[Federal Register Volume 76, Number 49 (Monday, March 14, 2011)]
[Rules and Regulations]
[Pages 13515-13524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-5960]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 413
[CMS-1430-IFC]
RIN 0938-AQ92
Medicare Program; Revisions to the Reductions and Increases to
Hospitals' FTE Resident Caps for Graduate Medical Education Payment
Purposes
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Interim final rule with comment period.
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SUMMARY: This interim final rule with comment period implements section
203 of the Medicare and Medicaid Extenders Act of 2010 relating to the
treatment of teaching hospitals that are members of the same Medicare
graduate medical education affiliated groups for the purpose of
determining possible full-time equivalent resident cap reductions.
DATES: Effective Date: These regulations are effective on March 14,
2011.
Comment Date: To be assured consideration, comments must be
received at one of the addresses provided below, no later than 5 p.m.
on April 13, 2011.
ADDRESSES: In commenting, please refer to file code CMS-1430-IFC.
Because of staff and resource limitations, we cannot
[[Page 13516]]
accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed)
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1430-IFC, P.O. Box 8013,
Baltimore, MD 21244-8013.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1430-IFC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD-- Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Tzvi Hefter, (410) 786-4487.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
I. Background
A. Statutory Authority
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and as currently implemented in the regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of
residents in the base period. The base period is, for most hospitals,
the hospital's cost reporting period beginning in FY 1984 (that is,
October 1, 1983 through September 30, 1984). The base year PRA is
updated annually for inflation. In general, Medicare direct GME
payments are calculated by multiplying the hospital's updated PRA by
the weighted number of full-time equivalent (FTE) residents working in
all areas of the hospital complex (and at nonprovider sites, when
applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for an additional payment
amount under the hospital inpatient prospective payment system (IPPS)
for hospitals that have residents in an approved GME program in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment, known as the indirect
medical education (IME) adjustment, are located at 42 CFR 412.105. The
hospital's IME adjustment applied to the DRG payments is calculated
based on the ratio of the hospital's number of FTE residents training
in either the inpatient or outpatient departments of the IPPS hospital
to the number of inpatient hospital beds.
The Balanced Budget Act of 1997 (Pub. L. 105-33) established a
limit on the number of allopathic and osteopathic residents that a
hospital may include in its FTE resident count for direct GME and IME
payment purposes. Under section 1886(h)(4)(F) of the Act, for cost
reporting periods beginning on or after October 1, 1997, a hospital's
unweighted FTE count of residents for purposes of direct GME may not
exceed the hospital's unweighted FTE count for its most recent cost
reporting period ending on or before December 31, 1996. Under section
1886(d)(5)(B)(v) of the Act, a similar limit on the FTE resident count
for IME purposes is effective for discharges occurring on or after
October 1, 1997.
The recently enacted Patient Protection and Affordable Care Act
(Pub. L. 111-148), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) (collectively referred to
in this document as the Affordable Care Act) made a number of statutory
changes relating to the determination of a hospital's FTE resident
count for direct GME and IME payment purposes and the manner in which
FTE resident limits are calculated and applied to hospitals under
certain circumstances. Section 5503 of the Affordable Care Act added a
new section 1886(h)(8) to the Act to provide for the reduction in FTE
resident caps for direct GME under Medicare for certain hospitals, and
to authorize the ``redistribution'' of the estimated number of FTE
resident slots to other qualified hospitals. In addition, section 5503
amended section 1886(d)(5)(B)(v) of the Act to require the application
of section 1886(h)(8) of the Act provisions ``in the same manner'' as
the FTE resident caps for IME. The regulations implementing section
5503 of the Affordable Care Act were included in the Outpatient
Prospective Payment System (PPS) Final Rule, published on November 24,
2010 in the Federal Register (75 FR 72147). The section below
summarizes the provisions of section 5503 of the Affordable Care Act as
implemented in
[[Page 13517]]
the November 24, 2010 Federal Register.
B. Reductions and Increases to Hospitals' FTE Resident Caps for GME
Payment Purposes Under Section 5503 of the Affordable Care Act
As previously discussed, the calculation of both direct GME and IME
payments is affected by the number of FTE residents that a hospital is
allowed to count; generally, the greater the number of FTE residents a
hospital counts, the greater the amount of Medicare direct GME and IME
payments the hospital will receive. In an attempt to end the implicit
incentive for hospitals to increase the number of FTE residents,
Congress instituted a cap on the number of allopathic and osteopathic
residents a hospital is allowed to count for direct GME and IME
purposes. Dental and podiatric residents are not included in this
statutorily mandated cap. Some hospitals have trained a number of
allopathic and osteopathic residents in excess of their FTE resident
caps, while other hospitals have reduced their FTE resident counts to
some level below their FTE resident caps. Section 5503 of the
Affordable Care Act added a new section 1886(h)(8) to the Act to
provide for reductions in the statutory FTE resident caps for direct
GME under Medicare for certain hospitals, and authorizes a
``redistribution'' to hospitals of the estimated number of FTE resident
slots resulting from the reductions. Section 5503 of the Affordable
Care Act also amended section 1886(d)(5)(B)(v) of the Act to require
application of the provisions of 1886(h)(8) of the Act ``in the same
manner'' to the FTE resident caps for IME.
The new section 1886(h)(8)(A) of the Act provides that, effective
for portions of cost reporting periods occurring on or after July 1,
2011, a hospital's FTE resident cap will be reduced if its ``reference
resident level'' is less than its ``otherwise applicable resident
limit,'' as these terms are described below. Section 1886(h)(8)(A)(ii)
of the Act and the November 24, 2010 Federal Register (75 FR 72147)
describes which hospitals are exempt from a cap reduction under section
5503 of the Affordable Care Act. Included in that group are rural
hospitals with fewer than 250 acute care inpatient beds. For other
hospitals, any such reduction will be equal to 65 percent of the
difference between the hospital's ``otherwise applicable resident
limit'' and its ``reference resident level.''
