[Federal Register Volume 86, Number 245 (Monday, December 27, 2021)]
[Rules and Regulations]
[Pages 73416-73519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-27523]
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Vol. 86
Monday,
No. 245
December 27, 2021
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412 and 413
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals; Changes to Medicare Graduate Medical Education
Payments for Teaching Hospitals; Changes to Organ Acquisition Payment
Policies; Final Rule
Federal Register / Vol. 86 , No. 245 / Monday, December 27, 2021 /
Rules and Regulations
[[Page 73416]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412 and 413
[CMS-1752-FC3]
RIN 0938-AU44
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals; Changes to Medicare Graduate Medical
Education Payments for Teaching Hospitals; Changes to Organ Acquisition
Payment Policies
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period finalizes certain
provisions of the fiscal year 2022 IPPS/LTCH PPS proposed rule. These
provisions implement policies based on legislative changes relative to
Medicare graduate medical education (GME) for teaching hospitals
provided by sections 126, 127, and 131 of the Consolidated
Appropriations Act (CAA), 2021; and changes, clarifications, and
codifications for Medicare organ acquisition payment policies relative
to organ procurement organizations (OPOs), transplant hospitals, and
donor community hospitals. In addition, this final rule with comment
period solicits comments on certain GME issues to inform potential
future rulemaking
DATES:
Effective date: This final rule with comment period is effective
February 25, 2022.
Comment date: To be assured consideration, comments on the graduate
medical education provisions discussed in sections II.B.3.b.(5),
II.B.3.d.(2). and II.B.5.e. of this final rule with comment period must
be received at one of the addresses provided below, by February 25,
2022.
ADDRESSES: In commenting, please refer to file code CMS-1752-FC3.
Comments, including mass comment submissions, must be submitted in
one of the following three 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-1752-FC3, 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-1752-FC3, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-
4487, Graduate Medical Education Issues.
Katie Lucas, (410) 786-7723, Amanda Michael, (410) 786-5834, and
Kellie Shannon (410) 786-0416, Organ Acquisition Payment Issues.
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
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to
view public comments. CMS will not post on Regulations.gov public
comments that make threats to individuals or institutions or suggest
that the individual will take actions to harm the individual. CMS
continues to encourage individuals not to submit duplicative comments.
We will post acceptable comments from multiple unique commenters even
if the content is identical or nearly identical to other comments.
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
Under various statutory authorities, we either discuss continued
program implementation or are making changes to the Medicare IPPS,
other related payment methodologies and programs and other policies and
provisions included in this rule. The purpose of and the statutory
authority(ies) for these changes include, but are not limited to, the
following:
Section 1886(d) of the Social Security Act (the Act),
which sets forth a system of payment for the operating costs of acute
care hospital inpatient stays under Medicare Part A (Hospital
Insurance) based on prospectively set rates, including indirect medical
education (IME) payments under section 1886(d)(5)(B) of the Act.
The Consolidated Appropriations Act of 2021 relating to
payments to hospitals for direct graduate medical education (GME) and
indirect medical education (IME) costs. Section 1886(a)(4) of the Act,
which specifies that costs of approved educational activities are
excluded from the operating costs of inpatient hospital services.
Hospitals with approved graduate medical education (GME) programs are
paid for the direct costs of GME in accordance with section 1886(h) of
the Act.
Organ acquisition costs are reimbursed to transplant
hospitals and kidney acquisition costs are reimbursed to organ
procurement organizations under reasonable cost principles under
section 1861(v) of the Act. Under 42 U.S.C. 273(b), organ procurement
organizations must have an agreement with the Secretary to be
reimbursed under title XVIII of the Social Security Act for the cost to
procure kidneys.
2. Summary of the Provisions
The following is a summary of the provisions in this final rule
with comment period.
a. Implementation of Sections 126, 127, and 131 of the Consolidated
Appropriations Act (CAA) of 2021
We are finalizing provisions to implement sections 126, 127, and
131 of the CAA. Section 126(a) of the CAA amended section 1886(h) of
the Act by adding a new section 1886(h)(9) of the Act requiring the
distribution of additional residency positions to qualifying hospitals.
Section 127 of the CAA amended section 1886(h)(4)(H)(iv) of the Act to
specify that in the case of a hospital not located in a rural area that
established or establishes a medical residency training program (or
rural track) in a rural area, the hospital, and each such hospital
located in a rural area that participates in such a training, is
allowed to receive an adjustment to its full-time equivalent (FTE)
resident limit. Section 131 of the CAA amended section 1886(h)(2)(F) of
the Act to provide an opportunity to hospitals with such extremely low
or $0 per resident amounts (PRAs) that meet certain criteria to reset
and establish new PRAs if the hospital trains resident(s) in a cost
reporting period
[[Page 73417]]
beginning on or after enactment (December 27, 2020) and before the date
that is 5 years after enactment (December 26, 2025). Section 131 of the
CAA also amended section 1886(h)(4)(H)(i) of the Act to provide an
opportunity for hospitals that meet certain criteria and that have very
small FTE resident caps to replace those caps if the Secretary
determines the hospital begins training residents in a new program
beginning on or after enactment (December 27, 2020) and before 5 years
after enactment (December 26, 2025).
In addition, this final rule with comment period solicits comments
on certain issues to inform potential future rulemaking. Specifically,
for the implementation of section 126 of the CAA regarding distribution
of residency slots, we seek comment on using a measure of health care
provided outside of a Health Professional Shortage Area (HPSA) to HPSA
residents (as discussed in section II.B.3.b.(5) of the preamble of this
final rule with comment period). For purposes of prioritizing hospitals
awarded residency positions under section 126, we seek comment on
feasible alternatives to HPSA scores as a proxy for health disparities
(as discussed in section II.B.3.d.(2) of the preamble of this final
rule). In addition, for the implementation of section 131, we seek
comment on the review process to determine eligibility for per resident
amount or full-time equivalent cap resets in situations where a
hospital disagrees with the information on the cost report, in
particular from cost reports that are no longer within the 3-year
reopening period (as discussed in section II.B.5.e. of the preamble of
this final rule).
We refer readers to section II.B.2. of this final rule with comment
period for a summary of the provisions of sections 126, 127, and 131 of
the CAA that we are implementing in this final rule with comment
period.
b. Changes to Organ Acquisition Payment Policy
We proposed changes pertaining to Medicare's share of organ
acquisition costs transplanted into Medicare beneficiaries. We also
proposed changes to longstanding Medicare organ acquisition payment
policies and changes pertaining to charges for services provided to
cadaveric organ donors by donor community hospitals. After considering
the numerous public comments received, at this time, we are not
finalizing our proposal with respect to the organ counting policy for
Medicare's organ acquisition payment purposes and the research organ
counting policy. We are finalizing other longstanding Medicare organ
acquisition payment policies with some modifications. We are also
finalizing rules with respect to Medicare-certified non-transplant
hospitals and transplant hospitals' charges for hospital services
provided to cadaveric donors, effective for cost reporting periods
beginning on or after the effective date of this final rule with
comment period.
3. Summary of Costs, Savings, Benefits, and Transfers
The following table provides a summary of the costs, savings,
benefits associated with the provisions described in section I.A.2. of
this final rule.
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Description of costs, transfers, savings,
Provision description and benefits
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Implementation of Sections Section 1886(h) of the Act, as amended by
126, 127, and 131 of the sections 126, 127, and 131 of the CAA,
Consolidated Appropriations provides for the distribution of
Act (CAA) of 2021. additional residency positions (section
126), promotes a rural hospital GME
funding opportunity (section 127), and
requires resetting PRAs and FTE resident
caps for certain hospitals after hosting
medical resident rotators for short
durations (section 131). We refer
readers to section II.B. of this final
rule with comment period for a summary
of the provisions of sections 126, 127
and 131 that we are implementing in this
final rule. We estimate that our
implementation of section 126 of the CAA
will result in an estimated cost of
approximately $1.830 billion from FY
2023 through FY 2031. We estimate that
our implementation of section 127 of the
CAA will result in an estimated cost of
approximately $0.130 billion from FY
2024 through FY 2031. We estimate our
implementation of section 131 of the CAA
will result in an estimated cost of
approximately $1.380 billion from FY
2022 through FY 2031.
Changes to Organ Acquisition We refer readers to sections II.C.2.a.
Payment Policy. through g. and i through m. and II.C.3.
of this final rule with comment period
for a summary of organ acquisition
payment policies we are implementing in
this final rule. These final policies
are not expected to have an impact on
expenditures. However, the provisions in
sections II.C.2.b., e. and l. of this
final rule with comment period to the
extent that any of these provisions may
have an impact on expenditures, that
impact is not estimable without the
availability of the appropriate cost
information to calculate such impact.
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B. Background
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Act sets forth a system of payment for the
operating costs of acute care hospital inpatient stays under Medicare
Part A (Hospital Insurance) based on prospectively set rates. Section
1886(g) of the Act requires the Secretary to use a prospective payment
system (PPS) to pay for the capital-related costs of inpatient hospital
services for these ``subsection (d) hospitals.'' Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M. The existing
regulations governing the IME adjustment are located in Sec. 412.105.
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2. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act. The amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing direct GME payments to
the various types of hospitals are located in 42 CFR part 413.
3. Issuance of Proposed Rulemaking
In the FY 2022 IPPS/LTCH PPS proposed rule appearing in the May 10,
2021 Federal Register (86 FR 25070), we set forth proposed payment and
policy changes to the Medicare IPPS for FY 2022 operating costs and
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we set forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2022.
The following is a general summary of the changes that we proposed
to make related to the provisions addressed in this final rule with
comment period.
In section V. of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, we discussed proposed changes to certain provisions of the
regulations in 42 CFR parts 412 and 413, including proposals to
implement provisions of the Consolidated Appropriations Act relating to
payments to hospitals for direct graduate medical education (GME) and
indirect medical education (IME) costs.
Section X. of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule included proposed changes pertaining to Medicare's share of organ
acquisition costs for organs transplanted into Medicare beneficiaries
and the charges for services provided to cadaveric organ donors by
donor community hospitals and transplants hospitals.
In Appendix A of the FY 2022 IPPS/LTCH PPS proposed rule, we set
forth an analysis of the impact the proposed changes for the provisions
listed would have on affected acute care hospitals, IPPS-excluded
hospitals and other entities.
We received approximately 28,000 timely pieces of correspondence in
response to the FY 2022 IPPS/LTCH PPS proposed rule. Approximately 570
items of the proposed rule's correspondence are addressed in this final
rule with comment period.
We also note that the FY 2022 IPPS/LTCH PPS final rule appeared in
the August 13, 2021 Federal Register (86 FR 44774) and that final rule
included the vast majority of the provisions of the proposed rule. This
final rule with comment period finalizes the graduate medical education
and certain organ acquisition payment policy provisions of the FY 2022
IPPS/LTCH PPS proposed rule. As noted in section II.A. of this final
rule with comment period, we are not addressing the proposed revisions
to the regulations relating to the treatment of section 1115 waiver
days for purposes of the disproportionate share hospital (DSH)
adjustment in this final rule with comment period. We expect to revisit
the issue of section 1115 waiver days in future rulemaking, and we
encourage stakeholders to review any future proposal on this issue and
to submit their comments at that time. As noted in section II.C. of
this final rule with comment period, we are not addressing the proposed
revisions to the Medicare organ counting policy in this final rule with
comment period. We may revisit the Medicare organ counting policy in
future rulemaking, and we encourage stakeholders to review any future
proposal on this issue and to submit their comments at that time.
II. Provisions of the Final Rule With Comment Period
A. Medicare Disproportionate Share Hospital (DSH) Payments: Counting
Days Associated With Section 1115 Demonstration Projects in the
Medicaid Fraction (Sec. 412.106)
In the FY 2022 IPPS/LTCH PPS proposed rule, we proposed revisions
to the regulation relating to the treatment of section 1115 waiver days
for purposes of the DSH adjustment (86 FR 25457 through 25459). In the
FY 2022 IPPS/LTCH PPS final rule, we stated that due to the number and
nature of the comments that we received on our proposal, we intended to
address the public comments in a separate document (86 FR 45249). We
thank the commenters for their input on the proposal, but after further
consideration of the issue, we have determined not to move forward with
the current proposal. We expect to revisit the issue of section 1115
waiver days in future rulemaking, and we encourage stakeholders to
review any future proposal on this issue and to submit their comments
at that time.
B. Payment for Indirect and Direct Graduate Medical Education Costs
(Sec. Sec. 412.105 and 413.75 Through 413.83)
1. Background
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 determining 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 full-
time equivalent (FTE) 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 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 a payment adjustment
known as the indirect medical education (IME) adjustment under the 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 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 calculation of both direct GME payments and the IME payment
adjustment 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, through the Balanced Budget Act of 1997 (Pub. L.
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105-33), established a limit on the number of allopathic and
osteopathic residents that a hospital could 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 direct GME in 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 based on the FTE count for IME during that cost
reporting period is applied, effective for discharges occurring on or
after October 1, 1997. Dental and podiatric residents are not included
in this statutorily mandated cap.
Section 422 of Public Law 108-173, the Medicare Modernization Act
(MMA), provided for the redistribution of unused residency positions
effective for portions of cost reporting periods beginning on or after
July 1, 2005. The policy implementing section 422 of the MMA was
included in the August 11, 2004 FY 2005 IPPS final rule (69 FR 49112
through 49169).
The Affordable Care Act made a number of statutory changes relating
to the determination of a hospital's FTE resident limit 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(a)(4) 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 training fewer
residents than their caps, and to authorize the redistribution of the
estimated number of excess FTE resident slots to other qualified
hospitals. In addition, section 5503(b) of the Affordable Care Act
amended section 1886(d)(5)(B)(v) of the Act to require the application
of the section 1886(h)(8) of the Act provisions in the same manner to
the IME FTE resident caps. The policy implementing section 5503 of the
Affordable Care Act was included in the November 24, 2010 CY 2011 OPPS/
ASC final rule with comment period (75 FR 72147 through 72212) and the
FY 2013 IPPS/LTCH PPS final rule (77 FR 53424 through 53434). Section
5506(a) of the Affordable Care Act amended section 1886(h)(4)(H) of the
Act to add a new clause (vi) that instructs the Secretary to establish
a process by regulation under which, in the event a teaching hospital
closes, the Secretary will permanently increase the FTE resident caps
for hospitals that meet certain criteria up to the number of the closed
hospital's FTE resident caps. The policy implementing section 5506 of
the Affordable Care Act was included in the November 24, 2010 CY 2011
OPPS/ASC final rule with comment period (75 FR 72212 through 72238),
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53434 through 53448), and
the FY 2015 IPPS/LTCH final rule (79 FR 50122 through 50140).
2. Provisions of the Consolidated Appropriations Act, 2021
The Consolidated Appropriations Act, 2021 (CAA), division CC,
contained 3 provisions affecting Medicare direct GME and IME payments
to teaching hospitals. Section 126 of the CAA makes available 1,000 new
Medicare-funded GME positions (but not more than 200 new positions for
a fiscal year), to be distributed beginning in fiscal year 2023, with
priority given to hospitals in 4 statutorily-specified categories.
Section 127 of the CAA makes statutory changes relating to the
determination of both an urban and rural hospital's FTE resident limit
for direct GME and IME payment purposes with regard to residents
training in an accredited rural training track (RTT), and the 3-year
rolling average set out at section 1886(h)(4)(G)(i) of the Act used to
calculate payments for these hospitals. Section 131 of the CAA makes
statutory changes to the determination of direct GME PRAs and direct
GME and IME FTE resident limits of hospitals that hosted a small number
of residents for a short duration. We provided detailed proposals for
implementing these three CAA provisions in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25502 through 25523). In this section of this
final rule with comment period, we discuss our proposals, respond to
public comments received, and provide our final policies.
3. Distribution of Additional Residency Positions Under the Provisions
of Section 126 of Division CC of the Consolidated Appropriations Act,
2021 (CAA)
a. Overview
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25503 through 25504), section 126(a) of the CAA amended section 1886(h)
of the Act by adding a new section 1886(h)(9) of the Act requiring the
distribution of additional residency positions to qualifying hospitals.
Section 1886(h)(9)(A) of the Act requires that for FY 2023, and for
each succeeding fiscal year until the aggregate number of full-time
equivalent (FTE) residency positions distributed is equal to 1,000, the
Secretary shall initiate separate rounds of applications from hospitals
for these additional residency positions. The Secretary is required,
subject to certain provisions in the law, to increase the otherwise
applicable resident limit for each qualifying hospital that submits a
timely application by the number of positions that may be approved by
the Secretary for that hospital. The Secretary is required to notify
hospitals of the number of positions distributed to them by January 31
of the fiscal year of the increase, and the increase is effective
beginning July 1 of that fiscal year. Section 1886(h)(9)(A) of the Act
also limits the aggregate number of such positions made available in a
single fiscal year across all hospitals to no more than 200.
In determining the qualifying hospitals for which an increase is
provided, section 1886(h)(9)(B) of the Act requires the Secretary to
take into account the ``demonstrated likelihood'' of the hospital
filling the positions made available within the first 5 training years
beginning after the date the increase would be effective, as determined
by the Secretary.
Section 1886(h)(9)(B) of the Act also requires a minimum
distribution for certain categories of hospitals. Specifically, the
Secretary is required to distribute at least 10 percent of the
aggregate number of total residency positions available to each of four
categories of hospitals. Stated briefly, and discussed in greater
detail later in this final rule with comment period, the categories are
as follows: (1) Hospitals located in rural areas or that are treated as
being located in a rural area (pursuant to sections 1886(d)(2)(D) and
1886(d)(8)(E) of the Act); (2) hospitals in which the reference
resident level of the hospital is greater than the otherwise applicable
resident limit; (3) hospitals in states with new medical schools or
additional locations and branches of existing medical schools; and (4)
hospitals that serve areas designated as Health Professional Shortage
Areas (HPSAs). Section 1886(h)(9)(F)(ii) of the Act defines a
qualifying hospital as a hospital in one of these four categories.
Section 1886(h)(9)(C) of the Act places certain limitations on the
distribution of the residency positions. First, a hospital may not
receive more than 25 additional FTE residency positions in total.
Second, no increase in the otherwise applicable resident limit of a
hospital may be made unless the hospital agrees to increase the total
number of FTE residency positions under the approved medical residency
[[Page 73420]]
training program of the hospital by the number of positions made
available to that hospital.
b. Determinations Required for the Distribution of Residency Positions
(1) Determination That a Hospital Has a ``Demonstrated Likelihood'' of
Filling the Positions
Section 1886(h)(9)(B)(i) of the Act directs the Secretary to take
into account the ``demonstrated likelihood'' of the hospital filling
the positions made available within the first 5 training years
beginning after the date the increase would be effective, as determined
by the Secretary.
Section 1886(h)(9)(A)(iii)(II) of the Act requires that the
increase would be effective beginning July 1 of the fiscal year of the
increase. For FY 2023, this means the additional positions would be
effective July 1, 2023.
In the FY 2022 IPPS/LTCH PPS proposed rule, we proposed that the
application deadline for the additional positions available for a
fiscal year would be January 31 of the prior fiscal year. However, as
discussed later in this final rule with comment period, we are
finalizing a deadline of March 31, such that the application deadline
for the additional positions available for a fiscal year will be March
31 of the prior fiscal year. Accordingly, for FY 2023, all references
in section II.B.3. of this final rule with comment period to the
application deadline are references to the application deadline of
March 31, 2022.
We proposed that a hospital would show a ``demonstrated
likelihood'' of filling the additional positions (sometimes
equivalently referred to as slots) for which it applies by
demonstrating that it does not have sufficient room under its current
FTE resident cap(s) to accommodate a planned new program or expansion
of an existing program.
In order to demonstrate that it does not have sufficient room under
its current FTE resident cap(s), we proposed that a hospital would be
required to submit copies of its most recently submitted Worksheets E,
Part A and E-4 from the Medicare cost report (CMS-Form-2552-10) as part
of its application for an increase to its FTE resident cap.
We proposed that a hospital would demonstrate and attest to a
planned new program or expansion of an existing program by meeting at
least one of the following two criteria:
``Demonstrated Likelihood'' Criterion 1 (New
Residency Program). The hospital does not have sufficient room under
its FTE resident cap, and the hospital intends to use the additional
FTEs as part of a new residency program that it intends to establish on
or after the date the increase would be effective (that is, a new
program that begins training residents at any point within the
hospital's first 5 training years beginning on or after the date the
increase would be effective).
Under ``Demonstrated Likelihood'' Criterion 1, we proposed that the
hospital would be required to meet at least one of the following
conditions as part of its application:
[squ] Application for approval of the new residency program has
been submitted to the ACGME or the American Board of Medical
Specialties (ABMS) by the application deadline for that year.
[squ] The hospital has submitted an institutional review document
or program information form concerning the new residency program in an
application for approval of the new program by the application deadline
for that year.
[squ] The hospital has received written correspondence by the
application deadline for that year from the ACGME or ABMS acknowledging
receipt of the application for the new residency program, or other
types of communication from the accrediting bodies concerning the new
program approval process (such as notification of site visit).
``Demonstrated Likelihood'' Criterion 2
(Expansion of an Existing Residency Program). The hospital does not
have sufficient room under its FTE resident cap, and the hospital
intends to use the additional FTEs to expand an existing residency
training program within the hospital's first 5 training years beginning
on or after the date the increase would be effective. Under
``Demonstrated Likelihood'' Criterion 2, we proposed that the hospital
would be required to meet at least one of the following conditions as
part of its application:
[squ] The hospital has approval by the application deadline from an
appropriate accrediting body (the ACGME or ABMS) to expand the number
of FTE residents in the program.
[squ] The hospital has submitted by the application deadline an
institutional review document or program information form for the
expansion of the existing residency training program.
Under ``Demonstrated Likelihood'' Criterion 2, we proposed that the
hospital would be applying for an increase in its FTE resident cap in
order to expand an existing residency program. We proposed that this
would mean that as of the application deadline the hospital was either
already training residents in this program, or, if the program existed
at another hospital as of that date, the residents would begin to
rotate at the applying hospital on or after the effective date of the
increase.
We note that section 1886(h)(9)(C)(ii) of the Act requires that if
a hospital is awarded positions, that hospital must increase the number
of its residency positions by the amount the hospital's FTE resident
caps are increased based on the newly awarded positions under section
126 of CAA. We therefore proposed that a hospital must, as part of its
application, attest to increase the number of its residency positions
by the amount the hospital's FTE resident caps are increased based on
any newly awarded positions.
We present a summary of the public comments and our responses to
our proposals related to the determination that a hospital has a
``demonstrated likelihood'' of filling the positions awarded under
section 126 of the CAA.
Comment: Several commenters expressed support for our proposed
``Demonstrated Likelihood'' criteria.
Response: We thank the commenters for their support.
Comment: A commenter supported our proposal to award additional
residency positions only for newly-created positions, rather than for
existing positions that a hospital may already be funding in excess of
its statutory FTE caps. Conversely, another commenter expressed concern
that hospitals training residents over their caps are neglected by our
proposed ``Demonstrated Likelihood'' criteria. This commenter
questioned why such hospitals were not being prioritized in the
distribution of additional residency positions, given the commenter's
belief that there is almost certain likelihood that additional
residency positions awarded to these hospitals would be immediately
filled and utilized.
Response: Section 1886(h)(9)(C)(ii) of the Act, as added by section
126 of the CAA, prohibits an increase in the otherwise applicable
resident limit of a hospital unless the hospital agrees to increase its
total number of FTE residency positions. Our proposed ``Demonstrated
Likelihood'' criteria thus reflect the requirements set forth in the
statute, which preclude the use of additional residency positions to
fund existing positions. In response to the comment that hospitals that
do not have sufficient room under their current FTE resident cap(s)
(that is, hospitals that are training at or above their Medicare GME
cap(s) and do not have any remaining
[[Page 73421]]
Medicare funding for positions to train additional FTE residents)
should be prioritized in the distribution of additional residency
positions, we note, as discussed in this section, that HPSA scores,
while not a perfect measure, provide the best prioritization approach
available at this time. In addition, and as discussed later in this
section, in order to be eligible for prioritization based on HPSA
scores, hospitals must first qualify under one or more of Category One,
Category Two, Category Three, or Category Four. Category Two consists
of hospitals in which the reference resident level of the hospital is
greater than the otherwise applicable resident limit. Therefore,
hospitals that do not have sufficient room under their current FTE
resident caps, may qualify to be prioritized for the distribution of
additional residency positions based on our prioritization of
applications from hospitals based on HPSA score final policy, discussed
further in this section.
Comment: A commenter suggested that hospitals should be able to
meet the ``demonstrated likelihood'' requirement by showing that the
number of residency positions currently filled for one or more programs
at the hospital is less than the number of residents for which those
programs have been accredited by the ACGME. Another commenter made a
similar point by requesting that the number of residency positions
distributed to a hospital take into account the hospital's ability to
use those residency positions immediately through existing programs.
Another commenter stated that the reason a hospital has unfilled
accredited residency positions may be that the hospital would be unable
to train the full complement of residents without exceeding its FTE
caps; the commenter added that such hospitals would not actually need
to establish a new residency program or expand an existing program in
order to quickly put any additional residency positions awarded to them
to use.
Response: We agree that a hospital should be able to meet the
``demonstrated likelihood'' requirement by showing that it has
unfilled, previously accredited positions in its residency program, and
that it is now seeking to fill those positions, as long as the hospital
does not have sufficient room under its FTE resident cap(s) for the
planned expansion. Therefore, we are modifying ``Demonstrated
Likelihood'' Criterion 2 (Expansion of an Existing Residency Program)
to include the scenario where a hospital currently has unfilled
positions in its residency program that have previously been approved
by the ACGME and is now seeking to fill those positions.
Comment: Several commenters recommended that rural hospitals should
only be awarded additional residency positions for the purpose of
expanding existing programs, since such hospitals can already receive a
cap adjustment whenever they establish a new program.
Response: We believe rural hospitals should be given the option of
receiving a permanent cap increase for a new program either under
section 126 of the CAA, or under the existing 5-year cap-building
process (42 CFR 413.70(e)). A rural hospital making this decision
should carefully consider which option is more appropriate to its
specific scenario.
Comment: A commenter expressed concern that many small rural
hospitals would be unlikely to meet the proposed requirements for
residency positions under ``Demonstrated Likelihood'' Criterion 2
(Expansion of an Existing Residency Program), since such hospitals
often restrict the size of their programs for reasons other than
funding, for example, because of teaching capacity or recruiting
challenges. The commenter stated that only large rural hospitals with
established programs would be likely to meet the proposed requirements
under ``Demonstrated Likelihood'' Criterion 2.
Response: We appreciate the concerns raised by the commenter about
unique challenges that may be faced by small rural hospitals. However,
the statute requires us to take into account the ``demonstrated
likelihood'' of a hospital filling the positions. Expansion of an
existing program is a valid way for a hospital to demonstrate the
likelihood of filling the positions. We note that since we are adopting
a criterion that 50 percent of the program's training take place in the
HPSA and not at the applicant hospital as proposed (which is discussed
in section II.B.3.d. of this final rule with comment period), a rural
hospital may be able to more easily partner with other participating
training sites to meet the 50 percent criterion and be able to apply
(and meet the requirements for ``demonstrated likelihood'') for the
amount of FTEs that will be training at its (the rural) hospital.
Comment: Several commenters requested that we update our proposed
``Demonstrated Likelihood'' criteria to be consistent with the
terminology currently used by the ACGME and the ABMS. Specifically,
commenters noted that the ACGME ``accredits'' new residency programs,
whereas we used the term ``approval'' in our proposed criteria. In
addition, the ACGME no longer employs the terms ``institutional review
document'' or ``program information form.'' Rather, if an existing
ACGME-accredited program seeks to expand, the program director would
submit a request to the relevant specialty Review Committee for a
permanent complement increase. Finally, commenters noted that ACGME
accreditation deadlines occur multiple times per year, whereas in our
proposal we referred to requirements that must be satisfied ``by the
application deadline for that year''.
Response: We thank commenters for bringing the terminology issues
to our attention and are revising the language accordingly as
summarized below. However, we believe that the commenters have
misinterpreted our references to the ``application deadline'' as
references to the ACGME accreditation deadlines. In the context of our
proposed ``Demonstrated Likelihood'' criteria, the ``application
deadline'' refers to the deadline for submitting applications to CMS
for additional residency positions under section 126 of the CAA, not
the deadline for submitting program materials to the ACGME or the ABMS,
as the commenters stated. We are therefore also clarifying that the
phrase ``application deadline'' used in this context refers to the
deadline for submitting applications under section 126 of the CAA for a
given fiscal year. (As noted previously, in this final rule with
comment period we are revising this deadline to March 31 of the prior
fiscal year.)
In summary, after consideration of the public comments received, we
are finalizing our proposed policy regarding the determination that a
hospital has demonstrated a likelihood of filling the positions for
``Demonstrated Likelihood'' Criterion 1 (New Residency Program) with
modifications. Under the policy finalized in this final rule with
comment period, as we proposed, a hospital will show a ``demonstrated
likelihood'' of filling the additional positions (sometimes
equivalently referred to as slots) for which it applies by
demonstrating that it does not have sufficient room under its current
FTE resident cap(s) to accommodate a planned new program or expansion
of an existing program. To do so, as we proposed, we are finalizing a
policy that a hospital will submit copies of its most recently
submitted Worksheets E, Part A and E-4 from the Medicare cost report
(CMS-Form-2552-10) as part of its application for an increase to its
FTE resident cap, and will demonstrate and attest to a planned new
program or
[[Page 73422]]
expansion of an existing program by meeting at least one of two
``Demonstrated Likelihood'' criteria.
Specifically, we are finalizing the following for ``Demonstrated
Likelihood'' Criterion 1:
``Demonstrated Likelihood'' Criterion 1 (New
Residency Program). The hospital does not have sufficient room under
its FTE resident cap, and the hospital intends to use the additional
FTEs as part of a new residency program that it intends to establish on
or after the date the increase would be effective (that is, a new
program that begins training residents at any point within the
hospital's first 5 training years beginning on or after the date the
increase would be effective). Under ``Demonstrated Likelihood''
Criterion 1, the hospital will be required to meet at least one of the
following conditions as part of its application:
[squ] Application for accreditation of the new residency program
has been submitted to the ACGME (or application for approval of the new
residency program has been submitted to the ABMS) by the application
deadline.
[squ] The hospital has received written correspondence from the
ACGME (or ABMS) acknowledging receipt of the application for the new
residency program, or other types of communication concerning the new
program accreditation or approval process (such as notification of site
visit) by the application deadline.
For ``Demonstrated Likelihood'' Criterion 2, we are finalizing the
following:
``Demonstrated Likelihood'' Criterion 2
(Expansion of an Existing Residency Program). The hospital does not
have sufficient room under its FTE resident cap, and the hospital
intends to use the additional FTEs to expand an existing residency
training program within the hospital's first 5 training years beginning
on or after the date the increase would be effective. Under
``Demonstrated Likelihood'' criterion 2, the hospital will be required
to meet at least one of the following conditions as part of its
application:
[squ] The hospital has received approval by the application
deadline from an appropriate accrediting body (the ACGME or ABMS) to
expand the number of FTE residents in the program.
[squ] The hospital has submitted a request by the application
deadline for a permanent complement increase of the existing residency
program.
[squ] The hospital currently has unfilled positions in its
residency program that have previously been approved by the ACGME and
is now seeking to fill those positions.
We are also finalizing, as we proposed, a policy that under
``Demonstrated Likelihood'' Criterion 2, the hospital is applying for
an increase in its FTE resident cap because it is expanding an existing
residency program. This means that as of the application deadline the
hospital is either already training residents in this program, or, if
the program exists at another hospital as of that date, the residents
will begin to rotate at the applying hospital on or after the effective
date of the increase. In addition, we note that section
1886(h)(9)(C)(ii) of the Act requires that if a hospital is awarded
positions, that hospital must increase the number of its residency
positions by the amount the hospital's FTE resident caps will increase,
based on the newly awarded positions under section 126 of CAA.
Therefore, we will require that a hospital must, as part of its
application, attest to increase the number of its residency positions
by the amount the hospital's FTE resident caps are increased based on
any newly awarded positions in accordance with the provisions of
section 1886(h)(9)(B)(i) of the Act.
(2) Determination of Hospitals That Are Located in a Rural Area or Are
Treated as Being Located in a Rural Area (Category One)
Section 1886(h)(9)(B)(ii) of the Act requires the Secretary to
distribute not less than 10 percent of resident positions available for
distribution to each of four categories of hospitals. Under section
1886(h)(9)(B)(ii)(I) of the Act, the first of these categories consists
of hospitals that are located in a rural area (as defined in section
1886(d)(2)(D) of the Act) or are treated as being located in a rural
area pursuant to section 1886(d)(8)(E) of the Act. We refer to this
category as Category One.
Section 1886(d)(2)(D)(ii) of the Act defines a rural area as any
area outside a Metropolitan Statistical Area (MSA). Under the existing
regulations at Sec. 412.64(b)(1)(ii), an ``urban area'' means an MSA
or a Metropolitan Division (in the case where a Metropolitan
Statistical Area is divided into Metropolitan Divisions), as defined by
the Office of Management and Budget. Under existing Sec.
412.64(b)(1)(ii)(C), a ``rural area'' means any area outside an urban
area. Since FY 2005, we no longer use the term MSA, but instead use the
term Core-Based Statistical Area (CBSA). Certain CBSAs are designated
as urban, while those not designated as urban are considered rural. For
purposes of section 1886(h)(9)(B)(ii) of the Act, in the FY 2022 IPPS/
LTCH PPS proposed rule (86 FR 25504), we proposed that a hospital with
its main campus located in an area outside of an urban CBSA would be
considered a rural hospital. We note that this definition of ``rural
area'' is consistent with our policy concerning designation of rural
areas for wage index purposes.
Similar to our historical wage index policy of cross walking
counties to CBSAs, CMS proposed to use the County to CBSA Crosswalk and
Urban CBSAs and Constituent Counties for Acute Care Hospitals File, or
successor files containing similar information, from the most recent FY
IPPS final rule (or correction notice if applicable) to determine if a
hospital is a rural hospital. (This file is available on the CMS
website in approximately August of the year prior to the year of the
application deadline. Under the file's current format, blank cells in
Columns D and E indicate an area outside of a CBSA.)
Under section 1886(d)(8)(E) of the Act, a subsection (d) hospital
(that is, generally, an IPPS hospital) that is physically located in an
urban area is treated as being located in a rural area for purposes of
payment under the IPPS if it meets criteria specified in section
1886(d)(8)(E)(ii) of the Act, as implemented in the regulations at
Sec. 412.103. Under these regulations, a hospital may apply to CMS to
be treated as located in a rural area for purposes of payment under the
IPPS.
Given the fixed number of available residency positions, it is
necessary to establish a deadline by which a hospital must be treated
as being located in a rural area for purposes of Category One. We
proposed to use Table 2, or a successor table containing similar
information, posted with the most recent IPPS final rule (or correction
notice if applicable) to determine whether a hospital is reclassified
to rural under Sec. 412.103. If a hospital is not listed as
reclassified to rural on Table 2, but has been subsequently approved by
the CMS Regional Office to be treated as being located in a rural area
for purposes of payment under the IPPS as of the application deadline
for additional positions for the fiscal year, we proposed that the
hospital must submit its approval letter with its application in order
to be treated as being located in a rural area for purposes of Category
One.
In this section we present a summary of the public comments and our
responses to our proposals related to the determination of hospitals
that are located in a rural area or are treated as
[[Page 73423]]
being located in a rural area (Category One).
Comment: Several commenters expressed support for our proposed
definition of Category One hospitals.
Response: We thank the commenters for their support.
Comment: A commenter supported our proposed definition of a rural
area, but suggested that we expand it to include certain locations
within MSAs that are considered rural by the Federal Office of Rural
Health Policy. The same commenter recommended that we assign a lower
priority to geographically urban hospitals that have been reclassified
as rural for wage index purposes, stating that this reclassification is
done for payment equity purposes and does not make such facilities
rural in any meaningful sense.
Response: Our proposed definition of a rural area is consistent
with how that term is employed in the context of the Medicare statute.
In particular, it is consistent with section 1886(h)(9)(B)(ii)(I) of
the Act, as added by section 126 of the CAA, which refers specifically
to the definition of a rural area at section 1886(d)(2)(D) of the Act.
Furthermore, as we stated in the FY 2022 IPPS/LTCH PPS proposed rule,
our definition is consistent with our policy concerning designation of
rural areas for other purposes, including the wage index. For these
reasons, we are not amending our definition of rural for purposes of
section 126 of the CAA.
With respect to the commenter's second point concerning rural
reclassifications, we believe that the commenter may have
misinterpreted our proposal. The commenter referred specifically to
urban hospitals that have been reclassified as rural for wage index
purposes. We believe that the commenter was referring to hospitals that
have been reclassified as rural by the Medicare Geographic
Classification Review Board (MGCRB). Under section 1886(d)(10) of the
Act, as implemented at 42 CFR 412.230, the MGCRB may change the
classification of a hospital for purposes of the wage index only.
However, the legislation directs the Secretary to consider hospitals
that are treated as being located in a rural area pursuant to section
1886(d)(8)(E) of the Act, which is a separate provision. Section
1886(d)(8)(E) of the Act, as implemented at Sec. 412.103, is
applicable beyond the calculation of the wage index. In particular,
under Sec. 412.103(a)(1), an urban hospital may apply to be
reclassified as rural if it is located in a rural census tract of an
MSA as determined by the Federal Office of Rural Health Policy. We
believe that this is the same criterion that the commenter requested be
consider in expanding our proposed definition of a rural area.
