory patient settings. HRSA awards funds to eligible teaching  health centers for the purpose of covering both direct and indirect GME  costs of new or expanded community-based primary care residency  programs. HHS established an interim annual payment rate of $150,000  per resident until it establishes formulas for determining the payments. However, the payment rate for THCGME recipients may fluctuate over  time, depending on available appropriations, the number of eligible  applicants, and the number of FTE residents supported. THCGME  awards can supplement GME payments from other federal sources,  including Medicare, Medicaid, and CHGME, but recipients generally  cannot use funds to pay for the same portion of resident time that they  used to count toward funding in these other GME programs. VA GME Program GME training is a statutory requirement of VA to enhance the nationwide  supply of health care professionals and assists VA in the recruitment and  retention of staff at its medical facilities. Nearly all of VA’s GME training is  conducted through academic affiliations with medical schools and  teaching hospitals where residents from those institutions do clinical  rotations at VA medical facilities. VA provides financial support for GME training at its facilities in two  ways—disbursement payments to its academic affiliates and educational  support payments for its VA medical facilities. VA reimburses academic  affiliates through disbursement agreements to cover the costs of stipends  and benefits for the period of time that a resident serves in a VA medical  facility. Reimbursement is based on the number of FTE residents  completing a VA rotation and the approved per diem rate of the academic  affiliates’ stipend and benefit costs by residents’ postgraduate year level  of training. In addition, VA allocates a portion of VA-wide funding for  educational support using a formula that accounts for the number of FTE  resident positions and a per resident cost factor. According to VA officials,  the funding is used to pay for compensation of faculty and other staff,  overhead costs, and other costs necessary to host and manage the GME  training at VA medical facilities. Federal Oversight of GME  Funding Like its funding, federal oversight of programs that fund GME training is  fragmented. Federal agencies are responsible for the management and  oversight of their respective GME training program or programs. For  Medicare, CMS uses regional contractors—MACs—to process and audit  payments for health care items and services submitted by enrolled  Medicare providers on their annual cost report, including Medicare DGME  and IME payments. For example, MACs audit the number of FTE  residents that hospitals report on their annual cost report by reviewing  relevant rotation schedules. Hospitals claiming reimbursement for GME  training are also required to submit Intern and Resident Information  System (IRIS) files that provide data on each resident that the hospital  trained, including the resident’s specialty type, postgraduate year, and  proportion of time spent on rotation at each training site. CMS is responsible for broad oversight of the Medicaid program, while  states are responsible for the daily administration of their individual  Medicaid programs, including program integrity activities. In its broad  oversight role, CMS develops guidance and provides assistance to the  states. However, state Medicaid programs are not required to make GME  payments, and CMS has not established requirements or guidance  specifically related to Medicaid GME payments. Instead, CMS reviews  states’ Medicaid payments to providers, including GME payments, as part  of its review of Medicaid state plans. HRSA is responsible for the management and oversight of the CHGME  and THCGME programs. Specifically, it is responsible for determining  applicants’ program eligibility, making payments, and auditing those  payments. HRSA is also responsible for collecting information about, and  reporting on, the performance of the CHGME and THCGME programs. Oversight of GME training at VA medical facilities is shared between the  VA medical facilities and their academic affiliates. Through affiliation  agreements, academic affiliates provide for the central administration of  residents’ stipends and benefits. Academic affiliates are also  responsible for the overall quality of the GME training program,  monitoring all resident educational activities, obtaining and maintaining  accreditation, developing educational objectives and curriculum, selecting  residents, creating resident rotation schedules, and submitting residents’  schedules of educational activities to VA for reimbursement. VA has the  responsibility of overseeing and managing clinical training in VA medical  facilities, and must ensure that there are sufficient patient care  opportunities, educational infrastructure, and qualified teaching  physicians to accommodate trainees from the affiliates. Each VA medical  facility must also track the educational activities of all residents, including  the amount of time the resident spent training at its facility. Federal Agencies and  State Medicaid  Agencies Spent Over  $16.3 Billion on GME  Training in 2015, and  the Amount Spent Per  FTE Resident Varied Federal agencies and state Medicaid agencies spent over $16.3 billion on  GME training in 2015 to support direct and indirect costs of training. The  amount spent per FTE resident varied across programs, and the largest  variation across payment recipients and regions was within Medicare due  to variation in the values of factors used to calculate Medicare payment  amounts. Almost half of participants received payments from more than  one program, and the designs of federal programs may reduce the  potential for duplicate payments. Federal Agencies and  State Medicaid Agencies  Spent Over $16 Billion on  GME Training in 2015 to  Support Direct and Indirect  Costs of Training Federal agencies and state Medicaid agencies spent over $16.3 billion on  GME training in 2015 through five federal programs and 45 state  Medicaid agencies. Of this, the federal government spent $14.5 billion  through Medicare, Medicaid, VA, the CHGME program, and the THCGME  program. (See table 2). Most spending on GME training came from  Medicare, accounting for 71 percent of federal spending, with over $10.3  billion in payments to teaching hospitals. Medicaid spending accounted  for 16 percent of federal spending on GME training, or $2.4 billion. These  federal Medicaid funds matched an additional $1.8 billion that Medicaid  agencies in 45 states spent on GME training in 2015. (For information  about state Medicaid agency and other non-federal sources of funding on  GME training, see appendix I.) These payments supported both direct and indirect costs associated with  GME training, though data were limited for some programs. We  calculated that about one-third of Medicare payments were made to cover  the direct costs of GME training. Similarly, HRSA reported that one-third  of CHGME payments were made to cover direct costs. For the VA GME  program, we calculated that 44 percent of payments were made to  academic affiliates to reimburse them for resident salaries and benefits, a  category of direct costs. HRSA does not separate payments for direct  costs from those for indirect costs under the THCGME program. And, the  data we received from state Medicaid directors did not separate them,  though 8 of 45 states specifically reported paying providers for indirect  costs in addition to direct costs. Providers in all 50 states and the District of Columbia received payments  for training GME residents, but some regions received a notably higher  amount compared to others. In particular, federal agencies spent $5.47  billion ($97 per-capita) in the Northeast region, which represents 38  percent of total federal spending, compared with the West where federal  agencies spent $1.83 billion ($24 per-capita or 13 percent of total federal  spending). (See table 3). State Medicaid agencies in the Northeast also  spent significantly more on GME training than did agencies in other  regions. Agencies in the Northeast spent $1 billion ($18 per-capita),  whereas agencies in the West spent $120 million ($2 per-capita). Notably,  New York accounted for about half (48 percent) of nationwide state  Medicaid agency spending on GME and 86 percent of spending in the  Northeast. Overall, GME spending was somewhat more concentrated in  the Northeast