GAO Report Highlights Effect of Medicare GME Cap Policies

June 28, 2021

The Government Accountability Office (GAO), a nonpartisan organization that reports to Congress on how Federal funding is spent, recently issued a report on the effect of Medicare resident caps. The report addressed the number of teaching hospitals that train residents above their caps, the extent to which hospitals share cap slots, and views on a Centers for Medicare & Medicaid Services policy that allows nonteaching hospitals five years to establish new residency programs and have new caps set. The Balanced Budget Act of 1997 set caps for teaching hospitals at the number of residents each hospital was training in 1996.

The GAO found that 70% of the nation’s teaching hospitals train more residents than Medicare graduate medical education (GME) payments reimburse them for, with most of these hospitals training residents above their cap at their own expense. Some experts told the GAO that “extending Medicare’s 5-year cap-establishment window for hospitals new to GME could increase the overall number of residents trained.” Representative Raul Ruiz (D-CA) and others recently introduced the Physician Shortage GME Cap Flex Act of 2021, a bipartisan bill that would provide new teaching hospitals in specialty shortage areas with an additional five years (for a total of 10 years) to build their residency programs. Senators Catherine Cortez Masto (D-NV) and John Barrasso (R-WY) introduced a companion bill in the Senate. GNYHA supports eliminating the Medicare resident cap and enacting the Resident Physician Shortage Reduction Act of 2021, which would add 14,000 Medicare-funded slots to train the future physician workforce.