Additionally, because section 1886(h)(9)(B)(ii)(I) of the Act
references both hospitals that are located in a rural area (as defined
in section 1886(d)(2)(D) of the Act) and those that are treated as
being located in a rural area pursuant to section 1886(d)(8)(E) of the
Act, we read the statutory language as intending for both groups of
hospitals to receive equal treatment.
With respect to hospitals that have reclassified as rural under
Sec. 412.103 (section 1886(d)(8)(E) of the Act), we note that
consistent with our past application of rural reclassification to GME
payment policies, these hospitals are considered rural for IME payment
purposes and urban for direct GME payment purposes. However, we believe
the inclusion of these hospitals under section 126 of the CAA is
intended only to deem these hospitals as eligible recipients of the
additional slots being distributed under section 126 of the CAA. We do
not believe section 126 of the CAA limits urban hospitals that have
reclassified as rural to only receiving IME FTE residency positions. As
such, these hospitals are eligible for both direct GME and IME FTE
residency positions under section 126 of the CAA.
Comment: Several commenters requested that we clarify whether rural
referral centers are included in the definition of hospitals that are
located in a rural area or are treated as being located in a rural
area.
Response: Generally, in order to qualify for rural referral center
(RRC) status under the criteria set forth at 42 CFR 412.96, a hospital
must be rural, that is, either located in a rural area, or treated as
being located in a rural area under section 1886(d)(8)(E) of the Act.
Most RRCs would therefore qualify under Category One as defined
previously in this final rule with comment period. However, we permit
hospitals that previously qualified as an RRC but lost their status due
to the Office of Management and Budget (OMB) redesignation of the
county in which they are located from rural to urban to be reinstated
as an RRC (August 1, 2000 IPPS final rule (65 FR 47054, 47089)).
Currently, there are a relatively small number of hospitals with RRC
status that are neither located in a rural area nor treated as being
located in a rural area under section 1886(d)(8)(E) of the Act
(approximately 11 percent). We are clarifying that such hospitals,
despite their status as RRCs, would not qualify under Category One.
Comment: A commenter expressed concern that, as a result of our
proposal to use the County to CBSA Crosswalk and Urban CBSAs and
Constituent Counties for Acute Care Hospitals File, urban hospitals
reclassified to rural may still be able to claim treatment as rural
hospitals despite being located well within a CBSA. The same commenter
also suggested what they characterized as a grammatical edit to our
definition of rural for purposes of Category One. In the proposed rule,
we proposed that a hospital with its main campus located in an area
outside of an urban CBSA is a rural hospital. The commenter recommended
that we revise this language to state that a hospital would be
considered located in a rural area, or treated as such, if its main
campus was located in an area outside of an urban CBSA and was
classified as a rural hospital (that is, not reclassified as urban).
The commenter added that this restriction would avoid allowing large
urban rural referral centers to expand an existing program and take
these residency positions from geographically rural hospitals, which
would thwart what the commenter believes to be the legislative intent
of the statute.
Response: We believe the commenter is referring to hospitals that
are located in urban CBSAs and have been reclassified as rural under
section 1886(d)(8)(E) of the Act, as implemented in the regulations at
42 CFR 412.103. As discussed previously, the statute explicitly refers
to such reclassified hospitals among the categories of qualifying
hospitals in section 1886(h)(9)(B)(ii)(I) of the Act. The preamble
language cited by the commenter, and to which a grammatical edit was
suggested, is only part of our proposed definition, which also includes
hospitals reclassified as rural, as required by the statute. We further
note that, as we proposed, such hospitals would not be identified using
the County to CBSA Crosswalk and Urban CBSAs and Constituent Counties
for Acute Care Hospitals File, but rather by consulting Table 2, or a
successor table containing similar information, posted with the most
recent IPPS/LTCH PPS final rule (or correction notice if applicable).
If a hospital is not listed as reclassified to rural on Table 2, but
has been subsequently approved by the CMS Regional Office to be treated
as being located in a rural area for purposes of payment under the IPPS
as of the application deadline for additional positions for the fiscal
year, the hospital must submit its approval letter with its application
in order to be treated as being located in a rural area for purposes of
Category One.
It also appears that the commenter may have conflated two distinct
[[Page 73424]]
categories of hospitals, namely, urban hospitals reclassified as rural
under Sec. 412.103, and RRCs, which are governed by the regulations at
Sec. 412.96. While an urban hospital reclassified as rural may elect
to apply for RRC status if it meets the criteria set forth at Sec.
412.96, such assignment is not automatic, and many RRCs are in fact
geographically rural. Thus, as explained previously, many, but not all,
RRCs may qualify as rural hospitals for purposes of section 126 of the
CAA, depending on whether they otherwise satisfy the criteria for
Category One.
Comment: A commenter, located in an urban area within a largely
rural state, requested that CMS reconsider our proposed definition of
hospitals located in rural areas or treated as being located in rural
areas. Another commenter, stated that despite being located in a rural
area and serving a mostly rural population, they would not qualify
under Category One since the zip code of the hospital itself is not
located in a HPSA.
Response: In response to the first commenter, we refer to the
language of section 1886(h)(9)(B)(ii)(I) of the Act concerning rural
hospitals, and note that a hospital located in an urban area cannot
qualify under this category (Category One) unless it has reclassified
as rural in accordance with the regulations at 42 CFR 412.103. We
believe that the second commenter has conflated our proposals regarding
two distinct statutory categories, namely, Category One (rural
hospitals) and Category Four (hospitals that serve HPSAs). In response,
we are clarifying that a hospital located in a rural area, or that is
treated as being located in a rural area, qualifies under Category One
whether or not it is physically located in a HPSA.
Comment: A commenter requested that the states of Hawaii and
Alaska, in addition to the U.S. territories of Guam, American Samoa,
Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S.
Virgin Islands, be recognized as rural for any federal definition. The
commenter stated that these areas face significant health care
challenges as they are non-contiguous and distant from the rest of the
United States, and that their health care systems are isolated and
vulnerable.
Response: Designating the states of Hawaii and Alaska, in addition
to the U.S. territories of Guam, American Samoa, Commonwealth of the
Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands, as
rural for any federal definition is beyond the scope of this
rulemaking. We note that hospitals in these states and territories that
are located in a rural area or are treated as being located in a rural
area, as applicable, are eligible to apply for residency positions
under section 126.
Comment: A commenter stated that we should revise our proposed
definition of Category One to include the requirement that the majority
of residents' training should take place in a rural area. The commenter
argued that, if the goal is to train more physicians to remain and
serve in communities of need, then the greatest priority should be
given to hospitals and systems that themselves are located in rural
areas, and in fact serve rural communities. According to the commenter,
this should include caveats that the training itself take place in a
``rural MSA,'' and residency positions should not be awarded to an
organization that has a facility located in a rural MSA if that
facility would not be the primary place of training.
Response: We agree with the commenter that the training and
retention of physicians in rural and underserved areas is an important
goal. However, the law requires that hospitals that are located in a
rural area (as defined in section 1886(d)(2)(D) of the Act) or are
treated as being located in a rural area pursuant to section
1886(d)(8)(E) of the Act are qualifying hospitals. Prioritization of
applications is a separate issue from the definition of Category One
(and is discussed in section II.B.3.d. of this final rule with comment
period).
After review of the public comments received, we are finalizing our
proposal regarding the determination of hospitals that are located in a
rural area or are treated as being located in a rural area (Category
One) as proposed, without modification.
(3) Determination of Hospitals for Which the Reference Resident Level
of the Hospital is Greater Than the Otherwise Applicable Resident Limit
(Category Two)
Under section 1886(h)(9)(B)(ii)(II) of the Act, the second category
consists of hospitals in which the reference resident level of the
hospital (as specified in section 1886(h)(9)(F)(iii) of the Act) is
greater than the otherwise applicable resident limit. We refer to this
category as Category Two.
Under section 1886(h)(9)(F)(iii) of the Act, the term `reference
resident level' means, with respect to a hospital, the resident level
for the most recent cost reporting period of the hospital ending on or
before the date of enactment of section 1886(h)(9) of the Act, December
27, 2020, for which a cost report has been settled (or, if not,
submitted (subject to audit)), as discussed in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25505).
Under section 1886(h)(9)(F)(iii) of the Act, the term `resident
level' has the meaning given such term in paragraph (7)(C)(i). That
section defines ``resident level'' as with respect to a hospital, the
total number of full-time equivalent residents, before the application
of weighting factors (as determined under paragraph (4)), in the fields
of allopathic and osteopathic medicine for the hospital.
Under section 1886(h)(9)(F)(i) of the Act, the term `otherwise
applicable resident limit' means, with respect to a hospital, the limit
otherwise applicable under subparagraphs (F)(i) and (H) of paragraph
(4) on the resident level for the hospital determined without regard to
the changes made by this provision of CAA 2021, but taking into account
section 1886(h)(7)(A), (7)(B), (8)(A), and (8)(B) of the Act. These
paragraphs all address the distribution of positions and redistribution
of unused positions.
In the CY 2011 OPPS final rule with comment period, we previously
interpreted these terms when we implemented section 5503 of the
Affordable Care Act. Under section 1886(h)(8)(H)(i) of the Act (as
interpreted in the CY 2011 OPPS final rule (75 FR 46391)), the
``reference resident level'' generally refers to the number of
unweighted allopathic and osteopathic FTE residents who are training at
a hospital in a given cost reporting period. That is, the ``reference
resident level'' refers to a hospital's allopathic and osteopathic FTE
resident count for a specific period. The definition can vary based on
what calculation is being performed to determine the correct allopathic
and osteopathic FTE resident count (see, for example, 42 CFR
413.79(c)(1)(ii)). As noted previously, section 126 of the CAA, under
new section 1886(h)(9)(F)(iii) of the Act defines the ``reference
resident level'' as coming from the most recent cost reporting period
of the hospital ending on or before the date of enactment of the CAA
(that is, December 27, 2020).
Under new section 1886(h)(9)(F)(i) of the Act, the term ``otherwise
applicable resident limit'' is defined as ``the limit otherwise
applicable under subparagraphs (F)(i) and (H) of paragraph (4) on the
resident level for the hospital determined without regard to this
paragraph but taking into account paragraphs (7)(A), (7)(B), (8)(A),
and (8)(B).'' In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25505),
we proposed to define this as the hospital's 1996 cap during its
reference year,
[[Page 73425]]
adjusted for the following: New programs as defined at Sec. 413.79(e);
participation in a Medicare GME affiliation agreement as defined at
Sec. Sec. 413.75(b) and 413.79(f); participation in an Emergency
Medicare GME affiliation agreement as defined at Sec. 413.79(f);
participation in a hospital merger; whether an urban hospital has a
separately accredited rural training track program as defined at Sec.
413.79(k); applicable decreases or increases under section 422 of the
MMA, applicable decreases or increases under section 5503 of the
Affordable Care Act, and applicable increases under section 5506 of the
Affordable Care Act.
Regarding the term ``resident level'', in the CY 2011 OPPS final
rule (75 FR 46391) we indicated that we generally refer to a hospital's
number of unweighted allopathic and osteopathic FTE residents in a
particular period as the hospital's resident level, which we proposed
to define consistently with the definition in section 126 of the CAA;
that is, the ``resident level'' under section 1886(h)(7)(c)(i) of the
Act, which is defined as the total number of full-time equivalent
residents, before the application of weighting factors (as determined
under paragraph (4)), in the fields of allopathic and osteopathic
medicine for the hospital.
For the purposes of section 126 of the CAA we proposed that the
definitions of the terms ``otherwise applicable resident level,''
``reference resident level,'' and ``resident level'' should be as
similar as possible to the definitions those terms have in the
regulations at Sec. 413.79(c) as developed in the CY 2011 OPPS
rulemaking.
The following is a summary of the public comments and our responses
to our proposals related to the determination of hospitals for which
the reference resident level of the hospital is greater than the
otherwise applicable resident limit (Category Two).
Comment: Several commenters expressed support for our proposed
definition of Category Two hospitals.
Response: We thank the commenters for their support.
Comment: A few commenters requested that we clarify that a hospital
qualifies under Category Two if it is over its direct GME cap, its IME
cap, or both. Some commenters added that such an interpretation would
be consistent with our implementation of the distribution process under
section 5503 of Public Law 111-148.
Response: We are clarifying that a hospital qualifies for direct
GME residency positions under Category Two if it is over its direct GME
cap; qualifies for IME residency positions under Category Two if it is
over its IME cap; and qualifies for both direct GME and IME residency
positions if it is over both its direct GME and IME caps. Furthermore,
we are clarifying that a hospital may only apply for direct GME and/or
IME residency positions if it does not have sufficient room to start a
new program or expand an existing program under its existing direct GME
and/or IME caps, respectively. For example, if a hospital has
sufficient room under its IME cap to expand an existing program, but
not under its direct GME cap, that hospital may only apply for direct
GME residency positions, but not IME residency positions, to facilitate
the planned expansion.
Comment: A commenter expressed concern that Category Two may bias
financing decisions toward larger hospitals that are more likely to be
able to support residency positions in excess of their caps due to the
training of more self-sustaining subspecialty physicians.
Response: While we acknowledge the commenter's concern, we note
that hospitals training residents in excess of their otherwise
applicable resident limit or caps, are included among qualifying
hospitals as defined by the statute, which also requires that we
distribute at least 10 percent of the aggregate number of additional
residency positions to hospitals that qualify under this category.
After review of the public comments received, we are finalizing our
proposal regarding the determination of hospitals for which the
reference resident level of the hospital is greater than the otherwise
applicable resident limit (Category Two) as proposed, without
modification.
(4) Determination of Hospitals Located in States With New Medical
Schools, or Additional Locations and Branch Campuses (Category Three)
The third category specified in section 1886(h)(9)(B)(ii) of the
Act, as added by section 126 of CAA, consists of hospitals located in
States with new medical schools that received `Candidate School' status
from the Liaison Committee on Medical Education (LCME) or that received
`Pre-Accreditation' status from the American Osteopathic Association
(AOA) Commission on Osteopathic College Accreditation (the COCA) on or
after January 1, 2000, and that have achieved or continue to progress
toward `Full Accreditation' status (as such term is defined by the
LCME) or toward `Accreditation' status (as such term is defined by the
COCA); or additional locations and branch campuses established on or
after January 1, 2000, by medical schools with `Full Accreditation'
status (as such term is defined by LCME) or `Accreditation' status (as
such term is defined by the COCA). We note that the statutory language
is specific with respect to these definitions. We refer to this
category as Category Three.
Based on research and assistance received from LCME and the COCA,
we understand that each accrediting body administers a multi-step
process for applicant medical schools to progress to fully accredited
status within the first few years after they are established and begin
training students. LCME grants candidate status to an applicant medical
education program after it reviews and approves the medical school's
data collection instrument and planning self-study; at this point, it
determines that the school is ready for a survey visit, and the
preliminary accreditation survey visit is scheduled. After that visit,
LCME reviews the survey team's preliminary survey report and determines
whether or not sufficient progress toward compliance with accreditation
standards has been made and satisfactory plans for the medical
education program have been developed.
If LCME grants preliminary accreditation status, the school may
begin accepting applications for enrollment. During the second year of
the school's charter class, a school with preliminary accreditation
status may submit information and receive a survey site visit to
determine whether it meets criteria for provisional accreditation
status. Finally, LCME grants full accreditation status to schools with
provisional accreditation status, typically in the fourth teaching
year, after determining the school is in compliance with or has made
significant progress toward attaining compliance with all full
accreditation standards.
LCME defines a regional campus, comparable to ``additional
locations and branch campuses'' in section 1886(h)(9)(B)(ii)(III)(bb)
of the Act, as a site distinct from the main campus of the medical
school where students spend at least 1 full year of the curriculum.
Regional campuses of a medical education program receive accreditation
status through the main campus of the program and are not separately
accredited.
The COCA may grant pre-accreditation status to a proposed college
of osteopathic medicine (COM) that has achieved candidate status and
meets the standards of pre-accreditation status. The pre-accreditation
process starts with the submission of a pre-
[[Page 73426]]
accreditation self-study by a proposed COM; COCA staff then reviews the
submission and conducts a site visit to examine the proposed COM's
compliance with accreditation standards. Following the site visit, the
COCA reviews the site visit report and other submitted information and
grants pre-accreditation status to a proposed COM that meets the pre-
accreditation standards. Once a proposed COM receives pre-accreditation
status, it may begin to recruit, accept applications from, and admit
prospective students. We note that prior to 2017, the COCA used the
term ``provisional status'' instead of ``pre-accreditation status.''
The COCA may grant accreditation status to a COM that has achieved
pre-accreditation status and meets the standards for accreditation.
These accreditation statuses include accreditation with exceptional
outcome, accreditation, accreditation with heightened monitoring,
accreditation with warning, and accreditation with probation. Any
accreditation status constitutes full accreditation, in contrast to
pre-accreditation status or candidate status, which do not constitute
full accreditation status.
The COCA defines a branch campus as a geographically separate
location apart from the COM's main campus that is: Permanent in nature;
offers courses in educational programming leading to a doctorate in
osteopathic medicine; has its own faculty and administrative or
supervisory organization; and maintains its own budgetary and hiring
authority. A COM that establishes a branch location must apply for and
receive separate approval from the COCA; the application process has
four steps: A written application and branch campus self-study, a
progress report, a revised branch campus self-study and site visit, and
a final, pre-operational site visit.
The COCA defines an additional location as a location that is
geographically separate from the main campus of a COM, but unlike a
branch location, shares administration, faculty, curriculum, and
budgetary authority with the main campus. Additional locations receive
accreditation through the main campus of the COM following the review
of documents and a survey site visit, after which a COM may enroll
students in the additional location.
Based on information gathered from LCME and the COCA about new
medical schools, additional locations and branch campuses, in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25506), we proposed that
hospitals located in the following 35 States and 1 territory, referred
to as Category Three States, would be considered Category Three
hospitals: Alabama, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana,
Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi,
Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina,
Ohio, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee,
Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin. We
further stated that if a hospital is located in a state not listed
here, but believes the state in which it is located should be on this
list, the hospital could submit a formal comment on the proposed rule
to make a change to this list, or could provide documentation with
submission of its application to CMS that the state in which it is
located has a medical school or additional location or branch campus of
a medical school established on or after January 1, 2000. Pursuant to
the statutory language, all hospitals in such states are eligible for
consideration; the hospitals, themselves, do not need to meet the
conditions of section 1886(h)(9)(B)(ii)(III)(aa) or (bb) of the Act in
order to be considered.
Comment: Several commenters expressed support for our proposed
definition of Category Three hospitals.
Response: We thank the commenters for their support.
In addition, we did not receive any comments requesting that a
state be added to the list of Category Three states.
Therefore, after review of the public comments received, we are
finalizing our proposal regarding the determination of hospitals
located in states with new medical schools, or additional locations and
branch campuses (Category Three) as proposed, without modification.
(5) Determination of Hospitals That Serve Areas Designated as Health
Professional Shortage Areas Under Section 332(a)(1)(A) of the Public
Health Service Act (Category Four)
The fourth category specified in the law consists of hospitals that
serve areas designated as health professional shortage areas under
section 332(a)(1)(A) of the Public Health Service Act (PHSA), as
determined by the Secretary. We refer to this category as Category
Four.
The Health Resources and Services Administration (HRSA) designates
certain areas as health professional shortage areas (HPSAs). Section
332(a)(1)(A) of the PHSA, states that a ``health professional shortage
area'' is ``an area in an urban or rural area (which need not conform
to the geographic boundaries of a political subdivision and which is a
rational area for the delivery of health services) which the Secretary
determines has a health manpower shortage''. HRSA designates HPSAs for
primary care, mental health, and dental health.
A geographic area may be designated as a HPSA under section
332(a)(1)(A) of the PHSA only on the basis of a shortage of services
for the entire population within that area (a ``geographic HPSA'').
Subsequent clauses of 332(a)(1) refer to other types of HPSAs, to which
we will return later in this final rule with comment period. The
geographic area to which a geographic HPSA is assigned may be a single
county, multiple counties, a county subdivision, census tract, or a
group of census tracts.
As we noted in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25506), section 126 of the CAA does not explicitly address the question
of how HPSAs for different medical specialties should factor into
determining which hospitals serve areas designated as HPSAs. In our
consideration of this question, we began by examining the use of HPSAs
in the HPSA Physician Bonus Program authorized under section 1833(m) of
the Act. This program is relevant because Congress established the
program as an incentive to attract new physicians to medically
underserved communities and to encourage physicians in those areas to
remain there (69 FR 47517 through 47518).
The HPSA Physician Bonus Program was created by Section 4043 of the
Omnibus Budget Reconciliation Act (OBRA) of 1987, which added section
1833(m) to the Act. It provides incentive payments to physicians who
furnish services to an individual in an area that is designated as a
HPSA. Originally, under section 1833(m) of the Act, a 5 percent payment
was added, beginning January 1, 1989, to the amounts otherwise payable
to physicians who furnish services to Medicare patients in designated
HPSAs. Section 6102 of OBRA 1989 further amended section 1833(m) of the
Act to raise the amount of this incentive payment from 5 percent to 10
percent for services furnished after December 31, 1990. The OBRA 1989
amendment also expanded eligible service areas to include both rural
and urban HPSAs.
We first examined the role of primary care geographic HPSAs in the
HPSA Physician Bonus program. Physicians furnishing services in a
primary care geographic HPSA are eligible to receive the bonus payments
and the payments apply to all physicians who perform covered services
within a primary care
[[Page 73427]]
geographic HPSA, regardless of specialty. Similarly, section 126 of the
CAA does not explicitly distinguish between physician specialties for
purposes of allocating the additional residency positions. Therefore,
in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25507), we proposed
that primary care geographic HPSAs would be considered in determining
what hospitals qualify under Category Four and that hospitals that have
main campuses or provider-based facilities in these HPSAs may apply for
additional residency positions for any specialty. We also note CMS used
primary care HPSAs for the allocation of residency positions for
purposes of section 5503 of the Affordable Care Act (75 FR 72147).
We next considered the use under the HPSA Physician Bonus Program
of areas that are solely mental health geographic HPSAs and not also
primary care geographic HPSAs. We will refer to these areas as mental
health only geographic HPSAs. The HPSA Physician Bonus Program provides
incentive payments for services provided in mental health only
geographic HPSAs, but only for services provided by psychiatry provider
specialties. The distinction between primary care geographic HPSAs, in
which all physician provider specialties, including psychiatry provider
specialties, receive the incentive payments, and mental health only
geographic HPSAs, in which only psychiatry provider specialties receive
the incentive payments, is relevant to the question of how mental
health only geographic HPSAs should factor into determining hospitals
that serve areas designated as HPSAs for purposes of section 126 of the
CAA. We believe that it is appropriate to incorporate this feature of
the HPSA Physician Bonus Program as well, and proposed to use mental
health only geographic HPSAs for mental health providers accordingly in
the determination of hospitals that serve areas designated as HPSAs.
Thus, we proposed that hospitals that only have main campuses or
provider-based facilities in mental health only geographic HPSAs could
only apply for residency positions for psychiatry residency programs.
We next considered dental geographic HPSAs. 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 allopathic
and osteopathic residents for purposes of direct GME may not exceed the
hospital's unweighted FTE count for direct GME in 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 based on the FTE count for
IME during the same cost reporting period is applied effective for
discharges occurring on or after October 1, 1997. Given that dental
residents are not included in this statutory cap and that section 126
of the CAA distributes additional residency positions in the context of
the statutory cap, we did not propose that dental geographic HPSAs
should factor into the determination of whether a hospital serves a
HPSA for purposes of section 126 of the CAA.
In summary, we proposed to consider geographic HPSAs for primary
care and mental health providers for purposes of determining hospitals
that serve areas designated as HPSAs. We proposed that hospitals that
only have campuses or provider-based facilities in mental health only
geographic HPSAs could only apply for positions for psychiatry
residency programs. We did not propose to consider dental HPSAs as
dental FTE residents are not subject to a hospital's IME and direct GME
caps.
We next considered what hospitals serving areas designated as
primary care or mental health HPSAs means for purposes of Category
Four. As with the question regarding the role of primary care, mental
health, and dental HPSAs, section 126 of the CAA does not explicitly
address this question.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25507), there are many possible interpretations of what hospitals that
serve areas designated as primary care or mental health HPSAs means for
purposes of Category Four. The most expansive interpretation might be
that this refers to the universe of hospitals where each hospital
provides care to at least one patient that resides in a HPSA without
regard to the location of the main campus of the hospital or of its
other patient care locations. This interpretation could be made less
expansive by developing a relative or absolute threshold for the number
of patients of the hospital that reside in HPSAs. It could also be made
less expansive by considering whether the physical location of the main
campus of the hospital and/or its other patient care locations are
inside of or proximate to a HPSA.
In considering this issue, we prioritized objective factors that
would maximize distribution of GME positions to residency programs
serving underserved populations. (See section V.J.2.a.(4). of the
preamble of the FY 2022 IPPS/LTCH PPS proposed rule for a further
discussion of our proposals for prioritizing care to underserved
populations.) To this end, we proposed that a hospital could qualify
under Category Four if it had its main campus or a provider-based
facility (under 42 CFR 413.65) physically located in a primary care or
mental health only geographic HPSA. Additionally, as part of the
qualification requirements under Category Four, in the residency
program for which the hospital was applying, we proposed that at least
50 percent of the residents' training time over the duration of the
program would have to occur at those locations in the HPSA. We stated
in the proposed rule that we believed it was important to avoid the
possibility that a hospital with provider-based facilities in multiple
locations, some of which may not be located in a HPSA, uses an
additional residency position mostly or entirely to serve populations
that face no health service shortage.
We proposed that a Category Four hospital submit an attestation,
signed and dated by an officer or administrator of the hospital who
signs the hospital's Medicare cost report, that it has its main campus
or a provider-based facility (under 42 CFR 413.65) physically located
in a primary care or mental health only geographic HPSA, and in the
program for which the hospital is applying, at least 50 percent of the
residents' training time over the duration of the program occurs at
those locations in the HPSA.
For example under our proposal, Hospital A applies under Category
Four for a psychiatry residency program. Its main campus is located in
a non-HPSA area and it has one provider-based facility located in a
mental health only geographic HPSA. Hospital A must attest that
residents training in the psychiatry residency program spend at least
50 percent of the duration of their training in the program at its
provider-based facility located in the mental health only geographic
HPSA.
As another example, Hospital B applies for a residency program. Its
main campus is located in a primary care geographic HPSA and it has two
provider-based facilities, one in the same geographic HPSA as the main
campus and one in a non-HPSA area. Hospital B must attest that
residents training in the program will spend at least 50 percent of the
duration of their training in the program on the main campus or at the
provider-based facility located in the geographic HPSA, combined (for
example, 30 percent of the time on the main campus and 20 percent at
the provider-based facility).
The following is a summary of the public comments and our responses
to our proposals related to Category Four qualification requirements.
[[Page 73428]]
Comment: Many commenters objected to the proposed requirement that
a hospital or provider-based facilities be located in a primary care or
mental health only geographic HPSA to be eligible under Category Four.
Several commenters expressed concern that our proposed definition of
Category Four limits hospitals from eligibility and that as a result,
only a small number of hospitals would qualify for residency positions
awarded under section 126 of the CAA. Other commenters argued that this
constraint does not take into account that many geographic HPSA
residents rely on health services provided outside of their HPSA. A
commenter noted this is particularly true of certain specialty care
services, such as mental health services, for which HPSA-residing
patients are referred to academic medical centers located in urban
areas. Several commenters suggested that it is for this reason that the
statutory language describes hospitals that serve HPSAs rather than
explicitly limiting eligibility under this category to hospitals
physically located within the geographic boundaries of HPSAs.
Many commenters believe Category Four should be interpreted to more
generally include hospitals that play a meaningful role in providing
health services to residents of shortage areas. These commenters
suggested we modify our proposal to include both hospitals located
within HPSAs and those within a reasonable distance of one. Several
commenters provided specific recommendations on what would be
considered within a reasonable distance of a HPSA, such as within one
mile, 10 miles, 20 miles, and 25 miles. In addition, a commenter
requested that CMS revise our proposed definition of Category Four so
that a hospital may be eligible for section 126 of the CAA residency
positions on the basis of serving either a geographic or ``population''
HPSA (the following link includes a brief description of HPSAs: https://bhw.hrsa.gov/workforce-shortage-areas/shortage-designation#hpsas).
Another commenter noted that some underserved communities do not
qualify for geographic or population HPSAs because of their proximity
to wealthier areas, but face provider shortages that deserve
recognition under Category Four. Some commenters recommended that we
define Category Four in terms of the measure of the hospital's patient
population that reside within geographic HPSAs, using either an
absolute or proportionate threshold. A commenter requested flexibility
in the data sources that hospitals may use to demonstrate they are
serving or will at some point serve HPSA populations, including data
from other government agencies and non-profit organizations.
Many commenters opposed the proposed requirement that to qualify
under Category Four, at least 50 percent of residents' training time in
the program must occur in facilities located in the geographic HPSA.
According to some commenters, this requirement would impede teaching
hospitals' ability to structure programs to best meet the needs of the
patients and communities they serve as well as to satisfy
administrative obligations, including accreditation standards.
Commenters also stated that the requirement that 50 percent or more of
residents' time be spent in a HPSA, often in rural areas, would not be
possible since supervising physicians and training schedules must be
focused on population centers with patient and condition mixes that are
necessary for training. A few commenters explained that the proposed 50
percent requirement, in addition to the proposed requirement that
hospitals or their facilities be physically located in a HPSA to
qualify under Category Four, is too restrictive to meet the policy goal
of directing new residency positions to areas that provide services to
underserved populations and does not meet congressional intent.
Several commenters, while supporting the proposed requirement that
50 percent of resident training time in programs take place in
locations in the HPSA, requested that nonprovider settings where
hospitals may count training time for IME and direct GME purposes be
counted. Commenters stated that community settings, such as critical
access hospitals, Federally Qualified Health Centers (FQHCs), and rural
health clinics (RHCs), are important contributors to the provision of
services in HPSAs and to residency training. Several commenters added
that, in their view, it was Congress's intent that FTEs awarded under
section 126 of the CAA train at nonprovider settings in addition to
hospital main campuses and provider-based facilities.
Several commenters were opposed to the proposed 50 percent training
time requirement because they believe it would impose a recordkeeping
burden on hospitals that administer residency programs. A few
commenters noted that normally, resident rotations are reported in the
Intern and Resident Reporting System (IRIS) in aggregate, whereas the
proposed 50 percent training time requirement would demand individual
resident tracking and reporting. Commenters stated that to attest to
meeting the requirement, teaching hospitals would need to develop a new
system and process to document and track section 126 of the CAA funded
residents that is separate from the system and process used to track
residents funded by other sources.
A commenter requested clarification on whether the proposed
requirement that residents spend 50 percent or more of their training
time in a geographic HPSA in order for the hospital to be eligible
under Category Four is based on all residents in aggregate or to
individual residents.
Response: We appreciate commenters' feedback and concerns regarding
the eligibility requirements under Category Four. After further
consideration, as discussed in greater detail later in this section, we
are modifying certain aspects of our proposal in response to public
comments. These modifications are intended to provide additional
flexibilities in meeting these requirements, while still targeting
Category Four eligibility to hospitals that are most clearly serving
HPSAs. We are persuaded by commenters' arguments and agree that
training in settings other than hospital settings is consistent with
our goal of maximizing distribution of GME positions to residency
programs serving underserved populations, including serving those in
community settings, and should be counted toward meeting Category Four
eligibility requirements. Therefore, we are modifying our proposal. Any
and all program training that occurs in a geographic HPSA at scheduled
program training sites that are physically located in that HPSA and
treat the HPSA's population, including nonprovider settings and
Veterans Affairs facilities, will count towards meeting the 50 percent
training requirement to qualify under Category Four. In addition,
because we are revising our proposed definition of Category Four to
allow all of these settings to be qualifying training sites, an
applicant hospital (including any provider-based facilities) itself
will not be required to be physically located in a geographic HPSA in
order to be eligible under Category Four as proposed. Rather, as long
as the hospital participates in training residents in a program where
at least 50 percent of the training time occurs at scheduled training
site(s) that are physically located in a geographic HPSA, that hospital
is considered to be eligible under Category Four. We believe these
changes will provide additional flexibility for teaching hospitals to
design programs to effectively serve patients and communities and meet
any administrative requirements while
[[Page 73429]]
targeting Category Four eligibility to hospitals that are most clearly
serving HPSAs.
Consider an example where Hospitals A, B, and C participate in
training residents in an approved family medicine program. The program
also has Training Site 1 as part of the rotation schedule (could be a
nonprovider setting, a Veterans Affairs facility, or another community
setting). Hospitals A and B are located in a primary care geographic
HPSA as is Training Site 1. Hospital C is not located in the HPSA.
Residents in the family medicine program spend 40 percent of their
training time at Hospitals A and B, 40 percent of their training time
at Hospital C, and 20 percent of their time training at Training Site
1. Since at least 50 percent of the program's total training time is
spent training at facilities located in the primary care geographic
HPSA, Hospitals A, B, and C all qualify under Category Four.
We appreciate commenters' suggestions to expand the proposed
requirement for Category Four beyond a hospital's training sites that
are physically located in HPSAs to include those within a certain
distance of a HPSA. While we believe a distance or proximity threshold
may warrant further consideration in the future for Category Four, we
note the suggested distances by some commenters ranged anywhere between
one mile to 25 miles. Based on these comments, a single uniform
distance threshold may not always be appropriate in the context of
section 126 of the CAA. For example, a single fixed mileage threshold
may not equitably address tertiary care situations because hospitals
providing equivalent tertiary care to residents of HPSAs may be located
varying distances from those HPSAs. At this time, we believe the
requirement that at least 50 percent of training time occurs at
training sites that are physically located in a geographic HPSAs
targets Category Four eligibility for hospitals that are most clearly
serving HPSAs.
We also appreciate comments recommending that we consider the
measure of a hospital's patient population that resides within a HPSA
to determine whether a hospital serves a HPSA, as well as the
suggestion of using different data sources to establish whether a
hospital serves a HPSA. We believe there should be a consistent method
used for hospitals to demonstrate that they meet the definition of
Category Four. We note, simultaneously allowing the use of different
data sources to establish whether a hospital serves a HPSA would mean
that we might compare applications supported by different data
collection methods, different definitions, or different data
altogether. As discussed earlier, at this time we believe requiring
that at least 50 percent of the training time of the program the
hospital participates in occurs at training site(s) that are physically
located in a geographic HPSA targets Category Four eligibility to
hospitals that are most clearly serving HPSAs. However, we continue to
welcome further feedback on the dependence of geographic HPSA residents
on health services provided outside of their HPSA and are seeking
comment on appropriate summary measures of where HPSA residents seek
medical care as a feasible alternative for potential use in future
rulemaking.
With regard to commenters' concern that the proposed definition of
Category Four would limit the pool of eligible applicants relative to
more expansive definitions, we appreciate the feedback. However, we do
not believe the goal of Category Four should be to create the most
expansive eligibility pool possible. Targeting Category Four
eligibility to hospitals that are clearly serving HPSAs (as discussed
previously) is entirely consistent with this statutory eligibility
criterion and our policy objectives for section 126 of the CAA
regarding medically underserved communities. In addition, as stated
previously, we are seeking comments on potential alternative feasible
definitions of Category Four to inform future rulemaking.
With regard to the request to include population HPSAs in the
definition of Category Four, we note that section 1886(h)(9)(B)(ii)(IV)
of the Act specifies that Category Four consists of hospitals that
serve areas designated as health professional shortage areas under
section 332(a)(1)(A) of the PHSA, as determined by the Secretary.
Paragraph (A) of section 332(a)(1) of the PHSA describes a geographic
HPSA, as explained previously and in the proposed rule (86 FR 25506). A
population HPSA is described by paragraph (B) of section 332(a)(1), as
explained in section II.B.3.d. of this final rule with comment period
and section V.J.2.a.(4).(a). of the preamble of the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25508). Therefore, we are not revising the
definition of Category Four to include population HPSAs as requested by
the commenter.
In response to comments that including a training time requirement
for qualification falls outside of the legislative intent of section
126 of the CAA, we disagree. The statute at 1886(h)(9)(B)(2)(IV) limits
Category Four eligibility to hospitals that serve areas designated as
HPSAs under section 332(a)(1)(A) of the PHSA, as determined by the
Secretary. As discussed in the proposed rule and in line with the
Administration's support for advancing health equity in underserved
communities, targeting Category Four eligibility to hospitals serving
HPSAs is consistent with this statutory eligibility criterion and our
policy objectives. We also note, as stated previously, we are seeking
comment on potential alternative definitions of Category Four to inform
future rulemaking.
We disagree with the comments that a minimum rotation time
requirement imposes a significant tracking or reporting requirement. We
do not expect hospitals to establish entirely new training tracks or
administrative structures to accommodate FTE slots awarded under
section 126 of the CAA. Hospitals regularly develop rotation schedules
to facilitate residents' training at participating sites and a
program's participating site information is generally readily available
on the ACGME website. As such, we are specifying that the percentage of
training time that residents in the program spend in the HPSA for
purposes of Category Four is required to be substantiated, utilizing
resident rotation schedules (or similar documentation). Regarding IRIS,
we do not expect the existing reporting requirements to change for
hospitals that receive these residential slots. We note that the 50
percent requirement applies to the program in its entirety, not to
individual residents. As such, hospitals would not need to track the
training time of individual residents to ensure each individual
resident spends 50 percent or more of their training time in a
geographic HPSA, so long as the program in its entirety meets the
requirement.
