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The Baltimore-based agency will pay the hospitals over the next six years in exchange for an agreement to train 2,000 fewer medical residents. This change represents an approximately 20% decline over the current number of residents trained.
The money comes from the Medicare system, which pays teaching hospitals an average of $87,000 for every resident they train. Under the new system, participating hospitals will get some of that money for every residency slot they leave vacant, but the amount will decrease every year for six years. By the seventh year, the subsidy will be gone.
The $400 million paid out will be $300 million less than the cost of maintaining the residency program at current levels, HCFA says.