The Kaiser Papers A Public Service Web Site   
  In Copyright Since September 11, 2000
This web site is in no manner affiliated with any Kaiser entity and the for profit Permanente Permission is granted to mirror this web site - Please acknowledge where the material was obtained.
 Link for Translation of the Kaiser Papers 
PATHFINDER(search)  |   ABOUT US  |  CONTACT  MCRC  |  PRIVACY POLICY


Corporate Financial Gain from the GME Program

Federal Statutes and those currently being proposed specific to GME


Council on Graduate Medical Education


In 2007, Medicare spent roughly $8.8 billion on GME activities.

...                                                    According to MedPAC, more than $3 billion in extra payments are made to teaching hospitals with no accountability for how these funds are used.  Congress should increase accountability around how these and other GME funds are spent. w w w . f i n a n c e . s e n a t e . g o v



Kaiser Publication - The Importance of Graduate Medical Education for Permanente Physicians, Kaiser Permanente, and American Medicine


Kaiser Permanente Patient Center Medical Homes:  Lessons Learned in Two Residencies and Applicable Elsewhere





Under current Federal statutes, GME qualifies as a community service; therefore, the providers of this education are entitled to receive tax benefits.

Source - Council on Graduate Medical Education -
Division of Medicine and Dentistry
Bureau of Health Professions
Health Resources & Services Administration
U.S. Dept. of Health & Human Services


Medicare and Medicaid are the largest explicit payers of GME, experts argue that GME receives significant implicit support from several private payment sources. Regarding many private sources of payment, the key word is “implicit,” because it is not possible to identify most, if any, amounts specifically allocated for GME. Teaching hospitals often refer to such non-labeled funds as core budget dollars that support GME rather than those that are identified as originating from service reimbursements of private payers.

NOTE THE FOLLOWING DOES NOT REFER TO PAYMENT TO NORTHERN CALIFORNIA PERMANENTE OR KAISER

Kaiser-Permanente Medical Groups

One example of Kaiser-Permanente’s involvement in GME is the Southern California Kaiser-Permanente Medical Group (SCPMG). SCPMG currently trains more than 250 residents in 21 Kaiser-administered GME programs in metropolitan Los Angeles. These programs include five separate family medicine residencies as well as a number of subspecialty residencies. The costs of residency education are partially funded through Kaiser’s Community Affairs initiative, and funds are administered by the SCPMG Clinical Services Department. A significant number of the new physicians graduating from these residency programs go on to become SCPMG physicians. In 2001, SCPMG’s residency programs were awarded a 5-year accreditation by ACGME, and many of these residencies began operating in Kaiser’s newly opened Center for Medical Education that same year. Each of SCPMG’s 12 different medical centers also employs a director of medical education who is responsible for the overall quality of programs and for maintaining State continuing medical education accreditation. SCPMG also provides clerkships for 400 to 500 medical students annually and in 1972 began a school to train nurse practitioners.

Under current Federal statutes, GME qualifies as a community service; therefore, the providers of this education are entitled to receive tax benefits. SCPMG residency programs in Los Angeles view their role as providing a direct community benefit not only by producing practicing physicians for the community, but also by involving residents in actual volunteer community service and in the care of medically underserved populations. Since the mid-1980s, the Kaiser Permanente Los Angeles Family Practice Residency Program has provided volunteer medical services at a couple of free clinics on a weekly basis. In the late 1990s, an SCPMG residency program director, Jimmy Hara, was appointed to the California Health Manpower Policy Commission, whose charge is to provide State funding to family practice residencies and nurse practitioner and physician assistant training programs.43

Another example of Kaiser’s involvement in GME is the New York branch of the Northeast Permanente Medical Group (NPMG), a small physician group in a less populated area of the State. In the late 1990s, NPMG and the New York Medical College jointly applied for and were awarded a small seed grant from the Josiah Macy, Jr. Foundation in New York City to fund planning and development of NPMG’s initial GME activity. Through earlier medical school teaching relationships, New York Medical College had a strong interest in working with NPMG to promote primary care and to develop sites for ambulatory training. In particular, NPMG was viewed by the college as an excellent training site for preparing residents for managed care practice. The ultimate arrangement involved the establishment of a managed care rotation for second- and third-year primary care residents in ambulatory sites of the group model HMO. Benefits to Kaiser of this arrangement include enhanced opportunities for physician recruitment and access to useful quality management projects conducted by participating residents.44