Under section 1886(h)(8)(B) of the Act, the Secretary is authorized
to increase the FTE resident caps for certain categories of hospitals
for portions of cost reporting periods occurring on or after July 1,
2011, by an aggregate number that does not exceed the estimated overall
reduction in FTE resident caps for all hospitals under section
1886(h)(8)(A) of the Act. A single hospital may receive an increase in
its FTE resident cap of no more than 75 additional FTEs. That is, a
hospital would be allowed to receive up to 75 additional slots for
direct GME and up to 75 additional slots for IME. In determining which
hospitals would receive an increase in their FTE resident caps,
sections 1886(h)(8)(C) through 1886(h)(8)(E) of the Act directs us to
do all of the following:
Take into account the demonstrated likelihood of the
hospital filling the additional positions within the first three cost
reporting periods beginning on or after July 1, 2011.
Take into account whether the hospital has an accredited
rural training track program.
Distribute 70 percent of the resident slots to hospitals
located in States with resident-to-population ratios in the lowest
quartile.
Distribute 30 percent of the resident slots to hospitals
located in a State, a territory of the United States, or the District
of Columbia that are among the top 10 States, territories, or Districts
in terms of the ratio of the total population living in an area
designated as a health professional shortage area (HSPA), as of March
23, 2010, to the total population, and/or to hospitals located in rural
areas.
A comprehensive description of the rules implementing the cap slot
redistribution under section 1886(h)(8) of the Act can be found in the
November 24, 2010 Federal Register (75 FR 72168).
C. Treatment of Affiliated Groups Under Section 5503 of the Affordable
Care Act
A previous redistribution of ``unused'' FTE resident slots was
performed in 2005 under section 422 of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (MMA) (Pub. L. 108-173).
Section 422 of the MMA provided for the redistribution of unused
residency positions effective for portions of cost reporting periods
beginning on or after July 1, 2005. While the redistribution under
section 5503 of the Affordable Care Act as initially enacted is similar
to the previous redistribution under section 422 of MMA, there are
substantive differences between the two provisions. One of those
differences involves the treatment of hospitals that were members of
the same Medicare GME affiliated groups for purposes of determining
whether a hospital should receive a cap reduction. The regulations
governing Medicare GME affiliated groups and Medicare GME affiliation
agreements are at 42 CFR 413.75(b) and 413.79(f), respectively.
Medicare GME affiliation agreements allow teaching hospitals to
temporarily transfer cap slots to other hospitals in order to
facilitate the cross training of residents. The duration of the
temporary cap slots transfer is a minimum of 1 year beginning on July 1
of a year, per the Medicare GME affiliation agreement.
Under section 422 of MMA, the statute explicitly directed the
Secretary to apply the provisions to hospitals that were members of the
same Medicare GME affiliated group as of July 1, 2003. Specifically,
section 1886(h)(7)(A)(iii) of the Act states ``The provisions of clause
(i) shall be applied to hospitals which are members of the same
Medicare GME affiliated group (as defined by the Secretary under
paragraph (4)(H)(ii)) as of July 1, 2003.'' Therefore, in implementing
section 422 of MMA, we based the FTE resident cap reductions for
hospitals that were participating in a Medicare GME affiliated group on
the aggregate cap and count data from all hospitals participating in
the same Medicare GME affiliated group(s). If a hospital was training a
number of residents below its FTE resident cap for the reference cost
reporting period but the hospital was part of a Medicare GME affiliated
group for some or all of that reference cost reporting period, the
Medicare contractor determined if the aggregate affiliated count for
all hospitals in the Medicare GME affiliated group was greater than the
aggregate affiliated cap. If the aggregate affiliated count was greater
than the aggregate cap, then there was no reduction made to the FTE
caps of any hospital in the Medicare GME affiliated group (even for the
hospital that was part of the Medicare GME affiliated group, but was
training below its cap).
However, as we noted in the November 24, 2010 Federal Register (75
FR 72161), in contrast to section 422 of MMA, section 5503 of the
Affordable Care Act as initially enacted did not include language
specific to Medicare GME affiliated groups as was included in section
422 of MMA under section 1886(h)(7)(A)(iii) of the Act. Thus, section
5503 of the Affordable Care Act as initially enacted did not provide
for determinations based on the aggregate experience of a Medicare GME
affiliated group. Therefore, we stated in the November 24, 2010 Federal
Register (75 FR 72161), that the determination of whether a hospital
would receive a cap reduction based on that individual
[[Page 13518]]
hospital's experience and not the aggregate experience of the Medicare
GME affiliated group.
D. Section 203 of the Medicare and Medicaid Extenders Act of 2010 (P.L.
111-309)
Section 203 of the Medicare and Medicaid Extenders Act of 2010
(MMEA) further amended section 1886(h)(8) of the Act by adding the
following new subparagraph:
(I) Affiliation.--The provisions of this paragraph shall be
applied to hospitals which are members of the same affiliated group
(as defined by the Secretary under paragraph (4)(H)(ii)) and the
reference resident level for each such hospital shall be the
reference resident level with respect to the cost reporting period
that results in the smallest difference between the reference
resident level and the otherwise applicable resident limit.
This paragraph refers to the treatment of hospitals that are
members of the same Medicare GME affiliated groups, as described in
section C of this interim final rule for purposes of determining a
hospital's possible cap reductions under section 1886(h)(8)(A) of the
Act. Similar to section 422 of MMA, this amendment to the language at
section 1886(h)(8) of the Act allows us to consider hospitals that are
members of the same Medicare GME affiliated group in the aggregate,
rather than only on an individual basis, for the purposes of
determining a GME FTE cap reduction.
Although this amendment allows us to implement section 5503 of the
Affordable Care Act in a manner similar to section 422 of MMA, a key
difference in implementation remains. One point of note is that section
422 of MMA, (section 1886(h)(7)(A)(ii)(I) of the Act) refers to the
most recent cost reporting period ending on or before September 30,
2002 as the reference cost reporting period. However, as stated in the
August 11, 2004 Federal Register (69 FR 49125), if a hospital was a
member of a Medicare GME affiliated group for the academic year
beginning July 1, 2003, then its reference cost reporting period was
the cost reporting period that included July 1, 2003. This differs from
section 5503 of the Affordable Care Act which instructs the Secretary
to choose the reference cost reporting period out of the hospital's
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, that has the highest FTE
resident count section 1886(h)(8)(H)(i)) of the Act.
