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Funding for Graduate MedicalEducation

Valerie P. Jackson, MD

The education of radiology residents and fellows is a vitally important but costly process. This paper reviews themost common methods of funding graduate medical education. The majority of graduate medical education inthe United States is funded by Medicare, but there are caps on the number of trainees allowed, and thegovernment is cutting payments. Academic medicine, particularly academic radiology, is at a point of crisistoday if new methods to provide additional support are not found.

Key Words: Graduate medical education, residency training, radiology education, education costs

J Am Coll Radiol 2006;3:945-948. Copyright © 2006 American College of Radiology

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he education of radiology residents and fellows is anmportant but costly process. Many programs haveeached a point of crisis in meeting the financial costs ofraduate medical education (GME). Most residency pro-rams cannot calculate the true costs of educating theiresidents because these costs extend well beyond resi-ents’ salaries and benefits. There are costs associatedith the decreased productivity of faculty radiologists

especially while teaching junior-level residents); librar-es, computers, and teaching materials; formal and infor-

al teaching time; and additional benefits provided toesidents, such as travel or book allowances, resident re-ruiting, and social events [1-7]. There are several fund-ng sources for GME [5]:

federal government sources, such as● Medicare,● the US Department of Veterans Affairs,● Medicaid,● the US Public Health Service, and● the military (US Department of Defense);state government sources, such as● Medicaid, and● state programs in some states;nongovernmental funding, including● radiology department practice plans,● industry grants and contracts,● foreign governments, and● philanthropy.

ndiana University School of Medicine, Indianapolis, Ind.

Corresponding author and reprints: Valerie P. Jackson, MD, Indiana Uni-ersity School of Medicine, 550 North University Blvd, Room 0663, India-

hapolis, IN 46202; e-mail: vjackso@iupui.edu.

2006 American College of Radiology091-2182/06/$32.00 ● DOI 10.1016/j.jacr.2006.07.001

EDICARE FUNDING

edicare is the largest source of funding for GME in thenited States. In general, payments are made to specificospitals. The money does not go directly from Medicareo departments or individual residents but rather is dis-ributed from either hospitals or medical schools to payesidents. The overall distribution of money among var-ous departments depends on the needs of an entire in-titution, not necessarily the needs of the individual de-artments. If there is an excess after salaries and benefits,ome may go back to departments in the form of pay-ents for administration, supervision, and teaching.There are two components of Medicare funding, di-

ect medical education (DME) payments and indirectedical education (IME) payments. Indirect medical ed-

cation payments are often twice as great as DME pay-ents for a particular institution, and there are wide

ariations in the size of payments across the country [8].Direct medical education payments support the cost

f residents by providing funds for residents’ salaries andringe benefits, the salaries and fringe benefits of super-ising faculty members, costs associated with the institu-ion or department providing GME programs, and allo-ated institutional overhead costs [5,9]. Althoughnstitutions receive funding for faculty teaching costs, ineality, the departments and faculty members providinghe education often get little or no direct compensationor these activities from these payments. In addition,nstitutions may not pay the salaries and benefits of eachesident. Direct medical education was originally anpen-ended, cost-reimbursed system, in which GMEas reimbursed at the same percentage as Medicare pa-

ient use at a particular institution. However, in 1997, asart of the Balanced Budget Act, this was changed to a

ospital-specific, per-resident rate that limited not only

945

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946 Journal of the American College of Radiology/Vol. 3 No. 12 December 2006

he number of funded positions but also the number ofears of full payment for a resident’s training [7,10].nfortunately, most American Association of Medicalolleges’ teaching hospitals received fewer actual dollars

or serving Medicare patients in fiscal year 2000 thanhey did in fiscal year 1997 (with no adjustment fornflation) [11].

