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Washington Highlights

CMS Issues Guidance for Teaching Hospitals on Reporting FICA Refunds

January 6, 2012—The Centers for Medicare and Medicaid Services (CMS) Dec. 30, 2011, issued Change Request 7685 to provide guidance to teaching hospitals on how to report Internal Revenue Service (IRS) refunds of medical resident Federal Contributions Insurance Act (FICA) taxes on the Medicare hospital cost report. 

Teaching hospitals are entitled to FICA refunds under a March 2, 2010, IRS determination that medical residents are exempt from FICA taxes based on the student exception for tax periods ending before April 1, 2005.  As encouraged by the AAMC, the final CMS guidance document instructs hospitals to report these refunds in a way that would not impact hospitals’ wage-related costs used to compute the inpatient prospective payment system (IPPS) wage index.

CMS is aware of a typographical error in Change Request 7685 that requires hospitals to submit revisions to their fiscal year (FY) 2009 cost reports to their contractors by Jan. 30, 2011.  The agency intends to publish a corrected version with a Jan. 30, 2012, deadline.


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806