Prompted by confusion among Medicare Administrative Contractors (MACs) regarding how to initiate payments to new teaching hospitals, CMS issued on September 22, 2017, a One-Time Notification, Transmittal 1923, "Calculating Interim Rates for Graduate Medical Education (GME) Payments to New Teaching Hospitals ." While the Notification contains instructions directed to the MACs, it also was accompanied by an MLN Matters article specifically for providers. The Notification will take effect October 23, 2017.

As the GME @ Dentons team discussed in "Seeing your first Medicare GME dollars," navigating initial GME payments has historically been a complicated process for new teaching hospitals, full of uncertainties as to the amount and timing of initial payments and the documentation the hospital must submit to its MAC to initiate such payments. While the Notification does not change GME payment rates or CMS policies, it does attempt to provide clarity regarding how and when MACs will determine interim GME payments for a hospital that is newly establishing a per resident amount (PRA) and/or GME caps.

Notably, the Notification instructs MACs to establish interim direct and indirect (DGME and IME) payment rates for new teaching hospitals at the earliest scheduled rate review after the hospital submits a written request for payment. The MAC need not, however, conduct a special rate review exclusively for purposes of establishing these interim rates. CMS also articulates clear lists of documents the hospital must provide to the MAC to establish initial payments. Finally, CMS instructs MACs to use the weighted mean PRA (updated for inflation) for the new teaching hospital's census region to calculate interim DGME rates, and to update the new teaching hospital's PRA to the weighted average PRA for the core-based statistical area (CBSA) only after the new teaching hospital files its base-year cost report.

The Medicare rules related to becoming a new teaching hospital are nuanced and complex. Dentons' Health Care team can answer your questions about Medicare reimbursement for both new and existing medical residency training programs.