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  • Washington Highlights

    Graduate Medical Education Final Rules Published for FY 2022 IPPS


    Brad Cunningham, Sr. Regulatory Analyst, Graduate Medical Education

    The Centers for Medicare & Medicaid Services (CMS) issued final rules for the graduate medical education (GME) portions of the fiscal year (FY) 2022 Inpatient Prospective Payment System (IPPS) final rule on Dec. 24, 2021. Included in the rule were the CMS’ final distribution methodology for 1,000 new residency positions, updates to the Rural Training Program (RTP, previously called Rural Training Tracks, or RTTs), and per-resident amount (PRA) and full-time equivalent (FTE) count resets for certain hospitals that were enacted as part of the Consolidated Appropriations Act, 2021 (CAA, P.L. 116-260). 

    Below are highlights from the final rule:

    •  The CMS finalized a methodology for distributing up to 5.0 FTE per year, per hospital. Priority will be given to hospitals in geographic primary care or mental health Health Professional Shortage Areas (HPSA), based on the applicant’s HPSA score. Starting in FY 2023, no more than 200 slots will be distributed per year: In the final rule, the CMS increased the maximum number of residency slots to a maximum of 5.0 FTEs per year, per hospital, from the 1.0 FTE in the proposed rule. Hospitals may use awarded slots to increase the resident count for an established program or a new program. Hospitals must apply each year for future distributions of slots, and hospitals awarded slots are permitted to apply for slots in subsequent years. 

      In May 2021, the CMS proposed two distribution models for the 1,000 newly created GME residency slots and requested comments on which method to use; one giving priority to qualified hospitals with the highest HPSA score and the second to hospitals that meet the greatest number of qualifying criteria. The CMS finalized a distribution model that prioritizes qualifying hospitals based on HPSA score. A qualifying hospital must meet the requirements of any of four categories: hospitals located in rural areas or hospitals that reclassified to rural, hospitals that are over the FTE cap, hospitals located in states with new medical schools or additional locations and branch campuses, and hospitals that serve areas designated as HPSAs. To qualify under the HPSA category, hospitals also must ensure that at least 50% of the training in the program occurs at sites located in a HPSA, including at non-provider settings and Veterans Affairs facilities. Hospitals with the highest HPSA score will receive distributions of residency positions first. If slots are available after priority hospitals are awarded slots, the CMS will award slots to hospitals with the next highest HPSA score and so on until all the slots are awarded. The CMS made a key modification for situations where more applicants have the same HPSA score than available slots to award (deemed a “tie”). In the event slots remain and multiple hospitals have the same HPSA score, hospitals with less than 250 beds will receive distributions of slots first, and if any slots remain, hospitals with 250 or greater beds will receive slots or a prorated distribution.  

      The application is available on the CMS website under the Section 126: Distribution of Additional Residency Positions tab. Applications are due by March 31. Awards will be announced by Jan. 31, 2023, though the CMS stated in the final rule that they may announce awards before this date. Awards will be effective July 1, 2023. 
    • Updates to RTPs: The CMS will allow any accredited residency program to participate in an RTP, changing the previous rule that required RTTs to be separately accredited. Rural hospitals with established programs may now take advantage of the RTP cap adjustment, like their urban hospital counterparts. Hospitals may participate in multiple RTPs, with a cap adjustment for any new RTPs for both the urban and rural hospital.
    • Resetting Low PRA and FTE Counts for Certain Hospitals: The CMS finalized rules to allow certain hospitals to reset low or zero PRAs and low FTE caps when hospitals train a requisite number of residents on or after Dec. 27, 2020 (the date of the enactment of the CAA). As proposed, Category A hospitals trained less than 1.0 FTE on any cost report prior to Oct. 1, 1997, and Category B hospitals trained 3.0 FTEs or less between Oct. 1, 1997, and Dec. 27, 2020; each will have a five-year window (ending Dec. 26, 2025) to “trigger” a reset. Category A hospitals would trigger a reset by reflecting 1.0 FTE or more on a cost report on or after Dec. 27, 2020, and Category B hospitals would do so when they train more than 3.0 FTEs on any cost report after Dec. 27, 2020. 

    In the final rule, the CMS clarified that any FTE reset for a hospital that start new programs during the statutorily defined five-year window would be added to the hospital’s current FTE count, and the PRA would be replaced with the new base year of the hospital’s reset.

    The CMS is seeking further comment on several issues that may be addressed in future rulemaking, including possible alternative definitions for Category 4 hospitals that “serve a HPSA population,” alternatives to using HPSA scores as a measure for prioritizing the distribution of slots, and alternatives for hospitals that wish to use a process other than the Healthcare Provider Cost Reporting Information System to reset low or zero PRAs and low FTE counts.