Comment: Several commenters objected to our approach to address the
issue of how specialties factor into determining which hospitals serve
areas designated as HPSAs. Commenters stated that our use of the HPSA
Physician Bonus Program as a model for addressing this question is
flawed because hospitals do not respond to incentives and cannot
relocate to new areas or establish new operations in the same manner as
individual physicians and physician practices. Additionally, commenters
stated that unlike the bonus payments in the HPSA Physician Bonus
Program, the proposed size of the FTE awards will be insufficient to
incentivize the establishment of new training programs in HPSAs.
[[Page 73430]]
Response: While we agree that the HPSA Physician Bonus Program and
the Category Four eligibility of hospitals for additional GME residency
positions target different types of entities, one being physicians and
the other physician training programs, as we discussed in the proposed
rule the policy objective underlying each is to strengthen the
physician workforce in underserved areas. We therefore disagree with
the comment that one is an unsuitable template upon which to build the
other. However, as discussed in greater detail later in this section,
we agree with commenters that the proposed 1.0 FTE per year limitation
on FTE awards with no assurance of follow-on awards would be an
insufficient incentive to encourage many hospitals to expand an
existing or establish a new training program. As such, we are
finalizing a policy to increase maximum award sizes to 5.0 FTEs per
hospital per year, which we discuss in more detail in section
II.B.3.c.(2). of this final rule with comment period.
Comment: Several commenters stated that hospital applications
associated with mental health only geographic HPSAs should not be
limited to psychiatry training programs. The commenters stated that
provider shortages in mental health only geographic HPSAs are not
limited to psychiatric services and the expansion of service
availability in any specialty would help address community health care
challenges.
A commenter objected to our inclusion of mental health only
geographic HPSAs in the definition for Category Four. Instead, the
commenter believed that eligibility under Category Four should only be
met when a hospital's main campus or other facilities are in a primary
care geographic HPSA. The commenter also stated that the new resident
slots should only be used to fund training for primary care residents.
Response: We appreciate the comments requesting that hospitals not
be limited to psychiatry training programs for hospitals that apply
under mental health only geographic HPSAs for Category Four. While we
understand that such an expansion could help address health care
challenges in underserved communities, we have no direct evidence of a
shortage of other specialties in mental health only geographic HPSAs
nor do we have a method at this time to uniformly measure a shortage of
other, non-psychiatric specialty providers in mental health only
geographic HPSAs. As we discussed in the proposed rule and previously,
the HPSA Physician Bonus Program provides incentive payments for
services provided in mental health only geographic HPSAs, but only for
services provided by psychiatry provider specialties. We continue to
believe that it is appropriate to use mental health only geographic
HPSAs for mental health providers in the determination of hospitals
that serve areas designated as HPSAs. Therefore, we disagree with the
comment that we should exclude mental health only geographic HPSAs from
the definition of Category Four and limit residency positions to
primary care training programs. However, we also believe it is equally
important to advance health equity in physical and mental health
services in underserved areas. Therefore, we are therefore modifying
our policy in this final rule with comment period to include
psychiatric subspecialty residency programs in addition to psychiatric
residency programs within the mental health only geographic HPSA
category.
Therefore, in this final rule with comment period, specific to
mental health only geographic HPSAs, we are finalizing the policy that
if a hospital participates in training residents in a psychiatric or a
psychiatric subspecialty program, where at least 50 percent of the
program's training time occurs in a training site(s) in the HPSA, the
hospital is eligible under Category Four.
Comment: Several commenters expressed support for our proposed
definition of Category Four hospitals.
Response: We thank the commenters for their support.
In summary, after consideration of and in response to the public
comments received, we are finalizing our proposed requirements for
determining eligibility under Category Four with modification in this
final rule with comment period. Under our final policy, an applicant
hospital qualifies under Category Four if it participates in training
residents in a program in which the residents rotate for at least 50
percent of their training time to a training site(s) physically located
in a primary care or mental health only geographic HPSA. Specific to
mental health only geographic HPSAs, the program must be a psychiatric
or a psychiatric subspecialty program. In addition, under this final
policy, as proposed, a Category Four hospital must submit an
attestation, signed and dated by an officer or administrator of the
hospital who signs the hospital's Medicare cost report, that it meets
the 50 percent requirement. We did not receive any comments on our
proposal not to consider dental HPSAs, as dental FTE residents are not
subject to a hospital's IME and direct GME caps. We are finalizing that
policy as proposed.
(6) Determination of Qualifying Hospitals
Section 1886(h)(9)(F)(ii) of the Act defines a qualifying hospital
as a hospital described in any of the subclauses (I) through (IV) of
subparagraph (B)(ii). As such, we proposed that a qualifying hospital
is a Category One, Category Two, Category Three, or Category Four
hospital, or one that meets the definitions of more than one of these
categories.
The following is a summary of the public comments and our responses
to our proposals related to the determination of qualifying hospitals.
Comment: A commenter supported our proposal for determining which
hospitals are considered qualifying hospitals. Specifically, hospitals
that meet the definitions of Category One, Category Two, Category
Three, or Category Four, or hospitals that meet the definitions of more
than one of these categories, are eligible for section 126 of the CAA
residency positions.
Response: We thank the commenter for their support.
Comment: A commenter stated that the Department of Veterans Affairs
should be included in future planning and evaluation of a more refined
distribution approach for future years.
Response: We thank the commenter for the feedback. We note that
residency positions distributed under section 126 will not be
distributed to Veterans Affairs hospitals. These hospitals are eligible
for GME payments through the Veterans Access, Choice, and
Accountability Act GME Expansion. However, we note that when
considering the percentage of program training time that occurs in a
HPSA for purposes of section 126, training time occurring at a Veterans
Affairs facility physically located in a HPSA will be included in that
percentage.
Comment: Several commenters recommended adding eligibility criteria
that would allow hospitals not meeting any of the definitions of
Categories One through Four to qualify for residency positions awarded
under section 126 of the CAA. Commenters recommended including the
following eligibility categories: Small hospitals with fewer than 250
beds, hospitals with single residency programs, Indian health care
providers, safety-net providers, and hospitals that host residency
programs whose graduates later practice in either predominantly rural
states or states with a large proportion of rational service areas
designated as HPSAs.
[[Page 73431]]
Response: We appreciate the commenters' feedback and input on
qualifying criteria. Section 1886(h)(9)(F)(ii) restricts eligibility to
the four categories discussed previously. However, we agree with
commenters that including hospitals with fewer than 250 beds in our
final policy, may be useful in further prioritizing residency positions
in certain instances. We refer commenters to the discussion in section
II.B.3.d.(2). of this final rule with comment period, where we
incorporate the suggested bed limit into our final policy. We also
welcome further comment regarding whether the remaining priority
hospitals or hospital characteristics identified by commenters should
be addressed in other aspects of our policy in future years.
Comment: A commenter requested that we issue a list of hospitals
that are likeliest to obtain additional residency positions under our
finalized criteria. The commenter stated that advance signaling of
which hospitals are likely to receive FTE awards will help them plan
for contingent expansions of existing programs or establishment of new
programs.
Response: We thank the commenter for the feedback. While we
understand that significant planning resources are required to
establish and expand training programs, we cannot anticipate changes to
training program rotations between now and the start of the 2023
program year that will affect applications or predict which hospitals
have determined that it is in their interest to expand their training
programs with distributions under section 126 of the CAA and will
apply. Therefore, we are unable to provide a list of hospitals that are
likeliest to be awarded residency positions before awards are made.
However, we intend to make available relevant information regarding the
distribution of positions at the completion of the distribution
process.
After consideration of comments received, we are finalizing our
policy related to the determination of qualifying hospitals as
proposed, without modification. Specifically, a qualifying hospital is
a Category One, Category Two, Category Three, or Category Four
hospital, or one that meets the definitions of more than one of these
categories.
c. Number of Residency Positions Made Available to Hospitals and
Limitation on Individual Hospitals
(1) Number of Residency Positions Made Available to Hospitals
Section 1886(h)(9)(A)(ii)(II) limits the aggregate number of total
new residency positions made available in a single fiscal year across
all hospitals to no more than 200. In order to provide these additional
residency positions to hospitals as quickly as possible, in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25508), we proposed to make 200
residency positions available for FY 2023 and each subsequent year.
In this section, we present a summary of the public comments and
our responses to our proposals related to the number of residency
positions made available to hospitals.
Comment: A number of commenters supported our proposal to make 200
residency positions available for FY 2023 and each subsequent year. A
commenter recommended that we distribute all 200 residency positions
each year even if fewer than 200 facilities apply, by allowing
additional FTEs to be assigned to hospitals that do not apply; the
commenter stated that this would fulfill the intent of Congress that
200 residency positions are distributed in each of the years.
Response: We thank the commenters for their support. With respect
to the suggestion that we distribute all 200 residency positions each
year even if fewer than 200 facilities apply, section 1886(h)(9)(A)(i)
of the Act, as added by section 126 of the CAA, makes it clear that, in
order to receive additional FTEs, a hospital must submit a timely
application. The law does not grant us the authority to distribute
residency positions to hospitals that do not apply. We also note that
section 1886(h)(9)(A)(ii)(II) of the Act states that the aggregate
number of residency positions made available shall not exceed 200 for a
fiscal year; it does not require that all 200 residency positions to be
distributed each year if there are insufficient numbers of applicant
hospitals. Although we do not expect that there will be an insufficient
number of applicant hospitals we intend to track progress in meeting
all statutory requirements and evaluate the need for potential
modifications in future rulemaking.
Comment: A few commenters expressed support for the statutory limit
on the aggregate number of residency positions. Conversely, a commenter
stated that the distribution of 200 residency positions per year across
potentially 50 states will likely have minimal impact, particularly
after a 25-year wait given that caps were implemented based on the
number of FTE residents hospitals trained in 1996.
Response: The limit on the aggregate number of residency positions
made available each year is set by the statute at 200.
Comment: A commenter was concerned about the impact of the
distribution of residency positions under section 126 of the CAA on
Medicaid. The commenter stated that the immediate impact on Medicaid in
its state is unclear as it is uncertain how many of the new residency
positions will be awarded to hospitals in its state. However, the
commenter further noted that since hospitals awarded residency
positions under section 126 will likely be incurring new medical
education costs, Medicaid expenditures would increase.
Response: We are clarifying that residency positions under section
126 of the CAA are related to Medicare GME payments, not Medicaid.
However, to the extent hospitals awarded residency positions under
section 126 and the partial Medicare funding of new residency positions
in that state might indirectly be associated with additional
expenditures under that state's Medicaid program, any additional
Medicaid expenditures that might occur are inestimable because it is
unknown what hospitals in what states will apply and be awarded
additional residency positions under section 126.
After consideration of comments received, we are finalizing our
policy related to the number of residency positions made available to
hospitals as proposed, without modification. Specifically, the
aggregate number of total residency positions made available in a
single fiscal year across all hospitals will be limited to no more than
200. Additionally, in order to provide these additional residency
positions to hospitals as quickly as possible, we are making 200
residency positions available for FY 2023 and each subsequent year.
(2) Limitation on Individual Hospitals
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25508), we expect the demand from hospitals for the aggregate number of
total residency positions made available for each fiscal year to
significantly exceed the 200 maximum. For example, there are currently
over 300 teaching hospitals that have their main campus located in a
primary care or mental health only geographic HPSA. In that same
proposed rule, we stated that we expect the majority of these hospitals
[[Page 73432]]
would apply for additional residency positions because they would
qualify under our proposed Category Four. Even if we were to
exclusively allocate the maximum 200 positions permitted under the
statute each year to these hospitals, which are only a subset of
Category Four hospitals (and Category Four itself is only one of four
categories), it would still be insufficient to award even 1.0 FTE to
each hospital each year. Therefore, in order to make additional
residency positions available to more hospitals each year, we proposed
to limit the increase in the number of residency positions made
available to each individual hospital to no more than 1.0 FTE each
year. We note that the proposal was not 1.0 FTE for each program at a
hospital each year, but rather 1.0 FTE for each hospital each year.
As noted earlier, section 1886(h)(9)(C)(i) of the Act places
certain limitations on the distribution of the residency positions, one
of which is that a hospital may not receive more than 25 additional FTE
residency positions. Under our proposed 1.0 FTE limitation per hospital
per year, no hospital would receive more than 25 additional FTE
residency positions. Rather, under the proposed 1.0 FTE limitation,
hospitals would receive a maximum of 5 additional FTE residency
positions.
The following is a summary of the public comments and our responses
to our proposals related to the limitation on individual hospitals.
Comment: A commenter supported our proposal to limit the size of
awards to 1.0 FTE per hospital per year. This commenter stated that the
more stringent limit was warranted since the demand for additional
residency positions will far exceed the total number of residency
positions available, and applying a 1.0 FTE limit would promote the
distribution of additional residency positions across a wider range of
qualifying hospitals. Furthermore, the commenter recommended that, in
subsequent distribution cycles, we prioritize applications from
hospitals that have not yet received residency positions, so that no
hospital would be awarded a second residency position until all other
qualifying hospitals have received their first award.
Response: We thank the commenter for their support, however, as we
explain in this section, we are modifying our policy in this final rule
with comment period to allow hospitals to receive up to 5.0 FTEs per
year. Regarding the recommendation that in subsequent distribution
cycles, we prioritize applications from hospitals that have not yet
received residency positions, we will take this recommendation under
consideration for potential future rulemaking.
Comment: A commenter requested CMS clarify whether or not the
proposal would distribute 1.0 FTE for the duration of a program, which
equates to 3-5 residency positions per FTE, without requiring hospitals
to reapply each year; for example, a hospital applying for a 3-year
Family Medicine program would receive 3 residency positions total,
while a hospital applying for a 5-year General Surgery program would
receive 5 residency positions. Similarly, another commenter stated that
they support our proposed limit and requested that in addition to the
proposal, the FTE be financed for the duration of their training rather
than a separate FTE being awarded for each year of training, and that
this consideration be taken into account in determining the aggregate
limit of 1,000 FTEs.
Response: We believe that the commenters have misconstrued our
proposal, and that they are interpreting the term ``FTE'' to refer to
the funding necessary to support one resident in each program year of a
residency training program for the length of the program. On the
contrary, the term ``FTE'' refers to the funding necessary to support
one resident during a single year of training; this is the sense in
which we employed the term in our proposal as written in the FY 2022
IPPS/LTCH PPS proposed rule, as well as in previous rulemaking cycles.
We did not propose to distribute additional residency positions in
blocks of 3.0-5.0 FTEs in the manner requested by the commenters.
However, as we explain later in this section, we are modifying our
policy in this final rule with comment period to allow hospitals to
receive up to 5.0 FTEs per application year.
Comment: Many commenters strongly objected to our proposal to limit
the size of awards to 1.0 FTE per hospital per year. Several commenters
argued that the proposal is contrary to congressional intent, and that
CMS was overstepping its authority by imposing a limit more stringent
than what is specified in the law. Others stated that the proposed
limit is inconsistent with the overall goal of increasing residency
training levels, especially in rural areas, and that the proposal could
significantly lessen the potential impact of the new legislation. A
commenter worried that the nationwide physician shortage may be further
exacerbated by the proposal to limit the size of awards to 1.0 FTE per
year, and stated that it may not be capable of producing trained
physicians to keep up with the need, if the cost burden for the
residency training programs is not further shared with Medicare.
Many commenters argued that an award of 1.0 FTE per hospital per
year would be insufficient to establish a new residency program or
meaningfully expand an existing program. With respect to new programs,
commenters observed that the ACGME Program Requirements specify a
minimum complement of two to four residents in each program year for
most specialties. They argued that the minimum cohort size is intended
to ensure an appropriate learning environment and to provide residents
with a sufficient shared clinical and educational experience that
promotes peer learning, teamwork, and coordination of care.
Accordingly, some commenters feared that the proposed limit would
threaten program continuity and disrupt the training of residents.
Moreover, a commenter observed that many programs are dependent on
other specialties for the education of residents, and that the proposed
limit would hinder an institution's ability to support new or expanded
residency programs as a result of their inability to simultaneously
expand residencies in the specialties that support those programs.
Several commenters were concerned that the proposed limit would not
be economically feasible for many institutions, particularly smaller
hospitals. A commenter estimated that five additional residency
positions over 5 years might be sufficient to support some new
fellowship programs, but would likely be insufficient to support even
half of the FTEs for most new residency programs. Another commenter
stated that receiving financial support for only one year of training
would be untenable for most smaller institutions, and that only large
hospitals with multiple programs could absorb the full cost of
expanding a program by one resident per program year. Such
considerations led a commenter to conclude that under our proposal the
costs of starting or expanding a residency program would outweigh the
benefits, while several others predicted that it would discourage small
hospitals from submitting applications altogether.
Numerous commenters worried that the proposal would result in an
onerous and unpredictable annual application process, which again would
disproportionately burden smaller hospitals. They observed that
hospitals would be forced to submit applications year after year with
no guarantee of
[[Page 73433]]
receiving awards in subsequent rounds and thus no guarantee of being
able to fund a residency position for the full length of a program. As
an example, a commenter envisioned the scenario of a hospital that
receives 1.0 FTE to establish a new residency program and does not
qualify for additional residency positions in subsequent years;
assuming a program duration of 3 years and a cohort size of four
residents, such a hospital might be responsible for self-funding 11.0
additional FTEs in order to run the new program. Another commenter
worried that hospitals may be forced to relocate residents if they are
unable to secure funding for future years.
Several commenters also maintained that the proposed limit would
particularly disadvantage hospitals in rural and underserved areas. A
commenter stated that many such hospitals have consistently operated
over their caps, often to their severe financial detriment; these
hospitals are especially in need of financial assistance, and the
proposed limit establishes a detrimental ceiling on the level of
support they would be able to receive. As a result, the commenter
concluded, our proposal would be likely to favor hospitals located in
densely-populated urban areas. Another commenter added that an award of
1.0 FTE per year would risk limiting residency positions to existing
programs, and would therefore disadvantage small institutions that are
seeking to become teaching hospitals.
Commenters suggested various alternatives to our proposed limit of
1.0 FTE per hospital per year, with several saying that we should
adhere to the statutory maximum of 25.0 FTEs. Among the most common
recommendations was that we should tie the size of the award to the
duration of the program for which a hospital is applying: For example,
a hospital applying for a Family Medicine program would receive 3.0
FTEs total (1.0 FTE x 3 years of training), while a hospital applying
for a General Surgery program would receive 5.0 FTEs (1.0 FTE x 5 years
of training). Several commenters stated that this should be considered
a minimum allocation, and expressed their preference for a maximum
award of 15.0 FTEs total, which would allow a hospital to meaningfully
expand one or more programs over 5 years. Other recommendations we
received include: Distributing at least 3.0 FTEs per hospital per year;
at least 3.0 FTEs per year for new programs, and 1.0 FTE per year for
existing programs; at least 5.0 FTEs per year, with a commenter again
suggesting that the amount could be different for new and existing
programs; awarding residency positions in groupings or blocks of 4.0
FTEs; awarding up to 10.0 FTEs per hospital per year; and allowing
hospitals to apply for up to three programs and no more than 15.0 FTEs
each year.
Several commenters recommended that, if we retain the limit of 1.0
FTE per hospital per year, then we should streamline the application
process to make it less burdensome and unpredictable for hospitals. All
of these commenters suggested that hospitals that receive an award in a
given fiscal year should be guaranteed to receive awards in subsequent
application cycles, up to a certain minimum amount, which might be
based on the duration of the training program. Such hospitals might be
permitted to apply for all of their residency positions up front,
without being required to submit further applications, or they might
have the option of resubmitting less detailed applications in future
years. Some commenters noted that under this model the minimum award
might not be guaranteed in instances where a hospital initially applies
for a program in one of the later application cycles, for example for
FY 2026, assuming that all 1,000 residency positions are distributed
over the course of 5 fiscal years. A commenter stated that, at a
minimum, CMS should provide more clarity on the number of residency
positions awarded over time to reduce the need for annual applications
and to allow hospitals to better plan for their GME programs.
Response: We disagree with commenters who asserted that our
proposed limitation of 1.0 FTE per hospital per year is contrary to
congressional intent. Section 1886(h)(9)(C)(i) of the Act specifies
that a hospital may not receive more than 25 additional full-time
equivalent residency positions under the provisions of section 126 of
the CAA; it does not specify a minimum award size, and leaves the
Secretary broad latitude in determining the number of residency
positions that will be distributed to individual hospitals.
However, after reviewing comments received, in particular the
comments which expressed concern that our proposed limitation would be
insufficient to establish a new program or meaningfully expand an
existing program, that it would be impractical for many institutions,
and that it would result in an unpredictable and burdensome application
process, we have reconsidered our proposal. Therefore, in this final
rule with comment period, we are modifying our proposal to adjust the
size of the award to the length of the program for which a hospital is
applying. Specifically, the maximum award amount is contingent on the
length of the program for which a hospital is applying, with up to 1.0
FTE being awarded per program year, not to exceed a program length of 5
years or 5.0 FTEs. For example, a hospital applying to train residents
in a program in which the length of the program is 3 years may request
up to 3.0 FTEs per fiscal year.
We understand that in many cases a limit of 5.0 FTEs per hospital
per year may not be sufficient for a hospital to fully fund Medicare's
portion of a new program or planned expansion of an existing program;
however, we believe that the increased limitation will provide a
meaningful level of financial support to hospitals that would otherwise
have to rely solely on their own resources to develop their GME
infrastructure. Based on the comments we received, we believe that a
limitation of 5.0 FTEs per hospital per year will be a sufficient
amount to fully fund at least one resident in each program year for
most specialties.
We note that if a hospital is applying for a program which has more
than one participating site, the hospital should only request the FTE
amount (not to exceed 1.0 FTE per program year) associated with the
training time at its facilities (including any nonprovider settings
consistent with 42 CFR 413.78).
Given the limited number of residency positions available and the
number of hospitals expected to apply, our focus under this
modification continues to be on hospitals that are applying to
establish or expand a single residency program. Therefore, we are
finalizing our proposal that a hospital may not submit more than one
application in any fiscal year. We continue to expect that a hospital
would choose to apply for a program that serves the HPSA with the
highest score among its programs, but a hospital is not required to do
so. Hospitals that receive awards in a given round of applications will
be able to reapply in subsequent years, either for the same program or
for a different program, but with no guarantee of receiving additional
residency positions.
With respect to hospitals that are seeking to become teaching
hospitals, we note that such hospitals are also eligible to establish a
cap(s) under 42 CFR 413.79(e). We refer these hospitals to section
II.B.5. of this final rule with comment period where we discuss the
implementation of section 131 of the CAA, specifically the 1.0 FTE cost
reporting threshold. We note that a
[[Page 73434]]
hospital that trains residents for the first time in an existing
program or a new program will have a per resident amount (PRA)
established for direct GME payment purposes, consistent with the
regulations at 42 CFR 413.77(e). Such a hospital will also have a
cap(s) established if the program in which it trains residents is a new
program. We refer these hospitals to the August 31, 2012 Federal
Register (77 FR 53416 through 53424), where we discuss the 5-year cap
building period for new teaching hospitals.
Comment: Several commenters recommended that the limit on the
number of residency positions should be adjusted to reflect the
demonstrated need of individual hospitals. For instance, a commenter
believed that hospitals in areas of great medical need should be
allowed to receive more than 1.0 FTE per year; another commenter argued
that, since the need for residency positions and full-time employees is
not uniform across HPSAs, hospitals should not be subjected to a
uniform cap on the size of their awards. A commenter stated that the
limit should apply only to hospitals that do not qualify under any of
the four statutory priority categories.
Response: We appreciate the commenters' concern for hospitals
located in areas of high need, and believe these concerns are addressed
by the statutory requirement which specifies that hospitals may qualify
for additional residency positions by serving HPSAs, and that at least
10 percent of the aggregate number of residency positions should be
distributed to hospitals in this category. In addition, as explained
previously, we are modifying our policy in this final rule with comment
period to allow hospitals to receive up to 5.0 FTEs per fiscal year.
With respect to the suggestion that the limit should apply only to
hospitals that do not qualify under any of the four statutory priority
categories, we note that section 1886(h)(9)(A)(i) of the Act directs
the Secretary to distribute additional residency positions to
qualifying hospitals, while section 1886(h)(9)(F)(ii) of the Act
defines the term ``qualifying hospital'' as a hospital that satisfies
the criteria of at least one of the four categories of hospitals
described in subclauses (I) through (IV) of subparagraph (B)(ii). In
other words, a hospital that does not qualify under any of the
statutory categories would not be eligible to apply for and receive
additional residency positions under section 126 of the CAA.
Comment: A few commenters recommended that CMS should delay the
implementation of the proposed limitation on individual hospitals and
evaluate the results of the first round of applications to determine
whether a limit below the statutory maximum is warranted.
Response: As explained previously, we are modifying our policy in
this final rule with comment period to allow hospitals to receive up to
5.0 FTEs per year. Under this modification to allow up to 5.0 FTEs, our
focus continues to be a single program given the limited number of
residency positions available and the number of hospitals we expect to
apply. Therefore, we are finalizing our proposal that a hospital may
not submit more than one application in any fiscal year. We continue to
expect that a hospital would choose to apply for a program that serves
the HPSA with the highest score among its programs, but a hospital is
not required to do so. We plan to evaluate the results of the first
round of applications and to consider whether any changes to the
limitation on individual hospitals should be adopted in future
rulemaking.
Additionally, as noted in the proposed rule and earlier in this
section, section 1886(h)(9)(C)(i) of the Act places certain limitations
on the distribution of the residency positions, one of which is that a
hospital may not receive more than 25 additional FTE residency
positions. Under our final policy to allow hospitals to receive up to
5.0 FTEs per year, no hospital would receive more than 25 additional
FTE residency positions.
Comment: In considering our proposed limit of 1.0 FTE per hospital
per year, a commenter stated that our proposal to prorate residency
positions in case the number of hospitals with the same HPSA score
exceeds the number of remaining residency positions will diminish the
value of awards and increase the likelihood that the costs of creating
a new program or expanding one would outweigh the benefits. Several
commenters recommended that in case of a tie, rather than prorating
residency positions, we should prioritize hospitals that are training
residents in excess of their statutory FTE caps.
Response: We thank the commenters for their suggestions. As
explained previously, we are modifying our policy in this final rule
with comment period to allow hospitals to receive up to 5.0 FTEs per
year. We refer the commenters to our discussion of our final policy to
distribute residency positions, including our policy should there be a
situation where the number of FTEs requested by hospitals with the same
HPSA score, exceeds the number of remaining positions, in section
II.B.3.d.(2). of this final rule with comment period.
In summary, we are modifying our proposal to account for the size
of a hospital's award to the length of the program for which the
hospital is applying, with a maximum award of 5.0 FTEs per hospital per
year. We are also finalizing the portion of our proposal that a
hospital may not submit more than one application in any fiscal year.
d. Prioritization of Applications From Hospitals for Residency Programs
That Serve Underserved Populations
(1) Use of Geographic HPSAs and Population HPSAs
The Executive Order on ``Ensuring an Equitable Pandemic Response
and Recovery'' noted that the COVID-19 pandemic has exposed and
exacerbated severe and pervasive health and social inequities in
America (see https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/21/executive-order-ensuring-an-equitable-pandemic-response-and-recovery/.) As we stated in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25508), in order to help address these exposed
health inequities longer term, we believe that it would be appropriate
to prioritize the applications from hospitals that will use the
additional residency positions under section 126 of the CAA in
residency programs serving underserved populations.
This prioritization was already partially reflected in our proposed
definition of Category Four, where we discussed maximizing the number
of GME positions distributed to residency programs serving underserved
populations in geographic HPSAs designated by HRSA under PHSA section
332(a)(1)(A). However, under PHSA section 332(a)(1)(B), HRSA also
designates HPSAs on the basis of a shortage of services for a specific
subset of the population (``population HPSAs'') rather than the entire
population in an area as is the case in geographic HPSAs. These
population subsets include, but are not limited to: Low-income
populations, Medicaid-eligible populations, Native American
populations, homeless populations, and migrant farmworker populations.
(For information on the location and types of population HPSAs see
https://data.hrsa.gov/tools/shortage-area/hpsa-find).
In order to more fully address health inequities for underserved
populations, we believe that it also would be appropriate to prioritize
the applications from hospitals that serve
[[Page 73435]]
the specific designated underserved population of a population HPSA.
We have already discussed our proposed definition in Category Four
of hospitals that serve the populations of geographic HPSAs. Similar to
that approach, in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25508), we proposed that a hospital would be considered to serve a
population HPSA if it has its main campus or a provider-based facility
(under 42 CFR 413.65) physically located in a primary care or mental
health population HPSA, and any such locations serve the designated
underserved population of that HPSA. Additionally, we proposed that, as
part of the qualification requirements under Category Four, in the
residency program for which the hospital is applying, at least 50
percent of the residents' training time over the duration of the
program must occur at those locations in the HPSA. As with geographic
HPSAs, we believe it is important to avoid the possibility that a
hospital with provider-based facilities in multiple locations, some of
which may not be located in a population HPSA or serve the designated
population of that HPSA, uses an additional residency position mostly
or entirely to serve populations that face no health service shortage.
Also similar to our proposed use of geographic HPSAs, we proposed
that hospitals that only have main campuses or provider-based
facilities in mental health only population HPSAs may only apply for
positions for psychiatry residency programs.
We proposed that a hospital submit an attestation, signed and dated
by an officer or administrator of the hospital who signs the hospital's
Medicare cost report, that it has its main campus or a provider-based
facility (under 42 CFR 413.65) physically located in a primary care or
mental health population HPSA, any such locations serve the designated
underserved population of that HPSA, and in the program for which the
hospital is applying, the criterion that at least 50 percent of the
residents' training time over the duration of the program occurs at
those locations in the HPSA. We note that there is a difference between
the Category Four qualification ``requirement'' and the prioritization
``criterion'' that 50 percent of a program's training time occur at
training sites physically located in a HPSA. Section
1886(h)(9)(B)(ii)(IV) of the Act specifies that not less than 10
percent of the residency positions distributed shall go to hospitals
that serve areas designated as HPSAs under section 332(a)(1)(A) of the
Public Health Service Act, as determined by the Secretary (that is,
geographic HPSAs, as discussed previously). Since section
1886(h)(9)(B)(ii)(IV) of the Act (referred to as Category Four in this
preamble discussion) requires that not less than 10 percent of
residency positions under section 126 of the CAA be awarded to
hospitals that serve geographic HPSAs, our Category Four policy
includes a ``requirement'' that the applicant hospital participates in
training residents in a program in which the residents rotate for at
least 50 percent of their training time to a training site(s)
physically located in a primary care or mental health only geographic
HPSA, as previously discussed. Separately, hospitals that qualify under
categories One through Four are then subject to the prioritization
criteria, including the ``criterion'' that at least 50 percent of a
program's training time occur at facilities physically located in a
geographic or population HPSA, as described in more detail later in
this section. The HPSA training percentage under the prioritization
``criterion,'' while not required by statute, is consistent with the
Administration's policy to prioritize training programs that have a
higher likelihood of training physicians that will practice in
underserved communities with the greatest need.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 22508 through
25509), we explained that our proposed approach for population-based
HPSAs means that we potentially would be awarding a residency position
for the provision of care that is not exclusively provided to the
designated underserved population for which the shortage exists.
However, in the context of our proposal to use HPSA scores to
prioritize applications by the severity of the shortages, our proposal
to limit the number of additional residency positions awarded to 1.0
FTE per hospital each year, and our proposed criterion that at least 50
percent of the training time over the duration of the program occur at
locations in the HPSA that serve the designated underserved population
of that HPSA, we believe it is sufficient for the residents in a
program to provide care to the designated underserved population of
that HPSA, and it is not necessary for residents to provide care
exclusively to that population.
We note that HRSA also designates certain facilities as HPSAs under
PHSA section 332(a)(1)(C) and the regulations at 42 CFR part 5. The
process for facility HPSA designation is dissimilar from that for
geographic and population HPSAs. Further, a HPSA score for a facility
does not reflect on the adequacy of the health care workforce outside
that facility in a geographic area, and so it is not comparable to
geographic or population HPSAs. Therefore, we did not propose to use
facility HPSA designations for the purposes of this rulemaking.
We also note that there are teaching hospitals that may not have
facilities in areas designated as geographic or population HPSAs, but
that under their Medicare provider agreement operate one or more
facilities that serve areas for which there exists a shortage of
providers. If this is the case, we recommend that a hospital interested
in applying for FTE resident cap positions under this section contact
its state or territorial Primary Care Office (PCO) to receive
information on the HPSA designation process. HRSA maintains cooperative
agreements with the 54 state and territorial PCOs, which conduct needs
assessments and submit applications to HRSA to designate areas as
HPSAs. We refer interested parties to 42 CFR part 5 and 57 FR 2473 for
information on procedures for HPSA designation for primary care and
mental health HPSAs, respectively.
In summary, we are finalizing without modification our proposal to
prioritize applications from qualifying hospitals (that is, hospitals
that qualify under categories One through Four, as previously
described) for residency programs that serve underserved populations in
geographic HPSAs or population HPSAs. In the next section we discuss
our proposal and final policy for the use of HPSA scores for this
purpose.
(2) Use of HPSA Scores for Prioritization
HRSA assigns HPSA scores on a scale of 0 to 25 as a measure of the
severity of a primary care or mental health provider shortage in a
geographic area, with higher scores indicating a more severe health
professional shortage. As we observed in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25509), using HPSA scores to differentiate
applications from hospitals that qualify under categories One through
Four would allow us to optimize the use of the limited number of
additional residency positions under section 126 of the CAA and best
address health inequities by focusing those residency positions on
underserved populations with the most need.
In the proposed rule we stated that, in preparing its application
for an additional residency position for a program, a hospital should
refer to HRSA's HPSA Find Tool (https://data.hrsa.gov/tools/shortage-area/hpsa-find) to obtain the HPSA score of the HPSA served by the
program and
[[Page 73436]]
include this score in its application. A HPSA is served by a program if
that program meets the requirements discussed earlier. Given our
proposal to limit the additional positions awarded to individual
hospitals to 1.0 FTE for any given year, we proposed that a hospital
may not submit more than one application in any fiscal year. Given the
limited number of residency positions available and the number of
hospitals we expect to apply, we expect that a hospital would choose to
apply for a program that serves the HPSA with the highest score among
its programs, but a hospital is not required to do so.
We proposed to allocate 1.0 FTE to each hospital with the highest
HPSA score, prorating only in the event that the number of hospitals
with the highest score exceeds the number of residency positions
available. If the number of hospitals with the highest score is less
than the number of residency positions available, each hospital with
the next highest score would receive 1.0 FTE, with proration again
occurring only in the event that the number of hospitals with this
score exceeds the number of positions remaining. We would continue in
this manner, moving on to hospitals with the next highest score until
all available positions are distributed. We noted that, under this
proposal, hospitals applying for residency positions for programs that
do not serve HPSAs would not be categorically excluded, but those
applications would have the lowest priority.
In the proposed rule we included the following as an illustrative
example, assume the following hospitals apply, Hospitals A through HV.
Assume there are 200 additional residency positions available. Under
our proposal, Hospitals A through ET would each get 1.0 FTE, while
Hospitals EU through HV would each get a prorated FTE award of 0.625,
as follows:
----------------------------------------------------------------------------------------------------------------
FTEs
Hospital name HPSA score FTEs awarded distributed/
remaining
----------------------------------------------------------------------------------------------------------------
A-AX (50 hospitals)............................................. 25 1.0 50/150
AY-CV (50 hospitals)............................................ 24 1.0 50/100
CW-ET (50 hospitals)............................................ 21 1.0 50/50
EU-HV (80 hospitals)............................................ 19 0.625 50/0
----------------------------------------------------------------------------------------------------------------
In summary, we proposed that additional residency positions under
section 126 of the CAA would be distributed to hospitals that qualify
under categories One through Four based on the HPSA score of the HPSA
served by the residency program for which each hospital is applying,
with programs serving higher HPSA scores receiving higher
prioritization. Hospitals applying for residency positions for programs
that do not serve HPSAs would not be categorically excluded, but those
applications would have the lowest priority.
In this section, we present a summary of the public comments and
our responses to our proposals related to the prioritization of
applications from hospitals for residency programs that serve
underserved populations.
Comment: Some commenters expressed support for our proposal to use
HPSA scores to prioritize applications from qualifying hospitals and
the policy goal that underlies this approach, specifically that of
addressing health disparities faced by underserved populations.
Commenters supporting our proposal indicated that where residents train
has an impact on where they practice. Some commenters stated that the
proposed methodology is a fair approach to increasing access to care in
rural and underserved areas. Some commenters indicated that the use of
HPSA scores would help improve the distribution of physicians across
the country.
Response: We thank the commenters for their support.
Comment: Some commenters agreed with CMS that a prioritization of
applications by HPSA scores would likely result in the statutory
minimum of at least 10 percent of total residency positions being
awarded to each of the four categories in section 1886(h)(9)(B)(ii) of
the Act. A commenter added that in the event minimum distributions to
each category are not met, minor adjustments can be made to the
methodology without substantially compromising the approach.
Other commenters disagreed and indicated that our proposed approach
would not result in the minimum statutory distributions being met. For
example, some of these commenters believed that our proposed
prioritization approach might result in the minimum only being met for
Category Four.
