On August 2, CMS released the fiscal year 2020 hospital inpatient prospective payment system (IPPS) final rule. The rule finalizes several proposals relating to hospital payment policy, including one that changes how full-time equivalent (FTE) resident time may be counted when residents train at critical access hospitals (CAHs). See “Two GME-related provisions in the FY 2020 IPPS proposed rule.” 

Under current Medicare policy, IPPS hospitals cannot claim time residents spend training at a CAH, because a CAH is not considered a “nonprovider setting.” Thus, even if an IPPS hospital incurs the stipend and benefit costs for residents during their training at a CAH, current policy only allows CMS to pay the CAH 101 percent of reasonable costs that the CAH itself incurs. This policy took effect for portions of cost-reporting periods occurring on or after October 1, 2013.  Prior to this date, CMS allowed a CAH the option of functioning as a nonhospital site or being paid 101 percent of the reasonable costs associated with training residents in an approved program.

When the October 1, 2013, policy was proposed, and in the years that followed, stakeholders expressed concerns that removing the option for a CAH to function as a nonprovider setting for GME payment purposes would create barriers to training in rural areas. In an effort to remove these barriers to training and to incentivize the practice of physicians in rural areas, the FY 2020 IPPS rule finalizes a policy that will allow a hospital to include in its FTE count time spent by residents training at a CAH, so long as the hospital meets the nonprovider setting requirements located at 42 C.F.R. sections 412.105(f)(1)(ii)(E) and 413.78(g). This policy will become effective for portions of cost reporting periods beginning October 1, 2019. 

CMS considered but rejected commenters’ suggestions that the new policy be revised to permit new hospitals in their cap-building windows to count resident time spent in a CAH prior to October 1, 2019, for cap-calculation purposes. Additionally, CMS indicated that even under the revised policy, a CAH may continue to incur the costs of training residents in an approved residency training program and receive payment based on 101 percent of the reasonable costs for this training. In effect, the new policy allows options similar to those available prior to October 1, 2013.

Additionally, CMS announced the closure of Providence Hospital, located in Washington, DC, and gave notice of another round of the Affordable Care Act’s section 5506 closed hospital slot redistribution program. In Round 15, CMS will redistribute 50.50 IME slots and 52.12 DGME slots from Providence Hospital. The 52.12 DGME slots available for redistribution take into account a 1.90 section 422 cap decrease from Providence Hospital’s 1996 DGME FTE cap of 54.02 DGME slots. Applications for Providence Hospital’s FTE resident caps must be received by the CMS Central Office by October 31, 2019.

Section 5506 of the ACA required CMS to implement the closed hospital residency slot redistribution program. Under the program, CMS is required to take all of the DGME and IME residency slots from hospitals that closed on or after March 23, 2008, and to permanently redistribute them according to certain criteria. Prior to the ACA, hospitals that took on displaced residents from closed hospitals could only receive cap slots temporarily until the displaced residents completed their training; there was no provision for the permanent redistribution of closed hospital slots.

The ACA specified that hospitals in the same geographic region as the closed hospital would receive priority for the closed hospital’s slots. Among other criteria, CMS also gave preference in distributing these permanent slots to hospitals that:

• Assumed an entire program from the closed hospital;
• Received slots from the closed hospital under a GME affiliation agreement and would use the slots to continue to train at least the number of residents the hospital had trained under the affiliation agreement; and
• Took in residents displaced by the hospital closure and would continue to train residents in the same programs as the displaced residents, even after the displaced residents completed their training.

The GME@Dentons team listed above can answer your questions about the IPPS final rule and the most recent round of slots being redistributed, or any other inquiries about Medicare funding of graduate medical education.