The Centers for Medicare and Medicaid Services (CMS) accepted two recommendations put forth by the AOA and the American Association of Colleges of Osteopathic Medicine relating to Graduate Medical Education in the Hospital Inpatient Prospective Payment System final rule released August 5. Hospitals receive payment for their indirect medical education costs and direct GME costs based on the number of interns and residents they train. Federal law caps the number of residents a hospital may count for Medicare payment purposes, but allows for special adjustments in specific situations.

Based on the comments it received, CMS adopted a policy that, effective October 1, 2014, a rural hospital that has been re-designated as urban can receive a permanent cap adjustment for a new program if it received a letter of accreditation for the new program, and/or started training residents in the new program, prior to being re-designated as urban. The AOA and AACOM recommended this letter of accr editation, when CMS originally proposed that the teaching hospital must be actively training residents in the new program while still rural in order for the hospital to continue receiving a cap adjustment for the new program.

CMS is also simplifying and streamlining the timing of its policies by making the FTE resident caps, rolling average, and IRB ratio cap effective simultaneously. In response to public comment, CMS finalized a modification of its original proposal so that its policies will be effective beginning with the applicable hospital’s cost reporting period that coincides with or follows the start of the 6th program year of the first new program started. Under that proposed policy, the FTE resident caps wou ld have taken effect at the beginning of the fiscal year that precedes the sixth program year.
Carol Monaco, Director of Federal Affairs (cmonaco@osteopathic.org)