For hospitals that were members of the same Medicare GME affiliated
groups, the MMEA now allows us to determine the reference cost
reporting period as the cost reporting period out of the hospitals
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010 with the smallest difference
between the reference resident level and the otherwise applicable
resident limit (section 1886)(h)(8)(I) of the Act). Therefore based on
the amendment made to section 1886(h)(8) of the Act by section 203 of
the MMEA adding subparagraph (I), we are establishing in this interim
final rule with comment period, a methodology to determine whether a
hospital is subject to a cap reduction under section 5503 of the
Affordable Care Act based on that hospital's participation in a
Medicare GME affiliated group(s) or an emergency Medicare GME
affiliated group under 42 CFR 413.79(f). Although the MMEA provision
applies to both regular Medicare GME affiliation agreements and
emergency Medicare GME affiliation agreements, for ease of reference,
we will refer in this discussion to both with the term Medicare GME
affiliation agreements. We believe the purpose of section 203 of MMEA
is to amend section 1886(h)(8) of the Act in order to implement section
5503 of the Affordable Care Act in a manner that is similar to section
422 of MMA with regard to treatment of hospitals that are members of
the same Medicare GME affiliated group. Accordingly, we are
implementing section 203 of the MMEA in a manner similar to the way in
which section 422 of MMA was implemented. The methodology used to
determine a cap reduction for hospitals which are members of the same
affiliated group is as follows:
Part 1: Determine the ``Reference Cost Reporting Period''
The Medicare contractor will assess each hospital on an individual
basis. First, the Medicare contractor will determine whether a hospital
was a member of a Medicare GME affiliated group at any point during any
of the hospital's three most recent cost reporting periods ending
before March 23, 2010 for which a cost report has been settled or has
been submitted to the Medicare contractor by March 23, 2010. That is,
the Medicare contractor will determine whether the caps during any of
those three cost reporting periods were revised because the hospital
was a member of a Medicare affiliation agreement. If a hospital was not
a member of a Medicare GME affiliated group during any of those three
cost reporting periods, then the Medicare contractor will determine if
and by how much that hospital's FTE resident caps should be reduced in
accordance with the policy established in the November 24, 2010 final
rule (75 FR 72155 through 72168).
If the Medicare contractor determines that a hospital was a member
of a Medicare GME affiliated group at any point during any of the three
most recent cost reporting periods ending before March 23, 2010 for
which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, then subparagraph (I) applies,
and the Medicare contractor will determine a hospital's reference cost
reporting period by determining the cost reporting period from the
three most recent cost reporting periods ending before March 23, 2010
for which a cost report has been settled or has been submitted to the
Medicare contractor by March 23, 2010, that results in the smallest
difference between the reference resident level and the otherwise
applicable resident limit. For example, a hospital with a FYE of
December 31 may not be a member of a Medicare GME affiliated group for
the academic years beginning July 1, 2006, 2007, or 2008, but it may be
a member of a Medicare GME affiliated group for the academic year
beginning July 1, 2005. In the cost reporting period ending December
31, 2006, the months of January through June 2006 would be affected by
the July 1, 2005 Medicare GME affiliation agreement. Therefore, in this
example, the hospital is indeed a member of a Medicare GME affiliated
group at some point, albeit for only a portion of a cost reporting
period, during its three most recent cost reporting periods ending
before March 23, 2010 for which a cost report has been settled or has
been submitted to the Medicare contractor by March 23, 2010 (in this
case, these cost reporting periods would include FYE 12/31/08, FYE 12/
31/07, and FYE 12/31/06), and as such its reference cost reporting
period would be determined as the cost reporting period that results in
the smallest difference between the reference resident level and the
otherwise applicable resident limit. As previously discussed, section
422 of the MMA specified a single time period that would be used for
all hospitals that were members of a Medicare GME affiliated group;
that is as of July 1, 2003. However, section 5503 of the Affordable
Care Act does not specify one cost reporting period, but rather it
specifies that the reference cost
[[Page 13519]]
reporting period is one out of three possible cost reporting periods.
For a hospital that was a member of a Medicare GME affiliated group at
any point during any of the three applicable cost reporting periods,
after determining the cost report that is a hospital's reference cost
reporting period based on the cost report that results in the smallest
difference between the reference resident level and the otherwise
applicable resident limit, to determine whether there are any excess
slots we believe it is appropriate to consider whether a hospital was a
member of a Medicare GME affiliated group as of July 1 of that
reference cost reporting period. The hospital may or may not have been
a member of a Medicare GME affiliated group during that reference cost
reporting period. We do not believe that section 1886(h)(8)(I) of the
Act, as added by section 203 of the MMEA, requires that a hospital must
be a member of a Medicare GME affiliated group during all 3 cost
reporting periods, nor during the year determined to be the reference
cost reporting period. Rather, being a member of a Medicare GME
affiliated group at some point in just one of the three cost reporting
periods warrants that a hospital's reference cost reporting period be
determined based on which cost report has the smallest difference
between the reference resident level and the otherwise applicable
resident limit. To determine if an FTE resident cap reduction is
appropriate, if the hospital was a member of a Medicare GME affiliated
group as of July 1 in the reference cost reporting period, we will look
at the Medicare GME affiliated group in the aggregate, when we
determine if the subject hospital has excess capacity for purposes of a
reduction under sections 5503 and 203. If the hospital was not a member
of a Medicare GME affiliated group as of July 1 in the reference cost
reporting period, excess FTEs training at other members of the
affiliated group will not be considered for the purposes of a reduction
under sections 5503 and 203 and that hospital's FTE resident caps
should be reduced in accordance with the policy established for
hospitals that are not members of Medicare GME affiliated groups in the
November 24, 2010 final rule (75 FR 72155 through 72168). The nature of
this determination underscores the fact that reductions to the FTE
resident caps of hospitals that are members of Medicare GME affiliated
groups must still be made on an individual hospital basis. The
following is an example of a reference cost reporting period
determination. (For ease of illustration, this example focuses on
reductions to the IME FTE resident caps only, but the methodology is
the same for reductions to the direct GME FTE resident caps):
Hospital A has a FTE resident cap of 10 FTE residents. Hospital A's
three most recent cost reports that have been settled or submitted to
the Medicare contractor by March 23, 2010 include cost reporting
periods with FYE 12/31/2006, 12/31/2007, and 12/31/2008. During these
three cost reporting periods, Hospital A trained 8, 9, and 9 FTE
residents, respectively. For the academic years beginning July 1, 2006
and July 1, 2007, Hospital A was not a member of a Medicare GME
affiliated group. However, for the academic year beginning July 1,
2008, Hospital A is affiliated with Hospital B and Hospital C. As a
result of its Medicare GME affiliation agreement with Hospitals B and
C, Hospital A's adjusted cap or otherwise applicable resident limit is
12 for the academic year beginning July 1, 2008. Thus, when determining
the reference cost reporting period for Hospital A, the Medicare
contractor would compare the resident level for Hospital A with its
otherwise applicable resident limit for each of the cost reporting
period as indicated below:
Cost Reporting Period 1 (01/01/2006-12/31/2006): 10 (FTE
Resident Cap)-8 (FTE Resident Count) = 2.
