H. Guy Collier Emily J. Cook Drew Elizabeth McCormick
Summary
The
Centers for Medicare & Medicaid Services (CMS) has historically
prohibited “new” teaching hospitals from sharing graduate medical
education (GME) full time equivalent (FTE) slots with another hospital
under a GME affiliation agreement.
In the fiscal year (FY) 2019
inpatient prospective payment system (IPPS) proposed rule, CMS proposed
to allow new urban teaching hospitals to share GME FTE slots with other
new teaching hospitals, whereas in the FY 2019 IPPS final rule, CMS
expanded this proposal to allow new urban teaching hospitals to share
GME FTE slots with existing teaching hospitals beginning five
years after having their FTE caps are set. This final rule may create
new opportunities for teaching hospitals that have exceeded their FTE
caps for slot sharing affiliations.
In Depth
Full-time
equivalent (FTE) resident caps for teaching hospitals set the maximum
number of residents for which the hospital is eligible to receive
graduate medical education (GME) reimbursement from Medicare.
Historically, FTE caps have been permanent, with adjustment only under
limited circumstances. For example, under current rules, a “new”
teaching hospital (that is, a hospital that established permanent FTE
caps after 1996) could receive additional FTE slots under a Medicare GME affiliation agreement with other teaching hospitals, but could notgive FTE
slots to another teaching hospital. In theory, this policy was intended
to prevent the owners of existing teaching hospitals from acquiring
hospitals without residency programs and then establishing new teaching
hospitals with the intent of transferring the new FTE slots to the
existing teaching hospital.
On August 2, 2018, CMS released its fiscal year 2019 IPPS final rule (the Final Rule), which now allows new urban teaching
hospitals to enter into Medicare GME affiliation agreements to share
FTE slots to accommodate the cross-training of residents.
Specifically,
beginning on July 1, 2019, a new urban teaching hospital may enter into
a Medicare GME affiliated group consisting of two or more new urban
teaching hospitals and receive a decrease to its FTE caps. In addition,
beginning on July 1, 2018, new urban teaching hospital(s) may enter into
a Medicare GME affiliated group with existing teaching hospital(s)
(that is, hospital(s) with 1996 FTE caps) and receive a decrease to its
FTE caps, as long as the new urban teaching hospital’s caps have been in
effect for five or more years. That is, once a new urban teaching
hospital’s caps are effective, after a cap-building period, the new
urban teaching hospital can participate in a Medicare GME affiliation
agreement with an existing teaching hospital and receive a decrease to
its FTE caps after an additional five-year waiting period.
An
“affiliated group” is a group of two or more hospitals that are located
in the same geographic area, jointly listed as the sponsor, primary
clinical site, or major participating institution for one or more
programs by the Accreditation Council for Graduate Medical Education, or
under common ownership.
Because Medicare GME affiliation agreements are effective consistent with the residency training year (i.e.,
July 1 through June 30), under the policy finalized in the Final Rule,
the new urban teaching hospital will be able to participate in an
affiliation agreement with an existing teaching hospital and receive a
decrease to its FTE caps effective with the July 1 date that begins at
least five years after the new urban teaching hospital’s caps are
effective. Applying existing CMS policy related to the effective date
for FTE caps and the five-year waiting period under the Final Rule, a
new urban teaching hospital can lend FTE cap slots to an existing
teaching hospital as of July 1 in the year that is at least five years
after the start of the hospital’s cost reporting period following the
start of the sixth program year of the first new program. Illustrative
examples of cap-sharing from the preamble to the Final Rule are included
in the table below.
| Example 1 |
| Assume Hospital A’s (a new urban teaching hospital that did not train residents in 1996) cost reporting period is from July 1 to June 30. Hospital A started training residents in its first new program effective July 1, 2014. Hospital A’s five-year cap-building period lasts through June 30, 2019, and its caps are effective July 1, 2019. Hospital A would be able to participate in a Medicare GME affiliation agreement with an existing teaching hospital and receive a decrease to its FTE caps beginning with the July 1 date (the residency training year) that is at least five years after July 1, 2019 (the start of the cost reporting period in which the permanent FTE caps are effective). Therefore, Hospital A would be able to receive a decrease to its FTE caps effective July 1, 2024. |
| Example 2 |
| Assume Hospital B (a new urban teaching hospital that did not train residents in 1996) has a cost reporting period that is from January 1 to December 31. Hospital B also started training residents in its first new program effective July 1, 2014. Hospital B’s five-year cap building period lasts through June 30, 2019, and its caps are effective January 1, 2020. Hospital B would be able to participate in a Medicare GME affiliation agreement with an existing teaching hospital and receive a decrease to its FTE caps beginning with the July 1 date (the residency training year) that is at least five years after January 1, 2020 (the start of the cost reporting period in which the permanent FTE caps are effective). Therefore, Hospital B would be able to receive a decrease to its FTE caps effective July 1, 2025. |
| Example 3 |
| Assume Hospital C (a new urban teaching hospital that did not train residents in 1996) has a cost reporting period that is from October 1 to September 30. Hospital C, like Hospitals A and B, started training residents in its first new program effective July 1, 2014. Hospital C’s five-year cap building period lasts through June 30, 2019, and its caps are effective October 1, 2019. Hospital C would be able to participate in a Medicare GME affiliation agreement with an existing teaching hospital and receive a decrease to its FTE caps beginning with the July 1 date (the residency training year) that is at least five years after October 1, 2019 (the start of the cost reporting period in which the permanent FTE caps are effective). Therefore, Hospital C would be able to receive a decrease to its FTE caps effective July 1, 2025. |
As
noted above, in the FY 2019 IPPS proposed rule (the Proposed Rule), CMS
proposed to permit 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. As such, the Final Rule was a surprising
further expansion in flexibility for sharing FTE slots. Explaining this
policy shift in the preamble, CMS stated that requiring a new urban
teaching hospital to wait a certain period of time prior to lending its
cap slots to an existing teaching hospital would demonstrate that the
new teaching hospital is, in fact, establishing and expanding its own
new residency training programs rather than serving as a means for an
existing teaching hospital to receive additional FTE slots. CMS also
expressed its belief that a time-limited approach is a more equitable
way of providing new urban teaching hospitals with the opportunity to
decrease their FTE caps than using a percentage of slots or determining
whether a new urban teaching hospital falls under the same corporate
structure as an existing teaching hospital, both of which were suggested
in comments in response to the Proposed Rule.