Medicare Program; Revisions to the Reductions and Increases to Hospitals' FTE Resident Caps for Graduate Medical Education Payment Purposes, 13515-13524 [2011-5960]
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Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Rules and Regulations
permit under 40 CFR part 70 or 40 CFR
part 71’’ until the final reconsideration
rule is published in the Federal
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III. What are the major comments and
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We received five comments in
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request comment on the title V
permitting issue in the forthcoming
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IV. What are the changes since
proposal?
No changes have been made to the
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The stay will not change the
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VI. Statutory and Executive Order
Reviews
A. General Requirements
Under Executive Order 12866 (58 FR
51735, October 4, 1993), and Executive
Order 13563 (76 FR 3821, January 21,
2011), this action is not a ‘‘significant
regulatory action,’’ and, therefore, is not
subject to review by the Office of
Management and Budget. For this
reason, this action is also not subject to
Executive Order 13211, ‘‘Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use’’ (66 FR 28355, May
22, 2001). In addition, this action does
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require prior consultation with State
officials, as specified by Executive
Order 12875 (58 FR 58093, October 28,
1993), or involve special consideration
of environmental justice related issues,
as required by Executive Order 12898
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(59 FR 7629, February 16, 1994).
Pursuant to the Regulatory Flexibility
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August 10, 1999). This action also is not
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‘‘Protection of Children from
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Risks’’ (62 FR 19885, April 23, 1997).
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with these statutes and Executive
Orders for the underlying rule is
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B. Submission to Congress and the
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The Congressional Review Act, 5
U.S.C. 801, et seq., as added by the
Small Business Regulatory Enforcement
Fairness Act of 1996, generally provides
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copy of the rule, to each House of the
Congress and to the Comptroller General
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report containing this notice and other
required information to the United
States Senate, the United States House
of Representatives, and the Comptroller
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publication of the rule in the Federal
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Federal Register. The stay of these
particular provisions in 40 CFR part 63,
subpart VVVVVV is not a ‘‘major rule’’
as defined by 5 U.S.C. 804(2). This rule
will be effective March 14, 2011.
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13515
List of Subjects in 40 CFR Part 63
Environmental protection,
Administrative practice and procedure,
Air pollution control, Reporting and
recordkeeping requirements.
Dated: March 8, 2011.
Lisa P. Jackson,
Administrator.
For the reasons stated in the
preamble, title 40, chapter I of the Code
of Federal Regulations is amended as
follows:
PART 63—[AMENDED]
1. The authority citation for part 63
continues to read as follows:
■
Authority: 42 U.S.C. 7401, et seq.
§ 63.11494
[STAYED IN PART]
2. In § 63.11494, paragraph (e) is
stayed from March 14, 2011, until
further notice.
■
[FR Doc. 2011–5778 Filed 3–11–11; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 413
[CMS–1430–IFC]
RIN 0938–AQ92
Medicare Program; Revisions to the
Reductions and Increases to Hospitals’
FTE Resident Caps for Graduate
Medical Education Payment Purposes
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment
period.
AGENCY:
This interim final rule with
comment period implements section
203 of the Medicare and Medicaid
Extenders Act of 2010 relating to the
treatment of teaching hospitals that are
members of the same Medicare graduate
medical education affiliated groups for
the purpose of determining possible
full-time equivalent resident cap
reductions.
SUMMARY:
Effective Date: These regulations
are effective on March 14, 2011.
Comment Date: To be assured
consideration, comments must be
received at one of the addresses
provided below, no later than 5 p.m. on
April 13, 2011.
ADDRESSES: In commenting, please refer
to file code CMS–1430–IFC. Because of
staff and resource limitations, we cannot
DATES:
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Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Rules and Regulations
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed)
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address only: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–1430–IFC, P.O. Box 8013,
Baltimore, MD 21244–8013.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address only: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–1430–IFC,
Mail Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. If you prefer,
you may deliver (by hand or courier)
your written comments before the close
of the comment period to either of the
following addresses:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue, SW.,
Washington, DC 20201
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address,
please call telephone number (410) 786–
7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses
indicated as appropriate for hand or
courier delivery may be delayed and
received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi
Hefter, (410) 786–4487.
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SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://regulations.gov.
Follow the search instructions on that
Web site to view public comments.
Comments received timely will be
also available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
I. Background
A. Statutory Authority
Section 1886(h) of the Act, as added
by section 9202 of the Consolidated
Omnibus Budget Reconciliation Act
(COBRA) of 1985 (Pub. L. 99–272) and
as currently implemented in the
regulations at 42 CFR 413.75 through
413.83, establishes a methodology for
determining payments to hospitals for
the direct costs of approved graduate
medical education (GME) programs.
Section 1886(h)(2) of the Act sets forth
a methodology for the determination of
a hospital-specific base-period per
resident amount (PRA) that is calculated
by dividing a hospital’s allowable direct
costs of GME in a base period by its
number of residents in the base period.
The base period is, for most hospitals,
the hospital’s cost reporting period
beginning in FY 1984 (that is, October
1, 1983 through September 30, 1984).
The base year PRA is updated annually
for inflation. In general, Medicare direct
GME payments are calculated by
multiplying the hospital’s updated PRA
by the weighted number of full-time
equivalent (FTE) residents working in
all areas of the hospital complex (and at
nonprovider sites, when applicable),
and the hospital’s Medicare share of
total inpatient days.
Section 1886(d)(5)(B) of the Act
provides for an additional payment
amount under the hospital inpatient
prospective payment system (IPPS) for
hospitals that have residents in an
approved GME program in order to
account for the higher indirect patient
care costs of teaching hospitals relative
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to nonteaching hospitals. The
regulations regarding the calculation of
this additional payment, known as the
indirect medical education (IME)
adjustment, are located at 42 CFR
412.105. The hospital’s IME adjustment
applied to the DRG payments is
calculated based on the ratio of the
hospital’s number of FTE residents
training in either the inpatient or
outpatient departments of the IPPS
hospital to the number of inpatient
hospital beds.
The Balanced Budget Act of 1997
(Pub. L. 105–33) established a limit on
the number of allopathic and
osteopathic residents that a hospital
may include in its FTE resident count
for direct GME and IME payment
purposes. Under section 1886(h)(4)(F) of
the Act, for cost reporting periods
beginning on or after October 1, 1997, a
hospital’s unweighted FTE count of
residents for purposes of direct GME
may not exceed the hospital’s
unweighted FTE count for its most
recent cost reporting period ending on
or before December 31, 1996. Under
section 1886(d)(5)(B)(v) of the Act, a
similar limit on the FTE resident count
for IME purposes is effective for
discharges occurring on or after October
1, 1997.
The recently enacted Patient
Protection and Affordable Care Act
(Pub. L. 111–148), as amended by the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152) (collectively referred to in this
document as the Affordable Care Act)
made a number of statutory changes
relating to the determination of a
hospital’s FTE resident count for direct
GME and IME payment purposes and
the manner in which FTE resident
limits are calculated and applied to
hospitals under certain circumstances.
Section 5503 of the Affordable Care Act
added a new section 1886(h)(8) to the
Act to provide for the reduction in FTE
resident caps for direct GME under
Medicare for certain hospitals, and to
authorize the ‘‘redistribution’’ of the
estimated number of FTE resident slots
to other qualified hospitals. In addition,
section 5503 amended section
1886(d)(5)(B)(v) of the Act to require the
application of section 1886(h)(8) of the
Act provisions ‘‘in the same manner’’ as
the FTE resident caps for IME. The
regulations implementing section 5503
of the Affordable Care Act were
included in the Outpatient Prospective
Payment System (PPS) Final Rule,
published on November 24, 2010 in the
Federal Register (75 FR 72147). The
section below summarizes the
provisions of section 5503 of the
Affordable Care Act as implemented in
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the November 24, 2010 Federal
Register.
B. Reductions and Increases to
Hospitals’ FTE Resident Caps for GME
Payment Purposes Under Section 5503
of the Affordable Care Act
As previously discussed, the
calculation of both direct GME and IME
payments is affected by the number of
FTE residents that a hospital is allowed
to count; generally, the greater the
number of FTE residents a hospital
counts, the greater the amount of
Medicare direct GME and IME payments
the hospital will receive. In an attempt
to end the implicit incentive for
hospitals to increase the number of FTE
residents, Congress instituted a cap on
the number of allopathic and
osteopathic residents a hospital is
allowed to count for direct GME and
IME purposes. Dental and podiatric
residents are not included in this
statutorily mandated cap. Some
hospitals have trained a number of
allopathic and osteopathic residents in
excess of their FTE resident caps, while
other hospitals have reduced their FTE
resident counts to some level below
their FTE resident caps. Section 5503 of
the Affordable Care Act added a new
section 1886(h)(8) to the Act to provide
for reductions in the statutory FTE
resident caps for direct GME under
Medicare for certain hospitals, and
authorizes a ‘‘redistribution’’ to hospitals
of the estimated number of FTE resident
slots resulting from the reductions.
Section 5503 of the Affordable Care Act
also amended section 1886(d)(5)(B)(v) of
the Act to require application of the
provisions of 1886(h)(8) of the Act ‘‘in
the same manner’’ to the FTE resident
caps for IME.
The new section 1886(h)(8)(A) of the
Act provides that, effective for portions
of cost reporting periods occurring on or
after July 1, 2011, a hospital’s FTE
resident cap will be reduced if its
‘‘reference resident level’’ is less than its
‘‘otherwise applicable resident limit,’’ as
these terms are described below. Section
1886(h)(8)(A)(ii) of the Act and the
November 24, 2010 Federal Register (75
FR 72147) describes which hospitals are
exempt from a cap reduction under
section 5503 of the Affordable Care Act.
Included in that group are rural
hospitals with fewer than 250 acute care
inpatient beds. For other hospitals, any
such reduction will be equal to 65
percent of the difference between the
hospital’s ‘‘otherwise applicable resident
limit’’ and its ‘‘reference resident level.’’
Under section 1886(h)(8)(B) of the
Act, the Secretary is authorized to
increase the FTE resident caps for
certain categories of hospitals for
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portions of cost reporting periods
occurring on or after July 1, 2011, by an
aggregate number that does not exceed
the estimated overall reduction in FTE
resident caps for all hospitals under
section 1886(h)(8)(A) of the Act. A
single hospital may receive an increase
in its FTE resident cap of no more than
75 additional FTEs. That is, a hospital
would be allowed to receive up to 75
additional slots for direct GME and up
to 75 additional slots for IME. In
determining which hospitals would
receive an increase in their FTE resident
caps, sections 1886(h)(8)(C) through
1886(h)(8)(E) of the Act directs us to do
all of the following:
• Take into account the demonstrated
likelihood of the hospital filling the
additional positions within the first
three cost reporting periods beginning
on or after July 1, 2011.
• Take into account whether the
hospital has an accredited rural training
track program.
• Distribute 70 percent of the resident
slots to hospitals located in States with
resident-to-population ratios in the
lowest quartile.
• Distribute 30 percent of the resident
slots to hospitals located in a State, a
territory of the United States, or the
District of Columbia that are among the
top 10 States, territories, or Districts in
terms of the ratio of the total population
living in an area designated as a health
professional shortage area (HSPA), as of
March 23, 2010, to the total population,
and/or to hospitals located in rural
areas.
A comprehensive description of the
rules implementing the cap slot
redistribution under section 1886(h)(8)
of the Act can be found in the November
24, 2010 Federal Register (75 FR
72168).
C. Treatment of Affiliated Groups Under
Section 5503 of the Affordable Care Act
A previous redistribution of ‘‘unused’’
FTE resident slots was performed in
2005 under section 422 of the Medicare
Prescription Drug, Improvement and
Modernization Act of 2003 (MMA) (Pub.
L. 108–173). Section 422 of the MMA
provided for the redistribution of
unused residency positions effective for
portions of cost reporting periods
beginning on or after July 1, 2005. While
the redistribution under section 5503 of
the Affordable Care Act as initially
enacted is similar to the previous
redistribution under section 422 of
MMA, there are substantive differences
between the two provisions. One of
those differences involves the treatment
of hospitals that were members of the
same Medicare GME affiliated groups
for purposes of determining whether a
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13517
hospital should receive a cap reduction.
The regulations governing Medicare
GME affiliated groups and Medicare
GME affiliation agreements are at 42
CFR 413.75(b) and 413.79(f),
respectively. Medicare GME affiliation
agreements allow teaching hospitals to
temporarily transfer cap slots to other
hospitals in order to facilitate the cross
training of residents. The duration of the
temporary cap slots transfer is a
minimum of 1 year beginning on July 1
of a year, per the Medicare GME
affiliation agreement.
Under section 422 of MMA, the
statute explicitly directed the Secretary
to apply the provisions to hospitals that
were members of the same Medicare
GME affiliated group as of July 1, 2003.
