The Medicare program reimburses teaching hospitals for their shares of costs associated with direct graduate medical education (GME) and indirect medical education (IME). Payments for residents are based on formulas incorporating such factors as hospital-specific per resident amounts, resident-to-bed ratios and FTE resident “caps”. Federal rules (1) set the standards under which medical residency programs may be established and reimbursed.
One of the effects of the Balanced Budget Act (BBA) passed by Congress in 1997 was to place some controls on the continuing growth of GME positions. The BBA contained several important changes in the GME funding mechanisms, included a cap on total residents funded by Medicare.
Generally, the regulations limit a residency program to the number of residents that the program had for the most recent cost reporting period ending on or before December 31, 1996. However, federal regulations create an exception to the limit for “a new residency training program,” allowing hospitals that did not have residents in 1996 to start new GME programs, if they meet certain requirements.
CMS Regulations define a “new medical residency training program” as a medical residency that received initial accreditation by the appropriate accrediting body or begins training residents on or after January 1, 1995.” (2) While that definition appears fairly straight forward, the Centers for Medicare and Medicaid Services, (CMS) has begun to apply a more restrictive definition.
A recent case that was decided by a Provider Reimbursement Board dealt with the issue in of a providers program qualified as a new program under the federal regulations. (3) The board ruled that the language of the regulation does not support a facility specific-based test. Rather, the regulation is specific to the program, not the facility at which it is located.
Furthermore, Medicare holds that the language of the Rule “does not mean that it is the first time a particular hospital began training residents in a program on or after January 1, 1995, but the program was in existence at another hospital prior to January 1, 1995.” (4) Hence, the deciding factor for determining a “new” program for residency training cap purposes is the program, not the hospital.
Accordingly, if a residency program was in existence and certified by the accreditation body (ACGME or AOA) at another hospital, CMS may consider it to merely be a “relocation” to another facility rather than a “new program”. Since existing training programs that are transferred to non-teaching hospitals are not considered “new” for purposes of establishing resident limits, those seeking to establish new training programs must be careful to ensure that the program is not a replacement for a pre-existing program. In the case where the closing of one residency program coincides with the opening of the new program in the same specialty and in the same or geographic area, CMS may consider factors such as:
- Relationships and communications between the two hospitals.
- Transfer of residents, from one program transfer to the other program to complete their training.
- The number of approved slots for the two programs
- Whether there is the same:
- Program director
- Director of medical education
- Hospital rotations
- Nonhospital rotations
- Didactics
- Sponsoring institution
This ruling may have broad implications for a hospital looking to start a new residency program in proximate time to the closure of a similar program at another facility. Care must be taken to ensure that there are substantive differences in the programs operation. Otherwise, the program may not qualify as a new program.
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