Response: We thank the commenters for their support. In response to
the commenters that disagreed that our proposed approach would result
in the minimum statutory distributions being met, we are finalizing our
approach, as proposed, to collect information regarding qualification
for all four categories in the application to allow us to track
progress in meeting all statutory requirements, and evaluate the need
to modify the distribution methodology in future rulemaking. However,
we continue to believe that our proposed approach will most likely
result in the statutory minimum 10 percent distributions being met for
all four of the statutory categories by the end of the 5-year
distribution process for the 1,000 FTE slots. Therefore, as described
in more detail later in this section, we are finalizing our proposal
that the residency positions will be distributed to qualifying
applicant hospitals using a method that prioritizes allotments based on
HPSA scores.
Comment: Many commenters objected to some or all of the aspects of
the proposed criterion that at least 50 percent of a program's training
time occur at applicant hospital locations inside a HPSA in order for
CMS to use that HPSA's score to prioritize the section 126 of the CAA
application for that program. Some of these commenters stated that
nonprovider settings inside the HPSA that are not applicant hospital
locations, such as FQHCs and RHCs, are important contributors to care
in the HPSA and training time at these sites should count. Several of
these commenters added that training time in nonprovider settings
counts for other GME purposes.
Other commenters objected to the existence of a minimum training
time criterion inside of a HPSA at all, regardless of what types of
locations. These commenters argued that many HPSA residents rely on
care provided outside of their HPSA. Some commenters noted this is
particularly true for certain specialty care for which HPSA-residing
patients are referred to teaching hospitals located outside the HPSA.
Some of these commenters suggested we modify our proposal to include
training locations within a HPSA and those within a reasonable
[[Page 73437]]
distance of one. Several commenters provided specific recommendations
for a reasonable distance, such as within 1 mile, 10 miles, 20 miles,
or 25 miles. A commenter requested that all Indian and Tribal
facilities be considered for prioritization regardless of where they
are located.
According to some commenters, a minimum training time inside the
HPSA would impede teaching hospitals' ability to structure programs to
best meet the needs of the patients and the communities they serve, as
well as make it difficult to satisfy administrative obligations such as
accreditation standards. For example, some commenters indicated it
would be impossible for some programs to satisfy this criterion because
locations in a HPSA provide insufficient training opportunities for
some specialties, and we would force hospitals to operate programs in
areas that are ill-suited to sustain training programs.
Some commenters were opposed to the minimum training time criterion
because they believe it would impose a recordkeeping burden on
hospitals. A few commenters noted that normally, resident rotations are
reported in IRIS in aggregate, whereas the proposed 50 percent training
time criterion would demand individual resident tracking and reporting.
Commenters stated that to attest to meeting the criterion, teaching
hospitals would need to develop a new system and process to document
and track section 126 of the CAA funded residents that is separate from
the system and process used to track residents funded by other sources.
A commenter requested clarification on whether the minimum training
time criterion is based on all residents in a program in aggregate or
to individual residents.
Response: We appreciate commenters' concerns regarding the proposed
criterion that at least 50 percent of a program's training time occur
at applicant hospital locations inside a HPSA in order for CMS to use
that HPSA's score to prioritize the section 126 of the CAA application
for that program. After consideration of these comments, we are
modifying certain aspects of this prioritization criterion.
After considering the comments received, we agree with commenters
that training should not be limited to hospital settings physically
located in the HPSA to the exclusion of other settings physically
located in the HPSA. For a geographic HPSA, any and all program
training based on resident rotation schedules (or similar
documentation) that occurs in the HPSA at program training sites that
are physically located in the HPSA and treat the HPSA's population,
including nonprovider settings and Veterans Affairs facilities, will
count towards meeting the 50 percent training criterion. For a
population HPSA, any and all program training based on resident
rotation schedules (or similar documentation) that occurs in the HPSA
at program training sites that are physically located in the HPSA and
treat the HPSA's designated population, including nonprovider settings
and Veterans Affairs facilities, will count towards meeting the 50
percent training criterion.
We disagree with commenters who objected to the existence of a
minimum training time criterion inside of a HPSA at all. We acknowledge
that many HPSA residents receive care provided outside of their HPSA in
areas where the physician shortages are less severe. However, with the
limited FTE slots available under section 126 of the CAA we are
choosing at this time to prioritize in a clear way the care provided
inside of HPSAs in order to increase the likelihood of residents
choosing to practice in areas with more severe shortages. We seek
comment to inform potential future rulemaking on incorporating a
measure of care provided outside of a HPSA to HPSA residents into the
section 126 of the CAA methodology.
We have considered the comment suggesting that all Indian and
Tribal facilities be considered for prioritization regardless of where
they are located. Given the unique relationship between the Medicare
program and Indian and Tribal facilities, and the health care
disparities that exist for the Indian and Tribal populations served by
these facilities, we believe it would be appropriate to also prioritize
applications for programs where the residents rotate into these
facilities. Specifically, for purposes of prioritization we will allow
the training time spent in Indian and Tribal facilities outside of a
HPSA to count towards the minimum training time criterion for that
HPSA, up to a maximum of 45 percentage points of the 50 percentage
points required.
We disagree with the commenters who claimed that the minimum
training time criterion inside the HPSA forces a hospital to
restructure its residency programs or operate programs that include
training opportunities in areas that cannot support them. Section 126
of the CAA is a voluntary program. Hospitals can choose to apply for
additional residency positions or not. We developed a prioritization
methodology because we anticipate that the number of FTE slots
requested will exceed the number available. If that were not the case
the minimum training time criterion would have no effect since even
applications at the lowest priority level (that is, applications for
programs that do not meet the minimum training time criterion for any
HPSA) would receive the number of FTE slots requested assuming all
other applicable requirements were met. We understand that some
commenters disagree with a prioritization method based on HPSA scores,
but that is different from the prioritization method forcing a hospital
to restructure residency programs or operate them in areas that cannot
support them.
As noted in responses to similar comments on Category Four, we also
disagree with the comments that a minimum rotation time criterion
imposes a significant tracking or reporting requirement. We are not
requiring hospitals to establish entirely new administrative structures
to accommodate section 126 of the CAA FTEs. Hospitals regularly develop
rotation schedules to facilitate residents' training at participating
sites and a program's participating site information is generally
readily available on the ACGME website. As such, we are specifying that
the percentage of time that residents in the program spend in the HPSA
and in Indian and Tribal facilities (if applicable) for purposes of
prioritization is required to be based on resident rotation schedules
(or similar documentation).
Regarding IRIS, we do not expect the existing reporting
requirements to change for hospitals that receive section 126 of the
CAA FTEs. In response to the question regarding whether the minimum
training time criterion applies to all residents in aggregate or to
individual residents, the criterion applies to the program in its
entirety, not to individual residents. As such, hospitals are not
expected to track the training time of individual residents so long as
the program in its entirety meets the criterion as demonstrated by the
rotation schedule.
Comment: Many commenters expressed concern about the accuracy of
HPSA scores and appropriateness of their use. Several commenters stated
that HPSA scores are not the most precise measures of barriers to
access to care or health care workforce shortages. A commenter provided
a link to a letter they had written to HRSA on recommendations to
improve their HPSA scoring methodology, including counting residents
and physicians differently in the population to provider ratio,
including an older-adult measure
[[Page 73438]]
in the primary care HPSA score, and taking steps to smooth out the
volatility of HPSA scores to improve predictability for providers in
shortage areas.\1\ Another commenter provided a link to an academic
article that argued HPSAs alone are an insufficient means to guide
policies intended to address complex and interrelated health
challenges.\2\ Some commenters stated that the provider to population
ratio is an important component of HPSA scores while the travel time to
care outside of a HPSA is not. Some commenters argued that HPSA scores
do not provide information on the availability of non-physician
clinicians, such as nurse practitioners and physician assistants, or on
the availability of non-primary care specialties, such as general
surgery. Thus, according to the commenters, the HPSA score reflects an
incomplete picture of physician availability in an area. A commenter
claimed that some states game their HPSA scores or submit faulty data
that incidentally lifts their scores. A commenter referenced HRSA's
June 2020 RFI that sought ideas on improving its HPSA scoring
methodology as an acknowledgment that the current system does not
accurately capture local access to care challenges.
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\1\ https://www.aha.org/system/files/media/file/2020/09/aha-comments-submitted-response-hrsas-rfi-health-professional-shortage-area-hpsa-scorin-9-18-20.pdf.
\2\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7182224/.
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Response: We continue to believe that HPSA scores, while not a
perfect measure, provide the best prioritization approach available at
this time. They are transparent, widely used, publicly available,
regularly updated, and have verifiable inputs for measuring the
severity of a service area's need for additional providers. Consistent
with the Administration's policy objectives and the authority provided
to the Secretary under section 126 of the CAA, we have prioritized
training programs that have a higher likelihood of training physicians
that will practice in underserved communities with the greatest need.
With regard to the comment that HPSAs do not take into account the
availability of non-physician clinicians in shortage areas, we believe
that since the residency positions distributed under section 126 of the
CAA are not available to non-physician clinicians, our focus should be
on measuring physician shortages. In response to the commenters who
expressed concerns related to HPSA scores being based on primary care
specialties and not non-primary care specialties, we acknowledge this
concern but note that the statutory Physician Bonus program utilizes
primary care HPSAs for non-primary care specialties and we believe
provides a currently feasible and appropriate template here.
Regarding the comment that claimed some states game their HPSA
scores or submit faulty data that incidentally lifts their scores, the
commenter did not provide any information to substantiate this claim.
We encourage stakeholders to continue to work with HRSA to improve
HPSAs as part of its Shortage Designation Modernization Project (SDMP),
which has been ongoing since 2013. We are also seeking comment on
feasible alternatives to HPSA scores as a proxy for health disparities
to inform potential future rulemaking regarding prioritization.
Comment: A commenter supported the use of geographic HPSA scores to
prioritize applications, but opposed the use of population HPSA scores.
The commenter indicated that population HPSA designations are sought by
areas that do not meet the criteria for geographic HPSA designations
and there are so many population HPSAs that their inclusion would
undermine legislative intent to target the distribution of residency
positions to areas with the greatest need.
Response: Although we agree with the commenter's assessment that
the inclusion of population HPSA scores changes the prioritization of
some applications, we disagree with the commenter that the inclusion of
population HPSAs undermines targeting the distribution of FTE slots to
areas of greatest need. The more targeted underserved populations in
population HPSAs are as equally deserving as the broader populations in
geographic HPSAs, and the HPSAs scores for both types of HPSAs reflect
the severity of the need. We also note that in the case of a population
HPSA, the requisite amount of training time for the residency program
must occur at facilities that treat the underserved population of the
population HPSA.
Comment: Several commenters argued that HPSAs are designed to
inform about health professional shortages and do not reflect the
capacity of hospitals to train residents.
Response: Our use of HPSA scores for prioritization is not intended
to measure a hospital's capacity to train residents. We rely on a
training program's ACGME accreditation and the ``demonstrated
likelihood'' criterion for that information.
Comment: A commenter alleged that the example distribution table we
provided in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25509) is
invalid because the number of areas and specific HPSA scores
represented in it do not reflect actual data. The commenter provided
their own HPSA table that includes data from June 2020 and that
indicates there are too few primary care geographic and population
HPSAs with scores ranging from 21 to 25 to distribute all 1,000
residency positions to hospitals that serve those HPSAs if award sizes
are capped at 1.0 FTE, so that the majority of the awards would be made
to hospitals that serve HPSAs with scores below 21.
Response: The table provided in the preamble of the proposed rule
was not designed to project the likely distribution of FTEs under
section 126 of the CAA, but to illustrate how the prioritization
methodology would be applied in practice based on hypothetical data.
The minimum score for an application to receive sufficient
prioritization to receive an award will not be known until all of the
applications are received and evaluated for an application year.
Comment: A commenter stated that HPSAs can overlap and expressed
concern that hospitals may have trouble locating their HPSA scores. The
commenter cautioned that unless CMS posts a list of HPSA scores,
hospitals will not be able to assess the impact on residency training
and ultimately on patients' access to physicians. Another commenter
stated that we should be more transparent about HPSA scores and clearer
about how HPSA scores will be assigned to applicant hospitals. A
commenter stated that they performed a study of the HPSA scoring
methodology that found that rural and frontier areas with populations
less than 5,000 people received lower scores. The commenter concluded
that the HPSA scoring system discriminates against populations at that
level or lower.
Response: A primary care HPSA, either a geographic or population
one, cannot overlap with any other primary care HPSAs. Similarly, a
mental health HPSA, either a geographic or population one, cannot
overlap with any other mental health HPSAs. However, there are areas
that are designated as both mental health and primary care HPSAs, and
have different scores for each. Overlap between primary care and mental
health HPSAs may be either complete or partial.
[[Page 73439]]
Hospitals can find information about the HPSA or HPSAs associated
with their training program locations using the HRSA search tool at:
https://data.hrsa.gov/tools/shortage-area/by-address. When a hospital
finds that its residency training program meets the requirement to be
prioritized by more than one HPSA, it may choose which HPSA to use on
its application. A hospital cannot choose more than one HPSA to
prioritize its application. CMS does not assign a HPSA to prioritize an
application.
The HPSA scoring methodology is a relative measure that is applied
uniformly and equitably regardless of the size of the underlying
population. Hospitals that would like to learn more about how HRSA
developed the HPSA scoring methodology through notice and comment
rulemaking and how it calculates the HPSA scores can find out more by
contacting HRSA or visiting this web page: https://www.hhs.gov/guidance/document/hpsa-and-muap-hpsa-scoring-criteria.
Comment: Several commenters requested that CMS clarify whether
there is any difference in prioritization between primary care or
mental health only geographic HPSAs and population HPSAs.
Response: There is no difference in prioritization with respect to
the HPSA score of a primary care geographic HPSA, a mental health only
HPSA, or a population HPSA. For example, a HPSA score of 21 is treated
the same in the prioritization regardless of whether it is associated
with a primary care geographic HPSAs, a mental health only HPSA, or a
population HPSA.
Comment: Some commenters recommended other methods of prioritizing
applications to distribute FTE slots to areas that are in most need. A
commenter recommended prioritizing applications by a composite of HPSA
scores and Medically Underserved Area (MUA) scores. Another commenter
suggested that for the 60 percent of residency positions not required
to be allocated to hospitals that meet the statutory eligibility
categories, priority should be given to hospitals that are located in
MUAs, or service areas or populations designated as medically
underserved by state health entities. A commenter urged CMS to
prioritize applications for addiction medicine in mental health only
HPSAs. Other commenters requested that any program for any physician
specialty be allowed to use the score from a mental health only HPSA,
with preference given to applications for psychiatry training programs.
A commenter stated that CMS should use the Medicare disproportionate
share hospital (DSH) patient percentage of the applicant hospital to
prioritize applications. Some commenters indicated that CMS should
prioritize applications from small hospitals with less than 250 beds,
and hospitals with only one residency program.
Response: We thank the commenters for their feedback. As indicated
earlier, we continue to believe that HPSA scores, while not a perfect
measure, provide the best prioritization approach available at this
time. They are transparent, widely used, publicly available, regularly
updated, uniformly calculated, and have verifiable inputs for measuring
the severity of a service area's need for additional physicians.
Different methodologies that would be used by individual states to
designate areas or populations as underserved do not possess all of
these characteristics.
We also do not believe that MUAs are as appropriate as HPSAs for
purposes of section 126 of the CAA. HPSAs were designed for the
National Health Service Corps to distribute clinicians to where they
are needed most, they form the statutory basis for the Medicare
Physician Bonus Program, and geographic HPSAs are explicitly referenced
in section 126 of the CAA. In contrast, MUAs were designed to help
establish health maintenance organizations and community health
centers,\3\ play no role in the Medicare Physician Bonus Program, and
are not referenced in section 126 of the CAA.
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We disagree that any residency training program regardless of
specialty should be allowed to use the score from a mental health only
HPSA for prioritization. These areas are only designated as shortage
areas for mental health services and such a wide use would be broadly
inconsistent with the Medicare Physician Bonus Program. Therefore, we
are allowing only programs for Psychiatry and subspecialties of
Psychiatry to use the score from a mental health only HPSA. We note
that the subspecialties of Psychiatry include addiction psychiatry and
multispecialty addiction medicine.
We disagree with the commenter who stated that CMS should use the
Medicare DSH patient percentage of the applicant hospital to prioritize
applications. We believe that using the DSH patient percentage is a
less targeted way to increase the likelihood of residents choosing to
practice in areas with more severe shortages.
We disagree with commenters who indicated that CMS should
prioritize applications from small hospitals with less than 250 beds
and generally smaller hospitals with only one residency program to the
extent that the commenters meant irrespective of the HPSA scores
associated with these applications. However, we do believe there is
merit in considering smaller hospital size as a tiebreaker when
prioritizing applications with equal HPSA scores in order to further
reduce the impact of proration. Of the two suggestions by commenters,
bed count is one of the most transparent and currently used measures of
hospital size (42 CFR 412.105(b)). Therefore, if there are insufficient
FTE slots remaining to distribute to applications with equal HPSA
scores, we will first distribute FTE slots to applications from
hospitals with less than 250 beds. If there are insufficient FTE slots
to distribute to applications from hospitals with less than 250 beds,
only then would we prorate among those applications. If there are
sufficient slots to distribute to applications from hospitals with less
than 250 beds, we would prorate the remaining slots among the
applications from hospitals with 250 beds or more.
Comment: Several commenters who otherwise supported the HPSA
scoring methodology recommended the incorporation of an ``impact
factor'' that measures the proportion of residents that ultimately go
on to practice in HPSAs. The use of this additional factor, according
to commenters, would help ensure that section 126 of the CAA
distributions support physician pipelines that produce lasting benefits
for underserved areas. A commenter noted that one research-focused non-
profit already documents the flow of residents to eventual practice
locations for family medicine programs. Commenters also stated that the
use of such an impact factor is aligned with the President's Executive
Order on ``Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government,'' which calls on federal
agencies to recognize and address policies and programs that serve as
barriers to equal opportunity. Another commenter expressed a similar
view, that hospitals should be given priority if their training
programs have records of sending residents on to practice in provider
shortage areas.
Response: We thank the commenters for their feedback and agree that
a measure of the extent to which residents later practice in
underserved areas may be beneficial. In order to inform potential
future rulemaking, we welcome further comment on how to best estimate
the impact factor using appropriately comprehensive and
[[Page 73440]]
transparent data sources across physician specialties, and how to weigh
an impact factor in the prioritization.
Comment: A commenter expressed their opinion that if Congress
passes new legislation increasing the number of available GME training
residency positions, then the distribution process will need to be
changed.
Response: Because we consider this comment to be outside the scope
of the section 126 proposals, we are not directly responding to this
comment in this final rule with comment period. However, we appreciate
the commenter's concern and expect that any future changes following
new legislation would be made through notice and comment rulemaking.
In summary, after considering the comments received, we are
finalizing the following prioritization policy. Applications from
hospitals for a fiscal year are grouped by the HPSA score of the
application, with each grouping consisting of those hospitals with the
same HPSA score. Applications are prioritized by descending HPSA score.
Within each grouping, applications with equal priority (i.e., those
with the same HPSA score) are next grouped by whether the application
is from a hospital with a bed size of less than 250 beds, or 250 beds
or more. Applications from hospitals with less than 250 beds are
prioritized within each grouping. The number of beds in the hospital is
determined in accordance with Sec. 412.105(b).
If there are insufficient slots available to be distributed to all
applications with both the same HPSA score and the same bed size
grouping, the remaining available slots are prorated among those
applications.
e. Alternative Considered for Prioritization
As an alternative to our proposed prioritization approach, in the
FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25509 through 25510), we
considered a simpler prioritization approach for FY 2023 that would
allow additional time to work with stakeholders to develop a more
refined approach for future years. Under this alternative approach, CMS
would distribute 200 additional residency positions for FY 2023 among
hospitals that qualify in Category One, Category Two, Category Three,
and/or Category Four, with higher priority given to applications from
hospitals that qualify in more categories. That is, hospitals that
qualify under all four categories would receive top priority, hospitals
that qualify under any three of the four categories would receive the
next highest priority, then any two of the four categories, and finally
hospitals that qualify under only one category. Under this alternative
proposal considered, in the proposed rule, we stated that we would
distribute 1.0 FTE to each hospital that qualified under all four
categories, prorating only in the event that the number of hospitals
that qualified under all four categories exceeds 200. If the number of
hospitals that qualified under all four categories is less than 200,
each hospital that qualified under three out of four categories would
receive 1.0 FTE, with proration again occurring only in the event that
the number of hospitals that qualified under three out of four
categories exceeds the number of positions remaining. We would continue
in this manner, moving on to hospitals that qualified under two out of
four and one out of four categories until all 200 positions are
distributed.
We sought comment on this alternative prioritization approach
considered to allow for additional time to work with stakeholders to
develop a more refined approach for future years.
Comment: Many commenters supported the proposed alternative
prioritization approach. Commenters stated it would be less burdensome,
more straightforward, and better reflect Congressional intent. Some
commenters indicated this was similar to part of the approach used for
Section 5503 of the Affordable Care Act. Several commenters indicated
that CMS should only use the alternative method for FY 2023 and should
work with stakeholders to develop a better approach for future years.
Some commenters indicated that because the four eligibility categories
are treated equally in the statute, hospitals that qualify under each
one should be equally positioned to receive FTE slots. Several
commenters stated that our proposed prioritization method based on HPSA
scores would disadvantage many hospitals that qualify only under
Category One, Category Two, and/or Category Three, and therefore would
be contrary to Congressional intent. Some commenters indicated that for
applications from hospitals that qualify under the same number of
statutory categories under the alternative method, we secondarily
prioritize those applications from hospitals training 10 FTEs or more
above their caps, with those most above their cap receiving slots
first.
Response: We thank the commenters for their feedback on the
prioritization method described in the ``Alternatives Considered''
portion of the proposed rule.
We acknowledge that our proposed method based on HPSA scores
prioritizes applications for programs where the residents spend
significant time in a geographic or population HPSA. This is
intentional. It is appropriate and entirely consistent with the statute
for CMS to establish a sufficiently focused prioritization methodology
so that our policy objectives for section 126 of the CAA regarding
reducing health care disparities for medically underserved communities
are most likely to be achieved. We disagree with commenters who believe
our proposed prioritization method based on HPSA scores is not likely
to achieve those goals. The locations of residents' training affects
where they practice, as noted by other commenters. We acknowledge some
similarity between aspects of the alternative approach and part of the
approach taken in the implementation of section 5503 of the Affordable
Care Act, but believe our approach based on HPSA scores is a more
targeted improvement over section 5503's approach. We also note that as
discussed earlier, the vast majority of commenters strenuously opposed
our proposed 1.0 FTE limit per hospital and in response to those
comments we are increasing that limit in this final rule with comment
period.
We considered the comments that we should secondarily prioritize
those applications from hospitals training 10 FTEs or more above their
caps, with those most above their cap receiving slots first. We
disagree with these comments because this secondary prioritization
method would be less effective at increasing the likelihood of
residents choosing to practice in areas with more severe shortages
compared to using the method we are adopting for prioritization based
on HPSA scores.
Comment: Some commenters opposed the use of the alternative method
and indicated it would exclude hospitals in states that do not have new
medical schools or additional locations and branch campuses from top
priority, disadvantaging many rural states. Commenters stated that some
of those states have made efforts to address physician workforce
shortages by increasing medical school class sizes rather than
establishing new medical schools. Some commenters stated that new
allopathic medical schools train fewer family physicians than older
medical schools so the alternative method disadvantages primary care.
Response: We agree with commenters that the alternative method
would exclude hospitals in states that do not have new medical schools
or additional
[[Page 73441]]
locations and branch campuses from top priority (that is, qualifying
under all four categories) because those hospitals cannot qualify under
Category Three. In addition, as several commenters pointed out, and as
discussed earlier, section 126 of the CAA addresses a nationwide
provider shortage and ensures minimum allotments to certain categories
of hospitals; prioritization for all 1,000 residency positions
distributed under this section to hospitals that meet all four
statutory eligibility categories could lead to the possibility that
hospitals located in the following 20 areas (15 states, one district
and four territories) would be awarded zero positions: Alaska, American
Samoa, Guam, Hawaii, Iowa, Maine, Maryland, Minnesota, Montana,
Nebraska, New Hampshire, North Dakota, Northern Mariana Islands,
Oregon, Rhode Island, South Dakota, U.S. Virgin Islands, Vermont,
Washington DC, and Wyoming. We believe that prioritization according to
the severity of the provider shortage is the more equitable approach to
distribution. Therefore, after consideration of the comments received,
and the reasons discussed, we are not finalizing the alternative
methodology for FY 2023.
f. Distributing at Least 10 Percent of Positions to Each of the Four
Categories
Section 1886(h)(9)(B)(ii) of the Act requires the Secretary to
distribute at least 10 percent of the aggregate number of total
residency positions available to each of the following categories of
hospitals discussed earlier: Category One, Category Two, Category
Three, and Category Four.
In the proposed rule (86 FR 25510), we stated that because it is
possible for a hospital to be eligible for distribution of additional
residency positions via more than one of the four categories, Category
One, Two, Three or Four, there is a strong likelihood that by
prioritizing applications by HPSA score the result will be that 10
percent or more of the additional residency positions will be
distributed to hospitals in each of the four categories. In the
proposed rule (86 FR 25510), we proposed to collect information
regarding qualification for all four categories in applications to
allow us to track progress in meeting all statutory requirements, and
evaluate the need to modify the distribution methodology in future
rulemaking.
We received no comments on this proposal. Therefore, we are also
finalizing our plan as proposed to collect information regarding
qualification for all four categories to allow us to track progress in
meeting all statutory requirements, and evaluate the need to modify the
distribution methodology in future rulemaking.
g. Hospital Attestation to National CLAS Standards
In order to ensure that the residents are educated and trained in
culturally and linguistically appropriate policies and practices, we
proposed that all applicant hospitals would be required to attest that
they meet the National Standards for Culturally and Linguistically
Appropriate Services in Health and Health Care (the National CLAS
Standards) to ensure the section 126 of the CAA additional residency
position allocation broadens the availability of quality care and
services to all individuals, regardless of preferred language,
cultures, and health beliefs. (For more information on the CLAS
standards, please refer to https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=2&lvlid=53)
Comment: Several commenters expressed support for our proposal that
all applicant hospitals be required to attest that they meet the
National Standards for Culturally and Linguistically Appropriate
Services (CLAS) in Health and Health Care.
Response: We thank the commenters for their support.
Comment: A few commenters expressed support for the aims of the
National CLAS Standards, but also raised concerns about requiring
hospitals to attest to a uniform benchmark. A commenter argued that
these criteria can be difficult to measure objectively, and recommended
that CMS modify the application requirement so that hospitals are still
eligible for residency positions if they attest that they support and
are making progress toward meeting the National CLAS standards. Another
commenter requested that hospitals be granted flexibility in
demonstrating their commitment to culturally and linguistically
appropriate training, and argued that many of the CLAS standards
overlap with requirements that hospitals already meet, including the
Internal Revenue Service (IRS) requirements for 501(c)(3) hospitals;
the Joint Commission Standards related to language access and
interpreter services; and ACGME core competency requirements. Another
commenter cited similar requirements and provided several examples of
initiatives that its own members have undertaken, but asserted that the
concept of a national standardized or mandated curriculum is
inappropriate, and that teaching hospitals should have the freedom to
design and implement their own educational programs.
Response: We appreciate commenters' feedback and support. We
acknowledge that other accreditation boards list some of the same
requirements as the National CLAS standards requirements, but we
believe that the National CLAS standards are more aligned with the
Administration's commitment to addressing healthcare barriers, which
include that residents are educated and trained in culturally and
linguistically appropriate policies and practices. However, we will
continue to consider further adjustments going forward if appropriate.
For additional information about implementing the National CLAS
standards within your organization to help advance and sustain
culturally and linguistically appropriate services, please visit
https://thinkculturalhealth.hhs.gov/.
After consideration of the comments we received, we are finalizing
our proposal that all applicant hospitals would be required to attest
that they meet the National CLAS Standards.
h. Payment for and Aggregation of Additional FTE Residency Positions
Awarded Under Section 126 of the CAA
Section 1886(h)(9)(D) requires that CMS pay a hospital for
additional positions awarded under this paragraph using the hospital's
existing direct GME PRAs for primary care and OB/GYN programs and non-
primary care programs consistent with the regulations at Sec. 413.77.
However, similar to our implementation of section 5503 in the CY 2011
OPPS final rule (75 FR 72192) with respect to the application of direct
GME PRAs for primary care and nonprimary care residents, we proposed
that a hospital that receives additional positions under section 126 of
the CAA would be paid for FTE residents counted under those positions
using the same primary care and nonprimary PRAs for which payment is
made for FTE residents subject to the 1996 FTE cap.
We received no comments on our proposal that additional positions
received under section 126 of the CAA would be paid using the same
primary care and nonprimary care PRAs which are used with respect to
FTE residents subject to the 1996 cap, therefore we are finalizing as
proposed. We will revise Worksheet E-4 to add a line on which hospitals
will report the number of FTEs by which the hospital's FTE caps were
increased for direct GME positions received under section 126 of the
CAA.
i. Conforming Regulation Amendments for 42 CFR 412.105 and 42 CFR
413.79
Section 126 of the CAA, under subsection (b), amends section
[[Page 73442]]
1886(d)(5)(B) of the Act to provide for increases in FTE resident
positions for IME payment purposes as well. Specifically, a new section
1886(d)(5)(B)(xii) of the Act was added, stating that for discharges
occurring on or after July 1, 2023, if additional payment is made for
FTE resident positions distributed to a hospital for direct GME
purposes under section 1886(h)(9) of the Act, the hospital will receive
appropriate IME payment based on the additional residency positions
awarded using the same IME adjustment factor used for the hospital's
other FTE residents. We proposed conforming amendments to the IME
regulations at 42 CFR 412.105 to specify that effective for portions of
cost reporting periods beginning on or after July 1, 2023, a hospital
may qualify to receive an increase in its otherwise applicable FTE
resident cap if the criteria specified in 42 CFR 413.79(p) are met.
We received no comments on our proposed amendments to 42 CFR
412.105 to implement section 1886(d)(5)(B)(xii) of the Act with respect
to IME payments. Therefore, we are finalizing our proposal to revise 42
CFR 412.105 by specifying that effective for portions of cost reporting
periods beginning on or after July 1, 2023, a hospital may qualify to
receive an increase in its otherwise applicable FTE resident cap if the
criteria specified in 42 CFR 413.79(p) are met. We will revise
Worksheet E Part A to add a line on which hospitals will report the
number of FTEs by which the hospital's FTE caps were increased for IME
positions received under section 126 of the CAA.
We also proposed to amend our regulations at 42 CFR 413.79 to
specify that--(1) for portions of cost reporting periods beginning on
or after July 1, 2023, a hospital may receive an increase in its
otherwise applicable FTE resident cap (as determined by CMS) if the
hospital meets the requirements and qualifying criteria under section
1886(h)(9) of the Act and if the hospital submits an application to CMS
within the timeframe specified by CMS; and (2) FTE resident cap
positions added under section 126 of the CAA (Pub. L. 116-260) may be
used in a Medicare GME affiliation agreement beginning in the 5th year
after the effective date of those FTE resident cap positions.
Comment: A commenter supported our proposal to allow residency
positions added under section 126 of the CAA to be used in a Medicare
GME affiliation agreement beginning in the 5th year after the effective
date of the hospital's section 126 of the CAA award. Several commenters
recommended additional regulatory action to ensure that after 5 years,
residency positions remain allocated to programs where 50 percent of
training takes place in a HPSA and be used for rural and primary care
priorities. These commenters further recommended regulatory action to
ensure that residency positions awarded under section 126 of the CAA
not be repurposed for different strategic directions of the hospital. A
commenter requested clarification whether residency positions, once
awarded, are program-specific, and whether they may be used to support
fellowships.
Response: We thank the commenters for their feedback. When a
hospital applies for residency positions under section 126 of the CAA,
it is attesting that the residency positions will be used for a
specific program. Therefore, the residency positions awarded under
section 126 of the CAA should be used for training residents in the
program associated with the hospital's section 126 of the CAA
application. Furthermore, section 126 of the CAA requires that not
later than September 30, 2025, and again not later than September 30,
2027, the Comptroller General of the United States conduct a study and
submit to Congress a report on the implementation of section 126 of the
CAA.
In response to the comment that CMS take regulatory action to
ensure that after 5 years the awarded residency positions are not being
used for purposes other than those for which they were awarded, at this
time, we are not including any additional requirements that must be met
5 years after the effective date of a hospital's section 126 award.
However, we will consider additional guardrails for future rulemaking
if residency positions awarded under section 126 are not being used for
their intended purposes. In response to the question regarding
fellowships, hospitals may apply for residency positions for
fellowships under section 126.
After consideration of the comments we received, and for the
reasons previously discussed, we are finalizing our proposed amendments
to 42 CFR 413.79.
j. Prohibition on Administrative and Judicial Review
Section 126 of the CAA, under clause (c), prohibits review of
section 1886(h)(9) of the Act. Specifically, it amends section
1886(h)(7)(E) of the Act by inserting ``paragraph (9),'' after
``paragraph (8),''. Therefore, we proposed that the determinations and
distribution of residency positions under sections 1886(d)(5)(B)(xii)
and 1886(h)(9) of the Act are final without administrative or judicial
review.
We received no comments on the proposal that determinations and
distribution of residency positions under sections 1886(d)(5)(B)(xii)
and 1886(h)(9) of the Act are final without administrative or judicial
review, and therefore are finalizing our proposed policy.
k. Report by the Comptroller General
We noted in the proposed rule that section 126(d) of the CAA
requires the Comptroller General of the United States to conduct a
study and submit to Congress two reports on section 126, after the 5-
year period of implementation is complete. No comments were received
regarding this requirement.
l. Application Process for Receiving Increases in FTE Resident Caps
In order for hospitals to be considered for increases in their FTE
resident caps, each qualifying hospital must submit a timely
application. In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25510
through 25511), we proposed that an application would be considered
timely for additional residency positions effective July 1 of a fiscal
year if it is completely submitted by January 31 of the prior fiscal
year. We also proposed that the following information be submitted on
an application to be considered completely submitted:
The name and Medicare provider number of the hospital.
The name of the Medicare contractor to which the hospital
submits its Medicare cost report.
The residency program for which the hospital is applying
to receive an additional position.
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (Including copies of Worksheets E,
Part A, and E-4).
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 1 (New Residency Program), which of the
following applies:
[square] Application for approval of the new residency program has
been submitted to the ACGME or the American Board of Medical
Specialties (ABMS) by the application deadline for that year.
[square] The hospital has submitted an institutional review
document or program information form concerning the new residency
program in an application for approval of the new
[[Page 73443]]
program by the application deadline for that year.
[square] The hospital has received written correspondence by the
application deadline for that year from the ACGME or ABMS acknowledging
receipt of the application for the new residency program, or other
types of communication from the accrediting bodies concerning the new
program approval process (such as notification of site visit).
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 2 (Expansion of an Existing Residency Program),
which of the following applies:
[square] The hospital has approval by the application deadline from
an appropriate accrediting body (the ACGME or ABMS) to expand the
number of FTE residents in the program.
[square] The hospital has submitted by the application deadline an
institutional review document or program information form for the
expansion of the existing residency training program.
Identification of the category that describes the hospital
under section 126 of Division CC of the Consolidated Appropriations
Act, 2021 (per section 1886(h)(9)(F)(ii) of the Social Security Act):
[square] (I) The hospital is located in a rural area (as defined in
section 1886(d)(2)(D) of the Social Security Act) or is treated as
being located in a rural area pursuant to section 1886(d)(8)(E) of the
Social Security Act.
[square] (II) The reference resident level of the hospital (as
specified in section 1886(h)(9)(F)(iii) of the Social Security Act) is
greater than the otherwise applicable resident limit.
[square] (III) The hospital is located in a State with a new
medical school (as specified in section 1886(h)(9)(B)(ii)(III)(aa) of
the Act), or with additional locations and branch campuses established
by medical schools (as specified in section 1886(h)(9)(B)(ii)(III)(bb)
of the Act) on or after January 1, 2000.
[square] (IV) The hospital serves areas designated as health
professional shortage areas (HPSAs) under section 332(a)(1)(A) of the
Public Health Service Act, as determined by the Secretary.
The HPSA (if any) served by the residency program for
which the hospital is applying and the HPSA score for that HPSA.
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, of the following:
``I hereby certify that the hospital is a Qualifying Hospital under
section 126 of Division CC of the Consolidated Appropriations Act, 2021
(per section 1886(h)(9)(F)(ii) of the Social Security Act).
``I hereby certify the ``demonstrated likelihood'' that the
hospital will fill the position made available under section 126 of
Division CC of the Consolidated Appropriations Act, 2021 within the
first 5 training years beginning after the date the increase would be
effective, as determined by the Secretary (per section 1886(h)(9)(B)(i)
of the Social Security Act).
``I hereby certify that the hospital agrees to increase the number
of its residency positions by the amount the hospital's FTE resident
caps are increased under section 126 of Division CC of the Consolidated
Appropriations Act, 2021, if awarded positions (per section
1886(h)(9)(C)(ii) of the Social Security Act).
``I hereby certify that if the residency program for which the
hospital is applying serves a geographic or population Health
Professional Shortage Area (HPSA), that the hospital has its main
campus or a provider-based facility (under 42 CFR 413.65) physically
located in that HPSA, any such locations serve the designated
underserved population of that HPSA in the case of a population HPSA,
and in the residency program for which the hospital is applying, at
least 50 percent of the residents training time over the duration of
the program occurs at those locations in the HPSA.
