Federal Issues - Graduate Medical Education 

AACOM monitors and advocates on federal issues that address or may impact osteopathic medical education. Select from the topic links below to learn about these issues, related AACOM activity and additional resources.

Why GME Matters - Take Action on GME!

IOM Announces Committee to Review Governance and Financing of GME

 Updated 1/10/13

  • IOM Committee on Governance and Financing of GME Holds Second Meeting
    The Institute of Medicine (IOM) Committee on Governance and Financing of Graduate Medical Education (GME) held its second meeting December 19-20, 2012, in Washington, DC. AACOM President and CEO, Stephen C. Shannon, DO, MPH, and AACOM government relations and medical education staff attended the meeting. The Committee heard presentations from seven expert panels on the following interest areas: Examples of National and Regional Workforce Planning; Determining Sufficiency of the Workforce; Challenges in Developing Community-Based Training; Trainee Perspectives; Additional Perspectives; Ensuring Innovation in Health Care and Medical Education; Ensuring Accountability; and Understanding the Costs and Financing of GME. 

    Gail Wilensky, PhD, Project HOPE, and Donald Berwick, MD, MPP, Institute for Healthcare       Improvement, served as moderators and co-chairs of the meeting.  Boyd Buser, DO, Vice President for Health Affairs and Dean, University of Pikeville - Kentucky College of Osteopathic Medicine, presented as a panel expert on “Understanding the Costs and Financing of GME.”  Raul Mirza, PGY-4, Walter Reed Army Institute of Research Sequential Preventive Medicine and Occupational & Environmental Medicine Residency and graduate of the Edward Via College of Osteopathic Medicine, presented on the “Trainee Perspectives” panel.  Barbara Ross-Lee, DO, Vice President for Health Sciences and Medical Affairs, New York Institute of Technology, currently serves on the IOM Committee.

    PowerPoint presentations and an audio recording of the December 2012 IOM GME Committee meeting may be accessed at
  • In October 2010, the Josiah Macy Jr. Foundation and the Association of Academic Health Centers suggested that the Institute of Medicine (IOM) perform an independent, external review of graduate medical education (GME). This request was in direct response to the growing need to ensure a physician workforce capable of caring for aging, diverse, and underserved populations with both acute and chronic health care needs, while balancing innovations in health care delivery and the need for a more cost-effective health care system. In addition to this request, in December 2011, a bipartisan group of senators sent a letter to Harvey Fineberg, MD, PhD, President of the IOM, asking for a comprehensive review of the U.S. GME system. 

    On 4/23/12, the IOM held a planning meeting to discuss the scope of the IOM review committee. AACOM Board Member Marc B. Hahn, DO, Senior Vice President for Health Affairs and Dean, University of New England College of Osteopathic Medicine, participated in the planning meeting. The IOM review committee is expected to begin its work by 6/1/12, and is expected to assess current regulation, financing, content, governance and organization of GME and recommend modifications. Public input will be solicited during a meeting in late summer/early fall 2012.
    For more information, visit

    The Institute of Medicine (IOM) Committee on Governance and Financing of Graduate Medical Education held its first meeting on September 4-5, 2012 in Washington, DC. AACOM President and CEO Stephen C. Shannon, DO, MPH, joined the public session of the meeting. The Committee was addressed by Mary Wakefield, PhD, RN, Administrator, Health Resources and Services Administration, U.S. Department of Health and Human Services; Robert Petzel, MD, Under Secretary for Health, and Malcolm Cox, MD, Chief Academic Affiliations Officer, Veterans Health Administration, U.S. Department of Veterans Affairs; Eric Schoomaker, GEN (Ret), former Army Surgeon General, Scholar in Residence, Uniformed Services University of the Health Sciences; and a congressional panel, which included personal member staff and committee staff. The IOM Committee will hold its next meeting on December 20-21 in Washington, DC. A report is expected to be issued in the fall of 2013. For more information on the IOM Committee:

