Children's Hospitals Graduate Medical Education (CHGME) Payment Program

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OMB No. 0915-0247
Expiration Date:  03/31/2010

Dear Applicant:

The Children’s Hospitals Graduate Medical Education Payment Program (CHGME PP) application package, which includes all applicable forms, guidance and instructions, is enclosed.  It is very important to thoroughly read the detailed application guidance and instructions before completing the required application forms.  The material contains information related to submission of both the initial and reconciliation applications.

Your completed application must be mailed following the guidance provided in the “Application Cycle and Deadlines” section of the attached package.  Applications must be received by the stated deadlines to be considered for CHGME PP funding.

If you have questions regarding the application, please call the Graduate Medical Education Branch at 301-443-1058 or e-mail at childrenshospitalgme@hrsa.gov.

Sincerely yours,
Marcia K. Brand, Ph.D.
Associate Administrator

Children’s Hospitals Graduate Medical Education Payment Program (CHGME PP) Application Package

Table of Contents

Section I

Overview of the CHGME PP

Introduction

In 1999, Congress addressed the disparity of explicit graduate medical education (GME) funding between freestanding children’s teaching hospitals and other teaching hospitals by passing the Healthcare Research and Quality Act, which established the Children’s Hospitals Graduate Medical Education Payment Program (CHGME PP).  The act was signed on December 6, 1999 and the legislation authorized the program for Federal fiscal year (FY) 2000 and FY 2001.  On October 17, 2000, the Children’s Health Act of 2000 amended the Healthcare Research and Quality Act of 1999 extending the CHGME PP through FY 2005.  On December 23, 2004, additional amendments under Public Law 108-490 were made to Section 340E of the Public Health Service Act affecting the CHGME PP.

There are more than 60 freestanding children’s teaching hospitals across the country that train about 30 percent of the Nation’s pediatricians, nearly half of pediatric sub-specialists, and provide valuable training for physicians in many other specialties.  These are the physicians who care for America’s youngest population – its children.  Almost 50 percent of the patient care that children’s teaching hospitals provide is for low-income children, including those covered by Medicaid and those who are uninsured.  In addition, these hospitals are regional and national referral centers for very sick children, often serving as the only source of care for many critical pediatric services.  More than 75 percent of inpatient care at children’s hospitals is devoted to children with one or more chronic conditions.

The CHGME PP provides a more adequate level of support for GME training in U.S. children’s teaching hospitals that have a separate Medicare provider number.  These hospitals receive relatively little funding from Medicare for GME.  Funding received by other teaching hospitals from Medicare was expected to exceed more than $8 billion in FY 2005.  

The CHGME PP law authorized $280 million for payments in FY 2000, $285 million in FY 2001, and “such sums as necessary” for fiscal years 2002 through 2005.  Congress appropriated $40 million for the program in FY 2000, $235 million in FY 2001, $285 million in FY 2002, $292 million in FY 2003, $305 million for FY 2004, and $303 million for FY 2005.  For both FY 2004 and FY 2005 Congress implemented a rescission which reduced the total appropriated amounts.  In FY 2005, the CHGME PP appropriation provided GME support to 60 children's hospitals in 31 states supporting more than 4,100 unweighted resident full-time equivalents (FTEs) training in these hospitals.  Since the inception of this program, the program has disbursed more than $1.1 billion in Federal GME support to freestanding children’s teaching hospitals.

Administration

The CHGME PP is administered by the Graduate Medical Education Branch (GMEB) of the Division of Medicine and Dentistry (DMD), Bureau of Health Professions (BHPr), Health Resources and Services Administration (HRSA), Department of Health and Human Services (DHHS).  The objective of the GMEB is to provide the assistance that freestanding children’s hospitals need to ensure a future pediatric workforce that will treat U.S. children.

Questions regarding the CHGME PP should be directed to the:

Department of Health and Human Services
Health Resources and Services Administration
Bureau of Health Professions
Division of Medicine and Dentistry
Graduate Medical Education Branch
Parklawn Building
5600 Fishers Lane Room 9A-05
Rockville, Maryland 20857
Telephone:  301-443-1058
Fax:  301-443-1879

Section II

Application Cycle and Deadlines

For hospitals to be considered for CHGME PP funding, they must comply with statutory eligibility requirements described herein and participate in the CHGME PP’s application cycle, which consists of specific processes for any given FY.  These processes are guided by the CHGME PP’s statutes and are described below.

Initial Application

For children’s hospitals, meeting all statutory and eligibility requirements, to receive CHGME PP funding, they must submit a completed initial application for CHGME PP funding in accordance with the established deadlines noted below.  During the initial application process, eligible children’s hospitals provide the CHGME PP with information relevant to the interim determination of payments.

Initial applications for CHGME PP funding must include the following forms:

1. HRSA 99:  Demographic and Contact Information
2. HRSA 99-1:  Determination of Weighted and Unweighted Resident FTE Counts
3. HRSA 99-2:  Determination of Indirect Medical Education Data Related to the Teaching of Residents
4. HRSA 99-3:  Certification
5. HRSA 99-5:  Application Checklist

Applications accepted for review must be completed following the application guidance and instructions provided herein, submitted in English, typed, and include the above completed forms and supporting documentation as identified in the HRSA 99-5 (Application Checklist).  The completed, signed application package must be postmarked by August 1, 2007, and submitted to the:

Department of Health and Human Services
Health Resources and Services Administration
Bureau of Health Professions
Division of Medicine and Dentistry
Graduate Medical Education Branch
Parklawn Building
5600 Fishers Lane Room 9A-05
Rockville, Maryland 20857

Application materials are available electronically via the CHGME PP website.  Applications that are not postmarked by the specified deadline will not be accepted for processing and funding and will be returned to the applicant.

Interim Payment Determination and Disbursement (Based Upon the Initial Application)

In accordance with CHGME PP statutory requirements, information provided by participating children’s hospitals in their initial applications for CHGME PP funding is used by the CHGME PP to calculate payments for all eligible children’s hospitals prior to the beginning of the FY (October 1^st) for which children’s hospitals have applied for CHGME PP funding.  CHGME PP payments, allocated to eligible children’s hospitals, are a function of the number of resident full-time equivalents (FTEs) participating in approved medical residency programs, inpatient discharges, case mix indexes, and the number of inpatient available beds, as reported by children’s hospitals in their initial applications for CHGME PP funding.  Payments are awarded for direct medical education (DME) and indirect medical education (IME) expenses, respectively.  DME and IME payment calculations are subject to all rules, regulations, and policies governing the CHGME PP.

On or after October 1^st of the FY for which eligible children’s hospitals have applied for CHGME PP funding, the CHGME PP will begin making interim payments.  CHGME PP payments to eligible children’s hospitals will be contingent upon the passage of the DHHS’ budget for the given FY by the President.  Children’s hospitals will be notified, in writing, of the Secretary’s interim payment determination.  In accordance with CHGME PP statutes, payments will reflect a 25 percent withholding from each interim installment (payment) for both DME and IME payments, as necessary, to ensure that a hospital will not be overpaid on an interim basis. 