MODELS OF PRIVATE-SECTOR GME FINANCING

Although it is known that Medicare and Medicaid are the largest explicit payers of GME, experts argue that GME receives significant implicit support from several private payment sources. Regarding many private sources of payment, the key word is “implicit,” because it is not possible to identify most, if any, amounts specifically allocated for GME. Teaching hospitals often refer to such non-labeled funds as core budget dollars that support GME rather than those that are identified as originating from service reimbursements of private payers. Despite continued efforts by private health plans and payers to negotiate lower rates for teaching hospitals, the Medicare Payment Advisory Commission in 2001 reported that private payers in 1999 were on average still paying teaching hospitals over 100 percent of their costs. This finding suggests that at least a portion of these higher payments were available for GME as Medicare payments to these institutions. However, a 2002 survey of acute care hospitals found that almost 60 percent of the Nation’s largest hospitals (many of which provide physician training) have canceled one or more contracts with private health plans because of poor financial results and overall financial pressures.38 What impact this situation will have on private sources of implicit GME payments to these institutions is not known.

In addition to payments from traditional private payers (e.g., Blue Shield), teaching hospitals and training programs may receive private funding from several sources that more likely are identified as providing explicit support for GME. These sources include philanthropy, industry grants and contracts, professional associations, faculty practice plans, and subsidies from sponsoring or affiliated managed care plans. This section of the report briefly describes some exemplary efforts by several large MCOs to use member dues and foundation funding to train physician residents.

Partnerships for Quality Education

Partnerships for Quality Education (PQE), based at the Harvard Pilgrim Health Plan in Boston, Massachusetts, has received support from The Robert Wood Johnson Foundation since 199939 to fund new “managed care” and interprofessional training models in several primary care residency and nurse practitioner education programs nationwide. With foundation funding, PQE is currently supporting four programs:

  • PQE funds medical residency and nurse practitioner programs to partner with MCOs to develop new curricula and new methods for teaching about managing care. To date, PQE has awarded thirty-two 2-year grants to residency programs and twenty-seven 2-year grants to nurse practitioner training programs, each worth $30,000.40
  • Collaborative Interprofessional Team Education (CITE) funds partnerships that use interprofessional teams to improve care delivery and patient outcomes. Each CITE partnership includes at least one primary care medical residency program and one nurse practitioner program working with a managed care organization or practice. Most partnerships also include schools of social work and pharmacy. To date, CITE has awarded five 3-year grants worth approximately $450,000 each.
  • Take Care to Learn: Teaching Clinical Care Management funds training institutions to improve the care of patients with asthma or diabetes. Grants allow the institutions to develop or enhance chronic illness management programs that serve as innovative platforms for teaching about managing clinical care. To date, this program has awarded nine 2-year grants worth about $315,000 each.
  • Achieving Competence Today (ACT) is a new program that supports efforts by residency programs to focus on training in system and practice improvement. ACT has awarded nineteen 2-year grants worth $25,000 each.41

Group Health Cooperative of Puget Sound Family Practice Residency Program

This staff model HMO’s family practice residency program (the only physician residency program at Group Health) is accredited by the Accreditation Council on Graduate Medical Education (ACGME) and has been training board-certified family physicians since 1969. The program is affiliated with the University of Washington and its network of family practice residencies in Washington, Wyoming, Alaska, Montana, and Idaho. Group Health member premiums partially subsidize educational costs associated with the residency program.

The residency also is the training site for nurse practitioner students. Group Health also offers continuing education programs for physicians and registered nurses, and plans to offer a fully paid 5-week extended orientation for newly graduating licensed practical nurses beginning in summer 2003.

Group Health’s medical staff in large part comprises primary care physicians; thus, the HMO values the importance of the family practice residency as an accessible and high-quality source of future medical staff. Educational emphasis is on primary care, family medicine, and prevention and includes state-of-the-art population management and full-spectrum family practice for a managed care environment.42








kaiserpapers.org