General Healthcare Costs

Let Me Be Brief: Graduate Medical Education (GME) Funding

A series of briefs by Texas Medical Students

By: Parker Davis, Ashlynn Mills, Priya Patel

The history of graduate medical education (GME) funding is complex with many competing interests, from teaching hospitals and government agencies that foot the bill to faculty physicians and residents themselves. The establishment of Medicare in 1965 marked the beginning of significant federal subsidization of residency training.1,2,3 Initially uncapped, financial support from Medicare was meant to be a temporary measure until more permanent systems of GME funding could be established.4 Today, Medicare remains the single largest monetary contributor to residents’ education. Direct graduate medical education (DME) covers resident and faculty salary and benefits, plus administrative overhead.5 Indirect graduate medical education (IME) was established to help alleviate the additional costs of running a teaching hospital related to a more complex patient panel and research expenses.4 However, concerns about inflating healthcare costs and the looming threat of a physician surplus in the 1980-90s prompted the curtailing of GME spending. Thus, the formulas used to calculate a hospital’s DME provided full funding for each “Full-Time Equivalent” (FTE; employed resident) only for the duration of the initial residency period or 5 years, whichever was shorter. PGY-6+ residents comprised only a fraction of an FTE, and the hospital received less money per senior resident.6 Additionally, the Balanced Budget Act of 1997 limited the number of residents at a given hospital that were eligible for DME, limiting a hospital’s maximum DME by the number of residents it employed in 1996.7

As indications for a national physician shortage emerged in the early 2000s, the conversation surrounding GME began to change. The focus became how to reconcile the myriad of funding streams and best support the growth of the next generation of physicians while eliminating excess spending. Even as the American Association of Medical Colleges (AAMC) was calling for expansion of medical school seats across the country, the 2010 Simpson-Bowles Commission recommended a reduction in average GME compensation, an attempt to reign in government spending in the midst of the economic recession.6 More recently, the US Department of Health and Human Services aimed to integrate GME funding streams from Medicare, Medicaid, and the Children’s Hospital into a single consolidated program, distributed jointly by the Centers for Medicare & Medicaid Services (CMS) and the Health Resources and Services Administration.8

The Texas Medical Association (TMA) was established to lobby on behalf of physicians at the state and federal levels to promote physician autonomy, protect the patient-physician relationship, and minimize regulatory intervention in the practice of medicine from insurers and other nonmedical entities. Created in the late 1970s, the Medical Student Section (MSS) is a voice for medical students within the TMA with the goal of improving medical education and advocating for the future of medicine.9 In the saga of GME, one of the TMA’s primary objectives has been to retain graduates of Texas medical schools in Texas. TMA advocacy has focused on supporting the growth of GME, both financially and in terms of the total number of seats.10,11,12 The acuity of the physician shortage was emphasized with the national population growth rate and was again highlighted during the COVID-19 pandemic, as patients experienced long wait-times and shortage of resources. In response, six new medical schools have opened in Texas since 2016, and some of the established nine medical schools have increased their class sizes.

However, even as the number of Texas medical school graduates is rising, the number of residency positions available remains stagnant.13 More positions are necessary to increase the physician workforce, which calls for an increase in GME funding. The TMA postulates a target ratio of 1.1:1 first-year GME slots per medical school graduate.14 Not only does this ratio provide enough residency spots for every medical student in Texas, it also gives graduates from out-of-state schools a reason to consider Texas when deciding where to bring their talents. Conversely, allowing the number of positions to dwindle provides a catalyst for a mass migration of graduates out of the state, taking with them a substantial revenue stream. It is thus imperative that GME remains a top priority for lawmakers. The consequences of allowing funding to fall by the wayside are too drastic to ignore. For the sake of the nation’s health, legislators must ensure that medical school graduates have the opportunity to take that necessary next step toward becoming a physician.

