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CMS Announces Fifth Round of Closed Hospital Residency Slots Redistribution

The Centers for Medicare and Medicaid Services (CMS) issued a May 3 notice announcing another round of Medicare residency slots under Section 5506 of the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).  Section 5506 authorizes CMS to redistribute residency cap slots after a hospital that trained residents in approved medical residency programs closes [see Washington Highlights, Feb 3, 2012]. 

In round five, CMS will redistribute the cap slots of Infirmary West Hospital in Mobile, Alabama, and Montgomery Hospital of Morristown, Pennsylvania.  Infirmary West Hospital’s Medicare Indirect Medical Education (IME) cap is 31.74 and its Medicare Direct Graduate Medical Education (DGME) cap is 31.84.  Montgomery Hospital’s IME cap is 16.56 and its DGME cap is 15.33.  These caps take into account Section 422 and Section 5503 adjustments.  Applications for the slots from these two closed teaching hospitals must be received, not postmarked, by 5 p.m. ET on Aug. 29.

Section 5506 of the ACA specified that hospitals in the same geographic region as the closed hospital would receive priority for that closed hospital’s slots. Among other criteria, CMS also gives preference in distributing these permanent slots to hospitals that:

  • Assume an entire program from the closed hospital;
  • Receive slots from the closed hospital under a GME affiliation agreement and will use the slots to continue to train at least the number of residents they had trained under the affiliation agreement; and
  • Take in residents displaced by the hospital closure and will continue to train residents in the same programs as the displaced residents, even after the displaced residents complete their training.

CMS used the FY 2014 Inpatient Prospective Payment System (IPPS) proposed rule to notify the public of the closure April 9, 2012, of Peninsula Hospital Centerin Far Rockaway, New York, and to initiate Round 4 of the section 5506 application and selection process.  Peninsula Hospital Center’s IME cap is 28.32 and its DGME cap is 36.34 including the Section 422 adjustment. 

Teaching hospitals that wish to apply for Peninsula Hospital Center’s slots have to make sure that their applications are received by the CMS Central Office no later than July 25, 2013. CMS encourages applicants to notify the agency by email ( indicating that a hard copy of the application has been mailed.

The “Section 5506 Application Form” and “Guidelines for Submitting Applications Under Section 5506” are located on the CMS Direct Graduate Medical Education Web page, along with links to other rules that contain policy guidance on submitting section 5506 applications, including the 2011 Outpatient Prospective Payment System (OPPS) final rule and the FY 2013 IPPS/LTCH PPS final rule.


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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
Senior Legislative Analyst, Govt. Relations
Telephone: 202-903-0806