The Children's Hospitals Graduate Medical Education (CHGME) program provides direct financial support to children's hospitals—those that treat primarily patients below the age of 18—to train medical residents and fellows. The program is administered by the Health Resources and Services Administration (HRSA) within the Department of Health and Human Services (HHS) and is authorized in Section 340E¹ of the Public Health Service Act (PHSA).² CHGME receives annual discretionary appropriations, which are authorized through FY2023. The use of discretionary appropriations to fund CHGME differs from other federal sources of graduate medical education (GME) support. For example, Medicare—the largest source of GME payments—is mandatory.³ More information on other GME programs and how programs interact is available in CRS Report R44376, Federal Support for Graduate Medical Education: An Overview.

This report describes the CHGME program's (1) purpose and structure, (2) history, and (3) authorizations and appropriations. It also provides select program data, including the number of hospitals supported under the program, their location, the amount of funding they receive, and the number of residents trained. Finally, the report discusses alternative sources of GME funding available.

CHGME Purpose and Program Structure

As detailed in the text box below, the CHGME program provides direct financial support to children's hospitals to train medical residents and fellows.

The CHGME program provides GME funds to "free-standing children's hospitals," which are hospitals that have a patient population that is primarily under the age of 18. Free-standing children's hospitals specialize in treating children, but are not part of a larger hospital system. For example, a general teaching hospital may offer pediatric training as part of its integrated services, or perhaps as part of a dedicated children's center, but such a center would receive Medicare GME support as part of the larger hospital's GME programs. Such a center would not be considered to be a free-standing children's hospital, and, therefore, would not be eligible for CHGME.

Hospitals eligible to participate in CHGME must have a Medicare Provider Agreement, and must be excluded from the Medicare Inpatient Prospective Payment System (IPPS).⁴ In addition, CHGME-eligible hospitals must operate programs that train pediatricians, or pediatric medical or surgical subspecialists, and these programs must be accredited (see text box above for definitions).⁵ The 2013 program reauthorization, discussed below, expanded the program to make additional hospitals eligible for a subset of the program's appropriation.⁶ These hospitals were defined as (1) free-standing; (2) having a Medicare payment agreement and being excluded from the Medicare IPPS; (3) having an inpatient population composed predominantly of individuals under 18 years of age; and (4) having an approved medical residency training program, but not one qualified to receive Medicare GME payments.⁷ The Government Accountability Office (GAO) examined the newly eligible programs and found that the new programs included one psychiatric hospital and three hospitals that had not previously participated in the program.⁸

Program Origins

The CHGME program was created in the Healthcare Research and Quality Act of 1999 (P.L. 106-129), which authorized payments to children's hospitals for FY2000 and FY2001 to support medical residency training. Medicare—which provides approximately $16.2 billion to support residency training⁹—is the largest supporter of medical residency training, but the level of Medicare support at any hospital is based on the volume of services that the hospital provides to Medicare beneficiaries. Because the Medicare program is used primarily by people who are over the age of 65, and children's hospitals treat primarily people below the age of 18, children's hospitals have low Medicare patient volume and receive few Medicare GME payments.

Prior to the program's inception, advocates argued that the lack of direct federal support for GME in children's hospitals impeded the development of the pediatric workforce because children's hospitals, rather than general hospitals, are more likely to have the patient volume necessary to train pediatric subspecialists.¹⁰ To operate an accredited training program, a hospital must have sufficient patient volume to ensure that residents receive the full measure of training in a given field. As such, children's hospitals are more likely to have the range of cases necessary to train pediatric subspecialists who focus on specific pediatric conditions or types of surgery in children.¹¹

Since the CHGME program began, the size of the pediatric subspecialty workforce has increased.¹² Despite these increases, some children lack access to pediatric subspecialty care (see text box), with long wait times for children to access certain types of pediatric subspecialists.¹³ Moreover, some children's hospitals report physician vacancies and difficulties hiring in certain subspecialties.¹⁴ Researchers have found that some geographic areas have a shortage of pediatric subspecialists, leading some children to seek care with subspecialists who focus on adults, which may adversely affect the care the children receive.¹⁵ In contrast, future projections find growth in the pediatric generalist population that exceeds growth in demand for pediatricians.¹⁶ In addition, other projections find that because of fertility declines, future demand for pediatric subspecialists will be less than current demand.¹⁷ However, projections are limited by the assumptions made, which generally assume that the future workforce will follow the same employment patterns as the current workforce. Researchers have found increasing numbers of pediatricians working part time, which may affect whether future surpluses are realized.¹⁸