Fast Facts

  • The $2.3 trillion Consolidated Appropriations Act of 2021 authorized relief funding for community development financial institutions. It provides funding for 1,000 new Medicare-supported GME slots beginning FY 2023, adding up to 200 positions annually.15 In 2021, Texas graduated almost 2,000 medical students.16 Texas needs to stabilize the physician workforce by allocating additional funds to the 2024-2025 Texas Higher Education Coordinating Board’s (THECB) physician development programs. Health related institution formula funding recommendations for the 24-25 Biennium provide the lowest percent increase for both Instruction and Operations (18.8%) and GME funding (19.3%). 17 These areas directly impact the ability of the state to attract faculty and residents to fill the much needed and growing physician workforce gap.
  • The 84th Texas Legislature, Regular Session, consolidated the Unfilled Residency Position Program, the New and Expanded Residency Program, and the Resident Physician Expansion Program into the single GME Expansion Program. The funding allowed the new positions created in 2014 and 2015 to be maintained and to provide enough funding to support the addition of approximately 130 new residency positions.
  • The 86th Texas Legislature, Regular Session, provided $157.2 million to support GME Expansion Programs. As a result, an estimated 2,000 residency positions received funding support in FY 2020 and FY 2021.
  • While adding new residency positions and programs is admirable and will contribute to the state’s 1.1 to 1 ratio goal, it is also important that the state’s existing residency programs receive adequate funding and support.
  • The closing of two family medicine residency programs resulted in reduced access to health care in the communities of Wichita Falls and Corpus Christi, further contributing to physician distribution challenges.

Funding Requested

  • Additional funding requested: $34 million for the State GME Expansion Grant Program to maintain residency positions created through the program to date, and to maintain the1.1:1 state target ratio. GME Expansion Program funding has supported the creation of 472 new first-year residency positions between 2014 and 2021 to accommodate the increase in the number of medical graduates resulting from the opening of new medical
  • Additional funding requested: $20.5 million to replace recent budget cuts to the Family Practice Residency Program and enable annual grants of $15,000 per family medicine resident.18
  • $1 million to activate the State Rural Training Track Grant Program for creation of rural residency training programs (HB 1065 passed in 2019 but was not funded).
  • $30 million one-time endowment to sustain the State Physician Education Loan Repayment Program and recruit physicians to the state’s most underserved areas.
  • $2.14 million for the Joint Admission Medical Program so it can keep pace with recent increases in medical school enrollments.

Related Bills (

No currently proposed Texas Legislature (

  1. H.R. 9424 – 117th Congress
    Introduced in House (12/05/2022)

    Creating Access to Residency Education Act of 2022
    Sponsor: Castor, Kathy [Rep.-D-FL-14] (Introduced 12/05/2022) Cosponsors: (0)
    Committees: House – Energy and Commerce
    This bill requires the Centers for Medicare & Medicaid Services to award matching funds to teaching hospitals or other graduate medical education training programs for medical residency
    training programs in states where there are fewer than 44 medical residents per 100,000 people. Recipients must cover one third of the costs for primary care residency training programs and
    one half of the costs for programs in other fields.
    Latest Action: House – 12/05/2022 Referred to the House Committee on Energy and Commerce.
  2. H.R. 3671 – 117th Congress
    Introduced in House (06/01/2021)

    Doctors of Community Act or the DOC Act
    This bill reauthorizes and provides mandatory funding for graduate medical education programs operated by teaching health centers.
    The bill sets out funding levels through FY2033. Funding for FY2034 and beyond equals the preceding fiscal year’s amount adjusted for medical inflation.
    Latest Action: House – 06/02/2021 Referred to the Subcommittee on Health.
    S.1958 — 117th Congress (2021-2022)
    Introduced in Senate (06/07/2021)

