The Resident Physician Shortage Reduction Act of 2019 (H.R. 1763/S. 348) was introduced on February 6, 2019. The bills were sponsored in the House by Representatives Terri Sewell (D-Ala.) and John Katko (R-N.Y.) and Senator Robert Menendez (D-NJ) in the Senate.

The bill would amend the Balanced Budget Act of 1997 which imposed caps on the number of residents that each teaching hospital is eligible to receive Medicare direct graduate medical education (DGME) and indirect medical education (IME) payments. These caps have remained in place and have generally only been adjusted as a result of certain limited and one-time programs.

The bill would increase the number of Medicare-funded residency slots by 3,000 each fiscal year from 2021 through 2025 (15,000 total). In addition, the bill provides that:

  • A hospital may not receive more than 75 slots in any fiscal year unless the Secretary of Health and Human Services (HHS) determines that there are remaining slots available for distribution. 
  • One-third of the new residency slots would be available only to hospitals that are already training at least 10 residents in excess of their existing cap and that train and will continue to train for five years, at least 25 percent of their residents in primary care and general surgery. 
  • In determining which hospital would receive slots, the HHS Secretary is required to consider the likelihood of a hospital filling the positions and would prioritize hospitals in the following order:
    1. Hospitals in states with new medical schools;
    2. Hospitals in training partnerships with Veterans Affairs medical centers;
    3. Hospitals that emphasize training in community-based settings or hospital outpatient departments;
    4. Non-rural hospitals that operate a training program in a rural area or a program with an integrated rural track; and
    5. All other hospitals. 

The Senate measure (S 348) is sponsored by Senators Robert Menendez (D-N.J.), John Boozman (R-Ark.) and Charles Schumer (D-N.Y.) Although the bill is named the same, this bill would increase the number of Medicare-funded residency slots nationally by 3,000 each FY from 2021 through 2025.

  • A hospital may not receive more than 75 slots in any fiscal year unless the HHS Secretary determines there are remaining slots for distribution. 
  • In determining which hospitals would receive slots, the HHS Secretary would have to consider the likelihood of a hospital filling the positions and would require to prioritize hospitals in the following order:
    1. Hospitals in states with new medical schools;
    2. Hospitals already training residents in excess of their cap;
    3. Hospitals in training partnerships with Veterans Affairs medical centers;
    4. Hospitals that emphasize training in community-based settings or hospital outpatient departments; 
    5. Non-rural hospitals that operate a training program in a rural area or a program with an integrated rural track; and
    6. All other hospitals. 

Both bills would require hospitals receiving additional slots to abide by specific conditions. At least 50 percent of the additional slots in each FY would have to be directed to a shortage specialty residency program, defined as any approved residency program in a specialty identified by the Health Resources and Services Administration (HRSA). 

New slots would be reimbursed at the hospital’s otherwise applicable per resident amounts for DGME purposes and according to the usual adjustment factor for IME reimbursement purposes. The bills would require the Government Accountability Office (GAO) to study and analyze strategies for increasing the number of health professionals from rural, lower-income, and underrepresented minority communities in the workforce. Within two years of enactment, the Comptroller General would be required to submit a report to Congress that includes recommendations for legislative and administrative changes.