Direct medical education payments to a hospital arealculated by multiplying the average per-residentmount established for that hospital in 1984 by the num-er of full-time-equivalent interns and residents in theospital by Medicare’s proportion of the total number of

npatient days at that hospital (the Medicare utilizationate), which is often about 30%. The DME amount peresident is variable from institution to institution andanges from approximately $40,000 to $120,000. Thisariability is due primarily to a historically flawed ac-ounting method [1]. Payments are higher in the north-astern United States than in other parts of the country8].

Indirect medical education payments compensateeaching hospitals for their higher inpatient operatingosts associated with training residents. This is due to thencreased degree of severity of cases in teaching hospitals,he lower productivity of faculty members while teach-ng, and the ordering of more diagnostic tests by trainees.n IME payment is made in addition to the standardiagnosis-related group payment for each Medicare pa-ient. The payment is calculated using the ratio of internsnd residents to beds (IRB) and is adjusted annually. Theormula used for calculation is

ME per Medicare case � M � �(1 � IRB)0.405 � 1�,

here M is the multiplier for that fiscal year. Since 1997,he IME adjustment has decreased from 7.7% to approx-mately 5.5% for each 0.1 in the ratio of trainees toospital beds, over and above the normal diagnosis-re-

ated group payments made to a specific hospital4,6,10,12]. Residents must work for the hospital inpa-ient or outpatient areas or a nonhospital provider whoas a written agreement with the hospital.Medicare pays 100% (1 full-time equivalent) for the

umber of years of training required for the “first resi-ency.” A transitional internship does not count as aesidency and therefore does not affect the number ofears of funding for training. After residents completeheir first residency requirements, Medicare will pay 50%0.5 full-time equivalent) for the completion of radiologyesidency training [6]. Therefore, a resident who does areliminary internal medicine internship has 3 years ofunding at 100%, followed by 2 more years of radiologyesidency at 50% funding. This is because internal med-cine is a 3-year residency program, and Medicare con-

iders internal medicine the first residency, even if the a

ndividual never intended to do more than 1 year beforentering radiology. Medicare will not pay anything foresidency training in a new specialty if an individual hasompleted an entire residency program. For example, if aerson has completed 3 years of an internal medicineesidency (the total number required by the Americanoard of Internal Medicine) and wants to switch to a

adiology residency, Medicare will not fund that individ-al’s radiology training. Such funding shortfalls are a bigroblem for institutions with relatively low DME plusME payments that barely cover the costs of salaries andenefits for their residents.In 1997, Medicare established a cap on the total num-

er of trainees it will fund for each institution. The capas based on the number of residents in December 1996,hen there was a national push to increase the number ofrimary care physicians and decrease the number of spe-ialists (because of a projected surplus of specialists), sohat many institutions shifted their positions away fromrograms such as radiology to increase the number ofamily medicine, internal medicine, and pediatrics posi-ions. At the same time, radiology was a relatively unpop-lar specialty for medical students, so fewer radiologyesident positions were filled in the United States. Thisffectively produced reduced Medicare funding for radi-logy at many institutions that has constricted the pipe-ine of new radiologists for a number of years. Someadiology departments have petitioned their institutionso increase their numbers of funded positions, but thisenerally comes at the expense of another departmenthat must reduce its number of residents. For many ra-iology programs, the Accreditation Council for Gradu-te Medical Education (ACGME) Residency Reviewommittee for Radiology has accredited the programs

or more residents (the ACGME or Residency Reviewommittee for Radiology cap) than Medicare will fund

the Medicare cap). If a program can find other sources ofunding, it can increase the number of residents up to itsesidency Review Committee for Radiology cap.Fellows accredited by the ACGME are considered res-

dents by Medicare: they fall within the institutional cap,nd Medicare provides funding. In reality, some radiol-gy programs do not receive this money, and such fellowsre partially or completely funded by academic radiologyractice plans. However, as trainees, these individualsannot get hospital credentials or privileges and thereforeannot bill. Thus, their departments have no way toecover their costs. Non-ACGME-accredited fellows areot considered trainees, so there is no funding fromedicare for these positions. However, because these

hysicians are licensed and generally board certified, theyan get hospital credentials and privileges and bill forheir work, often offsetting the expense of their salaries

nd benefits.