AACOM GR Activities Supporting GME

 Updated 11/16/11

  • AACOM has increased its outreach to Members of Congress to oppose GME funding cuts, which have been raised as part of the federal budget and deficit discussion.  On 08/02/11, President Obama signed into law the Budget Control Act of 2011, a debt limit and deficit reduction package which raises the $14.3 trillion debt ceiling through 2012 and trims federal spending by approximately $2.1 trillion over the next decade.  It set up a joint congressional committee – the Joint Select Committee on Deficit Reduction, or “Super Committee,” designed to recommend more than $1.5 trillion in further cuts by 11/23/11.  This bipartisan, 12-member congressional Super Committee is considering significant cuts in discretionary and entitlement spending, bringing potential cuts to Medicare-funded GME into the discussion.  AACOM continues to work on multiple levels to try to protect current payment streams and improve financing flexibility in ways that would benefit osteopathic medical education, enhance innovation and improve the training environment to better meet the future health care needs of our population.  Contact your Members of Congress now to ask them to sustain GME funding!  Read AACOM’s most recent letter to the Super Committee urging sustained funding for GME.
  • AACOM has increased its advocacy efforts with Congress and the White House during the recent budget and deficit negotiations to oppose any cuts to GME.  In December 2010, the President’s National Commission on Fiscal Responsibility and Reform released its final report with recommendations for reducing the nation’s deficit.  The report includes a recommendation to cut approximately 50% of GME funding – totaling $60 billion over 10 years.  It is AACOM's understanding that this recommendation is on the table during these negotiations.  AACOM GR staff has reached out to House and Senate Members who have COMs in their districts/states to urge them to protect GME and oppose any cuts during the discussions.  AACOM also sent a letter to the White House as well as a joint letter with the AOA to Congress on this matter.  The GR staff sent numerous action alerts to its membership to reach out to their MOCs to take action. 

Children’s Hospitals Graduate Medical Education

 Updated 10/4/11

  • House Reauthorizes Program to Fund CHGME
    On 9/20/11, the House of Representatives passed the Children's Hospital Graduate Medical Education (CHGME) Support Reauthorization Act of 2011 by voice vote.  The measure was sponsored by Rep. Joseph R. Pitts (R-PA), Chairman of the House Energy and Commerce Health Subcommittee and would reauthorize the CHGME Program at the current funding level through FY 2015.  The Senate is expected to consider its version of the bill this fall.  The President’s FY2012 budget eliminated funding for the program, which is scheduled to expire at the end of FY 2011.
  • On 07/28/11, the House Energy and Commerce Committee approved a five-year reauthorization of the Children's Hospitals Graduate Medical Education (CHGME) Payment Program, which funds training for pediatricians. The CHGME bill, H.R. 1852, would reauthorize the program through fiscal year (FY) 2016 at the current level of $330 million annually. President Obama’s FY12 budget eliminated funding for the program, which expires at the end of FY11. On 07/26/11, the House Energy and Commerce Health Subcommittee passed the legislation. The bill is expected to pass the House.
  • On 07/26/11, the House Energy and Commerce Health Subcommittee approved a five-year reauthorization of the Children's Hospitals Graduate Medical Education (CHGME) Payment Program, which funds training for pediatricians.  The CHGME bill, H.R. 1852, would reauthorize the program through fiscal year (FY) 2016 at the current level of $330 million annually.  President Obama’s FY12 budget eliminated funding for the program, which expires at the end of FY11.  A full committee markup of the bill is expected on 07/28/11.

National Commission on Fiscal Responsibility and Reform

  • National Commission on Fiscal Responsibility and Reform Releases Recommendations Impacting GME
    On 12/01/10, the National Commission on Fiscal Responsibility and Reform, established by President Obama, released its final report, entitled "The Moment of Truth," with recommendations for reducing the nation’s deficit.  The bipartisan Commission aimed at improving the nation’s current fiscal situation and achieving long-term fiscal sustainability.  However, the recommendations issued by the Commission were not formally adopted, with a vote of 11 to 18, three shy of the supermajority required. The Commission recommended severe cuts, around 50 percent, to the graduate medical education funding that Medicare provides to hospitals with teaching programs for physician residents.  To address these concerns, President and CEO Stephen C. Shannon, DO, MPH, released a press statement highlighting AACOM’s concerns with these cuts as well as addressing the challenges of meeting the demands of increasing GME to ensure an adequately trained physician workforce. 


Posted 09/01/2010

  • On 08/30/10, AACOM submitted comments to Donald Berwick, MD, Administrator of the Centers for Medicare and Medicaid Services (CMS), on the CMS proposed rule on the Medicare program, which includes modifications to implement certain graduate medical education provisions, including redistribution of slots, of the health reform law – the Patient Protection and Affordable Care Act.  View comments.

