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Medicare Resident Limits

			AAMC Documents FY 1998 PPS Final Rule Issue Brief

As of October 1, 1997, Medicare indirect medical education (IME) payments are subject to a resident limit. A resident limit also is imposed on direct graduate medical education (DGME) payments, effective with cost reporting periods beginning on or after October 1, 1997. The final regulations implementing the resident limits were included in the Federal Fiscal Year 1998 prospective payment system (PPS) final rule, which was published on May 12, 1998. Additional regulations concerning resident limits are generally published in the annual hospital inpatient PPS update rule.

The Balanced Budget Act of 1997 imposed a limit on the number of allopathic and osteopathic residents that are eligible for reimbursement under Medicare (dental and podiatry residents are exempt from the limits). For IME payments, the limit is based on the number of residents eligible for IME payments during a hospital's most recent cost report period ending on or before December 31, 1996 (1996 limit). For DGME, the limit is based on the residents eligible for DGME payments during a hospital's most recent cost report period ending on or before December 31, 1996. The limits for IME and DGME may differ because in 1996, residents training in non-hospital sites were eligible for DGME payments, but not for IME payments.

Any net increase in a hospital's resident count subsequent to that period, except for certain exceptions, will not be eligible for Medicare payment. HCFA (now the Centers for Medicare and Medicaid Services, CMS)has established a methodology for reducing the number of residents for DGME payment when the limit is exceeded. The resident limit may be increased in certain situations to account for new residency training programs. In general, rural hospitals may have their resident limits adjusted upward if they begin new programs. Resident limits for urban hospitals will only be adjusted for those new programs that were accredited by August 4, 1997. Hospitals also are permitted, under specified conditions, to aggregate their resident limits. This permits certain hospitals that are part of the aggregated group to increase their resident counts above their 1996 limits, so long as other hospitals in the group reduce their resident counts such that the overall aggregated resident limit is not exceeded.

For more information on resident limits, see the AAMC's summary and analysis of the May 12, 1998 PPS Final Rule.

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