Graduate Medical Education Graduate Medical Education (GME), per the Centers of (GME), per the Centers of

Medicare & Medicaid Services Medicare & Medicaid Services (CMS)(CMS)

DISCUSSION OF gme COSTS & DISCUSSION OF gme COSTS &

REIMBURSEMENT REIMBURSEMENT

CMS believes there should be a CMS believes there should be a payment provision for Teaching payment provision for Teaching Hospitals – they refer to this as Hospitals – they refer to this as Graduate Medical Education (or GME)Graduate Medical Education (or GME)

The GME reimbursement mechanism The GME reimbursement mechanism was created and split into two was created and split into two components: Direct (DGME) and components: Direct (DGME) and Indirect (IME) Indirect (IME)

What Payers fund GME costs?What Payers fund GME costs?

MEDICARE (federal program for the aged & MEDICARE (federal program for the aged & disabled)disabled)

MEDICAID (federal & state program for the MEDICAID (federal & state program for the financially challenged)financially challenged)

TRICARE (federal program for active & TRICARE (federal program for active & retired military)retired military)

What is the Funding specifically What is the Funding specifically for?for?

DGME funding is for House staff DGME funding is for House staff compensation, Faculty Supervision, compensation, Faculty Supervision, GME Office Admin costs & Hospital GME Office Admin costs & Hospital overheadoverhead

IME funding is to recognize a IME funding is to recognize a hospital’s higher operating costs that hospital’s higher operating costs that result from learning & training result from learning & training activitiesactivities

WHY DO WE GET THIS WHY DO WE GET THIS FUNDING? FUNDING?

CMS realizes that teaching hospitals CMS realizes that teaching hospitals incur more costs than non-teaching incur more costs than non-teaching hospitals and feels an obligation to hospitals and feels an obligation to pay THEIR share pay THEIR share

They also realize that without They also realize that without teaching hospitals, future doctors teaching hospitals, future doctors would not have real life training would not have real life training grounds to perfect their skills grounds to perfect their skills

WHY DO WE CARE ABOUT THIS WHY DO WE CARE ABOUT THIS TOPIC - PART I?TOPIC - PART I?

We receive approximately $33.3M A We receive approximately $33.3M A YEAR in GME funding from the YEAR in GME funding from the Medicare program aloneMedicare program alone

$11.0M for Direct Graduate Medical $11.0M for Direct Graduate Medical Education (DGME) costs and $22.3M Education (DGME) costs and $22.3M for Indirect Medical Education (IME) for Indirect Medical Education (IME) costscosts

WHY DO WE CARE ABOUT THIS WHY DO WE CARE ABOUT THIS TOPIC - PART II?TOPIC - PART II?

CMS also gives to State Medicaid CMS also gives to State Medicaid programs approximately 50% of their programs approximately 50% of their educational cost obligationeducational cost obligation

That amount is around $19.0M more That amount is around $19.0M more A YEAR than mentioned on the A YEAR than mentioned on the previous slide previous slide

Why do we care about this topic - Why do we care about this topic - Part III?Part III?

Some States, Virginia being one of Some States, Virginia being one of them, matches the Federal GME them, matches the Federal GME contribution and doles out another contribution and doles out another $19.0M for a total of $38.0M$19.0M for a total of $38.0M

Medicaid takes the combined funds Medicaid takes the combined funds and distributes those dollars to us as and distributes those dollars to us as DGME (approx $7.7M) & IME (approx DGME (approx $7.7M) & IME (approx $30.3M)$30.3M)

GOOD NEWS / BAD NEWSGOOD NEWS / BAD NEWS

Good News – it’s nice that CMS funds Good News – it’s nice that CMS funds their share of the additional costs of their share of the additional costs of being a teaching hospitalbeing a teaching hospital

Bad News – Even with the additional Bad News – Even with the additional funding of GME by CMS, hospitals still funding of GME by CMS, hospitals still LOSE LOTS of $$ on their Medicare LOSE LOTS of $$ on their Medicare businessbusiness

GOOD NEWS / BAD NEWS PART GOOD NEWS / BAD NEWS PART IIII

Good News – the Medicaid GME Good News – the Medicaid GME funding helps get us reimbursed at funding helps get us reimbursed at approximately 97% of our costs of approximately 97% of our costs of providing Medicaid servicesproviding Medicaid services

Bad News – it only helps us to get to Bad News – it only helps us to get to 97% of our costs – no profit margin97% of our costs – no profit margin

What does Tricare pay for What does Tricare pay for GME?GME?