Student Exception to the Federal Insurance Contributions Act 

Updated 11/19/2010

  • Oral Audio and Transcript Available for Mayo Foundation for Medical Education and Research et al. v. United States (Medical Resident Taxation Case)
    On behalf of AACOM, Pamela Murphy, MSW, Acting Director of Government Relations, recently attended the oral argument before the U.S. Supreme Court on the Mayo Foundation for Medical Education and Research et al. v. United States. The case involves a rule change by the U.S. Department of Treasury in 2005 providing that the student exemption from the Federal Insurance Contributions Act (FICA) tax does not apply if the individual works full-time. Eight of the nine Supreme Court justices considered the case, in which the Department of Treasury argued that the Internal Revenue Service (IRS) should be allowed to collect Social Security and Medicaid taxes from medical residents who work and study at teaching hospitals. Arguing for the medical colleges was a former solicitor general, Theodore B. Olson, who said that limiting the definition of a student to someone who works 40 hours or fewer a week was arbitrary. Four other federal appeals courts have ruled that the IRS must first examine the situations of medical residents at different institutions before deciding if they are eligible to be exempt from Social Security and Medicaid taxes. The newest member of the court, Justice Elena Kagan, recused herself from the case because she had signed the Justice Department's brief on behalf of the IRS while she was solicitor general. For more information on the case and the amicus brief filed by AACOM along with other organizations, please visit  Click here to hear the audio or view the transcript.   
  • On 03/02/10, following several losses in federal court cases, the Internal Revenue Service (IRS) reversed its position, for tax periods ending before April 1, 2005, that medical residents do not qualify for the student exception to paying Federal Insurance Contributions Act (FICA) taxes.  FICA taxes are comprised of both Social Security and Medicare taxes.  The IRS continues to enforce regulations promulgated in 2005 codifying that residents are not students and therefore are required to pay FICA taxes.  These regulations have also been challenged in federal court, and in one such case the U.S. Supreme Court has been asked to hear an appeal of a federal appeals court case where the court ruled in favor of the IRS.

Nelson Amendment (S.A. 2909)

Posted 02/16/2010

  • On 12/22/09, by a vote of 60-39, the Senate adopted a manager's amendment offered by Majority Leader Harry Reid (D-NV) that did not include the Nelson Amendment (S.A. 2909) to increase the number of Medicare-funded Graduate Medical Education (GME) slots.  The Nelson amendment would have authorized a 15% increase (approximately 15,000 slots) for GME and was offered on December 4, 2009, by Senator Bill Nelson (D-FL).  On 12/14/09, AACOM joined together with the American Osteopathic Association (AOA) and the Association of American Medical Colleges (AAMC) along with several other medical associations to send a letter to the U.S. Senate in support of the Nelson Amendment, S.A. 2909.

Resident Physician Shortage Reduction Act of 2009

Updated: 8/5/2009

  • RPSRA would expand the number of Medicare-supported physician residency training positions by 15 percent or roughly 15,000 slots.  Preference would be given to hospitals that apply for primary care, general surgery, or slots that emphasize community-based training.  Additional preference would be given to: (1) hospitals in states with fewer Medicare-supported residency slots than medical students; and (2) hospitals with low resident physician-to-population ratios. 

    The legislation would require that all time spent by a resident physician in nonhospital settings be counted towards the determination of full-time equivalency for the purposes of payments for direct graduate and indirect medical education costs, without regard to the setting in which the activities are performed, if the hospital continues to incur the costs of the resident's stipends and fringe benefits during the time spent in that setting.

    The legislation would permit Medicare indirect graduate medical education (GME) reimbursement for educational activities that occur in the hospital as well as Medicare direct GME reimbursement for educational activities that occur in clinical nonhospital settings, such as community health centers and other community-based ambulatory care sites. 

    Finally, the legislation would allow residency slots in hospitals that close to be redistributed to nearby teaching hospitals so that these slots are not lost upon hospital closure.
  • On 05/21/09, AACOM endorsed the Resident Physician Shortage Reduction Act of 2009 (RPSRA).  AACOM signed a letter, circulated by the American Osteopathic Association, to the bills’ sponsors in support of the legislation. The letter was signed by 75 osteopathic organizations.

Government Accountability Office

Updated: 8/5/2009

The Government Accountability Office issued a report in 05/04/09 focusing on: 


      1. trends in postgraduate medical training;
      2. factors that influence medical students’ specialty choice; and
      3. trends in the amounts of student debt incurred by medical school graduates. 

A summary of the report appears at:; for the full report, entitled, Graduate Medical Education:  Trends in Training and Student Debt go to:

Department of Veterans Affairs, Office of Academic Affiliations

Updated: 6/11/2010

  • AACOM held a meeting with the Department of Veterans Affairs (VA) Office of Academic Affiliations on Wednesday, May 12, to discuss the implementation of The Report of the Blue Ribbon Panel on VA-Medical School Affiliations as well as opportunities to increase the number of VA affiliations with osteopathic medical residency programs.   
  • AACOM and Department of Veterans Affairs (VA) are working together to make all colleges of osteopathic medicine, osteopathic postdoctoral training institutions, osteopathic graduate medical education program sponsors, and VA facilities aware of opportunities for collaboration on osteopathic medical education.