than was the number of GME residents; in a May 2017  study, we found that 31 percent of GME residents were located in the  Northeast. The Northeast was the only region for which the percentage  of the GME spending in the region was higher than the percentage of  GME residents. Available data show that almost all spending on GME training (99  percent) went to recipients located in urban areas. However, it is likely  that more than 1 percent of spending was used to support training in rural  areas; data limitations in HHS and state Medicaid agency data preclude  calculation of the amount of spending on GME training in rural areas. The  data we received from HHS listed only the direct recipient of the  payments, such as a hospital or a medical school, which can arrange  rotations at other teaching sites that may be located in rural areas. Data limitations also preclude calculation of the overall amount of  spending on GME resident training in specific specialties, such as primary  care. With data that were available, we found: Of the 10,367 FTE residents that VA funded, 53 percent were training  in a primary care specialty. We also estimated that 52 percent of VA’s  spending supported primary care training. The THCGME program is intended to train residents in primary care,  with 100 percent of the $76.3 million used to support 630 primary care  residency positions. HRSA reported that 43 percent of the 11,667 trainees supported by  CHGME funds trained in general pediatrics or combined pediatrics  programs. HRSA did not report how much it spent on primary care  training, or the number of FTE residents training in primary care  specialties. Of the 87,980 FTE residents that Medicare funded, 44 percent were  denoted as primary care residents. However, Medicare is likely  supporting more residency positions than these data indicate, and  these residents are unlikely to be training in primary care. The  program counts each resident pursuing additional training, such as a  resident training in a subspecialty, as half of an FTE when calculating  DGME payments. The Amount Paid Per FTE  Resident Varied Across  Programs, and the Largest  Variation Across  Recipients and Regions  Was within Medicare We found that in 2015, the average amount that a program paid per FTE  resident ranged from $34,814 for Medicaid GME payments to $137,491  for the VA GME program. (See table 4.) Programs use different  methods to calculate how much to pay providers on a per resident basis,  thus payment amounts are not comparable across programs. For  example, Congress appropriated funding for the THCGME program for  each of the fiscal years 2011 through 2017 and eligible entities received  the same amount per FTE resident. In contrast, Medicare GME payments  to eligible entities are determined according to formulas that take many  factors into account, including the share of a hospital’s patients that are  covered under Medicare. Consequently, the amount that Medicare pays  recipients varies widely based on variation in the values of factors used to  calculate payments. Nationwide, hospitals received $116,997 on average  from Medicare for each FTE resident, and the middle 50 percent of  hospitals received between $85,478 and $150,610. Given the wide variation in overall Medicare per FTE resident payment  amounts by hospital, we examined variation among regions and states. Regionally, the average total Medicare per FTE resident payment  ranged from $127,503 in the Midwest to $87,172 in the West. (See  table 5.) Across individual states, the average total Medicare per FTE resident  payment amount ranged from $65,672 in California to $170,591 in  New Hampshire. (See fig. 1.) Some of this variation is due to significant variation in the values of  certain factors used to calculate Medicare DGME payments—specifically,  the PRA and Medicare patient load. (See table 6.) The Medicare PRA varies among recipients and across regions,  though to a lesser degree than the overall per FTE resident payment.  For example, the average PRA for the middle 50 percent of primary  care residents ranged from $87,962 to $117,144 per FTE resident,  compared to $85,478 to $150,610 for the overall per FTE resident  payment. The PRA also varied by region and, as with the overall  payment amounts, the average PRA was lowest in the West.  However, in contrast to the nationwide average per FTE resident  payment, which was highest in the Midwest, the recipients in the  Northeast had the highest average PRA. The Medicare patient load also varies across regions, which affects  DGME payments. Medicare DGME payment recipients in the West  reported an average Medicare patient load of 24 percent, which is  significantly lower than the 34 to 36 percent reported in other regions. A hospital’s Medicare patient load also affects Medicare IME payments  per FTE resident. A hospital’s IME payment is calculated by increasing  Medicare’s payments for inpatient services to a hospital by an IME  adjustment factor. Therefore, a hospital that received more Medicare  payments for inpatient services will receive a larger IME payment. About Half of GME  Program Participants  Received Payments from  More than One Program Over half (51 percent) of providers that participated in any of the five  GME programs received payments from more than one federal program.  For example, 69 percent of providers that participated in Medicare also  participated in another program, and 84 percent of CHGME awardees  participated in another program. However, in each case, these programs  provided most of these recipients’ total funding (74 percent and 66  percent respectively). In contrast, recipients of Medicaid or VA payments  also generally participated in another program, but received only 22  percent and 10 percent of their total funding for GME training through  Medicaid and VA, respectively. (See table 7.) Though the high portion of providers that receive payments from multiple  sources creates the potential for providers to receive duplicate payments,  this risk of duplication is reduced by the programs’ designs. The CHGME program was established for children’s hospitals  because they did not traditionally receive significant Medicare GME  payments. The THCGME program provides payments to outpatient facilities,  whereas residency training has been, in general, hospital based. VA only pays for residents’ time spent training at a VA medical facility,  and not for time residents spent training in non-VA settings that may  receive other federal payments for GME training. Medicare adjusts all DGME payments by the ratio of a hospital’s  patients covered under Medicare. CMS has not established requirements or guidance specifically  related to Medicaid GME payments, including how the payments are  to be calculated. However, 10 states adjust payments by the ratio of  a teaching site’s patients covered under Medicaid. GME Training Costs  Vary by Residency  Program  Characteristics, and  Teaching Sites Face  Challenges in  Measuring These  Costs GME training costs vary by program characteristics, such as size, type,  training setting, and age, and some training costs are more prone to  variation than others. Challenges exist in measuring and comparing GME  training costs due to a lack of standard cost methodologies across  teaching sites and some training costs being difficult to measure. Further,  little is known about how GME training costs relate to federal GME  funding. GME Training Costs Vary  by Program Size, Type,  Setting, Age, and Location According to literature we reviewed and experts we interviewed, GME  training costs vary by residency program characteristic, and some costs,  such as faculty teaching time, are more prone to variation than others.  Specifically, variation in training costs can be explained by one or more of  the following program characteristics: Program size: Larger residency programs may be more cost efficient  than smaller ones in that fixed costs, such as infrastructure and  program administration, can be spread out over a larger number of  residents. Therefore, adding another resident increases variable  costs, but lowers per resident fixed costs. Type of Specialty: Residency training in some specialties costs more  than others, and accreditation requirements are one of several factors  driving this variation. For example, compared to internal medicine  programs, accreditation standards for family medicine programs  require more hours of faculty involvement and higher faculty-to- resident ratios. Therefore, these residency programs may incur higher  per resident costs. The complexity of a specialty program also affects  its training costs—for example, subspecialty programs, such as  vascular surgery or gastroenterology, require additional GME training  or specialized equipment and will thus incur more training costs. In  addition, costs can be affected by variation in faculty compensation.  