Cost Reporting Period 2 (01/01/2007-12/31/2007): 10 (FTE
Resident Cap)-9 (FTE Resident Count) = 1.
Cost Reporting Period 3 (01/01/2008-12/31/2008): 11
(Adjusted FTE Resident Cap)-9 (FTE Resident Count) = 2.
(Note that although Hospital A received an increase of 2 FTEs, from 10
to 12, under the Medicare GME affiliation agreement for the academic
year beginning July 1, 2008, since Hospital A has a 12/31 fiscal year
end, the actual cap adjustment is prorated to half of 2, for an
increase to its FTE resident cap of 1, equaling 11). In this example,
the smallest difference between the reference resident level and the
otherwise applicable resident limit for Hospital A is 1, which occurs
in the cost reporting period with FYE 12/31/2007. Thus, Hospital A's
reference cost reporting period is 01/01/2007-12/31/2007. Note that
Hospital A is not a member of a Medicare GME affiliated group during
FYE 12/31/07. The implications of this are discussed below.
Part 2: Determine the Applicable Reductions
For a hospital that was a member of a Medicare GME affiliated group
at any point during any of its three most recent cost reporting periods
ending before March 23, 2010 for which a cost report has been settled
or has been submitted to the Medicare contractor by March 23, 2010,
once the Medicare contractor determines that hospital's reference cost
reporting period (that is, the cost report with the smallest difference
between the hospital's FTE resident cap and FTE resident count), the
Medicare contractor must then determine if the hospital was a member of
a Medicare GME affiliated group as of the July 1 that occurs during
that reference cost reporting period. If not, and the hospital's FTE
resident count was equal to or exceeded its FTE resident cap in that
reference cost report, then no reduction to its FTE resident cap is
made and no further steps are necessary. If that hospital's FTE
resident count was less than its FTE resident cap during that reference
cost report, then the Medicare contractor would reduce the FTE resident
cap by 65 percent of the difference between the FTE resident cap and
the FTE resident count.
If the hospital was a member of a Medicare GME affiliated group as
of the July 1 that occurs during that reference cost reporting period,
the Medicare contractor will look at the members of the Medicare GME
affiliated group for that period in the aggregate, for the purpose of
determining a reduction to the particular hospital's FTE resident cap.
In other words, assuming the Medicare contractor is assessing Hospital
X, once it is determined that Hospital X was training residents below
its adjusted FTE resident cap as part of a Medicare GME affiliation
agreement occurring during Hospital X's reference cost reporting
period, the Medicare contractor will treat the hospitals in the
Medicare GME affiliated group in the aggregate, but only for the
purpose of determining the reduction to Hospital X's FTE resident cap.
The Medicare contractor would not actually reduce the FTE resident caps
of the other hospitals that were affiliated with Hospital X in that
year, since each hospital is evaluated separately, and it may be that
the reference cost reporting periods for the other hospitals may not be
the same as Hospital X's reference cost reporting period. (It may be
that the reference cost reporting period for another hospital is one in
which that hospital was not part of a Medicare GME affiliated group, in
which case, treatment as a group is not warranted when determining that
hospital's FTE cap reduction).
For the hospital that was a member of a Medicare GME affiliated
group as of the July 1 that occurs during that
[[Page 13520]]
reference cost report, the Medicare contractor will determine for each
hospital in the Medicare GME affiliated group respectively its FTE
resident cap and FTE resident count (IME and direct GME separately).
The Medicare contractor will add each hospital's FTE resident caps (IME
and direct GME separately) to determine the aggregate affiliated FTE
resident cap. The contractor will then add each hospital's FTE resident
count (IME and direct GME separately) to determine the aggregate
affiliated FTE resident count. If the aggregate FTE resident counts are
equal to or exceed the aggregate FTE resident caps, then no reductions
would be made to that particular hospital's FTE resident cap under
section 5503 of Affordable Care Act, and no further steps are necessary
for that hospital. We emphasize that at this point, it has only been
determined that the particular hospital will not be subject to an FTE
resident cap reduction--as the FTE resident cap reduction determination
is ultimately one that is done on an individual hospital basis, at this
point the contractor has not made any determinations regarding the
status of the other hospitals that are in the same Medicare GME
affiliated group as the particular hospital under review.
However, where the aggregate FTE resident count is below the
aggregate FTE resident cap (IME and direct GME separately), a reduction
to the particular hospital's FTE resident cap would be necessary. In
these cases, for each hospital that is a member of the same Medicare
GME affiliated group, the Medicare contractor will determine the
following FTE information from the cost report that includes July 1 of
the particular hospital's reference cost reporting period:
(1) The ``1996'' FTE resident cap (as adjusted by new programs, if
applicable) for the hospital under review-- For IME from Worksheet E,
Part A of the Medicare cost report, the sum of lines 3.04 and 3.05. If
the hospital's IME FTE resident cap was reduced under section 422 of
the MMA, subtract from this sum the amount reported on Worksheet E-3,
Part VI, line 13. For direct GME from Worksheet E-3, Part IV of the
Medicare cost report, the sum of lines 3.01 and 3.02. If the hospital's
direct GME FTE resident cap was reduced under section 422 of the MMA,
subtract from this sum the amount reported on Worksheet E-3, Part VI,
line 2.
