The Consolidated Appropriations Acts of 2021 and 2023 modestly expanded Medicare-funded graduate medical education by authorizing 1,200 new residency positions, representing the first increase in federally supported training slots since 1997 and targeting areas of workforce shortage, particularly primary care and psychiatry.
For nearly 25 years, the capacity of the United States to train new physicians was effectively frozen. The Balanced Budget Act of 1997 established a cap on the number of residency positions Medicare would fund at each teaching hospital, majorly stalling the growth of the physician workforce even as the population grew and aged.1,2,3 While medical school enrollment increased, the number of federally funded Graduate Medical Education (GME) “slots” remained stagnant, with some hospitals training residents in excess of their caps without federal support.1,2
The passage of the Consolidated Appropriations Act (CAA) of 2021 marked a historic shift, representing the first significant increase in Medicare-funded residency positions since 1997.1 Section 126 of the Act authorized 1,000 new positions to be phased in at a rate of no more than 200 slots per year beginning in fiscal year 2023.3,4 To ensure these slots address the most pressing needs, the law prioritizes four specific categories of hospitals: those in rural areas, those currently training residents above their cap, those in states with new medical schools, and those serving Health Professional Shortage Areas (HPSAs).1,3,4
Building on this momentum, the Consolidated Appropriations Act of 2023 introduced a smaller but highly targeted expansion. Section 4122 of the 2023 Act authorized an additional 200 residency positions.2,4 A critical difference in this legislation is the mandate that at least 100 of these positions must be dedicated to psychiatry or psychiatry subspecialty programs.4 This reflects a legislative effort to specifically address the national mental health workforce crisis.2
The mechanism for this expansion relies on the Centers for Medicare & Medicaid Services (CMS), which manages the application and distribution process.4,3 Medicare provides two types of payments to teaching hospitals: Direct GME (DGME) payments for the basic costs of training and Indirect Medical Education (IME) payments to offset the higher costs associated with being a teaching facility.1,4 Without these federal subsidies, many hospitals find it financially impossible to expand their residency programs.2,5
In practice, these acts are already making a difference. By December 2025, CMS had distributed 400 positions from both acts, with approximately 62% of newly awarded slots going to primary care and psychiatry programs. However, while these 1,200 total slots are a milestone, they are partial fixes rather than a total solution. The Association of American Medical Colleges (AAMC) projects a physician shortfall of up to 86,000 doctors by 2036.2
Ultimately, these laws signal that Congress acknowledges the physician shortage but is moving conservatively to address it. While more work remains, the expansion in residency positions through the Consolidated Appropriations Acts of 2021 and 2023 represent a meaningful step toward ensuring the country has the physicians necessary to meet the growing healthcare needs of all communities.
References
1. McDermott Will & Schulte. Consolidated Appropriations Act includes GME support provisions [Internet]. . 2021 Jan 15. Available from: https://www.jdsupra.com/legalnews/consolidated-appropriations-act-6549274/
2. Association of American Medical Colleges. Distribution of 400 new Medicare-supported graduate medical education residency positions marks milestone in expanding the physician workforce [Internet]. 2025 Dec 19 [cited 2026 Mar 25]. Available from: https://www.aamc.org/news/press-releases/distribution-400-new-medicare-supported-graduate-medical-education-residency-positions-marks
3. Schleiter K, Johnson L. Federal bills raise cap on Medicare-funded residency positions and modify graduate medical education policies. J Grad Med Educ. 2021 Aug;13(4):602–606.
4. Centers for Medicare & Medicaid Services. Direct graduate medical education (DGME) [Internet]. 2026 Mar 10 [cited 2026 Mar 25]. Available from: https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/direct-graduate-medical-education-dgme
5. U.S. Government Accountability Office. Graduate medical education: information on initial distributions of new Medicare-funded physician residency positions [Internet]. Washington (DC): GAO; 2025 Dec 22 [cited 2026 Mar 25]. Available from: https://www.gao.gov/products/gao-26-107686