In a Jan. 31 letter to lawmakers, the American Hospital Association supported the bill’s aim of adding 5,000 new residency slots nationwide, but raised concerns about proposed changes to funding formulas that could strain some teaching hospitals. The American Association of Medical Colleges, which represents teaching hospitals, shared similar concerns and called for increasing the number of new slots to 10,000.
The draft proposal comes as the nation faces a projected shortage of 180,000 physicians by 2037, according to data from the Health Services and Resources Administration, an HHS agency.
Five notes on the proposal and the groups’ responses:
- The bill proposes 5,000 new Medicare-supported residency slots. The legislation seeks to increase training physician training capacity, with a focus on rural areas and specialties with the most significant shortages. Hospitals would be subject to a 30-slot cap each to ensure appropriate distribution. The AHA and AAMC support the cap, but recommended allowing hospitals that reach it to apply for any unused slots.
“We must ensure that all available positions are allocated, as this will help address the projected physician shortage the nation faces,” the AAMC said in a letter to lawmakers.
- Both the AHA and AAMC warn that the bill’s per-resident funding adjustments could reduce payments for certain hospitals. The PRA, which determines how much Medicare reimburses per resident, is based on cost models from the ’80s. While the proposal aims to modernize it, the groups cautioned proposed changes could create “financial instability,” for certain teaching hospitals. “We strongly recommend that you consider the implications this provision may have on hospitals whose support may decrease as a result of these changes,” the AHA wrote.
- The draft bill differs from the Resident Physician Shortage Reduction Act, bipartisan legislation that would add 14,000 Medicare-supported residency positions over seven years. Hospitals, medical schools and physicians have been urging federal lawmakers to pass the legislation since it was introduced in 2023.
- Healthcare industry groups routinely point to the long-standing cap on Medicare-supported residency slots as a major contributor to the nation’s growing physician shortage. The Balanced Budget Act of 1997 set caps on the number of positions as a way to control spending on graduate medical education, based on the number of residents teaching hospitals were training at the end of 1996. Despite growing enrollment in medical schools, Congress has approved only 1,200 new positions since then.
- Most large academic medical centers today train residents well above the number of positions for which they receive federal funding, meaning they cover full training costs for additional residents. In 2021, the average annual cost to train one resident was $184,000. However, healthcare groups have warned that self-funded resident positions are not sustainable in the long-term.