Assessment of Resident FTE Counts Reported in Initial Applications

The CHGME PP statute, Public Law 106-310, mandates that “the Secretary shall determine any changes to the number of residents reported by a hospital in the (initial) application of the hospital for the current FY for both direct and indirect expense amounts.”  Therefore, prior to the end of the FY for which children’s hospitals have applied for CHGME PP funding, the Secretary must determine (reconcile) any changes to the number of resident FTEs reported by a hospital in its initial application for the current FY, which will impact final payments made by the CHGME PP to all eligible children’s hospitals.  This determination is done by conducting a comprehensive assessment of the resident FTE counts claimed by children’s hospitals in their initial applications for CHGME PP funding.

The CHGME PP has contracted with fiscal intermediaries (hereinafter CHGME FIs) to carry out an assessment of resident FTE counts (hereinafter the “Resident FTE Assessment Program”) reflected in participating children’s hospitals initial applications for CHGME PP funding to determine any changes to the resident FTE counts initially reported.  A 100 percent assessment of resident FTE counts reported by children’s hospitals in their initial applications for CHGME PP funding is performed regardless of the type(s) of Medicare cost report (MCR) the hospital files (e.g., full, low- or no-utilization) for purposes of receiving CHGME PP funding.  This process is designed to assess resident FTE counts for all children’s hospitals in an equitable fashion and within CHGME PP time constraints.

The Resident FTE Assessment Program requires participating children’s hospitals to comply with requests from the CHGME FIs, within the time constraints provided, as any changes to resident FTE counts in one children’s hospital’s application for CHGME PP funding affects the distribution of funds among all eligible children’s hospitals.  To minimize public burden, CHGME FIs use and build upon work previously conducted by CHGME and/or Medicare FIs in prior years.  The CHGME PP has made available several guidance documents on the CHGME PP’s website which provide further information about the Resident FTE Assessment Program and documentation recommendations related to the assessment of resident FTE counts.

At the conclusion of the Resident FTE Assessment Program, the CHGME FIs will forward final assessment reports to the respective children’s hospitals, the Medicare FIs, and the CHGME PP explaining the results of the review.  The assessment reports include CHGME FI-generated HRSA 99-1’s, which children’s hospitals must use to complete their reconciliation applications (see Reconciliation Application below).  The assessment reports may also include supporting documentation including, but not limited to:  adjustment reports, updates to the intern and resident database, adjustments to the Centers for Medicare and Medicaid Services (CMS) form 2552-96 Worksheet E-3, Part IV, or letters (to the Medicare FI) requesting the reopening of one or more MCRs.

Reconciliation Application

During the third quarter of each FY (typically April 1^st) for which payments are being made, the CHGME PP will release a reconciliation application for use by participating children’s hospitals to report changes in the resident FTE counts reported in their initial applications for CHGME PP funding.  For children’s hospitals to continue receiving CHGME PP funding, they must submit a completed reconciliation application for CHGME PP funding in accordance with established deadlines noted below.  The resident FTE counts reported by children’s hospitals in their reconciliation applications must be for the same MCR period(s) identified in the hospital’s initial application for the subject FY and consistent with those reported in the CHGME FIs FTE final assessment report to be accepted by the CHGME PP.  The resident FTE counts from the final assessment reports are used to determine the final amounts payable to children’s hospitals for the current FY for both DME and IME.  Children’s hospitals whose resident FTE counts have not changed are not exempt from completing and submitting a CHGME PP reconciliation application.

Reconciliation applications for CHGME PP funding must include the following forms:

1. HRSA 99:  Hospital Demographic and Contact Information
2. HRSA 99-1:  Determination of Weighted and Unweighted Resident FTE Counts
3. HRSA 99-2:  Determination of Indirect Medical Education Data Related to the Teaching of Residents
4. HRSA 99-3:  Hospital Certification
5. HRSA 99-4:  Government Performance and Results Act Tables
6. HRSA 99-5:  Application Checklist

Applications accepted for review must be completed following the application guidance and instructions provided herein, submitted in English, typed, and include the above completed forms and supporting documentation as identified in the HRSA 99-5 (Application Checklist).  The completed, signed application package must be postmarked by May 1, 2008, and submitted to the:

Department of Health and Human Services
Health Resources and Services Administration
Bureau of Health Professions
Division of Medicine and Dentistry
Graduate Medical Education Branch
Parklawn Building
5600 Fishers Lane Room 9A-05
Rockville, Maryland 20857

Application materials are available electronically via the CHGME PP website.  If a children’s hospital fails to complete and return a reconciliation application according to the terms and conditions of the CHGME PP, the DHHS may suspend the award, pending corrective action, or may terminate the award for cause.

Children’s hospitals that were not eligible to participate or did not apply for funding during the initial application process for a given FY are not eligible to apply for and receive funding during the reconciliation application process for the same FY.  These hospitals must wait until the next (initial) application cycle to apply for CHGME PP funding.

Final Payment Determination and Disbursement (Based Upon the Reconciliation Application)

The Secretary will determine any balance due or any overpayment made to individual hospitals following the determination of changes, if any, to the number of resident FTEs reported by children’s hospitals in their reconciliation applications as a result of the Resident FTE Assessment Program.  Children’s hospitals will be notified, in writing, of the Secretary’s final reconciliation payment determination during the fourth quarter (July 1^st – September 30^th) of the FY in which payments are being made.

Children’s hospitals that have been notified of an overpayment will have 30 days to return the overpayment to the DHHS without accrual of interest.  Children’s hospitals that fail to return overpayments within the specified timeframe will accrue and be responsible for any interest.

Reconciliation payments will be made to individual hospitals on or before the end of the FY (September 30^th) in which payments are being made.  The Secretary will include in the reconciliation payments funding initially withheld in accordance with statutory requirements.  All hospitals, whether or not they report changes to their resident FTE counts during the reconciliation process, can expect changes to their final payment determination as a result of resident FTE count changes reported by other participating children’s hospitals.  This is due to the methodology used to determine CHGME PP payments.  More detailed information is available on the CHGME PP payment methodology in Section V of this application package.  Information on the payment formulas is also available on the CHGME PP website.  DME and IME payment calculations are subject to all rules and regulations governing the CHGME PP statute, including the June 19, 2000 Federal Register notice for DME, the July 20, 2001 Federal Register notice for IME, and §422 of the Medicare Modernization Act (MMA) of 2003 and all accompanying policies and regulations.

At the end of the FY, the CHGME PP may make a final payment to distribute any remaining funds, including those funds that have been returned to the DHHS during the course of the FY as a result of overpayment or hospitals’ loss of eligibility.

Electronic Availability of Application Materials

Application materials are available electronically via the CHGME PP website.

Section III

CHILDREN’S HOSPITALS GRADUATE MEDICAL EDUCATION PAYMENT PROGRAM APPLICATION FORMS

OMB No. 0915-0247
Expiration Date: 03/31/2010

Public Burden Statement

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.  The OMB control number for this project is 0915-0247.  Public reporting burden for the applicant for this collection of information is estimated to average 69 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.  Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to HRSA Reports Clearance Officer, 5600 Fishers Lane, Room 14-33, Rockville, Maryland, 20857.