``I hereby certify that the hospital meets the National Standards
for Culturally and Linguistically Appropriate Services in Health and
Health Care (the National CLAS Standards).
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may be
punishable by criminal, civil, and administrative action, fine and/or
imprisonment under federal law. Furthermore, I understand that if
services identified in this application were provided or procured
through payment directly or indirectly of a kickback or where otherwise
illegal, criminal, civil, and administrative action, fines and/or
imprisonment may result. I also certify that, to the best of my
knowledge and belief, it is a true, correct, and complete application
prepared from the books and records of the hospital in accordance with
applicable instructions, except as noted. I further certify that I am
familiar with the laws and regulations regarding Medicare payment to
hospitals for the training of interns and residents.''
We also proposed that the completed application be submitted to CMS
using an online application system under development. A link to the
online application system as well as instructions for accessing the
system and completing the online application process will be made
available on the CMS Direct GME website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.
Comment: Many commenters expressed concern that an award
notification date as late as January 31 of the fiscal year of the FTE
increase would leave teaching hospitals without the time needed to
recruit resident candidates that would be funded with those awards, as
the recruitment process begins several months earlier. Some commenters
noted that January 31 is the last day that hospitals can amend their
residency quotas for national resident matching purposes; they argued
that, without knowing in advance how many residency positions they will
receive under section 126, hospitals would have difficulty adjusting
their program sizes for the purposes of matching with residents, which
would affect their ability to recruit new residents to their programs.
Several commenters recommended approaches to better align the
application and award process with the timing of accreditation
decisions and the national residency matching timeline. Commenters also
recommended flexibility where appropriate to accommodate differing
fiscal years. All commenters that wrote about the notification date
requested that it be moved forward and offered a range of alternative
dates, from October 1 of the fiscal year in which the residency
positions will be effective to no later than early or mid-December of
the fiscal year the residency positions are effective. A commenter
recommended postponing the application deadline for the first round to
March 31, 2022.
Response: We appreciate commenters bringing this issue to our
attention. We agree with the suggested date of March 31st as the
application deadline. With regards to the date of the announcement of
residency positions distributed under section 126, the Secretary is
required to notify hospitals of the number of positions distributed by
January 31 of the fiscal year of the increase. However, in light of the
commenters' concerns, we will consider completing this announcement
earlier if possible.
After incorporating the final policy described previously, in order
to be considered for an increase in its FTE resident caps under section
126, each qualifying hospital must submit a
[[Page 73444]]
complete and timely application. An application is considered timely
for additional residency positions effective July 1 of the applicable
fiscal year if it is submitted by March 31 of the prior fiscal year.
(For example, for awarded residency positions which will be effective
July 1, 2023 (FY 2023), the completed application must be submitted by
March 31, 2022 and hospitals will be notified of the increases they are
awarded by January 31, 2023.) The following information must be
submitted on the application in order for it to be considered complete:
The name and Medicare provider number (CCN) of the
hospital.
The name of the Medicare Administrative Contractor to
which the hospital submits its Medicare cost report.
The residency program for which the hospital is applying
to receive an additional position(s).
FTE resident counts for direct GME and IME and FTE
resident caps for direct GME and IME reported by the hospital in the
most recent as-filed cost report. (Including copies of Worksheets E,
Part A, and E-4).
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 1 (New Residency Program), which of the
following applies:
[square] Application for accreditation of the new residency program
has been submitted to the Accreditation Council for Graduate Medical
Education (ACGME) (or application for approval of the new residency
program has been submitted to the American Board of Medical Specialties
(ABMS)) by March 31, 2022.
[square] The hospital has received written correspondence from the
ACGME (or ABMS) acknowledging receipt of the application for the new
residency program, or other types of communication concerning the new
program accreditation or approval process (such as notification of site
visit) by March 31, 2022.
If the hospital qualifies under ``Demonstrated
Likelihood'' Criterion 2 (Expansion of an Existing Residency Program),
which of the following applies:
[square] The hospital has received approval by March 31, 2022 from
an appropriate accrediting body (the ACGME or ABMS) to expand the
number of FTE residents in the program.
[square] The hospital has submitted a request by March 31, 2022 for
a permanent complement increase of the existing residency training
program.
[square] The hospital currently has unfilled positions in its
residency program that have previously been approved by the ACGME and
is now seeking to fill those positions.
Identification of the categories that describe the
hospital under section 126 of Division CC of the Consolidated
Appropriations Act, 2021 (per section 1886(h)(9)(F)(ii) of the Social
Security Act):
[square] (I) The hospital is located in a rural area (as defined in
section 1886(d)(2)(D) of the Social Security Act) or is treated as
being located in a rural area pursuant to section 1886(d)(8)(E) of the
Social Security Act.
[square] (II) The reference resident level of the hospital (as
specified in section 1886(h)(9)(F)(iii) of the Social Security Act) is
greater than the otherwise applicable resident limit.
[square] (III) The hospital is located in a State with a new
medical school (as specified in section 1886(h)(9)(B)(ii)(III)(aa) of
the Act), or with additional locations and branch campuses established
by medical schools (as specified in section 1886(h)(9)(B)(ii)(III)(bb)
of the Act) on or after January 1, 2000.
[square] (IV) The hospital serves an area designated as a health
professional shortage area (HPSA) under section 332(a)(1)(A) of the
Public Health Service Act, as determined by the Secretary).
The HPSA (if any) served by the residency program for
which the hospital is applying and the HPSA ID for that HPSA.
An attestation, signed and dated by an officer or
administrator of the hospital who signs the hospital's Medicare cost
report, of the following:
``I hereby certify that the hospital is a Qualifying Hospital under
section 126 of Division CC of the Consolidated Appropriations Act, 2021
(per section 1886(h)(9)(F)(ii) of the Social Security Act).''
``I hereby certify the ``demonstrated likelihood'' that the
hospital will fill the position made available under section 126 of
Division CC of the Consolidated Appropriations Act, 2021 within the
first 5 training years beginning after the date the increase would be
effective, as determined by the Secretary (per section 1886(h)(9)(B)(i)
of the Social Security Act).''
``I hereby certify that if my application is for a currently
accredited residency program, the number of full-time equivalent (FTE)
positions requested by the hospital does not exceed the number of
positions for which the program is accredited.''
``I hereby certify that if my hospital currently has unfilled
positions in its residency program that have previously been approved
by the ACGME, the number of FTE positions requested by the hospital
does not exceed the number of previously approved unfilled residency
positions.''
``I hereby certify that if my application is for a residency
training program with more than one participating site, I am only
requesting the FTE amount that corresponds with the training occurring
at my hospital, and any FTE training occurring at nonprovider settings
consistent with 42 CFR 413.78.''
``I hereby certify that the hospital agrees to increase the number
of its residency positions by the amount the hospital's FTE resident
caps are increased under section 126 of Division CC of the Consolidated
Appropriations Act, 2021, if awarded positions (per section
1886(h)(9)(C)(ii) of the Social Security Act).''
``I hereby certify that (choose one):
__ In the geographic HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 50 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the population of
the HPSA and are physically located in the HPSA.
__ In the population HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 50 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the designated
underserved population of the HPSA and are physically located in the
HPSA.
__ In the geographic HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 5 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the population of
the HPSA and are physically located in the HPSA, and the program's
training time at those sites plus the program's training time at Indian
or Tribal facilities located outside of the HPSA is at least 50 percent
of the program's training time.
__ In the population HPSA the hospital is requesting that CMS use for
prioritization of its application, at least 5 percent of the program's
training time based on resident rotation schedules (or similar
documentation) occurs at training sites that treat the designated
underserved population of the HPSA and are physically located in the
[[Page 73445]]
HPSA, and the program's training time at those sites plus the program's
training time at Indian or Tribal facilities located outside of that
HPSA is at least 50 percent of the program's training time.
__ None of the above apply.''
``I hereby certify that the hospital meets the National Standards
for Culturally and Linguistically Appropriate Services in Health and
Health Care (the National CLAS Standards).''
``I hereby certify that I understand that misrepresentation or
falsification of any information contained in this application may be
punishable by criminal, civil, and administrative action, fine and/or
imprisonment under Federal law. Furthermore, I understand that if
services identified in this application were provided or procured
through payment directly or indirectly of a kickback or where otherwise
illegal, criminal, civil, and administrative action, fines and/or
imprisonment may result. I also certify that, to the best of my
knowledge and belief, it is a true, correct, and complete application
prepared from the books and records of the hospital in accordance with
applicable instructions, except as noted. I further certify that I am
familiar with the laws and regulations regarding Medicare payment to
hospitals for the training of interns and residents.''
The completed application must be submitted to CMS using an online
application system. A link to the online application system as well as
instructions for accessing the system and completing the online
application process will be made available on the CMS Direct GME
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME.
We note that we have modified the application so that hospitals no
longer need to furnish a HPSA score. Instead, when applicants include
the HPSA ID associated with the geographic or population HPSA included
in their application the HPSA score will automatically populate. In
preparing its application for additional residency positions, hospitals
should refer to HRSA's Find Shortage Areas by Address (https://data.hrsa.gov/tools/shortage-area/by-address) to obtain the HPSA ID of
the HPSA served by the program and include this ID in its application.
Using this HPSA Find Shortage Areas by Address, applicants may enter
the address of a training location (included on the hospital's rotation
schedule or similar documentation), provided the location chosen
participates in training residents in a program where at least 50
percent (5 percent if an Indian and Tribal facility is included) of the
training time occurs in the HPSA. Each year in November, prior to the
beginning of the application period, CMS will request HPSA ID and score
information from HRSA so that recent HPSA information is available for
use for the application period. CMS will only use this HPSA
information, HPSA ID's and their corresponding HPSA scores, in order to
review and prioritize applications. To assist hospitals in preparing
for their applications, the HPSA information received from HRSA will
also be posted when the online application system becomes available on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME. The information will also be
posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices.
Click on the link on the left side of the screen associated with the
appropriate final rule home page or ``Acute Inpatient--Files for
Download.''
The burden associated with this information collection requirement
is the time and effort necessary to review instructions and register
for the electronic submission system as well as the time and effort to
gather, develop and submit various documents associated with a formal
request of resident position increases from teaching hospitals to CMS.
The aforementioned burden is subject to the Paperwork Reduction Act
(PRA); and as discussed in section III. of this final rule with comment
period, the burden associated with these requests is captured in an
information collection request currently available for public review
and comment. The 60-day notice published on October 22, 2021 (86 FR
58664).
Lastly, we received public comments that were outside the scope of
the GME proposals included in the FY 2022 IPPS/LTCH PPS proposed rule.
These comments were related to: Medicare GME cap policies, promoting
legislation to modernize and expand GME funding, incentivizing
collaborative and team-based environments for health care
practitioners, facilitating care delivery across states, funding for
interprofessional primary care teams, rural recruitment and rotations
for specialty residencies and fellowships, analysis of GME self-
funding, large primary care group practices and preceptorships. Because
we consider these public comments to be outside the scope of the
proposed rule, we are not addressing them in this final rule. We may
consider these public comments for possible proposals in future
rulemaking.
4. Implementation of Section 127 of the CAA, ``Promoting Rural Hospital
GME Funding Opportunity''
To encourage the training of residents in rural areas, section
407(c) of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (Pub. L. 106-113) (BBRA) amended section 1886(h)(4)(H) of
the Act to add a provision (subsection (iv)) stating that, in the case
of a hospital that is not located in a rural area (an urban hospital)
that establishes separately accredited approved medical residency
training programs (or rural tracks) in a rural area, or has an
accredited training program with an integrated rural track, the
Secretary shall adjust the urban hospital's cap on the number of FTE
residents under subsection (F), in an appropriate manner in order to
encourage training of physicians in rural areas. Section 407(c) of
Public Law 106-113 was effective for direct GME payments to hospitals
for cost reporting periods beginning on or after April 1, 2000, and for
IME payments applicable to discharges occurring on or after April 1,
2000. We refer readers to the August 1, 2000 interim final rule with
comment period (65 FR 47026, 47033 through 47037) and the FY 2002 IPPS
final rule (66 FR 39828, 39902 through 39909) where we implemented
section 407(c) of Public Law 106-113. The regulations for establishing
rural track FTE limitations are located at 42 CFR 413.79(k) for direct
GME and at 42 CFR 412.105(f)(1)(x) for IME.
In the August 1, 2003 IPPS final rule (68 FR 45456 through 45457),
we clarified our existing policy that although the rural track
provision allows an increase to the urban hospital's FTE cap, sections
1886(h)(4)(H)(iv) and 1886(d)(5)(B) of the Act do not provide for an
exclusion from the rolling average for the urban hospital for those FTE
residents training in a rural track. These provisions are interpreted
to mean that, except for new rural track programs begun by urban
teaching hospitals that are establishing an FTE cap for the first time,
when an urban hospital with an FTE resident cap establishes a new rural
track program or expands an existing rural track program, FTE residents
in the rural track that are counted by the urban hospital are included
in the hospital's rolling average calculation immediately. This policy
is reflected in the regulation at Sec. 412.105(f)(1)(v)(F) for IME and
Sec. 413.79(d)(7) for direct GME, and applies for IME and direct GME
to cost
[[Page 73446]]
reporting periods beginning on or after April 1, 2000.
In the FY 2017 IPPS/LTCH PPS final rule (81 FR 57027), we finalized
a revision to the regulations at Sec. 413.79(k) (and which, in turn,
affect IME adjustments under Sec. 412.105(f)(1)(x)) to permit that, in
the first 5 program years (rather than the first 3 program years) of
the rural track's existence, the rural track FTE limitation for each
urban hospital would be the actual number of FTE residents training in
the rural training track at the urban hospital, and beginning with the
urban hospital's cost reporting period that coincides with or follows
the start of the sixth program year of the rural training track's
existence, the rural track FTE limitation would take effect. However,
as previously stated, due to the statutory language at sections
1886(d)(5)(B) and 1886(h)(4)(H)(iv) of the Act as implemented in our
regulations at Sec. Sec. 412.105(f)(1)(v)(F) and 413.79(d)(7), except
for new rural track programs begun by urban teaching hospitals that are
establishing an FTE cap for the first time, FTE residents in a rural
training track (RTT) program at the urban hospital are subject
immediately to the 3-year rolling average for direct GME and IME. In
addition, under the regulations at Sec. 412.105(a)(1)(i), no exception
to the IME intern- and resident-to-bed (IRB) ratio cap is provided for
residents in a rural track training program (except for new rural track
programs begun by urban teaching hospitals that are establishing an FTE
cap for the first time).
Since implementation of the rural training track provision from the
BBRA of 1999, stakeholders and advocates of residency training in rural
areas have raised concerns about inequities and unintended consequences
of the BBRA provision. First, the BBRA provision allows an urban
hospital to receive additional cap slots based on the time that
residents in the RTT train at the urban hospital. However, the
provision does not specify that the Secretary provide a cap adjustment
for rural hospitals participating in RTTs. As a result, unless the RTT
program was new, the rural hospital could not receive FTE resident cap
increases, resulting in direct GME and IME payments going only to the
urban hospital for the urban portion of the training, with no attending
funding going to the rural hospital for the rural portion of the
training. Second, the statutory provision does not specify that the
Secretary may provide a cap adjustment to urban hospitals or rural
hospitals when an urban hospital adds additional rural locations to
already existing RTTs. Third, the provision stated that the Secretary
would adjust the caps of an urban hospital that establishes separately
accredited approved medical residency training programs (or rural
tracks) in a rural area. Historically, the Accreditation Council for
Graduate Medical Education (ACGME) has separately accredited family
medicine programs in the ``1-2 format'' (meaning, residents in the 1-2
format receive their first year experience at a core family medicine
program in an urban area, and their second and third year experiences
at another site, which may or may not be rural). Because the ACGME has
historically accredited family medicine programs in the 1-2 format, CMS
interpreted the provision to mean that the development of rural tracks
in specialties other than family medicine may not be feasible. Fourth,
residents added to an RTT were previously not exempt from the 3-year
rolling average for IME and direct GME. We believe that section 127 of
the CAA remedies each of these concerns, as we explain in more detail
in this final rule with comment period.
a. Cap Adjustment for Urban and Rural Hospitals Participating in Rural
Training Track Programs
As amended by the BBRA, section 1886(h)(4)(H)(iv) of the Act
provided for IME and direct GME FTE resident cap adjustments for an
urban hospital that establishes separately accredited rural tracks;
however, the statute did not provide for a similar adjustment to rural
hospitals participating in rural tracks. Specifically, section
1886(h)(4)(H)(iv) of the Act refers to the case of a hospital that is
not located in a rural area but establishes separately accredited
approved medical residency training programs (or rural tracks) in a
rural area. Because of this explicit incentive and permission for FTE
resident cap adjustments for an urban hospital that establishes a rural
track, the rural track does not need to be new for Medicare payment
purposes, as it otherwise would in order for the urban hospital to
qualify for the FTE resident cap adjustments. That is, under section
1886(h)(4)(H)(iv) of the Act, if an urban hospital already had an
accredited family medicine residency program, it could establish from
that existing family medicine program, for the first time, a rural
track, and, assuming all applicable requirements are met, that urban
hospital could receive IME and direct GME FTE resident cap adjustments.
However, with regard to a rural hospital participating in the second
and third years of training in the rural track, since the BBRA language
did not mention cap adjustments to rural hospitals, only if the program
is new for Medicare payment purposes can the rural teaching hospital
also receive an FTE resident cap adjustment for the program. Under
Sec. 413.79(e)(3), any time that a rural hospital participates in
training residents in a new program, the rural hospital may receive an
increase to its FTE resident caps. We refer readers to the FY 2010
IPPS/LTCH PPS final rule for the criteria identifying a new program for
Medicare payment purposes (74 FR 43908 through 43917)). In this case, a
rural track established from an already existing urban family medicine
program would not meet the newness requirement for the rural hospital.
Consequently, Division CC, section 127 of the CAA 2021 revised section
1886(h)(4)(H)(iv) of the Act to state that in the case of a hospital
not located in a rural area that established or establishes a medical
residency training program (or rural tracks) in a rural area, the
Secretary must adjust in an appropriate manner the limitation under
subparagraph (F) for such hospital and each such hospital located in a
rural area that participates in such a training. This revision provides
for cap adjustments for both the urban teaching hospital and the rural
teaching hospital(s). In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25513), we proposed that each time an urban hospital and rural hospital
establish an RTT program for the first time, even if the RTT program
does not meet the newness criteria for Medicare payment purposes, both
the urban and rural hospitals may receive a rural track FTE limitation.
For example, Urban Hospital A has an existing internal medicine
program. In July 2023, it partners with Rural Hospital 1 to create a
RTT from the existing internal medicine program. We proposed that both
Urban Hospital A and Rural Hospital 1 may receive adjustments to their
resident caps (rural track FTE limitations) to reflect their portions
of FTE residents training in the RTT. We proposed to make various
changes throughout the regulations text at 42 CFR 413.79(k) ``Residents
training in rural track programs'' to accommodate the rural track FTE
limitations for both urban and rural hospitals. We also provide
examples in this final rule with comment period, regarding how the
rural track FTE limitations are calculated, according to the same
methodology already in place at 42 CFR 413.79(k)(1) and as previously
explained in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57028).
[[Page 73447]]
b. Cap Adjustments When the Urban Hospital Adds Additional Rural
Training Tracks
As previously stated, under section 1886(h)(4)(H)(iv) prior to
enactment of the CAA, if an urban hospital already had an accredited
family medicine residency program, it could, for the first time,
establish a rural track from that existing family medicine program and,
assuming all applicable requirements were met, such hospital could
receive the IME and direct GME FTE resident cap adjustments. Because
section 1886(h)(4)(H)(iv) of the Act gave this explicit permission for
FTE resident cap adjustments to an urban hospital that establishes a
rural track, the rural track program does not need to be new for
Medicare payment purposes in order for the urban hospital to qualify
for the FTE resident cap adjustments. (We refer readers to the FY 2010
IPPS/LTCH PPS final rule for the criteria identifying a new program for
Medicare payment purposes (74 FR 43908 through 43917)). However, after
establishing its first RTT, the urban hospital can receive a rural
track limitation adjustment for additional established RTTs only if
those additional programs are ``new'' for Medicare payment purposes. As
we explained in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25513),
we believe that section 127 of the CAA amends section 1886(h)(4)(H)(iv)
of the Act such that it permits us to adjust the resident caps of an
urban hospital wishing to create additional RTTs after establishing its
first RTT, while also adjusting the resident caps of the rural
hospital(s) added by creating the subsequent RTTs. Section 127 of the
CAA amends section 1886(h)(4)(H)(iv) of the Act to add a new subclause
which states that for cost reporting periods beginning on or after
October 1, 2022, in the case of a hospital not located in a rural area
that established or establishes a medical residency training program
(or rural tracks) in a rural area . . . adjust in an appropriate manner
the limitation under subparagraph (F) for such hospital and each such
hospital located in a rural area that participates in such a training.
Because the law now states ``established or establishes,'' both past
tense and future tense, we believe the statute grants the Secretary
unique authority not previously held; that is, the authority to
prospectively allow (under certain circumstances) cap adjustments to
existing RTTs expanded in a cost reporting period beginning on or after
October 1, 2022. That is, the provision gives explicit permission to
adjust the RTT limitations of an urban hospital wishing to create
additional RTTs after establishing its first RTT, while also adjusting
the resident caps of the additional rural hospital(s) added by creating
the second (or third, etc.) RTT. We believe this new statutory
authority is separate and distinct from the statute's requirement that,
for IME and direct GME payment purposes, caps can be adjusted only for
new teaching urban hospitals and for rural hospitals with new programs
under section 1886(h)(4)(H)(i) of the Act. That is, in general, urban
hospitals becoming teaching hospitals for the first time and rural
hospitals may receive cap adjustments only if the program(s) in which
they train residents is ``new'' in accordance with Medicare rules (as
explained in detail at 74 FR 43908 through 43917). Therefore, under the
explicit authority under section 127 of the CAA, in the FY 2022 IPPS/
LTCH PPS proposed rule (86 FR 25513) we proposed to prospectively allow
increases to the IME and direct GME caps of both the participating
urban and rural hospitals that expand a qualifying RTT. We proposed
that if, in a cost reporting period beginning on or after October 1,
2022, an urban hospital with an existing RTT (``hub'') adds an
additional RTT (``spoke'') to the existing urban core program of the
same specialty, the urban and rural hospitals may receive adjustments
to their rural track FTE limitation. (For ease of reference, we are
referring to the urban core hospital as the ``hub'' and the one or more
RTTs as the ``spokes'' associated with that urban ``hub.'') For
example, Urban Hospital A has an existing family medicine program. In
2015, Urban Hospital A partnered with Rural Hospital 1 to create a RTT
from the existing family medicine program and received a rural track
FTE limitation to reflect the time that residents training in the RTT
spent at its facility. In July 2023, Urban Hospital A partners with
Rural Hospital 2 in a different rural area of the state, to create an
additional family medicine RTT (adding another ``spoke'' to the
existing urban program ``hub.'') We proposed that both Urban Hospital A
and Rural Hospital 2 may receive adjustments to their resident caps
(rural track FTE limitations) to reflect the portion of the time that
FTE residents in the second family medicine RTT ``spoke'' spend at
their respective facility. We believe that allowing prospective
adjustments to RTT FTE limitations for additional RTT ``spokes'' added
in cost reporting periods beginning on or after October 1, 2022 is an
efficient means of addressing rural healthcare workforce shortages, by
allowing already experienced and successful urban ``hub'' RTTs to
branch out and partner with additional rural communities, rather than
relying solely on starting RTTs from scratch. That is, with the ability
for CMS to provide funding for additional spokes, it should be easier
for urban hospitals that already have one RTT to reach rural areas more
quickly and efficiently with the addition of more spokes, rather than
starting brand new ``hubs''. However, we proposed to limit the
increases to the urban and rural hospitals' RTT FTE limitations only in
the instance where additional residents are recruited to add a new
rural ``spoke'' RTT, and not to allow increases to the RTT FTE
limitations in the instance where the urban and rural hospital add
additional FTE residents to an existing rural RTT ``spoke.'' We believe
it is appropriate to do so because section 127 of the CAA states that
in the case of a hospital not located in a rural area that established
or establishes a medical residency training program (or rural tracks)
in a rural area or establishes an accredited program where greater than
50 percent of the program occurs in a rural area, the Secretary shall
consistent with the principles of subparagraphs (F) and (G) and subject
to paragraphs (7) and (8), prescribe rules for the application of such
subparagraphs with respect to such a program and, in accordance with
such rules, adjust in an appropriate manner the limitation under
subparagraph (F) for such hospital and each such hospital located in a
rural area that participates in such a training. That is, the statute
directs the Secretary to adjust the cap (the limitation under
subparagraph (F)) in an appropriate manner. As we explained in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25514), we believe that
``appropriate'' means not rendering the RTT FTE limitations
meaningless. If we would allow adjustments to the RTT FTE limitations
at any time, for any type or any amount of expansion even to already
existing rural site ``spokes,'' there would, in essence, not be any RTT
FTE limitation at all. As a matter of public policy, as long as the FTE
resident caps (that is, the ``limitation under subparagraph (F)'') are
in place, we believe that CMS should be judicious with providing for
additional funded cap slots, as that, in turn, encourages thoughtful
residency program expansion among hospital stakeholders. Therefore, we
proposed to limit the provision of an increase to the urban and rural
hospitals' RTT FTE limitations only to the instance where additional
residents are recruited to add a new rural RTT ``spoke'' to the
existing urban ``hub'', and not to allow increases
[[Page 73448]]
under this section to the RTT FTE limitations in the instance where the
urban and rural hospital add additional FTE residents to an existing
rural RTT ``spoke.'' As with the general FTE resident caps, since the
slots associated with the RTT FTE limitation are fungible, urban and
rural hospitals with multiple RTT ``spokes'' may reduce the number of
FTE residents training at one track and ``spoke'' in order to
accommodate an increase in training and funding at another track and
``spoke.'' For example, Urban Hospital A has an existing family
medicine program. In 2015, it partnered with Rural Hospital 1 to create
a RTT from the existing family medicine program. Urban Hospital A
received a cap/rural track FTE limitation to reflect residents in the
RTT training at its facility. In July 2023, Urban Hospital A receives
permission from the ACGME to permanently expand this family medicine
RTT by 2 FTE residents, to train at both Urban Hospital A and Rural
Hospital 1. We proposed NOT to allow an adjustment to the rural track
FTE limitation of Urban Hospital A and Rural Hospital 1 for the
addition of 2 FTE residents, because this would be an expansion of an
already existing RTT ``spoke.''
We also note that if the urban hospital already has an existing RTT
in one specialty and an associated rural track FTE limitation, the
urban hospital may also receive an adjustment to its rural track FTE
limitation if it starts another RTT in a different specialty, because
starting a RTT in a different specialty would not be an expansion of
the already existing RTT. For example, Urban Hospital A has an existing
family medicine program. In 2015, it partnered with Rural Hospital 1 to
create a RTT from the existing family medicine program and, as a
result, received a cap/rural track FTE limitation adjustment to reflect
residents in the RTT training in its facility. In July 2023, Urban
Hospital A partners once again with Rural Hospital 1 to create a RTT in
internal medicine. We proposed that both Urban Hospital A and Rural
Hospital 1 may receive adjustments to their cap/rural track FTE
limitations to reflect the time that residents train in the internal
medicine RTT ``spoke'' in their respective facilities. Thus, Urban
Hospital A and Rural Hospital 1 would have cap/rural track FTE
limitations reflecting FTE residents training in both a family medicine
RTT and an internal medicine RTT.
c. Removal of Requirement That Rural Track Must Be ``Separately
Accredited''
Previously, section 1886(h)(4)(H)(iv) stated that the Secretary
would adjust the caps of an urban hospital that establishes separately
accredited approved medical residency training programs (or rural
tracks) in a rural area. Historically, the ACGME has separately
accredited family medicine programs in the ``1-2 format'' (meaning,
residents in the 1-2 format receive their first year experience at a
core family medicine program, and their second and third year
experiences at another site, which may or may not be rural). Because
the ACGME has only accredited family medicine programs in the 1-2
format, hospitals have not been able to seek additional funding
opportunities for rural tracks developed in specialties other than
family medicine. Since implementation of the original BBRA provision,
stakeholders have expressed concern that FTE cap adjustments have not
been permitted for sending residents to rural areas if the program was
not a separately accredited family medicine RTT. Section 127 of the CAA
removes the requirement that the rural track be ``separately
accredited.'' Specifically, section 1886(h)(4)(H)(iv)(II) now states
that in the case of a hospital not located in a rural area that
established or establishes a medical residency training program (or
rural tracks) in a rural area, or establishes an accredited program
where more than 50 percent of the training takes place in a rural area,
the Secretary may adjust the resident cap in an appropriate manner.
(Residency programs, whether they are ``rural tracks'' or any other
program, must still be accredited under the law in order to receive IME
and direct GME payments; see section 1886(h)(4)(H)(iv)(II) of the Act).
Therefore, in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25514), we
proposed that effective for cost reporting periods beginning on or
after October 1, 2022, so long as the program in its entirety is
accredited by the ACGME, regardless of the specialty, it may qualify as
an RTT and urban and/or rural hospitals may receive rural track FTE
limitations, assuming all other requirements are met.
d. Requirement That Greater Than 50 Percent of the Program Occurs in a
Rural Area
Under existing regulations at 42 CFR 413.79(k)(1) and (2), the
urban hospital establishing the RTT may only receive a cap/rural track
FTE limitation to count residents in the RTT if the urban hospital
rotates residents to either a rural hospital or rural nonprovider site,
for more than 50 percent of the duration of the program. As described
in detail in rules implementing the original BBRA provision (see the
August 1, 2000 interim final rule with comment period (65 FR 47033
through 47037) and the FY 2002 IPPS final rule (66 FR 39902 through
39909) where we implemented section 407(c) of Public Law 106-113), we
adopted this greater than one-half duration rule based on the fact that
residents training in separately accredited 1-2 family medicine RTTs
spend greater than 50 percent of their training time in rural areas. We
also wanted to ensure that cap adjustments would not be allowed for
minimal rotations to rural areas. Section 1886(h)(4)(H)(iv)(II) is
amended by section 127 of the CAA which states that in the case of a
hospital not located in a rural area that established or establishes a
medical residency training program (or rural tracks) in a rural area or
establishes an accredited program where greater than 50 percent of the
program occurs in a rural area, the Secretary shall, consistent with
the principles of subparagraphs (F) and (G) and subject to paragraphs
(7) and (8), prescribe rules for the application of such subparagraphs
with respect to such a program. As discussed in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25515), we believe section 127 of the CAA now
requires in statute what CMS has required in regulation; that is, we
proposed that in order for urban or rural hospitals to receive FTE cap
adjustments for residents training in RTTs, the residents must be in
``an accredited program where greater than 50 percent of the program
occurs in a rural area.'' We believe that a ``medical residency
training program (or rural tracks)'' refers to what the ACGME currently
separately accredits as a 1-2 program; family medicine residencies that
typically would have a first year in an urban hospital and second and
third years in a rural hospital/setting. These separately accredited 1-
2 family medicine RTTs may continue to maintain their RTT FTE
limitations, assuming all applicable requirements are met. However, we
proposed that an ``accredited program where greater than 50 percent of
the program occurs in a rural area'' is the new statutory authorization
for development of rural tracks in specialties other than family
medicine, because eligibility for cap adjustments is no longer tied
exclusively to ``separately accredited'', 1-2 programs. Specifically,
as long as a program in its entirety is accredited by the ACGME,
whether the program is in family medicine or in another specialty,
[[Page 73449]]
and the residents spend more than 50 percent of the entire program in a
rural area, then prospectively for cost reporting periods beginning on
or after October 1, 2022, we proposed to also provide additional slots
to any program in any specialty. Therefore, for all accredited
specialties, we proposed to allow an urban hospital to include in its
FTE count, not to exceed its rural track FTE limitation, residents
training in the urban hospital that are designated to rotate to a rural
area for greater than 50 percent of the duration of the particular
program. In addition, we proposed that a rural hospital that is
partnered with the urban hospital in the RTT would similarly include in
its FTE count, not to exceed its rural track FTE limitation, the time
residents train in the rural hospital only if the residents rotate to a
rural area for greater than 50 percent of the duration of the
particular program. For example, greater than 50 percent of the
duration of a 3-year family medicine program would be more than 18
months rotating to a rural area; greater than 50 percent of the
duration of a 4-year psychiatry program would be more than 24 months
training in a rural area.
e. Exemption From the 3-Year Rolling Average During the 5-Year Rural
Track FTE Limitation Window
In the August 1, 2003 IPPS final rule (68 FR 45456 through 45457),
we clarified our existing policy that although the rural track
provision allows an increase to the urban hospital's FTE cap, sections
1886(h)(4)(H)(iv) and 1886(d)(5)(B) of the Act do not provide for an
exclusion from the rolling average for the urban hospital for those FTE
residents training in a rural track. These provisions are interpreted
to mean that, except for new rural track programs begun by urban
teaching hospitals that are establishing an FTE cap for the first time,
when an urban hospital with an FTE resident cap establishes a new rural
track program or expands an existing rural track program, FTE residents
in the rural track that are counted by the urban hospital are included
in the hospital's rolling average calculation immediately. This policy
is reflected in the regulation at Sec. 412.105(f)(1)(v)(F) for IME and
Sec. 413.79(d)(7) for direct GME, and applies for IME and direct GME
to cost reporting periods beginning on or after April 1, 2000.
In addition, as stated in the FY 2017 IPPS/LTCH PPS final rule (81
FR 57028), under the regulations at Sec. 412.105(a)(1)(i), no
exception to the IME intern- and resident-to-bed (IRB) ratio cap is
provided for residents in a rural track training program (except for
new rural track programs begun by urban teaching hospitals that are
establishing an FTE cap for the first time, or for rural hospitals, if
the rural track meets the definition of a new program).
As we explained in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25515), we believe that section 127 of the CAA amends section
1886(h)(4)(H)(iv) of the Act to provide for an exemption from the 3-
year rolling average of the urban hospital and rural hospital during
the 5-year growth window for FTE residents participating in rural
tracks. Specifically, section 1886(h)(4)(H)(iv)(II) of the Act states
that in the case of a hospital not located in a rural area that
established or establishes a medical residency training program (or
rural tracks) in a rural area or establishes an accredited program
where greater than 50 percent of the program occurs in a rural area,
the Secretary shall consistent with the principles of subparagraphs (F)
and (G) and subject to paragraphs (7) and (8), prescribe rules for the
application of such subparagraphs with respect to such a program.
Subparagraph (F) is the FTE resident cap, and subparagraph (G) refers
to the 3-year rolling average. This italicized language is the same as
that used at section 1886(h)(4)(H)(i) regarding providing exemptions
from the FTE resident cap and 3-year rolling average for new teaching
hospitals starting new residency programs. That is, section
1886(h)(4)(H)(i) states: ``(i) New facilities.--The Secretary shall,
consistent with the principles of subparagraphs (F) and (G) and subject
to paragraphs (7) and (8), prescribe rules for the application of such
subparagraphs in the case of medical residency training programs
established on or after January 1, 1995.'' The previous rural track
language at section 1886(h)(4)(H)(iv) did not mention subparagraph (G);
therefore, the law did not exempt from the rolling average any
residents participating in a rural track, even during the cap building
window as we explained in the August 1, 2003 IPPS final rule (68 FR
45456 through 45457). Because section 127 of the CAA amends section
1886(h)(4)(H)(iv) to add in new subclause (II) which contains language
modeled on the language for providing for FTE resident cap and rolling
average exemptions in the case of new programs started on or after
January 1, 1995, we proposed that similarly, during the 5-year cap
growth window for RTTs, the FTE residents participating in the RTT
either at the urban hospital or a rural hospital would not be included
in a hospital's 3-year rolling average calculation during the cost
reporting periods prior to the beginning of the applicable hospital's
cost reporting period that coincides with or follows the start of the
sixth program year of each rural track. That is, just as residents in
new programs are exempt from the 3-year rolling average until the cost
reporting period that coincides with or follows the start of the sixth
program year, similarly, effective for RTTs started in cost reporting
periods beginning on or after October 1, 2022, for each rural track
started, full-time equivalent residents at an urban hospital or rural
hospital in a rural track program would be excluded from the rolling
average calculation during the cost reporting periods prior to the
beginning of the applicable hospital's cost reporting period that
coincides with or follows the start of the sixth program year of each
rural track.
f. Changes to the Regulations Text
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25516), although section 127 of the CAA directly amends section 1886(h)
for direct GME, and does not specifically refer to amendments for IME,
the existing language at section 1886(d)(5)(B)(viii) of the Act states
that rules similar to the rules of subsection (h)(4)(H) shall apply for
purposes of clauses (v) and (vi). Accordingly, the statutory authority
to make corresponding changes to IME for rural tracks already exists.
Clause (v) refers to the IME resident caps, and clause (vi) refers to
the 3-year rolling average. Therefore, we proposed to apply to the IME
payment the new authority under section 1886(h)(4)(H)(iv) of the Act to
allow both urban and rural hospitals to receive IME rural track FTE
limitations, as well as an exemption from the IME 3-year rolling
average for FTE residents during the 5-year cap building window. We are
making appropriate changes to the regulations text for IME at 42 CFR
412.105(f)(1)(v)(F) and 412.105(f)(1)(x) to mirror the following
proposed regulations text changes for direct GME:
We proposed to modify the definition of Rural Track FTE
limitation at 42 CFR 413.75(b) to add ``or rural hospital.''