Specifically, section 1886(h)(7)(A)(iii) of
the Act states ‘‘The provisions of clause
(i) shall be applied to hospitals which
are members of the same Medicare GME
affiliated group (as defined by the
Secretary under paragraph (4)(H)(ii)) as
of July 1, 2003.’’ Therefore, in
implementing section 422 of MMA, we
based the FTE resident cap reductions
for hospitals that were participating in
a Medicare GME affiliated group on the
aggregate cap and count data from all
hospitals participating in the same
Medicare GME affiliated group(s). If a
hospital was training a number of
residents below its FTE resident cap for
the reference cost reporting period but
the hospital was part of a Medicare GME
affiliated group for some or all of that
reference cost reporting period, the
Medicare contractor determined if the
aggregate affiliated count for all
hospitals in the Medicare GME affiliated
group was greater than the aggregate
affiliated cap. If the aggregate affiliated
count was greater than the aggregate
cap, then there was no reduction made
to the FTE caps of any hospital in the
Medicare GME affiliated group (even for
the hospital that was part of the
Medicare GME affiliated group, but was
training below its cap).
However, as we noted in the
November 24, 2010 Federal Register (75
FR 72161), in contrast to section 422 of
MMA, section 5503 of the Affordable
Care Act as initially enacted did not
include language specific to Medicare
GME affiliated groups as was included
in section 422 of MMA under section
1886(h)(7)(A)(iii) of the Act. Thus,
section 5503 of the Affordable Care Act
as initially enacted did not provide for
determinations based on the aggregate
experience of a Medicare GME affiliated
group. Therefore, we stated in the
November 24, 2010 Federal Register (75
FR 72161), that the determination of
whether a hospital would receive a cap
reduction based on that individual
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hospital’s experience and not the
aggregate experience of the Medicare
GME affiliated group.
D. Section 203 of the Medicare and
Medicaid Extenders Act of 2010 (P.L.
111–309)
Section 203 of the Medicare and
Medicaid Extenders Act of 2010
(MMEA) further amended section
1886(h)(8) of the Act by adding the
following new subparagraph:
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(I) Affiliation.—The provisions of this
paragraph shall be applied to hospitals which
are members of the same affiliated group (as
defined by the Secretary under paragraph
(4)(H)(ii)) and the reference resident level for
each such hospital shall be the reference
resident level with respect to the cost
reporting period that results in the smallest
difference between the reference resident
level and the otherwise applicable resident
limit.
This paragraph refers to the treatment
of hospitals that are members of the
same Medicare GME affiliated groups,
as described in section C of this interim
final rule for purposes of determining a
hospital’s possible cap reductions under
section 1886(h)(8)(A) of the Act. Similar
to section 422 of MMA, this amendment
to the language at section 1886(h)(8) of
the Act allows us to consider hospitals
that are members of the same Medicare
GME affiliated group in the aggregate,
rather than only on an individual basis,
for the purposes of determining a GME
FTE cap reduction.
Although this amendment allows us
to implement section 5503 of the
Affordable Care Act in a manner similar
to section 422 of MMA, a key difference
in implementation remains. One point
of note is that section 422 of MMA,
(section 1886(h)(7)(A)(ii)(I) of the Act)
refers to the most recent cost reporting
period ending on or before September
30, 2002 as the reference cost reporting
period. However, as stated in the August
11, 2004 Federal Register (69 FR
49125), if a hospital was a member of a
Medicare GME affiliated group for the
academic year beginning July 1, 2003,
then its reference cost reporting period
was the cost reporting period that
included July 1, 2003. This differs from
section 5503 of the Affordable Care Act
which instructs the Secretary to choose
the reference cost reporting period out
of the hospital’s three most recent cost
reporting periods ending before March
23, 2010 for which a cost report has
been settled or has been submitted to
the Medicare contractor by March 23,
2010, that has the highest FTE resident
count section 1886(h)(8)(H)(i)) of the
Act.
For hospitals that were members of
the same Medicare GME affiliated
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groups, the MMEA now allows us to
determine the reference cost reporting
period as the cost reporting period out
of the hospitals three most recent cost
reporting periods ending before March
23, 2010 for which a cost report has
been settled or has been submitted to
the Medicare contractor by March 23,
2010 with the smallest difference
between the reference resident level and
the otherwise applicable resident limit
(section 1886)(h)(8)(I) of the Act).
Therefore based on the amendment
made to section 1886(h)(8) of the Act by
section 203 of the MMEA adding
subparagraph (I), we are establishing in
this interim final rule with comment
period, a methodology to determine
whether a hospital is subject to a cap
reduction under section 5503 of the
Affordable Care Act based on that
hospital’s participation in a Medicare
GME affiliated group(s) or an emergency
Medicare GME affiliated group under 42
CFR 413.79(f). Although the MMEA
provision applies to both regular
Medicare GME affiliation agreements
and emergency Medicare GME
affiliation agreements, for ease of
reference, we will refer in this
discussion to both with the term
Medicare GME affiliation agreements.
We believe the purpose of section 203
of MMEA is to amend section 1886(h)(8)
of the Act in order to implement section
5503 of the Affordable Care Act in a
manner that is similar to section 422 of
MMA with regard to treatment of
hospitals that are members of the same
Medicare GME affiliated group.
Accordingly, we are implementing
section 203 of the MMEA in a manner
similar to the way in which section 422
of MMA was implemented. The
methodology used to determine a cap
reduction for hospitals which are
members of the same affiliated group is
as follows:
Part 1: Determine the ‘‘Reference Cost
Reporting Period’’
The Medicare contractor will assess
each hospital on an individual basis.
First, the Medicare contractor will
determine whether a hospital was a
member of a Medicare GME affiliated
group at any point during any of the
hospital’s three most recent cost
reporting periods ending before March
23, 2010 for which a cost report has
been settled or has been submitted to
the Medicare contractor by March 23,
2010. That is, the Medicare contractor
will determine whether the caps during
any of those three cost reporting periods
were revised because the hospital was a
member of a Medicare affiliation
agreement. If a hospital was not a
member of a Medicare GME affiliated
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group during any of those three cost
reporting periods, then the Medicare
contractor will determine if and by how
much that hospital’s FTE resident caps
should be reduced in accordance with
the policy established in the November
24, 2010 final rule (75 FR 72155 through
72168).
If the Medicare contractor determines
that a hospital was a member of a
Medicare GME affiliated group at any
point during any of the three most
recent cost reporting periods ending
before March 23, 2010 for which a cost
report has been settled or has been
submitted to the Medicare contractor by
March 23, 2010, then subparagraph (I)
applies, and the Medicare contractor
will determine a hospital’s reference
cost reporting period by determining the
cost reporting period from the three
most recent cost reporting periods
ending before March 23, 2010 for which
a cost report has been settled or has
been submitted to the Medicare
contractor by March 23, 2010, that
results in the smallest difference
between the reference resident level and
the otherwise applicable resident limit.
For example, a hospital with a FYE of
December 31 may not be a member of
a Medicare GME affiliated group for the
academic years beginning July 1, 2006,
2007, or 2008, but it may be a member
of a Medicare GME affiliated group for
the academic year beginning July 1,
2005. In the cost reporting period
ending December 31, 2006, the months
of January through June 2006 would be
affected by the July 1, 2005 Medicare
GME affiliation agreement. Therefore, in
this example, the hospital is indeed a
member of a Medicare GME affiliated
group at some point, albeit for only a
portion of a cost reporting period,
during its three most recent cost
reporting periods ending before March
23, 2010 for which a cost report has
been settled or has been submitted to
the Medicare contractor by March 23,
2010 (in this case, these cost reporting
periods would include FYE 12/31/08,
FYE 12/31/07, and FYE 12/31/06), and
as such its reference cost reporting
period would be determined as the cost
reporting period that results in the
smallest difference between the
reference resident level and the
otherwise applicable resident limit. As
previously discussed, section 422 of the
MMA specified a single time period that
would be used for all hospitals that
were members of a Medicare GME
affiliated group; that is as of July 1,
2003. However, section 5503 of the
Affordable Care Act does not specify
one cost reporting period, but rather it
specifies that the reference cost
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reporting period is one out of three
possible cost reporting periods. For a
hospital that was a member of a
Medicare GME affiliated group at any
point during any of the three applicable
cost reporting periods, after determining
the cost report that is a hospital’s
reference cost reporting period based on
the cost report that results in the
smallest difference between the
reference resident level and the
otherwise applicable resident limit, to
determine whether there are any excess
slots we believe it is appropriate to
consider whether a hospital was a
member of a Medicare GME affiliated
group as of July 1 of that reference cost
reporting period. The hospital may or
may not have been a member of a
Medicare GME affiliated group during
that reference cost reporting period. We
do not believe that section 1886(h)(8)(I)
of the Act, as added by section 203 of
the MMEA, requires that a hospital must
be a member of a Medicare GME
affiliated group during all 3 cost
reporting periods, nor during the year
determined to be the reference cost
reporting period. Rather, being a
member of a Medicare GME affiliated
group at some point in just one of the
three cost reporting periods warrants
that a hospital’s reference cost reporting
period be determined based on which
cost report has the smallest difference
between the reference resident level and
the otherwise applicable resident limit.
To determine if an FTE resident cap
reduction is appropriate, if the hospital
was a member of a Medicare GME
affiliated group as of July 1 in the
reference cost reporting period, we will
look at the Medicare GME affiliated
group in the aggregate, when we
determine if the subject hospital has
excess capacity for purposes of a
reduction under sections 5503 and 203.
If the hospital was not a member of a
Medicare GME affiliated group as of July
1 in the reference cost reporting period,
excess FTEs training at other members
of the affiliated group will not be
considered for the purposes of a
reduction under sections 5503 and 203
and that hospital’s FTE resident caps
should be reduced in accordance with
the policy established for hospitals that
are not members of Medicare GME
affiliated groups in the November 24,
2010 final rule (75 FR 72155 through
72168). The nature of this determination
underscores the fact that reductions to
the FTE resident caps of hospitals that
are members of Medicare GME affiliated
groups must still be made on an
individual hospital basis. The following
is an example of a reference cost
reporting period determination. (For
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ease of illustration, this example focuses
on reductions to the IME FTE resident
caps only, but the methodology is the
same for reductions to the direct GME
FTE resident caps):
Hospital A has a FTE resident cap of
10 FTE residents. Hospital A’s three
most recent cost reports that have been
settled or submitted to the Medicare
contractor by March 23, 2010 include
cost reporting periods with FYE 12/31/
2006, 12/31/2007, and 12/31/2008.
During these three cost reporting
periods, Hospital A trained 8, 9, and 9
FTE residents, respectively. For the
academic years beginning July 1, 2006
and July 1, 2007, Hospital A was not a
member of a Medicare GME affiliated
group. However, for the academic year
beginning July 1, 2008, Hospital A is
affiliated with Hospital B and Hospital
C. As a result of its Medicare GME
affiliation agreement with Hospitals B
and C, Hospital A’s adjusted cap or
otherwise applicable resident limit is 12
for the academic year beginning July 1,
2008. Thus, when determining the
reference cost reporting period for
Hospital A, the Medicare contractor
would compare the resident level for
Hospital A with its otherwise applicable
resident limit for each of the cost
reporting period as indicated below:
• Cost Reporting Period 1 (01/01/
2006–12/31/2006): 10 (FTE Resident
Cap)¥8 (FTE Resident Count) = 2.
• Cost Reporting Period 2 (01/01/
2007–12/31/2007): 10 (FTE Resident
Cap)¥9 (FTE Resident Count) = 1.
• Cost Reporting Period 3 (01/01/
2008–12/31/2008): 11 (Adjusted FTE
Resident Cap)¥9 (FTE Resident
Count) = 2.
(Note that although Hospital A received
an increase of 2 FTEs, from 10 to 12,
under the Medicare GME affiliation
agreement for the academic year
beginning July 1, 2008, since Hospital A
has a 12/31 fiscal year end, the actual
cap adjustment is prorated to half of 2,
for an increase to its FTE resident cap
of 1, equaling 11). In this example, the
smallest difference between the
reference resident level and the
otherwise applicable resident limit for
Hospital A is 1, which occurs in the cost
reporting period with FYE 12/31/2007.
Thus, Hospital A’s reference cost
reporting period is 01/01/2007–12/31/
2007. Note that Hospital A is not a
member of a Medicare GME affiliated
group during FYE 12/31/07. The
implications of this are discussed
below.
