Clarification of New Medical Residency Training Program

Generally, a provider’s full-time equivalent (FTE) resident count is capped at the number of FTE residents it had during its most recent cost reporting period ending on or before December 31, 1996. However, federal regulations (42 C.F.R. § 413.79(e)) permit hospitals to adjust their FTE caps for “new medical residency training programs” under certain circumstances. Currently, section 413.79(l) defines a “new medical residency training program” as “a medical residency that receives initial accreditation by the appropriate accrediting body or begins training residents on or after January 1, 1995.” The Proposed Rule “clarifies” that a “new medical residency training program” is one that receives its initial accreditation for the first time, as opposed to reaccreditation of a program that existed previously at the same or another hospital. According to CMS, the current definition could be interpreted as including existing residency programs that merely have been assumed by a different hospital. Additionally, CMS indicated that an accrediting body’s identification of a program as “new” or “initial” is not necessarily determinative with respect to whether the program meets the definition of “new.” Rather, CMS suggests that in evaluating whether a program is truly “new,” the following factors should be considered in addition to the characterization by the accrediting body: (1) whether there are new program directors and/or new teaching staff; (2) whether there are only new residents training in the program(s); (3) the relationship between the hospitals (e.g., common ownership or shared medical school); and (4) the degree to which the hospital with the original program continues to operate its own program in the same specialty. The ability of CMS to look beyond the accrediting body’s determination of a new program creates a murky standard for hospitals attempting to establish training programs that may have some relationship to former residency programs. This is an area ripe for comment by hospitals considering establishing new residency training programs.

Participation of New Teaching Hospitals in Medicare GME Affiliation Groups

Hospitals are permitted to elect to apply their IME and GME FTE resident caps on an aggregate basis if they form a Medicare GME affiliated group (see 42 C.F.R. § 413.79(f)). This allows hospitals meeting certain specifications to temporarily adjust their caps to reflect the rotations of residents among the affiliated hospitals during a given fiscal year. Currently, each hospital in an affiliated group must elect aggregate treatment no later than July 1 of the relevant residency program year. In the Proposed Rule, CMS recognizes that the July 1 deadline created problems for new hospitals that wish to join affiliation groups, yet did not open and begin training residents prior to the July 1 deadline. Therefore, CMS is proposing to amend section 413.79(f) to allow hospitals that are new after July 1 and begin training residents for the first time prior to the following July 1 to receive a temporary FTE cap adjustment to reflect its participation in a Medicare GME affiliated group.