According to a 2013 analysis of available data on residency training  costs, the median compensation for attending physicians in academic  health centers ranged from $163,319 for family medicine to $336,136  for radiation oncology. Further, malpractice insurance premium  costs can vary based on the degree of surgical involvement, with  primary care specialties having the lowest premium costs and general  surgery physicians the highest. Type of Training Setting: GME training in outpatient settings, such  as community-based clinics, is considered less efficient and more  expensive than in inpatient hospital settings, according to reviewed  literature and experts we interviewed. One reason for this may be  differences in the models of teaching used in each of these settings.  According to one group of experts we interviewed, residents in  inpatient settings are part of teams that do rounds together, where  much of the teaching time involves one clinical teacher and a team of  residents, nurses, and other affiliated professionals. This method of  teaching may not be feasible in outpatient settings where teaching is  more often provided on a more expensive one-to-one basis.  Outpatient settings, particularly smaller ones, may also have to incur  more fixed costs relative to inpatient settings that may have more  facility space and other resources in place to meet accreditation  requirements. Location: Geographic location also drives the variation in training  costs. For example, resident salaries vary based on general salary  patterns across the United States. According to one group of experts  we interviewed, there is a range of compensation packages for  residents, and base salaries can vary from $35,000 to $55,000 per  year. Malpractice insurance may also vary by geographic location.  Further, rural training sites may incur higher costs because their  training may have to utilize multiple training sites—such as community  hospitals or rural health clinics—in order to meet accreditation  requirements for resident rotations and patient case-mix. The added  administrative work of coordinating with other sites to provide these  resources can be a challenge. Age of the program: Newer residency programs may have higher  costs than older, more established programs. According to some  GME experts we interviewed, the first year a teaching site operates a  residency program is more expensive because new programs may be  smaller and cannot spread out fixed costs. In addition, it can be  expensive for a new GME program to meet accreditation  requirements, such as required infrastructure and minimum faculty. Studies estimating GME training costs show these costs vary by program  characteristics. For example, we identified 10 studies that estimated GME  training costs; however, these studies were not comparable because they  focused on discrete programs with different characteristics, utilized  different methodologies, were conducted at different points in time, and  did not examine the same cost elements. Further, these studies are not  generalizable due to limitations in study methodology, such as small  sample sizes. And, given the age of some of these studies, they may not  be reflective of current GME training costs. Across the 10 studies we  reviewed, estimates of costs ranged from $35,164 to $226,331 per  resident. (See table 8.) The Medicare cost reports that hospitals submit annually to CMS, though  they have certain limitations, also suggest variability in residency training  costs. For example, according to the cost reports, in 2015, direct costs  varied from $56,998 to $333,565 per resident (excluding outliers). (See  table 9.) However, these costs are limited to direct GME costs specified in  Medicare guidance, and they have other limitations due to their collection  and reporting. Challenges Exist in  Measuring and Comparing  GME Training Costs and  Little is Known about their  Relationship to Federal  GME Funding We found that there is no standard method or tool across teaching sites  for identifying and capturing GME training costs. One expert told us that,  therefore, the reporting of costs depends on how each teaching site, and  the individuals at each site, are tracking and defining those costs. Another  group of experts who conducted a study to estimate GME training costs in  teaching health centers told us they were unable to identify a common  instrument and had to develop their own instrument to standardize costs. According to literature we reviewed and experts we interviewed, Medicare  GME guidance for reporting training costs is not always clear, and  differences in how teaching sites define costs can lead to inconsistent  measurement. One expert told us that Medicare GME payment rules are  subject to interpretation, and thus there is variation between teaching  sites in how costs are reported on Medicare cost reports. Other GME  experts told us that many teaching health center residency programs rely  on in-kind benefits, such as building space donated by organizations, but  health centers vary in how they account for the costs of these benefits.  Some teaching health centers will score them as in-kind contributions,  others will provide a square footage cost amount, and others may not  track and report these costs at all. While one group of experts suggested  there be national guidelines to ensure all teaching sites are using the  same rules to define and report costs, one expert cautioned that a  common tool would make it impossible to reflect the unique  characteristics of each program. Factors specific to teaching sites may affect how they identify their  training costs. The varying relationships and financial arrangements  between the teaching site, its partners, and its faculty affect how it  allocates and reports training costs. For example, a teaching site may  have various educational partners, such as medical schools and  community-based training sites, and be affiliated with multiple hospitals,  each of which tracks costs differently. Teaching sites differ in how they  share training costs with these partners. In addition, faculty arrangements  vary. For example, in some cases faculty are employees of the teaching  site and in other cases, faculty bill for their services independently.  Moreover, facilities vary in the experience of their personnel responsible  for identifying GME training costs. For example, program directors may  not have the financial experience needed to identify costs, and some  teaching sites may use outside consultants to identify costs. Turnover in  the staff responsible for tracking costs, lack of communication between  program staff and the accounting departments, or a change in ownership  of the teaching site may add to the challenge of accurately identifying  costs. According to studies we reviewed and experts we interviewed, some  GME training costs are difficult to accurately identify and measure. For  example: Faculty Costs: Faculty responsibilities are spread out across  education, research, administrative, and patient care activities, and  the time spent in each activity is not always clear. The only allowable  faculty costs on Medicare cost reports are those for education-related  activities, such as the clinical supervision of residents. For example, if  a faculty member performs a procedure while doing rounds with  residents, the teaching site must determine how much of that time  was for patient care and how much was for education. However,  making this determination can be challenging for teaching sites. One  group of experts told us that while most teaching sites have a formula  to calculate these education costs, they are most likely an undercount.  