Part 2: Determine the Applicable
Reductions
For a hospital that was a member of
a Medicare GME affiliated group at any
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13519
point during any of its three most recent
cost reporting periods ending before
March 23, 2010 for which a cost report
has been settled or has been submitted
to the Medicare contractor by March 23,
2010, once the Medicare contractor
determines that hospital’s reference cost
reporting period (that is, the cost report
with the smallest difference between the
hospital’s FTE resident cap and FTE
resident count), the Medicare contractor
must then determine if the hospital was
a member of a Medicare GME affiliated
group as of the July 1 that occurs during
that reference cost reporting period. If
not, and the hospital’s FTE resident
count was equal to or exceeded its FTE
resident cap in that reference cost
report, then no reduction to its FTE
resident cap is made and no further
steps are necessary. If that hospital’s
FTE resident count was less than its
FTE resident cap during that reference
cost report, then the Medicare
contractor would reduce the FTE
resident cap by 65 percent of the
difference between the FTE resident cap
and the FTE resident count.
If the hospital was a member of a
Medicare GME affiliated group as of the
July 1 that occurs during that reference
cost reporting period, the Medicare
contractor will look at the members of
the Medicare GME affiliated group for
that period in the aggregate, for the
purpose of determining a reduction to
the particular hospital’s FTE resident
cap. In other words, assuming the
Medicare contractor is assessing
Hospital X, once it is determined that
Hospital X was training residents below
its adjusted FTE resident cap as part of
a Medicare GME affiliation agreement
occurring during Hospital X’s reference
cost reporting period, the Medicare
contractor will treat the hospitals in the
Medicare GME affiliated group in the
aggregate, but only for the purpose of
determining the reduction to Hospital
X’s FTE resident cap. The Medicare
contractor would not actually reduce
the FTE resident caps of the other
hospitals that were affiliated with
Hospital X in that year, since each
hospital is evaluated separately, and it
may be that the reference cost reporting
periods for the other hospitals may not
be the same as Hospital X’s reference
cost reporting period. (It may be that the
reference cost reporting period for
another hospital is one in which that
hospital was not part of a Medicare
GME affiliated group, in which case,
treatment as a group is not warranted
when determining that hospital’s FTE
cap reduction).
For the hospital that was a member of
a Medicare GME affiliated group as of
the July 1 that occurs during that
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reference cost report, the Medicare
contractor will determine for each
hospital in the Medicare GME affiliated
group respectively its FTE resident cap
and FTE resident count (IME and direct
GME separately). The Medicare
contractor will add each hospital’s FTE
resident caps (IME and direct GME
separately) to determine the aggregate
affiliated FTE resident cap. The
contractor will then add each hospital’s
FTE resident count (IME and direct
GME separately) to determine the
aggregate affiliated FTE resident count.
If the aggregate FTE resident counts are
equal to or exceed the aggregate FTE
resident caps, then no reductions would
be made to that particular hospital’s
FTE resident cap under section 5503 of
Affordable Care Act, and no further
steps are necessary for that hospital. We
emphasize that at this point, it has only
been determined that the particular
hospital will not be subject to an FTE
resident cap reduction—as the FTE
resident cap reduction determination is
ultimately one that is done on an
individual hospital basis, at this point
the contractor has not made any
determinations regarding the status of
the other hospitals that are in the same
Medicare GME affiliated group as the
particular hospital under review.
However, where the aggregate FTE
resident count is below the aggregate
FTE resident cap (IME and direct GME
separately), a reduction to the particular
hospital’s FTE resident cap would be
necessary. In these cases, for each
hospital that is a member of the same
Medicare GME affiliated group, the
Medicare contractor will determine the
following FTE information from the cost
report that includes July 1 of the
particular hospital’s reference cost
reporting period:
(1) The ‘‘1996’’ FTE resident cap (as
adjusted by new programs, if applicable)
for the hospital under review— For IME
from Worksheet E, Part A of the
Medicare cost report, the sum of lines
3.04 and 3.05. If the hospital’s IME FTE
resident cap was reduced under section
422 of the MMA, subtract from this sum
the amount reported on Worksheet E–3,
Part VI, line 13. For direct GME from
Worksheet E–3, Part IV of the Medicare
cost report, the sum of lines 3.01 and
3.02. If the hospital’s direct GME FTE
Hospital
1996 FTE
Caps
(Step 1)
D ...................................
E ...................................
F ...................................
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14:12 Mar 11, 2011
resident cap was reduced under section
422 of the MMA, subtract from this sum
the amount reported on Worksheet E–3,
Part VI, line 2.
(2) The ‘‘affiliated’’ FTE resident cap
for the hospital being assessed—For
IME, line 3.07. For direct GME, line
3.04.
(3) The total number of allopathic and
osteopathic FTE residents for the
hospital being assessed—For IME, line
3.08. For direct GME, line 3.05.
(4) The difference between the
aggregate ‘‘affiliated’’ FTE resident cap
and the total FTE resident counts for all
of the affiliated hospitals—For IME, S
line 3.08 minus S (lines 3.04 +
3.05¥applicable section 422 reduction
amount). For direct GME, S line 3.05
minus S (lines 3.01 + 3.02¥applicable
section 422 reduction amount).
(5) For IME, for those hospitals whose
FTE resident count from line 3.08 is
greater than the ‘‘affiliated’’ FTE resident
cap on line 3.07, indicate ‘‘zero.’’ For
direct GME, for those hospitals whose
FTE resident count from line 3.05 is
greater than the ‘‘affiliated’’ FTE resident
cap on line 3.04, indicate ‘‘zero.’’ For
IME, for those hospitals whose FTE
resident count from line 3.08 is less
than the ‘‘affiliated’’ FTE resident cap on
line 3.07, determine the difference
between the hospital’s ‘‘affiliated’’ FTE
resident cap and the hospital’s FTE
resident count, line 3.08 minus line
3.07. For direct GME, for those hospitals
whose FTE resident count from line
3.05 is less than the ‘‘affiliated’’ FTE
resident cap on line 3.04, determine the
difference between the hospital’s
‘‘affiliated’’ FTE resident cap and the
hospital’s FTE resident count, line 3.05
minus line 3.04.
(6) For IME and direct GME
separately, to determine the total
amount by which the FTE resident
counts are below the ‘‘affiliated’’ FTE
resident caps and add the amounts
determined under step 5 for each
hospital that trained fewer residents
than its ‘‘affiliated’’ FTE resident caps.
(7) For IME and direct GME
separately, determine a pro rata cap
reduction for the hospital being assessed
by dividing the hospital-specific amount
in step 5 by the total amount for all of
those hospitals in step 6, and multiply
by the amount in step 4. (that is, (step5/
step6) × step 4).
‘‘Affiliated’’
FTE cap
(Step 2)
115
80
120
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90
100
10
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Number of
FTEs below
the ‘‘Affiliated’’
Cap
(Step 5)
FTE Count
(Step 3)
75
125
10
Fmt 4700
Sfmt 4700
(8) For IME and direct GME
separately, determine the actual cap
reduction for the hospital being assessed
by multiplying the pro rata cap
reduction from step 7 by 0.65.
(9) For IME and direct GME
separately, determine the reduced FTE
resident cap for the hospital being
assessed by subtracting the actual cap
reduction from step 8 from the ‘‘1996’’
FTE resident cap from step 1. This is the
hospital’s FTE resident cap effective
July 1, 2011.
The following is an example of how
the reductions to the FTE resident caps
will be determined where the FTE
resident counts in the aggregate for
hospitals that were affiliated as of July
1 of the reference cost reporting period
for a particular hospital are below the
hospitals’ FTE resident caps in the
aggregate. For ease of illustration, this
example focuses on reductions to the
IME caps only, but the methodology is
the same for reductions to the direct
GME caps.
In this example, the Medicare
contractor has determined, using the
methodology from Step 1, that the
reference cost reporting period (the
period with smallest difference between
the reference resident level and the
otherwise applicable resident limit) for
Hospital D is January 1, 2007 to
December 31, 2007. The academic year
that occurs in this reference cost
reporting period begins July 1, 2007.
Hospitals D, E, and F are members of a
Medicare GME affiliated group for the
academic year that begins July 1, 2007.
Hospital D is also separately affiliated
with Hospitals G and H for the academic
year that begins July 1, 2007. Thus, the
affiliated group for GME payment
purposes, and for purposes of
determining possible FTE cap
reductions for Hospital D under
subparagraph (I) consists of Hospitals D,
E, F, G, and H. Hospital E’s cost report
that includes July 1, 2007 is FYE June
30, 2008. Hospital D’s, F’s, and G’s cost
report that includes July 1, 2007 is their
FYE December 31, 2007, and Hospital
H’s cost report that includes July 1, 2007
is its FYE September 30, 2007. Using
steps 1 through 9 above, the reduction
to the FTE resident caps for Hospital D
is determined in the table below.
Pro rate
reduction
(Step 7)
¥15
0
0
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¥8
N/A
N/A
14MRR1
Actual Cap
Reduction
(Step 8)
¥5.2
N/A
N/A
Final FTE
Cap
(Step 9)
109.8
N/A
N/A
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Hospital
‘‘Affiliated’’
FTE cap
(Step 2)
1996 FTE
Caps
(Step 1)
Number of
FTEs below
the ‘‘Affiliated’’
Cap
(Step 5)
FTE Count
(Step 3)
Pro rate
reduction
(Step 7)
Actual Cap
Reduction
(Step 8)
13521
Final FTE
Cap
(Step 9)
95
30
115
125
125
65
0
¥60
N/A
N/A
N/A
N/A
N/A
N/A
Totals ....................
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G ..................................
H ...................................
440
440
Step 4→
400
¥40
¥75
Step 6↑
N/A
N/A
N/A
In this example, Hospital D’s FTE
resident count of 75 was 15 less than its
’’affiliated’’ FTE resident cap of 90, and
Hospital H’s FTE resident count of 65
was 60 less than its ’’affiliated’’ FTE
resident cap of 125 (as determined
under step 5). Hospital F’s ’’affiliated’’
FTE resident cap equaled its FTE
resident count. Under this methodology,
the fact that Hospitals E and G exceeded
their respective ’’affiliated’’ FTE resident
caps minimizes the reductions to
Hospital D’s ’’1996’’ FTE resident caps
through the calculation of a pro rata
reduction under step 7.
We note that although Hospital H is
also under its cap; its cap is not reduced
in this exercise. Under section 5503, the
cap reduction determination is
calculated individually for each hospital
based on its individual reference cost
reporting period, so each hospital would
be evaluated for a possible reduction
separately. Hospital H will be evaluated
separately, and it may be that Hospital’s
H reference cost report may not be its
FYE September 30, 2007 cost report,
and ultimately, Hospital H may or may
not be subject to an FTE resident cap
reduction. Thus, under step 8, the actual
cap reduction of 5.2 FTEs for Hospital
D is determined by taking 65 percent of
8 (rather than 65 percent of 15). As a
result, under step 9, Hospital D’s final
FTE resident cap effective on July 1,
2011 is determined to be 109.8 FTEs.
We also note that the reduction to
Hospital D’s ’’1996’’ FTE resident caps
was minimized only because Hospitals
E and G exceeded their ’’affiliated’’ FTE
resident caps. If all hospitals in the
Medicare GME affiliated group had
trained residents below their ’’affiliated’’
FTE resident caps, then a pro rata
reduction would not benefit Hospital D.
In that case, the ’’1996’’ FTE resident
caps of Hospital D in the Medicare GME
affiliated group would be reduced by 65
percent of the difference between its
’’affiliated’’ FTE resident cap and FTE
resident count.
We believe this final policy is similar
to the method used to implement
section 422 of the MMA with regard to
hospitals that were members of the same
Medicare GME affiliated group in that,
as under section 422 of the MMA, we
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are only treating a hospital as part of a
group if the hospital was a member of
a Medicare GME affiliation agreement
during its reference cost reporting
period under section 1886(h)(8) of the
Act. In implementing section 203 of the
MMEA in this manner, we believe we
have addressed the concerns raised by
commenters in response to the CY 2011
Outpatient PPS proposed rule (75 FR
46395 August 3, 2010) in that this
policy could protect hospitals from a
loss of slots if the aggregate counts equal
to or exceed the ‘‘affiliated’’ FTE resident
caps, and could limit the loss of slots in
the instance where a hospital is a
member of a Medicare GME affiliated
group and the aggregate counts are
below the ‘‘affiliated’’ FTE resident caps.
II. Provisions of the Interim Final Rule
As part of the CY 2011 Hospital
Outpatient PPS final rule published in
the November 24, 2010 Federal Register
(75 FR 71800), we implemented section
5503 of the Affordable Care Act, which
added a new section 1886(h)(8) to the
Act. Section 5503 of the Affordable Care
Act provides for reductions in the
statutory FTE resident caps for direct
GME under Medicare for certain
hospitals, and authorizes a
‘‘redistribution’’ to hospitals of the
estimated number of FTE resident slots
resulting from the reductions. Section
5503 of the Affordable Care Act also
amended section 1886(d)(5)(B)(v) of the
Act to require application of the
provisions of 1886(h)(8) of the Act ‘‘in
the same manner’’ to the FTE resident
caps for IME. Section 1886(h)(8) of the
Act requires that any such reduction to
the FTE resident caps will be equal to
65 percent of the difference between the
hospital’s ‘‘otherwise applicable resident
limit’’ and its ‘‘reference resident level.’’
