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CMS Announces Hospital Closure and Round Seven of Sec. 5506 Closed Hospital Slot Redistribution Program

June 6, 2014The Centers for Medicare and Medicaid Services (CMS) issued a June 3 notice announcing round seven of the redistribution 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 seven, CMS will redistribute the cap slots of closed hospital Long Beach Medical Center in Long Beach, N.Y. (CBSA Code – 35004).  Long Beach Medical Center’s Medicare Indirect Medical Education (IME) cap is 26.79 and its Medicare Direct Graduate Medical Education (DGME) cap is 28.89 (taking into account Section 422 adjustments). Applications for the slots from this closed teaching hospital must be received, not postmarked, by 5 p.m. ET on Sept. 2, 2014.

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 encourages notifying the agency by email indicating that a hard copy of the application has been mailed.

The Sec. 5506 Application Form and Guidelines for Submitting Sec. 5506 Applications are located on the CMS Direct Graduate Medical Education website, along with links to other rules that contain policy guidance on submitting section 5506 applications, including the calendar year (CY) 2011 outpatient prospective payment system (OPPS) final rule and the fiscal year (FY) 2013 hospital inpatient prospective payment systems (IPPS)/long-term care hospitals (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
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806