Medicare GME reimbursement is designed only to support the training of medical, dental and podiatric residents. The Medicare program does, however, provide separate funding to support certain programs that train nursing and allied health residents, such as pharmacists and nurse midwives. By and large, most Medicare reimbursement for allied health education consists of cost-based reimbursement for "provider-operated" programs (though reimbursement also may be available under certain circumstances for on-campus clinical training costs of longstanding, non-provider-operated programs). Two key factors in determining whether Medicare will reimburse the direct costs of a "provider-operated" allied health residency program are (1) whether the program is operated by the hospital itself rather than by a non-hospital (usually academic) entity, and (2) whether the residency program previously has been supported by the community, rather than by the Medicare program.

First, for CMS to consider a provider to be the operator of an approved nursing and allied health education program eligible for Medicare reimbursement, the provider must:

  • directly incur the training costs;
  • have direct control of the program curriculum, including providing all of the courses relating to the theory and practice of the profession that are required for the program degree, diploma or certificate, except for basic academic courses, which may be furnished by an educational institution other than the provider;
  • control and be responsible for the administration of the program and its day-to-day operation, including collection of tuition and maintenance of payroll records of teaching staff and/or students, as may be applicable, maintaining control over all aspects of any contracted administrative functions;
  • employ the teaching staff; and
  • provide and control both clinical training and any required classroom instruction.

Second, even if a program meets these regulatory requirements to be considered a "provider-operated" program, the provider, to be eligible for Medicare funding, also must have incurred direct program costs since the program's inception. Under this "community support principle," the Medicare program will only share in the costs of training that have consistently been borne by the Medicare program. Thus, if an academic institution previously has supported the allied health program—such that CMS would take the position that the "community" has stepped in to incur the program costs—Medicare principles prohibit the provider from shifting (or "redistributing") those costs to the Medicare program.

If a hospital meets the regulatory requirements for a provider-operated program and has incurred the costs of the program from its inception, the hospital will be eligible for reimbursement of its reasonable costs for the program, prorated for the hospital's "Medicare share" (i.e., the proportion of inpatient days attributable to Medicare patients). Hospitals that treat Medicare Advantage populations may be eligible for additional Medicare Advantage-related funding for an allied health residency program that has received traditional Medicare funding for a two-year period.