Section 5503 of the Affordable Care Act
as initially enacted did not include
language specific to Medicare GME
affiliated groups and did not provide for
FTE resident cap reduction
determinations based on the aggregate
experience of a Medicare GME affiliated
group. Accordingly, section 203 of the
MMEA further amended section
1886(h)(8) of the Act to specify that the
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Fmt 4700
Sfmt 4700
provisions of section 1886(h)(8) of the
Act shall be applied to hospitals which
are members of the same Medicare GME
affiliated group, and the ‘‘reference
resident level’’ for each such hospital is
the FTE resident count from the cost
reporting period that results in the
smallest difference between the FTE
resident count and the FTE resident cap.
We are revising § 413.79(m)(7) to reflect
the changes made by section 203 of the
MMEA.
III. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
with a subsequent document, we will
respond to the comments in the
preamble to that document.
IV. Waiver of Proposed Rulemaking,
60-Day Comment Period, and Delay of
Effective Date
Under 5 U.S.C. 553(b) of the
Administrative Procedure Act (APA),
we are required to publish a notice of
proposed rulemaking (NPRM) in the
Federal Register. Section 1871(b)(1) of
the Act imposes a similar requirement:
that the Secretary publish a Federal
Register notice with not less than 60
days for public comment. In addition,
both authorities mandate a 30-day delay
in effective date.
Section 553(b)(B) of the APA provides
for an exception from these APA
requirements; in cases in which this
exception applies, section 1871(b)(2)(C)
of the Act provides an exception from
the notice and delayed effective date
requirements of the Act as well. Section
553(b)(B) of the APA authorizes an
agency to dispense with normal
rulemaking requirements for good cause
if the agency makes a finding that notice
and comment procedures are
impracticable, unnecessary, or contrary
to the public interest. In addition, both
section 553(d)(3) of APA and section
1871(e)(1)(B)(ii) of the Act allow the
agency to avoid the 30-day delay in
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Federal Register / Vol. 76, No. 49 / Monday, March 14, 2011 / Rules and Regulations
effective date where such delay is
contrary to the public interest and an
agency includes a statement of support.
Here, section 203 of the MMEA
amends section 1886(h)(8) of the Act.
Regulations implementing section
5503(a) of the ACA were published in
the November 24, 2010 Federal
Register. The amendment made by
section 203 of the MMEA is effective as
if included in the enactment of section
5503(a) of the Affordable Care Act.
Specifically the amendments apply to
portions of cost reporting periods
occurring on or after July 1, 2011. As a
result, given the December 15, 2010
enactment of the MMEA, there was and
there is a finite and, under the
circumstances, highly compressed
window of opportunity to complete
implementation before the statutory
deadline. Time pressure is acute
because the agency must commence
implementation substantially in
advance of its July 1, 2011 deadline or
risk a cascade of missed deadlines and
failed intermediate steps, jeopardizing
the program. Binding instructions must
be given to Medicare contractors and
hospitals as soon as possible to enable
them to undertake critical first steps in
a tight chain of business decisions that
must precede implementation of the
new provision.
As we indicate in section VI.C., the
effect of section 203 of the MMEA is
that it benefits member hospitals of
Medicare GME affiliated groups by
protecting them from or mitigating their
loss of residency slots. Prior
implementation of section 422 of the
MMA, which similarly redistributed
unused FTE resident cap slots to other
qualifying hospitals, suggests that
significant time is required to
implement this type of provision. The
MMA was passed in December 2003,
and was effective on July 1, 2005.
Unlike section 5503 of the ACA, section
422 of the MMA, as originally enacted,
already included language giving
special consideration to the treatment of
members of Medicare GME affiliated
groups. We published final regulations
implementing the process for reducing
the FTE resident caps of certain
teaching hospitals, both members of
Medicare GME affiliated groups and
those that were not affiliated, by August
1, 2004 (69 FR 49111). Since section 422
of the MMA was effective on July 1,
2005, the agency had 11 months
between August 2004 and July 1, 2005
to implement section 422 of the MMA.
In this case, the statutory deadline
provides the agency with significantly
less time to implement section 5503 of
the ACA and section 203 of the MMEA
than it had to implement section 422 of
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14:12 Mar 11, 2011
Jkt 223001
the MMA. The ACA was passed on
March 23, 2010, and we included the
proposal for section 5503 of the ACA in
the CY 2011 OPPS proposed rule; the
final rule was not issued until
November 1, 2010 (75 FR 72133). Since
section 5503 of the ACA must be
implemented to be effective on July 1,
2011, this means that we have only 8
months (as compared to the 11 months
under section 422 of the MMA) to
implement section 5503. Moreover,
because the language regarding special
treatment of hospitals that are members
of Medicare GME affiliated groups was
not passed as part of the MMEA until
December 15, 2010, yet it has the same
effective date of July 1, 2011 as section
5503 of ACA, the amount of time
available to implement the provision by
July 1, 2011 has been further reduced to
approximately 4 months. Facing this
comparatively brief window, and based
on historical experience, we find that it
would be impracticable for us and our
contractors to perform enough GME
audits to assure the validity of assubmitted cost report data that are
necessary for implementation—
especially while simultaneously
reviewing for regulatory compliance
many hundreds of applications
requesting additional slots.
The implementation of section 5503
of ACA and section 203 of the MMEA,
as we learned when implementing
section 422 of the MMA, requires
significant planning, coordination, and
investment of time and audit resources.
There are approximately 1,100 teaching
hospitals and more than 300 of them are
members of Medicare GME affiliated
groups. Many of these teaching
hospitals have hundreds of residents,
and it can take a Medicare contractor
many weeks or months to audit the data
on each as-submitted cost report. On
January 7, 2011, we issued instructions
to the contractors instructing them to
begin audits for the purpose of
implementing section 5503 of ACA. In
those instructions, and in the CY 2011
OPPS final rule (75 FR 72153), we stated
that the contractors are required to
submit their estimates of each teaching
hospital’s FTE resident cap reduction, if
any, to CMS by May 16, 2011. This
would allow us to create the ‘‘pool’’ of
slots available for redistribution, and to
start assigning those slots to qualifying
hospitals based on applications we
reviewed between January 21, 2011 and
May 2011. Even prior to May 16, 2011,
the Medicare contractors will need time
to notify hospitals of their tentative
findings and allow hospitals to react to
the potential FTE resident cap
reductions. Unfortunately, many audits
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Fmt 4700
Sfmt 4700
have yet to begin, as the Medicare
contractors have been waiting for
instructions regarding treatment of
hospitals that are members of Medicare
GME affiliated groups.
For these reasons, that is, because we
face an extremely compressed
timeframe; because Medicare
contractors and hospitals need to make
critical business decisions and systems
changes far in advance, each
constituting a material change of
position that would be costly and
impracticable to reverse; because
historical evidences suggests that even a
slight delay could prevent timely
implementation of this Congressionally
mandated policy change; and because it
is therefore probable that failing to act
early would have adverse financial
impacts for teaching hospitals and the
Federal government—we have
concluded that there is good cause to
waive ordinary rulemaking provisions
as they are impracticable and contrary
to the public interest in this case, and
issue interim final regulations as soon as
possible, that being necessary to
implementing section 203 of the MMEA
in an accurate, comprehensive, and
timely manner. We are providing a 30day public comment period.
V. Collection of Information
Requirements
This document does not impose
information collection and
recordkeeping requirements.
Consequently, it need not be reviewed
by the Office of Management and
Budget under the authority of the
Paperwork Reduction Act of 1995. (44
U.S.C. Chapter 35)
VI. Regulatory Impact Statement
A. Statement of Need
Section 5503 of the Affordable Care
Act provides for reductions in the
statutory FTE resident caps under
Medicare for certain hospitals and
authorizes a ‘‘redistribution’’ of the FTE
resident slots resulting from the
reduction in the FTE resident caps to
other hospitals. The purpose of section
5503 is to allow hospitals in certain
states that wish to start new or expand
existing programs in primary care or
general surgery but are already training
residents at or above their FTE resident
caps to use slots from other hospitals
that have not been using all of their
slots. Section 203 of the Medicare and
Medicaid Extenders Act of 2010
amended section 1886(h)(8) of the Act
(as added by section 5503 of the
Affordable Care Act) to specify that the
provisions of section 1886(h)(8)(A) of
the Act shall be applied to hospitals
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which are members of the same
Medicare GME affiliated group, and the
‘‘reference resident level’’ for each
hospital is the FTE resident count from
the cost reporting period that has the
smallest difference between the FTE
resident count and the FTE resident cap.
The purpose of section 203 is to take
into account the unique situation of
hospitals that are members of the same
Medicare GME affiliated group in that
they share FTE resident cap slots, and
that FTE resident cap reduction
determinations of hospitals should
consider the shared nature of those
slots.
B. Overall Impact
We have examined the impact of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (February 2,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 1102(b) of the Social
Security Act, section 202 of the
Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104–4),
Executive Order 13132 on Federalism
(August 4, 1999) and the Congressional
Review Act (5 U.S.C. 804(2)).
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). A regulatory impact
analysis (RIA) must be prepared for
major rules with economically
significant effects ($100 million or more
in any 1 year). This rule does not reach
the economic threshold and thus is not
considered a major rule.
In the November 24, 2010 final rule
which implemented section 5503 of the
Affordable Care Act (75 FR 72239), we
mentioned that we were unable to
project how many FTE resident slots
will be available for redistribution
under section 5503 of the Affordable
Care Act. Unlike section 422 of the
MMA, which also provided for a
redistribution of FTE resident slots but
provided that the redistributed slots will
be paid using the national average per
resident amount (PRA) for direct GME
payment purposes, section 5503 of the
Affordable Care Act requires that
hospitals be paid for their additional
FTE resident slots using the hospitals’
specific PRAs. Because we were unable
to determine the number of FTE
resident slots that will be redistributed
under section 5503 of the Affordable
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14:12 Mar 11, 2011
Jkt 223001
Care Act or which hospitals will be
receiving additional FTE resident slots,
we could not calculate a direct GME
impact for section 5503 of the
Affordable Care Act. Similarly, we
cannot calculate a direct GME dollar
impact for section 203 of the MMEA.
Although the general effect of section
203 of the MMEA is to protect from loss
or mitigate the loss of slots of hospitals
that are members of a Medicare GME
affiliated group, there could be fewer
direct GME and IME slots available for
redistribution to other hospitals. For
several reasons, we are unable to
compute a dollar impact on the
redistribution of those slots to other
hospitals. First, although there are
currently 307 hospitals that are
members of a Medicare GME affiliated
group, these hospitals were not
necessarily members of Medicare GME
affiliated groups during the reference
cost reporting periods specified by
section 5503 of the Affordable Care Act.
Second, we do not know which
hospitals, that are members of a
Medicare GME affiliated group, will be
at risk for losing direct GME and/or IME
FTE resident cap slots under section
5503 of the Affordable Care Act, as
revised by section 203 of the MMEA.
Third, we do not know the PRAs and
Medicare utilization rates of hospitals
that will be receiving additional FTE
resident slots. With respect to
determining an impact for IME payment
purposes, section 5503 of the Affordable
Care Act requires us to use an IME
multiplier of 1.35; however, we do not
know the intern-to-bed ratio and
resident-to-bed ratio for the hospitals
that will receive additional FTE resident
slots or the volume or case mix of
Medicare discharges at those hospitals.
Therefore, we cannot determine a
financial impact for purposes of direct
GME and IME for this provision. We
solicit comment on our analysis.
The RFA requires agencies to analyze
options for regulatory relief of small
entities, if a rule has a significant impact
on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
physician practices, hospitals and other
providers are small entities, either by
nonprofit status or by qualifying as
small businesses under the Small
Business Administration’s size
standards (revenues of less than $7.0 to
$34.5 million in any 1 year). States and
individuals are not included in the
definition of a small entity. For details,
see the Small Business Administration’s
Web site at https://ecfr.gpoaccess.gov/
cgi/t/text/text-idx?c=ecfr&
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sid=2465b064ba6965cc1fbd2
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node=13:1.0.1.1.16.1.266.9&idno=13)
Individuals and States are not
included in the definition of a small
entity. The Regulatory Flexibility Act
requires an agency to prepare an initial
regulatory flexibility analysis when they
issue a general notice of proposed rulemaking. However, HHS has maintained
a long-standing policy of voluntarily
preparing initial regulatory flexibility
analyses for all rule-making. The
Secretary has determined that this
interim final rule will not have a
significant economic impact on a
substantial number of small entities.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 604 of the
RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a Metropolitan Statistical Area for
Medicare payment regulations and has
fewer than 100 beds. We are not
preparing an analysis for section 1102(b)
of the Act because the Secretary has
determined that this interim final rule
will not have a significant impact on the
operations of a substantial number of
small rural hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2011, that threshold is approximately
$136 million. This rule will have no
consequential effect on State, local, or
tribal governments or on the private
sector.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
requirement costs on State and local
governments, preempts State law, or
otherwise has Federalism implications.
