The following memorandum is a summary of the graduate medical education (GME) provisions included in the Hospital Inpatient Prospective Payment System (IPPS) Proposed Rule recently issued by the Centers for Medicare and Medicaid Services (CMS). The most notable GME provisions in the proposed rule implement three provisions of the Consolidated Appropriations Act of 2021 (CAA) pertaining to Medicare GME payments to teaching hospitals. The proposed rule also addresses the Intern and Resident Information System (IRIS).

The proposed rule is scheduled to be published in the Federal Register on May 10, 2021. Comments on the proposed rule are due by June 28, 2021. View the complete rule.

The American Association of Colleges of Osteopathic Medicine (AACOM) continues to evaluate the proposed rule and will be submitting strategic recommendations to CMS on behalf of the osteopathic medical education community. We will be sharing those recommendations with our members and giving you the opportunity to support them through comment in the coming weeks. Please contact aacomgr@aacom.org for additional information.  

This analysis was prepared by Venable, LLP, on behalf of AACOM.

1. Implementation of 1,000 New Medicare-Funded GME Positions 

Overview

Section 126 of the CAA created 1,000 new Medicare-funded GME positions that will be distributed to qualifying hospitals beginning in fiscal year (FY) 2023 that fall into any one or more of the following categories: (1) hospitals that are located in a rural area or are treated as being located in a rural area; (2) hospitals for which the reference resident level of the hospital is greater than the otherwise applicable resident limit; (3) hospitals located in states with new medical schools, or additional locations and branch campuses; and (4) hospitals that serve areas designated as health professional shortage areas (HPSAs). The CAA requires that at least 10 percent of the total GME positions available be distributed to each of the above categories of qualifying hospitals. 

The CAA limits the number of GME positions that may be awarded in a given FY to no more than 200. The first allocation of new positions will be for FY23. Additional GME positions will be distributed in each subsequent FY within this limit until the total number of full-time equivalent (FTE) residency positions is equal to 1,000.

Number of Residency Positions

CMS proposes to make 200 residency positions available for FY23 and each subsequent year in order to make the positions available to qualifying hospitals as quickly as possible. Further, in order to make additional residency positions available to more hospitals each year, CMS proposes to limit the increase in the number of residency positions made available to each individual hospital to no more than 1.0 FTE each year.

Application Process 

CMS proposes that applications for new residency positions be submitted by January 31 of the FY prior to the fiscal year in which the new positions would take effect.  Accordingly, applications will need to be submitted by January 31, 2022 for a position awarded for FY23. Applications will be submitted online and will request information specified in the proposed rule.

Prioritization of Applications

CMS proposes prioritizing the distribution of new residency positions to qualifying hospitals using one of the following two methods:

1. Use of Geographic HPSAs and Population HPSAs: Under this method, CMS would prioritize applications from qualifying hospitals that would use additional residency positions serving underserved populations in geographic HPSAs or population HPSAs.
2. Alternative Prioritization Using Hospitals that Qualify in More Categories: Alternatively, CMS is considering a simpler prioritization approach for FY23 that would give higher priority to applications from hospitals that qualify in more categories. For example, hospitals that qualify under all four categories would receive top priority, hospitals that quality under any three of the four categories would receive the next highest priority, and so on. CMS is considering this alternative method of prioritization for FY23 to allow additional time to work with stakeholders to develop a more refined approach for future years. CMS is seeking comment on this alternative approach to prioritization.

Payment for Additional Residency Positions

CMS proposes to pay hospitals that receive additional residency positions for FTE residents using the same primary care and non-primary care per resident amounts (PRAs) for which payment is made for FTE residents subject to the 1996 FTE cap.

2. Rural Track Training (RTT) Program 

Overview

Section 127 of the CAA made statutory changes relating to the RTT program that were intended to create more flexibility for both rural and urban hospitals to address the physician workforce needs of rural hospitals. The proposed rule seeks to implement various aspects of Section 127 to provide for such flexibility.

