On May 29, 2020, CMS published its 2021 IPPS Proposed Rule (“Proposed Rule”). If adopted, the Proposed Rule would change CMS’s funding methods for graduate medical education (“GME”), giving additional flexibility to hospitals that train residents who are affected by a hospital or residency program closure. Comments on the Proposed Rule are due on July 10, 2020.
Summary
The Proposed Rule addresses the distribution of GME Full-Time Equivalent (“FTE”) cap space when a teaching hospital or a resident training program closes. Under current regulations, a hospital that accepts and trains displaced residents is eligible to receive cap space from a closing hospital only if the resident is physically present at the teaching hospital on the day before, or day of, closure. The Proposed Rule addresses situations faced by matched matriculating residents and residents assigned to off-site rotations at the time the hospital or program closes. It also changes the key date to be the date that the closure is publicly announced rather than the actual date of closure, addressing the needs of residents who pursue other training opportunities after learning of an impending closure.
Current Regulations
Under CMS’s current rule and policy, hospitals that train displaced residents from closed hospitals can temporarily have their FTE caps increased by submitting a request to the MAC within 60 days of beginning to train the displaced residents. Each receiving hospital must submit a letter to their MAC providing the name and Social Security Number of each relocated resident that it takes on. The letter must also state the amount of cap per resident that the hospital requests. A receiving hospital can only request cap space if, and to the extent that, it is over its cap.
If a hospital agrees to accept and train residents from approved GME training programs that close (i.e., the other hospital remains open and just the program closes), both the receiving hospital and the hospital that closed the program must communicate with the MAC, providing the information listed above and also that the hospital that closed the program will not otherwise use the FTE cap the receiving hospital wants to use. In effect, the hospital that closed the program needs to temporarily “give up” the FTE cap for the receiving hospital to use it to complete the training of the displaced residents.
CMS currently considers a displaced resident to be a resident who: (1) is physically training in the hospital on the day prior to, or day of, program or hospital closure, and (2) a resident who would have been at the closing hospital/program on the day prior to/day of closure but for the fact that he or she was on approved leave at the time, and will be unable to return to their training in the closing hospital/program. CMS has applied this policy in practice, but as of yet, it has not adopted the policy as a regulation.
Changes in Proposed Rule
The Proposed Rule would make it easier for a hospital that trains a displaced resident to receive GME funding for doing so. Hospitals that train these residents are eligible to receive temporary increases in their GME FTE cap, with the cap space coming from the closing hospital. To create this flexibility, CMS proposes to define the term “displaced resident” to include a wider range of residents who are affected by a hospital/program closure and to shift the key date for the determination from the date of closure to the date that the closure is publicly announced.
Under the Proposed Rule, CMS would define “displaced residents” to include residents who were training at the hospital on the day of or day before closure (as is the case under CMS’s current policy), and also residents who were on approved leave at the time of the announcement of a closure or actual closure (a relaxation of current policy). The term would also include:
- Residents who leave a program after a closure is publicly announced, but before the actual closure;
- Residents assigned to, and training at, planned rotations at other hospitals who will be unable to return to their rotations at the closing hospital or program; and
- Individuals (such as medical students or to-be fellows) who matched into GME programs at the closing hospital or program but have not yet started training at the closing hospital program.
Receiving hospitals should be aware that FTE cap transfers would not be automatically granted under the new policy. Instead, the closing hospital/hospital with a closing program must agree to transfer a portion of its FTE cap to the receiving hospital. In cases where the closing hospital has more residents than cap space, it can decide how to distribute cap space to eligible receiving hospitals. In addition, CMS appears not to be changing its policy that a teaching hospital that closes a GME program (but remains open as a teaching hospital) must agree to a temporary reduction in its FTE cap for the period that the receiving hospital would get the FTE cap for the displaced residents. In effect, this process cannot create new cap space—it can only act as a transfer of existing FTE cap space from one hospital to another.
Practical Takeaways
- If adopted, the Proposed Rule will not go into effect until January 1, 2021. Before then and depending on how the rule is finalized, teaching hospitals who take on residents from hospitals that close should not expect that CMS will allow a transfer of FTE cap space to the receiving hospital unless the resident(s) continues working and learning at the closing hospital until the day before or day of closure or is otherwise on approved leave.
- Receiving hospitals should continue to coordinate with closing hospitals to facilitate the transfer of residents and FTE cap space when a hospital or program closes. All hospitals should bear in mind CMS’s position that GME FTE cap space cannot be separated from the Medicare provider agreement/number, and that FTE cap can only be temporarily transferred under the rules discussed above and for closing hospitals permanently redistributed by CMS under the Section 5506 process. And if a hospital is potentially eligible to receive Section 5506 FTE cap, it must be requested under the CMS process.
- Closing and receiving hospitals should be sure that changes to GME programs are appropriately communicated to personnel responsible for preparing and submitting the hospitals’ cost reports. Receiving hospitals that are eligible for a cap transfer could lose out on additional funding if it is not appropriately claimed on the cost report.
For more information about this topic, please contact:
- Scott Geboy at sgeboy@wp.hallrender.com or (414) 721-0451;
- James Junger at jjunger@wp.hallrender.com or (414) 721-0922; or
- Your regular Hall Render attorney.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
