Washington, DC, October 23, 1998 - Although the federal government has taken steps to discourage medical schools from continuing to produce an oversupply of physicians, a panel of experts led by former Senator George Mitchell, contend that far more needs to be done. In its first report in over two years, the Pew Health Professions Commission is calling for drastic changes in the subsidies that the federal government gives to train physicians.

Specifically, the Commission is recommending the creation of an all-payer pool to finance education for physicians, advance practice nurses and physician assistants; the elimination of graduate medical education payments for international medical graduate residents (IMGs) who are not U.S. citizens or permanent residents; and a 25 percent reduction in all federally subsidized first-year residency positions.

In its new report, Beyond the Balanced Budget Act of 1997: Strengthening Federal GME Policy, the Pew Health Professions Commission concludes that federal policies for subsidizing medical education need further revamping because the U.S. continues to have too many physicians, "many of whom are ill-prepared to serve the public in the emerging wellness-oriented, ambulatory-based environment."

Medicare spends about $7 billion a year to support medical residency training. But in recent years, there has been mounting criticism that the program's historic tilt toward hospital-based training has produced too many physicians who are ill-equipped to practice primary care medicine. Although the Balanced Budget Act (BBA) represents the first major overhaul of Medicare graduate medical education (GME) policy since the early 1980s, the commission says further reforms are needed to align the financial incentives of training with the realities of the healthcare marketplace. 

"The Balanced Budget Act focused on curbing Medicare expenditures rather than on providing the right incentives to meet the nation's health workforce needs,"said Mitchell, chairman of the Pew Health Professions Commission. "By itself, the BBA does not ensure that the U.S. has an appropriate physician workforce to meet the nation's health needs."

The panel cites several major shortcomings in Medicare GME policy that must be overcome including: the lack of a means to ensure that private health plans contribute to subsidizing GME; insufficient incentives to permit market forces to regulate the production of physicians; illogical variation in reimbursement for direct medical education expenses; insufficient incentives for training physicians as generalists and in non-hospital settings; lack of incentives for controlling costs; and insufficient support for clinical education for advanced nurse practitioners and physician assistants.

The Commission believes that the federal government should continue to play a key role in subsidizing medical education. But it says that future policies must ensure that training programs encourage use of federal subsidies in a manner consistent with workforce requirements. 

To achieve that goal, the report urges that federal GME policy be revamped to:

• ensure that physicians are trained in relevant clinical sites;
• guarantee an adequate distribution of specialists;
• promote an appropriate geographic distribution of physicians;
• improve the racial/ethnic distribution of physicians;
• teach physicians how to practice as part of a multi-disciplinary team;
• and encourage acquisition of the appropriate skills needed to deliver care in a new health care environment, such as community wellness, appropriate use of information technology and life- long learning.

Specific recommendations in the Commission report include:

• create an all-payer financing pool to ensure that both public and private health plans contribute to the subsidization of clinical education for physicians, advance nurse practitioners, and physician assistants. 
• set the number of all-payer funded residency positions at a level no greater than 110 percent of the number of U.S. allopathic and osteopathic medical graduates in 1997-- a reduction of 25 percent from the current number of federally subsidized first-year residency positions. 
• guarantee all-payer reimbursement for all U.S. medical graduates who have passed parts I and II of the U.S. Medical Licensure Examination or the Comprehensive Osteopathic Medical Licensing Examination. 
• preserve access to care for the uninsured by expanding the National Health Service Corps' loan repayment program 
• eliminate GME payments for international medical graduate residents who are citizens of other nations. They would be permitted to complete their GME training in the U.S. as long as it is paid for by foreign aid, their home governments, or private funds. 
• require teaching institutions that receive all-payer GME payments to continue to offer no fewer than the number of generalist residency positions currently available at those institutions and provide direct medical education payments only for residents completing minimum requirements for board eligibility. 
• create a separate mechanism for payment of indirect medical education that would delink it from payments for inpatient hospital care. 
• eliminate Medicare's subsidy for diploma nurse education programs and create a new all-payer subsidy for clinical education of advanced practice nurses and physician assistants. 
• create a commission to track health care workforce trends and advise Congress, the President, and the Department of Health & Human Services on workforce issues.

The Pew Charitable Trusts support non-profit activities in the areas of culture, education, the environment, health and human services, public policy and religion. Based in Philadelphia, the Trusts make strategic investments that encourage and support citizen participation in addressing critical issues and effecting social change. In 1997, with more that $4.5 billion in assets, the Trusts awarded $181 million to 320 non-profit organizations.

The Center for the Health Professions at the University of California, San Francisco is a national center committed to changing the health care workforce. The Center assists health care professionals, health professions schools, care delivery organizations, and public policy makers in responding to the challenges of educating and managing a health care workforce capable of improving the health and well-being of people and their communities.

PEW HEALTH PROFESSIONS COMMISSION

CHAIRMAN
The Honorable George J. Mitchell
Special Counsel
Verner, Liipfert, Bernhard, McPherson & Hand
University of California, San Francisco

EXECUTIVE DIRECTOR
Edward H. O'Neil, PhD
Director
Center for the Health Professions
University of California San Francisco

COMMISSIONERS
Stuart Altman, PhD*
Sol C. Chaikin Professor of Nat'l Health Policy
Brandeis University
The Florence Heller Graduate School of Social Policy

Uwe E. Reinhardt, PhD*
Professor
Princeton University
Woodrow Wilson School of Public and International Affairs

Ruth Ballweg, PA-C
Director 
University of Washington
MEDEX Northwest Physician Assistant Program

Barbara J. Safriet, JD
Associate Dean
Yale University School of Law

Troyen A. Brennan, JD, MPH, MD
President
Brigham and Women's Physician Hospital Organization

Louis Sullivan, MD
President
Morehouse School of Medicine

Carolyne K. Davis, RN, PhD
Pew Health Professions Commission

David Swankin, JD
President
Citizen Advocacy Center

Mimi L. Fields, MD, MPH, FACPM
Health Consultant & Wellness Physician
HEAL Thyself, Inc.

Neal A. Vanselow, MD
Chancellor Emeritus
Tulane University Medical Center

Robert Graham, MD
Executive Vice President
American Academy of Family Physicians

*Indicates Commissioners who disagreed with several recommendations listed in the Commission report, particularly in relation to: a physician surplus, too many specialists, reducing care for the uninsured, and indirect graduate medical education payments. A commentary explaining the disagreement is included in the back of the report.