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July 29 (Bloomberg) -- Tighter oversight is needed for more than $15 billion spent yearly on doctor training in the U.S., according to a new report that’s already under fire from medical centers that provide the education.

The report, by the U.S. Institute of Medicine, calls for per-resident funding based on outcomes that address strategic needs in health care, such as the looming shortage of family doctors in some areas. It suggests a 10-year introduction period that would end the practices of basing payments on historical caps and the Medicare services provided.

Such a move would have to be approved by Congress, which provides two-thirds of the $15 billion in public training money each year through its funding of Medicare. The Association of American Medical Colleges, which represents 400 of the nation’s more than 1,000 teaching hospitals, opposes the recommendations, saying they would funnel federal dollars away from Medicare patients, and create uncertainty for their members.

“We are not taking money out of the system,” said Gail Wilensky, a co-chairwoman of the institute panel that wrote the report. “But we think current expenditures, because of the lack of transparency and accountability, are difficult to justify.”

The report urges the creation of a new policy council to develop a strategic plan for doctor training, and a new office within the U.S. Centers for Medicare and Medicaid Services to implement proposals and increase transparency of where the funds are used.

Controversial Proposals

The institute, a nonprofit volunteer organization that provides input on health policy to the government, has been controversial in the past calling for mandated coverage of birth control pills at no cost to patients and determining that there’s no link between the measles vaccine and autism.

Revising the payment rules for doctor training would try to “change the entire health-care system with 2 percent of Medicare funding,” the amount centers get to fund their training, said Atul Grover, a college association spokesman. “Two percent isn’t going to overshadow the other 98 percent.”

Studies of future supply and demand in health care have projected physician shortages, the report found. Even with more doctors trained, the shortage in high-need areas is unlikely to be solved. Not many new doctors choose primary care or to practice in rural and underserved areas.

Goals such as increasing diversity in the physician workforce, encouraging a primary care focus and increasing access in underserved rural or urban areas should be reached through the use of payment incentives provided by the government, not with outcomes-based funding, Grover said.

To contact the reporter on this story: Marie French in New York at

To contact the editors responsible for this story: Reg Gale at Andrew Pollack

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