(2) The ``affiliated'' FTE resident cap for the hospital being
assessed--For IME, line 3.07. For direct GME, line 3.04.
(3) The total number of allopathic and osteopathic FTE residents
for the hospital being assessed--For IME, line 3.08. For direct GME,
line 3.05.
(4) The difference between the aggregate ``affiliated'' FTE
resident cap and the total FTE resident counts for all of the
affiliated hospitals--For IME, [Sigma] line 3.08 minus [Sigma] (lines
3.04 + 3.05-applicable section 422 reduction amount). For direct GME,
[Sigma] line 3.05 minus [Sigma] (lines 3.01 + 3.02-applicable section
422 reduction amount).
(5) For IME, for those hospitals whose FTE resident count from line
3.08 is greater than the ``affiliated'' FTE resident cap on line 3.07,
indicate ``zero.'' For direct GME, for those hospitals whose FTE
resident count from line 3.05 is greater than the ``affiliated'' FTE
resident cap on line 3.04, indicate ``zero.'' For IME, for those
hospitals whose FTE resident count from line 3.08 is less than the
``affiliated'' FTE resident cap on line 3.07, determine the difference
between the hospital's ``affiliated'' FTE resident cap and the
hospital's FTE resident count, line 3.08 minus line 3.07. For direct
GME, for those hospitals whose FTE resident count from line 3.05 is
less than the ``affiliated'' FTE resident cap on line 3.04, determine
the difference between the hospital's ``affiliated'' FTE resident cap
and the hospital's FTE resident count, line 3.05 minus line 3.04.
(6) For IME and direct GME separately, to determine the total
amount by which the FTE resident counts are below the ``affiliated''
FTE resident caps and add the amounts determined under step 5 for each
hospital that trained fewer residents than its ``affiliated'' FTE
resident caps.
(7) For IME and direct GME separately, determine a pro rata cap
reduction for the hospital being assessed by dividing the hospital-
specific amount in step 5 by the total amount for all of those
hospitals in step 6, and multiply by the amount in step 4. (that is,
(step5/step6) x step 4).
(8) For IME and direct GME separately, determine the actual cap
reduction for the hospital being assessed by multiplying the pro rata
cap reduction from step 7 by 0.65.
(9) For IME and direct GME separately, determine the reduced FTE
resident cap for the hospital being assessed by subtracting the actual
cap reduction from step 8 from the ``1996'' FTE resident cap from step
1. This is the hospital's FTE resident cap effective July 1, 2011.
The following is an example of how the reductions to the FTE
resident caps will be determined where the FTE resident counts in the
aggregate for hospitals that were affiliated as of July 1 of the
reference cost reporting period for a particular hospital are below the
hospitals' FTE resident caps in the aggregate. For ease of
illustration, this example focuses on reductions to the IME caps only,
but the methodology is the same for reductions to the direct GME caps.
In this example, the Medicare contractor has determined, using the
methodology from Step 1, that the reference cost reporting period (the
period with smallest difference between the reference resident level
and the otherwise applicable resident limit) for Hospital D is January
1, 2007 to December 31, 2007. The academic year that occurs in this
reference cost reporting period begins July 1, 2007. Hospitals D, E,
and F are members of a Medicare GME affiliated group for the academic
year that begins July 1, 2007. Hospital D is also separately affiliated
with Hospitals G and H for the academic year that begins July 1, 2007.
Thus, the affiliated group for GME payment purposes, and for purposes
of determining possible FTE cap reductions for Hospital D under
subparagraph (I) consists of Hospitals D, E, F, G, and H. Hospital E's
cost report that includes July 1, 2007 is FYE June 30, 2008. Hospital
D's, F's, and G's cost report that includes July 1, 2007 is their FYE
December 31, 2007, and Hospital H's cost report that includes July 1,
2007 is its FYE September 30, 2007. Using steps 1 through 9 above, the
reduction to the FTE resident caps for Hospital D is determined in the
table below.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs
1996 FTE Caps ``Affiliated'' FTE Count below the Pro rate Actual Cap Final FTE Cap
Hospital (Step 1) FTE cap (Step (Step 3) ``Affiliated'' reduction Reduction (Step 9)
2) Cap (Step 5) (Step 7) (Step 8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
D....................................... 115 90 75 -15 -8 -5.2 109.8
E....................................... 80 100 125 0 N/A N/A N/A
F....................................... 120 10 10 0 N/A N/A N/A
[[Page 13521]]
G....................................... 95 115 125 0 N/A N/A N/A
H....................................... 30 125 65 -60 N/A N/A N/A
---------------------------------------------------------------------------------------------------------------
Totals.............................. 440 440 400 -75 N/A N/A N/A
Step 4[rarr] -40 Step 6[uarr]
--------------------------------------------------------------------------------------------------------------------------------------------------------
In this example, Hospital D's FTE resident count of 75 was 15 less
than its ''affiliated'' FTE resident cap of 90, and Hospital H's FTE
resident count of 65 was 60 less than its ''affiliated'' FTE resident
cap of 125 (as determined under step 5). Hospital F's ''affiliated''
FTE resident cap equaled its FTE resident count. Under this
methodology, the fact that Hospitals E and G exceeded their respective
''affiliated'' FTE resident caps minimizes the reductions to Hospital
D's ''1996'' FTE resident caps through the calculation of a pro rata
reduction under step 7.
We note that although Hospital H is also under its cap; its cap is
not reduced in this exercise. Under section 5503, the cap reduction
determination is calculated individually for each hospital based on its
individual reference cost reporting period, so each hospital would be
evaluated for a possible reduction separately. Hospital H will be
evaluated separately, and it may be that Hospital's H reference cost
report may not be its FYE September 30, 2007 cost report, and
ultimately, Hospital H may or may not be subject to an FTE resident cap
reduction. Thus, under step 8, the actual cap reduction of 5.2 FTEs for
Hospital D is determined by taking 65 percent of 8 (rather than 65
percent of 15). As a result, under step 9, Hospital D's final FTE
resident cap effective on July 1, 2011 is determined to be 109.8 FTEs.