INSERT CHGME PP APPLICATION FORMS AFTER THIS PAGE

(FORMS HRSA 99, HRSA 99-1, HRSA 99-2, HRSA 99-3, HRSA 99-4, HRSA 99-5)

Section IV

Hospital Eligibility

Eligibility Criteria

According to Public Law 106-310, a children’s teaching hospital must meet the following eligibility criteria for CHGME PP funding.  The hospital must:

1. participate in an approved GME program;
2. have a Medicare Provider Agreement;
3. be excluded from the Medicare inpatient prospective payment system (PPS) under section 1886(d)(1)(B)(iii) of the Social Security Act, and its accompanying regulations⁽¹⁾; and
4. operate as a “freestanding” children’s teaching hospital, as defined by the CHGME PP.⁽²⁾

⁽¹⁾ A hospital with a 3300 series Medicare provider number would meet this criterion (i.e., 55-3300).
⁽²⁾A children’s teaching hospital is considered “freestanding” if it does not operate under a Medicare hospital provider number assigned to a larger health care entity that receives Medicare GME payments.

Additional references:

• § Social Security Act, Section 1886
• § CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Changes in Eligibility

A hospital remains eligible for CHGME PP funding as long as it meets the eligibility criteria listed above and trains residents as a “freestanding” children’s hospital during the FY for which CHGME PP payments are being made.

If a hospital becomes ineligible for payments:

1. it must notify the CHGME PP immediately of the change in status and the date of the change; and
2. it will be liable for the reimbursement, with interest, of any funds received during the period of ineligibility.

Additional references:

• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Section V

Payment Methodology

Payment Methodology

CHGME PP funding to individual children’s hospitals is based upon a number of variables, including the rolling average of weighted and unweighted resident FTE counts, which are used to calculate DME and IME payments, respectively.  Payment variables and calculations are subject to all rules and regulations governing the CHGME PP statute, including the June 19, 2000 Federal Register notice for DME, the July 20, 2001 Federal Register notice for IME, and §422 of the MMA of 2003 and all accompanying policies and regulations.

The rolling average is the average of the resident FTE counts reported by the children’s hospital for the ⁽¹⁾:

1. most recently filed MCR (or the most recently completed MCR period); and
2. the prior two years.

⁽¹⁾ CHGME PP funding to a children’s hospital that has not completed three (3) MCR periods will be based upon the hospital’s resident FTE count from its “most recently filed” or “most recently completed” MCR period until three (3) MCR periods have been completed.

The rolling average resident FTE count includes all residents except those that qualify for an adjustment after the averaging rules are applied in accordance with 42 CFR 413.77.

The resident FTE count for any MCR period is based upon the number of:

• allopathic and osteopathic residents following application of the “cap”, where applicable; and
• dental and podiatric residents.

Effective “for portions of cost reporting periods occurring on or after July 1, 2005”, the CHGME PP will not include resident FTEs counted against the §422 cap increase in the 3-year rolling average calculation for purposes of DME and IME payments.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is included in Sections VII and VIII of this application package.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.77 (CMS)
• CMS, Federal Register Notice, August 11, 2004 (69 FR 48916)
• CHGME PP, Federal Register Notice dated June 19, 2000 (65 FR 37985)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)
• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980)
• CHGME PP, Federal Register Notice dated October 22, 2003 (68 FR 60396)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Section VI

Data Sources for Children’s Hospitals that File Full MCRs

To complete a CHGME PP application, hospitals that file full MCRs (i.e., report residents to Medicare on CMS 2552-96, Worksheet E-3, Part IV) must use the data as reflected in their:

1. most recently filed MCR for the period ending on or before December 31, 1996 (the “cap year");
2. most recently filed MCR; and the
3. prior two years.

In addition, hospitals who received adjustments to their cap (increases or decreases) as a result of §422 of the MMA of 2003 must use data included in and provide a copy of their written notification from CMS regarding these adjustments.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is included in Sections VII and VIII of this application package.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.77 (CMS)
• CMS, Federal Register Notice, August 11, 2004 (69 FR 48916)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Data Sources for Children’s Hospitals that File Low- or No-Utilization MCRs

To complete a CHGME PP application, hospitals that file low- or no-utilization MCRs (i.e., do not report residents to Medicare on CMS 2552-96, Worksheet E-3, Part IV) must use the data as reflected in their hospital records for the:

1. most recently completed MCR period for the period ending on or before December 31, 1996 (the “cap year”);
2. most recently completed MCR period; and the
3. completed MCR periods for the prior two years.

In addition, hospitals who received adjustments to their cap (increases or decreases) as a result of §422 of the MMA of 2003 must use data included in and provide a copy of their written notification from CMS regarding these adjustments.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is included in Sections VII and VIII of this application package.

Hospitals whose most recently completed MCR period ends less than five (5) months prior to the stated CHGME PP initial application deadline may report as their most recently completed MCR period resident FTE counts from their most recently completed or the previously completed MCR period.

Example:
Charlie’s Angels Children’s Center (CACC) will file a low-utilization MCR for its 6/30/03 year-end.  The CHGME PP application deadline for FY 2004 is August 1, 2003 (approximately 1 month after CACC’s year-end).  CACC has the option of reporting as its “most recently completed MCR period” data from its 6/30/02 or 6/30/03 year-end.  Since CACC needs time to close-out its resident FTE counts and financial records for its 6/30/03 year-end, it decides to use the resident FTE count data from its 6/30/02 cost reporting period to complete Section 4 of HRSA-99-1.  Consequently, CACC must use data from its 6/30/01 and 6/30/00 MCR periods to complete Sections 5 and 6 of the HRSA-99-1, respectively.  CACC must also use its hospital data from its 6/30/02 cost reporting period to complete all subsequent application forms (i.e., HRSA-99-2, HRSA-99-4, etc.).  CACC cannot use the resident FTE count data from its 6/30/03 MCR period until the next CHGME PP initial application cycle (FY 2005).

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.77 (CMS)
• CMS, Federal Register Notice, August 11, 2004 (69 FR 48916)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Data Sources for Children’s Hospitals that Have Not Completed Three (3) MCR Periods

If a hospital has completed at least one (1), but not more than two (2) MCR periods, CHGME PP funding to the children’s hospital will be based upon data from the hospital’s “most recently filed” or “most recently completed” MCR period until three (3) MCR periods have been completed.  Hence, the hospital will not complete sections 5 and 6 of HRSA-99-1 and its DME and IME payments will not be based upon a three-year rolling average resident FTE count.

Upon completion of three (3) MCR periods, the hospital will complete sections 5 and 6 of HRSA-99-1 and will receive DME and IME payments based upon a three-year rolling average resident FTE count.

In addition, hospitals who received adjustments to their cap (increases or decreases) as a result of §422 of the MMA of 2003 must use data included in and provide a copy of their written notification from CMS regarding these adjustments.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is included in Sections VII and VIII of this application package.

