FREQUENTLY ASKED QUESTIONS: Graduate Medical Education/Workforce Issues

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1 FREQUENTLY ASKED QUESTIONS: Graduate Medical Education/Workforce Issues Q. How do the current disparities in physician payment rates, which are substantially lower for primary care physicians and general surgeons, contribute to the shortage of these physicians? Our nation s insidious policies deter medical students and residents from pursuing careers in primary care and general surgery. Studies indicate that income disparities have a significant negative impact on the choice of medical specialties. The incomes of most subspecialists are nearly three times that of a primary care physician. The instability of the physician payment system stemming from the flawed sustainable growth rate formula (SGR) results in the threat of annual cuts triggered by the SGR. This unpredictability forces primary care practices with limited revenues and narrow margins to make difficult decisions about whether to lay off staff, reduce their Medicare patient population, defer investments or opt for early retirement. General internists are already retiring earlier than other physician specialties at the same time that fewer medical students and residents are choosing primary care. Stabilizing the payment system to accurately reflect the cost and value of providing care is essential to discouraging early retirement and maintaining our existing workforce. Payment policy and workforce policies should be expressly linked legislation should state that payment reform must be sufficient to increase the number of primary care physicians and general surgeons. The AOA recommends that total Medicare payments for services provided by primary care physicians should be increased by at least 10 percent on January 1, 2010, and Congress should mandate an annual increase for primary care to achieve market competitiveness. A similar bonus should be applied to services provided by general surgeons Additionally, Congress should pursue other improvements in the Medicare Fee Schedule, including changes to ensure the appropriateness and accuracy of Relative Value Units (RVUs), a better process for identifying misvalued services and ensuring that there is sufficient input from primary care physicians in the process of providing advice on RVUs.

2 Equitable physician payment policies represent an essential policy solution to the primary care shortage. Q. How can the current payment system, which values volume over quality patient care, be restructured to make the practice of primary care more professionally satisfying for physicians? As Congress moves toward an improved comprehensive, coordinated model of health care delivery, we must recognize that the coordination of care across all elements of a complex health care system requires considerable practice expense to primary care physicians, which is not offset in any way by existing payment policies. Congress must develop a payment system in which the value of primary care is recognized through equitable reimbursements for services that are provided outside of the traditional office visit. The physician payment system today places more value on the volume of services than on prevention and the coordination of care that can lead to better outcomes. We strongly support Congressional efforts to adopt a patient-centered medical home (PCMH) delivery model. This model would provide additional reimbursement and potentially reduce administrative burdens for practices that have the infrastructure and capability to provide patient-centered, physician-guided, coordinated, comprehensive, and longitudinal care. Practices that organize to deliver patient-centered care through the PCMH model should be paid a monthly, risk-adjusted care management fee for each eligible patient, fee-for-service payment for face-to-face encounters with patients and performance-based payments for reporting on quality, patient satisfaction, and efficiency metrics. A shared savings component should also be included. The total payments for the PCMH must be high enough to fully cover the costs and result in an overall and substantial gain in net revenue to primary care physicians in such practices. Total compensation for PCMH should support the goals of making primary care more attractive, thereby bolstering the workforce. Q. To what extent has past legislation led to the future shortfall of physician supply in the United Sates? Experts across the political spectrum have reached a consensus that the United States will face a shortfall in its physician supply over the next twenty years. Because it takes 10 years to train a physician, the nation will have a shortage of 85,000 to 200,000 physicians in 2020 unless action is taken soon. Our current physician shortage comes at a time when it is estimated that the population of the United States will grow by 25 million people over the next decade and the number of Medicare beneficiaries will double within

3 the next 20 years. By 2030, individuals over the age of 65 will account for over 20 percent of the population. Since Medicare beneficiaries, on average, use significantly more health resources than those under 65 the need for more physicians and other health care professionals will increase significantly. Today, over 50 million people in the United States live in areas that are designated as health profession shortage areas and an estimated 50 million people lack adequate access to primary care physicians. Access to primary care and general surgery in the United States is declining at alarming rate and must be addressed urgently. We must begin to educate and train a larger cadre of physicians now. However, the 1997 Balanced Budget Act froze the number of residents that a hospital could claim Medicare payment for based on the number of residents that each hospital trained in The current cap on full-time equivalent (FTE) residency slots was intended to address a perceived oversupply of physicians in the 1990 s. Instead, the cap has created an arbitrary limit on training capacity that is contributing to our current shortages. Additional BBA provisions, such as the 3-year rolling average, have impacted negatively community-based and rural programs contributing to the decline in the number of primary care physicians. Congress must act now to address the failings our graduate medical education (GME) system. Q. How can Congress ensure that the United States has an adequate physician workforce to meet the future needs of its patients? First, Congress should remove the limitations on the number of funded graduate medical education system that have been in place since the enactment of the Balanced Budget Act of The stringent and static provisions established in 1997 have prevented growth in the physician workforce and are a leading contributor to our current shortage. The AOA is requesting that Congress increase the nation s GME capacity by 15 percent over the next 3 years. We also urge Congress to enact legislation that will create new training opportunities in non-hospital settings and clarify existing regulations governing non-hospital training. Research has shown that physicians who are trained in community health centers, for example, are twice as likely to work in underserved settings and four times more likely to work in health centers after completing their residency. However, qualitative assessments reveal that the affiliation between health centers and primary care residency programs is hindered by financial and administrative barriers. Providing experiences in non-hospital settings for resident physicians, especially those in primary care specialties, increases the likelihood that they will seek practice opportunities in those settings. Currently, the time residents spend training in non-hospital settings can be counted as long as the hospital pays all or substantially all of the training

