Government Affairs Home > Washington Highlights > July 12, 2002

House Bill Would Redistribute Unused Residency Slots for DGME Payments

July 12, 2002 - Under the Medicare legislation (H.R. 4954) passed by the House June 27, the portion of a hospital's resident limit (as mandated by the Balanced Budget Act of 1007) that is being "unused" would be redistributed to teaching hospitals seeking to increase their resident limits. The slots that would be redistributed would be eligible for direct graduate medical education (DGME) payments, but not indirect medical education (IME) payments.

According to the language, a resident "pool" would be created based on the difference between hospitals' actual historical resident counts and their resident limits, to the extent the actual count is lower. Specifically, if a hospital's resident count is below its corresponding resident limit in each of its three most recent cost reporting periods as of September 30, 2001, its resident limit would be permanently reduced by the difference in its resident limit and 75 percent of the highest resident count of the three year period. Both the DGME and IME resident limits would be reduced. Upon request to the Secretary, hospitals may seek to have cost reporting periods that include July 2002 factored into the resident limit reduction determinations.

The one-time pool of resident slots created by the retroactive resident limit reductions would be available to hospitals through an application process that would be administered by the Secretary of Health and Human Services, starting as early as July 1, 2003. Hospitals located in rural and "other urban" areas would be given preference to have their resident limits increased on a first-come first-serve basis. Only DGME payments would be made for the additional residents. DGME payments for the additional residents would be paid based on a national average per resident amount rather than the hospital's current per resident amount.

The Congressional Budget Office has scored the provision at $1 billion over 10 years.

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