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Jackson/Funding for Graduate Medical Education 947

Over the past decade, there has been increasing atten-ion to the need to improve the quantity and quality ofadiology research training. Many residency programsave electives or requirements for research. However,edicare DME will be paid for resident research time

nly if the time is required by a program and the researchs performed within the hospital complex. Bench re-earch is allowed. Indirect medical education is paid forrainee research time only if it relates to the direct care ofhospital patient. Bench research does not qualify for

ME payment [13].The Department of Veterans Affairs funds residency

ositions at its hospitals, usually those affiliated withcademic medical centers. Over the years, the number ofositions funded for subspecialties, such as radiology, hasecreased. Nonetheless, this remains a significant sourcef funding for residents’ salaries and benefits.

The Public Health Service has scholarships, grants,nd loans for residents working in some underservedreas. The funding may help with loan repayment or maye tied to service in an underserved area in the Unitedtates at the completion of training.

The Department of Defense has its own residencyraining programs but also provides funding for a limitedumber of residents from the armed forces to train inivilian programs. The military pays individuals’ stan-ard military pay and benefits during training. Residencyrograms will have to pay for additional benefits, such asravel and book allowances, and may have to pay foralpractice insurance.Some states have programs to help fund GME. For

xample, Minnesota’s department of health institutedhe Medical Education and Research Costs Fund in 1996o help offset the difference between traditional GMEunding and the actual costs of postgraduate training14,15].

ONCLUSIONS

e are facing a crisis in radiology GME. There is aontinued shortage of radiologists. With the cap on theumber of Medicare-funded residency positions, this isnlikely to change in the near future. Radiology trainingrograms bear the burden of many of the expenses ofducation outside of residents’ salaries and standardringe benefits. Faculty expenses and fringe benefits areften not reimbursed by hospitals or medical schools.any resident benefits (meeting expenses, book allow-

nces, etc) may be paid from department practice plans.Academic medical centers have higher proportions of

ower reimbursement cases (Medicare, Medicaid, unin-ured, indigent) than private hospitals. This has pro-uced decreasing revenues despite increased case vol-

mes over the years. This limits the time faculty members

ave to devote to teaching and other academic pursuits,ut departments cannot pay salaries competitive withost private practices. The loss of academic radiologists

o the private sector has devastated many departments inhe past 10 years.

Fewer radiology residents have been doing fellowshipsn recent years, partly because of the many private prac-ice jobs available. The result has been fewer fellows andess subspecialized expertise in radiology in the Unitedtates. This has the potential to threaten the future ofadiology as more nonradiologists want to do imaging.ractices are encouraged to hire fellowship-trained indi-iduals rather than those directly out of residency. Inddition, financial contributions to help with the depart-ent-paid benefits of residents and fellows are extremely

elpful.Possible solutions to the crisis include the following:

Increase Medicare funding for radiology residency. Al-though this is unlikely to occur in the short term,lobbying should still occur to bring about long-termchanges.Increase the number of radiology trainees. This re-quires funding, which is unlikely to come from thefederal government. However, lobbying might bringabout long-term change.Require private, third-party payers to include fundingfor GME in their reimbursements.Residency programs that can afford it are encouragedto self-fund additional residency positions.Private practices are strongly encouraged to help fundresidency or fellowship positions or provide fundingfor the department-paid extra benefits residents re-ceive.Private practice radiologists may be able to volunteertheir time to staff cases and teach residents at academicradiology programs. This would give the lower paidacademic radiologists time for academic pursuits, suchas research and teaching. This opportunity varies fromdepartment to department. For smaller departments,this can be extremely helpful. For large departmentswith multiple hospitals, the credentialing process maybe so onerous that it is not worthwhile for limitedvolunteer activity. Nonetheless, it is almost always pos-sible to have outside radiologists give teaching confer-ences for the residents.We will solve these problems only if academic andprivate practice radiologists work together to find ap-propriate long-term and short-term solutions.

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