Addressing the Residency Shortage: The New Medicare Plan to Fund 14,000 Residency Slots

The U.S. healthcare system has long grappled with a persistent shortage of physicians, a problem that has gained greater urgency in light of the COVID-19 pandemic and an aging population. To address this critical issue, the Centers for Medicare and Medicaid Services (CMS) has unveiled a bold plan to fund 14,000 new residency slots over the next seven years, a move that could significantly expand the physician workforce and enhance patient access to care.

The Legislative Landscape

The initiative stems from the Resident Physician Shortage Reduction Act of 2023 (H.R.2389), which has received bipartisan support. The bill aims to add 2,000 Medicare-funded residency positions each year for seven years, with a focus on:

• Hospitals already training over their caps
• Hospitals in rural areas
• Hospitals in states with new medical schools or branch campuses
• Hospitals serving areas designated as health professional shortage areas*1.

Tackling Physician Shortages

This much-needed boost in residency slots is expected to alleviate physician shortages that have strained healthcare delivery systems across the country. The American Hospital Association (AHA) has applauded the legislation, stating that it "responsibly addresses the nation’s urgent need for additional physicians." The AHA also endorsed the bill's directive for the Government Accountability Office to recommend strategies for increasing the diversity of the health professional workforce to Congress*1.

How to Apply for Additional Residency Slots

Hospitals interested in applying for these new residency slots should be aware of the application process outlined by CMS. As per Section 126 of the Consolidated Appropriations Act of 2021, an additional 1,000 Full-Time Equivalent (FTE) resident cap slots are being made available, phased in at a rate of no more than 200 slots per year starting in fiscal year 2023. Applications for fiscal year 2024 are due by March 31, 2023**2***3.

To qualify for additional FTE resident cap slots, a hospital must fall into at least one of the following four categories:

1. Hospitals in rural areas (or treated as being located in a rural area under the law)
2. Hospitals training a number of residents in excess of their GME cap
3. Hospitals in states with new medical schools or branch campuses
4. Hospitals that serve areas designated as health professional shortage areas (HPSAs)

At least 10 percent of the cap slots must go to hospitals in each of the four categories, and no single hospital can receive more than 25 FTE resident cap slots***3.

Implications for Residency Programs

The addition of 14,000 residency positions represents a significant expansion of medical training capacity, one that will require careful planning and implementation by residency directors and program administrators. Leveraging this opportunity will require strategic planning to ensure alignment with program objectives and the evolving needs of the healthcare system.

While the funding and allocation of new residency slots is an important step, it is part of a broader effort to ensure a robust and diverse physician workforce ready to meet the health needs of the nation. As this process unfolds, we will continue to monitor developments and provide updates on this critical initiative.

No matter your program, no matter the size, Med-Challenger for Residencies can better prepare your residents and increase test scores.