Very little but it’s because we have a very Very little but it’s because we have a very low Tricare utilization (business)low Tricare utilization (business)

GME Funding from this source is GME Funding from this source is approximately $.8M annually (DGME only, approximately $.8M annually (DGME only, no IME)no IME)

As a result of this scant funding, we will As a result of this scant funding, we will largely focus on Medicare & Medicaid largely focus on Medicare & Medicaid fundingfunding

How are the Resident FTE counts How are the Resident FTE counts done for DGME?done for DGME?

New Innovations (may sound familiar)New Innovations (may sound familiar) Residents may be “weighted” meaning Residents may be “weighted” meaning

some can only count as half an FTE, one can some can only count as half an FTE, one can never be more than an FTEnever be more than an FTE

Examples – Residents that switch Examples – Residents that switch residencies, do a second residency or do a residencies, do a second residency or do a fellowshipfellowship

Resident time is allowed for patient care, Resident time is allowed for patient care, didactics or research while rotating in the didactics or research while rotating in the hospital, up to a program’s initial residency hospital, up to a program’s initial residency period period

Resident can be claimed in a non-provider Resident can be claimed in a non-provider setting but research time is excluded setting but research time is excluded

The FTE “CAPS”The FTE “CAPS”

Based on FY96’s Cost Report, CMS Based on FY96’s Cost Report, CMS established FTE CAP’s for both DGME established FTE CAP’s for both DGME & IME (idea – limit how much CMS had & IME (idea – limit how much CMS had to pay for growing GME programs)to pay for growing GME programs)

For DGME, CMS took all the For DGME, CMS took all the “weighted” countable FTE’s of that “weighted” countable FTE’s of that year and “unweighted” them (i.e. year and “unweighted” them (i.e. made them a full FTE) to come up with made them a full FTE) to come up with a CAP of 401.51 a CAP of 401.51

FTE CAPS – Part IIFTE CAPS – Part II

The DGME “unweighted” FTE CAP is The DGME “unweighted” FTE CAP is then compared every year to the then compared every year to the “unweighted” FTE count of the current “unweighted” FTE count of the current year and that ratio is applied to the year and that ratio is applied to the current year’s “weighted” FTE count current year’s “weighted” FTE count

The IME FTE CAP (since no one is The IME FTE CAP (since no one is “weighted”) is much simpler – it came “weighted”) is much simpler – it came from the FY96 Cost Report and is from the FY96 Cost Report and is 367.72 367.72

FTE CAPS – Part IIIFTE CAPS – Part III

Hospital Based “Dental” Residencies Hospital Based “Dental” Residencies are excluded from both DGME & IME are excluded from both DGME & IME CAPSCAPS

Affiliated Agreements with other Affiliated Agreements with other hospitals that are under their FTE hospitals that are under their FTE CAPS help hospitals that are over their CAPS help hospitals that are over their CAPS by allowing more GME CAPS by allowing more GME reimbursement to be claimed reimbursement to be claimed (Example: Howard University Hospital)(Example: Howard University Hospital)

DGME Formulary ComponentsDGME Formulary Components FTE counts according to DGME counting rules, broken FTE counts according to DGME counting rules, broken

down into Primary Care & Non-Primary Care FTE’sdown into Primary Care & Non-Primary Care FTE’s Three Year Rolling Average (Current, Prior & Three Year Rolling Average (Current, Prior &

Penultimate)Penultimate) Per Resident Amounts (PRA) – established in 1985 for Per Resident Amounts (PRA) – established in 1985 for

each teaching hospital based on their Direct teaching each teaching hospital based on their Direct teaching costs and increased each year for inflation costs and increased each year for inflation

To encourage Teaching Hospitals to produce more To encourage Teaching Hospitals to produce more primary care doctors, a higher PRA was given to that primary care doctors, a higher PRA was given to that group versus groups considered non-primary caregroup versus groups considered non-primary care

MCR FFS & MCO Inpatient Utilizations (Patient Days) MCR FFS & MCO Inpatient Utilizations (Patient Days)

Medicare DGME Formula PartMedicare DGME Formula Part I I(Very Simplified)(Very Simplified)

# of FTE’s rotating at hospital 395 # of FTE’s rotating at hospital 395

(3(3 year rolling avg, Dental & Cap Adj)year rolling avg, Dental & Cap Adj)

Blended Per Resident Amount Blended Per Resident Amount $88,753$88,753

Subtotal $35,057,435 Subtotal $35,057,435 Medicare FFS Utilization Medicare FFS Utilization .2564.2564 Medicare FFS DGME Pmt $8,988,726Medicare FFS DGME Pmt $8,988,726