We proposed to remove the requirement at 42 CFR
413.79(d)(7) that FTE residents in the rural track are included in the
3-year rolling average during the 5-year cap building window.
We proposed to make various changes throughout the
regulations text at 42 CFR 413.79(k) ``Residents training in rural
track programs.''
[[Page 73450]]
g. Documentation Required for Medicare Administrative Contractor (MAC)
To Pay for RTTs
We will amend or clarify as necessary the Medicare cost report,
CMS-2552-10, Worksheets E, Part A for IME and E-4 for direct GME, to
accommodate additional rural track limitations. With this new authority
to pay for more Rural Track Programs (RTPs--see explanation in response
to comments later in this section as to why CMS is using the term
``RTP''), MACs may face an increase in requests for adjustments to
interim rates as hospitals first build these programs. While, as with
payment for any GME program, hospitals must maintain and, upon a MAC's
request, submit applicable documentation, to make review and processing
of these new RTP payment requests more manageable, we are reiterating
the documentation requirements here. We proposed that the urban and
rural hospitals must provide, upon request, to its MAC the following
(Note: In response to a comment we received on the following bullet
points, we have modified the language in these bullet points to reflect
our response to that comment in this final rule with comment period):
The ACGME accreditation for the program as a whole (that
is, both urban and rural training components), and documents showing
whether the urban and rural participating sites are starting the RTP
for the first time in this particular specialty, or whether the urban
and rural hospital already have an RTP in this specialty, but are
adding additional participating sites to the RTP.
A list of all urban and rural hospital and nonprovider
training sites in the RTP.
Resident rotation schedules (or similar documentation)
showing that residents in the specified RTP spend greater than 50
percent of their training in a geographically rural area in the 5-year
growth window in order to receive IME and direct GME rural track FTE
limitations. In the instance where only a subset of the residents in
the particular program are participating in the RTP, and the training
time of the RTP residents is included in the main rotation schedule for
the entire program, the hospital must specifically highlight the names
of the residents and their urban and rural training locations on the
main rotation schedule, so that the MAC can easily identify which
residents are training in the RTP, where they are training, and be able
to verify that over 50 percent of their training time is spent in a
rural area.
The number of FTE residents and the amount of time
training in all 5 program years at both the urban and rural settings
since establishment of a Rural Track Program (based on the rotation
schedules), so that this information is available to the MAC when
needed in auditing the accuracy of the RTP FTE cap limitation
established by the hospital in the cost reporting period that coincides
with or follows the start of the sixth program year of the RTP.
Following are examples of how the urban and rural hospital's rural
track FTE limitations would be calculated:
Example 1: Urban Hospital and Rural Hospital are participating
sites in an accredited rural track program. The program is in internal
medicine (3 years minimum accredited length), and is accredited for a
total of 6 residents, 2 in each program year (PGY). The residents spend
PGY1 at Urban Hospital, and then the PGY2s and PGY3s rotate to a rural
area, to train at both Rural Hospital and Rural Clinic (a nonprovider
site). The PGY2 and PGY3 residents, while mostly assigned to the rural
area, do come back to the Urban Hospital for some required training.
However, the residents spend more than 50 percent of the duration of
the 3 year program in the rural area. Therefore, the Urban Hospital
qualifies to receive a cap/rural track FTE limitation adjustment. Rural
Hospital incurs the cost of the salaries and fringe benefits of the
residents for the time spent training at Rural Clinic and meets other
applicable requirements at Sec. 413.78(g) to be able to count the time
residents spend training at the Rural Clinic. The rotations and the cap
calculation are as follows:
----------------------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
----------------------------------------------------------------------------------------------------------------
PGY1 2.0 Urban Hospital......... PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban
Hospital. Hospital. Hospital. Hospital.
PGY2 0.......................... PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural
Hospital and Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic Rural Clinic
(1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10
Urban Hospital Urban Hospital Urban Hospital Urban Hospital
(.20). (.20). (.20). (.20).
PGY3 0.......................... PGY3 0............ PGY3 2 @.95 Rural PGY3 2 @.95 Rural PGY3 2 @.95 Rural
Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic
(1.9), 2 @.05 (1.9), 2 @.05 (1.9), 2 @.05
Urban Hospital Urban Hospital Urban Hospital
(.10). (.10). (.10).
Total 2.0....................... TOTAL 4.0......... TOTAL 6.0......... TOTAL 6.0......... TOTAL 6.0.
5 Year Total = 24.
----------------------------------------------------------------------------------------------------------------
Urban Hospital's 5 YEAR FTE TOTAL = 11.1
Rural Hospital's 5 YEAR FTE TOTAL (includes time at Rural Clinic) =
12.9
5 Year FTE Total = 24
Step 1: Highest number of FTE residents training in any program
year during fifth year across all participating hospitals is 2.0:
PGY 1s = 2.0
PGY 2s = 2.0
PGY 3s = 2.0
Step 2: 2.0 x 3 (minimum accredited length) = 6.
Step 3: Urban Hospital's cap adjustment is based on the ratio of
training at Urban Hospital over all 5 years to the total training that
is occurring at all sites over all 5 years: 6 x [11.1/(24)] = 2.76.
Step 4: Rural Hospital's cap adjustment is based on the ratio of
training at Rural Hospital and Rural Clinic over all 5 years to the
total training that is occurring at all sites over all 5 years: 6 x
[12.9/(24)] = 3.24.
2.76 + 3.24 = 6.0, the total cap assignment does not exceed the
total number of accredited slots. Urban Hospital's rural track FTE
limitation is 2.76. Rural Hospital's rural track FTE limitation is
3.24. (We note that this calculation is done separately for IME and
direct GME caps respectively. Also note that during these 5 program
years, the Urban Hospital and Rural Hospital exclude the FTE residents
from the 3-year rolling average calculation on their Medicare cost
reports.)
Example 2: Urban Hospital and Rural Hospital are participating
sites in an accredited rural track program. The program is in
psychiatry (4 years minimum accredited length), and is accredited for a
total of 8 residents, 2 in each program year (PGY). The residents spend
PGY1 at Urban Hospital, and then the PGY2s and PGY3s and PGY4s rotate
to a rural area, to train at both Rural Hospital and Rural Clinic (a
nonprovider site). The PGY2 and PGY3 and PGY4 residents, while mostly
assigned to the rural area, do come back to the Urban Hospital for some
required training. However, the residents spend more than 50 percent
(that is, more than
[[Page 73451]]
24 months) of the duration of the 4 year program in the rural area.
Rural Hospital incurs the cost of the salaries and fringe benefits of
the residents for the time spent training at Rural Clinic and meets
other applicable requirements at Sec. 413.78(g) to be able to count
the time residents spend training at the Rural Clinic. The rotations
and the cap calculation are as follows:
----------------------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
----------------------------------------------------------------------------------------------------------------
PGY1 2.0 Urban Hospital......... PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban
Hospital. Hospital. Hospital. Hospital.
PGY2 0.......................... PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural
Hospital and Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic Rural Clinic
(1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10
Urban Hospital Urban Hospital Urban Hospital Urban Hospital
(.20). (.20). (.20). (.20).
PGY3 0.......................... PGY3 0............ PGY3 2 @.95 Rural PGY3 2 @.95 Rural PGY3 2 @.95 Rural
Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic
(1.9), 2 @.05 (1.9), 2 @.05 (1.9), 2 @.05
Urban Hospital Urban Hospital Urban Hospital
(.10). (.10). (.10).
PGY4 0.......................... PGY4 0............ PGY4 0............ PGY4 2 @.90 Rural PGY4 2 @.90 Rural
Hospital and Hospital and
Rural Clinic Rural Clinic
(1.8), 2 @.10 (1.8), 2 @.10
Urban Hospital Urban Hospital
(.20). (.20)
Total 2.0....................... TOTAL 4.0......... TOTAL 6.0......... TOTAL 8.0......... TOTAL 8.0.
5 Year Total = 28.
----------------------------------------------------------------------------------------------------------------
Urban Hospital's 5 YEAR FTE TOTAL = 11.5
Rural Hospital's 5 YEAR FTE TOTAL (includes time at Rural Clinic) =
16.5
5 Year FTE Total = 28
Step 1: Highest number of FTE residents training in any program
year during fifth year across all participating hospitals is 2.0:
PGY 1s = 2.0
PGY 2s = 2.0
PGY 3s = 2.0
PGY4s = 2.0
Step 2: 2.0 x 4 (minimum accredited length) = 8.
Step 3: Urban Hospital's cap adjustment is based on the ratio of
training at Urban Hospital over all 5 years to the total training that
is occurring at all sites over all 5 years: 8 x [11.5/(28)] = 3.29.
Step 4: Rural Hospital's cap adjustment is based on the ratio of
training at Rural Hospital and Rural Clinic over all 5 years to the
total training that is occurring at all sites over all 5 years: 8 x
[16.5/(28)] = 4.71.
3.29 + 4.71 = 8.0, the total cap assignment does not exceed the
total number of accredited slots. Urban Hospital's rural track FTE
limitation is 3.29. Rural Hospital's FTE cap adjustment is 4.71. (We
note that this calculation is done separately for IME and direct GME
caps respectively. Also note that during these 5 program years, the
Urban Hospital and Rural Hospital exclude the FTE residents from the 3-
year rolling average calculation on their Medicare cost reports.)
Example 3: Refer to Example 1 (as previously described), where
Urban Hospital and Rural Hospital are participating sites in an
accredited internal medicine rural track program. The program is in
internal medicine (3 years minimum accredited length), and is
accredited for a total of 6 residents, 2 in each program year (PGY).
Urban Hospital's rural track FTE limitation is 2.76. Rural Hospital's
FTE cap adjustment is 3.24. In July 2023, Urban Hospital partners with
Second Rural Hospital in a different rural part of the state to create
another internal medicine RTT (that is, Urban Hospital internal
medicine ``hub'' is adding another ``internal medicine RTT ``spoke'').
Urban Hospital adds 2 FTE residents to train in PGY1 at the Urban
Hospital, and then the PGY2s and PGY3s rotate to a rural area, to train
at both Second Rural Hospital and Second Rural Clinic (a nonprovider
site). The PGY2 and PGY3 residents, while mostly assigned to the rural
area, do come back to the Urban Hospital for some required training.
However, the residents spend more than 50 percent of the duration of
the 3 year program in the rural area. Therefore, Urban Hospital
qualifies to receive another rural track FTE limitation. Second Rural
Hospital incurs the cost of the salaries and fringe benefits of the
residents for the time spent training at Second Rural Clinic and meets
other applicable requirements at Sec. 413.78(g) to be able to count
the time residents spend training at the Second Rural Clinic. The
rotations and the cap calculation are as follows:
----------------------------------------------------------------------------------------------------------------
Year 1 Year 2 Year 3 Year 4 Year 5
----------------------------------------------------------------------------------------------------------------
PGY1 2.0 Urban Hospital......... PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban PGY1 2.0 Urban
Hospital. Hospital. Hospital. Hospital.
PGY2 0.......................... PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural PGY2 2 @.90 Rural
Hospital and Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic Rural Clinic
(1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10 (1.8), 2 @.10
Urban Hospital Urban Hospital Urban Hospital Urban Hospital
(.20). (.20). (.20). (.20).
PGY3 0.......................... PGY3 0............ PGY3 2 @.95 Rural PGY3 2 @.95 Rural PGY3 2 @.95 Rural
Hospital and Hospital and Hospital and
Rural Clinic Rural Clinic Rural Clinic
(1.9), 2 @.05 (1.9), 2 @.05 (1.9), 2 @.05
Urban Hospital Urban Hospital Urban Hospital
(.10). (.10). (.10).
Total 2.0....................... TOTAL 4.0......... TOTAL 6.0......... TOTAL 6.0......... TOTAL 6.0.
5 Year Total = 24.
----------------------------------------------------------------------------------------------------------------
Urban Hospital's 5 YEAR FTE TOTAL = 11.1
Second Rural Hospital's 5 YEAR FTE TOTAL (includes time at Second Rural
Clinic) = 12.9
5 Year FTE Total = 24
Step 1: Highest number of FTE residents training in any program
year during fifth year across all participating hospitals is 2.0:
PGY 1s = 2.0
PGY 2s = 2.0
PGY 3s = 2.0
Step 2: 2.0 x 3 (minimum accredited length) = 6.
Step 3: Urban Hospital's cap adjustment is based on the ratio of
training at Urban Hospital over all 5 years to the total training that
is occurring at all sites over all 5 years: 6 x [11.1/(24)] = 2.76.
Step 4: [Note: As we explain in the summary of comments and
responses, as a result of responding to one comment, we realized that
the original Step 4 as included in the proposed rule contained errors.
Therefore, we are replacing the language of Step 4 of the proposed rule
with the following corrected language in this final rule with comment
period]. Second Rural Hospital's cap adjustment is based on
[[Page 73452]]
the ratio of training at Rural Hospital and Rural Clinic over all 5
years to the total training that is occurring at all sites over all 5
years: 6 x [12.9/(24)] = 3.24 2.76 + 3.24 = 6.0, the total cap
assignment does not exceed the total number of accredited slots. Urban
Hospital's rural track FTE limitation is 2.76. This second rural track
FTE limitation is added to Urban Hospital's first rural track FTE
limitation for a total rural track FTE limitation of 5.52 (2.76 +
2.76). Second Rural Hospital's FTE cap adjustment is 3.24 (we note that
Second Rural Hospital does not have a previous RTP FTE limitation). (We
note that this calculation is done separately for IME and direct GME
caps respectively. Also note that during these 5 program years, the
hospitals exclude the FTE residents from the 3-year rolling average
calculation and the cap on the IME IRB ratio on their Medicare cost
reports.)
We invited comments on our proposals. Following is a summary of the
comments received and our responses to those comments.
Comment: Commenters were overall very pleased with CMS's proposed
implementation of section 127 of the CAA, and believe it addresses the
teaching concerns of rural hospitals in a significant way. However, the
commenters disputed CMS's concern that allowing expansion of existing
programs might render RTT cap limitations meaningless. Commenters
argued that nothing in section 127 of the CAA precludes CMS from
providing a one-time adjustment opportunity to existing rural RTT
spokes (rural providers). Commenters noted that CMS states in the IPPS
proposed rule, ``Because the law now states `established or
establishes,' both past tense and future tense, we believe the statute
grants the Secretary unique authority not previously held; that is, the
authority to prospectively allow (under certain circumstances) cap
adjustments to existing RTTs expanded in a cost reporting period
beginning on or after October 1, 2022'' (emphasis added; 86 FR 25513).
Many commenters urged CMS to create an exceptions process that would
allow hospitals with existing RTTs to demonstrate that the only way
they could train more residents at a rural hospital was to expand an
existing RTT. They suggested that CMS could consider making this a one-
time exception per program and limit the total number of residents
allowed to 3.0 FTEs per program.
Response: We appreciate the commenters' support for our proposals.
However, we disagree with how the commenters are interpreting
``established or establishes.'' We do not believe the past tense
includes general expansions of existing programs. Rather, for the first
time, the law allows adding additional sites to an already
``established'' RTP. As we stated in the proposed rule, ``. . . the
provision gives explicit permission to adjust the RTT limitations of an
urban hospital wishing to create additional RTTs after establishing its
first RTT, while also adjusting the resident caps of the additional
rural hospital(s) added by creating the second (or third, etc.) RTT . .
. Therefore, under the explicit authority under section 127 of the CAA,
we are proposing to prospectively allow increases to the IME and direct
GME caps of both the participating urban and rural hospitals that
expand a qualifying RTT. We are proposing that if, in a cost reporting
period beginning on or after October 1, 2022, an urban hospital with an
existing RTT (``hub' '') adds an additional RTT (``spoke'') to the
existing urban core program of the same specialty, the urban and rural
hospitals may receive adjustments to their rural track FTE limitation''
(86 FR 25513). That is, the new authority not previously available
allows for an expansion of an existing, already ``established'' RTT by
adding additional participating sites (not previously allowed). Section
127 of the CAA does not delineate an exceptions process as requested by
commenters, even if an exception is limited to 3 FTEs or some other
relatively small number. In the absence of such a delineation, we will
not permit exceptions in some cases, but deny them in other cases. We
interpret the clause in section 127 that the Secretary's rules shall be
``consistent with the principles of subparagraph (F)'' as a
demonstration of Congressional intent to retain the FTE caps.
Furthermore, this interpretation is consistent with our past
interpretations of the principles of subparagraph (F), under which we
have not permitted the addition of residents to an already existing
program, whether at an urban or a rural hospital (see for example, May
12, 1998 (63 FR 26328, 26334, and 26335). Accordingly, we believe that
allowing an exceptions process for expansions of RTPs at existing rural
participating sites is inconsistent with our longstanding
interpretations of subparagraph (F), and would render the FTE caps
meaningless.
Comment: Numerous commenters provided feedback on the terminology
CMS used in the proposed rule to describe different constructs of rural
training and the manner in which they are accredited. For example,
several commenters noted that CMS uses multiple terms to refer to
possibly the same concept regarding ``rural training track,'' or
``rural training track program.'' The commenters recommend that CMS be
careful in using these terms interchangeably, and define each
separately, if they have a distinctive meaning for CMS. A commenter
suggested that CMS clarify the difference between a separately
accredited program and a track within a program that is already
accredited, as follows:
Separately accredited rural track programs (traditional
`RTTs' or integrated rural tracks as described in the FY2003 Final
Rule; or `RTPs,' Rural Track Programs in the new ACGME language just
published in May 2021. (See https://acgme.org/What-We-Do/Accreditation/Medically-Underserved-Areas-and-Populations/))
Urban programs with not-separately-accredited rural tracks
(`RTs,' not programs)
We consider `tracks' of urban programs that do not place
residents for training in rural locations for >50 percent of their
training time to be `pathways.'
Response: We appreciate the comments encouraging consistent
terminology, and we agree that in this final rule with comment period,
we can improve the clarity and consistency in the language and the
terms we used to describe programs in which residents rotate to rural
areas. As pointed out in the comments, historically we have referred to
the separately accredited family medicine programs which were eligible
for the FTE cap adjustments under the BBRA of 1999 as ``Rural Training
Tracks'' (RTTs), or ``Rural Training Track Programs.'' (See 65 FR
47026, 47033 through 47037 August 1, 2000) and the FY 2002 IPPS final
rule (66 FR 39828, 39902 through 39909) and (68 FR 45456 through 45457
August 1, 2003). However, section 127 of the CAA shifts eligibility for
FTE cap adjustments away from ``separate accreditation'' to an
``accredited program where greater than 50 percent of the program
occurs in a rural area.'' Accordingly, going forward, so long as the
training is not an expansion of an existing site's program, CMS' and
the MACs' focus for determining an urban and rural hospital's
eligibility for FTE cap adjustments is documentation showing that
specific residents actually spend greater than 50 percent of the
duration of their training in the program in a geographically rural
area. CMS and the MACs will no longer look for evidence of ``separate
accreditation''. We have spoken with the ACGME and we have
[[Page 73453]]
reviewed the terminology on the ACGME's website, and we intend to use
the terminology ``Rural Track Program'' (RTP) in this final rule with
comment period to describe the type of program that could qualify for
IME and direct GME FTE cap adjustments. Specifically, at https://acgme.org/What-We-Do/Accreditation/Medically-Underserved-Areas-and-Populations/, the ACGME defines Rural Track Program (RTP) as follows:
ACGME Rural Track Program (RTP)--An ACGME-accredited program with a
unique 10-digit identifier in which residents/fellows gain both urban
and rural experience with more than half of the education and training
for each resident/fellow taking place in a rural area (any area outside
of a Core-Based Statistical Area (CBSA)).
This definition of RTP includes the key point that the residents
(or fellows, if applicable) spend more than half of their training in a
geographically rural area. However, this current definition contains
two points that CMS and the MACs will not require: (1) A unique 10-
digit identifier, which we understand is characteristic of the
separately accredited 1-2 programs, and (2) that ``each'' resident/
fellow spends more than half of the education and training in a rural
area. Our understanding is that, while it is certainly possible for a
program to be designed such that ``each'' resident in the program is
designated to spend more than 50 percent of the time in the rural area,
it is also common for only a subset of residents within an entire
accredited program to be designated for the rural training experience.
Therefore, if only a subset of the number of residents for which a
program is accredited is slated for the RTP, then, based on rotation
schedules, the MAC would verify those residents and that their training
experience consists of greater than 50 percent of the time in a rural
area, and would calculate the FTE cap adjustment based on that
proportion of FTEs spending more than 50 percent of their time in the
rural area. Nevertheless, as stated previously, we are using the term
RTP to refer to programs that, at least for a subset of the residents,
meet the statutory requirement for greater than 50 percent of the
training occurring in a rural area, and therefore, the urban and rural
hospital could qualify for IME and direct GME rural track FTE
limitations.
We are adding a new definition to the regulations at 42 CFR
413.75(b) for Rural Track Program as follows: ``Rural Track Program
means, effective for cost reporting periods beginning on or after
October 1, 2022, an ACGME-accredited program in which all, or some,
residents/fellows gain both urban and rural experience with more than
half of the education and training for the applicable resident(s)/
fellow(s) taking place in a rural area as defined at 42 CFR
412.62(f)(iii). In the finalized regulations text at 42 CFR
412.105(f)(1)(v) and (x) and 42 CFR 413.79(k), effective for a cost
reporting period beginning on or after October 1, 2022, if those
programs (either the whole program, or a subset of residents in the
program) consist of greater than 50 percent of the training time in a
rural area, we will use the term ``Rural Track Program''. Conversely,
in the same regulations text, when referring to programs where less
than 50 percent of the training occurs in a rural area, we will use the
term ``program,'' with no mention of ``rural''.
Comment: A commenter was concerned that in the absence of distinct
ACGME criteria identifying programs where greater than 50 percent of
the training occurs in a rural area, CMS should devise concrete
criteria for identifying programs eligible for FTE cap adjustments. The
commenter recommended that CMS require that a new `director' be named
in supporting materials for any newly created RTP but allow the
program's `director' to be any of the following in ACGME terms: A
`Program Director,' an `Associate Program Director,' or even a
participating `site director' of a rural track that is not separately
accredited. The same commenter requested that CMS define a not
separately accredited rural track as ``an organized and deliberate
urban residency program strategy to produce physicians to rural
practice as indicated by all the following:
A name for the rural track
A director;
A program-specific goal or objective(s) to recruit,
nurture, educate, train, or encourage residents toward rural practice,
including a separate NRMP number or another process for assigning
individual residents to this track early in the first program year; and
A description that explicitly articulates a rural focus,
including a rotation schedule that demonstrates how the track will meet
the 50 percent threshold for assigned residents training in a rural
location.''
Response: In order to provide maximum flexibility to stakeholders,
we believe it is appropriate for us to adhere to the criteria specified
in section 127 of the CAA, rather than impose additional regulatory
conditions for payment. We expect ACGME to develop additional criteria,
which we believe is likely to occur in the coming years, as both the
industry and the ACGME gain more experience with operating RTPs in a
variety of specialties. Therefore, we are not adopting the commenter's
suggested criteria.
Comment: A commenter requested that CMS confirm that as long as the
residency program in its entirety is accredited by ACGME, there is no
separate accreditation requirement or designation or recognition for
the program to qualify as an RTT, above and beyond what is required
under Medicare regulations. The commenter also requested that CMS
confirm how it intends to treat RTTs that become immediately eligible
as of October 1, 2022, due to meeting all regulatory requirements with
the exception of the ``separate accreditation'' requirement.
Response: As we stated in response to the previous comment, we
would use the ACGME's term ``Rural Track Program'' to refer to programs
that are ACGME-accredited in their entirety, and where residents
(either all, or a subset) spend greater than 50 percent of their
training in the program in a rural area. We also do not understand why
special consideration is needed for programs that become eligible for
payment as an RTP immediately on October 1, 2022. As we stated, a
hospital that believes it qualifies for an RTP FTE limitation should
approach its MAC showing it meets the greater than 50 percent rural
training requirement, and the MAC may adjust the hospital's interim
rates so that effective for a cost report starting on or after October
1, 2022, the hospital could receive increased IME and direct GME
payment as appropriate.
Comment: Some other commenters recommended using ACGME terms like
``participating hospital'' and to avoid the term ``sponsor''. The
commenters noted that many, if not most, residency programs involve
multiple participating hospitals and both provider and non-provider
ambulatory sites, and that the sponsoring institution may not
necessarily be a hospital. Some commenters also noted that in the
Examples 1 and 2 on pages 25516-18 of the proposed rule, CMS refers to
hospitals that ``jointly sponsor'' programs. The commenters noted that
the ACGME does not use the term ``joint sponsor,'' and instead refers
to hospitals as ``participating sites'' in an accredited program. In
Example 3, a commenter corrected CMS's wording to indicate that Urban
Hospital partners with Second Urban Hospital in a different part of the
State to ``create'', and not to ``sponsor,'' another internal medicine
RTT. A commenter also noted that the ACGME only allows one organization
to serve as the Sponsoring Institution of an ACGME-accredited program,
and that
[[Page 73454]]
education and training in each accredited program takes place in
participating sites. A couple of other commenters noted that use of the
term ``core'' and ``hub'' for the urban hospital are unnecessarily
urban-centric, and suggest that the language be changed instead to
`networks' of multiple participating urban and rural hospitals and
ambulatory sites.
Response: We appreciate the commenters' corrections and have made
the suggested corrections in Examples 1, 2, and 3. We have consulted
the ACGME's ``Glossary of Terms,'' dated April 15, 2020 (https://www.acgme.org/portals/0/pdfs/ab_acgmeglossary.pdf). After considering
the commenters' suggestions, we believe it is best to use terms that
are already defined in the ACGME's Glossary. We found the following
relevant definitions:
Primary clinical site: The primary facility designated for
clinical instruction in the program.
Participating site: An organization providing educational
experiences or educational assignments/rotations for residents/fellows.
Examples of participating sites include: A university; a medical
school; a teaching hospital, including its ambulatory clinics and
related facilities; a private medical practice or group practice; a
nursing home; a school of public health; a health department; a
federally qualified health center; a public health agency; an organized
health care delivery system; a health maintenance organization (HMO); a
medical examiner's office; a consortium; or an educational foundation.
Accordingly, in this final rule with comment period and going
forward, rather than refer to the ``core'' and ``hub'' for the urban
hospital, and ``spoke'' for the rural training sites, in this final
rule with comment period, we instead will refer to the urban
hospital(s) as the ``primary clinical site,'' and will refer to the
various other training locations as either the ``rural hospital
participating site,'' if the site is a rural hospital, or the ``rural
non-provider participating site'' if the site is an ambulatory clinic,
or some other non-hospital site. For illustrative purposes, had we used
this new terminology in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25515), we would have written the language as follows:
We are proposing that if, in a cost reporting period beginning on
or after October 1, 2022, an urban hospital with an existing RTT RTP
(``primary clinical site'') adds an additional RTT (``spoke'') rural
``participating site'' to the existing urban core program RTP of the
same specialty, the urban and rural hospitals may receive adjustments
to their rural track FTE limitation. (For ease of reference, we are
referring to the urban core hospital as the `hub'' and the one or more
RTTs as the ``spokes'' associated with that urban ``hub.'' For example,
Urban Hospital A (primary clinical site) has an existing family
medicine program. In 2015, Urban Hospital A partnered with Rural
Hospital 1 (rural hospital participating site) to create a RTT RTP from
the existing family medicine program and received a rural track FTE
limitation to reflect the time that residents training in the RTT RTP
spent at its facility. In July 2023, Urban Hospital A (primary clinical
site) partners with Rural Hospital 2 (an additional rural hospital
participating site) in a different rural area of the State, to create
an additional family medicine RTT RTP (adding another ``spoke'' to the
existing urban program ``hub.'') We are proposing that both Urban
Hospital A and Rural Hospital 2 may receive adjustments to their
resident caps (rural track FTE limitations) to reflect the portion of
the time that FTE residents in the second family medicine RTT ``spoke''
rural hospital participating site RTP spend at their respective
facility.
Comment: A commenter reviewed our proposed reiterated criteria for
hospitals to seek MAC approval to receive payment for RTPs (see 86 FR
25516), and made the following suggested edits:
1. The accreditation for the ``spoke, ``Approval of the urban
program's rural track from the ACGME and information whether the track
is in the same specialty as an RTT/RTP program that the urban hospital
already has, or whether the ``spoke'' track is a newly created RTT
rural track in a different specialty.
2. Intern and resident rotation schedules (or similar
documentation) showing that residents in each particular RTT program
(both hub and spokes overall) the specified rural track spend greater
than 50 percent of their training in the initial residency period in a
geographically rural area in order to receive IME and direct GME rural
track FTE limitations.
3. The number of FTE residents and the amount of time training in
all program years at both the urban and rural settings since
establishment of the particular ``spoke of any already accredited RTT/
RTP or approved not-separately-accredited RT, so that the MAC may be
able to verify the RTT cap and appropriately adjust the rural FTE
limitation.
Response: We appreciate the commenter's suggestions, and will
revise the criteria as follows:
The ACGME accreditation for the program as a whole (that
is, both urban and rural training components), and documents showing
whether the urban and rural participating sites are creating the RTP
for the first time in this particular specialty, or whether the urban
and rural hospital already have an RTP in this specialty, but are
adding additional participating sites to the RTP.
Intern and resident rotation schedules (or similar
documentation) showing that residents in the specified RTP spend
greater than 50 percent of their training in a geographically rural
area in the 5-year growth window order to receive IME and direct GME
rural track FTE limitations. In the instance where only a subset of the
residents in the particular program are participating in the RTP, and
the training time of the RTP residents is included in the main rotation
schedule for the entire program, the hospital must specifically
highlight the names of the residents on the main rotation schedule, and
highlight their urban and rural training locations, so that the MAC can
easily identify which residents are training in the RTP, and be able to
verify that over 50 percent of their training time is spent in a rural
area.
The number of FTE residents and the amount of time
training in all 5 program years at both the urban and rural settings
since establishment of a Rural Track Program (based on the rotation
schedules), so that this information is available to the MAC when
needed in auditing the accuracy of the RTP FTE cap limitation
established by the hospital in the cost reporting period that coincides
with or follows the start of the sixth program year of the RTP.
We note that under the second bullet, we removed the phrase ``in
the initial residency period'' and changed it to ``in the 5-year growth
window'' because we believe that is what the commenter intended to say
(we note the phrase ``initial residency period'' as defined at 42 CFR
413.79(a) does not make sense in this context).
Comment: A commenter requested that CMS confirm that a hospital
that is physically located in an urban area but treated as rural for
purposes of payment under the IPPS as implemented in Sec. 412.103
would be considered urban for purposes of meeting the requirements for
the RTT provision and would be eligible for both DGME and IME cap
adjustments as an urban hospital should it successfully partner with a
hospital physically located in a rural area.
Response: Hospitals physically located in urban areas, but that are
[[Page 73455]]
reclassified to rural areas under 42 CFR 412.103 are treated as rural
for IPPS payment purposes, which includes IME. This is because 42 CFR
412.103 affects payments under section 1886(d) of the Act, which are
the IPPS payments, and IME is an add-on to the teaching hospital's IPPS
payment. However, 42 CFR 412.103 does not affect direct GME because
direct GME is addressed under section 1886(h) of the Act. This means
that such a hospital is rural for IME purposes, but it is urban for
direct GME purposes (because it is still physically located in an urban
area). Therefore, we are not confirming the commenter's statement that
the urban hospital reclassified as rural under 42 CFR 412.103 would be
considered urban for the purpose of meeting the RTP requirements.
Rather, the hospital would be rural for IME and urban only for direct
GME. We did not propose any changes to this policy. Thus, as long as an
urban hospital retains its 412.103 reclassification, CMS would treat
that hospital as rural for section 1886(d) purposes, which includes all
ramifications to the IME adjustment.
With regard to urban hospitals that are reclassified as rural under
Sec. 412.103 and participate in RTPs, there are challenges associated
with correctly determining the payment implications for an RTP that
has, as its primary clinical site, or even as a participating site, a
hospital that is rural for IME purposes, but is urban for direct GME
purposes. For instance, in determining whether greater than 50 percent
of residents' training time occurs in an urban area or a rural area,
would the training that occurs in this hospital that is rural for IME
but urban for direct GME be counted towards the urban portion or the
rural portion? The answer is that for the purpose of qualifying for an
adjustment to only the IME FTE limitation, the residents' training time
spent in the urban hospital reclassified as rural under 42 CFR 412.103
could count toward the rural portion of training time. However, the
hospital would be in the awkward position of needing to send those same
residents to train in a geographically rural participating site in
order to separately meet the greater than 50 percent rural training
requirement to qualify for the adjustment to the direct GME FTE
limitation. Urban hospitals reclassified as rural under 42 CFR 412.103
that wish to participate in RTPs may decide that it is preferable both
from an educational and economic standpoint to synchronize the time
spent in geographically rural participating sites, so that the IME and
direct GME rotations would be synchronized as well. It would also be
much easier to document the training time to the MAC for the purpose of
receiving the IME and direct GME FTE limitation adjustment.
Comment: A commenter noted that in the proposed rule, we stated
that ``as with the general FTE resident caps, since the slots
associated with the RTT FTE limitation are fungible, urban and rural
hospitals with multiple RTT ``spokes'' may reduce the number of FTE
residents training at one track and ``spoke'' in order to accommodate
an increase in training and funding at another track and ``spoke'' (86
FR 25514). The commenter requested clarification on how the
``fungible'' aspect would work in the following example: Urban Hospital
A and Rural Hospital 1 decide to adjust the RTT limitation partnership
between the two hospitals by adding additional family medicine
residents and reducing the number of internal medicine residents. The
commenter requested confirmation that this single RTT cap limitation
across two hospitals cross-training multiple specialties is what is
intended by this example.
The commenter also requested confirmation regarding a second
example demonstrating the fungible nature of the rural track FTE
limitation. The commenter noted that CMS includes a more formal example
(Example 3, 86 FR 25518) later in the preamble. In Example 3, which
builds on Example 1, Urban Hospital forms a second rural training track
in internal medicine with ``Second Rural Hospital.'' According to
Example 3, Urban Hospital's first rural track FTE limitation and second
rural track FTE limitation are added together to form a single rural
track FTE limitation for that particular specialty (internal medicine).
CMS includes a note that the ``second rural track FTE limitation is
added to Second Rural Hospital's first rural track FTE limitation for a
total rural track FTE limitation of 6.48 (3.24 + 3.24)'' (emphasis by
CMS; 86 FR 25519). However, there is no indication in the earlier part
of Example 3 of the origin of Second Rural Hospital's first rural track
FTE limitation, and in particular whether it came from the same
specialty or a different specialty. The commenter believed the intent
is to demonstrate that Second Rural Hospital's first rural track FTE
limitation was in a different specialty (not internal medicine), and
the two distinct specialty rural track FTE limitations get added
together to, again, form a single RTT cap limitation that was created
via multiple specialties. The commenter requested confirmation that
this single RTT cap limitation for Second Rural Hospital across
multiple specialties is what is intended by this example.
Response: Regarding the first example, we partially confirm the
commenter's general understanding, that if Urban Hospital A and Rural
Hospital 1 receive RTP cap limitations for both family medicine and
internal medicine, the two FTE cap limitations calculated as a result
of each respective specialty may be added for a total RTP cap
limitation at each respective hospital, not across both hospitals.
Then, within each respective hospital's total RTP FTE cap limitation,
the actual number of residents in each RTP may be reduced in one
specialty, and increased in another specialty. For example, if a
hospital has a total RTP FTE cap limitation of 6, consisting of 3 from
a family medicine RTP, and 3 from an internal medicine RTP, the
hospital could choose to reduce the family medicine RTP to 2 FTEs, and
increase the internal medicine RTP to 4 FTEs, while still staying
within the total RTP FTE cap limitation of 6. However, we disagree with
the commenter's belief that a ``single RTT cap limitation across two
hospitals cross-training multiple specialties'' is permissible. There
is no ``single RTP cap limitation across two hospitals.'' Rather, each
hospital, whether urban or rural, has its own IME and direct GME RTP
FTE limitations; we are not creating Medicare GME affiliation
agreements specific to sharing RTP FTE limitations. We note that, as
with regular FTE caps, hospitals are free to increase or decrease FTE
residents in any specialty at any location, but Medicare would only pay
each hospital for no more FTEs than the amount in their RTP FTE
limitations.