Since this regulation does not impose
any costs on State or local governments,
the requirements of Executive Order
13132 are not applicable.
C. Anticipated Effects
We believe the general effect of
section 203 of the MMEA is that it could
protect from loss or mitigate the loss of
slots for hospitals that are members of
a Medicare GME affiliated group, and
therefore, there could be fewer direct
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GME and IME slots available for
redistribution to other hospitals.
D. Alternatives Considered
Although there may be alternatives,
the method we are finalizing in this
interim final rule is the most consistent
with that of a similar provision for
hospitals that are members of Medicare
GME affiliated groups implemented as
part of section 422 of the MMA.
E. Conclusion
The analysis above, together with the
remainder of this preamble, provides a
Regulatory Flexibility Analysis as well
as a Regulatory Impact Analysis. For the
reasons outlined in the RIA, we are not
preparing an analysis for either the RFA
or section 1102(b) of the Act because we
have determined that this interim final
rule with comment would not have a
direct significant economic impact on a
substantial number of small entities or
a direct significant impact on the
operations of a substantial number of
small rural hospitals.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
List of Subjects in 42 CFR Part 413
Health facilities, Kidney diseases,
Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR
chapter IV as set forth below:
PART 413—PRINCIPLES OF
REASONABLE COST
REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE
SERVICES; OPTIONAL
PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED
NURSING FACILITIES
1. The authority citation for part 413
continues to read as follows:
■
Authority: Secs. 1102, 1812(d), 1814(b),
1815, 1833(a), (i), and (n), 1861(v), 1871,
1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b),
1395g, 1395l(a), (i), and (n), 1395x(v),
1395hh, 1395rr, 1395tt, and 1395ww); and
sec. 124 of Pub. L. 106–133 (113 Stat. 1501A–
332).
2. Section 413.79 is amended by
revising paragraph (m)(7) to read as
follows:
WReier-Aviles on DSKGBLS3C1PROD with RULES
■
§ 413.79 Direct GME payments:
Determination of the weighted number of
FTE residents.
(m) * * *
(7) Consideration for members of
Medicare GME affiliated groups. For a
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hospital that is a member of a Medicare
GME affiliated group at any point
during any of the hospital’s three most
recent cost reporting periods ending
before March 23, 2010 for which a cost
report has been settled or has been
submitted to Medicare contractor by
March 23, 2010, in determining whether
a hospital’s otherwise applicable
resident FTE resident cap is reduced
under paragraph (m) of this section, the
Medicare contractor determines a
hospital’s reference cost reporting
period by finding the cost reporting
period that results in the smallest
difference between the reference
resident level and the otherwise
applicable resident limit.
(i) If the reference resident level is
less than the otherwise applicable
resident limit in that reference cost
reporting period, the Medicare
contractor must then determine if the
hospital was a member of a Medicare
GME affiliated group as of the July 1
that occurs during that reference cost
reporting period.
(ii) If the hospital was a member of a
Medicare GME affiliated group as of the
July 1 that occurs during that reference
cost report, the Medicare contractor
does all of the following:
(A) Treat the members of the
Medicare GME affiliated group as a
group for that reference cost reporting
period, for the purpose of determining
a reduction to the particular hospital’s
FTE resident cap.
(B) Determine for each hospital in the
Medicare GME affiliated group
respectively the FTE resident cap and
FTE resident count (IME and direct
GME separately).
(C) Add each hospital’s FTE resident
caps (IME and direct GME separately) to
determine the aggregate FTE resident
cap.
(D) Add each hospital’s FTE resident
count (IME and direct GME separately)
to determine the aggregate FTE resident
count.
(iii) If the aggregate FTE resident
count is equal to or exceeds the
aggregate FTE resident cap, then the
Medicare contractor would make no
reduction to the particular hospital’s
otherwise applicable FTE resident cap
under paragraph (m) of this section, and
no further steps are necessary for that
hospital.
(iv) If the hospitals’ aggregate FTE
resident count is less than the aggregate
FTE resident cap, then the Medicare
contractor would determine on a
hospital-specific basis whether the
particular hospital’s FTE resident count
is less than its otherwise applicable FTE
resident cap (as adjusted by affiliation
PO 00000
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Fmt 4700
Sfmt 4700
agreement(s)) in the hospital’s reference
cost report.
(v) If the hospital’s FTE resident count
exceeds its otherwise applicable FTE
resident cap, the hospital will not have
its otherwise applicable FTE resident
cap reduced under paragraph (m) of this
section.
(vi) If the particular hospital’s FTE
resident count is less than its otherwise
applicable FTE resident cap, the
Medicare contractor determines a pro
rata cap reduction amount that is equal,
in total, to 65 percent of the difference
between the aggregate FTE resident cap
and the aggregate FTE resident count for
the Medicare GME affiliated group.
(A) The pro rata cap reduction to the
particular hospital’s otherwise
applicable FTE resident cap is
calculated by dividing the difference
between the hospital’s otherwise
applicable FTE resident cap and the
hospital’s FTE resident count, by the
total amount by which all of the
hospitals’ individual FTE resident
counts are below their affiliated FTE
resident caps, multiplying the quotient
by the difference between the aggregate
FTE resident cap and the aggregate FTE
resident counts for the Medicare GME
affiliated group, and multiplying that
result by 65 percent.
(B) The final reduction takes into
account the hospital’s FTE resident cap
as reduced under the provisions of
paragraph (c)(3) of this section.
*
*
*
*
*
(Catalog of Federal Domestic Assistance
Program No. 93.773, Medicare—Hospital
Insurance; and Program No. 93.774,
Medicare—Supplementary Medical
Insurance Program)
Dated: February 10, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: March 1, 2011.
Kathleen Sebelius,
Secretary.
[FR Doc. 2011–5960 Filed 3–11–11; 8:45 am]
BILLING CODE 4120–01–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 73
[DA 11–324; MB Docket No. 10–189;
RM–11611]
Radio Broadcasting Services; Willow
Creek, CA
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
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Agencies
[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Rules and Regulations]
[Pages 13515-13524]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-5960]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 413
[CMS-1430-IFC]
RIN 0938-AQ92
Medicare Program; Revisions to the Reductions and Increases to
Hospitals' FTE Resident Caps for Graduate Medical Education Payment
Purposes
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: This interim final rule with comment period implements section
203 of the Medicare and Medicaid Extenders Act of 2010 relating to the
treatment of teaching hospitals that are members of the same Medicare
graduate medical education affiliated groups for the purpose of
determining possible full-time equivalent resident cap reductions.
DATES: Effective Date: These regulations are effective on March 14,
2011.
Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on April 13, 2011.
ADDRESSES: In commenting, please refer to file code CMS-1430-IFC.
Because of staff and resource limitations, we cannot
[[Page 13516]]
accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed)
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1430-IFC, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1430-IFC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Statutory Authority
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and as currently implemented in the regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of
residents in the base period. The base period is, for most hospitals,
the hospital's cost reporting period beginning in FY 1984 (that is,
October 1, 1983 through September 30, 1984). The base year PRA is
updated annually for inflation. In general, Medicare direct GME
payments are calculated by multiplying the hospital's updated PRA by
the weighted number of full-time equivalent (FTE) residents working in
all areas of the hospital complex (and at nonprovider sites, when
applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for an additional payment
amount under the hospital inpatient prospective payment system (IPPS)
for hospitals that have residents in an approved GME program in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment, known as the indirect
medical education (IME) adjustment, are located at 42 CFR 412.105. The
hospital's IME adjustment applied to the DRG payments is calculated
based on the ratio of the hospital's number of FTE residents training
in either the inpatient or outpatient departments of the IPPS hospital
to the number of inpatient hospital beds.
The Balanced Budget Act of 1997 (Pub. L. 105-33) established a
limit on the number of allopathic and osteopathic residents that a
hospital may include in its FTE resident count for direct GME and IME
payment purposes. Under section 1886(h)(4)(F) of the Act, for cost
reporting periods beginning on or after October 1, 1997, a hospital's
unweighted FTE count of residents for purposes of direct GME may not
exceed the hospital's unweighted FTE count for its most recent cost
reporting period ending on or before December 31, 1996. Under section
1886(d)(5)(B)(v) of the Act, a similar limit on the FTE resident count
for IME purposes is effective for discharges occurring on or after
October 1, 1997.
The recently enacted Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) (collectively referred to
in this document as the Affordable Care Act) made a number of statutory
changes relating to the determination of a hospital's FTE resident
count for direct GME and IME payment purposes and the manner in which
FTE resident limits are calculated and applied to hospitals under
certain circumstances. Section 5503 of the Affordable Care Act added a
new section 1886(h)(8) to the Act to provide for the reduction in FTE
resident caps for direct GME under Medicare for certain hospitals, and
to authorize the ``redistribution'' of the estimated number of FTE
resident slots to other qualified hospitals. In addition, section 5503
amended section 1886(d)(5)(B)(v) of the Act to require the application
of section 1886(h)(8) of the Act provisions ``in the same manner'' as
the FTE resident caps for IME. The regulations implementing section
5503 of the Affordable Care Act were included in the Outpatient
Prospective Payment System (PPS) Final Rule, published on November 24,
2010 in the Federal Register (75 FR 72147). The section below
summarizes the provisions of section 5503 of the Affordable Care Act as
implemented in
[[Page 13517]]
the November 24, 2010 Federal Register.
B. Reductions and Increases to Hospitals' FTE Resident Caps for GME
Payment Purposes Under Section 5503 of the Affordable Care Act
As previously discussed, the calculation of both direct GME and IME
payments is affected by the number of FTE residents that a hospital is
allowed to count; generally, the greater the number of FTE residents a
hospital counts, the greater the amount of Medicare direct GME and IME
payments the hospital will receive. In an attempt to end the implicit
incentive for hospitals to increase the number of FTE residents,
Congress instituted a cap on the number of allopathic and osteopathic
residents a hospital is allowed to count for direct GME and IME
purposes. Dental and podiatric residents are not included in this
statutorily mandated cap. Some hospitals have trained a number of
allopathic and osteopathic residents in excess of their FTE resident
caps, while other hospitals have reduced their FTE resident counts to
some level below their FTE resident caps. Section 5503 of the
Affordable Care Act added a new section 1886(h)(8) to the Act to
provide for reductions in the statutory FTE resident caps for direct
GME under Medicare for certain hospitals, and authorizes a
``redistribution'' to hospitals of the estimated number of FTE resident
slots resulting from the reductions. Section 5503 of the Affordable
Care Act also amended section 1886(d)(5)(B)(v) of the Act to require
application of the provisions of 1886(h)(8) of the Act ``in the same
manner'' to the FTE resident caps for IME.
The new section 1886(h)(8)(A) of the Act provides that, effective
for portions of cost reporting periods occurring on or after July 1,
2011, a hospital's FTE resident cap will be reduced if its ``reference
resident level'' is less than its ``otherwise applicable resident
limit,'' as these terms are described below. Section 1886(h)(8)(A)(ii)
of the Act and the November 24, 2010 Federal Register (75 FR 72147)
describes which hospitals are exempt from a cap reduction under section
5503 of the Affordable Care Act. Included in that group are rural
hospitals with fewer than 250 acute care inpatient beds. For other
hospitals, any such reduction will be equal to 65 percent of the
difference between the hospital's ``otherwise applicable resident
limit'' and its ``reference resident level.''
Under section 1886(h)(8)(B) of the Act, the Secretary is authorized
to increase the FTE resident caps for certain categories of hospitals
for portions of cost reporting periods occurring on or after July 1,
2011, by an aggregate number that does not exceed the estimated overall
reduction in FTE resident caps for all hospitals under section
1886(h)(8)(A) of the Act. A single hospital may receive an increase in
its FTE resident cap of no more than 75 additional FTEs. That is, a
hospital would be allowed to receive up to 75 additional slots for
direct GME and up to 75 additional slots for IME. In determining which
hospitals would receive an increase in their FTE resident caps,
sections 1886(h)(8)(C) through 1886(h)(8)(E) of the Act directs us to
do all of the following:
Take into account the demonstrated likelihood of the
hospital filling the additional positions within the first three cost
reporting periods beginning on or after July 1, 2011.
Take into account whether the hospital has an accredited
rural training track program.
Distribute 70 percent of the resident slots to hospitals
located in States with resident-to-population ratios in the lowest
quartile.
