On March 14, 2011, CMS published an interim final rule with comment (available by clicking here) implementing section 203 of the Medicare and Medicaid Extenders Act of 2010 (MMEA), which amends section 5503 of PPACA, to address the treatment of hospitals involved in GME affiliated groups for purposes of applying the IME and GME FTE resident cap redistribution provisions of PPACA (the “2011 Cap Redistribution”). While the statute containing the IME/GME cap redistribution that occurred in 2005 addressed the treatment of hospitals in GME affiliated groups, PPACA did not contain a similar provision. With section 203 of the MMEA, Congress created a similar, although not identical, plan for the treatment of hospitals in GME affiliated groups for purposes of the 2011 Cap Redistribution. Section 203 of the MMEA allows CMS to consider hospitals that are members of the same Medicare GME affiliated group in the aggregate when determining whether to reduce a hospital’s caps. In the interim final rule, CMS has added section (7) to 42 CFR § 413.79(m) to state the following procedure for determining whether (and if so, how much) a hospital’s IME and GME FTE resident caps will be reduced as a result of the 2011 Cap Redistribution. IME and GME are considered separately throughout this process.

  • Step 1: The Medicare contractor will determine whether a hospital was a member of a Medicare GME affiliated group at any point during any of the hospital’s three most recent cost reporting periods ending before March 23, 2010 for which a cost report has been settled or submitted to the Medicare contractor by March 23, 2010.
  • Step 2: If the answer to the prior question is yes, then the Medicare contractor will determine a hospital’s “reference cost reporting period” by determining the cost reporting period from the three most recent cost reporting periods that results in the smallest difference between the “reference resident level” and the “otherwise applicable resident limit.”
  • Step 3: The Medicare contractor will determine whether a hospital was a member of a Medicare GME affiliated group as of July 1 of the reference cost reporting period. If the hospital was a member of a Medicare GME affiliated group as of July 1 in the reference cost reporting period, CMS will look at the Medicare GME affiliated group in the aggregate when determining whether the hospital will be subject to reduction to its cap. If the hospital was not a member of a Medicare GME affiliated group as of July 1 in the reference cost reporting period, the analysis will proceed under the policy established for hospitals that are not members of a Medicare GME affiliated group (as set forth in the November 24, 2010 final rule).
  • Step 4: If the hospital was a member of a GME affiliated group as of July 1 of the reference cost reporting period, the Medicare contractor will determine the IME and GME FTE resident caps and FTE resident counts for each hospital in the Medicare GME affiliated group. The Medicare contractor will add each hospital's IME and GME FTE resident caps to determine the aggregate affiliated FTE resident cap, and will then add each hospital’s FTE resident count to determine the aggregate affiliated FTE resident count (again, IME and GME are considered separately). If the aggregate FTE resident count is equal or more than the aggregate FTE resident cap, then no reduction will be made to the hospital's cap. However, if the aggregate FTE resident count is below the aggregate FTE resident cap, the contractor will calculate the reduction to the hospital's cap.
  • Step 5: If the aggregate count was below the aggregate cap, CMS will determine the hospital’s pro rata share of the difference between the aggregate cap and FTE count. The hospital's pro rata share will then be multiplied by 0.65, to determine the number of FTEs by which the hospital's cap will be reduced.

Comments to this interim final rule must be received by CMS by April 13, 2011.