We also note that the reduction to Hospital D's ''1996'' FTE
resident caps was minimized only because Hospitals E and G exceeded
their ''affiliated'' FTE resident caps. If all hospitals in the
Medicare GME affiliated group had trained residents below their
''affiliated'' FTE resident caps, then a pro rata reduction would not
benefit Hospital D. In that case, the ''1996'' FTE resident caps of
Hospital D in the Medicare GME affiliated group would be reduced by 65
percent of the difference between its ''affiliated'' FTE resident cap
and FTE resident count.
We believe this final policy is similar to the method used to
implement section 422 of the MMA with regard to hospitals that were
members of the same Medicare GME affiliated group in that, as under
section 422 of the MMA, we are only treating a hospital as part of a
group if the hospital was a member of a Medicare GME affiliation
agreement during its reference cost reporting period under section
1886(h)(8) of the Act. In implementing section 203 of the MMEA in this
manner, we believe we have addressed the concerns raised by commenters
in response to the CY 2011 Outpatient PPS proposed rule (75 FR 46395
August 3, 2010) in that this policy could protect hospitals from a loss
of slots if the aggregate counts equal to or exceed the ``affiliated''
FTE resident caps, and could limit the loss of slots in the instance
where a hospital is a member of a Medicare GME affiliated group and the
aggregate counts are below the ``affiliated'' FTE resident caps.
II. Provisions of the Interim Final Rule
As part of the CY 2011 Hospital Outpatient PPS final rule published
in the November 24, 2010 Federal Register (75 FR 71800), we implemented
section 5503 of the Affordable Care Act, which added a new section
1886(h)(8) to the Act. Section 5503 of the Affordable Care Act provides
for reductions in the statutory FTE resident caps for direct GME under
Medicare for certain hospitals, and authorizes a ``redistribution'' to
hospitals of the estimated number of FTE resident slots resulting from
the reductions. Section 5503 of the Affordable Care Act also amended
section 1886(d)(5)(B)(v) of the Act to require application of the
provisions of 1886(h)(8) of the Act ``in the same manner'' to the FTE
resident caps for IME. Section 1886(h)(8) of the Act requires that any
such reduction to the FTE resident caps will be equal to 65 percent of
the difference between the hospital's ``otherwise applicable resident
limit'' and its ``reference resident level.'' Section 5503 of the
Affordable Care Act as initially enacted did not include language
specific to Medicare GME affiliated groups and did not provide for FTE
resident cap reduction determinations based on the aggregate experience
of a Medicare GME affiliated group. Accordingly, section 203 of the
MMEA further amended section 1886(h)(8) of the Act to specify that the
provisions of section 1886(h)(8) of the Act shall be applied to
hospitals which are members of the same Medicare GME affiliated group,
and the ``reference resident level'' for each such hospital is the FTE
resident count from the cost reporting period that results in the
smallest difference between the FTE resident count and the FTE resident
cap. We are revising Sec. 413.79(m)(7) to reflect the changes made by
section 203 of the MMEA.
III. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
IV. Waiver of Proposed Rulemaking, 60-Day Comment Period, and Delay of
Effective Date
Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), we
are required to publish a notice of proposed rulemaking (NPRM) in the
Federal Register. Section 1871(b)(1) of the Act imposes a similar
requirement: that the Secretary publish a Federal Register notice with
not less than 60 days for public comment. In addition, both authorities
mandate a 30-day delay in effective date.
Section 553(b)(B) of the APA provides for an exception from these
APA requirements; in cases in which this exception applies, section
1871(b)(2)(C) of the Act provides an exception from the notice and
delayed effective date requirements of the Act as well. Section
553(b)(B) of the APA authorizes an agency to dispense with normal
rulemaking requirements for good cause if the agency makes a finding
that notice and comment procedures are impracticable, unnecessary, or
contrary to the public interest. In addition, both section 553(d)(3) of
APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid
the 30-day delay in
[[Page 13522]]
effective date where such delay is contrary to the public interest and
an agency includes a statement of support.
Here, section 203 of the MMEA amends section 1886(h)(8) of the Act.
Regulations implementing section 5503(a) of the ACA were published in
the November 24, 2010 Federal Register. The amendment made by section
203 of the MMEA is effective as if included in the enactment of section
5503(a) of the Affordable Care Act. Specifically the amendments apply
to portions of cost reporting periods occurring on or after July 1,
2011. As a result, given the December 15, 2010 enactment of the MMEA,
there was and there is a finite and, under the circumstances, highly
compressed window of opportunity to complete implementation before the
statutory deadline. Time pressure is acute because the agency must
commence implementation substantially in advance of its July 1, 2011
deadline or risk a cascade of missed deadlines and failed intermediate
steps, jeopardizing the program. Binding instructions must be given to
Medicare contractors and hospitals as soon as possible to enable them
to undertake critical first steps in a tight chain of business
decisions that must precede implementation of the new provision.
As we indicate in section VI.C., the effect of section 203 of the
MMEA is that it benefits member hospitals of Medicare GME affiliated
groups by protecting them from or mitigating their loss of residency
slots. Prior implementation of section 422 of the MMA, which similarly
redistributed unused FTE resident cap slots to other qualifying
hospitals, suggests that significant time is required to implement this
type of provision. The MMA was passed in December 2003, and was
effective on July 1, 2005. Unlike section 5503 of the ACA, section 422
of the MMA, as originally enacted, already included language giving
special consideration to the treatment of members of Medicare GME
affiliated groups. We published final regulations implementing the
process for reducing the FTE resident caps of certain teaching
hospitals, both members of Medicare GME affiliated groups and those
that were not affiliated, by August 1, 2004 (69 FR 49111). Since
section 422 of the MMA was effective on July 1, 2005, the agency had 11
months between August 2004 and July 1, 2005 to implement section 422 of
the MMA.
In this case, the statutory deadline provides the agency with
significantly less time to implement section 5503 of the ACA and
section 203 of the MMEA than it had to implement section 422 of the
MMA. The ACA was passed on March 23, 2010, and we included the proposal
for section 5503 of the ACA in the CY 2011 OPPS proposed rule; the
final rule was not issued until November 1, 2010 (75 FR 72133). Since
section 5503 of the ACA must be implemented to be effective on July 1,
2011, this means that we have only 8 months (as compared to the 11
months under section 422 of the MMA) to implement section 5503.