    Doctors of Community Act or the DOC Act
    DOC Act
    Sponsor: Murray, Patty [Sen.-D-WA] (Introduced 06/07/2021) Cosponsors: (8)
    Committees: Senate – Health, Education, Labor, and Pensions This bill reauthorizes and provides mandatory funding for graduate medical education programs operated by teaching health centers. The bill sets out funding levels through FY2033. Funding for FY2034 and beyond equals the preceding fiscal year’s amount adjusted for medical inflation. Latest Action: Senate – 06/07/2021 Read twice and referred to the Committee on Health, Education, Labor, and Pensions
  1. H.R.8508 – Rural Physician Workforce Production Act of 2022 – 117th Congress (2021-2022)
    Sponsor: Rep. O’Halleran, Tom [D-AZ-1] (Introduced 07/26/2022)
    Committees: House – Ways and Means; Energy and Commerce
    Latest Action: House – 07/26/2022 Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined
    by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
  2. H.R.949 — 117th Congress (2021-2022)
    There is one summary for H.R.949. Bill summaries are authored by CRS.
    Introduced in House (02/08/2021)
    Expanding Teaching Health Centers Act of 2021
    This bill provides funding through FY2023 to the Department of Health and Human Services to establish and expand medical residency training programs at teaching health centers.
    Latest Action: House – 02/09/2021 Referred to the Subcommittee on Health. (All Actions)


  1. House report number 213, 89th Congress, 1st session. (1965), Accessed 13th February 2023.
  2. Guss D, Prestipino AL, Rubash HE. Graduate medical education funding: a Massachusetts General Hospital case study and review. J Bone Joint Surg Am. 2012;94(4):e24. doi:10.2106/JBJS.K.00425
  3. Stevens R. American medicine and the public interest. New Haven and London: Yale University Press; 1971.
  4. Schuster BL. Funding of Graduate Medical Education in a Market-Based Healthcare System. Am J Med Sci. 2017;353(2):119-125. doi:10.1016/j.amjms.2016.11.027
  5. Solomon IH, Normandin E, Bhattacharyya S, et al. Neuropathological Features of Covid-19. N Engl J Med. 2020;383(10):989-992. doi:10.1056/nejmc2019373
  6. He K, Whang E, Kristo G. Graduate medical education funding mechanisms, challenges, and solutions: A narrative review. Am J Surg. 2021;221(1):65-71. doi:10.1016/j.amjsurg.2020.06.007
  7. Iglehart JK. Medicare, graduate medical education, and new policy directions. N Engl J Med. 2008;359:643-50.
  8. FY 2019 Budget & Performance. Published 2019. Accessed February 13, 2023.
  9. TMA House of Delegates. “TMA 2025 Goals.” TMA 2025 Goals, Texas Medical Association, 10 Apr. 2019,
  10. 200.016 Graduate Medical Education. Published 2016. Accessed February 15, 2023.
  11. 200.045 Needed Growth in Graduate Medical Education Programs. Published 2017. Accessed February
    14, 2023.
  12. 205.022 Federal Title VII Graduate Medical Education Grant Program. Published 2022. Accessed February 14, 2023.
  13. Price, Sean. “Unfreezing GME: A Boost to Federal Funding for Residencies by Sean Price Texas Medicine October 2021.” Texmed, Texas Medical Association, Oct. 2021,
  14. Sorrel, Amy Lynn. “Legislative Priority #1: Scope of Practice Encroachments, Graduate Medical Education Funding.” Texmed, Texas Medical Association,
  15. Robeznieks, A. (2022, March 16). 1,000 new GME slots are coming. CMS must not hamper their use. American Medical Association. Retrieved February 14, 2023, from
  16. Michas, F. (2022, June 8). Total Medical School graduates in the State. Statista.
    Retrieved February 14, 2023, from
  17. Formula advisory committees – Texas Higher Education Coordinating Board. (n.d.). Retrieved February 14, 2023, from committees/formula-advisory-committees/

Helpful Resources

  4. 205.024 Medicare and Medicaid Graduate Medical Education Funding. Published 2016. Accessed February 14, 2023.

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