Additional references:

• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Data Sources for Children’s Hospitals that Have Not Completed One (1) MCR Period

New children’s teaching hospitals (new to the CHGME PP) training residents who were originally trained in a program that received and will continue to receive funding under the CHGME PP are required to wait until they have completed a MCR period before applying for CHGME PP funding.  These hospitals must also apply the 3-year rolling average (to their resident FTE counts) in accordance with Medicare regulations.  Over a 3-year period, the “new children’s teaching hospital” will gradually increase its number of resident FTEs that can be claimed in the CHGME PP as the children’s hospital that originally trained those resident FTEs gradually decreases its resident FTE count for determining payments from the CHGME PP.

New children’s teaching hospitals (new to the CHGME PP) training residents previously trained at a hospital that never received (or is no longer receiving) funding under the CHGME PP are eligible for CHGME PP funding without having completed a MCR period.  In addition, a hospital that becomes newly eligible for the CHGME PP by starting its own “new medical residency training program” according to Medicare regulation 42 CFR 413.79(e)(1) will also be eligible for CHGME PP funding without having completed a MCR period.

Hospitals that are eligible to receive CHGME PP funding without having completed a MCR period must follow the guidance provided in Section X of this application package which provides special calculation instructions for hospitals that have not completed a MCR report.

Additional references:

• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Section VII

Cap and Cap Year

Section 1886(d)(5)(B)(v) of the Social Security Act established “caps” on the number of allopathic and osteopathic residents that a hospital operating an approved GME program may count when requesting payment for DME and IME costs.  A hospital’s “cap” (hereinafter the “1996 Base Year Cap”) is currently defined as the “number of unweighted resident FTEs enrolled in a hospital’s allopathic and osteopathic residency programs during the most recent cost reporting period ending on or before December 31, 1996 (the “cap year”).”  The cap (i.e., limit) on the number of allopathic and osteopathic residents is effective for all cost reporting periods beginning on or after October 1, 1997.  Dental and podiatric residents are exempt from the cap, but are included in the resident FTE counts for all relevant years to calculate the rolling average.

The “cap year” is defined as a hospital’s most recent cost reporting period ending on or before December 31, 1996.

Example:
CACC had 75 resident FTEs enrolled in its allopathic programs, 25 resident FTEs enrolled in its osteopathic programs and 7 resident FTEs enrolled in its dental and podiatric programs for its 6/30/96 MCR period (its most recent MCR period ending on or before December 31, 1996).  Hence, CACC’s cap for Medicare and CHGME PP purposes is 100 (75+25=100).

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.79 (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)
• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980)

Applicable to the following application forms:  HRSA-99-1 and HRSA-99-2

Adjustments to a Hospital’s Cap

As noted above, Section 1886(d)(5)(B)(v) of the Social Security Act established caps on the number of allopathic and osteopathic residents that a hospital operating an approved GME program may count when requesting payment for DME and IME costs.  While Medicare and the CHGME PP only make DME and IME payments for the number of allopathic and osteopathic resident FTEs up to a hospital’s “1996 Base Year Cap”, some hospitals have trained allopathic and osteopathic residents in excess of their 1996 Base Year Cap.  There are also a number of hospitals that have reduced their resident positions to a level below their 1996 Base Year Cap. 

Subsequent legislative actions and related Federal Register notices provisions have been published addressing these issues allowing a hospital’s cap to be permanently changed (increased or decreased) by CMS or temporarily adjusted at the request of the hospital and approved by CMS.  These provisions are detailed below.

§422 of the Medicare Modernization Act of 2003

In December 2003, the President signed the MMA of 2003 (also known as the Medicare Prescription Drug and Improvement Act of 2003), Public Law 108-173.  §422 of the MMA, added Section 1886(h)(7) to the SSA.  This provision reduced the 1996 Base Year Cap for certain hospitals and redistributed those positions to other hospitals that applied for and received an increase to their 1996 Base Year Cap under §422.  Hereinafter, any decreases to a hospital’s 1996 Base Year Cap as a result of §422 will be referred to as the “§422 Cap Reduction” and any increases to the 1996 Base Year Cap as a result of §422 will be referred to as the “§422 Cap Increase.”  Authority for implementing §422 of the MMA was delegated to the CMS.  Determinations made and implemented by CMS in response to §422 are final and not subject to appeal.

Under the CHGME PP statute, by incorporation of the Social Security Act provisions, the HRSA must implement the counting law and rules of Medicare, which include those related to the implementation of §422 of the MMA.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA can be found in Section VIII of this application package.

Medicare GME Affiliation Agreements and Other Regulations Allowing the Establishment or Adjustment of a Hospital Cap

Hospitals that were not in existence for the most recent cost reporting period ending on or before December 31, 1996 do not have a “1996 Base Year Cap” and are, therefore, “capped” to a resident FTE count of zero “0”.  Hence, hospitals must obtain (or adjust) their 1996 Base Year Cap (or lack thereof) in order to receive CHGME PP funding.

To provide an adjustment to a cap, the CHGME PP will allow hospitals to add resident FTEs to their “1996 Base Year Cap” based on the following Medicare and CHGME PP regulations:

1. the formation of a new medical residency program as described in 42 CFR 413.79(e)(1); or
2. the execution of a Medicare GME Affiliation Agreement for an aggregate cap, as set forth in 42 CFR 413.79(f) and 63 FR 26338 as published in the Federal Register on May 12, 1998, with the following exceptions:
   1. A “new children's teaching hospital” participating in the CHGME PP for the first year must establish an effective date of the agreement for purposes of the CHGME PP. For the first year, unless otherwise specified, the Department will use as the effective date of the Medicare GME Affiliation Agreement for an aggregate cap the date that the hospital becomes eligible for CHGME PP funding. This effective date will only apply to the CHGME PP. A hospital must also have an effective date of July 1^st for the Medicare Program. Subsequent to the first year of the Medicare GME Affiliation Agreement, the effective date must comply with the above-cited Federal Register final rule, which specifies an effective date of July 1^st for all affiliation agreements.

The CHGME PP allows this exception because hospitals must meet eligibility criteria and have their caps determined prior to the CHGME PP application deadline. If the CHGME PP application deadline occurs before July 1^st, some hospitals would have a cap of zero and thus be excluded from receiving funds. By deviating from the prescribed Medicare final rule, the CHGME PP will not place some hospitals in this position.

Unlike the Medicare Program, for the first year that a hospital is eligible to participate in the CHGME PP, the CHGME PP will not prorate the cap based on the effective date of the cap.  Instead, the full value of the cap as determined by the Medicare GME Affiliation Agreement will be used.  For purposes of the CHGME PP and its application forms, a hospital that is now starting to train residents previously trained at a hospital that never received or is no longer receiving funds from the CHGME PP will be allowed to use the cap agreed upon in the Medicare GME Affiliation Agreement until the full value of the cap is reflected in the MCR.  Afterwards, the hospital will use the resident FTE count and cap from its filed MCR as indicated in Section VI of this application package.

