A Study of Graduate Medical Education Costs

This final report provides our analysis of hospital graduate medical education (GME) costs during the first 5 years of Medicare's prospective payment system. Our report, which is intended to assist health care policymakers in their review and formulation of GME payment policy, found that historical GME costs increased much faster than leading economic indices and the average cost per resident varied widely among hospitals. Given the growing surplus of some physician specialists and the financial uncertainty facing the Medicare trust funds, the OIG sees a need and opportunity for Medicare to cut back its subsidy of GME costs. We are recommending that the Health Care Financing Administration (HCFA) consider proposing legislation to reduce or even eliminate Medicare's investment in GME for surplus physician specialists if the Administration's proposed health reform is not enacted by Congress. The HCFA agreed with the conclusions in our report.