Variations in Medicare Payments for Graduate Medical Education in California and Other States

Thomas Oliver
Atul Grover
Philip Lee, UCSF


This is archived content, for historical reference only.

One of Medicare’s key social roles is to provide financial support for graduate medical education (GME). Medicare makes GME payments to the nation’s teaching hospitals to cover both the direct and the indirect costs associated with training clinical residents, such as compensation for trainees and instructors, overhead expenses, and the higher costs of patient care in such institutions. Medicare is the single largest source of GME funding. In FY 1998, Medicare made $7.09 billion in payments for GME, while Medicaid and other state programs added an estimated $2.4 billion.

Both the amount of GME funding and the methods of determining payments to teaching hospitals have come under scrutiny as policymakers struggle to contain Medicare costs and to reconcile policies that promote competition among health care providers. In addition, the system produces wide variation in payments across teaching hospitals and geographic regions. This June 2001 report shows the variations in Medicare GME payments among teaching hospitals and the six states receiving the largest payments; discusses possible causes of such variations; and examines potential effects of policy changes. The full report is available under Document Downloads below.

This report represents the initial activity under the California HealthCare Foundation and the National Health Policy Forum (NHPF) partnership. For more information on the topic of GME funding and reform, see the companion piece, “Federal and State Perspectives on GME Reform,” on the NHPF Web site through the link below.