On August 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released the agency’s fiscal year 2019 inpatient prospective payment system (IPPS) final rule. Although the rule contains many proposals relating to hospital payment policy, three GME-related issues are worthy of note to the teaching hospital community.

First, you may recall from our previous analysis of the proposed rule that CMS proposed a change relating to new urban teaching hospitals’ participation in Medicare GME affiliated group agreements. Under current CMS policy, a “new” urban teaching hospital (i.e., one that has built or is in the process of building DGME and IME FTE caps under the regulations at 42 C.F.R. sections 405.105(f)(1)(vii) and 413.79(f)(1)) is only permitted to enter into a Medicare GME affiliated group agreement to receive slots, not to loan its own slots to other hospitals. CMS' proposed rule would have permitted new urban teaching hospitals to loan slots to other new urban teaching hospitals beginning July 1, 2019, while still prohibiting these hospitals from loaning their cap slots to other “existing teaching hospitals,” which CMS defines as hospitals whose GME caps were set in the 1996 base year. 

In the final rule, CMS finalized its proposal to allow new urban teaching hospitals to loan slots to other new teaching hospitals beginning July 1, 2019. Then, the agency went on to surprise the teaching hospital community with an additional grant of flexibility, permitting a new urban teaching hospital to loan slots to existing teaching hospitals, beginning five years after its caps are set. Accordingly, CMS is revising its regulations to indicate that “a new urban teaching hospital can lend FTE cap slots to an existing teaching hospital under a Medicare GME affiliation agreement, effective with the July 1 date (the residency training year) that is at least 5 years after the start of the hospital’s cost reporting period that coincides with or follows the start of the sixth program year of the first new program.” This new policy also takes effect July 1, 2019.

Second, CMS announced in the final rule a new round of GME slot redistribution through the Affordable Care Act section 5506 closed hospital slot redistribution program. Under this new Round 13, CMS will redistribute 73.66 IME slots and 72.62 DGME slots from closed hospital Memorial Hospital of Rhode Island. The deadline for hospitals to apply for these slots is October 31, 2018.

Finally, CMS decided not to finalize its proposal to reject a cost report for lack of supporting documentation if the Intern and Resident Information System (IRIS) data do not contain the same total counts of DGME and IME FTE residents that are reported on the Medicare hospital cost report. CMS decided not to implement this proposed policy “because of extenuating circumstances” that prevented the new XML-based IRIS from being able “to calculate the GME (weighted and unweighted) FTE counts and IME FTE counts by October 1, 2018." CMS did however, finalize a change to the GME regulations to specify that teaching hospitals must submit IRIS “data” rather than a “diskette.”

Dentons’ Health Care team can help you assess the implications of the final rule, evaluate Medicare GME affiliated group options, and assist with the preparation of Section 5506 slot redistribution applications on behalf of your institution.