HRSA's program data indicate that CHGME plays a significant role in training nearly half of the pediatric physician workforce. HRSA data show that the program provided financial support to more than 13,000 medical residents and fellows in the 2019-2020 academic year (the last year of final data available).¹⁹ Among those supported, 41% were pediatric residents, 25% were pediatric subspecialty residents or fellows, 3% were dental residents, and approximately 30% were residents training in adult medical or surgical specialties who would have rotated to a children's hospital for part of their training.²⁰

CHGME Authorization and Appropriations

The program was created in the Healthcare Research and Quality Act of 1999 (P.L. 106-129), which authorized payments to children's hospitals for FY2000 and FY2001 to support medical resident training. The program's appropriations were then reauthorized through FY2005 in the Children's Health Act of 2000 (P.L. 106-310). That law also made changes to the program's payment methodology and reporting requirements. The program was unauthorized, but it received appropriations in FY2006. It was then reauthorized for a third time in the Children's Hospital GME Support Reauthorization Act of 2006 (P.L. 109-307), which reauthorized the program from FY2007 through FY2011. It was subsequently reauthorized for the fourth time in 2013—in the Children's Hospital Reauthorization Act of 2013 (P.L. 113-98)—which authorized appropriations from FY2014 through FY2018. The 2013 reauthorization broadened the definition of hospitals eligible to participate to include children's psychiatric hospitals and hospitals that had not been able to participate in the program for technical reasons (i.e., those that HRSA had determined did not technically meet the statutory definition in PHSA Section 340E).²¹ This reauthorization also established a quality bonus system to provide bonus payments to CHGME-participating hospitals that meet quality standards established by the HHS Secretary. These standards are to include, for example, improving interpersonal and communication skills of residents, delivering patient-centered care, and practicing in integrated health systems, such as by training in community-based health settings. The law required the Secretary to collaborate with stakeholders in developing these quality standards.²² Finally, the program was most recently reauthorized from FY2019 through FY2023 in 2018 in the Dr. Benjy Frances Brooks Children's Hospital GME Support Reauthorization Act of 2018 (P.L. 115-241). This reauthorization increased the amount of funding authorized and extended the period of the program's authorization of appropriations to FY2023. The reauthorization did not include substantive program changes.

The CHGME program has received funding since its inception, despite a lapse in authorization in FY2006, FY2012, and FY2013. Table 1 presents funding and authorizing history from FY2000 to FY2023.

CHGME Payments

CHGME payments are structured similarly to Medicare GME payments. In both programs, hospitals receive two types of payments: direct and indirect. Direct payments are intended to cover the salary and benefits of residents and their supervisors, as well as other costs associated with operating a residency training program, including space and administrative support. Indirect payments are made to hospitals to offset the cost a hospital incurs from training residents; for example, for the extra tests they order as part of their training, and for the reduced productivity of hospital staff.²³ The CHGME program uses formulas to derive hospital-specific payment amounts similar to those used in the Medicare program (see text box).

Despite similarities in the structure of Medicare GME and CHGME payments, there are two noteworthy funding differences between the two programs and a third difference in the reporting requirements for the two programs. First, the CHGME program is a discretionary program, with funds drawn from the Treasury. Congress must appropriate funds annually in order for hospitals to receive CHGME payments. In contrast, Medicare GME payments are mandatory and are drawn from the Medicare trust funds.²⁴ As a result, Medicare GME funds do not need to be appropriated annually and do not need to be reauthorized.

A second difference is that CHGME spending is limited by the size of the annual appropriation. Given this, if CHGME appropriations do not increase, adding new hospitals to the program would result in a reduction in the amount of funds that existing hospitals receive.²⁵ Conversely, Medicare GME funds flow to a hospital based on the size of its approved residency training programs, the number of Medicare-recognized residents, and its Medicare inpatient volume. Distributing Medicare GME funds to one hospital does not affect the Medicare GME funds paid to another.