However, another expert said that officials preparing the cost reports  are not systematically splitting faculty time between education and  patient-care activities and are most likely guessing. Facility Costs: MAC officials told us that facility costs that hospitals  report on their cost reports should be allocated based on square  footage, building depreciation, and utility costs, but there is some  variation in how teaching sites calculate their square footage. Further,  as previously described, donated building space may not be  accurately identified by teaching sites. Experts who conducted a study  to estimate teaching health center program costs told us that several  centers in their study were not accustomed to thinking of donated  space as a residency program expense. Indirect Medical Education Costs: There is not a clear and  consistent definition of the indirect medical education costs, and there  may be variability in these costs. Furthermore, there is little incentive  for teaching sites to accurately identify these costs because Medicare  does not require them for purposes of determining IME payments,  according to one reviewed study. As a result, it is unclear what  indirect costs the Medicare IME payment adjustment is meant to  cover. Additionally, experts told us that it is difficult to measure the  extent to which costs associated with the unique services that  teaching sites provide, such as stand-by services or their role as a  safety net provider, are attributable to GME training. Resident benefits for teaching site costs and productivity: The  benefits that residents provide can generate cost savings and revenue  for the teaching site, yet the extent of these benefits can be difficult to  calculate. According to one study we reviewed, the value that  residents provide cannot be measured directly; rather, the value is  reflected in the teaching site’s patient care costs and on the clinical  productivity of attending physicians. One expert we interviewed said  that identifying when residents move from a cost to a financial benefit  is complicated and depends, for example, on a resident’s year of  training and residency program requirements. Also, the value of  resident services can vary by specialty. For example, residents in  general surgery or internal medicine provide more on-call services  than residents in dermatology or radiation oncology. Although the  cost savings and revenue generated by residents has an effect on the  net costs of GME training, it is typically not accounted for when  estimating costs. In addition to these challenges, federal agencies do not systematically  collect and standardize cost information at the national level, according to  literature we reviewed and experts we interviewed. For example, a HRSA  study identified training costs in teaching health centers, but the study  only captured costs over one year and did not include all THCGME  programs. Further, in addition to inconsistencies in how teaching sites  collect data for Medicare cost reports, the data do not include the revenue  impact and actual indirect costs associated with training residents and  cannot be broken down by specialty programs. In addition, they are not a  comprehensive source of training costs because they are limited to  teaching sites that received Medicare GME payments. It does not include  other teaching sites, such as medical schools, teaching health centers,  and teaching hospitals that may have only received other federal funding  for GME training, such as VA GME payments. Finally, because Medicare  cost report data are not generally used to calculate GME payments, they  are not reviewed or audited by contractors except when new teaching  sites establish their base year PRA. Further, teaching sites may not have accurately reported costs used to  calculate Medicare DGME payments. According to experts we  interviewed, at the time that most teaching sites established the base  year PRAs used to calculate DGME payments, teaching site accounting  practices and their varying financial relationships with affiliated education  partners may have led them to over-report or under-report their costs.  As a result, there is variation in sites’ PRAs, which may not reflect actual  variation in direct costs. To identify how the PRA compares to reported  direct training costs, we compared teaching site PRAs with the direct  training costs that they reported for 2015 (though reported costs may not  accurately reflect all GME training costs, as previously noted). For  teaching sites in the median range, their Medicare DGME payment  covered 67 percent of their reported direct training costs in 2015.  However, we found wide variation across teaching sites—the PRA ranged  from 31 to 157 percent (excluding outliers) of teaching sites’ reported  direct costs. (See table 10.) In addition to the challenges of identifying and comparing costs, little is  known about their relationship to federal GME funding. Some studies  have analyzed federal GME funding relative to GME training costs but do  not consistently indicate whether federal payments accurately reflect  training costs. For example, both the Medicare Payment Advisory  Commission and HHS found that the Medicare IME payment adjustment  exceeds the actual indirect costs that teaching sites incur from operating  GME programs. The studies recommended modifying the IME payment  adjustment. However, another study found that indirect medical education  costs and other costs, such as stand-by services, add to patient care  costs in teaching hospitals, and concluded that a reduction in the  Medicare IME payment adjustment could result in insufficient Medicare  payments to cover these costs. Other studies found that federal funding  is lower than actual program costs. For example, one study estimated the  per resident training cost in teaching health centers in fiscal year 2017 to  be $157,602, compared to the $95,000 per resident that was being  provided in federal funding. Another study found that their average  $183,138 per resident cost estimate for internal medicine programs of  120 residents exceeded Medicare DGME payments in 2012 by  approximately $160,000 per resident, and noted that other sources of  funding, including Medicare IME payments, subsidized training costs. The relationship between training costs and federal GME funding is  complicated by the nature of how most GME payments are made. For  example, with respect to Medicare GME payments, the largest source of  federal GME funding, payments are not based on actual costs, and there  are no reporting requirements for how teaching sites use the payments.  Specifically, teaching sites distribute these payments depending on their  needs and the needs of their affiliates, making it difficult to understand the  relationship between GME funding and training costs. Information the  Federal Government  Collects to Manage  Programs Is Not  Sufficient to  Comprehensively  Understand Its  Investment in GME  Training Agencies generally collect information to manage their respective  programs, ensure the accuracy of payments, and reduce the potential for  duplicative payments within or across federal programs that fund GME  training. However, HHS does not have sufficient information available to  comprehensively evaluate the federal programs that fund GME training,  identify gaps between federal GME programs’ results and physician  workforce needs, and make or recommend to Congress changes in order  to improve the efficient and effective use of federal funds. Each Federal Agency  Generally Collects  Information Needed to  Manage Its Respective  Program and Ensure  Payment Accuracy Federal agencies generally collect information to manage their respective  programs and ensure the accuracy of payments. To manage their  programs, agencies use information, such as the total number of FTE  residents and training costs, to calculate payments. For example, VA  medical facilities use information that academic affiliates report about the  costs of their resident salaries and benefits to set payment rates used to  reimburse the affiliates. And, information about individual residents is  used to verify that recipients accurately reported, according to resident  counting rules, the number of FTE residents used to calculate payments.  