March 21, 2019

Proposed Budget Would Cut Funding for Graduate Medical Education

The recently released Trump Administration budget included a proposal to overhaul Graduate Medical Education (GME) that could lead to funding cuts averaging $470 million per year for the program.

Though the President’s budget does not necessarily foretell actual policy changes, the plan is widely viewed as a statement of the administration’s fiscal and policy priorities.

The proposed reform would replace Medicare GME, Medicaid GME and Children’s Hospital GME (CHGME) with a single grant program funded out of the Department of the Treasury. Growth in total GME funding would be capped at the sum of Medicare and Medicaid’s 2017 GME payments, plus 2017 CHGME payments adjusted for inflation (the consumer price Index for all urban consumers) minus one percentage point annually.

If adopted, the new funding formula would result in a total net cut of $47.9 billion over 10 years.

Under the proposal, GME payments to hospitals would be based on the “number of residents at a hospital (up to its existing cap) and the portion of the hospital’s inpatient days accounted for by Medicare and Medicaid patients.”

The Department of Health and Human Services (HHS) secretary would have discretion to modify payments to address hospital-specific factors, such as the proportion of residents training in priority specialty programs, health care professional shortage areas and other educational priorities.

Again, it is important to remember that the administration’s budget details the president’s priorities, but Congress largely drives federal spending through its appropriations process. Many of the president’s cuts to federal agencies and institutions will likely face bipartisan pushback and are unlikely to be enacted.

Questions about the proposed GME funding plan may be directed to Rebecca Spangler, ACR Director, Government Relations (rspangler@acr.org).