Is There Any Way to Increase Your Hospital's Resident FTE Cap

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Is There Any Way to Increase Your Hospital's
Resident FTE Cap?

• AHME 2009
• Spring Educational Institute
• April, 2009
• Savannah, GA
• Scott J. Geboy, J.D.
• Leah Voigt Romano, J.D., MPH
• Hall, Render, Killian, Heath Lyman, P.C.

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Goals of This Program

• Understand the purpose and history of the
  Medicare FTE Cap rules.
• Understand how the Cap is determined.
• Understand the limited circumstances in which
  certain hospitals without an FTE Cap and rural
  hospitals can add "new program" Cap.

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Goals of This Program, cont'd

• Assess the impact of hospital mergers and
  spin-offs on FTE Cap.
• Identify whether circumstances exist to preserve
  the Cap, in the event of hospital closure,
  reorganization or disaster.

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Goals of this Program, cont'd

• An FTE cap checklist for the expected upcoming
  wave of health care mergers, acquisitions,
  dislocations.
• This session outlines key factors to help spot
  issues lots of details are not covered.
  Medicare rules are highly technical and will need
  to be worked through.

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Why the Cap?

• In the Balanced Budget Act ("BBA") of 1997,
  Congress put limits on hospital payments for
  graduate medical education.
• One important limit a "cap" on the number of
  allopathic, osteopathic residents included in a
  hospital's full time equivalent ("FTE") resident
  count.
• Dental and podiatry residents exempt.

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Why the Cap?

• General rule FTE count "capped" at the most
  recent cost reporting period ending on/before
  December 31, 1996.
• Why? Congress intended to halt program expansion
  nationwide (and to limit Medicare GME payments).

FTEs
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"Special Rules" for Determining the Cap

• But, Congress did direct special rules for new
  programs (i.e., training programs that start
  on/after January 1, 1995).
• And "new program" rules must give "special
  consideration" for facilities in underserved
  areas
• CMS (then HCFA) also recognized that temporary
  cap adjustments permissible when a hospital
  closes a program.

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Guidance and Regulations

• 42 CFR 413.75 general requirements for direct
  GME payments
• 42 CFR 413.78 total number of FTE residents
• 42 CFR 413.79 weighted number of FTE residents
  (includes cap determining rules)

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Guidance and Regulations

• Is there any way to increase a teaching
  hospital's Medicare FTE cap under current rules?

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The Medicare FTE Cap

• For cost reporting periods beginning on/after
  October 1, 1997.
• Hospital's resident FTE count cannot exceed
  hospital's unweighted FTE count for most recent
  cost reporting period ending on/before December
  31, 1996.
• The so-called Section 422 reallocation raised
  some and lowered others. That's done.

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The Medicare FTE Cap Rural Hospital Adjustment

• For cost reporting periods beginning on/after
  April 1, 2000.
• Rural hospital's resident FTE count cannot exceed
  130 percent of unweighted FTE count in most
  recent CR period ending on/before December 31,
  1996. This is the "30 percent rule."
• Some of that increase may have been reduced by
  the Section 422 adjustments.

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The Medicare FTE Cap

• Affiliated groups
• Hospitals without a Cap
• New programs
• Rural hospitals
• Mergers and Spin-Offs
• Program or hospital closure
• Rural track programs
• Disasters

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Affiliated Groups

• Hospitals in a Medicare GME affiliated group can
  apply the limit on an aggregate basis, each with
  temporary (/-) adjustments.
• Net effect of the adjustments on group's
  aggregate FTE cap must zero.

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Affiliated Groups

• Each hospital in the group must
• Have a shared rotational arrangement with another
  hospital in the group.
• Submit the affiliation agreement (as defined by
  Medicare regulations) to the fiscal intermediary.

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Affiliated Groups

• During a shared rotational arrangement, more than
  one hospital must court the proportionate time
  spent by the resident(s).
• No resident may be counted in the aggregate as
  more than one FTE.

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Hospitals Without a Cap and New Programs

• Hospitals that had no residents in its most
  recent CR period ending on/before December 31,
  1996 and
• Established a new medical residency training
  program on/after January 1, 1995.

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New Programs

• What is a "new medical residency training
  program"?
• Received initial accreditation (including
  provisional) or began training residents on or
  after January 1, 1995.
• Other unwritten standards now being imposed by
  CMS.

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Hospitals without a Cap and New Programs

• The first residency program at a hospital is key.
  Why?
• The hospital's cap cannot be adjusted for new
  programs established more than three years after
  the first program begins training residents.

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Hospitals Without a Cap andNew Programs

• Cap is set in third year after the first year of
  the first new program.
• Cap the highest number of residents in any
  program year during the third year of the first
  program x number of years to complete the
  program.
• Limited by the total number of accredited FTE
  slots.

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New Programs The Cap from below is 58
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Rural Hospitals and New Programs

• Rural hospitals are "exempt" from the "three year
  rule."
• At a rural hospital, the Cap can be adjusted to
  incorporate new programs started at the rural
  hospital.

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Rural Hospitals and New Programs

• Cap increases by the actual number of residents
  training in years 1 and 2 of new program.
• Third year of new program adjusts hospital's cap,
  same calculation as discussed above for a
  hospital without a cap.
• Highest number of residents in any program year X
  years of program, limited by number of approved
  slots.
• Does not apply to expansions of pre-existing
  programs.