Moreover, because the language regarding special treatment of hospitals
that are members of Medicare GME affiliated groups was not passed as
part of the MMEA until December 15, 2010, yet it has the same effective
date of July 1, 2011 as section 5503 of ACA, the amount of time
available to implement the provision by July 1, 2011 has been further
reduced to approximately 4 months. Facing this comparatively brief
window, and based on historical experience, we find that it would be
impracticable for us and our contractors to perform enough GME audits
to assure the validity of as-submitted cost report data that are
necessary for implementation--especially while simultaneously reviewing
for regulatory compliance many hundreds of applications requesting
additional slots.
The implementation of section 5503 of ACA and section 203 of the
MMEA, as we learned when implementing section 422 of the MMA, requires
significant planning, coordination, and investment of time and audit
resources. There are approximately 1,100 teaching hospitals and more
than 300 of them are members of Medicare GME affiliated groups. Many of
these teaching hospitals have hundreds of residents, and it can take a
Medicare contractor many weeks or months to audit the data on each as-
submitted cost report. On January 7, 2011, we issued instructions to
the contractors instructing them to begin audits for the purpose of
implementing section 5503 of ACA. In those instructions, and in the CY
2011 OPPS final rule (75 FR 72153), we stated that the contractors are
required to submit their estimates of each teaching hospital's FTE
resident cap reduction, if any, to CMS by May 16, 2011. This would
allow us to create the ``pool'' of slots available for redistribution,
and to start assigning those slots to qualifying hospitals based on
applications we reviewed between January 21, 2011 and May 2011. Even
prior to May 16, 2011, the Medicare contractors will need time to
notify hospitals of their tentative findings and allow hospitals to
react to the potential FTE resident cap reductions. Unfortunately, many
audits have yet to begin, as the Medicare contractors have been waiting
for instructions regarding treatment of hospitals that are members of
Medicare GME affiliated groups.
For these reasons, that is, because we face an extremely compressed
timeframe; because Medicare contractors and hospitals need to make
critical business decisions and systems changes far in advance, each
constituting a material change of position that would be costly and
impracticable to reverse; because historical evidences suggests that
even a slight delay could prevent timely implementation of this
Congressionally mandated policy change; and because it is therefore
probable that failing to act early would have adverse financial impacts
for teaching hospitals and the Federal government--we have concluded
that there is good cause to waive ordinary rulemaking provisions as
they are impracticable and contrary to the public interest in this
case, and issue interim final regulations as soon as possible, that
being necessary to implementing section 203 of the MMEA in an accurate,
comprehensive, and timely manner. We are providing a 30-day public
comment period.
V. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995. (44 U.S.C. Chapter 35)
VI. Regulatory Impact Statement
A. Statement of Need
Section 5503 of the Affordable Care Act provides for reductions in
the statutory FTE resident caps under Medicare for certain hospitals
and authorizes a ``redistribution'' of the FTE resident slots resulting
from the reduction in the FTE resident caps to other hospitals. The
purpose of section 5503 is to allow hospitals in certain states that
wish to start new or expand existing programs in primary care or
general surgery but are already training residents at or above their
FTE resident caps to use slots from other hospitals that have not been
using all of their slots. Section 203 of the Medicare and Medicaid
Extenders Act of 2010 amended section 1886(h)(8) of the Act (as added
by section 5503 of the Affordable Care Act) to specify that the
provisions of section 1886(h)(8)(A) of the Act shall be applied to
hospitals
[[Page 13523]]
which are members of the same Medicare GME affiliated group, and the
``reference resident level'' for each hospital is the FTE resident
count from the cost reporting period that has the smallest difference
between the FTE resident count and the FTE resident cap. The purpose of
section 203 is to take into account the unique situation of hospitals
that are members of the same Medicare GME affiliated group in that they
share FTE resident cap slots, and that FTE resident cap reduction
determinations of hospitals should consider the shared nature of those
slots.
B. Overall Impact
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(February 2, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999) and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
does not reach the economic threshold and thus is not considered a
major rule.
In the November 24, 2010 final rule which implemented section 5503
of the Affordable Care Act (75 FR 72239), we mentioned that we were
unable to project how many FTE resident slots will be available for
redistribution under section 5503 of the Affordable Care Act. Unlike
section 422 of the MMA, which also provided for a redistribution of FTE
resident slots but provided that the redistributed slots will be paid
using the national average per resident amount (PRA) for direct GME
payment purposes, section 5503 of the Affordable Care Act requires that
hospitals be paid for their additional FTE resident slots using the
hospitals' specific PRAs. Because we were unable to determine the
number of FTE resident slots that will be redistributed under section
5503 of the Affordable Care Act or which hospitals will be receiving
additional FTE resident slots, we could not calculate a direct GME
impact for section 5503 of the Affordable Care Act. Similarly, we
cannot calculate a direct GME dollar impact for section 203 of the
MMEA.
