On May 11, 2020, CMS released the FY 2021 Inpatient Prospective Payment Services (IPPS) Proposed Rule, which includes proposed changes related to closing hospitals and closing residency programs.  CMS’s proposals focus on how “displaced residents” are defined for purposes of determining whether the closing hospital or program can voluntarily transfer temporary cap slots to other hospitals that agree to train the residents for the remainder of their programs. The proposed changes will take effect October 1, 2020.

In a previous GME @ Dentons article, Differences between program closure rules and hospital closure rules, we provided an overview of the relevant regulations and policies and the distinctions between the rules pertaining to program closure versus hospital closure. We noted in this article that CMS has taken the position that residents must be physically present at the closing hospital or the hospital that is closing the program (or on standard vacation) on the last or next-to-last day of the program (i.e., they cannot be training in another hospital) to be considered a “displaced” resident.  In the FY 2021 IPPS proposed rule, CMS proposes modifications to this policy with the goal of addressing operational concerns and administrative challenges that arise when residents: transfer while hospitals are winding down, but before a residency program closes; are assigned to and are training in planned rotations at other hospitals; or have matched into a program that closes before their training begins.

To address these issues, CMS proposes two changes to current Medicare policy related to temporary funding for displaced residents. First, CMS proposes that affected residents will no longer have to be present at the hospital that is closing the program on the last or next-to-the-last day of the program. Instead, CMS will focus on the day that the closure is publicly announced (for example, via a press release or a formal notice to the Accreditation Council on Graduate Medical Education (ACGME)). Second, CMS proposes to allow funding to be transferred temporarily to hospitals on behalf of residents in planned out-rotations and on behalf of residents who matched into a program and who are not physically present at the hospital that is closing the program, but who intended to train (or return to training) at that hospital.

To implement these changes, CMS proposes to add the following new definition of “displaced resident” to the GME regulations:

Displaced resident means a resident who--

1. Leaves a program after the hospital or program closure is publicly announced, but before the actual hospital or program closure;
2. Is assigned to and training at planned rotations at another hospital who will be unable to return to his/her rotation at the closing hospital or program;
3. Is matched into a GME program at the closing hospital or program but has not yet started training at the closing hospital or program;
4. Is physically training in the hospital on the day prior to or day of program or hospital closure; or
5. Is on approved leave at the time of the announcement of closure or actual closure, and therefore, cannot return to his/her rotation at the closing hospital or program.

To apply for the temporary increase in the Medicare resident cap, the receiving hospital will continue to be required to submit a letter to its Medicare Administrative Contractor within 60 days of beginning to train a displaced resident. CMS proposes to modify existing policies regarding the information required in this letter to the MAC, however. Instead of full social security numbers of the displaced residents, CMS now only requests the last four digits of each displaced resident’s social security number. 

Comments on these and other IPPS proposals must be received by CMS no later than 5 pm EDT on July 10, 2020.  Please feel free to contact the GME@Dentons team listed above if you have questions about these proposed policies.