Example:
CACC opened as a freestanding children’s hospital on January 1, 2003 and would like to apply for FY 2004 CHGME PP funding.  The CHGME PP FY2004 application deadline is August 1, 2003.  Since CACC did not train residents in 1996, it has a cap of zero, but was able to arrange a Medicare GME Affiliation Agreement for an aggregate cap with Shirley Temple Medical Center in which CACC’s current residents had previously trained. 

CACC did the following in order to apply for CHGME PP funding:

1. Established a cap by forming a Medicare GME Affiliation Agreement with Shirley Temple Medical Center for an aggregate cap.
2. The agreement had an effective date of January 1, 2003 (for CHGME PP purposes only) and an effective date of July 1, 2003 and expiration date of June 30, 2004 for and in accordance with Medicare rules and regulations.
3. CACC and Shirley Temple Medical Center filed the agreement with their Medicare FIs (the hospital’s have different Medicare FIs) before June 30, 2003 (in accordance with Medicare rules and regulations) and provided a signed copy to the CHGME PP following acceptance by the FIs.

Hospitals that report residents to Medicare and are part of an affiliated group may elect to apply the resident FTE limit on an aggregate basis under Medicare rules and regulations.  If the combined resident FTE counts for the individual members of the group exceed the aggregate limit, each hospital’s resident FTE cap will be adjusted per the agreement between the members of the affiliated group.  These adjustments must be reflected in the filed MCR in order to be considered for the CHGME PP.

Hospitals that receive an increase to their 1996 Base Year Cap from CMS under §422 of the MMA of 2003 and participate in a Medicare GME Affiliation Agreement under 42 CFR 413.79(f) on or after July 1, 2005, may only affiliate for the purpose of adjusting their (original) 1996 Base Year Cap.  The additional slots that a hospital receives under §422 may not be aggregated and applied (through Medicare GME Affiliation Agreements) to the cap of any other hospitals.

Hospitals should refer to 42 CFR 413.79(f) for additional information on adjustments to the cap.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.79(f) (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)
• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Exceeding the Cap

For DME payment calculations if a hospital’s unweighted resident FTE count for allopathic and osteopathic residents exceeds its FTE limit (“cap”), the weighted count is reduced by the ratio of the resident FTE limit to the actual unweighted resident FTE count for the subject cost reporting period.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is provided below.

Example:
CACC, per its Medicare GME Affiliation Agreement, has a cap of 100.  For its 6/30/03 MCR, CACC reported an unweighted resident FTE count of 150 and a weighted count of 105 for its allopathic and osteopathic programs.

For DME payment purposes, CACC would determine its weighted allopathic and osteopathic resident FTE count by taking its cap divided by its total unweighted resident FTE count and multiplying that product by the total weighted resident FTE for allopathic and osteopathic residents [(100/150) x 105 = 70.00].  The weighted count of any dental and podiatric residents trained during this MCR period would be added to the 70.00 as dental and podiatric residents are exempt from (i.e., not subject to) the cap.

For IME payment calculations if a hospital’s unweighted resident FTE count for allopathic and osteopathic residents exceeds its FTE limit (“cap”), the hospital must report the lesser of the unweighted resident FTE count or the cap for the subject cost reporting period.  Additional information regarding the CHGME PP’s implementation of §422 of the MMA of 2003 is provided below.

Example:
CACC, per its Medicare GME Affiliation Agreement, has a cap of 100.  For its 6/30/03 MCR, CACC reported an unweighted resident FTE count of 150 and a weighted count of 105 for its allopathic and osteopathic programs.

For IME payment purposes, CACC would report 100.00 [the lesser of the unweighted allopathic and osteopathic resident FTE count (150) or the cap (100)]. The unweighted count of any dental and podiatric residents trained during this MCR period would be added to the 100.00 as dental and podiatric residents are exempt from (i.e., not subject to) the cap.

Impact of §422 of the MMA When a Hospital Exceeds It’s Cap

§422 of the MMA will affect the determination of DME and IME payments for each of the children’s hospitals participating in the CHGME PP.  The CHGME PP will begin accounting for the redistribution of the 1996 caps under §422 of the MMA in determining DME and IME payments starting with “portions of a hospital’s cost reporting periods occurring on or after July 1, 2005.”

Children’s hospitals whose cap has been reduced under §422 of the MMA will report and be paid based on the §422 Cap Reduction effective “for portions of cost reporting periods occurring on or after July 1, 2005.”  The 1996 Base Year Cap will be used for MCR periods prior to the effective date.  Children’s hospitals will be asked to submit a copy of the letter they received from CMS informing them of the reduction in their cap that includes the actual reduction.  The full effect of the reduction for a given hospital will take about three years following implementation of §422 when all three MCR periods reflected in the hospital’s application for CHGME PP funding are affected by the §422 Cap Reduction.

For children’s hospitals who received an increase to their 1996 Base Year Cap under §422 of the MMA, the CHGME PP will not include resident FTEs counted against the §422 Cap Increase in the 3-year rolling average calculation for purposes of DME and IME payments effective for portions of cost reporting periods and discharges occurring on or after July 1, 2005.  In addition, effective for discharges occurring on or after July 1, 2005, the CHGME PP will not apply the intern/resident to bed (IRB) ratio cap to the residents claimed against a hospital’s §422 Cap Increase.  However, residents claimed against the 1996 Base Year Cap will be subject to the 3-year rolling average and will be subject to the IRB ratio cap.

Additional references:

• 42 CFR 413.79 (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA 99-1and HRSA 99-2

Eligible Residency Programs (Approved Training Programs)

Residents may be included in a hospital’s resident FTE count for CHGME PP purposes if the residency program (in which the resident is enrolled) meets one of the following criteria:

• The program must be approved by one of the following accrediting bodies:
  1. Accreditation Council for Graduate Medical Education (ACGME);
  2. Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association;
  3. Commission on Dental Accreditation of the American Dental Association; or
  4. Council of Podiatric Medicine Education of the American Podiatric Medical Association.
• The program may count towards certification of the participant in a specialty or subspecialty listed in the current edition of the Directory of Graduate Medical Education Programs (published by the American Medical Association) or the Annual Report and Reference Handbook (published by the American Board of Medical Specialties).
• The program is approved by the ACGME as a fellowship program in geriatric medicine; or
• The program would be accredited except for the accrediting agency’s reliance upon an accreditation standard that requires an entity to perform an induced abortion or require, provide, or refer for training in the performance of induced abortions, or make arrangements for such training, regardless of whether the standard provides exceptions or exemptions.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.75(b) (CMS)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Eligible Residents

In order to be counted in CHGME PP payment calculations, a resident must be:

• in an approved residency training program (see Eligible Residency Program above);

  and either

• a graduate of an accredited medical school in the U.S. or Canada; or
• have passed the United States Medical Licensing Examination (USMLE) Parts I & II (international or foreign medical graduates)

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.75(b) (CMS)
• 42 CFR 413.80 (CMS)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

International Medical Graduates (IMGs)

An IMG [(formerly known as a foreign medical graduate (FMG)] is a resident who is not a graduate of a medical, osteopathy, dental, or podiatry school, respectively, accredited or approved as meeting the standards necessary for accreditation by the:

1. Liaison Committee on Medical Education of the American Medical Association;
2. American Osteopathic Association;
3. Commission on Dental Accreditation; or the
4. Council on Podiatric Medical Education.