For example, MACs use IRIS data about residents’ number of years  completed in all types of GME training programs to verify that residents  who have completed their initial residency period were only counted as  half (50 percent) when determining the DGME payment amount. (For a  summary of the information that agencies collect for each of the five  programs we reviewed, see appendix II. See table 11 for a summary of  how agencies use the collected information.) In contrast to the other programs, states establish and administer  Medicaid GME payment policies and CMS generally collects limited  information about states’ Medicaid GME payments. CMS does not use  this information except to determine the amount of federal matching funds  for each state. While state Medicaid agencies report the aggregate  amount of GME supplemental payments they make to CMS, there are no  federal requirements that states or teaching institutions report information  about supplemental payments at the provider level, the aggregate or  provider-level amount of add-on adjustments to the state’s payment rates  for GME training, or how these payments support GME training. Rather,  CMS officials said that states have the option to collect information about  Medicaid GME payments. However, of the 45 state Medicaid agencies  that reported on our survey that they paid for GME training, less than half  (20 states) indicated that they require funding recipients to report any  information related to Medicaid GME payments, such as the number or  type of residents supported. While the risk of duplication is reduced by each program’s design, federal  agencies also use the information collected to identify duplicative  payments within and between most of the federal programs, with the  exception of Medicaid. For example, IRIS data is used to identify whether  more than one hospital claimed the same resident’s time for purposes of  Medicare GME payments. Also, according to HRSA officials, contractors  conduct assessments of the FTE resident counts reported by recipients of  CHGME or THCGME program funding to identify duplication with FTE  residents reported for Medicare GME payments. For example, HRSA  officials told us that its combined academic years 2012-2013, 2013-2014,  and 2014-2015 FTE assessment of the 59 teaching health centers in the  THCGME program identified 6 centers, from 3 unique organizations, that  had a combined total of 6.63 FTE residents that were duplicative with  Medicare FTE resident claims, out of over 1,000 FTE residents reviewed  over that 3-year time period. In addition, HRSA has worked with CMS to  maintain data for this assessment. For example, at HRSA’s request, CMS  added a field to the cost reports to check whether any residents from a  teaching health center rotated to the hospital and, if so, the number that  rotated from a teaching health center. However, these agencies do not  have procedures in place to identify potentially duplicative payments  between their programs and Medicaid GME payments, which totaled $2.3  billion in federal Medicaid spending in 2015. There is no federal  requirement that CMS identify potentially duplicative payments between  Medicaid GME payments and other federal GME programs. And, without  better data collected about Medicaid GME payments, there is limited  information available to identify potentially duplicative payments between,  for example, HRSA’s GME programs and Medicaid GME payments. HRSA and VA, which combined provided 13 percent of total federal GME  funding in 2015, use the information collected for ongoing program  performance measurement and program evaluation. HRSA evaluates the  performance of its payment programs. To do so, HRSA collects  information on program outcomes, such as whether supported residents  received training in, or went on to practice in, a medically underserved  area, a primary care setting, or rural area. HRSA uses these performance  measures for ongoing evaluations, for internal and congressional  reporting, and in its budget justification. In addition, HRSA is authorized to  implement a quality bonus system for the CHGME program, which it  plans to do by fiscal year 2019. VA issues a survey to VA residents to  assess, among other things, a resident’s likelihood of considering a future  employment opportunity at a VA medical facility. VA medical facilities are  required to collect detailed records of residents’ participation in assigned  educational activities and they must evaluate each resident according to  accrediting body requirements, such as patient care and medical  knowledge. VA medical facilities are also required to produce an annual  report on each GME training program that includes, among other things,  the accreditation status of its GME training programs, its response to  results of the resident satisfaction survey, and opportunities for  improvement in residents’ education. CMS, however, does not use the information it collects for Medicare or  Medicaid to evaluate the performance of these programs toward meeting  physician workforce goals, even though they accounted for 87 percent of  federal GME spending in 2015. As noted, Medicaid programs are  administered at the state level. For Medicare, CMS officials said that their  goal is to ensure hospitals are paid according to the GME statutes and  regulations. It does not use information collected to evaluate the  performance of Medicare GME payments, such as evaluating the number  of residents supported by specialty or whether residents went on to  practice in rural areas, primary care, or in medically underserved areas.  The officials further noted that Medicare is an insurance program, and not  among the health care workforce programs that are under the purview of  HRSA. Although CMS officials told us that they coordinate with HRSA  regarding Medicare GME payments, HRSA does not conduct research to  inform GME policy related to CMS’s GME payments. Also, in a 2015  report, we found that HHS lacks performance measures of Medicare  GME payments that are directly aligned with areas of health care  workforce needs identified in HRSA workforce projections. Agencies Do Not Collect  Sufficient Information for  HHS to Comprehensively  Understand the Federal  Investment in GME  Training Information that agencies collect is not always complete, especially  information about Medicaid GME spending. As previously noted, CMS  collects limited information about the amount of Medicaid GME payments  and how these payments support GME training, such as the number or  type of residents supported. In addition, agencies did not collect or use  the following information, with some exceptions, to understand the federal  investment in GME training: Payment Amounts by Recipient Characteristics: With the  exception of HRSA’s CHGME and THCGME programs, agencies do  not collect information on payment amounts to training programs with  specific characteristics, such as payment amounts by the type of  training programs supported. This information would be needed, for  example, to compare the payment rates of each program to the costs  of training residents in the teaching sites supported. GME Costs and Revenues: Agencies did not collect information  about funding recipients’ indirect costs or revenue generated from  resident activities, with the exception of HRSA’s THCGME program.  Also as previously noted, the costs that hospitals are required to  report annually on their Medicare cost report may not be complete or  consistent, nor, according to CMS officials we interviewed, is this  information audited and used except in limited cases. No information  is collected by CMS about direct or indirect training costs incurred by  recipients of Medicaid GME payments, and only eight state Medicaid  agencies reported on our survey that they require recipients to report  information about their direct costs. Output or Outcome Measures: Unlike HRSA and VA, CMS does not  collect information for the GME training programs that it supports  through Medicaid to assess outputs or outcomes related to health  care workforce planning. In addition, while CMS uses IRIS to collect  information on the number and type of residents and their number of  years completed in all types of GME training programs of residents  supported by Medicare GME payments, it does not use it to  understand the output of such spending or for health care workforce  planning. CMS also does not collect information on the outcomes  associated with Medicare GME payments, such as whether residents  who were supported by Medicare went on to practice primary care  specialties or in rural or medically underserved areas. Further,  although HRSA collects data about the outcomes of its CHGME and  THCGME programs, this information is self-reported by funding  recipients. However, HRSA officials told us that it has taken steps to  validate the information reported. For example, it has started to collect  residents’ national provider identifiers for residents supported by the  CHGME and THCGME programs, which is used to validate resident  FTE counts and reported outcomes, such as