A third difference between Medicare GME and the CHGME program is that, in statute, hospitals that receive CHGME support are required to report to HRSA the number of residents they train by specialty; such hospitals may be penalized—in the form of reduced DGME payments—for failure to report. In contrast, the Center for Medicare & Medicaid Services (CMS)—which administers the Medicare program—does not require its programs to report data on the trainees supported with Medicare funds.²⁶ Additionally, HRSA is required by the CHGME statute to aggregate the data it receives from GME programs and report on

• 1. the types of residency training programs (by specialty);
• 2. the number of residents supported in each specialty;
• 3. the training programs that hospitals operate that provide care to diverse and underserved children;
• 4. changes in training programs from the prior year (including curricula changes); and
• 5. the number of graduates of a hospital's residency training programs that practice within the service area where they trained.²⁷

CMS does not have similar reporting requirements for Medicare GME, nor does CMS generally collect the component data that would be required to compile such a report.²⁸ The 2013 CHGME reauthorization also included authorization for a quality bonus system, whereby hospitals that meet established standards are eligible for additional payments. This represents the first system within a federal GME payment program where payments are distributed based on hospitals reporting certain data and having programs that meet certain established goals.²⁹ No similar system exists for Medicare GME payments; however, expert groups, including the Institute of Medicine (now National Academy of Medicine), recommend that some Medicare GME be awarded based on program performance.³⁰

CHGME Quality Bonus System

The CHGME Quality Bonus System (QBS) aims to incentivize hospitals to report individual-level data on residents.³¹ In statute, the program authorizes the Secretary to establish a QBS for hospitals that meet standards specified by the Secretary in areas such as quality measures and improvement.³² In practice, the system requires reporting on resident-level characteristics as discussed below. Hospitals began reporting under this system in FY2019, with hospitals initially reporting information about their trainees. Based on these reports in FY2020 and FY2021, a subset of hospitals received bonus payments—29 of 59 hospitals in FY2020.³³ Since that time all participating hospitals (59) received these payments, in academic year (AY) 2021-2022 by completing individual level documentation of all the residents that the program supported.³⁴ The FY2023 CHGME FY2023 Notice of Funding Opportunity required that hospitals submit the following data as part of their annual performance report to be eligible for award payments and meet the following data collection metrics:

• individual level data for all residents supported in FY2023;
• have a 90% or greater response rate on resident's demographic characteristics, including their ethnicity, race, rural and disadvantaged background and at the same response rate on residency training in telehealth and working on interprofessional teams; and
• have a 50% or greater response rate on post-residency employment of residents who completed their training.³⁵

CHGME Eligible Hospitals and Payment Distribution

As discussed above, the CHGME program provides GME funds to free-standing children's hospitals. According to HRSA, when the program first began in FY2000, there were 60 hospitals eligible. In FY2001, the program supported residents training at 57 of these 60 hospitals.³⁶ In FY2022, the most recent year of final data available, the program supported training at 59 free-standing children's hospitals located in 29 states, the District of Columbia, and Puerto Rico.³⁷ (See the Appendix for a list of hospitals that received CHGME and the amount of payments they received.)

More than half of states have an eligible free-standing children's hospital that receives CHGME payments. These states are geographically dispersed. Residents in states with no CHGME-funded hospitals may benefit from the program by traveling to receive services at a CHGME-supported hospital or by receiving treatment from a pediatrician or a pediatric subspecialist who trained at one. The extent to which this occurs is unknown.

The 10 states receiving the highest amount of CHGME payments in FY2020 were generally states with large populations. Among the 10 states, all had at least one large children's hospital that received more than $5 million annually in CHGME payments (e.g., Children's Hospital of Philadelphia in Pennsylvania and Boston Children's Hospital in Massachusetts). Table 2 presents the 10 states that received the highest payment amounts under this program.

CHGME Residents Trained

Table 3 presents the number of residents that received CHGME support since the program's inception in FY2000. The number of residents trained has steadily increased, but the program's appropriation has varied over time. Given this, the amount of funding awarded to support each individual resident has also varied. In addition, the table shows that the number of hospitals that participate in the program has fluctuated over time; in some years, CHGME funds are awarded to fewer hospitals that, on average, are training more residents. Note that the 2013 reauthorization added new hospitals to the program, but it reserved a portion of the program's appropriation for these new hospitals to mitigate decreases in payment amounts for hospitals that were already participating in the program.

Other Sources of GME Funding for Children's Hospitals

CHGME funds are one source of medical residency training support at children's hospitals. Other sources exist, including patient care or other revenue, Medicaid, state and local funds, and private donations.³⁸ However, CHGME payments are the only source for which a specific amount can be quantified.