In order for an IMG to be included in a hospital’s resident FTE count, s/he must have passed Parts I and II of the USMLE and be enrolled in an eligible residency program.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.75(b) (CMS)
• 42 CFR 413.80 (CMS)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Resident Full-Time Equivalent (FTE) Counts

Resident FTE counts are based on the number of residents training at the hospital complex and certain non-hospital/non-provider settings/sites throughout the hospital’s fiscal year.  Residents are counted as FTEs based on the total time necessary to fill a full-time residency slot for the year. 

For purposes of clarification, a resident FTE is measured in terms of time worked during a residency training year.  It is not a measure of the number of individual residents who are working.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.78 (CMS)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Initial Residency Period (IRP)

Residents are divided into two categories, those in their:

1. initial residency period (IRP);
   1. Effective July 1, 1995, an IRP is defined as the minimum number of years required for board eligibility.
   2. For osteopathic, dentistry, and podiatric programs, the IRP is the minimum number of years of formal training necessary to satisfy the requirements of the approving body for those programs.
   3. Prior to July 1, 1995, an IRP is defined as the minimum number of years required for board eligibility in a specialty or subspecialty plus 1 year (not to exceed 5 years with some exceptions).
2. and those beyond their IRP.

   Example:
   The IRP for pediatrics is 3 years.  Therefore, the initial residency period for all pediatric subspecialties (e.g., pediatric cardiology) is three years.

   The IRP for general surgery is 5 years.  Therefore, the initial residency period of all surgical subspecialties (e.g., pediatric surgery) is 5 years even if the training program requires a longer period of training.

   A Pediatric Surgery (subspecialty) resident (or fellow) who previously completed a 5-year general surgery residency program and is now in his first year of subspecialty training (in Pediatric Surgery) is beyond his IRP.  His IRP was 5 years (general surgery).

Exceptions apply to the IRP for residents enrolled in preventive medicine, geriatric medicine, transitional year and combined residency programs.  Refer to 42 CFR 413.79(a) for additional information on the IRP and exceptions.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.79(a) (CMS)

Applicable to the following application forms:  HRSA-99-1

Weighting of Resident FTE Counts

The CHGME PP, like Medicare, assigns a 0.5 (or ½) weighting factor to residents who are beyond their IRP.  Hence a resident who is beyond his or her initial residency period is factored by 0.5 regardless of the number of years or length of the training program in which s/he is currently enrolled.

Example:
John Doe completed a 3-year pediatric residency program on June 30, 1999 at CACC.  Following completion of his residency program, John continued his training in a pediatric cardiology fellowship program also at CACC.  During the first year of his fellowship program (July 1, 1999 to June 30, 2000), John spent 40% of the academic year at CACC and 60% of the academic year rotating to other teaching hospitals.

CACC’s MCR period is the same as the academic year (July 1 to June 30).  Hence, CACC would report John as 0.20 for the MCR period ending June 30, 2000 [(40/100) x  0.5 = .20].  CACC must weight John’s resident FTE count because the IRP for pediatrics is 3 years and John is in his 4^th year of training (3 years of residency training and 1 year of fellowship training). 

For CHGME PP purposes, the weighting of resident FTE counts is also applicable to the increase in resident FTEs based on §422 of the MMA et al.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.79(b) (CMS)

Applicable to the following application forms:  HRSA-99-1

Where Residents Are Counted

The time a resident spends anywhere within the hospital complex (see “Hospital Complex” below) may be included in the resident FTE count for CHGME PP purposes.  In addition, the time spent by residents in certain non-hospital/non-provider settings/sites is counted if the criteria identified below (under “Non-Provider/Non-Hospital Settings and Written Agreements”) are met.

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.78 (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Hospital Complex

The time a resident spends anywhere within the hospital complex (as defined in 42 CFR 413.65) may be included in the resident FTE count for CHGME PP purposes.

The CMS final rule implementing the per resident amount (PRA) methodology for payment of the direct GME costs of approved GME activities defines a hospital complex as “hospitals and hospital-based providers and sub providers” (54 FR 40286, September 29, 1989).  The term “hospital” is defined in Section 1861(e) of the Social Security Act as, in part, an institution which is primarily engaged in providing, by or under the supervision of physicians, diagnostic and therapeutic services to inpatients.  The term “provider of services” is defined in Section 1861(u) of the Social Security Act as a hospital, skilled nursing facility, comprehensive outpatient rehabilitation facility, home health agency, hospice program, or, for purposes of Section 1814(g) and Section 1835(c), a fund.  The term “sub provider” is defined in the Provider Reimbursement Manual (PRM) Part II, Section 2405(b) as “a portion of a general hospital which has been issued a sub provider identification number because it offers a clearly different type of service from the remainder of the hospital, such as long-term psychiatric.”

The CHGME PP, however, does not differentiate between PPS and non-PPS locations within a hospital complex. 

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.65 (CMS)
• 42 CFR 413.78(a) (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Non-Provider/Non-Hospital Settings and Written Agreements

The time a resident spends in a non-provider (or non-hospital) setting such as a physician’s office or a freestanding community health center in connection with an approved program may be included in the resident FTE count if the criteria in Federal regulation 42 CFR 413.78 are met.  For CHGME PP purposes, 42 CFR 413.78 applies to both DME and IME funding received under the CHGME PP.

Written agreements covering residents’ time spent in non-provider/non-hospital settings shall cover a period of one year and must commence on the start of the cost reporting period and must be between the hospital and the non-hospital setting, not between the related School of Medicine (SOM), School of Podiatric Medicine (SOPM), or School of Dentistry (SOD).  Refer to 42 CFR 413.78 for additional information on written agreements.

Additional references and application forms:

• Social Security Act, Section 1886
• 42 CFR 413.78 (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Partial Resident Full-Time Equivalents (FTEs)

A partial resident FTE is a resident who does not spend all time that is part of the approved training program in the hospital complex or qualified non-hospital setting.  A resident will count as a partial resident FTE based on the proportion of allowable time worked at the children’s hospital and qualified non-hospital (provider) settings compared to the total time necessary to fill a full-time residency slot.  Instances where a resident would be counted as a partial resident FTE include, if the resident:

1. is part-time;
2. rotates to other hospitals as part of the approved training program sponsored by the children’s hospital;
3. is in a program sponsored by another hospital and spends one or more rotations at the  children's hospital;
4. is on maternity leave;
5. joins or leaves a program mid-year; or
6. passes the USMLE mid-year.

Hospitals should consult with their FIs regarding additional exceptions.

The sum of partial FTE resident counts at all institutions where an individual resident works as part of his/her approved residency program may not exceed 1.0 FTE.  Also, time spent by residents moonlighting may not be counted.

Example:
During the course of the year, a full-time resident in orthopedic surgery spends 90 days at the children’s hospital and 275 days at the hospital sponsoring the residency program.  The resident would count as a 0.25 FTE at the children’s hospital [90/365 = 0.2465 (rounded to 0.25)].