whether residents went  on to practice in primary care. Quality Measures: Agencies generally require that GME training  programs be accredited in order to receive funding, and accrediting  bodies are responsible for evaluating the educational quality of GME  training programs. In addition, HRSA and VA collect some information  about the learning experiences of residents in GME training programs  supported, such as whether residents received training in certain topic  areas. HHS and its advisory bodies have proposed tying federal  funding to the performance of the programs. For example, the  President’s budget proposals for fiscal years 2015, 2016, and 2017 for  HHS proposed to Congress that it be allowed to set standards for  teaching hospitals that receive Medicare GME payments to  emphasize skills that promote high quality and high value in health  care. In addition, the National Academy of Medicine has called for  improved measures of the performance of GME training programs,  and as of October 2017, it had an initiative to identify quality and other  measures, such as residents’ competency or patient outcomes of care  provided by residents. Information is also not always consistently collected within programs or  standardized across programs. For example, VA medical facilities report  information centrally to VA about their total payments to academic  affiliates, but they inconsistently used accounting codes to report the total  amount that they spent and did not report the amount they paid each  academic affiliate, limiting the reliability of data VA collects on the total  amount spent on GME. Additionally, VA medical facilities are required to  report annually to VA their approved payment rates that each affiliate  charges, but VA was unable to provide payment rate schedules for all  affiliates in fiscal year 2015. Across all agencies, information about the  number of FTE residents supported was collected at, and for, generally  different points in time and through different reporting systems. (See table  12.) For example, HRSA generally collects FTE resident information  through applications or supporting documentation prior to and at the end  of a fiscal year, while VA collects such information in monthly or quarterly  invoices throughout an academic year. And, CMS collects similar FTE  resident information through cost reports and IRIS files based on each  hospital’s own cost reporting period, which can vary by hospital. In  addition, the five federal programs do not consistently use the same  unique identifiers for their funding recipients, such as a hospital’s  Medicare provider identification number, or individual residents  supported, such as their national provider identifier, which limits the ability  to link data across programs. In some cases, data collection may vary across the various GME  programs based on program requirements. Additionally, GME funding  recipients may be required by law to report certain types of information for  some programs, but not for others. For example, THCGME recipients are  required to report on the number of residents trained at the health centers  who completed their residency and care for vulnerable populations living  in underserved areas. Relatedly, CHGME funding recipients are required  to report the number of residents trained at the hospital who completed  their residency training and care for children within the service area of the  hospital or state in which the hospital is located. No similar requirements  apply to Medicare GME recipients. Because the information that agencies collect is not always complete or  consistent, HHS does not have sufficient information available to  comprehensively evaluate the federal programs that fund GME training.  As a result, HHS cannot identify problems and make or recommend  changes to Congress in order to improve the efficient and effective use of  federal funds. Under leading practices we derived from GPRA and  GPRAMA and federal standards for internal controls, agencies should  identify and collect complete and reliable information needed to evaluate  the performance of federal programs, while balancing the administrative  costs of such efforts. In addition, agencies should use that information to  monitor performance of programs in order to identify problems and make  changes or recommendations to Congress for improvements.  Improvements in the performance monitoring can enhance and sustain  collaboration and reduce fragmentation within and across federal  agencies that administer programs that fund GME training. However,  because of limitations with the information agencies collect, HHS does  not have information available to comprehensively understand across all  programs that fund GME training, for example, the:  1.  Total amount that the federal government spends on GME training  that includes total Medicaid GME spending and the total amount VA  medical facilities paid to academic affiliates;  2.  The amount the federal government paid each recipient for GME  training, such as the amount paid to each VA academic affiliate;  3.  Distribution of funding—that is, the amount of funding by GME training  program characteristics, including program type;  4.  Extent to which the net cost of training residents, including the  variation in costs along different factors that were previously  discussed, are accurately represented by formulas used to calculate  payments;  5.  Output and outcomes of GME training funded by federal programs— that is, how many and what type of residents the federal government  supports, where those residents trained and went on to practice, and  whether those residents will help address future health care workforce  needs; and  6.  Quality of GME training programs that are supported by the federal  government, such as whether residents participated in certain  educational activities or the practice readiness or competence of  residents who completed GME training programs supported. HHS’s advisory bodies and stakeholders have made calls for  improvements in the accountability and transparency of federal programs  that fund GME training. For example, the Medicare Payment Advisory  Commission recommended greater accountability and transparency for  Medicare GME payments by making information about Medicare GME  payments and teaching costs available to the public. And, the National  Academy of Medicine recommended that a GME Center within the  Centers for Medicare & Medicaid Services be created to be responsible  for, among other things, data collection and detailed reporting to ensure  transparency in the distribution and use of Medicare GME payments. Conclusions The federal government is an important source of funds for GME training,  and through its funding and workforce planning efforts, HHS, as the  largest funder of GME training, has an important role in ensuring federal  programs are meeting the nation’s workforce needs. For HHS to carry out  the comprehensive planning approach that we recommended in 2015,  complete and consistent information on GME training is important.  However, the information currently collected is insufficient for this  purpose. For example, HHS lacks comprehensive information on the total  number and specialty type of residents supported by all of the federal  programs that fund GME training. But, HHS may have the opportunity to  improve the information that its component agencies collect about how  federal funding is used to support GME training to determine whether  these programs are meeting these needs. New data collection efforts  could potentially increase certain administrative costs for the federal  government and providers. However, unless HHS collects more complete  and consistent information, it will be limited in its ability to conduct  comprehensive, ongoing evaluations of the federal government’s $14.5  billion annual investment in GME training. Such evaluations could allow  HHS and other federal agencies to make programmatic changes, or make  recommendations to Congress if legislative authority is needed, to  improve the cost effectiveness of current federal funding. In addition,  collecting more complete information could help HHS and other federal  agencies better manage fragmentation in spending, management, and  oversight of federal programs that fund GME training. Recommendation for  Executive Action We are making the following two recommendations to HHS:  The Secretary of HHS should coordinate with federal agencies, including  VA, that fund GME training