Some have suggested that the availability of other sources of GME funding lessens, or obviates, the need for the CHGME program. For example, the Office of Management and Budget in a 2003 CHGME Program Assessment stated that the program was performing adequately, but noted that the program is "fundamentally duplicative of other Federal, state, and private efforts."³⁹ The assessment went on to say that children's hospitals have higher profit margins than other hospitals, which could lead to more revenue available to support training programs. The assessment concluded with a recommendation to more closely track the accountability of children's hospitals receiving payments under the program and to assess whether the program should be continued.⁴⁰

More recent data also indicate that children's hospitals are still operating at higher profit margins than other hospital types. These data also suggest that despite these hospitals having tax-exempt status, some provide little charity care.⁴¹ Given that profits in a nonprofit hospital are intended to be reinvested in the hospital,⁴² these funds are a potential source of GME support. However, this research is historical, and it is not clear whether these financial advantages persist. In addition, the CHGME pays hospitals less per resident than do other sources of GME.⁴³ The Children's Hospital Association—the organization the represents children's hospitals—contends that the program is not paying the full cost of resident training and will disadvantage pediatric training, as these payments grow at a slower rate than do Medicare GME payments.⁴⁴ In 2023, the Children's Hospital Association along with other advocates noted in a letter to appropriators that the program pays approximately one-half of the amount that other federal training programs pay per resident.⁴⁵ Others have examined payments over time and noted that they have not adjusted for inflation. These researchers contend that the lack of inflation adjustment has resulted in a steady decline in per-resident amounts; they estimate that the inflation-adjusted average of support per resident was $39,000 (for the period of 2000 through 2016). This amount was below their estimates of training costs, which was $72,227 in 2000 dollars and $112,000 in 2021 dollars.⁴⁶ In contrast, the estimated amount that Medicare paid per resident in 2018 was an average of $171,000 per resident, with amounts paid ranging between $68,000 and $279,000 depending on the hospital.⁴⁷ Despite these differences in amount paid by program, the true "cost" of training residents is difficult to determine, as it may vary by the type of resident, the year the resident is in training, the resident's specialty, and programs' efficiency among other things.⁴⁸ Given this complexity, it is not possible to evaluate whether the CHGME program is paying full resident costs, nor do systematic data exist on the use of hospital revenue to support GME. Given that these data do not exist, the Congressional Research Service cannot determine whether, and to what extent, hospitals use their own revenue to support GME. Despite data showing the impact of the CHGME program on pediatric residency training, it is not clear whether the pediatric workforce would have increased without the program's explicit support, because many of the available funding sources existed prior to the program's inception. Similarly, it is not possible to know whether the increased workforce size could be attributable to training supported by other funding sources available to children's hospitals.

Another source of GME funding for children's hospitals is Medicaid reimbursements, but data are limited regarding the extent to which these funds are used. Medicaid is a joint federal-state program in which states operate their own program under federal oversight. States may choose to use Medicaid funds to support GME, but not all states choose to do so. According to Medicaid expenditure data, 36 states, including the District of Columbia, reported making Medicaid GME payments through the fee-for-service delivery system in FY2021,⁴⁹ and those payments totaled $3.4 billion, with the federal government paying 66% of that amount.⁵⁰ These expenditure data include only fee-for-service GME payments, but states can also make Medicaid GME payments through Medicaid managed care.⁵¹

Concluding Observations

Appropriations for the CHGME program were reauthorized in 2018 through the end of FY2023. Though the reauthorization did not include substantive changes, the program's unique reporting requirements and quality bonus system, which has been implemented since that reauthorization, may be of congressional interest given concerns about accountability in federal GME funding.

The CHGME program collects and reports a number of data elements on the residents trained. This differs from other and larger sources of federally supported GME program (e.g., Medicare). As such, the CHGME program data may be useful for Congress to examine to determine whether such data are sufficient and whether it would be useful for other programs to collect such data elements. The CHGME program has also implemented a quality bonus system that provides additional payments to programs that provide data. In FY2022, all eligible hospitals reported the required information (see "CHGME Quality Bonus System"), as such, Congress may evaluate whether these payments, which effectively reward reporting are functioning as intended, which would be to reward quality training, rather to provide extra payments to all programs as occurred in FY2022, the last year of complete data. Despite this potential concern, the Quality Bonus System is unique among federal GME programs and is in line with the recommendations of expert groups (e.g., the Institute of Medicine).⁵² As such, this system and whether any potential refinements are needed may be an area for future congressional oversight. Further, Congress may consider whether part of this reporting system could be applied to other GME programs.

Appendix. Children's Hospitals that Received CHGME

Table A-1 presents the most recent data on hospitals that participate in the program, the state in which they are located, and the amount of CHGME funding they received.