Medicare DGME Formula Medicare DGME Formula Part IIPart II

(Awarded Slots - MMA)(Awarded Slots - MMA)

# of DGME Slots Awarded 18.21# of DGME Slots Awarded 18.21Claimable Slots After Formulary 16.38 Claimable Slots After Formulary 16.38 Nat’l Avg Per Resident Amt Nat’l Avg Per Resident Amt $86,993$86,993Subtotal $1,424,945 Subtotal $1,424,945 Medicare FFS Utilization .2Medicare FFS Utilization .2564564 Medicare FFS DGME Pmt $365,356Medicare FFS DGME Pmt $365,356Medicare MCO Utilization Medicare MCO Utilization .0463.0463Medicare MCO DGME Pmt $65,975Medicare MCO DGME Pmt $65,975

Medicare DGME Medicare DGME Formula Part IIIFormula Part IIIMedicare Managed CareMedicare Managed Care

# of FTE’s rotating at hospital 395 # of FTE’s rotating at hospital 395 (3 year rolling avg, Dental & Cap Adj)(3 year rolling avg, Dental & Cap Adj)

Per Resident Amount Per Resident Amount $88,753$88,753Subtotal $35,057,435 Subtotal $35,057,435 Medicare MCO Utilization Medicare MCO Utilization .0463.0463 Medicare MCO DGME pmt $ 1,623Medicare MCO DGME pmt $ 1,623,,159159

Total MCR DGME Total MCR DGME ReimbursementReimbursement

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

To see Actual DGME To see Actual DGME CalculationsCalculations

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

GME Salary & Benefits, FY11GME Salary & Benefits, FY11

I&R Salary & Benefits - $39,152,007I&R Salary & Benefits - $39,152,007 Refunds from hospitals - $ 7,334,825Refunds from hospitals - $ 7,334,825 Net VCUHS I&R Costs - $31,817,182Net VCUHS I&R Costs - $31,817,182

This is one component of CMS’s view This is one component of CMS’s view of a hospital’s DGME costs of a hospital’s DGME costs

Federal RegulationsFederal Regulations

There have been a lot over the years, There have been a lot over the years, a lot of acronyms such as BBA, BBRA, a lot of acronyms such as BBA, BBRA, BIPA, MMA and most recently ACA BIPA, MMA and most recently ACA (Affordable Care Act) (Affordable Care Act)

Discussion of all these would need to Discussion of all these would need to be it’s own presentation but suffice it be it’s own presentation but suffice it to say, all these regulations were to say, all these regulations were intended to cut GME funding in some intended to cut GME funding in some way, shape or formway, shape or form

Most Relevant GME Most Relevant GME RegulationsRegulations

FTE Caps were established for both DGME & FTE Caps were established for both DGME & IME counts to limit payments in case IME counts to limit payments in case teaching hospitals expanded their programs teaching hospitals expanded their programs (BBA’97)(BBA’97)

The IME Federal Formulary began The IME Federal Formulary began undergoing significant alterations – all undergoing significant alterations – all negative – which began with the BBA and negative – which began with the BBA and goes thru today’s ACAgoes thru today’s ACA

Clarifications on what residents can be Clarifications on what residents can be doing and where they can be doing it in doing and where they can be doing it in order to be counted for either DGME or IME order to be counted for either DGME or IME

Examples of a “Clarification” Part IExamples of a “Clarification” Part I

ACA Regulation for DGME countsACA Regulation for DGME counts

In the Hospital, Resident can be counted In the Hospital, Resident can be counted for doing patient care, vacation/sick, for doing patient care, vacation/sick, didactic & researchdidactic & research

In a Non-hospital/Provider Setting, resident In a Non-hospital/Provider Setting, resident can be doing all of the above with the can be doing all of the above with the exception of research. Didactics was just exception of research. Didactics was just recently “clarified” as allowed effective recently “clarified” as allowed effective 7/1/09. Prior to that, it was not allowed. 7/1/09. Prior to that, it was not allowed.

Examples of a “Clarification” Part IIExamples of a “Clarification” Part II

ACA Regulation for IME countsACA Regulation for IME counts

In the Hospital, a resident can be counted In the Hospital, a resident can be counted for doing patient care, vacation/sick, & for doing patient care, vacation/sick, & didactic. Research time however CANNOT didactic. Research time however CANNOT be counted effective 10/1/01 – no word on be counted effective 10/1/01 – no word on if it could have counted prior to 10/1/01if it could have counted prior to 10/1/01

In a Non-hospital/Provider Setting, a In a Non-hospital/Provider Setting, a resident can only be counted while doing resident can only be counted while doing patient care or vacation/sick. Didactics patient care or vacation/sick. Didactics and Research are NOT countable time. and Research are NOT countable time.