to identify information needed to evaluate the  performance of federal programs that fund GME training, including the  extent to which these programs are efficient and cost-effective and are  meeting the nation’s health care workforce needs. (Recommendation 1) The Secretary of HHS should coordinate with federal agencies to identify  opportunities to improve the quality and consistency of the information  collected within and across federal programs, and implement these  improvements. (Recommendation 2) Agency Comments  and Our Evaluation We provided a draft of this product to HHS and VA for comment. In its  comments, reproduced in appendix III, HHS concurred with our two  recommendations to identify and improve information collected to  evaluate the performance of federal GME programs. HHS noted that the  President’s fiscal year 2019 budget for HHS, released on February 12,  2018, proposed consolidating federal spending from Medicare, Medicaid,  and the CHGME Payment Program into a single grant program for  teaching hospitals. The proposed program would be jointly operated by  CMS and HRSA and grant HHS authority to modify GME payment  amounts based on criteria, including addressing health care workforce  shortages. HHS stated that the program would allow the department to  set priorities, reward performance, and align reporting metrics across its  GME efforts. HHS indicated that, if the Congress adopts this proposal, it  could work toward addressing both recommendations. It is important to  note, however, that the recommendations in this report stand on their own  and are separate from any efforts to modify how federal GME funds are  distributed. Whether or not legislation is enacted to implement a  consolidated federal GME grant program, HHS still needs to take actions  to improve the information that agencies collect about how federal funding  is used to support GME training. Such actions are important for HHS to  assess the cost effectiveness of federal efforts to help meet the nation’s  physician workforce needs. HHS also provided technical comments, which we incorporated as  appropriate. In its comments, reproduced in Appendix IV, VA said that it has significant  relationships with other federal funders of GME, including HRSA. In  addition, VA said it looks forward to further dialogue with other agencies  to better share GME information. VA did not provide technical comments. As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 20 days from the  report date. At that time, we will send copies of this report to the  Secretary of Health and Human Services and the Secretary of Veterans  Affairs. In addition, the report will be available at no charge on GAO’s  website at http://www.gao.gov. If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for our  Office of Congressional Relations and Office of Public Affairs can be  found on the last page of this report. Other major contributors to this  report are listed in appendix V. Appendix I: State Medicaid Agency and  Other State and Private Sources of Graduate  Medical Education Funding In addition to federal funding, state governments—including state  Medicaid agencies—and private sources also support graduate medical  education (GME) training. However, little is known about these other  sources. Therefore, we analyzed Medicare cost report data to determine  the extent to which teaching hospitals were operating above their FTE  resident caps in 2015—an indication of the extent to which hospitals may  receive other sources of GME funding, such as state or private sources.  We also surveyed state Medicaid Directors from 50 states and the District  of Columbia to collect information on how and the extent to which states  paid for GME training through Medicaid payments, and the states’ related  reporting requirements and oversight activities. As part of our interviews  with experts from research and industry organizations, we asked about  state and private sources of funding for GME training and what is known  about the amount of such funding. Teaching hospitals likely utilize state and private sources of funding, as  well as other federal funding, to pay for residents beyond those paid for  by Medicare—the largest federal funder of GME training. Hospitals have  continued to add residents over time even though for most hospitals  Medicare capped funding based on their number of full-time-equivalent  (FTE) residents in 1996. In 2015, about half of teaching hospitals that  receive Medicare GME payments had expanded their GME training  programs above their Medicare FTE cap, and the extent to which they  operate above their cap varied by hospital. We found that 47 percent of  teaching hospitals were operating their GME training programs above  their Medicare FTE cap on direct GME (DGME) payments. These  hospitals had an average of 30.8 additional FTE residents above their  DGME cap, ranging from 1.0 to 284.3 additional FTE residents. Most states (45) paid for GME training through their Medicaid programs in  2015; however, states varied in the payment model that they used to  make Medicaid payments for GME training, though most used fee-for- service payments, including supplemental payments. Of the 45 state  Medicaid agencies that paid for GME training, 25 states did so through  fee-for-service payments only; 19 states did so through both fee-for- service and managed care payments; and 1 state (New Jersey) made  managed care payments only. Of the 44 states that paid for GME through Medicaid fee-for-service  payments, 21 states paid as an add-on to its fee-for-service rate, and  31 states paid through lump sum supplemental or other payments. Of the 20 states that made Medicaid managed care payments for  GME, 12 paid teaching sites directly and 10 states made GME  payments through managed care plans. Of the 19 states that paid for GME through both Medicaid fee-for- service and managed care, fee-for-service GME payments made up  48 percent of all Medicaid GME payments, on average, while  managed care payments made up 52 percent. (See table 13.) While some states followed the Medicare formula for calculating GME  payments, most have deviated from this method. Of the 43 states that  responded about how they calculated the amount of GME payments, 10  states reported that they followed the Medicare GME payment formula to  calculate Medicaid fee-for-service payments for GME training. In addition,  two states followed Medicare’s formula for making managed care  payments for GME training. Most states (32) followed another method. Medicaid GME payments per FTE resident varied by state and within  states, even after adjusting for geographic differences in labor costs.  Specifically, the average combined federal and state payment per FTE  resident ranged from $2,108 in Rhode Island to $100,587 in Arizona.  (See table 14.) The payment per FTE resident also varied within states.  The Medicaid payment per FTE varied the most within Ohio, where the  state reported payments ranging from $1,415 per FTE to $453,098 per  FTE. About half of the states (22 of 45) reported that they specified the type of  expenses that its Medicaid GME payments were intended to cover. Of  these 22 states, payments were intended to cover the costs of residents’  salaries and benefits (14 states), faculty salaries and benefits (11 states),  program administration costs (10 states), or indirect medical education  costs (8 states). Some state Medicaid agencies have tied their payments to incentives to  expand the physician workforce. Of the 45 states that reported Medicaid  GME payments in 2015, 4 states—Alabama, Montana, New Mexico, and  South Dakota—reported that they restrict payments to the training of  primary care physicians only. (See table 15.) An additional 9 states  required that the funding recipient have a primary care residency  program. In addition, according to experts we interviewed, states have  been considering how to target Medicaid GME payments to meet state  workforce needs. For example, one expert said some states have used  Medicaid payments to expand GME training of physicians in outpatient,  ambulatory care settings. However, Medicaid GME payments generally  go to hospitals. Specifically, 44 of the states reported making payments to  hospitals and 7 states paid other teaching sites, such as teaching health  centers. The one state that did not make payments to teaching hospitals  directed all Medicaid payments for GME training to medical schools.  