4 costs at that site and the resident spends his or her time in patient care activities. Measures to provide greater flexibility for residency training programs should include a clarification of the meaning of all or substantially all to allow for the counting of patient care activities as long as the hospital continues to incur the costs of the stipends and fringe benefits of the resident during the time the resident spends training in the non-hospital setting. Additionally, Congress must recognize that a major obstacle often preventing the establishment of new residency training programs are the costs associated with the creation of such programs. Under current law, a hospital starting a new residency program is not eligible for GME or IME funding until they have filed their initial cost-report with the Centers for Medicare and Medicaid Services (CMS). This financing arrangement presents challenges for hospitals that operate on narrow margins, especially community hospitals that lack adequate reserve funds to offset the financial commitments associated with starting a new residency program. The Physician Workforce and Graduate Medical Education Enhancement Act (H.R. 914) would establish an interest-free loan program whereby hospitals committed to starting new residency training programs in underrepresented specialties could secure start-up funding to offset the initial costs of starting such programs. We urge Congress to consider the inclusion of such a program in its health reform package. Q. What can Congress do to improve the current graduate medical education (GME) system in the United States? Greater flexibility in the laws and regulations governing graduate medical education is essential to increasing the primary care workforce. Our nation s GME system is burdened by a Medicare payment system that fails to recognize the value of didactic experiences, the provision of training opportunities in non-hospital settings, and voluntary physician supervision of medical residents. While medical residency programs are characterized by simultaneous educational and clinical training, Medicare Direct Graduate Medical Education (DGME) and Indirect Medical Education (IME) payments do not account presently for the resources expended by institutions on voluntary or didactic instruction. We urge Congress to enact legislation that would permit GME and IME reimbursement for educational activities that occur in the hospital as well as non-hospital clinical settings. Congress should also adopt policies that would allow hospitals to count the time residents spend training and providing patient care in outpatient settings. Under existing law, hospitals often continue to incur the costs of the stipends and fringe benefits of the resident during this time, but are unable to recoup these costs through GME payments. Providing training opportunities in real world settings such as ambulatory care centers provides residents with exposure to primary care specialties and increases the likelihood that residents will choose to practice in these settings.

5 Q. To what extent does educational debt impact the career choices of osteopathic medical school graduates? A primary deterrent to medical students seeking careers in public health service, practicing in underserved areas, or seeking careers in primary care specialties and general surgery is the heavy burden of educational debt. According to the American Association of Colleges of Osteopathic Medicine (AACOM), the average osteopathic medical school graduate has a debt load of $168,031. The average first year medical resident stipend is $44,747, making student debt a significant hardship throughout a physician s residency training program. The AOA Congress to provide an economic hardship deferment that would residents who meet certain debt and income criteria to postpone loan repayments during their training, without the additional interest that accrues in forbearance, as contained in the Medical Economic Deferment for Students (MEDS) Act (S. 646). Currently, qualified borrowers are entitled to use the economic hardship deferment for periods of up to one year at a time, not to exceed three years cumulatively. During the deferment, interest on the unsubsidized portion of the borrower's portfolio continues to accrue. Restoring the debt-to-income pathway ( 20/220 pathway ) used by many medical residents to qualify for economic hardship loan deferment would alleviate some of the financial pressures faced by medical residents that serve as a disincentive to choosing a career in primary care. To reach medical students early in the pipeline, Congress should examine options for targeted scholarship, loan deferment and loan forgiveness programs to allow medical school graduates to pursue training in medical specialties based upon career interests and talents versus financial obligations. Q. What programs, currently administered by the Federal Government, work to increase the physician workforce, especially in underserved areas and specialties? The National Health Service Corps (NHSC) Scholarship and Loan Repayment programs have provided successful incentives for recruiting health professionals into primary care to work in underserved areas. An expansion of this program is central to effectively improving health care in underserved areas of the country. Over 50 million residents of the United States live in more than 3,000 federally designated health professional shortage areas. These communities lack access to essential primary health care and are burdened by poor health outcomes. Over its 35-year history, the NHSC has provided crucial staff to local healthcare facilities, which serve to expand access and improve health outcomes. The NHSC Scholarship and Loan

6 Repayment Programs also address the issue of physician misdistribution. Due to financial returns, underserved areas do not attract health professionals, particularly in the area of primary care. Workforce strategies aimed at addressing geographic disparities in access to care should incorporate an expansion of NHSC programs. Q. What administrative burdens serve as an impediment to physicians practicing primary care? While physicians in all specialties face unnecessary and costly administrative hassles, the burden on primary care physicians is particularly excessive, detracting from the time available for patient care. Primary care physicians role in coordinating care and making needed referrals to specialists typically involves frequent interaction with managed care organizations and other third-party payers to obtain required approvals, services, and payment, resulting in paperwork and overhead expenses almost twice as great as those of other physicians. These physicians see more patients than other physicians and treat a higher proportion of Medicare patients. A typical primary care physician must coordinate care for Medicare patients with 229 other physicians working in 117 different offices, yet receives no compensation for these care coordination services. As a result, the average primary care physician spends only 55% of his or her workday on face-to-face patient care. The constant barrage of daily regulations and documentation requirements imposed by federal health agencies and private payers forces physicians to spend more time on red tape. Primary care physicians, on average, dedicate more time dealing with insurers than do specialists and surgeons. The average primary care physician spends 3.5 hours on health plans' administrative requirements, while medical specialists spend an average of 2.6 hours, and surgical specialists spend 2.1 hours. Regulatory and administrative burdens have led to widespread professional dissatisfaction with the current primary care practice model and compound the many threats to our declining workforce. Congress must act now to examine and reform these regulations.

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