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Hospital Mergers

• When two hospitals merge, the respective FTE caps
  are aggregated.
• The surviving provider's cap is the sum of the
  two hospital caps.
• Corporate merger v. provider merger?

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Hospital Mergers

• The FTE cap is an attribute of the Medicare
  Provider Number.
• Single legal entity/corporation can own two or
  more providers.
• To consolidate the cap, a provider number merger
  is needed.
• Mergers aggregate positive attributes, e.g. cap
  is retained, but also aggregate provider number
  liabilities.

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Spin-Offs and New Hospitals

• Multi-campus hospitals may be able to establish
  new hospital/new provider at a campus.
• More a separation than a spin-off.
• Location becomes a new hospital without a cap.

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Spin-Offs and New Hospitals

• A truly new hospital, not a replacement hospital
  and not a new separate location of an existing
  Medicare provider.
• A new hospital does not have a cap, so it can
  create one.
• Detailed planning needed and risks are present
  related to relationships with existing Medicare
  providers.

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Preserving the Cap Hospital Closure

• A hospital can receive a temporary adjustment to
  its Cap to add residents from a closed hospital.
• The hospital must notify the fiscal intermediary
  within 60 days after it starts to train the
  "displaced" residents.

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Preserving the Cap Hospital Closure

• Once residents leave or complete their programs,
  the hospital's Cap returns to its "base."

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Preserving the Cap Program Closure

• Similar to the rule for hospital closure.
• Also a temporary adjustment to the Cap.
• Receiving hospital must notify the FI within 60
  days.

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Preserving the Cap Program Closure

• Hospital that closed its program must also
  temporarily reduce its Cap to account for
  residents in the closed program.
• Yearly reduction in Cap number of residents who
  would have been training in the program had the
  program not closed.

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Preserving the Cap Program Closure

• Hospital that closed its program must also notify
  the FI within 60 days after residents start
  training in another hospital.
• Sending hospital must agree to temporarily reduce
  its Capso the receiving hospital can temporarily
  increase its Cap.

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Rural Track Programs for Urban Hospitals

• Creates option for urban hospital to add cap
  temporarily for residents training in rural track
  program.
• Requires participation by urban teaching hospital
  and rural teaching hospital.

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Rural Track Programs for Urban Hospitals

• If its a "new program" then the rural hospital's
  FTE cap may be permanently increased.
• If it's an expansion of an existing program, the
  FTE cap adjustment may be temporary for both
  hospitals.

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Rural Track Programs for Urban Hospitals

• For the urban hospital, a "rural track FTE limit"
  is established.
• Separately accredited rural track program, 50 of
  time rotating to rural hospital (66 prior to
  2003).
• Rural track FTE limit created on 3 year cycle,
  with limit created in 3rd year of first new rural
  track program.

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Temporary Disaster Cap Transfers

• Only Available for federally declared disasters
• Section 1135 emergency area or section 1135
  emergency period mean, respectively, a geographic
  area in which, or a period during which, there
  exists
• (i) An emergency or disaster declared by the
  President pursuant to the National Emergencies
  Act or the Robert T. Stafford Disaster Relief and
  Emergency Assistance Act and
• (ii) A public health emergency declared by the
  Secretary pursuant to section 319 of the Public
  Health Service Act.

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Temporary Disaster Cap Transfers

• Yet another "Affiliation Agreement" is needed
• Emergency Medicare GME Affiliation Agreements
• Home Hospital the hospital that experienced the
  disaster (minimum 20 decrease in inpatient bed
  occupancy) and needs to out place residents
• Host Hospital the hospital that takes the
  residents temporarily
• Together they form an Emergency Medicare GME
  affiliated group

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Temporary Disaster Cap Transfers

• Yet another "Affiliation Agreement" is needed
• Emergency Medicare GME Affiliation Agreements

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Temporary Disaster Cap Transfers

• Host Hospital gets a positive increase in its
  cap.
• Home hospital gets a negative increase in its
  cap.
• Net cannot exceed the combined caps of both
  hospitals.
• Provisions to address any Medicare GME
  Affiliation Agreements in place at the time of
  the disaster.
• Agreements must be filed with Medicare within
  timing requirements after the fact for the
  academic year in which the disaster occurs.

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New Legislation?
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Cap Multiplier Software

• And these days there is always a technology
  solution
• Software that applies a proprietary algorithm to
  Hospital Cost Report Data to Maximize FTE
  assignment.
• Estimates that use of product increases the DGME
  cap by a factor of 1.006 to 1.18.

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Cap Multiplier Software

• The Proprietary Algorithm
• NoDiCMIi(WIi.711.289)1.6((1residents-to-bed
  ratio) .405-1)
• Yes, this is a joke

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Cap Multiplier Software

• Available in the Sky Mall Catalogue!
• Heed the Words of the Sage of Omaha
• "Beware of geeks bearing formulas."
• Berkshire Hathaway, Letter to Shareholders,
  February 2009

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Questions?

• Questions?
• Questions?

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Thank You!

• Scott J. Geboy, J.D.
• Leah Voigt Romano, J.D., MPH
• Hall, Render, Killian, Heath Lyman, P.C.
• sgeboy_at_hallrender.com
• lromano_at_hallrender.com
• www.hallrender.com
• 790351v1