A part-time third year resident in pediatrics works 4 days week. The normal workweek for a full time third year pediatric residents is 6 days per week.  The resident would count as 0.67 FTE [4/6 = .6666 (rounded to 0.67)]

During the course of the year, a full-time resident (who is also a foreign medical graduate) is enrolled in his second year of a three-year family practice residency program at CACC.  The resident spends the entire academic year (2000-2001) at CACC and does not rotate to any other sites.  The resident took and passed Part I of the USMLE in September 2000.  On May 1, 2001, the resident sat for Part II of the USMLE and is awaiting the examination results.  In June 2001 the resident learns that he passed Part II of the USMLE.  Since CACC’s year-end is June 30, CACC may count and include the resident in their resident FTE counts (as a partial FTE) for the period May 1, 2001 (the date he took the examination) to June 30, 2001 (CACC’s year end).  The resident would count as 0.17 FTE [61 days (31 days in May + 30 days in June)/ 365 days = 0.1671 (rounded to 0.17)].

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.78(b) (CMS)

Applicable to the following application forms:  HRSA-99-1, HRSA-99-2, and HRSA-99-4

Research Time

Research may be included in a hospital’s resident FTE count if the research is part of the residency program and the resident carries out the research in:

1. the children’s hospital complex (clinical or bench research); or
2. in a non-provider setting where the research involves patient care and the compensation for both the residents, the faculty and other teaching costs are paid by the children’s hospital (requirements listed at 42 CFR 413.78 must be met (66 FR 39896, Aug. 1, 2001)).

Additional references:

• Social Security Act, Section 1886
• 42 CFR 413.75 (CMS)
• 42 CFR 413.78 (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA 99-2, and HRSA 99-4

Resident FTE Count Accuracy and Documentation

Children’s hospitals are responsible for the accuracy of the resident FTE counts submitted to HRSA and are subject to audit.  More specifically, the Secretary, by statute, must “determine any changes to the number of residents reported by a hospital in the (initial) application of the hospital for the current FY for both direct and indirect expense amounts.”  This mandate is accomplished through the Resident FTE Assessment Program carried out by the CHGME PP (see “Application Cycle and Deadlines”).  Children’s hospitals are not required to submit with their completed initial applications for CHGME PP funding, documentation in support of the resident FTE data reported in their applications.  However, at the time children’s hospitals certify their applications (i.e., sign and submit form HRSA 99-3 to the CHGME PP), the hospital should possess documentation in accordance with 413.75(d) and other applicable Medicare record-keeping regulations.  Hospitals that do not report resident FTE counts to Medicare are not exempt from this policy. 

The CHGME PP has developed a Documentation Guidance (document) and an accompanying sample documentation binder to assist participating hospitals in collecting and providing the documentation necessary to support resident FTEs reported by a children’s hospital in its initial application for CHGME PP funding.  Participating children’s hospitals can use this document and the accompanying sample binder for compiling and organizing the information/data to be provided to the CHGME FI during the Resident FTE Assessment process.  The Documentation Guidance (document) is available at http://bhpr.hrsa.gov/childrenshospitalgme/apply.htm.

Additional references:

• 42 CFR 413.20 (CMS)
• 42 CFR 413.24 (CMS)
• 42 CFR 413.75(d) (CMS)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-1, HRSA 99-2, and HRSA 99-4

Section VIII

Special Instructions for Calculating Reductions and Increases to a Hospital’s 1996 Base Year Cap as a Result of §422 of the Medicare Modernization Act of 2003

Hospitals that received an increase or reduction to their 1996 Base Year Cap as a result of §422 of the MMA must use the following methodology for calculating and claiming resident FTE counts against their caps.

Decrease to a Hospital’s 1996 Base Year Cap (§422 Cap Reduction)

Children’s hospitals who received a decrease to their 1996 Base Year Cap as a result of §422 of the MMA will report and be paid based on the §422 Cap Reduction effective “for portions of cost reporting periods occurring on or after July 1, 2005.”  The 1996 Base Year Cap will be used for MCR periods prior to the effective date.  Children’s hospitals will be asked to submit a copy of the letter they received from CMS informing them of the reduction in their cap that includes the actual reduction amount.  The full effect of the reduction for a given hospital will take about three years following the implementation of §422 when all three MCR periods reflected in the hospital’s application for CHGME PP funding are subject to the §422 Cap Reduction.

Example:
CACC had 75 resident FTEs enrolled in its allopathic programs, 25 resident FTEs enrolled in its osteopathic programs and 7 resident FTEs enrolled in its dental and podiatric programs for its 6/30/96 MCR period (its most recent MCR period ending on or before December 31, 1996).  Hence, CACC’s 1996 Base Year Cap for Medicare and CHGME PP purposes is 100 (75+25=100).  However, in December 2004 CACC received a letter from CMS indicating that their 1996 Base Year Cap would be reduced by 7.50 resident FTEs under §422 of the MMA.  CACC’s new, revised cap is now 92.50 (1996 Base Year Cap - §422 Cap Reduction).  Any dental and podiatric residents trained during this MCR period would not be included in the 1996 Base Year Cap or the “new, revised” cap as dental and podiatric residents are exempt from (i.e., not subject to) the cap.

Increase to a Hospital’s 1996 Base Year Cap (§422 Cap Increase)

Children’s hospitals who received an increase to their 1996 Base Year Cap as a result of §422 of the MMA will report and be paid based on the §422 Cap Increase effective “for portions of cost reporting periods occurring on or after July 1, 2005.”  The 1996 Base Year Cap will be used for MCR periods prior to the effective date.  Children’s hospitals will be asked to submit a copy of the letter they received from CMS informing them of the adjustment to their cap that includes the actual increase amount.  It is important to note that a §422 Cap Increase is not automatically added to a hospital’s 1996 Base Year Cap.  A hospital’s ability to utilize their §422 Cap Increase is contingent upon whether the hospital is training above or below their 1996 Base Year Cap.  Examples are provided below.

Examples (for Hospitals Training “Above” Their 1996 Base Year Cap):

CACC had 75 resident FTEs enrolled in its allopathic programs, 25 resident FTEs enrolled in its osteopathic programs and 7 resident FTEs enrolled in its dental and podiatric programs for its 6/30/96 MCR period (its most recent MCR period ending on or before December 31, 1996).  Hence, CACC’s 1996 Base Year Cap for Medicare and CHGME PP purposes is 100 (75+25=100).  However, in December 2004 CACC received a letter from CMS indicating that their 1996 Base Year Cap would be increased by 20 resident FTEs under §422 of the MMA.  CACC now has a 1996 Base Year Cap of 100 and a §422 Cap Increase of 20.

