Press Releases

CMS IMPROVES PAYMENT FOR TRAINING MEDICAL RESIDENTS IN PROGRAMS AFFECTED BY NATURAL DISASTERS

CMS IMPROVES PAYMENT FOR TRAINING MEDICAL RESIDENTS IN PROGRAMS AFFECTED BY NATURAL DISASTERS

The Centers for Medicare & Medicaid Services (CMS) today issued an interim final rule with comment period that provides for continued Medicare financing of medical residents in training programs affected by natural disasters or public health emergencies, promoting the continuity of training in affected hospitals and programs.  The interim final rule will apply retroactively to arrangements between home hospitals in the areas affected by Hurricanes Katrina and Rita that temporarily closed parts of their residency programs and the host hospitals that accepted the displaced residents as well as to future disasters.

“This is an additional source of special health care funding to help the Gulf Coast communities recover from last year’s severe hurricanes,” said Mark B. McClellan, M.D., Ph.D.  “This rule will make it easier for residents to return to their home hospitals and communities as soon as possible.  The rule will enable residents from the affected hospitals to get Medicare support as they train at temporary host hospitals, and to regain their full residency funding when they return to their training programs.”

Prior to this interim final rule with comment, Medicare regulations allowed a host hospital to temporarily count displaced residents for Medicare payment purposes only if the original program in which the resident trained at the home hospital is completely closed.  On the other hand, home hospitals that need to send residents to continue training at host hospitals could modify any existing Medicare graduate medical education affiliation agreements with hospitals in their affiliated group, but could only send them to hospitals in their geographic areas or hospitals outside their areas that were under common ownership and had residents rotating between hospitals.  These affiliation agreements allow the home hospital to temporarily transfer their allotment of residents paid for under the Medicare program to any host hospital listed in the affiliation agreement, allowing the host hospital to receive payment for the residents from the Medicare.  Under current regulations, because payment for residency training is based on a three-year rolling average count of residents, the host hospital receives only one-third of the payment in the first year, two-thirds in the second year, and full payment only in the third year.

Under this interim final rule, hospitals will be allowed to create emergency Medicare GME affiliation agreements that are more flexible than the traditional affiliation agreements in a number of ways:

1. The agreements may be retroactive to the date of the disaster.

1. The agreements may apply even if the home hospital only closes part of its residency training program - total closure is not required.

1. The host hospital can be anywhere in the country and does not have to be under common ownership with the home hospital.

1. For purposes of the Katrina/Rita emergency, the host hospitals will receive payment in full for the displaced residents in the first year, rather than having these residents included in the calculation of the rolling average.

1. The three-year rolling average rules will still apply to the home hospital. As a result, the home hospital will also receive two-thirds payment for the displaced residents in the year of the disaster.

“This interim final rule provides needed financial relief to the hospitals in the hurricane-affected areas, as well as to the hospitals that responded to the emergency by accepting displaced residents,” said Dr. McClellan.  “Equally important, we have laid the groundwork for responding to future emergencies.”

The interim final rule is one of several steps taken by the Administration to shore up health care services in areas affected by the hurricanes.  Recently, CMS distributed $1.5 billion of the $2 billion allocated in the Deficit Reduction Act of 2005 to add to all of the expanded Medicaid funding to help those in the affected areas.

The interim final rule with comment, which is effective immediately, will be published in the April 12, 2006 Federal Register.  Comments will be accepted until June 12, and a final rule will be published later this year.

Note: For more information, see: www.cms.hhs.gov/AcuteInpatientPPS/