AND ON THE 8TH DAY, GOD CREATED THE Centers for Medicare

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AND ON THE 8TH DAY, GOD CREATED THE
Centers for Medicare medicaid services (CMS)
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• And then, it was decided that CMS should have a
  payment provision for Teaching Hospitals called
  Graduate Medical Education (or GME)
• The GME reimbursement mechanism was born and
  split into two components Direct (DGME) and
  Indirect (IME)

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Why the religious connotation?

• Im not a preacher man trapped in a Finance
  persons body
• I dont want any one of us struck down by
  lightening
• So its simple really CMS giveths CMS
  takeths away

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What Payers fund GME costs?

• MEDICARE (federal program for the aged
  disabled)
• MEDICAID (federal state program for the
  financially challenged)
• TRICARE (federal program for active retired
  military)

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What is the Funding specifically for?

• DGME funding is for Intern Resident
  compensation, Faculty Supervision, GME Office
  Admin costs Hospital overhead
• IME funding is to recognize a hospitals higher
  operating costs that result from teaching
  activities

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WHY DO WE GET THIS FUNDING?

• CMS realizes that teaching hospitals incur more
  costs than non-teaching hospitals and feels an
  obligation to pay THEIR share
• They also realize that without teaching
  hospitals, future doctors would not have real
  life training grounds to perfect their skills

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WHY DO WE CARE ABOUT THIS TOPIC - PART I?

• We receive approximately 33.3M A YEAR in
  Graduate Medical Education funding from the
  Medicare program alone
• 11.0M for Direct Graduate Medical Education
  (DGME) costs and 22.3M for Indirect Medical
  Education (IME) costs

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WHY DO WE CARE ABOUT THIS TOPIC - PART II?

• CMS also gives to State Medicaid programs
  approximately 50 of their Educational cost
  obligation
• That amount can be approximately 15.0M more A
  YEAR than mentioned on the previous slide

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Why do we care about this topic - Part III?

• Some States, Virginia being one of them, matches
  the Federal GME contribution and doles out
  another 15.0M for a total of 30.0M
• Medicaid takes the combined funds and distributes
  those dollars to us as DGME (approx 7.7M) IME
  (approx 22.3M)

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GOOD NEWS / BAD NEWS

• Good News its nice that CMS funds their share
  of the additional costs of being a teaching
  hospital
• Bad News Even with the additional funding of
  Graduate Medical Education by CMS, Hospitals
  still LOSE LOTS of on their Medicare business

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GOOD NEWS / BAD NEWS PART II

• Good News the Medicaid GME funding helps get us
  reimbursed at nearly 100 of our costs of
  providing Medicaid services
• Bad News it only helps us to get to nearly 100
  of our costs no profit margin

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What does Tricare pay for GME?

• Very little but its because we have a very low
  Tricare utilization (business)
• GME Funding from this source is approximately
  .8M annually (DGME only, no IME)
• As a result of this scant funding, we will
  largely focus on Medicare Medicaid funding

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How are the Resident FTE counts done for DGME?

• New Innovations (may sound familiar)
• Residents may be weighted meaning some can only
  count as half an FTE, one can never be more than
  an FTE
• Examples Residents that switch residencies, do
  a second residency or do a fellowship
• Resident time is allowed for patient care,
  didactics or research while rotating in the
  hospital, up to a programs initial residency
  period
• Resident can be claimed in a non-provider setting
  but research time is excluded

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The FTE CAPS

• Based on FY96s Cost Report, CMS established FTE
  CAPs for both DGME IME (idea limit how much
  CMS had to pay for growing GME programs)
• For DGME, CMS took all the weighted countable
  FTEs of that year and unweighted them (i.e.
  made them a full FTE) to come up with a CAP of
  401.51

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FTE CAPS Part II

• The DGME unweighted FTE CAP is then compared
  every year to the unweighted FTE count of the
  current year and that ratio is applied to the
  current years weighted FTE count
• The IME FTE CAP (since no one is weighted) is
  much simpler it came from the FY96 Cost Report
  and is 367.72

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FTE CAPS Part III

• Hospital Based Dental Residencies are excluded
  from both DGME IME CAPS
• Affiliated Agreements with other hospitals that
  are under their FTE CAPS help hospitals that are
  over their CAPS by allowing more GME
  reimbursement to be claimed (Example Howard
  University Hospital)

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DGME Formulary Components

• FTE counts according to DGME counting rules,
  broken down into Primary Care Non-Primary Care
  FTEs
• Three Year Rolling Average (Current, Prior
  Penultimate)
• Per Resident Amounts (PRA) established in 1985
  for each teaching hospital based on their Direct
  teaching costs and increased each year for
  inflation
• To encourage Teaching Hospitals to produce more
  primary care doctors, a higher PRA was given to
  that group versus groups considered non-primary
  care
• MCR FFS MCO Inpatient Utilizations (Patient
  Days)

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Medicare DGME Formula Part I

• (Very Simplified)
• of FTEs rotating at hospital 395
• (3 year rolling avg, Dental Cap Adj)
• Blended Per Resident Amount 88,753
• Subtotal 35,057,435
  Medicare FFS Utilization .2564
  Medicare FFS DGME Pmt 8,988,726

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Medicare DGME Formula Part II

• (Awarded Slots - MMA)
• of DGME Slots Awarded 18.21
• Claimable Slots After Formulary 16.38
• Natl Avg Per Resident Amt 86,993
• Subtotal
  1,424,945 Medicare FFS Utilization
  .2564 Medicare FFS DGME Payment 365,356
• Medicare MCO Utilization .0463
• Medicare MCO DGME Payment 65,975