IME Formulary ComponentsIME Formulary Components

FTE’s according to the IME rules & FTE’s according to the IME rules & clarificationsclarifications

Three Year Rolling AverageThree Year Rolling Average Acute Bed Days Available (number of Acute Bed Days Available (number of

staffed beds in acute areas of the staffed beds in acute areas of the hospital times the number of days they hospital times the number of days they are open in a year divided by 365 days) are open in a year divided by 365 days)

DRG (inpatient) payments on FFS & DRG (inpatient) payments on FFS & MCO MCO

Medicare IME Formula Medicare IME Formula Part IPart I

# of IME I&R # of IME I&R 404.66 404.66Acute Bed Days Available 629.88 Acute Bed Days Available 629.88 IRB Ratio .642446IRB Ratio .642446Plus 1.00 1.642446 Plus 1.00 1.642446 Power to .405 1.222570Power to .405 1.222570Minus 1.00 .222570 Minus 1.00 .222570 TimesTimes 1.35 .300470 1.35 .300470 MCR FFS DRG pmts MCR FFS DRG pmts $66,324,839$66,324,839MCR FFS IME pmts $19,928,632MCR FFS IME pmts $19,928,632

Medicare IME Formula Medicare IME Formula Part IIPart II

(Awarded Slots - MMA)(Awarded Slots - MMA)

# of IME CAP Slots # of IME CAP Slots 3.02 3.02Acute Bed Days Available 629.88 Acute Bed Days Available 629.88 IRB Ratio .004795IRB Ratio .004795Plus 1.00 1.004795 Plus 1.00 1.004795 Power to .405 1.001939Power to .405 1.001939Minus 1.00 .001939 Minus 1.00 .001939 TimesTimes .66 .001280 .66 .001280 MCR FFS DRG pmts MCR FFS DRG pmts $66,324,839$66,324,839MCR FFS IME payment $84,880MCR FFS IME payment $84,880

Medicare IME Formula Part Medicare IME Formula Part IIIIII

Medicare Managed CareMedicare Managed Care

# of IME I&R - # of IME I&R - 404.66 404.66Acute Bed Days Available - 629.88 Acute Bed Days Available - 629.88 IRB Ratio - .642446IRB Ratio - .642446Plus 1.00 1.642446 Plus 1.00 1.642446 Power to .405 1.222570Power to .405 1.222570Minus 1.00 .222570 Minus 1.00 .222570 TimesTimes 1.35 .300470 1.35 .300470 MCR FFS DRG pmts MCR FFS DRG pmts $7,510,320$7,510,320MCR MCO IME Pmts $2,256,626MCR MCO IME Pmts $2,256,626

Total MCR IME ReimbursementTotal MCR IME Reimbursement

MCR FFS Payment - $19,928,632 MCR FFS Payment - $19,928,632

MCR MMA Payment $ 84,880MCR MMA Payment $ 84,880

MCR MCO Payment MCR MCO Payment $ 2,256,626$ 2,256,626

Total MCR IME Pay $22,270,138Total MCR IME Pay $22,270,138

To see Actual IME CalculationsTo see Actual IME Calculations

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

CONCLUSIONCONCLUSION Although we receive millions of dollars for GME Although we receive millions of dollars for GME

costs, it only represents a portion of our overall costs, it only represents a portion of our overall teaching coststeaching costs

Despite these additional payments from our Despite these additional payments from our governmental payers, we still lose significant governmental payers, we still lose significant money on Medicare & Tricare business and money on Medicare & Tricare business and only receive up to a % of our costs on Medicaid only receive up to a % of our costs on Medicaid businessbusiness

When the Federal government is looking to When the Federal government is looking to either save money or be “budget neutral” for a either save money or be “budget neutral” for a new Program, you can bet that GME will always new Program, you can bet that GME will always be up on the proverbial Chopping Block be up on the proverbial Chopping Block

QUESTIONS???QUESTIONS???

C. Todd Gardner / Acacia C. Todd Gardner / Acacia PulliamPulliam

Dept of Reimbursement, Dept of Reimbursement, VCUHSVCUHS

828.4733 or 827.5374828.4733 or 827.5374