Medicare Payment Advisory Commission

Updated: 3/18/2011

  • MedPAC Chair Testifies at Congressional Hearing
    On 3/15/11, the House Ways and Means Committee’s Subcommittee on Health held a hearing on the Medicare Payment Advisory Commission’s (MedPAC) March 2011 Report to the Congress: Medicare Payment Policy, which focuses on rate recommendations for providers. Glenn M. Hackbarth, Chairman of MedPAC, served as the sole witness.  The hearing covered MedPAC’s fiscal 2012 recommendations, which include stabilizing Medicare service payments as well as asking Congress to create a reimbursement system that raises provider payments based on quality rather than quantity.  Other recommendations include: changing Medicare’s fee-for-service reimbursement policy to support workforce skills that reduce cost growth while maintaining or improving quality; freezing FY 2012 cost updates for skilled nursing facilities, long-term care centers, and inpatient rehabilitation centers; updating payments for physician fee schedule services in 2012 by 1 percent; addressing and adopting delivery systems reform, many of which were included in the ACA; and investigating payment reforms, such as rewarding quality care and penalizing care that is not deemed to meet the highest standards.

    To view the written testimony of MedPAC Chairman Glenn Hackbarth, visit:

    View a fact sheet on the MedPAC March 2011 report:
  • On 6/23/10, the House Energy and Commerce Committee’s Subcommittee on Health held a hearing on the June 2010 report of the Medicare Payment Advisory Commission (MedPAC).   Glenn Hackbarth, Chairman of MedPAC, served as the sole witness.  The hearing covered MedPAC’s recommendations on reforming the Medicare payment system, with particular focus on graduate medical education (GME) financing, including:  proposing $3.5 billion in indirect GME payments contingent on teaching hospitals meeting new education standards; changing Medicare payment structure away from fee-for-service; analyzing the workforce implications of Medicare-funded GME residency training slots; and promoting diversity among physicians in training.
  • On 6/15/10, the Medicare Payment Advisory Commission (MedPAC) released its June 2010 report:  Report to the Congress: Aligning Incentives in Medicare.  The report’s five recommendations on GME financing include: changing Medicare’s funding of GME to support workforce skills that reduces cost growth while maintaining or improving quality; publishing a report that shows Medicare medical education payments received by each hospital and each hospital’s associated costs; conducting workforce analysis to determine the number of residency positions needed in the US in total and by specialty; reporting to Congress on how residency programs affect the financial performance of sponsoring institutions and whether residency programs in all specialties should be supported equally; and studying strategies for increasing diversity of the health professional workforce and report on what strategies are most effective to achieve this goal. 
  • On 06/15/09, the Medicare Payment Advisory Commission (MedPAC), the panel that advises Congress on Medicare issues, released its June 2009 report to Congress, Improving Incentives in the Medicare Program.

    Chapter one of the report examines medical education in the context of long-term health care delivery system reform.  In a study of internal medicine residency programs, MedPAC found that formal curricula are not well aligned with objectives of delivery system reform.  Although most programs provide at least some training in selected topics essential for delivery reform (e.g., care coordination across settings), overall, their curricula fall far short of the instruction recommended by the IOM and other experts.

    Of particular concern is the relative lack of formal training and experience in multidisciplinary teamwork, cost awareness in clinical decision making, comprehensive health information technology, and patient care in ambulatory settings.  Residency experience in nonhospital and community-based settings is important because most of the medical conditions that practicing physicians confront should be managed in nonhospital settings.  Inherent financial incentives and Medicare regulations, however, strongly encourage teaching hospitals to confine their residents' learning experiences to within the hospital.

    Future MedPAC work on medical education policy issues may include exploring ways to link delivery system reforms to medical education incentives and structuring medical education subsidies to produce the optimal balance of generalists and specialists.

    Another issue to examine is enlisting all payers to contribute explicitly to medical education.  To view the entire report, go to:  The table of contents, with links to individual chapters, is located at:  Additionally, a news release and a fact sheet regarding the report are available at: and, respectively.
  • MedPAC voted on 01/08/09, to decrease the current 5.5 percent indirect medical education (IME) adjustment by one percentage point to 4.5 percent and redirect the funds to support the implementation of a value-based purchasing (VBP) system.  VBP requires a portion of a hospital’s reimbursement be dependent on their performance in pre-defined quality measures.

    The reduction of IME is based on the committee’s findings that there was only a 2.2 percent increase in costs for every 10 percent increase in teaching intensity in a hospital, whereas the current payments showed a 5.5 percent increase for every 10 percent increase in teaching intensity.