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Medicare DGME Formula Part III

• (Medicare Managed Care Organizations)
• of FTEs rotating at hospital 395
• (3 year rolling avg, Dental Cap Adj)
• Per Resident Amount 88,753
• Subtotal 35,057,435
  Medicare MCO Utilization .0463
  Medicare MCO DGME Pmt 1,623,159

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Total MCR DGME Reimbursement

• MCR FFS Payment - 8,988,726
• MCR MMA FFS Payment 365,356
• MCR MMA MCO Payment 65,975
• MCR MCO Payment 1,623,159
• Total MCR DGME Payment 11,043,216

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To see Actual DGME Calculations

• The DGME Formularies are found on a teaching
  hospitals Medicare Cost Report, Worksheet E-3,
  Part IV, Lines 3.01 - 25 AND Worksheet E-3, Part
  VI, Lines 5 - 12

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GME Salary Benefits, FY11

• IR Salary Benefits - 39,152,007
• Refunds from hospitals - 7,334,825
• Net VCUHS IR Costs - 31,817,182
• This is one component of CMSs view of a
  hospitals DGME costs

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Federal Regulations

• There have been a lot over the years, a lot of
  acronyms such as BBA, BBRA, BIPA, MMA and most
  recently ACA (Affordable Care Act)
• Discussion of all these would need to be its own
  presentation but suffice it to say, all these
  regulations were intended to cut GME funding in
  some way, shape or form

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Most Relevant GME Regulations

• FTE Caps were established for both DGME IME
  counts to limit payments in case teaching
  hospitals expanded their programs (BBA97)
• The IME Federal Formulary began undergoing
  significant alterations all negative which
  began with the BBA and goes thru todays ACA
• Clarifications on what residents can be doing and
  where they can be doing it in order to be counted
  for either DGME or IME

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Examples of a Clarification Part I

• ACA Regulation for DGME counts
• In the Hospital, Resident can be counted for
  doing patient care, vacation/sick, didactic
  research
• In a Non-hospital/Provider Setting, resident can
  be doing all of the above with the exception of
  research. Didactics was just recently clarified
  as allowed effective 7/1/09. Prior to that, it
  was not allowed.

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Examples of a Clarification Part II

• ACA Regulation for IME counts
• In the Hospital, a resident can be counted for
  doing patient care, vacation/sick, didactic.
  Research time however CANNOT be counted effective
  10/1/01 no word on if it could have counted
  prior to 10/1/01
• In a Non-hospital/Provider Setting, a resident
  can only be counted while doing patient care or
  vacation/sick. Didactics and Research are NOT
  countable time.

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IME Formulary Components

• FTEs according to the IME rules clarifications
• Three Year Rolling Average
• Acute Bed Days Available (number of staffed beds
  in acute areas of the hospital times the number
  of days they are open in a year divided by 365
  days)
• DRG (inpatient) payments on FFS MCO

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Medicare IME Formula Part I

• of IME IR (cap adj dental 3 yr avg)
  404.66
• Acute Bed Days Available
  629.88
• IRB Ratio
  .642446
• Plus 1.00
  1.642446
• Power to .405
  1.222570
• Minus 1.00
  .222570
• Times 1.35 (IME Factor)
  .300470
• MCR FFS DRG payments
  66,324,839 MCR FFS IME payment (Factor X DRG)
  19,928,632

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Medicare IME Formula Part II

• (Awarded Slots - MMA)
• of IME CAP Slots
  3.02
• Acute Bed Days Available
  629.88
• IRB Ratio
  .004795
• Plus 1.00
  1.004795
• Power to .405
  1.001939
• Minus 1.00
  .001939
• Times .66 (IME Factor)
  .001280
• MCR FFS DRG payments
  66,324,839 MCR FFS IME payment (Factor X DRG)
  84,880

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Medicare IME Formula Part III

• (Medicare MCOs / Shadow Bills)
• of IME IR (cap adj dental 3 yr avg)
  404.66
• Acute Bed Days Available
  629.88
• IRB Ratio
  .642446
• Plus 1.00
  1.642446
• Power to .405
  1.222570
• Minus 1.00
  .222570
• Times 1.35 (IME Factor)
  .300470
• MCR FFS DRG payments on MCO Cases 7,510,320
  MCR IME pmt for MCOs (Factor X DRG) 2,256,626

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Total MCR IME Reimbursement

• MCR FFS Payment - 19,928,632
• MCR MMA Payment 84,880
• MCR MCO Payment 2,256,626 Total MCR
  IME Payment 22,270,138

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To see Actual IME Calculations

• The IME Formularies are found on a teaching
  hospitals Medicare Cost Report, Worksheet E Part
  A, Lines 3 3.24 AND Worksheet E-3, Part VI,
  Lines 16 - 23

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CONCLUSION

• Although we receive millions of dollars for GME
  costs, it only represents a portion of our
  overall teaching costs
• Despite these additional payments from our
  governmental payers, we still lose significant
  money on Medicare Tricare business and only
  receive up to our costs on Medicaid business
• When the Federal government is looking to either
  save money or be budget neutral for a new
  Program, you can bet that GME will always be up
  on the proverbial Chopping Block

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QUESTIONS???

• C. Todd Gardner / Acacia Pulliam
• Dept of Reimbursement, VCUHS
• 828.4733 or 827.5374