Although the general effect of section 203 of the MMEA is to
protect from loss or mitigate the loss of slots of hospitals that are
members of a Medicare GME affiliated group, there could be fewer direct
GME and IME slots available for redistribution to other hospitals. For
several reasons, we are unable to compute a dollar impact on the
redistribution of those slots to other hospitals. First, although there
are currently 307 hospitals that are members of a Medicare GME
affiliated group, these hospitals were not necessarily members of
Medicare GME affiliated groups during the reference cost reporting
periods specified by section 5503 of the Affordable Care Act. Second,
we do not know which hospitals, that are members of a Medicare GME
affiliated group, will be at risk for losing direct GME and/or IME FTE
resident cap slots under section 5503 of the Affordable Care Act, as
revised by section 203 of the MMEA. Third, we do not know the PRAs and
Medicare utilization rates of hospitals that will be receiving
additional FTE resident slots. With respect to determining an impact
for IME payment purposes, section 5503 of the Affordable Care Act
requires us to use an IME multiplier of 1.35; however, we do not know
the intern-to-bed ratio and resident-to-bed ratio for the hospitals
that will receive additional FTE resident slots or the volume or case
mix of Medicare discharges at those hospitals. Therefore, we cannot
determine a financial impact for purposes of direct GME and IME for
this provision. We solicit comment on our analysis.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most physician practices, hospitals and
other providers are small entities, either by nonprofit status or by
qualifying as small businesses under the Small Business
Administration's size standards (revenues of less than $7.0 to $34.5
million in any 1 year). States and individuals are not included in the
definition of a small entity. For details, see the Small Business
Administration's Web site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=2465b064ba6965cc1fbd2eae60854b11&rgn=div8&view=text&node=13:1.0.1.1.16.1.266.9&idno=13)
Individuals and States are not included in the definition of a
small entity. The Regulatory Flexibility Act requires an agency to
prepare an initial regulatory flexibility analysis when they issue a
general notice of proposed rule-making. However, HHS has maintained a
long-standing policy of voluntarily preparing initial regulatory
flexibility analyses for all rule-making. The Secretary has determined
that this interim final rule will not have a significant economic
impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. We are not preparing an analysis for section 1102(b) of the
Act because the Secretary has determined that this interim final rule
will not have a significant impact on the operations of a substantial
number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2011, that
threshold is approximately $136 million. This rule will have no
consequential effect on State, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of Executive Order 13132 are not
applicable.
C. Anticipated Effects
We believe the general effect of section 203 of the MMEA is that it
could protect from loss or mitigate the loss of slots for hospitals
that are members of a Medicare GME affiliated group, and therefore,
there could be fewer direct
[[Page 13524]]
GME and IME slots available for redistribution to other hospitals.
D. Alternatives Considered
Although there may be alternatives, the method we are finalizing in
this interim final rule is the most consistent with that of a similar
provision for hospitals that are members of Medicare GME affiliated
groups implemented as part of section 422 of the MMA.
E. Conclusion
The analysis above, together with the remainder of this preamble,
provides a Regulatory Flexibility Analysis as well as a Regulatory
Impact Analysis. For the reasons outlined in the RIA, we are not
preparing an analysis for either the RFA or section 1102(b) of the Act
because we have determined that this interim final rule with comment
would not have a direct significant economic impact on a substantial
number of small entities or a direct significant impact on the
operations of a substantial number of small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 413
Health facilities, Kidney diseases, Medicare, Puerto Rico,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
0
1. The authority citation for part 413 continues to read as follows:
Authority: Secs. 1102, 1812(d), 1814(b), 1815, 1833(a), (i),
and (n), 1861(v), 1871, 1881, 1883, and 1886 of the Social Security
Act (42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a), (i), and
(n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww); and sec. 124 of
Pub. L. 106-133 (113 Stat. 1501A-332).
0
2. Section 413.79 is amended by revising paragraph (m)(7) to read as
follows:
Sec. 413.79 Direct GME payments: Determination of the weighted number
of FTE residents.
(m) * * *
(7) Consideration for members of Medicare GME affiliated groups.
For a hospital that is a member of a Medicare GME affiliated group at
any point during any of the hospital's three most recent cost reporting
periods ending before March 23, 2010 for which a cost report has been
settled or has been submitted to Medicare contractor by March 23, 2010,
in determining whether a hospital's otherwise applicable resident FTE
resident cap is reduced under paragraph (m) of this section, the
Medicare contractor determines a hospital's reference cost reporting
period by finding the cost reporting period that results in the
smallest difference between the reference resident level and the
otherwise applicable resident limit.
(i) If the reference resident level is less than the otherwise
applicable resident limit in that reference cost reporting period, the
Medicare contractor must then determine if the hospital was a member of
a Medicare GME affiliated group as of the July 1 that occurs during
that reference cost reporting period.
(ii) If the hospital was a member of a Medicare GME affiliated
group as of the July 1 that occurs during that reference cost report,
the Medicare contractor does all of the following:
(A) Treat the members of the Medicare GME affiliated group as a
group for that reference cost reporting period, for the purpose of
determining a reduction to the particular hospital's FTE resident cap.
(B) Determine for each hospital in the Medicare GME affiliated
group respectively the FTE resident cap and FTE resident count (IME and
direct GME separately).
(C) Add each hospital's FTE resident caps (IME and direct GME
separately) to determine the aggregate FTE resident cap.
(D) Add each hospital's FTE resident count (IME and direct GME
separately) to determine the aggregate FTE resident count.
(iii) If the aggregate FTE resident count is equal to or exceeds
the aggregate FTE resident cap, then the Medicare contractor would make
no reduction to the particular hospital's otherwise applicable FTE
resident cap under paragraph (m) of this section, and no further steps
are necessary for that hospital.
(iv) If the hospitals' aggregate FTE resident count is less than
the aggregate FTE resident cap, then the Medicare contractor would
determine on a hospital-specific basis whether the particular
hospital's FTE resident count is less than its otherwise applicable FTE
resident cap (as adjusted by affiliation agreement(s)) in the
hospital's reference cost report.
(v) If the hospital's FTE resident count exceeds its otherwise
applicable FTE resident cap, the hospital will not have its otherwise
applicable FTE resident cap reduced under paragraph (m) of this
section.
(vi) If the particular hospital's FTE resident count is less than
its otherwise applicable FTE resident cap, the Medicare contractor
determines a pro rata cap reduction amount that is equal, in total, to
65 percent of the difference between the aggregate FTE resident cap and
the aggregate FTE resident count for the Medicare GME affiliated group.
(A) The pro rata cap reduction to the particular hospital's
otherwise applicable FTE resident cap is calculated by dividing the
difference between the hospital's otherwise applicable FTE resident cap
and the hospital's FTE resident count, by the total amount by which all
of the hospitals' individual FTE resident counts are below their
affiliated FTE resident caps, multiplying the quotient by the
difference between the aggregate FTE resident cap and the aggregate FTE
resident counts for the Medicare GME affiliated group, and multiplying
that result by 65 percent.
(B) The final reduction takes into account the hospital's FTE
resident cap as reduced under the provisions of paragraph (c)(3) of
this section.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: February 10, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: March 1, 2011.
Kathleen Sebelius,
Secretary.
[FR Doc. 2011-5960 Filed 3-11-11; 8:45 am]
BILLING CODE 4120-01-P