Polis’ budget proposal would cut Colorado support for training new doctors

Gov. Jared Polis’ administration is proposing an $18.2 million cut to Colorado’s funding for medical education, a reduction that hospitals say might force them to reduce training slots.

The cut applies to residency programs, which train medical school graduates for three to seven years before they move into independent practice. Medicare funds direct costs, such as residents’ salaries, for the majority of available slots.

States can then choose whether to use Medicaid — whose costs they split with the federal government — to fund indirect costs and additional slots. Currently, Colorado is one of 23 states that do, according to Polis’ Jan. 2 budget letter.

The Department of Health Care Policy and Financing, which administers the funding, didn’t clarify Monday whether the cut would end the state’s contribution to indirect medical education costs, or if it would continue to provide a smaller amount.

“Reductions in (indirect medical education) payments would be limited to system hospitals, those more able to lean on their systems partners to share financial burden; no rural hospitals would be affected by this policy,” the letter said.

Hospitals also can bill patients’ insurance for services provided by residents, though not for the time that established doctors spend supervising them.

The state faces a challenging budget year, with a shortfall of nearly $1 billion. The governor’s budget proposal, which includes significant cuts to Medicaid beyond reducing spending on medical education, got a less-than-enthusiastic reception from lawmakers when he presented it in November, though.

The American Association of Medical Colleges reported 21 hospitals in Colorado participate in teaching. More than one-quarter of the 1,220 residency slots in the state don’t receive funding for direct costs from Medicare, making indirect cost funding important to maintaining them, it said in a fact sheet.

The $18.2 million cut to medical education at facilities that are part of systems would cost teaching hospitals an additional $41.5 million in federal matching funds, said Heather Retzko, one of the principals at Policy Matters, a lobbying group that works with the hospital industry in Colorado. At this point, the department hasn’t clarified if all 17 teaching hospitals that are part of systems would face equal reductions, she said.

Dr. Richard Zane, chief medical and innovation officer at UCHealth, said the system has “hundreds” of residency slots that don’t receive funding from Medicare, meaning that if state funding disappeared, it would have to either come up with the money itself or cut those positions. He declined to speculate about how many training slots it might eliminate.

“It would be substantive. That’s all I can say,” he said.

Nationwide, an average of 60% of doctors ultimately practice in the market where they completed residency, so fewer slots in Colorado would mean fewer health care providers here in the future, Zane said. The step seems counterproductive, since one of the arguments behind opening a new medical school at the University of Northern Colorado was that the state needs more doctors, he said.

“Despite adding medical student positions, we’re decreasing training positions,” he said.

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