Further, one expert we interviewed told us that it is difficult for states to  change their GME financing models to direct funding to specific workforce  goals because hospitals are reliant on state GME payments to support  certain residency positions. Instead, states have used a moderate  approach, such as providing additional funding targeted to specific  training, rather than a complete funding overhaul that would redistribute  existing funds. Despite the significant investment in GME training by state Medicaid  agencies, which is matched by the federal government, the extent of state  oversight of Medicaid GME spending varied by state. As previously  mentioned, less than half of the states (20 of 45) required teaching sites  that received Medicaid GME payments to report information to the state.  (See table 16.) Among these 20 states, 16 required recipients to report  information on the number of residents or FTE residents, 8 states  required information about direct medical education costs, 6 states  required information about the GME training program specialties  supported, and 4 states required recipients to report information about the  residents’ characteristics, such as their post-graduate year. Of the 10  states that made Medicaid GME payments to managed care plans, 4  states—Kansas, Kentucky, Michigan, and Minnesota—set the  methodology or base rate that managed care plans were required to use  to calculate GME payments. None of the states reviewed and approved  payments. Further, 44 of the 45 states were able to provide at least some  information on the total amount the state spent on Medicaid GME  payments, but the amount of information they were able to provide varied.  While most states (38) were able to provide data on all GME payments by  recipient, 4 states could provide data on some but not all payments, and 2  states could not provide data on the amount of GME payments by  recipient. And, less than half of the states (18 of 45) were unable to  provide data on either the number of FTE residents or resident counts at  teaching entities that received Medicaid GME payments. (See table 17.) Experts we interviewed identified other sources of state and private  funding for GME training. Hospitals and health systems: Hospitals may rely on their own  funding to support their residency programs. One expert we  interviewed said that hospitals that sponsor GME residency programs  provide funding for certain specialty residency programs that make  money for the hospital. State government grant or other funding: Aside from GME funding  through Medicaid, one expert told us that some states make direct  grants to residency programs, mostly primary care residency  programs, or through state appropriations specifically for GME  training. For example, Florida created an $80 million fund to support  state training in outpatient or community-based programs. And, one  expert told us that some states have developed innovative funding  mechanisms. This was the case in Georgia, which established a  hospital coalition that funded 400 new residency slots to meet the  needs of medically underserved populations. Private health insurers: Experts said GME funding from private  health insurers is generally thought to be provided through higher  reimbursement rates to teaching hospitals than nonteaching hospitals,  including through Medicare reimbursement. While private insurers  fund GME training through their contracts with individual hospitals,  one expert told us that those contracts do not likely differentiate the  amount of funding that is used toward GME training versus other  activities. However, one expert raised concerns that private insurers  are not paying their share of GME costs. Another expert noted that  there have been some state-level efforts to require all payers,  including private insurers, to have some responsibilities in paying for  the education of the health care workforce, even beyond physician  GME training. Other: Experts also identified other possible sources of private  funding. For example, one expert told us that, while the amount of  funding from pharmaceutical or medical device companies has not  been identified in existing studies, anecdotally there is a growing use  of these funding sources. Experts also said that some funding is  provided by philanthropic organizations or medical schools that are  affiliated with residency programs. Appendix II: Information that Federal  Programs Collect about Funding for  Graduate Medical Education Training Appendix II: Information that Federal Programs  Collect about Funding for Graduate Medical  Education Training Medicaid Services (CMS) Administration (HRSA) Affairs (VA) Medicaid Services (CMS) Administration (HRSA) Affairs (VA) Appendix IV: Comments from the  Department of Veterans Affairs Appendix V: GAO Contact and Staff  Acknowledgments GAO Contact Acknowledgments In addition to the contact named above, William Hadley, Assistant  Director; Christine Brudevold, Assistant Director; Katherine Mack,  Analyst-in-Charge; A. Elizabeth Dobrenz; Maggie G. Holihan; Daniel Lee;  and Todd Anderson made key contributions to this report. Also  contributing were Sam Amrhein, Muriel Brown, Lisa Opdycke, and  Jennifer Whitworth.
An adequate, well-trained physician workforce is essential for providing access to quality health care. While a number of factors affect the supply and distribution of physicians, GME is a significant determinant. A significant portion of GME training funds come from federal programs and states. This report (1) describes the amount and distribution of federal government and state Medicaid agency spending on GME; (2) describes what is known about GME costs; and (3) examines the extent to which the federal government collects information to understand its investment in GME. GAO reviewed reports, agency websites, and interviewed agency officials to identify federal programs that fund the clinical training of residents and were authorized through 2017. GAO analyzed 2015 data—the most recent data available at the time of GAO's analysis—including from a state survey. All 50 states and the District of Columbia responded to the survey. GAO reviewed literature, interviewed experts from seven organizations knowledgeable about GME costs, and analyzed Medicare data. GAO also reviewed documentation from HHS and the Department of Veterans Affairs (VA) and interviewed agency officials. Federal agencies and state Medicaid agencies spent over $16.3 billion in 2015 to fund graduate medical education (GME) training for physicians—commonly known as residency training. The federal government spent $14.5 billion through five programs, and 45 state Medicaid agencies spent $1.8 billion. About half of teaching sites that received funding—such as teaching hospitals—received funds from more than one of the five programs. GME training costs vary due to the characteristics of teaching sites, such as the number of residents trained and their specialty, which can make it difficult to compare training costs across sites. Further, challenges exist in measuring training costs because some costs, such as faculty teaching time, are difficult to identify. Also, there is no standard method for identifying and capturing training costs, and each teaching site may vary in how it does so. While federal agencies generally collect information needed to manage their individual programs, this information is not sufficient to comprehensively understand whether the federal investment in GME training meets national physician workforce needs. The information agencies collect is not always complete or consistent within or across programs. For example, national data on GME training costs are not systematically collected, and some agencies lacked data to understand the total amount spent, or the outcomes of their programs, such as where supported residents went on to practice. GAO recommended in 2015 that the Department of Health and Human Services (HHS) develop a comprehensive planning approach to identify and address areas of health care workforce need. HHS concurred and identified steps it could take. While HHS has yet to take these steps, the information currently available is also insufficient for such planning. Comprehensive information is needed to identify gaps between federal GME programs and national physician workforce needs—particularly the distribution of physicians geographically or across specialties—and to make or recommend to Congress changes to improve the efficient and effective use of federal funds to meet those needs.