Distribute 30 percent of the resident slots to hospitals
located in a State, a territory of the United States, or the District
of Columbia that are among the top 10 States, territories, or Districts
in terms of the ratio of the total population living in an area
designated as a health professional shortage area (HSPA), as of March
23, 2010, to the total population, and/or to hospitals located in rural
areas.
A comprehensive description of the rules implementing the cap slot
redistribution under section 1886(h)(8) of the Act can be found in the
November 24, 2010 Federal Register (75 FR 72168).
C. Treatment of Affiliated Groups Under Section 5503 of the Affordable
Care Act
A previous redistribution of ``unused'' FTE resident slots was
performed in 2005 under section 422 of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
Section 422 of the MMA provided for the redistribution of unused
residency positions effective for portions of cost reporting periods
beginning on or after July 1, 2005. While the redistribution under
section 5503 of the Affordable Care Act as initially enacted is similar
to the previous redistribution under section 422 of MMA, there are
substantive differences between the two provisions. One of those
differences involves the treatment of hospitals that were members of
the same Medicare GME affiliated groups for purposes of determining
whether a hospital should receive a cap reduction. The regulations
governing Medicare GME affiliated groups and Medicare GME affiliation
agreements are at 42 CFR 413.75(b) and 413.79(f), respectively.
Medicare GME affiliation agreements allow teaching hospitals to
temporarily transfer cap slots to other hospitals in order to
facilitate the cross training of residents. The duration of the
temporary cap slots transfer is a minimum of 1 year beginning on July 1
of a year, per the Medicare GME affiliation agreement.
Under section 422 of MMA, the statute explicitly directed the
Secretary to apply the provisions to hospitals that were members of the
same Medicare GME affiliated group as of July 1, 2003. Specifically,
section 1886(h)(7)(A)(iii) of the Act states ``The provisions of clause
(i) shall be applied to hospitals which are members of the same
Medicare GME affiliated group (as defined by the Secretary under
paragraph (4)(H)(ii)) as of July 1, 2003.'' Therefore, in implementing
section 422 of MMA, we based the FTE resident cap reductions for
hospitals that were participating in a Medicare GME affiliated group on
the aggregate cap and count data from all hospitals participating in
the same Medicare GME affiliated group(s). If a hospital was training a
number of residents below its FTE resident cap for the reference cost
reporting period but the hospital was part of a Medicare GME affiliated
group for some or all of that reference cost reporting period, the
Medicare contractor determined if the aggregate affiliated count for
all hospitals in the Medicare GME affiliated group was greater than the
aggregate affiliated cap. If the aggregate affiliated count was greater
than the aggregate cap, then there was no reduction made to the FTE
caps of any hospital in the Medicare GME affiliated group (even for the
hospital that was part of the Medicare GME affiliated group, but was
training below its cap).
However, as we noted in the November 24, 2010 Federal Register (75
FR 72161), in contrast to section 422 of MMA, section 5503 of the
Affordable Care Act as initially enacted did not include language
specific to Medicare GME affiliated groups as was included in section
422 of MMA under section 1886(h)(7)(A)(iii) of the Act. Thus, section
5503 of the Affordable Care Act as initially enacted did not provide
for determinations based on the aggregate experience of a Medicare GME
affiliated group. Therefore, we stated in the November 24, 2010 Federal
Register (75 FR 72161), that the determination of whether a hospital
would receive a cap reduction based on that individual
[[Page 13518]]
hospital's experience and not the aggregate experience of the Medicare
GME affiliated group.
D. Section 203 of the Medicare and Medicaid Extenders Act of 2010 (P.L.
111-309)
Section 203 of the Medicare and Medicaid Extenders Act of 2010
(MMEA) further amended section 1886(h)(8) of the Act by adding the
following new subparagraph:
(I) Affiliation.--The provisions of this paragraph shall be
applied to hospitals which are members of the same affiliated group
(as defined by the Secretary under paragraph (4)(H)(ii)) and the
reference resident level for each such hospital shall be the
reference resident level with respect to the cost reporting period
that results in the smallest difference between the reference
resident level and the otherwise applicable resident limit.
This paragraph refers to the treatment of hospitals that are
members of the same Medicare GME affiliated groups, as described in
section C of this interim final rule for purposes of determining a
hospital's possible cap reductions under section 1886(h)(8)(A) of the
Act. Similar to section 422 of MMA, this amendment to the language at
section 1886(h)(8) of the Act allows us to consider hospitals that are
members of the same Medicare GME affiliated group in the aggregate,
rather than only on an individual basis, for the purposes of
determining a GME FTE cap reduction.
Although this amendment allows us to implement section 5503 of the
Affordable Care Act in a manner similar to section 422 of MMA, a key
difference in implementation remains. One point of note is that section
422 of MMA, (section 1886(h)(7)(A)(ii)(I) of the Act) refers to the
most recent cost reporting period ending on or before September 30,
2002 as the reference cost reporting period. However, as stated in the
August 11, 2004 Federal Register (69 FR 49125), if a hospital was a
member of a Medicare GME affiliated group for the academic year
beginning July 1, 2003, then its reference cost reporting period was
the cost reporting period that included July 1, 2003. This differs from
section 5503 of the Affordable Care Act which instructs the Secretary
to choose the reference cost reporting period out of the hospital's
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, that has the highest FTE
resident count section 1886(h)(8)(H)(i)) of the Act.
For hospitals that were members of the same Medicare GME affiliated
groups, the MMEA now allows us to determine the reference cost
reporting period as the cost reporting period out of the hospitals
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010 with the smallest difference
between the reference resident level and the otherwise applicable
resident limit (section 1886)(h)(8)(I) of the Act). Therefore based on
the amendment made to section 1886(h)(8) of the Act by section 203 of
the MMEA adding subparagraph (I), we are establishing in this interim
final rule with comment period, a methodology to determine whether a
hospital is subject to a cap reduction under section 5503 of the
Affordable Care Act based on that hospital's participation in a
Medicare GME affiliated group(s) or an emergency Medicare GME
affiliated group under 42 CFR 413.79(f). Although the MMEA provision
applies to both regular Medicare GME affiliation agreements and
emergency Medicare GME affiliation agreements, for ease of reference,
we will refer in this discussion to both with the term Medicare GME
affiliation agreements. We believe the purpose of section 203 of MMEA
is to amend section 1886(h)(8) of the Act in order to implement section
5503 of the Affordable Care Act in a manner that is similar to section
422 of MMA with regard to treatment of hospitals that are members of
the same Medicare GME affiliated group. Accordingly, we are
implementing section 203 of the MMEA in a manner similar to the way in
which section 422 of MMA was implemented. The methodology used to
determine a cap reduction for hospitals which are members of the same
affiliated group is as follows:
Part 1: Determine the ``Reference Cost Reporting Period''
The Medicare contractor will assess each hospital on an individual
basis. First, the Medicare contractor will determine whether a hospital
was a member of a Medicare GME affiliated group at any point during any
of the hospital's three most recent cost reporting periods ending
before March 23, 2010 for which a cost report has been settled or has
been submitted to the Medicare contractor by March 23, 2010. That is,
the Medicare contractor will determine whether the caps during any of
those three cost reporting periods were revised because the hospital
was a member of a Medicare affiliation agreement. If a hospital was not
a member of a Medicare GME affiliated group during any of those three
cost reporting periods, then the Medicare contractor will determine if
and by how much that hospital's FTE resident caps should be reduced in
accordance with the policy established in the November 24, 2010 final
rule (75 FR 72155 through 72168).
If the Medicare contractor determines that a hospital was a member
of a Medicare GME affiliated group at any point during any of the three
most recent cost reporting periods ending before March 23, 2010 for
which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, then subparagraph (I) applies,
and the Medicare contractor will determine a hospital's reference cost
reporting period by determining the cost reporting period from the
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, that results in the smallest
difference between the reference resident level and the otherwise
applicable resident limit. For example, a hospital with a FYE of
December 31 may not be a member of a Medicare GME affiliated group for
the academic years beginning July 1, 2006, 2007, or 2008, but it may be
a member of a Medicare GME affiliated group for the academic year
beginning July 1, 2005. In the cost reporting period ending December
31, 2006, the months of January through June 2006 would be affected by
the July 1, 2005 Medicare GME affiliation agreement. Therefore, in this
example, the hospital is indeed a member of a Medicare GME affiliated
group at some point, albeit for only a portion of a cost reporting
period, during its three most recent cost reporting periods ending
before March 23, 2010 for which a cost report has been settled or has
been submitted to the Medicare contractor by March 23, 2010 (in this
case, these cost reporting periods would include FYE 12/31/08, FYE 12/
31/07, and FYE 12/31/06), and as such its reference cost reporting
period would be determined as the cost reporting period that results in
the smallest difference between the reference resident level and the
otherwise applicable resident limit. As previously discussed, section
422 of the MMA specified a single time period that would be used for
all hospitals that were members of a Medicare GME affiliated group;
that is as of July 1, 2003. However, section 5503 of the Affordable
Care Act does not specify one cost reporting period, but rather it
specifies that the reference cost
[[Page 13519]]
reporting period is one out of three possible cost reporting periods.
For a hospital that was a member of a Medicare GME affiliated group at
any point during any of the three applicable cost reporting periods,
after determining the cost report that is a hospital's reference cost
reporting period based on the cost report that results in the smallest
difference between the reference resident level and the otherwise
applicable resident limit, to determine whether there are any excess
slots we believe it is appropriate to consider whether a hospital was a
member of a Medicare GME affiliated group as of July 1 of that
reference cost reporting period. The hospital may or may not have been
a member of a Medicare GME affiliated group during that reference cost
reporting period. We do not believe that section 1886(h)(8)(I) of the
Act, as added by section 203 of the MMEA, requires that a hospital must
be a member of a Medicare GME affiliated group during all 3 cost
reporting periods, nor during the year determined to be the reference
cost reporting period. Rather, being a member of a Medicare GME
affiliated group at some point in just one of the three cost reporting
periods warrants that a hospital's reference cost reporting period be
determined based on which cost report has the smallest difference
between the reference resident level and the otherwise applicable
resident limit. To determine if an FTE resident cap reduction is
appropriate, if the hospital was a member of a Medicare GME affiliated
group as of July 1 in the reference cost reporting period, we will look
at the Medicare GME affiliated group in the aggregate, when we
determine if the subject hospital has excess capacity for purposes of a
reduction under sections 5503 and 203. If the hospital was not a member
of a Medicare GME affiliated group as of July 1 in the reference cost
reporting period, excess FTEs training at other members of the
affiliated group will not be considered for the purposes of a reduction
under sections 5503 and 203 and that hospital's FTE resident caps
should be reduced in accordance with the policy established for
hospitals that are not members of Medicare GME affiliated groups in the
November 24, 2010 final rule (75 FR 72155 through 72168). The nature of
this determination underscores the fact that reductions to the FTE
resident caps of hospitals that are members of Medicare GME affiliated
groups must still be made on an individual hospital basis. The
following is an example of a reference cost reporting period
determination. (For ease of illustration, this example focuses on
reductions to the IME FTE resident caps only, but the methodology is
the same for reductions to the direct GME FTE resident caps):
Hospital A has a FTE resident cap of 10 FTE residents. Hospital A's
three most recent cost reports that have been settled or submitted to
the Medicare contractor by March 23, 2010 include cost reporting
periods with FYE 12/31/2006, 12/31/2007, and 12/31/2008. During these
three cost reporting periods, Hospital A trained 8, 9, and 9 FTE
residents, respectively. For the academic years beginning July 1, 2006
and July 1, 2007, Hospital A was not a member of a Medicare GME
affiliated group. However, for the academic year beginning July 1,
2008, Hospital A is affiliated with Hospital B and Hospital C. As a
result of its Medicare GME affiliation agreement with Hospitals B and
C, Hospital A's adjusted cap or otherwise applicable resident limit is
12 for the academic year beginning July 1, 2008. Thus, when determining
the reference cost reporting period for Hospital A, the Medicare
contractor would compare the resident level for Hospital A with its
otherwise applicable resident limit for each of the cost reporting
period as indicated below:
Cost Reporting Period 1 (01/01/2006-12/31/2006): 10 (FTE
Resident Cap)-8 (FTE Resident Count) = 2.
Cost Reporting Period 2 (01/01/2007-12/31/2007): 10 (FTE
Resident Cap)-9 (FTE Resident Count) = 1.
Cost Reporting Period 3 (01/01/2008-12/31/2008): 11
(Adjusted FTE Resident Cap)-9 (FTE Resident Count) = 2.
(Note that although Hospital A received an increase of 2 FTEs, from 10
to 12, under the Medicare GME affiliation agreement for the academic
year beginning July 1, 2008, since Hospital A has a 12/31 fiscal year
end, the actual cap adjustment is prorated to half of 2, for an
increase to its FTE resident cap of 1, equaling 11). In this example,
the smallest difference between the reference resident level and the
otherwise applicable resident limit for Hospital A is 1, which occurs
in the cost reporting period with FYE 12/31/2007. Thus, Hospital A's
reference cost reporting period is 01/01/2007-12/31/2007. Note that
Hospital A is not a member of a Medicare GME affiliated group during
FYE 12/31/07. The implications of this are discussed below.
