CMS Finalizes Rules for Distribution of 1000 New Medicare-Funded Residency Positions and Changes to Rural Training Track Programs.

Abstract

In 2020, Congress passed legislation to expand eligibility for rural training track (RTT) funding and add 1000 new Medicare-funded positions for the first time since 1997. In August 2021, we discussed proposed rules the Centers for Medicare and Medicaid Services (CMS) put forward to guide the parameters of both programs.1 This follow-up article summarizes core concepts of both expanded programs and explains the December 2021 final rule in which CMS finalized details about how it will implement them.In December 2020, the fiscal year (FY) 2021 omnibus spending bill, the Consolidated Appropriations Act of 2021 (CAA), was signed into law.2 The CAA extended certain graduate medical education (GME) training programs through FY 2023, including the Teaching Health Center GME program, the National Health Service Corps, community health centers, and the Children's Hospitals GME program. Many programs critical to GME, including the Children's Hospitals GME program, received increased funding from last year's levels.In addition, the CAA contained 3 provisions affecting Medicare direct GME (DGME) and indirect medical education (IME) payments to teaching hospitals. Section 126 of the CAA makes available 1000 new Medicare-funded GME positions (but no more than 200 new positions each FY), to be distributed beginning in FY 2023, with priority given to hospitals in 4 statutorily specified categories.Section 127 of the CAA makes statutory changes relating to the determination of both urban and rural hospitals' full-time equivalent (FTE) limit for DGME and IME payment purposes with regard to residents training in an accredited RTT, and the 3-year rolling average used to calculate payments for these hospitals.Section 131 of the CAA makes statutory changes to the determination of direct GME per resident amounts and DGME and IME FTE resident limits of hospitals that hosted residents for a short duration.Each of these provisions will be discussed in turn, along with information from the final rules CMS published in December 2021 that included details on how CMS will implement the new provisions.3The spending measure added 1000 new Medicare-funded residency positions for the first time since 1997. The framework resembles the recurrent Resident Physician Shortage Reduction Act, which has been reintroduced in the 117th Congress and calls for an additional 14 000 positions to be funded.Until now, increases for urban teaching hospitals with resident caps set at the time of the Balanced Budget Act of 1997 have only occurred from policy changes directing the redistribution of existing residency slots. The new provision lifts the cap on Medicare-funded positions by creating 1000 new DGME and IME slots beginning October 1, 2022. Starting in FY 2023, CMS will award no more than 200 slots per year until the 1000 spots are filled. Final rules released in December 2021 provided guidance on how the slots will be awarded.The new law establishes some parameters for the new slots, including what kind of hospitals qualify. For example, at least 10% of the slots must be awarded to hospitals in each of the following categories:There are also rules for receipt of the slots—for example, hospitals must agree to increase the number of residency positions by the same number as the additional slots. There are also payment rules for receipt of the slots.CMS initially proposed limiting the increase in residency positions made available to no more than 1.0 FTE for each hospital (not each program) each year. However, comments submitted through the open comment period suggested that this limit was insufficient to establish a new residency program or meaningfully expand an existing residency program, particularly for hospitals in rural and underserved areas. Commenters also suggested that this limit would result in an impractical, unpredictable, and burdensome application process. As such, CMS reconsidered its proposal, and according to the final rule, will allow hospitals to receive a maximum of 5.0 FTE residency positions per year.CMS will adjust the size of the award to the length of the program for which a hospital is applying, with 1.0 FTE awarded each year per program year, not to exceed a program length of 5 years or 5.0 FTEs. For example, a hospital applying to train residents in a 3-year program may request up to 3.0 FTEs per fiscal year. A hospital applying to train residents in a 5-year program may request up to 5.0 FTEs per fiscal year.In determining which hospitals will receive new residency positions, CMS must consider the likelihood of the hospital filling the positions made available within the first 5 training years after the increase would go into account. Under the policy finalized in the final rule, a hospital must demonstrate that it does not have sufficient room under its current FTE resident cap(s) to accommodate a planned new program or expansion of an existing program, and that it intends to use the additional FTEs to establish a new residency program or expand an existing residency program. Hospitals can demonstrate this likelihood in several ways (see the Box).The new law requires CMS to report back at least twice on distribution of the new positions and where the physicians who filled those slots went on to practice.CMS will engage in a separate round of applications for the new slots, with applications to be submitted March 31 of a FY for positions, effective July 1 of the following FY. For FY 2023, the application deadline was March 31, 2022. The completed application must be submitted using an online application available on the CMS DGME website.4The spending bill eased RTT requirements to provide greater opportunity for Medicare funding for permanent DGME and IME cap increases for hospitals that develop rural-urban partnerships to address the physician workforce needs of rural areas.Medicare rules include an RTT provision incentivizing urban hospitals to partner with hospitals