Regarding the commenter's second request for confirmation
referencing Example 3 on page 25518 and 25519 of the proposed rule, we
have reviewed this Example 3, and realize that we made an error. As the
commenter notes, Example 3 does build on Example 1. Urban Hospital
forms a second rural track FTE limitation in internal medicine with
``Second Rural Hospital.'' According to Example 3, Step 4, Urban
Hospital's first rural track FTE limitation and second rural track FTE
limitation are added together to form a single rural track FTE
limitation for that particular specialty (internal medicine). CMS
includes a note that the ``second rural track FTE limitation is added
to Second Rural Hospital's first rural track FTE limitation for a total
rural track FTE limitation of 6.48 (3.24 + 3.24)'' (emphasis by CMS; 86
FR 25519). However, that is incorrect, because Second Rural Hospital
had no previous
[[Page 73456]]
rural track FTE limitation (it was First Rural Hospital in Example 1
that already had a rural track FTE limitation of 3.24, but First Rural
Hospital is NOT part of Example 3; rather, Second Rural Hospital is at
issue, and in fact is just receiving a rural track FTE limitation of
only 3.24 for the first time). It is Urban Hospital that, under Example
3, has two rural track FTE limitations which are added together to form
a total rural track FTE limitation for Urban Hospital of 5.52 (2.76 +
2.76). The intent of this Example 3 was to show how the limitations are
calculated when ``Urban Hospital internal medicine ``hub'' adds another
``internal medicine RTT `spoke' '' ((86 FR 25518) or, in terms used in
this final rule with comment period, urban primary clinical site added
a second rural hospital participating site but for the same specialty
program). We are rewriting Step 4 of Example 3 in this final rule with
comment period as follows:
Step 4: Second Rural Hospital's cap adjustment is based on the
ratio of training at Rural Hospital and Rural Clinic over all 5 years
to the total training that is occurring at all sites over all 5 years:
6 x [12.9/(24)] = 3.24. 2.76 + 3.24 = 6.0; therefore, the total cap
assignment does not exceed the total number of accredited slots. Urban
Hospital's rural track FTE limitation is 2.76. This second rural track
FTE limitation is added to Urban Hospital's first rural track FTE
limitation for a total rural track FTE limitation of 5.52 (2.76 +
2.76). Second Rural Hospital's FTE cap adjustment is 3.24 (we note that
Second Rural Hospital does not have a previous RTP FTE limitation). We
note that this calculation is done separately for IME and direct GME
caps respectively per 42 CFR 412.105(f)(1)(x) for IME and 42 CFR
413.79(k) for direct GME. Also note that during these 5 program years,
the hospitals exclude the FTE residents from the 3-year rolling average
calculation and the cap on the IME IRB ratio on their Medicare cost
reports.
At this point, Urban Hospital has a RTP FTE limitation of 5.52,
while First Rural Hospital from Example 1 has a RTP FTE limitation of
4.71, and Second Rural Hospital from revised Example 3 has a RTP FTE
limitation of 3.24. Each hospital's RTP FTE limitations for IME and
direct GME respectively belong to each hospital, and are derived from a
single specialty, internal medicine. Thus, there are not yet any slots
to be fungible. The slots can be fungible when there is more than one
specialty RTP. We can elaborate on Example 3 further, and imagine that
Urban Hospital and First Rural Hospital decide to create a new RTP in
pediatrics. Five years pass, and both Urban Hospital and First Rural
Hospital receive RTP FTE limitations associated with the pediatrics
RTP, and that Urban Hospital's RTP FTE limitation has increased from
5.52 to 8.0, and First Rural Hospital's RTP FTE limitation increased
from 3.24 to 6.0. After some more time, Urban Hospital and First Rural
Hospital believe there is a need to expand their complement of
residents training in their existing internal medicine RTP. However,
since adjustments to RTP FTE limitations are not provided for
expansions of existing programs, they decide to reduce the complement
of pediatrics residents by 1.0, and increase the complement of internal
medicine residents training in the RTP at Urban Hospital and First
Rural Hospital by 1.0. Thus, both Urban Hospital and First Rural
Hospital maintain training levels within their respective existing RTP
FTE limitations. This demonstrates the fungible nature of each
hospital's RTP FTE limitations, when there is more than one RTP
specialty.
Comment: A commenter requested that CMS comment on the following
example. Urban Hospital A has an internal medicine RTT with two rural
hospitals (Rural Hospital X and Rural Hospital Y). Urban Hospital A has
an internal medicine RTT limitation of 5.0, which was established by
expanding its internal medicine program by 15 rural track residents,
training 5.0 FTE residents in Urban Hospital A and rotating 5.0 FTE
residents to Rural Hospital X and 5.0 FTE residents to Rural Hospital
Y. After the RTT cap for the program was established, Urban Hospital A
decides to rotate more residents to Rural Hospital X (increase to 6.0)
and fewer residents to Rural Hospital Y (decrease to 4.0). Rural
Hospital X would be training above its internal medicine RTT
limitation. Rural Hospital Y would be training below its internal
medicine RTT limitation. The commenter believed that Urban Hospital A
would retain its internal medicine RTT limitation of 5.0, even if the
number of residents training in Rural Hospital X and Rural Hospital Y
changed. The commenter also believed that Rural Hospital X and Rural
Hospital Y could form an affiliated group and aggregate their FTE caps
such that Rural Hospital X raises its FTE cap by 1.0 and Rural Hospital
Y lowers its FTE cap by 1.0 to accommodate Urban Hospital A's rotation
change. The commenter requested confirmation that an urban hospital's
RTT cap limitation for a single specialty would not change, even if its
spokes altered the amount of training occurring at each spoke hospital,
and that the spoke hospitals may form a Medicare affiliated group
agreement to share rural track FTE limitation ``space.''
Response: In the situation where the FTEs at the Urban Hospital's
portion of the RTP do not change, but there is a change at the Rural
Hospitals, such that there is an increase of FTEs at one Rural Hospital
with a decrease at another Rural Hospital, we agree that Urban
Hospital's RTP FTE limitation and payment would not change, because it
is still sending the same amount of FTEs to a rural area for greater
than 50 percent of the program. However, payment to the Rural Hospitals
would change. Rural Hospital X would be training in excess of its RTP
FTE limitation, and would not be paid for the amount of FTEs in excess
of its RTP FTE limitation. While Rural Hospital Y would now have
``room'' under its RTP FTE limitation, it would receive payment only
for the number of FTEs in the RTP it trains. As we mentioned
previously, effective October 1, 2022, we are not permitting the
formation of Medicare GME affiliated groups for the purpose of
aggregating and cross-training RTP FTE limitations. First, we believe
Medicare GME affiliated groups for RTPs are premature at this point, as
only starting October 1, 2022 would hospitals have the first
opportunity to add additional participating sites. Subsequently, there
would be the 5-year cap building period in which Medicare GME
affiliations are not permitted, even under existing Medicare GME
affiliation agreement rules (42 CFR 413.79(f)). Second, before we
create Medicare GME affiliation agreements unique to RTPs, we believe
it would be best to first modify the Medicare cost report form to add
spaces for the hospitals to indicate the number of any additional RTP
FTEs, and the caps applicable to those FTEs. We also wish to assess
flexibility within a hospital's own total RTP FTE limitation, before
sharing those slots with other hospitals. We would need to be vigilant
to ensure that the RTP FTE limitations are not comingled with regular
FTE cap adjustments currently used in Medicare GME affiliation
agreements. Therefore, we believe it is best to reassess allowing
Medicare GME affiliation agreements for RTP FTE limitations at some
point in the future.
Comment: A commenter noted that CMS stated in the proposed rule
that RTTs will be prospectively exempt from the rolling average ``for
RTTs started in cost reporting periods beginning on or after October 1,
2022'' (86 FR 25515). Several commenters believe this effective date
will adversely impact
[[Page 73457]]
many programs just developed with HRSA funding this past 2 years, and
special consideration should be given for 7 programs expected to begin
July 1, 2022. The commenters recommended that the effective date should
be aligned with the start of the academic year, so that the rolling
average should instead be ``effective for RTTs starting in Academic
Year 2022-23 (July 1, 2022) and beginning with their cost reports
starting on or after October 1, 2022. . . .'' Another commenter
suggested that FTEs in RTTs be prorated such that the rolling average
would not apply for portions of cost reporting periods on or after
October 1, 2022.
Response: First, we acknowledge an error that we made in the
proposed rule with regard to the effective date of the exemption from
the rolling average. That is, a commenter noted that CMS stated in the
proposed rule that RTTs will be prospectively exempt from the rolling
average ``for RTTs started in cost reporting periods beginning on or
after October 1, 2022'' (emphasis added, 86 FR 25515). In fact, section
127 of the CAA states ``for cost reporting periods beginning on or
after October 1, 2022 . . .;'' the law does not state that for RTTs
``started in'' cost reporting periods beginning on or after October 1,
2022. This means that even for RTTs started prior to October 1, 2022,
so long as the urban hospital and rural hospital are within the 5-year
growth window for FTE residents participating in the RTT, the earliest
a hospital can first benefit from the rolling average exemption is a
hospital's first cost reporting period beginning on or after October 1,
2022. We also note that the law changes the heading at section
1886(h)(4)(H)(iv)(I) to be ``cost reporting periods beginning before
October 1, 2022,''; the statutory effective date is explicit. We cannot
allow hospitals to prorate and exclude FTEs from the rolling average
for the portion of the cost reporting period that occurs after October
1, 2022, because the law does not say ``for portions of cost reporting
periods on or after October 1, 2022.'' The law also does not specify
that special consideration be given to programs with a start date of
July 1, 2022. We understand any disappointment related to waiting for
the rolling average exemption in the first cost reporting period
starting on or after October 1, 2022, but we cannot alter this
statutory effective date. Therefore, new programs started on July 1,
2022 would still be subject to the rolling average for the cost
reporting period that started prior to October 1, 2022. Only effective
with a hospital's cost reporting period starting on or after October 1,
2022 would the new rules regarding not needing separate accreditation
for the RTT or exemption from the rolling average apply.
Comment: A commenter pointed out that CMS uses the authority within
section 1886(d)(5)(B)(viii) of the Act, which specifies ``[r]ules
similar to the rules of subsection (h)(4)(H) shall apply for purposes
of clauses (v) and (vi)'' to exempt new teaching hospitals from being
held to the IME intern and resident-to-bed (IRB) ratio cap during the
cap-building period. Since section 1886(d)(5)(B)(vi)(I) is the part of
the statute that imposes the IRB ratio cap, the commenter believes that
CMS has authority under section 1886(d)(5)(B)(viii) to also grant an
exemption to RTTs from the IRB ratio cap during their cap-building
windows and should exercise its authority to do so.
Response: We agree that urban and rural hospitals within a 5-year
cap building period for an RTP would not apply the IME IRB ratio cap
during the cost reporting periods prior to the beginning of the
applicable hospital's cost reporting period that coincides with or
follows the start of the sixth program year of each RTP. The commenter
refers to section 1886(h)(4)(H) of the Act, called ``Special rules for
application of subparagraphs (F) and (G).'' Subparagraph (F) is the FTE
resident cap for direct GME, and subparagraph (G) refers to the 3-year
rolling average for direct GME. Section 1886(h)(4)(H) provides the
authority for CMS to exempt new teaching hospitals first establishing
new programs from applying the FTE caps and the 3-year rolling average
during the 5-year cap building period. Section 1886(h)(4)(H)(iv)
provides the special authority for exemptions for RTPs. Similarly, on
the IME side, section 1886(d)(5)(B)(viii) refers to subsection
(h)(4)(H) in order to exempt new teaching hospitals first establishing
new programs from applying the IME FTE cap (section 1886(d)(5)(B)(v)),
the IME 3-year rolling average (section 1886(d)(5)(B)(vi)(I)), and the
IME IRB ratio cap (section 1886(d)(5)(B)(vi)(II)). Thus, by specifying
that rules similar to the rules of subsection 1886(h)(4)(H) shall
apply, the statute exempts RTPs within their 5-year cap building period
from application of the FTE caps, the 3-year rolling average for IME
and direct GME, and effective for cost reporting periods beginning on
or after October 1, 2022, the IRB ratio cap for IME as well.
Comment: A commenter expressed concern regarding the implementation
of a new OMB definition of non-metropolitan (that is, `rural' and `not
urban', (micropolitan = <100,000 population)), and how it may impact
RTPs. The commenter suggested CMS outline a policy that covers RTPs and
changes to CBSAs that inevitably occur every census from population
change.
Response: Currently, CMS has made no proposals to adopt such OMB
changes. If and when CMS does propose changes similar to those proposed
by OMB, we would address their ramifications in proposed rulemaking at
the appropriate time. In the meantime, we refer readers to existing
policy regarding changes resulting from census data; see 42 CFR
413.79(k)(7), implemented in the August 22, 2014 IPPS final rule (79 FR
50111 through 50117).
Comment: Some commenters encouraged CMS to include RTT programs
within consortium agreements with urban hospitals for inpatient
rotations and FQHCs for outpatient clinics, as this would provide
needed physicians for FQHCs with waiting lists of untreated patients,
and would foster the training of primary care physicians.
Response: CMS does not have any specific rules regarding RTPs and
inclusion or exclusion within consortium agreements, so we are unclear
as to why CMS would need to do so now. To the extent that there are
FQHCs located in rural areas, RTP training time spent in such FQHCs
would be counted in the portion of the RTP that is in the rural area.
h. Final Policies and Changes to the Regulations Text
We are finalizing our proposed policies with minor adjustments but
no substantive policy changes. We are also finalizing changes to the
regulations text for IME at 42 CFR 412.105 to mirror regulations text
changes for direct GME, and we are finalizing changes to the direct GME
regulations as follows:
We are adding a new definition of Rural Track Program at
42 CFR 413.75(b).
We are finalizing the modification to the definition of
Rural Track FTE limitation at 42 CFR 413.75(b) to add ``or rural
hospital''.
We removed the requirement at 42 CFR 413.79(d)(7) that FTE
residents in the RTP are included in the 3-year rolling average during
the 5-year cap building window, and at 42 CFR 412.105(a)(1)(i), we are
stating that in cost reporting periods beginning on or after October 1,
2022, FTE residents in the RTP are exempt from the cap on the IRB ratio
during the 5-year cap building window.
We are finalizing various changes throughout the
regulations text at 42
[[Page 73458]]
CFR 413.79(k) ``Residents training in rural track programs.''
5. Implementation of Section 131 of the CAA; Addressing Adjustment
of Low Per Resident Amounts (Direct GME) and Low FTE Resident Caps
(Direct GME and IME) for Certain Hospitals
Section 131 of the CAA provides us with the opportunity to reset
the low or zero direct GME per resident amounts of certain hospitals,
and to reset the low IME and direct GME FTE resident caps of certain
hospitals. Regarding direct GME PRAs, section 1886(h)(2) of the Act
sets forth a methodology for the determination of a hospital-specific
base-period PRA that is calculated by dividing a hospital's allowable
direct costs of GME in a base period by its number of full-time
equivalent (FTE) 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). For
hospitals that became teaching hospitals after 1984, section
1886(h)(2)(F) of the Act states that ``the Secretary shall, for the
first such period for which it has such a residency training program
and is participating under this title, provide for such approved FTE
resident amount as the Secretary determines to be appropriate, based on
approved FTE resident amounts for comparable programs.'' The
regulations at 42 CFR 413.77(e)(1) implement this provision, stating
that the per resident amount is based on the lower of the amount
specified in paragraph (e)(1)(i) or paragraph (e)(1)(ii) of that
section, subject to the provisions of paragraph (e)(1)(iii) of this
section. In other words, the new teaching hospital's PRA generally will
be based on the lower of its actual GME costs per FTE in its base
period, or the weighted average PRA of existing teaching hospitals
located in the same core-based statistical area (CBSA) as the new
teaching hospital. Under section 1886(h)(2)(D) of the Act, once the PRA
is established in a base period, no changes are made to it; it is only
updated for inflation in each subsequent year.
The calculations of both direct GME payments and the IME payment
adjustment are affected by the number of FTE residents that a hospital
is allowed to count. Congress, through 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 direct GME in 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 based on the FTE count for IME during that cost
reporting period is applied, effective for discharges occurring on or
after October 1, 1997.
a. Background on Establishment of PRAs and FTE Resident Caps for
Hospitals Hosting Residency Training
Section 1886(h)(2)(F) of the Act does not require a hospital to
incur costs, be the program sponsor, or train a certain minimum number
of FTE residents, in order to become a teaching hospital. Accordingly,
under the regulations at 42 CFR 415.152, ``Teaching hospital'' is
defined as a hospital engaged in an approved GME residency program in
medicine, osteopathy, dentistry, or podiatry. Our historical policy is
that if a hospital has residents that are training in an approved GME
residency program(s), and if the training is according to a planned and
regular schedule (that is, not spontaneous or random), then we consider
the hospital to be a teaching hospital, even if--
It is not incurring the costs of the residents' salaries
and fringe benefits,
It is not the sponsor of the program,
It is only training a very small number of FTE residents,
and
The program in which the residents are training does not
have to be a ``new'' program under Medicare rules.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25520), in the past, a number of hospitals have found themselves in the
situation of establishment of a low PRA, when they served as a training
site for only small numbers of residents from programs sponsored by a
medical school or another hospital. In many cases, these hospitals did
not incur any salaries for those residents and may have incurred only
insignificant overhead costs associated with the residents' presence at
their facilities and, therefore, their PRAs were either very low or $0.
Such low PRAs preclude meaningful direct GME payment in the future if
these hospitals expand their training of residents and incur
significant costs associated with the training. Section 131(a) of the
CAA amends section 1886(h)(2)(F) of the Act to direct the Secretary,
for such hospitals with such extremely low or $0 PRAs that meet certain
criteria, to establish new PRAs using the methodology described in 42
CFR 413.77(e) if the hospital trains resident(s) in a cost reporting
period beginning on or after its enactment (December 27, 2020) and
before the date that is 5 years after enactment (December 26, 2025). In
accordance with 42 CFR 413.77(e), a new teaching hospital's PRA is
based on the lower of its actual GME costs per FTE during a specific
base year, or the weighted average PRA of existing teaching hospitals
located in the same core- based statistical area (CBSA) as the new
teaching hospital. Similar to the establishment of low PRAs, in the
past, a number of hospitals have found themselves in the situation of
establishing low (but greater than zero) direct GME and IME FTE caps
when they served as training sites for only small numbers of residents.
The statute does not require that a hospital train a certain minimum
number of FTE residents in order to establish permanent caps. Hospitals
wishing subsequently to participate in training residents in a
significant manner were precluded by low FTE resident caps from
receiving meaningful IME and direct GME payments. Section 131(b) of the
CAA addresses this problem by amending section 1886(h)(4)(H)(i) to add
new subclauses (III) and (IV) to direct the Secretary, for hospitals
that meet certain criteria and that have very low FTE resident caps, to
``adjust''--that is, redetermine--those caps if the Secretary
determines that the hospital begins training residents in a program
year beginning on or after enactment (December 27, 2020) and before 5
years after enactment (December 26, 2025).
b. Hospitals Qualifying To Reset Their PRAs
Section 131(a) of the CAA also amends section 1886(h)(2)(F) of the
Act to add a new clause (iii) to describe the categories of hospitals
that qualify to receive a replacement PRA. For ease of reference, we
will refer to these hospitals as Category A and Category B. As
discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25520), a
Category A Hospital is one that, as of the date of enactment (December
27, 2020), has a PRA that was established based on less than 1.0 FTE in
any cost reporting period beginning before October 1, 1997. Typically,
a Category A hospital is one that trained less than 1.0 FTE in its most
recent cost reporting period ending on or before December 31, 1996, and
received a very low or $0 PRA. A Category B Hospital is one that, as of
the date of enactment (December 27, 2020), has a PRA that was
established based on training of no more than 3.0 FTEs in any cost
reporting period beginning on or
[[Page 73459]]
after October 1, 1997, and before the date of enactment (December 27,
2020). This new subclause provides that the Secretary shall in lieu of
these low PRAs, establish a new PRA in accordance with the process
described in Sec. 413.77(e), for each such hospital if the hospital
trains at least 1.0 FTE (in the case of a Category A hospital) or more
than 3.0 FTEs (in the case of a Category B hospital) (emphasis added).
The recalculation period begins on December 27, 2020, and ends 5 years
later.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25520 through
25521), we proposed that to redetermine the PRA, the training occurring
at a Category A Hospital or a Category B Hospital need not necessarily
be training residents in a new program; the residents may be in either
an approved program that is ``new'' for Medicare IME and direct GME
purposes, or may be in an existing approved program. This is because
the new subclause does not state that the training be in a ``new''
program, and furthermore, CMS's current policy is that for a hospital
which starts training residents for the first time, the PRA can be
established based on the training of residents in either a ``new''
approved program, or an existing approved program. However, for a
Category A Hospital, we proposed not to reset its PRA until we
determine that the Category A Hospital trains at least 1.0 FTE, and
that training must occur in a cost reporting period beginning on or
after December 27, 2020 (date of enactment) and before December 26,
2025 (5 years after enactment). Similarly, for a Category B Hospital,
we proposed not to reset its PRA until we determine that the Category B
Hospital trains more than 3.0 FTEs, and that training must occur in a
cost reporting period beginning on or after December 27, 2020 (date of
enactment) and before December 26, 2025 (5 years after enactment).
Because new section 1886(h)(2)(F)(iii) uses the word ``trains'', we
interpret this to require ``continuous'' training, and therefore, we
proposed that for both Category A and B Hospitals, it is not relevant
whether they may have trained at least 1.0 FTE or more than 3.0 FTEs in
a cost reporting period or periods prior to December 27, 2020. While we
proposed that such previous training of at least 1.0 FTE or greater
than 3.0 FTEs would not preclude resetting of a Category A Hospital's
PRA or a Category B Hospital's PRA, we proposed that the relevant
factor in determining when to reset their PRAs would be if and when the
hospital trains the requisite amount of FTE residents in a cost
reporting period beginning on or after December 27, 2020 (date of
enactment) and 5 years after (December 26, 2025). For example, a
Category A Hospital trains 6.05 FTEs in its cost reporting period
beginning on January 1, 2020. The Category A Hospital trains 5.95 FTEs
in its cost reporting period beginning on January 1, 2021. We proposed
that we would reset this Category A Hospital's PRA effective with its
cost reporting period beginning on January 1, 2021. In a second
example, a Category B Hospital trains 6.05 FTEs in its cost reporting
period beginning on January 1, 2020. The Category B Hospital trains 2.0
FTEs in its cost reporting period beginning on January 1, 2021. Then
the Category B Hospital trains 3.25 FTE in its cost reporting period
beginning on January 1, 2022. We proposed that we would reset this
Category B Hospital's PRA effective with its cost reporting period
beginning on January 1, 2022. Once reset, in the absence of additional
legislation, the PRAs for either a Category A Hospital or a Category B
Hospital are permanent, subject to annual inflation updates under 42
CFR 413.77(c)(1).
We refer readers to section II.B.5.f. of this final rule with
comment period for a summary of the policies we are finalizing after
consideration of public comments, on redetermination of PRAs provided
under section 131 of the CAA.
c. Calculating the Replacement PRA and Cost Reporting Requirements
Consistent with the new statute, in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25521), we proposed to calculate the replacement
PRA using the existing regulations in place at 42 CFR 413.77(e). First,
we proposed to use as the PRA base period the first cost reporting
period beginning on or after December 27, 2020 in which either the
Category A Hospital or Category B Hospital trains their requisite
threshold FTEs; that is, at least 1.0 FTE is trained at Category A
Hospital, and more than 3.0 FTEs are trained at Category B Hospital.
Then, as 42 CFR 413.77(e)(1) states, we proposed to amend the
regulations to add a new Sec. 413.77(e)(1)(iv) to establish the
replacement PRA as the LOWER OF--
The hospital's actual cost per resident incurred in
connection with the GME program(s) based on the cost and resident data
from the hospital's replacement base year cost reporting period; and
The updated weighted mean value of per resident amounts of
all hospitals located in the same geographic wage area is calculated
using all per resident amounts (including primary care and obstetrics
and gynecology and nonprimary care) and FTE resident counts from the
most recently settled cost reports of those teaching hospitals.
If there are fewer than three existing teaching hospitals
with per resident amounts that can be used to calculate the weighted
mean value per resident amount, for base periods beginning on or after
October 1, 1997, the per resident amount equals the updated weighted
mean value of per resident amounts of all hospitals located in the same
census region as that term is used in subpart D of part 412 of this
subchapter.
We will issue instructions to the MACs and to hospitals to provide
for an orderly process of request and review for the purpose of
receiving replacement PRAs. When the hospital trained the requisite
number of FTEs in a particular cost reporting period, upon submission
of that cost report, the hospital will notify its MAC that it believes
a replacement PRA can be determined. The MACs of the Category A and
Category B Hospitals will review the GME costs and FTE counts reported
in the Medicare cost report, rotation schedules supporting the FTE
counts, etc. to determine at what point the requisite threshold of FTE
residents are trained. As required under 42 CFR 413.20 and 413.24,
hospitals must provide sufficient documentation to ensure proper
payment (for GME, this includes, but is not limited to, rotation
schedules and training agreements). We note that newly amended section
1886(h)(2)(F) of Act makes two points regarding cost reporting. First,
clause 1886(h)(2)(F)(ii) states that in the case of a hospital that
trains residents and has not entered into a GME affiliation agreement
(as defined by the Secretary for purposes of paragraph (4)(H)(ii)), on
or after the date of enactment of this clause, the Secretary shall not
establish an FTE resident amount until such time as the Secretary
determines that the hospital has trained as least 1.0 FTE resident in
an approved medical residency training program in a cost reporting
period. Medicare GME affiliation agreements, as implemented in the
regulations at 42 CFR 413.79(f), permit teaching hospitals that cross
train residents in the same programs to aggregate and share their FTE
resident caps to facilitate movement of residents and reimbursement for
that training. Entering into a Medicare GME affiliation agreement is a
voluntary and conscious action on the part of a hospital. Therefore,
even if a hospital trains less than 1.0 FTE (and this would be any
hospital, not just a Category A Hospital or a Category B Hospital), but
has entered into a Medicare GME affiliation
[[Page 73460]]
agreement for that training, we stated in the proposed rule that we
believe the law is directing the Secretary to establish a PRA for that
hospital. Thus, effective for a cost reporting period beginning on or
after enactment (December 27, 2020), we proposed to establish a PRA in
the instance where a hospital trains less than 1.0 FTE and that
hospital has entered into a Medicare GME affiliation agreement for that
training. However, in the instance where a hospital did not enter into
a Medicare GME affiliation agreement for that training, we proposed to
establish a PRA only when a hospital trains at least 1.0 FTE. We
proposed to amend the regulations at 42 CFR 413.79(f) to reflect this
new provision.
Second, section 1886(h)(2)(F)(iv) states that for purposes of
carrying out this subparagraph for cost reporting periods beginning on
or after the date of the enactment of this clause, a hospital shall
report full-time equivalent residents on its cost report for a cost
reporting period if the hospital trains at least 1.0 full-time
equivalent resident in an approved medical resident training program or
programs in such period. Accordingly, in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25521 through 25522), we proposed that both a
Category A Hospital and a Category B Hospital must accurately report
FTEs on the IME Worksheet E, Part A and the direct GME Worksheet E-4 of
CMS-Form-2552-10, when either category of hospital trains at least 1.0
FTE on or after December 27, 2020. We further proposed that all
hospitals, even if they do not classify as Category A or Category B
Hospitals, must enter the FTE counts on Worksheets E, Part A and E-4 of
the CMS-Form-2552-10, for cost reporting periods during which the
hospital trains at least 1.0 FTE. In addition, the hospital must
provide the information required by the Interns and Residents
Information System (IRIS) software for a cost report that contains at
least 1.0 FTE on Worksheets E, Part A (IME) and E-4 (direct GME). We
proposed this rule regardless of whether or not such hospital incurs
the costs or is the program sponsor, because we believe that a PRA is
established when a hospital trains at least 1.0 FTE (or, if there is a
Medicare GME affiliation agreement, even less than 1.0 FTE). We
proposed to amend the regulations at 42 CFR 413.78(b), with a cross-
reference to 42 CFR 413.77(e) and 413.79(f), to require that effective
for a cost reporting period beginning on or after December 27, 2020, a
hospital must report FTE residents on its Medicare cost report for a
cost reporting period if: (1) In the absence of a Medicare GME
affiliation agreement, a hospital trains at least 1.0 FTE in an
approved program or programs; or (2) if there is a Medicare GME
affiliation agreement, a hospital trains less than 1.0 FTE in an
approved program or programs. As we stated in the proposed rule, this
proposed regulation would put hospitals on notice that they would
establish a PRA when they report FTE residents on their Medicare cost
report beginning on or after December 27, 2020.
On a technical note, newly added clause1886(h)(2)(F)(v) states that
as appropriate, the Secretary may consider information from any cost
reporting period necessary to establish a new FTE resident amount.
Keeping in mind the regulations regarding predicate facts at 42 CFR
405.1885, our policy has been to refer, but not make changes, to a
hospital's ``true'' base year under 42 CFR 413.77(e), even if that base
year cost report is beyond the 3-year reopening rules. For example, if,
in 2019, a MAC discovered that a hospital trained a small number of FTE
residents in its 2005 cost reporting period, the MAC would use the 2005
cost report and documentation to obtain direct GME costs (if any, or
$0) and the FTE resident(s), determine a cost per FTE, and compare that
to the 2005 weighted average PRA of the other teaching hospitals in the
same CBSA, even though the 2005 cost report was beyond the 3-year
reopening period. In accordance with 42 CFR 413.77(e), the MAC would
establish the LOWER of the two amounts to be the hospital's base year
PRA. In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25522), we
proposed to continue to be consistent with our existing predicate fact
regulations going forward, such that we would not reopen cost reports
beyond their 3-year reopening period, but would refer to and use
whatever contemporaneous documentation we would need to establish a
PRA. However, because section 131 of the CAA directs the Secretary to
replace a Category A Hospital's PRA or a Category B Hospital's PRA if
the hospital trains at least 1.0 FTE or more than 3.0 FTEs in a cost
reporting period beginning on or after such date of enactment and
before the date that is 5 years after, we proposed to amend the
regulations at 42 CFR 413.77(e) to use as the PRA base year for a
Category A Hospital the cost reporting period beginning on or after
December 27, 2020 and before December 26, 2025 in which that hospital
trains at least 1.0 FTE, and for a Category B Hospital, the cost
reporting period beginning on or after December 27, 2020 and before
December 26, 2025 in which that hospital trains more than 3.0 FTEs. In
determining whether a hospital trained the requisite thresholds of 1.0
or more than 3.0 FTEs, we proposed not to round up; that is, an FTE
count of 0.99 would not be rounded up to be at least 1.00 FTE. Rather,
the FTE count would have to equal at least 1.00 without rounding
applied. Similarly, an FTE count would have to add to be greater than
3.00 without rounding rules applied.
d. Hospitals Qualifying To Reset Their FTE Resident Caps
Section 131(b) of the CAA 2021 amends section 1886(h)(4)(H)(i) of
the Act to add new subclauses (II) through (V) to describe the
categories of hospitals that qualify to receive a replacement PRA. For
ease of reference, we continue to refer to these hospitals as Category
A and Category B. As explained in the FY 2022 IPPS/LTCH PPS proposed
rule (86 FR 25522), a Category A Hospital is one that, as of the date
of enactment (December 27, 2020), has an IME and/or direct GME FTE
resident cap that was established based on less than 1.0 FTE in any
cost reporting period beginning before October 1, 1997. Typically, a
Category A hospital is one that did train less than 1.0 FTE in its most
recent cost reporting period ending on or before December 31, 1996, and
therefore, received FTE caps of less than 1.0 FTE (along with a very
low or $0 PRA). A Category B Hospital is one that, as of the date of
enactment (December 27, 2020), has an IME and/or direct GME FTE
resident cap that was established based on training of no more than 3.0
FTEs in any cost reporting period beginning on or after October 1,
1997, and before the date of enactment (December 27, 2020). The new
subparagraphs (III) and (IV) provide that the Secretary shall adjust
the FTE resident cap in the manner applicable to a new approved medical
residency training program, which under subparagraph (V), states that
the adjustment to the FTE resident cap shall be made in a manner
consistent with the methodology, as appropriate, in Sec. 413.79(e).
The Secretary shall adjust the FTE resident caps if the hospital
``begins training'' at least 1.0 FTE (in the case of Category A) or
``begins training'' more than 3.0 FTEs (in the case of Category B) in a
program year beginning on or after such date of enactment and before
the date that is 5 years after such date of enactment (emphases added).
Unlike our preceding proposal regarding resetting the PRAs of
Category A and B Hospitals, where a training program does not
necessarily need to be
[[Page 73461]]
new, in the case of resetting the FTE resident caps, we did propose
that the FTE resident caps would only be reset when a Category A
Hospital or Category B Hospital ``begins training'' FTE residents in a
new residency program(s) (see our discussion of the definition of ``new
program'' at 42 CFR 413.79(l) and 74 FR 43908 through 43917).
Specifically, we emphasize that the new subparagraphs (III) and (IV)
state that the Secretary shall adjust the FTE resident caps in the
manner applicable to a new program if the Secretary determines the
hospital ``begins training'' the requisite number of FTE residents
(emphasis added). In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25522), we proposed that ``begins training'' means future training in a
new program for the first time on or after enactment. We proposed that
for both Category A and B Hospitals, it is not relevant whether they
may have trained at least 1.0 FTE or more than 3.0 FTEs in a new
program in a cost reporting period or periods prior to December 27,
2020; rather, we proposed that the relevant factor in determining the
timing of resetting their FTE resident caps would be if the hospital
first begins training the requisite amount of FTE residents at some
point in a cost reporting period beginning on or after December 27,
2020 (date of enactment) and 5 years after (December 26, 2025). For
example, a Category A Hospital trains 6.05 FTEs in a new program in its
cost reporting period beginning on January 1, 2017. Category A Hospital
trains 15.95 FTEs in its cost reporting period beginning on January 1,
2021. We proposed that we would NOT reset this Category A Hospital's
FTE resident caps effective with its cost reporting period beginning on
January 1, 2021, because it first began training residents in a new
program prior to its cost reporting period beginning on or after
enactment, and continued to train FTE residents in the new program
after enactment. Rather, in order to qualify for a replacement FTE
resident cap, both a Category A Hospital and a Category B Hospital
would have to wait to start training residents in a new program in a
cost reporting period beginning on or after enactment; if they started
training residents in a new program at some point prior to enactment,
we proposed that they would not qualify to receive replacement FTE
resident caps. For example, a Category A Hospital wanted to start
training residents in a new program, but delayed doing so because it
believed it could not support a new residency program with IME and
direct GME FTE resident caps of less than 1.0. With the enactment of
section 131 of the CAA, this Category A Hospital receives accreditation
to start a new residency program, and begins to train at least 1.0 FTE
resident in the new program on July 1, 2022. We proposed to replace the
small FTE resident caps of this Category A Hospital with new FTE
resident caps in accordance with the regulations for calculating FTE
resident caps for new programs at 42 CFR 413.79(e). We proposed to
apply the same policy for a Category B Hospital that waits to train
more than 3.0 FTE residents in a new program in a cost reporting period
on or after December 27, 2020.
e. Calculating the Replacement FTE Resident Caps and Cost Reporting
Requirements
Consistent with the new statutory provisions, in the FY 2022 IPPS/
LTCH PPS proposed rule (86 FR 25523), we proposed to calculate the
replacement FTE resident caps using the existing regulations in place
at 42 CFR 413.79(e)(1). First, we proposed to use the first program
year of the 5-year cap building period in which either the Category A
Hospital or Category B Hospital ``begins training'' their requisite
threshold FTEs; that is, the program year beginning after December 27,
2020 in which at least 1.0 FTE begins to train at Category A Hospital,
and the program year beginning after December 27, 2020 in which more
than 3.0 FTEs are trained at Category B Hospital. Then, as 42 CFR
413.79(e)(1) states, we proposed to calculate the FTE resident caps
based on the sum of the products of the highest number of FTE residents
in any program year during the fifth year of the first new program's
existence and the number of years in which residents are expected to
complete the program based on the minimum accredited length for each
type of program. The adjustment to each qualifying hospital's cap for
new residency training program(s) would be equal to the sum of the
products of--
The highest total number of FTE residents trained in any
program year during the fifth year of the first new program's existence
at all of the hospitals to which the residents in the program rotate;
The number of years in which residents are expected to
complete the program, based on the minimum accredited length for each
type of program.
The ratio of the number of FTE residents in the new
program that trained at the hospital over the entire 5-year period to
the total number of FTE residents that trained at all hospitals over
the entire 5-year period.
We will issue instructions to the MACs and to hospitals to provide
for an orderly process of request and review for the purpose of
receiving replacement FTE resident caps. The MACs of the Category A and
Category B Hospitals will review the FTEs reported in the Medicare cost
reports, as well as rotation schedules, information regarding any
nonprovider-site training, and accreditation information, etc.) to
determine at what point the requisite threshold of FTE residents are
trained. As required under 42 CFR 413.20 and 413.24, hospitals must
provide sufficient documentation to ensure proper payment (for GME,
this includes, but is not limited to, rotation schedules and training
agreements, and ACGME accreditation information).
Prospectively, consistent with new section 1886(h)(4)(H)(i)(II) of
the Act, we proposed not to establish permanent FTE resident caps for
hospitals training residents in new programs begun on or after December
27, 2020, until we determine that in a cost reporting period beginning
on or after December 27, 2020, the hospital trains at least 1.0 FTE in
a new medical residency program. We proposed to amend the regulations
at 42 CFR 413.79(e) to reflect this new provision. We proposed this for
all hospitals that do not yet have caps triggered. Therefore, permanent
FTE caps for new programs would no longer be triggered if the amount of
FTEs being trained by a hospital in the new program equates to less
than 1.0 FTE.
As with the resetting of the PRAs, newly added section
1886(h)(4)(H)(i)(V) states that as appropriate, the Secretary may
consider information from any cost reporting period necessary to make
such an adjustment to the limitation. Going forward, we proposed to
continue to be consistent with our existing predicate fact regulations
at 42 CFR 405.1885, such that we would not reopen cost reports beyond
their 3-year reopening period, but would refer to and use whatever
contemporaneous documentation we would need to establish the FTE
resident caps.
We invited comments on our proposals regarding resetting the
applicable PRAs and FTE resident caps. Following are the comment
summaries and our responses:
Comment: Many commenters expressed support for our proposals for
defining Category A and Category B hospitals and how we would reset PRA
and cap.
