On June 7, 2017, Senators Bill Nelson (D-FL), Dean Heller (R-NV), and Charles Schumer (D-NY) introduced the Resident Physician Shortage Reduction Act of 2017. Strongly supported by GNYHA, the legislation would increase the number of residency positions that would be eligible for Medicare direct graduate medical edu­cation (GME) and indirect medical education (IME) support.

Medicare Resident Caps Part of BBA

The Balanced Budget Act (BBA) of 1997 imposed caps on the number of residents for which each teaching hospital is eligible to receive Medicare GME and IME reimbursement. These caps have remained in place and teaching hospitals have generally only been eligible for adjustments to their caps as a result of extremely limit­ed, one-time programs. The Resident Physician Shortage Reduction Act of 2017 would create additional slots above the current caps and establish a more robust and organized process to permit needed adjustments.

Distribution Methodology for Additional Slots

The bill would increase the number of residency slots nationally by 3,000 each year from 2019 through 2023, for a total of 15,000 slots. At least 1,500 slots of those distributed each year would have to be used for training additional physicians in a shortage specialty. The bill defines eligible residency programs as any approved in a specialty identified by a 2008 Health Resources and Services Administration report on the physician workforce. A hospital may not receive more than 75 slots in the aggregate from 2019 through 2023 unless the Centers for Medicare & Medicaid Services (CMS) determines there are remaining slots available for distribution.

In determining which hospitals will receive slots, CMS must consider the likelihood of a teaching hospital filling the positions and would prioritize teaching hospitals in the following manner:

  • First, hospitals in states with new medical schools (including new branch campuses)
  • Second, hospitals training residents over their caps at the time of the legislation’s enactment
  • Third, civilian hospitals that train residents in cooperation with the Veterans Health Administration
  • Fourth, hospitals that emphasize training in community-based settings, such as community health centers or hospital outpatient departments
  • Fifth, urban hospitals that are operating training programs in rural areas
  • Sixth, all other hospitals

Requirements Associated with Additional Slots

Hospitals receiving additional slots must ensure that:

  • at least 50% of the new slots are used for a shortage specialty residency program
  • the total number of residents trained is not reduced prior to the distribution of the new slots
  • the ratio of residents in a shortage specialty program is not reduced prior to the distribution of the new slots

Reimbursement Level for Additional Slots

New slots would be reimbursed at a hospital’s otherwise applicable per resident amount for GME purposes and using the usual adjustment factor for IME reimbursement purposes.

Required Studies and Reports

The legislation requires a study by the Government Accountability Office on strategies for increasing the diver­sity of the health professional workforce.