New Rules for Residency Rotations to Non-Provider Sites
June 26, 2007
CMS has issued two new rules related to the calculation of resident time that will affect the payments hospitals receive from CMS. Hospitals should review whether their non-provider rotations qualify as resident time and plan to recalculate their full-time equivalent numbers based on these rules.Both direct medical education (GME) and indirect medical education (IME) Medicare payments to hospitals depend on the hospital’s resident full-time equivalent (FTE) count. Teaching hospitals that receive GME and IME payments should be aware that the Centers for Medicare and Medicaid Services (CMS) issued two new rules relating to the calculation of the resident FTE count, one effective July 1, 2007, and the other effective October 1, 2007.
The first rule change was included in the CMS Long-Term Care Hospitals rule for RY-2008 (see 72 Fed. Reg. 26870 et seq. (May 11, 2007)). This rule change addresses the question of whether time spent by residents at non-provider sites can be included in the resident FTE count. For several years, CMS has required that for the time to be included, the hospital must incur the costs of both resident stipends and fringe benefits, as well as the non-provider site’s teaching supervisory costs. While the industry has argued that teaching physicians typically volunteer their time, and so there are no such costs, CMS has declined to recognize "volunteer" time in situations in which a teaching physician is part of a group and receives any portion of compensation as fixed salary or on any basis other than collections from personal services.
The first new rule, effective July 1, 2007, makes two important changes. First, hospitals are only required to incur 90 percent of the resident and teaching physician supervisory costs. Second, CMS provides an elaborate set of assumptions that hospitals can use to determine teaching supervisory costs in lieu of tracking actual costs. These assumptions are found in the preamble text rather than in the regulation itself.
Teaching hospitals with rotations to non-provider sites would be well served to calculate their teaching supervisory costs using the CMS assumptions. For some hospitals, these "deemed" costs will be sufficiently low such that a hospital’s incurring 100 percent of the resident salary and fringe benefits will be sufficient without the hospital’s payment of any teaching supervisory costs at all. For hospitals that do pay such costs, the calculation should be run to determine whether current payments to the non-provider site are sufficient to claim resident FTE time. As many hospitals have learned, this is an area in which adjustments by fiscal intermediaries is commonplace, and in some situations (particularly in family medicine residency programs, where non-provider rotations represent a substantial portion of total resident time), those adjustments can be surprisingly large.
The second new rule relates to resident vacation time. Historically, fiscal intermediaries included such time as part of the resident FTE count. For programs in which residents rotate through multiple hospitals, disputes would arise as to which hospital should properly receive the allocation of vacation time. Effective October 1, 2007, CMS will no longer include vacation time in either the numerator or denominator of the resident FTE count (see 72 Fed. Reg. 24813 et seq. (May 3, 2007)). While providers will have limited ability to influence the effect of this new rule, hospitals may wish to recalculate their projected GME and IME payments, which will change (in some cases positively, others negatively) under this new rule.
