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Impact on GME Funding: DGME Penalty Removal and New State Funding Mechanisms

Recent adjustments to Medicare funding in Graduate Medical Education (GME) are reshaping the way institutions are leveraging funding opportunities. Specifically, the removal of the Direct Graduate Medical Education (DGME) funding penalty and the emergence of new state funding mechanisms present several implications for teaching hospitals across the country.


The historical ideology of refraining from claiming residents beyond institutional caps is no longer beneficial and can negatively impact GME funding. Previously, penalties for surpassing the established DGME funding cap encouraged institutions to underreport the number of residents. With the elimination of these penalties, institutions can now accurately report their resident count without fear of reducing their reimbursement. 


Furthermore, while some states have historically offered varying levels of GME-related funding, an increasing number of states are expanding funding for training programs with new state funding mechanisms. With 6 out of 10 physicians remaining in the state they trained, states that invested in these training programs are seeing the positive return of their expenditure when reviewing their ability to address the ongoing physician shortages.


In contrast to federal funding, most state funding mechanisms are not subject to a cap or limitation, rather they are paid based on the total number of residents. While many institutions may still exclude some programs from their resident count, this strategy not only impacts current federal funding but also impacts their eligibility to utilize new state funding mechanisms.


In conclusion, the elimination of penalties for institutions exceeding their FTE cap paired with the recent modifications to state GME funding significantly increases GME funding opportunities for institutions and healthcare systems. By strategically leveraging these changes, GME stakeholders can better navigate challenges, optimize resources, and enhance the quality and accessibility of healthcare services.


Germane Solutions continually monitors emerging GME funding strategies and legislative changes relevant to GME. We strive to provide our current and future clients with the optimal funding opportunities for existing and projected growth.

 

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