Part 2: Determine the Applicable Reductions
For a hospital that was a member of a Medicare GME affiliated group
at any point during any of its three most recent cost reporting periods
ending before March 23, 2010 for which a cost report has been settled
or has been submitted to the Medicare contractor by March 23, 2010,
once the Medicare contractor determines that hospital's reference cost
reporting period (that is, the cost report with the smallest difference
between the hospital's FTE resident cap and FTE resident count), the
Medicare contractor must then determine if the hospital was a member of
a Medicare GME affiliated group as of the July 1 that occurs during
that reference cost reporting period. If not, and the hospital's FTE
resident count was equal to or exceeded its FTE resident cap in that
reference cost report, then no reduction to its FTE resident cap is
made and no further steps are necessary. If that hospital's FTE
resident count was less than its FTE resident cap during that reference
cost report, then the Medicare contractor would reduce the FTE resident
cap by 65 percent of the difference between the FTE resident cap and
the FTE resident count.
If the hospital was a member of a Medicare GME affiliated group as
of the July 1 that occurs during that reference cost reporting period,
the Medicare contractor will look at the members of the Medicare GME
affiliated group for that period in the aggregate, for the purpose of
determining a reduction to the particular hospital's FTE resident cap.
In other words, assuming the Medicare contractor is assessing Hospital
X, once it is determined that Hospital X was training residents below
its adjusted FTE resident cap as part of a Medicare GME affiliation
agreement occurring during Hospital X's reference cost reporting
period, the Medicare contractor will treat the hospitals in the
Medicare GME affiliated group in the aggregate, but only for the
purpose of determining the reduction to Hospital X's FTE resident cap.
The Medicare contractor would not actually reduce the FTE resident caps
of the other hospitals that were affiliated with Hospital X in that
year, since each hospital is evaluated separately, and it may be that
the reference cost reporting periods for the other hospitals may not be
the same as Hospital X's reference cost reporting period. (It may be
that the reference cost reporting period for another hospital is one in
which that hospital was not part of a Medicare GME affiliated group, in
which case, treatment as a group is not warranted when determining that
hospital's FTE cap reduction).
For the hospital that was a member of a Medicare GME affiliated
group as of the July 1 that occurs during that
[[Page 13520]]
reference cost report, the Medicare contractor will determine for each
hospital in the Medicare GME affiliated group respectively its FTE
resident cap and FTE resident count (IME and direct GME separately).
The Medicare contractor will add each hospital's FTE resident caps (IME
and direct GME separately) to determine the aggregate affiliated FTE
resident cap. The contractor will then add each hospital's FTE resident
count (IME and direct GME separately) to determine the aggregate
affiliated FTE resident count. If the aggregate FTE resident counts are
equal to or exceed the aggregate FTE resident caps, then no reductions
would be made to that particular hospital's FTE resident cap under
section 5503 of Affordable Care Act, and no further steps are necessary
for that hospital. We emphasize that at this point, it has only been
determined that the particular hospital will not be subject to an FTE
resident cap reduction--as the FTE resident cap reduction determination
is ultimately one that is done on an individual hospital basis, at this
point the contractor has not made any determinations regarding the
status of the other hospitals that are in the same Medicare GME
affiliated group as the particular hospital under review.
However, where the aggregate FTE resident count is below the
aggregate FTE resident cap (IME and direct GME separately), a reduction
to the particular hospital's FTE resident cap would be necessary. In
these cases, for each hospital that is a member of the same Medicare
GME affiliated group, the Medicare contractor will determine the
following FTE information from the cost report that includes July 1 of
the particular hospital's reference cost reporting period:
(1) The ``1996'' FTE resident cap (as adjusted by new programs, if
applicable) for the hospital under review-- For IME from Worksheet E,
Part A of the Medicare cost report, the sum of lines 3.04 and 3.05. If
the hospital's IME FTE resident cap was reduced under section 422 of
the MMA, subtract from this sum the amount reported on Worksheet E-3,
Part VI, line 13. For direct GME from Worksheet E-3, Part IV of the
Medicare cost report, the sum of lines 3.01 and 3.02. If the hospital's
direct GME FTE resident cap was reduced under section 422 of the MMA,
subtract from this sum the amount reported on Worksheet E-3, Part VI,
line 2.
(2) The ``affiliated'' FTE resident cap for the hospital being
assessed--For IME, line 3.07. For direct GME, line 3.04.
(3) The total number of allopathic and osteopathic FTE residents
for the hospital being assessed--For IME, line 3.08. For direct GME,
line 3.05.
(4) The difference between the aggregate ``affiliated'' FTE
resident cap and the total FTE resident counts for all of the
affiliated hospitals--For IME, [Sigma] line 3.08 minus [Sigma] (lines
3.04 + 3.05-applicable section 422 reduction amount). For direct GME,
[Sigma] line 3.05 minus [Sigma] (lines 3.01 + 3.02-applicable section
422 reduction amount).
(5) For IME, for those hospitals whose FTE resident count from line
3.08 is greater than the ``affiliated'' FTE resident cap on line 3.07,
indicate ``zero.'' For direct GME, for those hospitals whose FTE
resident count from line 3.05 is greater than the ``affiliated'' FTE
resident cap on line 3.04, indicate ``zero.'' For IME, for those
hospitals whose FTE resident count from line 3.08 is less than the
``affiliated'' FTE resident cap on line 3.07, determine the difference
between the hospital's ``affiliated'' FTE resident cap and the
hospital's FTE resident count, line 3.08 minus line 3.07. For direct
GME, for those hospitals whose FTE resident count from line 3.05 is
less than the ``affiliated'' FTE resident cap on line 3.04, determine
the difference between the hospital's ``affiliated'' FTE resident cap
and the hospital's FTE resident count, line 3.05 minus line 3.04.
(6) For IME and direct GME separately, to determine the total
amount by which the FTE resident counts are below the ``affiliated''
FTE resident caps and add the amounts determined under step 5 for each
hospital that trained fewer residents than its ``affiliated'' FTE
resident caps.
(7) For IME and direct GME separately, determine a pro rata cap
reduction for the hospital being assessed by dividing the hospital-
specific amount in step 5 by the total amount for all of those
hospitals in step 6, and multiply by the amount in step 4. (that is,
(step5/step6) x step 4).
(8) For IME and direct GME separately, determine the actual cap
reduction for the hospital being assessed by multiplying the pro rata
cap reduction from step 7 by 0.65.
(9) For IME and direct GME separately, determine the reduced FTE
resident cap for the hospital being assessed by subtracting the actual
cap reduction from step 8 from the ``1996'' FTE resident cap from step
1. This is the hospital's FTE resident cap effective July 1, 2011.
The following is an example of how the reductions to the FTE
resident caps will be determined where the FTE resident counts in the
aggregate for hospitals that were affiliated as of July 1 of the
reference cost reporting period for a particular hospital are below the
hospitals' FTE resident caps in the aggregate. For ease of
illustration, this example focuses on reductions to the IME caps only,
but the methodology is the same for reductions to the direct GME caps.
In this example, the Medicare contractor has determined, using the
methodology from Step 1, that the reference cost reporting period (the
period with smallest difference between the reference resident level
and the otherwise applicable resident limit) for Hospital D is January
1, 2007 to December 31, 2007. The academic year that occurs in this
reference cost reporting period begins July 1, 2007. Hospitals D, E,
and F are members of a Medicare GME affiliated group for the academic
year that begins July 1, 2007. Hospital D is also separately affiliated
with Hospitals G and H for the academic year that begins July 1, 2007.
Thus, the affiliated group for GME payment purposes, and for purposes
of determining possible FTE cap reductions for Hospital D under
subparagraph (I) consists of Hospitals D, E, F, G, and H. Hospital E's
cost report that includes July 1, 2007 is FYE June 30, 2008. Hospital
D's, F's, and G's cost report that includes July 1, 2007 is their FYE
December 31, 2007, and Hospital H's cost report that includes July 1,
2007 is its FYE September 30, 2007. Using steps 1 through 9 above, the
reduction to the FTE resident caps for Hospital D is determined in the
table below.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs
1996 FTE Caps ``Affiliated'' FTE Count below the Pro rate Actual Cap Final FTE Cap
Hospital (Step 1) FTE cap (Step (Step 3) ``Affiliated'' reduction Reduction (Step 9)
2) Cap (Step 5) (Step 7) (Step 8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
D....................................... 115 90 75 -15 -8 -5.2 109.8
E....................................... 80 100 125 0 N/A N/A N/A
F....................................... 120 10 10 0 N/A N/A N/A
[[Page 13521]]
G....................................... 95 115 125 0 N/A N/A N/A
H....................................... 30 125 65 -60 N/A N/A N/A
---------------------------------------------------------------------------------------------------------------
Totals.............................. 440 440 400 -75 N/A N/A N/A
Step 4[rarr] -40 Step 6[uarr]
--------------------------------------------------------------------------------------------------------------------------------------------------------
In this example, Hospital D's FTE resident count of 75 was 15 less
than its ''affiliated'' FTE resident cap of 90, and Hospital H's FTE
resident count of 65 was 60 less than its ''affiliated'' FTE resident
cap of 125 (as determined under step 5). Hospital F's ''affiliated''
FTE resident cap equaled its FTE resident count. Under this
methodology, the fact that Hospitals E and G exceeded their respective
''affiliated'' FTE resident caps minimizes the reductions to Hospital
D's ''1996'' FTE resident caps through the calculation of a pro rata
reduction under step 7.
We note that although Hospital H is also under its cap; its cap is
not reduced in this exercise. Under section 5503, the cap reduction
determination is calculated individually for each hospital based on its
individual reference cost reporting period, so each hospital would be
evaluated for a possible reduction separately. Hospital H will be
evaluated separately, and it may be that Hospital's H reference cost
report may not be its FYE September 30, 2007 cost report, and
ultimately, Hospital H may or may not be subject to an FTE resident cap
reduction. Thus, under step 8, the actual cap reduction of 5.2 FTEs for
Hospital D is determined by taking 65 percent of 8 (rather than 65
percent of 15). As a result, under step 9, Hospital D's final FTE
resident cap effective on July 1, 2011 is determined to be 109.8 FTEs.
We also note that the reduction to Hospital D's ''1996'' FTE
resident caps was minimized only because Hospitals E and G exceeded
their ''affiliated'' FTE resident caps. If all hospitals in the
Medicare GME affiliated group had trained residents below their
''affiliated'' FTE resident caps, then a pro rata reduction would not
benefit Hospital D. In that case, the ''1996'' FTE resident caps of
Hospital D in the Medicare GME affiliated group would be reduced by 65
percent of the difference between its ''affiliated'' FTE resident cap
and FTE resident count.
We believe this final policy is similar to the method used to
implement section 422 of the MMA with regard to hospitals that were
members of the same Medicare GME affiliated group in that, as under
section 422 of the MMA, we are only treating a hospital as part of a
group if the hospital was a member of a Medicare GME affiliation
agreement during its reference cost reporting period under section
1886(h)(8) of the Act. In implementing section 203 of the MMEA in this
manner, we believe we have addressed the concerns raised by commenters
in response to the CY 2011 Outpatient PPS proposed rule (75 FR 46395
August 3, 2010) in that this policy could protect hospitals from a loss
of slots if the aggregate counts equal to or exceed the ``affiliated''
FTE resident caps, and could limit the loss of slots in the instance
where a hospital is a member of a Medicare GME affiliated group and the
aggregate counts are below the ``affiliated'' FTE resident caps.
II. Provisions of the Interim Final Rule
As part of the CY 2011 Hospital Outpatient PPS final rule published
in the November 24, 2010 Federal Register (75 FR 71800), we implemented
section 5503 of the Affordable Care Act, which added a new section
1886(h)(8) to the Act. Section 5503 of the Affordable Care Act provides
for reductions in the statutory FTE resident caps for direct GME under
Medicare for certain hospitals, and authorizes a ``redistribution'' to
hospitals of the estimated number of FTE resident slots resulting from
the reductions. Section 5503 of the Affordable Care Act also amended
section 1886(d)(5)(B)(v) of the Act to require application of the
provisions of 1886(h)(8) of the Act ``in the same manner'' to the FTE
resident caps for IME. Section 1886(h)(8) of the Act requires that any
such reduction to the FTE resident caps will be equal to 65 percent of
the difference between the hospital's ``otherwise applicable resident
limit'' and its ``reference resident level.'' Section 5503 of the
Affordable Care Act as initially enacted did not include language
specific to Medicare GME affiliated groups and did not provide for FTE
resident cap reduction determinations based on the aggregate experience
of a Medicare GME affiliated group. Accordingly, section 203 of the
MMEA further amended section 1886(h)(8) of the Act to specify that the
provisions of section 1886(h)(8) of the Act shall be applied to
hospitals which are members of the same Medicare GME affiliated group,
and the ``reference resident level'' for each such hospital is the FTE
resident count from the cost reporting period that results in the
smallest difference between the FTE resident count and the FTE resident
cap. We are revising Sec. 413.79(m)(7) to reflect the changes made by
section 203 of the MMEA.
III. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
IV. Waiver of Proposed Rulemaking, 60-Day Comment Period, and Delay of
Effective Date
Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), we
are required to publish a notice of proposed rulemaking (NPRM) in the
Federal Register. Section 1871(b)(1) of the Act imposes a similar
requirement: that the Secretary publish a Federal Register notice with
not less than 60 days for public comment. In addition, both authorities
mandate a 30-day delay in effective date.
Section 553(b)(B) of the APA provides for an exception from these
APA requirements; in cases in which this exception applies, section
1871(b)(2)(C) of the Act provides an exception from the notice and
delayed effective date requirements of the Act as well. Section
553(b)(B) of the APA authorizes an agency to dispense with normal
rulemaking requirements for good cause if the agency makes a finding
that notice and comment procedures are impracticable, unnecessary, or
contrary to the public interest. In addition, both section 553(d)(3) of
APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid
the 30-day delay in
[[Page 13522]]
effective date where such delay is contrary to the public interest and
an agency includes a statement of support.
Here, section 203 of the MMEA amends section 1886(h)(8) of the Act.
Regulations implementing section 5503(a) of the ACA were published in
the November 24, 2010 Federal Register. The amendment made by section
203 of the MMEA is effective as if included in the enactment of section
5503(a) of the Affordable Care Act. Specifically the amendments apply
to portions of cost reporting periods occurring on or after July 1,
2011. As a result, given the December 15, 2010 enactment of the MMEA,
there was and there is a finite and, under the circumstances, highly
compressed window of opportunity to complete implementation before the
statutory deadline. Time pressure is acute because the agency must
commence implementation substantially in advance of its July 1, 2011
deadline or risk a cascade of missed deadlines and failed intermediate
steps, jeopardizing the program. Binding instructions must be given to
Medicare contractors and hospitals as soon as possible to enable them
to undertake critical first steps in a tight chain of business
decisions that must precede implementation of the new provision.
As we indicate in section VI.C., the effect of section 203 of the
MMEA is that it benefits member hospitals of Medicare GME affiliated
groups by protecting them from or mitigating their loss of residency
slots. Prior implementation of section 422 of the MMA, which similarly
redistributed unused FTE resident cap slots to other qualifying
hospitals, suggests that significant time is required to implement this
type of provision. The MMA was passed in December 2003, and was
effective on July 1, 2005. Unlike section 5503 of the ACA, section 422
of the MMA, as originally enacted, already included language giving
special consideration to the treatment of members of Medicare GME
affiliated groups. We published final regulations implementing the
process for reducing the FTE resident caps of certain teaching
hospitals, both members of Medicare GME affiliated groups and those
that were not affiliated, by August 1, 2004 (69 FR 49111). Since
section 422 of the MMA was effective on July 1, 2005, the agency had 11
months between August 2004 and July 1, 2005 to implement section 422 of
the MMA.
In this case, the statutory deadline provides the agency with
significantly less time to implement section 5503 of the ACA and
section 203 of the MMEA than it had to implement section 422 of the
MMA. The ACA was passed on March 23, 2010, and we included the proposal
for section 5503 of the ACA in the CY 2011 OPPS proposed rule; the
final rule was not issued until November 1, 2010 (75 FR 72133). Since
section 5503 of the ACA must be implemented to be effective on July 1,
2011, this means that we have only 8 months (as compared to the 11
months under section 422 of the MMA) to implement section 5503.
Moreover, because the language regarding special treatment of hospitals
that are members of Medicare GME affiliated groups was not passed as
part of the MMEA until December 15, 2010, yet it has the same effective
date of July 1, 2011 as section 5503 of ACA, the amount of time
available to implement the provision by July 1, 2011 has been further
reduced to approximately 4 months. Facing this comparatively brief
window, and based on historical experience, we find that it would be
impracticable for us and our contractors to perform enough GME audits
to assure the validity of as-submitted cost report data that are
necessary for implementation--especially while simultaneously reviewing
for regulatory compliance many hundreds of applications requesting
additional slots.
The implementation of section 5503 of ACA and section 203 of the
MMEA, as we learned when implementing section 422 of the MMA, requires
significant planning, coordination, and investment of time and audit
resources. There are approximately 1,100 teaching hospitals and more
than 300 of them are members of Medicare GME affiliated groups. Many of
these teaching hospitals have hundreds of residents, and it can take a
Medicare contractor many weeks or months to audit the data on each as-
submitted cost report. On January 7, 2011, we issued instructions to
the contractors instructing them to begin audits for the purpose of
implementing section 5503 of ACA. In those instructions, and in the CY
2011 OPPS final rule (75 FR 72153), we stated that the contractors are
required to submit their estimates of each teaching hospital's FTE
resident cap reduction, if any, to CMS by May 16, 2011. This would
allow us to create the ``pool'' of slots available for redistribution,
and to start assigning those slots to qualifying hospitals based on
applications we reviewed between January 21, 2011 and May 2011. Even
prior to May 16, 2011, the Medicare contractors will need time to
notify hospitals of their tentative findings and allow hospitals to
react to the potential FTE resident cap reductions. Unfortunately, many
audits have yet to begin, as the Medicare contractors have been waiting
for instructions regarding treatment of hospitals that are members of
Medicare GME affiliated groups.
For these reasons, that is, because we face an extremely compressed
timeframe; because Medicare contractors and hospitals need to make
critical business decisions and systems changes far in advance, each
constituting a material change of position that would be costly and
impracticable to reverse; because historical evidences suggests that
even a slight delay could prevent timely implementation of this
Congressionally mandated policy change; and because it is therefore
probable that failing to act early would have adverse financial impacts
for teaching hospitals and the Federal government--we have concluded
that there is good cause to waive ordinary rulemaking provisions as
they are impracticable and contrary to the public interest in this
case, and issue interim final regulations as soon as possible, that
being necessary to implementing section 203 of the MMEA in an accurate,
comprehensive, and timely manner. We are providing a 30-day public
comment period.
V. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995. (44 U.S.C. Chapter 35)
VI. Regulatory Impact Statement
A. Statement of Need
Section 5503 of the Affordable Care Act provides for reductions in
the statutory FTE resident caps under Medicare for certain hospitals
and authorizes a ``redistribution'' of the FTE resident slots resulting
from the reduction in the FTE resident caps to other hospitals. The
purpose of section 5503 is to allow hospitals in certain states that
wish to start new or expand existing programs in primary care or
general surgery but are already training residents at or above their
FTE resident caps to use slots from other hospitals that have not been
using all of their slots. Section 203 of the Medicare and Medicaid
Extenders Act of 2010 amended section 1886(h)(8) of the Act (as added
by section 5503 of the Affordable Care Act) to specify that the
provisions of section 1886(h)(8)(A) of the Act shall be applied to
hospitals
[[Page 13523]]
which are members of the same Medicare GME affiliated group, and the
``reference resident level'' for each hospital is the FTE resident
count from the cost reporting period that has the smallest difference
between the FTE resident count and the FTE resident cap. The purpose of
section 203 is to take into account the unique situation of hospitals
that are members of the same Medicare GME affiliated group in that they
share FTE resident cap slots, and that FTE resident cap reduction
determinations of hospitals should consider the shared nature of those
slots.
B. Overall Impact
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
does not reach the economic threshold and thus is not considered a
major rule.
In the November 24, 2010 final rule which implemented section 5503
of the Affordable Care Act (75 FR 72239), we mentioned that we were
unable to project how many FTE resident slots will be available for
redistribution under section 5503 of the Affordable Care Act. Unlike
section 422 of the MMA, which also provided for a redistribution of FTE
resident slots but provided that the redistributed slots will be paid
using the national average per resident amount (PRA) for direct GME
payment purposes, section 5503 of the Affordable Care Act requires that
hospitals be paid for their additional FTE resident slots using the
hospitals' specific PRAs. Because we were unable to determine the
number of FTE resident slots that will be redistributed under section
5503 of the Affordable Care Act or which hospitals will be receiving
additional FTE resident slots, we could not calculate a direct GME
impact for section 5503 of the Affordable Care Act. Similarly, we
cannot calculate a direct GME dollar impact for section 203 of the
MMEA.
Although the general effect of section 203 of the MMEA is to
protect from loss or mitigate the loss of slots of hospitals that are
members of a Medicare GME affiliated group, there could be fewer direct
GME and IME slots available for redistribution to other hospitals. For
several reasons, we are unable to compute a dollar impact on the
redistribution of those slots to other hospitals. First, although there
are currently 307 hospitals that are members of a Medicare GME
affiliated group, these hospitals were not necessarily members of
Medicare GME affiliated groups during the reference cost reporting
periods specified by section 5503 of the Affordable Care Act. Second,
we do not know which hospitals, that are members of a Medicare GME
affiliated group, will be at risk for losing direct GME and/or IME FTE
resident cap slots under section 5503 of the Affordable Care Act, as
revised by section 203 of the MMEA. Third, we do not know the PRAs and
Medicare utilization rates of hospitals that will be receiving
additional FTE resident slots. With respect to determining an impact
for IME payment purposes, section 5503 of the Affordable Care Act
requires us to use an IME multiplier of 1.35; however, we do not know
the intern-to-bed ratio and resident-to-bed ratio for the hospitals
that will receive additional FTE resident slots or the volume or case
mix of Medicare discharges at those hospitals. Therefore, we cannot
determine a financial impact for purposes of direct GME and IME for
this provision. We solicit comment on our analysis.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most physician practices, hospitals and
other providers are small entities, either by nonprofit status or by
qualifying as small businesses under the Small Business
Administration's size standards (revenues of less than $7.0 to $34.5
million in any 1 year). States and individuals are not included in the
definition of a small entity. For details, see the Small Business
Administration's Web site at https://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=2465b064ba6965cc1fbd2eae60854b11&rgn=div8&view=text&node=13:1.0.1.1.16.1.266.9&idno=13)
Individuals and States are not included in the definition of a
small entity. The Regulatory Flexibility Act requires an agency to
prepare an initial regulatory flexibility analysis when they issue a
general notice of proposed rule-making. However, HHS has maintained a
long-standing policy of voluntarily preparing initial regulatory
flexibility analyses for all rule-making. The Secretary has determined
that this interim final rule will not have a significant economic
impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. We are not preparing an analysis for section 1102(b) of the
Act because the Secretary has determined that this interim final rule
will not have a significant impact on the operations of a substantial
number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2011, that
threshold is approximately $136 million. This rule will have no
consequential effect on State, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
C. Anticipated Effects
We believe the general effect of section 203 of the MMEA is that it
could protect from loss or mitigate the loss of slots for hospitals
that are members of a Medicare GME affiliated group, and therefore,
there could be fewer direct
[[Page 13524]]
GME and IME slots available for redistribution to other hospitals.
D. Alternatives Considered
Although there may be alternatives, the method we are finalizing in
this interim final rule is the most consistent with that of a similar
provision for hospitals that are members of Medicare GME affiliated
groups implemented as part of section 422 of the MMA.
E. Conclusion
The analysis above, together with the remainder of this preamble,
provides a Regulatory Flexibility Analysis as well as a Regulatory
Impact Analysis. For the reasons outlined in the RIA, we are not
preparing an analysis for either the RFA or section 1102(b) of the Act
because we have determined that this interim final rule with comment
would not have a direct significant economic impact on a substantial
number of small entities or a direct significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
0
1. The authority citation for part 413 continues to read as follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Pub. L. 106-133 (113 Stat. 1501A-332).
0
2. Section 413.79 is amended by revising paragraph (m)(7) to read as
follows:
Sec. 413.79 Direct GME payments: Determination of the weighted number
of FTE residents.
(m) * * *
(7) Consideration for members of Medicare GME affiliated groups.
For a hospital that is a member of a Medicare GME affiliated group at
any point during any of the hospital's three most recent cost reporting
periods ending before March 23, 2010 for which a cost report has been
settled or has been submitted to Medicare contractor by March 23, 2010,
in determining whether a hospital's otherwise applicable resident FTE
resident cap is reduced under paragraph (m) of this section, the
Medicare contractor determines a hospital's reference cost reporting
period by finding the cost reporting period that results in the
smallest difference between the reference resident level and the
otherwise applicable resident limit.
(i) If the reference resident level is less t