Changes to RTT Program 

CMS proposes to make the following changes to the RTT program:

1. Each time an urban hospital and rural hospital establish an RTT program for the first time, even if the RTT program does not meet the newness criteria for Medicare payment purposes, both the urban and rural hospitals may receive a rural track FTE limitation.
2. Prospectively allow increases to the indirect medical education and direct GME caps of both the participating urban and rural hospitals that expand a qualifying RTT. CMS proposes that if, in a cost reporting period beginning on or after October 1, 2022, an urban hospital with an existing RTT (hub) adds an additional RTT (spoke) to the existing urban core program of the same specialty, the urban and rural hospitals may receive adjustments to their rural track FTE limitation.
3. For cost reporting periods beginning on or after October 1, 2022, medical residency training programs may qualify as an RTT without the need to be “separately accredited,” so long as the program in its entirety is accredited by the ACGME.
4. In order for urban or rural hospitals to receive FTE cap adjustments for residents training in RTTs, the residents must be in an accredited program where greater than 50 percent of the program occurs in a rural area.
5. During the five-year cap growth window for RTTs, residents participating in the RTT either at the urban hospital or a rural hospital would not be included in a hospital’s three-year rolling average calculation during the cost reporting periods prior to the beginning of the hospital’s cost reporting period that coincides with or follows the start of the sixth program year of each rural track.

3. Adjustment of Low PRAs and Low Resident Caps for Certain Hospitals

Overview

Section 131 of the CAA made statutory changes to the determination of direct GME PRAs and direct GME and IME FTE resident limits of hospitals that host a small number of residents for a short duration.  Namely, Section 131 allows CMS to reset the low or zero direct GME PRA and to reset the low IME and direct GME FTE resident caps of such hospitals. Furthermore, the CAA added descriptions of the categories of hospitals that qualify to receive a replacement PRA, which are described in the proposed rule as follows: (1) Category A – hospitals that (as of December 27, 2020) have PRAs established based on less than 1.0 FTE in any cost reporting period beginning before October 1, 1997; and (2) Category B – hospitals that (as of December 27, 2020) have PRAs that were established based on training of no more than 3.0 FTEs in any cost reporting period beginning on or after October 1, 1997.

Resetting PRAs

CMS proposes that a Category A hospital’s PRA may be reset when CMS determines that such hospital trains at least 1.0 resident FTEs participating in a new or existing resident training program in a cost reporting period beginning on or after December 27, 2020 and before December 26, 2025.  Similarly, CMS proposes that a Category B’s PRA may be reset when CMS determines that such hospital trains more than 3.0 resident FTEs during the same cost reporting period.

CMS further proposes to calculate the replacement PRA using the existing regulations in place at 42 C.F.R. § 413.77(e). Namely, CMS proposes to use as the PRA base period the first cost reporting period in which the hospital trains the requisite threshold FTEs. CMS proposes to establish the replacement PRA as the lower of (1) the hospital’s actual cost per resident incurred in connection with the GME program based on the cost and resident data from the hospital’s replacement base year cost reporting period; and (2) the updated weighted mean value of PRAs of all hospitals located in the same geographic wage area calculated using all PRAs and FTE resident counts from the most recently settled cost reports of such hospitals.

CMS proposes that, for cost reporting periods beginning on or after December 27, 2020, a hospital must report FTE residents on its Medicare cost report for a cost reporting period if: (1) a hospital that does not have a Medicare GME affiliation agreement trains at least 1.0 FTE in an approved program(s); or (2) a hospital that does have a Medicare GME affiliation agreement trains less than 1.0 FTE in an approved program(s).

Resetting FTE Resident Caps

CMS also proposes to reset FTE resident caps when a Category A hospital or Category B hospital “begins training” FTE residents in a new residency program(s). CMS proposes to define “begins training” to mean future training in a new program for the first time on or after December 27, 2020.

CMS proposes to calculate the replacement FTE resident caps using the existing regulations in place at 42 C.F.R. § 413.79(e)(1). Namely, CMS proposes to use the first program year of the five-year cap building period in which either the Category A hospital or Category B hospital “begins training” their requisite threshold FTEs. Then, they propose to calculate the FTE resident caps based on the sum of the products of the highest number of FTE residents in any program year during the fifth year of the first new program’s existence and the number of years in which residents are expected to complete the program based on the minimum accredited length for each type of program.

4. IRIS Data

CMS proposes to require that the total weighted and unweighted FTE counts on the IRIS for direct GME and IME for all applicable allopathic, osteopathic, dental and podiatric residents that a hospital may train must equal the same total weighted and unweighted FTE counts for direct GME and IME reported on Worksheet E–4 and Worksheet E, Part A of the filed Medicare cost report.

Please contact AACOM Government Relations at aacomgr@aacom.org with questions or for further information.

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