Example #1:  During CACC’s most recent MCR period, CACC claimed 110 allopathic and osteopathic resident FTEs and 7 dental and podiatric resident FTEs.  Based on CACC’s 1996 Base Year Cap of 100 and §422 Cap Increase of 20, CACC would claim 100 resident FTEs against its 1996 Base Year Cap and the remaining 10 resident FTEs would be claimed against its §422 Cap Increase.  Any dental and podiatric residents trained during this MCR period would be added to the total (un)weighted allopathic and osteopathic resident FTEs following application of the caps as dental and podiatric residents are exempt from (i.e., not subject to) the cap.

Example #2:  During CACC’s most recent MCR period, CACC claimed 140 allopathic and osteopathic resident FTEs and 7 dental and podiatric resident FTEs.  Based on CACC’s 1996 Base Year Cap of 100 and §422 Cap Increase of 20, CACC would claim 100 resident FTEs against its 1996 Base Year Cap and the remaining 40 resident FTEs would be claimed against its §422 Cap Increase.  As CACC’s number of resident FTEs claimed exceeds both its 1996 Base Year Cap and its §422 Cap Increase, the DME and IME payment calculation methodology described in Section VII of this application package (“Exceeding the Cap”) would be followed.  Any dental and podiatric residents trained during this MCR period would be added to the total (un)weighted allopathic and osteopathic resident FTEs following application of the caps as dental and podiatric residents are exempt from (i.e., not subject to) the cap.

Examples (for Hospitals Training “Below” Their 1996 Base Year Cap):

Example #1:  During CACC’s most recent MCR period, CACC claimed 95 allopathic and osteopathic resident FTEs and 7 dental and podiatric resident FTEs.  Based on CACC’s 1996 Base Year Cap of 100 and a §422 Cap Increase of 20, CACC would claim 95 resident FTEs against its 1996 Base Year Cap and zero “0” residents against its §422 Cap Increase.  Any dental and podiatric residents trained during this MCR period would be added to the total (un)weighted allopathic and osteopathic resident FTEs following application of the caps as dental and podiatric residents are exempt from (i.e., not subject to) the cap

Additional references:

• Social Security Act, Section 1886(h)(7)
• 42 CFR 413.79(b) (Centers for Medicaid and Medicare Services, formerly the Health Care Financing Administration)

Applicable to the following application forms:  HRSA-99-1

Section IX

Special Instructions for Calculating

Indirect Medical Education Payment Variables

Hospitals applying for IME payments should follow the instructions provided below when calculating inpatient discharges, CMI, available beds, and the intern/resident to bed ratio.  Additional information and “calculation” instructions are provided in Section X of this application package for hospitals that are eligible to begin receiving CHGME PP funding without having completed a MCR period.

Number of Inpatient Discharges

The number of inpatient discharges is a measure of a hospital’s inpatient care.  This measure is defined as the sum of all daily inpatient discharges for the hospital’s most recently filed (or most recently completed) MCR period from all parts of the hospital complex including healthy newborns from the healthy newborn nursery.  Pubic Law 108-490 does not exclude inpatient discharges associated with healthy newborns inpatient stays in the “well baby” nursery.

Additional references:

• Social Security Act, Section 1886
• Public Law 108-490, December 23, 2004
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)
• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37986)

Applicable to the following application forms:  HRSA-99-2

Case Mix Index (CMI)   

The CMI is the sum of the diagnosis-related group (DRG) weights for all inpatient discharges excluding healthy newborns from the most recently filed (or most recently completed) MCR period divided by the number of inpatient discharges for the same period.  All hospitals applying for IME payments must submit a CMI on all inpatients discharges using the appropriate CMS DRG version, excluding healthy newborns.   This value must be reported to four decimal points.  The CMS DRG version to be used for CHGME PP purposes is published, through the CHGME PP alert system each spring, prior to the beginning of the FY for which payments will be made. The principles in determining the version of the CMS grouper is delineated is the July 20, 2001 CHGME PP Federal Register Notice.

Additional references:

• Social Security Act, Section 1886
• Public Law 108-490, December 23, 2004
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)

Applicable to the following application forms:  HRSA-99-2

Number of Available Beds

An available bed is defined as an adult or pediatric bed, including beds or bassinets available for lodging inpatients including beds in intensive care units, coronary care units, neonatal intensive care units, short stay units, and other special care inpatient hospital units.  Beds in the following location are excluded: healthy newborn nursery, labor rooms, post-anesthesia or post-operative recovery rooms, outpatient areas, emergency rooms, ancillary departments, nurses’ and other staff residence, and other areas as are regularly maintained and utilized for purposes other than lodging inpatients.  To be considered an available bed, a bed must be permanently maintained for lodging inpatients.  It must be available for use and housed in patient rooms or wards (i.e. not in corridors or temporary beds).  CMS in its August 11, 2004, final inpatient PPS Federal Register Notice, revised its regulations at 42 CFR 412.105(b) and 412.106(a)(1)(ii) to specify that bed days in a unit that was occupied to inpatient care for at least one day during the preceding 3 months are included in the available bed day count for a month.  In addition, bed days for any beds within a unit that would otherwise be considered occupied should be excluded from the available bed day count for the current month if the bed has remained unavailable (could not be made available for patient occupancy within 24 hours) for 30 consecutive days, or if the bed is used to provide outpatient observation services or swing bed skilled nursing care.  This clarified policy is effective for discharges occurring on or after October 1, 2004. 

The available bed count for the current or prior MCR period is the sum of all available beds per day in the cost reporting period, excluding beds and bassinets in the healthy newborn nursery, divided by the number of days in that period.

Additional references:

• Social Security Act, Section 1886
• Public Law 108-490, December 23, 2004
• 42CFR412.105(b)
• 42 CFR 412.106(a)(1)(ii)
• CMS, Federal Register Notice dated August 11, 2004 (69 FR 48916)
• CHGME PP, Federal Register Notice dated March 1, 2001 (66 FR 12940)
• CHGME PP, Federal Register Notice dated July 20, 2001 (66 FR 37980, 37986)

Applicable to the following application forms:  HRSA-99-2

Intern/Resident to Bed (IRB) Ratio

The IRB ratio for the most recently filed (or most recently completed) MCR period is equal to the 3-year unweighted rolling average divided by the number of available beds for the same period.  The IRB ratio for the previous MCR period is equal to the unweighted resident FTE count for the previous MCR period divided by the number of available beds for the same period. To comply as closely as possible with Medicare rules and regulations, the Department applies a cap on the IRB ratio pursuant to regulations at 42 CFR 412.105(a)(1), whereby the ratio from the most recently filed (or most recently completed) MCR period may not exceed the ratio for the hospital's prior cost reporting period as defined above.  Hospitals that meet the criteria for an exception or adjustment to their 1996 Base Year Cap (e.g. through a Medicare GME Affiliation Agreement) should refer to the CMS August 1, 2001 Federal Register Notice which provides additional information and guidance in determining the IRB ratio subject to these exceptions. 

Effective for portions of cost reporting periods and discharges occurring on or after July 1, 2005, the CHGME PP will not include resident FTEs counted against the §422 cap in the 3-year rolling average calculation and the CHGME PP will not apply an IRB ratio cap to the resident FTEs counted against a hospital’s §422 Cap Increase for purposes of determining IME payments.  A §422 IRB calculation will be implemented as g