and other settings in rural areas to cross-train residents. However, several challenges were identified:The CAA addressed these concerns in several ways.First, the new law removes the requirement that RTTs be separately accredited programs. Instead, CMS has proposed that any ACGME-accredited program may qualify as an RTT if all other requirements are met, such as the requirement that greater than 50% of the program occur in a rural area. This provision will go into effect for cost reporting periods beginning on or after October 1, 2022.The CAA also authorizes both urban and rural hospitals to be eligible for DGME and IME cap increases. According to the final rule, both rural and urban hospitals with an RTT will be authorized to include in their FTE counts the time RTT residents train in the urban and rural hospital, respectively.The CAA also removed previous language stating that hospitals would be eligible for cap adjustments only if the applicable residency program was deemed to be a newly established program. Now, both urban and rural hospitals may receive a rural track FTE limitation each time an RTT is established for the first time, even if the RTT program doesn't meet newness criteria for Medicare payment purposes.However, CMS wants to be judicious in its approach. As such, CMS will not allow increases where the urban and rural hospitals add FTE residents to an existing participating site. For example, Urban Hospital A with a rural track in family medicine at Rural Hospital A could not add more family medicine residents to that program and expect those spots to be funded by the RTT program.CMS will adjust the urban and rural hospital FTE limitations in the instance when additional residents are recruited to add a new rural RTT participating site in the same specialty. To take the previous example, Urban Hospital A with a rural track in family medicine at Rural Hospital A could add a second rural track in family medicine at Rural Hospital B. CMS has stated that allowing experienced urban primary clinical sites to branch out and partner with additional rural communities rather than starting from scratch is an efficient means of addressing rural health care workforce shortages.CMS also will allow an urban hospital with an existing RTT in a specialty to receive an adjustment to its rural track FTE limitation if it starts another RTT in a different specialty. CMS will not consider the RTT in a different specialty an expansion of an existing RTT. So, Urban Hospital A with an RTT in family medicine at Rural Hospital A could add a new rural track in psychiatry at Rural Hospital A.CMS has observed that slots are fungible, and as such, urban and rural hospitals with multiple RTT participating sites may reallocate the number of FTE residents training at each track in order to accommodate increases or decreases in training and funding at such participating sites.Finally, the revised rules provide that, while the RTT specialty cap is being built, both the rural and urban hospitals are eligible for a temporary exemption from the 3-year rolling average rule and the intern and resident-to-bed ratio cap rule. This change mirrors the exemption from these rules for hospitals creating new residency programs and is intended to fix a temporary lag in DGME and IME payments when the RTT specialty cap is being built—a particular challenge to rural hospitals' ability to participate in RTTs. The method for calculating cap assignments and adjustments is outlined in detail in the final rule.Consistent with ACGME terminology, and in the interest of clarity and transparency, CMS is adopting new terminology for its RTT program, starting with the name of the program itself. The program will now be called the “Rural Track Program.” New definitions are as follows:The spending bill eliminated the CMS penalty imposed on certain community hospitals that have hosted “rotator” residents for brief periods. CMS will now allow those hospitals to establish new residency programs without limitations on the number of residency slots. It will also allow hospitals to host a certain number of medical residents for short-term rotations without triggering the permanent FTE resident cap or per-resident amounts (PRAs).The provision is structured to delay the establishment of the PRA, DGME cap, and, if applicable, IME cap, or to provide a “restart” opportunity for hospitals that had their PRAs and Medicare GME caps inadvertently set because of a small number of residency rotations.The section sets a new threshold amount level below which CMS is not permitted to calculate hospital-specific amounts in the future. It also provides an opportunity for more reasonable PRAs and Medicare GME caps for certain hospitals for future payment periods, if the hospitals have already had those amounts set at low levels.CMS will categorize hospitals based on the current cap to determine when a hospital's cap-building period will start or be reset.The FTE resident cap adjustment will be equal to the sum of the products of:The final rule specifies that CMS will reset the FTE resident caps only when a hospital “begins training” residents in a new residency program. That is, the rule applies when the hospital begins to train the requisite number of residents for the first time on or after enactment of the CAA (December 27, 2020) and up to 5 years after (December 26, 2025). In its final rule, CMS highlighted a one-time opportunity for Category B hospitals for which there are open or reopenable cost reports and that believe the PRA or its IME and/or DGME FTE caps were established based on no more than 3.0 FTEs, to request reconsideration by the Medicare Administrative Contractor on or before July 1, 2022.The opportunity to reset the FTE resident cap will not be afforded to hospitals that trigger low caps or PRAs after enactment of the Consolidated Appropriations Act of 2021. CMS plans to issue instructions to Medicare Administrative Contractors and hospitals to provide for an orderly process of request and review for the purpose of receiving replacement PRAs.