"Pay-for-performance" initiatives have become the norm within Medicare payment programs. However, Medicare funding for graduate medical education (GME) is still based on statutory formulae that are not linked to outcome or performance metrics. In a first-of-its-kind request for public comment, the Health Resources and Services Administration (HRSA) is now asking for feedback on structuring a new Quality Bonus System for payments made under the Children's Hospitals Graduate Medical Education (CHGME) program. Written comments on HRSA's proposal are due no later than December 15, 2017.

In its notice, HRSA requests assistance in developing "the standards, payment structure, and outcome measures for the CHGME Quality Bonus System," a program authorized by the Children's Hospital GME Support Reauthorization Act of 2013. Of the total amount appropriated annually for the CHGME program in each of fiscal years 2014 through 2018, the Act makes available up to $7 million for the purpose of providing CHGME payments to newly-qualified children's teaching hospitals. To distribute remaining funds (i.e., up to the $7 million annual amount, after payments are made to newly-qualified hospitals), the statute authorizes HRSA to establish a "quality bonus system" for participating hospitals. Based on FY 2017 payment data, HRSA estimates that approximately $3 million may be available annually for the new CHGME Quality Bonus System, which HRSA proposes would commence in FY 2019 (assuming annual CHGME appropriations are passed by Congress).

HRSA's proposal comes in two parts. For FY 2019 payments, the agency plans to base quality payments on a children's hospital's ability to demonstrate that it (i) engaged in initiatives at the state or regional level to improve access, quality and cost effectiveness of pediatric health care; and (ii) engaged residents in these activities. HRSA's comment request includes additional details regarding qualifying partnerships and initiatives the agency has identified; proposed documentation requirements to receive quality bonus payments; and a contemplated three-tiered payment structure for quality bonus payments in FY 2019. HRSA is seeking public comment on its proposed timeline, eligibility for participation in the payment program, standards for the quality bonus system, documentation and payment structure.

For quality bonus payments in FY 2020 and beyond, HRSA proposes to tie bonus payments to GME outcome measures, and is seeking comment on which measures would be appropriate and can meaningfully distinguish performance. Specifically, HRSA is requesting feedback on resident specialty outcomes (e.g., number of graduates in high-need pediatric specialties), resident service outcomes (e.g., service to high need rural or underserved communities) and children's hospital quality outcomes. HRSA also is seeking comment on available data sources and ways to minimize reporting burdens.

Though CMS has yet to propose a similar program with respect to Medicare GME payments, it is foreseeable that whatever CHGME quality bonus program HRSA adopts ultimately could play a role in informing such an initiative. The Dentons team will continue to monitor HRSA and CMS activity in this area. We are also available to answer any questions you may have about the HRSA proposal and to assist you in drafting comments on behalf of your organization.