The Resident Physician Shortage Reduction Act of 2015 would expand the number of residency positions supported by Medicare. Introduced as H.R. 2124 in the House and S. 1148 in the Senate, the bill would authorize 15,000 additional positions over five years.
The proposal addresses a constraint in the physician pipeline. Medical school enrollment has grown in recent years, but the number of federally funded residency positions has remained effectively frozen for nearly two decades. The supply of new doctors depends on both the number of qualified graduates and the number of available training positions.
If enacted, the legislation would increase federal support for residency training from fiscal year 2017 through fiscal year 2021. It would direct the new positions to shortage specialties, hospitals that already train residents without full federal support, partnerships with Veterans Affairs, and community-based settings.
Why residency funding is the issue
The current structure dates in significant part to the Balanced Budget Act of 1997. That law capped the number of residency positions that Medicare would fund as part of an effort to control Medicare spending. At the time, policymakers feared that the country would produce more physicians than the health system needed.
That prediction has not matched later conditions. The US population has grown by more than 50 million people since the cap was established. The Baby Boomer generation is also entering a period of life when medical needs are most acute. The system is therefore facing a projected shortage of tens of thousands of physicians by 2025.
Teaching hospitals can train residents above their Medicare caps, but they often have to pay for those positions themselves. Many institutions have absorbed those costs to maintain their training programs. That burden is less sustainable for many safety-net hospitals, which limits the ability of some institutions to expand residency capacity.
The proposed legislation would change the federal funding limit. It would not require hospitals to create additional positions without corresponding Medicare support.
What the bill would change
The bill would add 3,000 Medicare-supported residency positions each fiscal year from 2017 through 2021, for a total of 15,000 positions. The phased increase would give the system time to absorb the additional capacity.
The new positions would receive support through the two principal Medicare payment streams for teaching hospitals: indirect medical education, or IME, and direct graduate medical education, or DGME. DGME payments cover direct training costs, including resident salaries. IME payments address the higher overhead costs associated with operating a teaching facility.
The legislation would not distribute the positions evenly among hospitals. The Centers for Medicare and Medicaid Services would instead use a prioritized method for allocating them.
One priority would be hospitals in states with new medical schools or branch campuses. The goal would be to help graduates continue their training in the regions where they received their medical education. Retention data indicates that doctors tend to practice near the place where they completed residency.
The bill also would give priority to hospitals already training residents above their 1997 caps. Those hospitals have shown a commitment to medical education despite lacking full federal support. Another priority would be cooperation between teaching hospitals and Veterans Affairs medical centers. Such arrangements would allow the VA system to benefit from additional trainees.
The proposal also emphasizes community-based training. This includes programs connected to community health centers and other settings outside the traditional acute-care hospital.
A focus on shortage specialties
At least 50 percent of the new positions would have to be dedicated to shortage specialties. The bill identifies primary care, general surgery, and other fields designated by the Health Resources and Services Administration as being in critical need.
This requirement responds to concerns that existing GME funding has favored subspecialties over fields with pressing workforce gaps. Directing part of the new positions to shortage fields could align federal training support more closely with needs in primary care, rural areas, and other underserved communities.
The remaining 50 percent of the positions would be available for any specialty. That provision would give hospitals room to address local workforce needs while reserving half of the expansion for shortages identified at the national level.
Oversight and political obstacles
The bill also includes reporting requirements. The Government Accountability Office would study physician workforce strategies, including ways to increase diversity in the health professions and methods for identifying and filling gaps in the healthcare workforce. The reports are intended to inform future GME decisions and shift policy away from historical funding limits toward staffing decisions based on evidence.
Passage would not be assured. The recent passage of the “Doc Fix,” or MACRA, addressed one major healthcare payment issue but left GME funding largely untouched. The proposed act would address that unresolved issue while lawmakers remain focused on deficit reduction.
The central fiscal question is how to pay for 15,000 additional Medicare-supported positions. Opponents could argue that GME needs structural reform and greater efficiency rather than additional funding alone. Supporters, including the Association of American Medical Colleges, hospital associations, and patient advocacy groups, view residency expansion as an investment in the physician workforce and national health security.
If the bill advances, it would provide a path to federal support for expanding residency programs. If it stalls, hospitals will continue choosing between limiting their programs and carrying more of the training costs themselves.