Response: We appreciate the commenters' support for our proposals.
Comment: Several commenters were concerned with the CMS suggestion
that Medicare Audit Contractors (MACs)
[[Page 73462]]
could use ``predicate facts'' to establish a new FTE resident amount,
using whatever ``contemporaneous documentation we would need to
establish a PRA'' or ``contemporaneous documentation we would need to
establish the FTE resident caps.'' (p. 25522, 25524). This leads to
confusion as to how and why CMS will decide which facts are predicate
facts, and which ones are not. Commenters stated that hospitals may be
discouraged from availing themselves of the opportunities set out in
section 131 of the CAA if MACs may find records of past training that
will leave them with an extremely low PRA or FTE cap. They requested
clarification as to how CMS and the MACs will decide what predicate
facts are relevant, as well as assurances that MACs will not be
encouraged to search for predicate facts that may suppress hospitals'
GME support from Medicare.
Response: We believe the commenters misinterpreted the language in
the proposed rule regarding ``predicate facts.'' In the proposed rule,
we did not propose any new policy regarding predicate facts, nor did we
propose any new review procedures that are different from already
existing policy. In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25522), we merely proposed to ``continue to be consistent with our
existing predicate fact regulations'' at 42 CFR 405.1885, under which
our policy has been to refer, but not make changes, to a hospital's
``true'' base year under 42 CFR 413.77(e), even if that base year cost
report is beyond the 3-year reopening rules. . . . Going forward, we
propose to continue to be consistent with our existing predicate fact
regulations, such that we would not reopen cost report9s beyond their
3-year reopening period, but would refer to and use whatever
contemporaneous documentation we would need to establish a PRA''
(emphasis added). This means that the MACs are not hindered by the fact
that a cost report is not reopenable, but instead have the flexibility
to still consider documentation available from that time frame of that
non-reopenable cost report. Accordingly, hospitals that believe they
have PRAs set based on a small amount of FTEs, and/or have small FTE
caps from a cost report prior to enactment more likely have nothing to
lose, and would gain from providing contemporaneous documentation to
the MAC for an assessment of its reset eligibility. If a hospital does
not provide documentation and does not engage with the MAC at all, then
it certainly would be left with a PRA or caps that it believes is
``low''. The intent of section 131 of the CAA is to provide reset
opportunities where there previously were none. Nevertheless, as with
existing policy, documentation that hospitals provide to the MAC must
meet sufficiency standards; newly added clause 1886(h)(2)(F)(v) does
not include an exceptions language waiving otherwise standard
documentation practices. In response to the following comments, we
include more details on the types of documentation that we require or
consider acceptable.
Comment: Many commenters provided feedback regarding the review
process CMS and the MACs would use to determine eligibility for PRA or
FTE cap resets. Several commenters stated they believe the public
should have an opportunity to comment on the process before it is
finalized by CMS, perhaps even via an interim final rule with comment
period. Commenters also expressed concerns and confusion as to which
hospitals will be eligible for PRA or cap resets, and that hospitals
that do meet the statutory criteria could be ``overlooked'' by the MACs
for possible eligibility for a reset. Some commenters urged CMS to
publish a list of all hospitals that may have inadvertently triggered a
PRA or caps. The following are some scenarios that the commenters
posited:
What if a hospital did not report a small number of FTE
residents on its cost report because it was under the impression that
it had not established a new residency program and was not eligible for
Medicare DGME or IME reimbursement, and the hospital has received a
notice of provider reimbursement for that cost reporting period?
How would CMS treat a hospital that did not report its low
number of FTE residents on an old cost report because it did not
believe it was eligible for DGME or IME reimbursement; or that did not
report residents but if they had, would have a $0 or minimal PRA and
low FTE cap?
What does it mean to ``have'' a PRA or ``have'' FTE caps
``as of enactment?''
How would CMS treat hospitals that trained a resident but
never reported FTEs on their cost reports?
What if a hospital triggered a PRA but the MAC did not
determine and finalize a PRA on a settled cost report?
What if a hospital's cap building period was triggered
prior to enactment, but the 5-year window closed in a cost report after
enactment?
What type of documentation would CMS require, given that
the statutory provision stretches back to determinations made in 1996,
and contemporaneous documentation from the time period of the cost
report may be difficult to obtain?
Response: We acknowledge there are complexities in implementing
section 131 of the CAA, and believe the commenters raised fair points
in their comments. In general, the primary challenges we and the MACs
face in implementing section 131 of the CAA are managing myriads of
review requests in an efficient and timely manner, competing MAC
priorities for review, and dealing with old documentation, most likely
from cost reports that are no longer within the 3-year reopening
period. Our final policies try to balance these considerations. We
believe that it is incumbent on a hospital to approach its MAC to
request a PRA or cap reset; we are not instructing MACs to reach out to
individual hospitals. We also distinguish between cost reports that are
no longer reopenable, cost reports that have been settled but are still
open or reopenable, and cost reports that have not yet been settled.
Settled But Open or Reopenable Cost Reports
First, in this final rule with comment period, to manage the volume
of review requests, we are finalizing policies related to PRA and FTE
cap determinations from cost reports that have been settled but are
still open or reopenable, and cost reports that have not yet been
settled, with one exception related to the 1996 FTE caps (explained in
greater detail in this section). We believe the MACs' workload will be
considerable from these relatively more recent categories of cost
reports alone, and in order to spread the workload, we will instruct
MACs to first only accept PRA or FTE cap review requests from hospitals
where the base year or cap setting cost report is open or reopenable.
We are seeking comment on how to handle reviews of PRAs or FTE caps
from cost reports beyond the 3-year reopening period (with the
exception of Category A and Category B hospitals that agree with the
HCRIS posting, as discussed below).
(1) Use of HCRIS To Assist in Determining Reset Status
On the points raised by commenters about which hospitals will be
eligible for PRA or cap resets, and that CMS should publish a list of
hospitals and their status, we will post a file on the CMS website
containing an extract of the HCRIS cost report worksheets on which the
FTE counts, caps, and PRAs, if any, would have been reported, starting
with cost reports beginning in 1995 (although as we stated previously,
[[Page 73463]]
we are instructing MACs to only first accept reviews of PRAs or FTE
caps from open or reopenable cost reports, with the exception of a
Category A hospital or a Category B hospital that agrees with what is/
is not reported in the HCRIS posting). This file will be made available
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/IPPS-Regulations-and-Notices. Click
on the link on the left side of the screen associated with the
appropriate final rule home page or ``Acute Inpatient--Files for
Download.'' This file will also be made available on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/DGME. Use of the HCRIS extract provides a national,
standard source for MAC determinations.
If a hospital wishes to receive a PRA or cap determination from its
MAC for a possible reset of an open or reopenable cost report, the
hospital must consult the web posting first. In cases where no PRA or
caps are reported on a settled cost report, or when PRAs or caps are
reported without any FTEs, and cost report is settled but reopenable,
the hospital gets the benefit of a reset without further review by the
MAC. Examples of hospitals that would qualify for a reset based on the
HCRIS extract without need for further MAC review are as follows:
The hospital's cost report in HCRIS that ended on or
before December 31, 1996 shows an FTE count of less than 1.0 for either
IME or direct GME (Category A).
The hospital's cost report in HCRIS that began on or after
October 1, 1997, and before enactment of section 131 of CAA shows an
FTE count of not more than 3.0 for either IME or direct GME (Category
B).
A hospital's employee(s) recall that residents were
trained at the hospital, but no FTEs were reported on any settled
Medicare cost report, as shown in HCRIS.
A hospital where FTEs are reported on a settled cost
report, but the FTE cap lines are not filled (this hospital would be
eligible for new FTE caps).
A hospital with FTEs reported on a settled cost report,
but the PRA lines are not filled in on that earliest cost report where
FTEs are reported (this hospital would be eligible for a new PRA).
A hospital with a PRA reported on a settled cost report,
but no FTEs are reported on the earliest cost report in which the PRA
is reported, so the amount of FTEs used to determine that PRA cannot be
determined (this hospital would be eligible for a new PRA).
We believe that allowing resets in the circumstances stated
previously demonstrates our willingness to fulfill Congressional intent
to allow eligible hospitals their second chance at meaningful IME and
direct GME reimbursement, and further indicates that we and the MACs
intend to be fair and reasonable throughout the implementation process.
As we stated in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25523),
MACs would calculate the replacement PRAs and/or FTE resident caps
using the existing regulations in place at 42 CFR 413.77(e) and 42 CFR
413.79(e)(1), but after the MAC confirms that either the Category A
Hospital or Category B Hospital trains their requisite threshold FTEs
in a new program(s) started after December 27, 2020.
(2) One-Time Deadline To Request Reconsideration and Review by the MAC
for Possible Category B Hospitals
If, for open or reopenable cost reports, there is a PRA and/or FTE
caps reported on the HCRIS web posting, and the potential Category B
hospital believes its PRA in fact was established based on not more
than 3.0 FTEs, or its IME and/or direct GME FTE caps were based on not
more than 3.0 FTEs, a hospital has a 1-time opportunity to request
reconsideration by its MAC which must be submitted electronically and
received by the MAC on or before July 1, 2022. We are providing this
lead time for this 1-time submission to assist hospitals in ensuring
that they include complete and unambiguous documentation supporting
their assertion that the HCRIS cost report information is incorrect. We
also believe this approach encourages only review requests with
realistic chances for reset eligibility under section 131 of the CAA.
(See response regarding documentation required). The MAC would review
the information within a specified timeframe to be determined by CMS
and make a determination as to the hospital's eligibility for a PRA
and/or FTE cap reset based on the adequacy of the documentation
submitted by July 1, 2022. The decision issued by the MAC to the
hospital would be final. If the MAC determines that the FTEs reported
are greater than 3.0 respectively, the hospital is NOT eligible for a
PRA or FTE cap reset. Hospitals that disagree with the MAC's
determination could appeal to the Provider Reimbursement Review Board
for review, assuming that all conditions for appeal are met.
(3) Cost Reports Not in HCRIS or Not Yet Settled
There may be situations where a cost report is not in HCRIS web
posting, or even if the cost report is in the HCRIS web posting, there
is no PRA or no FTE caps reported because the cost report has not yet
been settled and/or the MAC has not yet determined the PRA or the FTE
caps. Such a hospital must submit a request to the MAC by July 1, 2022
requesting that the MAC issue a determination regarding possible reset
eligibility for the PRA and/or FTE caps using cost reports that began
prior to enactment. The review request must be received by July 1,
2022, and must include complete and unambiguous documentation for FTE
counts and for FTE cost and payment information (see response regarding
documentation requirements). The MAC would use existing regulations at
42 CFR 413.77(e) and 42 CFR 413.79(e)(1) to determine the hospital's
PRA and FTE caps from the cost report(s).
For cost reports that began during CY 2020 (but still prior to
enactment of the CAA) and are subject to PHE submission deadlines, the
hospital must file its cost report with complete and unambiguous
supporting GME documentation to the MAC by July 1, 2022 in order to
receive consideration for possible PRA or FTE cap reset. MACs will
reject incomplete or untimely submissions, with no opportunity for a
later or 2nd MAC review.
If the MAC determines that the FTEs are greater than 3.0, the
hospital is NOT eligible for a PRA or FTE cap reset. Hospitals that
disagree with the MAC's determination may appeal to the Provider
Reimbursement Review Board assuming that all conditions for appeal are
met.
Accordingly, for the purpose of implementing section 131 of the
CAA, in response to the comment asking what it means to ``have'' a PRA
or ``have'' FTE caps ``as of enactment,'' we are clarifying that
``having a PRA'' means that there is a PRA reported in HCRIS from a
cost reporting period beginning prior to enactment, or if not in HCRIS
or not yet determined, the MAC determines the PRA based on the
hospital's request by July 1, 2022, but from a cost reporting period
beginning prior to enactment. If the PRA base period cost report begins
prior to enactment, we believe it is acceptable if it ends after
enactment. This is because section 131(a)(iii) states, '' . . . in the
case of a hospital that, as of such date of enactment, has an approved
FTE resident amount . . . in any cost reporting period beginning on or
after
[[Page 73464]]
October 1, 1997, and before the date of enactment . . .'' (emphasis
added). Thus, a hospital's PRA could have been initiated when training
no more than 3.0 FTEs in a cost report beginning prior to enactment on
May 1, 2020, and ending April 30, 2021 (after enactment). Similarly, we
are clarifying that ``having FTE caps as of enactment'' means that the
5-year cap building window would close in a cost reporting period that
began before enactment, although the cost report may end after
enactment. This is because section 131(b)(IV) states, ``in the case of
a hospital that, as of the date of the enactment of this subclause, has
a limitation under subparagraph (F), based on a cost reporting period
beginning . . . before such date of enactment . . .'' (emphasis added).
For example, if a hospital's 5-year cap building window closed June 30,
2021, but that was during the hospital's cost report beginning October
1, 2020 (prior to enactment) and ending September 30, 2021 (after
enactment), this hospital would ``have'' FTE caps as of enactment.
(4) PRA Base Periods Initiated Prior to Enactment, With Cap-Building
Period Ending After Enactment
Commenters requested clarification regarding when a hospital's cap
building period was triggered prior to enactment, but the 5-year window
closes in a cost report with a start date after enactment. The
following policies apply. As we stated previously, in response to the
comment asking what is means to ``have'' a PRA and ``have'' FTE caps
``as of enactment,'' if the PRA base period cost report begins prior to
enactment, we believe it is acceptable if it ends after enactment.
Similarly, ``having FTE caps as of enactment'' means that the 5-year
cap building window would close in a cost reporting period that began
before enactment, although the cost report may end after enactment.
That is, the 5-year cap building window would have to close during a
cost reporting period that started prior to enactment. For example, if
a hospital's 5-year cap building window closed June 30, 2021, but that
was during the hospital's cost report beginning October 1, 2020 (which
started prior to enactment) and ending September 30, 2021 (after
enactment), this hospital would ``have'' FTE caps as of enactment.
Under existing regulations at 42 CFR 413.79(e)(1), the year for
determining new program caps is the third year of the new program's
existence for programs started prior to October 2012, and the fifth
year of new program's existence for programs started after October
2012. Therefore, only hospitals whose third or fifth program year ENDS
in a cost reporting period that started PRIOR to enactment would
qualify under section 131 of the CAA for a possible FTE cap reset. The
law does not allow consideration for FTE cap reset for a hospital whose
FTE cap setting year (that is, the cost report following the close of
the 5-year cap building window) begins after enactment. Therefore,
there can be situations where a hospital might be eligible for a PRA
reset, as the PRA base period occurred prior to enactment, while the
same hospital is NOT eligible for FTE cap resets, since the relevant
cost reporting period for setting that hospital's FTE caps in
accordance with 42 CFR 413.79(e)(1) would not even occur until some
time after enactment. For example, a hospital for the first time trains
2.0 FTE residents in a new program in its cost reporting period
beginning January 1, 2019 and ending December 31, 2019. The new program
started on July 1, 2019. This FYE December 31, 2019 would be the PRA
base period, so the hospital would ``have'' a PRA ``as of enactment''.
The 5-year cap building window would end on June 30, 2024, during the
hospital's cost report that began January 1, 2024. Since the 5-year cap
building window ends in a cost report that starts after enactment, this
hospital does not have a FTE cap ``as of enactment,'' and would not
qualify under section 131 for an FTE cap reset.
Therefore, hospitals submitting documentation to their MACs by July
1, 2022 for a determination regarding PRA or FTE cap reset must include
documentation showing that the PRA base period started prior to
December 27, 2020, and that the 5-year cap building window ended in a
cost reporting period that started prior to December 27, 2020. Such
documentation includes the following:
The date that residents in a new program first rotated
into this hospital (see August 27, 2009 IPPS final rule (74 FR 43908)
for definition of new program).
Whether that date was the first time residents began
training at ANY rotational site for that program, or whether residents
in that program had previously rotated to other sites before rotating
into this hospital.
Comment: A commenter requested clarification on what documentation
would be needed to demonstrate/obtain eligibility for a PRA or cap
reset. The commenter stated that they have cost reports, but no longer
have records of IRIS reports or rotation schedules.
Response: We are not creating new or different documentation
requirements for the purpose of section 131 of the CAA, but continue to
use our existing documentation requirements, discussed previously in
the August 29, 1989 final rule (54 FR 40286, 40291 and 40304), the
August 18, 2006 IPPS final rule (71 FR 47869, 48077), and implemented
at 42 CFR 413.75(d). We stated that a rotation schedule is the primary
documentation that can be used to support the direct GME and IME
resident counts but other similar documentation may be acceptable (71
FR 48077). The rotation schedule is prepared by the Program Director
for each program for each program year. As such, there is only one
rotation schedule for each approved program for each program year and
all the hospitals to which the residents in that program rotate must
use that same schedule. 42 CFR 413.78(d) states, ``The information must
be certified by an official of the hospital and, if different, an
official responsible for administering the residency program.'' If the
hospitals to which the residents rotate have other than June 30 FYEs,
the hospitals must use two rotation schedules which overlap that FYE.
We are including a list of documents necessary to demonstrate the
FTEs from which a PRA would have been calculated or from which a FTE
cap would have been calculated. The main documentation needed for FTE
cap support and for the FTEs claimed on the earliest cost report which
will be used to determine if the hospital meets the less than 1.0 FTE
or not more than 3 FTEs requirement for the PRA is: The program
approvals; the rotation schedules showing the location of the
residents, either within hospitals or nonprovider sites per 42 CFR
413.78(g); the Intern and Resident Information System (IRIS) (to be
used only as an audit tool until direct GME and IME counts on the IRIS
and the cost report match); a resident's Foreign Medical Graduate
Examination in the Medical Sciences certificate (FMGEMS) status for
direct GME under 42 CFR 413.75(b) and 42 CFR 413.80; information
whether the resident is full-time/part-time at the hospital; agreements
between the hospitals and program approval if the resident is floating
from another hospital's program.
Documentation to establish a PRA includes payroll and employment
data indicating payment of residents' salaries and fringe benefits if
the hospital employs the residents, contracts with medical schools or
other hospitals which employ the residents specifying the charges to
the host hospital for these expenses and related invoices, evidence
that the host hospital actually paid the
[[Page 73465]]
charges from the medical school or other hospital, documentation of the
expenses the host hospital paid for the portion of the teaching
physicians' compensation and fringe benefits related to teaching and
supervision of the residents, and documentation supporting payment of
other Medicare allowable costs that are directly related to operating
the program (such as salaries of the program director and other office
staff associated with operating the program, and operating and overhead
costs directly attributable to training the residents).
We understand that there may be some difficulty involved in
procuring documentation in the case where the hospital seeking to reset
its low PRA and FTE caps trained the residents for a minimal time, and
may not have the official documents such as the rotation schedule.
Nevertheless, we want to be clear that unofficial copies or deviations
from the official program rotation schedule and other substitutions
will not be accepted. Hospitals seeking PRA and cap resets still must
meet standard documentation requirements (per 42 CFR 413.20 and
413.24), and will have to work with the program primary clinical sites
and program director to obtain definitive FTE information. In an effort
to implement section 131 of the CAA in an accurate and administratively
feasible manner, it is of utmost importance for hospitals to submit
clear and acceptable documentation to their MACs by the July 1, 2022
deadline. The MACs' determinations will be based on documentation
received by that date. Hospitals may supplement their documentation up
until the July 1, 2022 deadline, but not after that date. We reiterate
that we are not creating new or different documentation requirements
for the purpose of section 131 of the CAA, but continue to use our
existing documentation requirements, discussed previously in the August
29, 1989 final rule (54 FR 40291 and 40304), the August 18, 2006 IPPS
final rule (71 FR 48077-78), and implemented at 42 CFR 413.75(d).
Comment: A commenter believed it is not appropriate for CMS to
require that a teaching hospital permitted to have its PRA reset use a
base period that has already begun at the time of the release of the
IPPS proposed rule. The commenter asserted that hospitals want to know
how CMS proposes to implement this provision, then see how the rules
are finalized, and then avail themselves of the opportunity for a reset
as applicable. This commenter requested that CMS permit a hospital to
use any base period within the statutory 5-year window, including a
base period that begins: (1) After enactment of the CAA; (2) after
publication of the IPPS proposed rule; (3) after publication of the
IPPS final rule; and (4) after CMS issues instructions to the MAC and
the community for carrying out this process. Then, the commenter
recommended that CMS allow hospitals to request to have their PRAs
reset based on an applicant hospital's next full cost reporting period
following approval by CMS of its application and request.
Response: We understand the commenter's point that although
hospitals can avail themselves of a PRA reset as early as after the
enactment of the CAA, that initial cost report overlapping with or
immediately following CAA enactment would still be when the hospital is
unaware of how CMS intends to implement section 131 of the CAA. We
agree with the commenter that a hospital should have some flexibility
in determining the timing of its new PRA base period, to the extent
that the statute permits. However, we note, that clause (iii)(II) of
section 131 of the CAA directs the Secretary to reset a PRA ``if the
hospital trains at least 1.0'' FTE or ``more than 3.0'' FTE ``in a cost
reporting period beginning on or after such date of enactment and
before the date that is 5 years after such date of enactment.'' That
is, the timing of the revised PRA base period is dependent upon when
the hospital trains at least 1.0 FTE or more than 3.0 FTE (as
applicable) in the time frame of after enactment and 5 years after
that. We also note that clause (iii)(II) of section 131 of the CAA
directs the Secretary to use the methodology in the regulations at 42
CFR 413.77(e) to establish the revised PRA, which typically would mean
use of the earliest cost report in which the hospital trains residents
in an approved program. Therefore, we do not believe we can provide
hospitals with the option to choose any cost reporting period occurring
during the time frame of after enactment and 5 years after as the new
PRA base period. However, we believe we can utilize the flexibility
provided by section 131 of the CAA, clause (v), which states, ``As
appropriate, the Secretary may consider information from any cost
reporting period necessary to establish a new FTE resident amount as
described in clause (iii)'' (emphasis added). Therefore, we believe it
would be fair to allow a hospital to have the option of using as its
new PRA base period cost report the first cost reporting period
beginning after issuance of this final rule with comment period. That
is, we are finalizing a policy that if the hospital already started
training at least 1.0 FTE or more than 3.0 FTEs in a cost reporting
period beginning immediately following enactment, the hospital could
choose to use either that cost report as the PRA base period, or the
hospital could wait to see if the first cost reporting period beginning
after issuance of this final rule with comment period may result in a
more favorable PRA. If a hospital does not even start training at least
1.0 FTE or more than 3.0 FTEs until a cost reporting period that is
after the first cost reporting period beginning after issuance of this
final rule with comment period (but still within 5 years after
enactment), then the hospital would not have a choice as to which cost
reporting period to use as its new PRA base period; the hospital must
use that second or subsequent cost reporting period after issuance of
this final rule with comment period as its new PRA base period. We are
revising the regulations at 42 CFR 413.77(e)(1)(iv) accordingly. We are
also not requiring in the regulations at 42 CFR 413.77(e)(1) that
residents be on duty during the first month of the PRA base period for
teaching hospitals receiving a PRA reset, and for new teaching
hospitals in general. We believe that requirement is no longer
relevant, in light of the statutory focus on when at least 1.0 or more
than 3.0 FTEs are trained.
Comment: A commenter noted that throughout the discussion in the
proposed rule regarding the opportunity for a hospital to adjust its
small IME and direct GME FTE caps, CMS uses words like ``replace,'' or
``reset,'' which implies that CMS would eliminate even the small amount
of FTE cap that the hospital already has, and give a different cap. The
commenter believed that Congress is directing CMS to allow a qualifying
hospital to add to its existing direct GME or IME caps (not restart at
zero).
Response: We have reviewed the language of section 131 of the CAA,
and we note that section 1886(h)(4)(H)(i)(III) of the Act, as added by
subsection 131(b), states that ``the Secretary shall adjust the
limitation''; it does not say `in lieu of'', as it does for the PRA,
under clause 1886(h)(2)(F)(iii) of the Act, as added by subsection
131(a) of the CAA. Accordingly, we agree with the commenter that an
eligible hospital would keep its IME or direct GME FTE caps of less
than 1.0 or not more than 3.0, and any cap amount based on new programs
would be added to the original cap amounts. That is, new caps created
based on new programs started after enactment and 5 years after would
be
[[Page 73466]]
added to the hospital's original caps, while the original PRA would be
replaced by a new PRA from a base year after enactment and 5 years
after. We are revising the regulations text at 42 CFR 413.79(e)(1)(vi)
accordingly, to state that the adjusted FTE cap is equal to the sum of
the original FTE cap and the products of three factors based on the new
program(s).
Comment: A commenter expressed confusion regarding what situations
CMS intends to exclude with the restriction that it would not reset the
caps for a hospital that ``first began training residents in a new
program prior to its cost reporting period beginning on or after
enactment and continued to train FTE residents in the new program after
enactment'' (86 FR 25522). The commenter was particularly concerned
that CMS may be interpreting Congress's intent in using the phrase
``begins training'' to restrict the applicability of section 131 of the
CAA to a much smaller set of hospitals than they believe was intended.
Other commenters argued that by adding the term ``first'' or ``first
time'', in front of ``begins training'' CMS changes the entire meaning
of the provision. These commenters asserted that the statute clearly
indicates that beginning a new program should be the trigger, and they
do not believe requiring a hospital to have never started a new program
since its cap was set is in keeping with the statute. For example, it
leaves hospitals with a cap of less than 3 (Category B hospitals) that
started a new program after that cap was set, but before the law was
enacted, with no recourse. The first commenter provided the following
example and requested that CMS confirm their understanding that the
section 131 of the CAA FTE cap resetting policy would be implemented
for a hospital in this situation in the manner described.
Example:
Hospital A, which operates on a cost reporting period of July 1
through June 30, trained residents for the first time as of July 2003.
During that residency program year, 2.7 FTE residents from a new
internal medicine program established at New Teaching Hospital B
rotated to Hospital A.
Hospital A continued to train that same number of FTE
residents from that same program for the subsequent four residency
program years. Hospital A did not train any additional residents in its
hospital between July 2003 and June 2008. Hospital A had a DGME cap of
2.7 set as of July 1, 2008.
Hospital A continued to train 2.7 FTE residents from that
same internal medicine program established at New Teaching Hospital B
every year between July 2008 and June 2018.
Beginning in July 2018 and during each residency year
through June 2022, Hospital A trains 10.0 additional FTE residents from
Existing Hospital C in the specialties of family medicine, emergency
medicine, and general surgery. The family medicine residents are
training in a newly established residency program that first began
training residents in July 2018 while the emergency medicine and
general surgery residents are training in and rotating from
longstanding, existing residency programs.
In its most recent cost report, Hospital A reports
training 12.7 FTE residents and reports a DGME cap of 2.7.
Hospital A applies to CMS to have its cap reset under
section 131 of the CAA's provision (based on having a cap of 2.7).
Beginning in July 2022, Hospital A establishes a new
three-year family medicine program approved for 15 positions, with 5
FTE residents in each program year with all FTE resident time countable
and no rotations to any other hospitals.
Beginning in July 2025, Hospital A establishes a second
new program, a 5-year general surgery program approved for 30
positions, with six FTE residents in its initial program year (July
2025 to June 2026) with all FTE resident time countable and no
rotations to any other hospitals.
The commenter requests that CMS confirm that Hospital A's DGME cap
would be reset as of July 2027 as follows:
2.7 (existing DGME cap prior to enactment of CAA)
+ 15 (representing cap adjustment for family medicine program started
in July 2022)
+ 30 (representing cap adjustment for general surgery program started
in July 2025)
= 47.7 (new DGME cap as of July 2027)
Response: We have reviewed the statute and we are convinced by the
commenters that the statute does not require that a hospital wait to
begin a new program until after enactment in order to be considered an
eligible Category A or Category B Hospital. We are changing our
proposed policy to not disqualify a hospital that started a new program
prior to enactment from being eligible for a cap reset, so long as it
also starts a new program after enactment. However, we would only give
the cap adjustment for new programs started after enactment, not before
enactment. Thus, Hospital A in the commenter's example would qualify as
a Category B hospital, but its FTE resident caps of 2.7 would be
adjusted upward to reflect only the family medicine program and general
surgery program started after enactment (in 2022 and 2025
respectively), and NOT the family medicine program started in 2018.
Comment: A commenter requests clarification on the possible
confusion of the use of ``program year'' and ``cost reporting year'':
In one part of the preamble, CMS states that ``adjustments will be
available for a hospital that begins training more than 1.0 or 3.0 FTE
in a program year beginning on or after the date section 131 of the CAA
was enacted.'' The commenter stated this inconsistency is mirrored in
the proposed regulatory changes to DGME and IME caps at 42 CFR
413.79(e)(1)(vi) and 42 CFR 412.105(f)(1)(vii)(B). The commenter
requested that this be remedied or explained.
Response: We are not sure to which inconsistency the commenter is
referring. We note that section 131 of the CAA specifically uses the
term ``program year.'' That is, section 131(b) of the CAA (adding new
section 1886(h)(4)(H)(i)(III) of the Act), states, ``In applying this
clause in the case of a hospital that, as of the date of enactment of
this subclause, has a limitation . . . of less than 1.0 full-time
equivalent resident, the Secretary shall adjust the limitation . . . if
. . . the hospital begins training at least 1.0 full time equivalent
residents in a program year beginning on or after such date of
enactment . . .'' (emphasis added). Similar language is at section
1886(h)(4)(H)(i)(IV) of the Act, as added by the CAA, applicable when a
hospital begins training more than 3.0 FTEs. Regardless, we are making
changes to conform to our final policies at 42 CFR 413.79(e)(1)(vi) and
412.105(f)(1)(vii)(B).
Comment: Some commenters stated that CMS should ensure that the
concept of ``community support and redistribution of costs'' not be
applied under this provision. This principle, stating that Medicare
will not reimburse for situations after another entity has paid for
resident training, is not appropriate because it was statutory and
regulatory actions that prevented hospitals from appropriate
reimbursement for residency positions from Medicare. At a minimum, CMS
should change its rules to allow hospitals in this situation to count
the FTEs in the new program or programs established following enactment
in setting its new cap during its 5-year cap-setting window.
Response: We disagree with the commenters that we should (even if
we
[[Page 73467]]
could) waive community support principles at 42 CFR 413.81, but also
disagree with commenters that it would even be an obstacle. After all,
the law would readjust the cap based on ``new'' programs started by the
hospital and if the program is new and the hospital is incurring the
cost from the start, then there is no concern of redistribution or
community support.
Comment: A few of the commenters argued that CMS's proposal limits
eligibility to the Category A and Category B criteria set forth in
subparagraphs iii and iv of CAA 2021 for hospitals that previously
trained residents in the distant past. The commenters believed it was a
critical omission, and that nothing in the drafting of subparagraphs
ii, iii, and iv of the Act as added by the CAA indicates that a
hospital's eligibility is conditioned solely on whether a hospital
falls into Category A or Category B. Otherwise, any hospital that has
ever reported FTE residents on a cost report but was unable to meet the
technical requirements of Category A or Category B would be barred from
establishing a new FTE resident cap, which we believe is contrary to
the legislative intent of the Act. Therefore, the commenters requested
that CMS clarify that a hospital that has previously reported FTE
residents on a cost report may pursue a new FTE resident cap
determination under a new residency program pursuant to subparagraph ii
of the Consolidated Appropriations Act, 2021.
Response: We do not believe Congress gave us the authority to
provide relief or waivers to categories beyond A and B. We believe that
the CAA is unequivocally clear about the size of the caps that would be
eligible for a reset; that is, for hospitals with caps set based on its
1996 cost report, the cap must be less than 1.0 FTE, and for hospitals
with caps set in a cost reporting period between 1997 and prior to
enactment, the cap must not be more than 3.0 FTE.
Comment: A commenter noted that section 131 of the CAA states, ``A
hospital shall report full-time equivalent residents on its cost report
for a cost reporting period if the hospital trains at least 1.0 full-
time equivalent residents in an approved medical resident training
program or programs in such period.'' The commenter questioned how a
hospital would know that it ``shall'' and what happens if it does not.
The commenter also questioned whether these hospitals would again have
PRAs of $0 and acquire caps without knowing it, after the 5-year window
included in the legislation.
Another commenter stated that PRAs have not been proactively
assigned to every hospital in the US, and under current regulations a
PRA of $0 is only discovered and established when a resident is first
reported on a cost report. The commenter requested that until such time
as hospitals have the opportunity for a certified audit financed by CMS
prior to training residents, we recommend that all hospitals without a
PRA or cap be assigned a PRA that is ``the updated weighted mean value
of per resident amounts of all hospitals located in the same census
region as that term is used in subpart D of part 412 of this
subchapter,'' or until a hospital can demonstrate its ability to train
residents for less than that amount.
Response: Regarding how to treat hospitals in the future that
inadvertently train small numbers of residents, we note that section
131 of the CAA specifies that ``for cost reporting periods beginning on
or after enactment, a hospital shall report full-time equivalent
residents on its cost report if the hospital trains at least 1.0 full-
time equivalent residents in an approved medical residency program or
programs in such period.'' In the proposed rule, we interpreted this to
mean that Congress was putting hospitals on notice that they are
obligated to be aware of and report their residents to CMS on the cost
report for training as minimal as 1.0 FTE. We also believe that section
131 of the CAA is unequivocally clear that a qualifying hospital's cap
or PRA must be in effect ``as of enactment,'' which means that it would
have been (or should be determined) from a cost reporting period that
started prior to enactment. Thus, we believe section 131 of the CAA is
not meant to provide relief to hospitals that trigger low caps or PRAs
after enactment. As stated previously, we are also no longer requiring
in the regulations at 42 CFR 413.77(e)(1) that residents be on duty
during the first month of the PRA base period for teaching hospitals
receiving a PRA reset, and for new teaching hospitals in general. We
are finalizing our proposed interpretation of these clauses, and
accordingly, we do not believe we have flexibility to ``forgive'' or
``ignore'' caps or PRAs triggered after enactment, even when the
training is not more than 1.0 FTE.
Regarding the comment that prior to the MAC audit for a new
teaching hospital's PRA, the hospital should be assigned the census
region PRA, we note that policy is already in effect per Transmittal
1923, CR 10240 (page 5), which states: ``. . . the MAC shall use the
latest available census region PRA issued by CMS for the census region
in which the new teaching hospital is located, updated for inflation to
the base period of the new teaching hospital, for the purpose of
calculating and paying DGME interim rates. However, once the hospital
submits its base year cost report, the MAC shall calculate and assign
the appropriate PRA to the new teaching hospital (as part of the normal
cost report settlement process for the new teaching hospital).''
Comment: A commenter requested that once a hospital resets its FTE
cap under section 131 of the CAA, it should have certainty that no
audits will revisit prior training, while another commenter stated that
redeterminations under section 131 of the CAA should be binding unless
the provider concealed material information, or the provider appeals
the determination. Another commenter recommended that hospitals with
yet undiscovered low PRAs be subject to limited lookback (for example,
3 years) and only set a PRA when beginning the training of residents in
the future. An additional commenter noted that CMS requires records of
cost reports to be retained in their original or legally reproduced
form for 5 years after the closure of the cost report, and strongly
recommended that CMS use the record retention requirements to set a
lookback window of 5 years when evaluating the cost reports of
hospitals that are seeking to set a new PRA under these rules.
Response: As we stated in response to a previous comment, we must
manage a significant workload resulting from implementation of section
131 of the CAA, and therefore, we are taking steps to try to mitigate
that workload, including instituting a one-time deadline of July 1,
2022 for hospitals to request a reset for their PRAs or FTE caps. MACs
will not consider late documentation, nor will MACs conduct second
reviews. Hospitals that disagree with the MACs' determinations may
appeal to the PRRB, assuming conditions to appeal are met. In addition,
in this final rule with comment period, to manage the volume of review
requests, we are finalizing policies related generally to more recent,
open cost reports, and would accept comments after publication of this
final rule with comment period regarding how to address the use of
older cost reports to which some kind of limited ``look back'' policy
could be applicable. Thus, we believe our final policy of one-time
review is consistent with the commenters' requests that the MACs'
determinations should not be revisited, and they should be binding,
[[Page 73468]]
unless fraud is suspected. With regard to hospitals with ``yet
undiscovered low PRAs,'' these hospitals would follow the methodology
outlined previously, where hospitals would use the HCRIS posting to
determine their status (or follow the policy in the section regarding
cost reports not yet in the HCRIS posting or not yet settled).
A comment was submitted regarding the regulations related to new
teaching hospitals and the impact of the ongoing pandemic and public
health emergency (PHE). We are not addressing this comment at this
time, as it is not in the scope of the proposed rule.
f. Summary of Finalized Policies With Regard to Section 131 of the CAA
After consideration of comments we received, we are finalizing the
following policies with regard to section 131 of the CAA:
In this final rule with comment period, we are finalizing
policies for resets related to cost reports that are open, reopenable,
or not yet settled. We will post a file on the CMS website containing
an extract of the HCRIS cost report worksheets on which the FTE counts,
caps, and PRAs, if any, would have been reported, starting with cost
reports beginning in 1995. We are also seeking public comment regarding
how to handle reviews of PRAs or FTE caps from cost reports that are
beyond the 3-year reopening period (with the exception of Category A
and Category B hospitals that agree with the HCRIS posting).
Hospitals must first consult the HCRIS posting on CMS's
website to determine reset eligibility. MACs will not reach out to
hospitals.
In cases where no PRA or caps are reported on a settled
cost report, or when PRAs or caps are reported without any FTEs, and a
cost report is settled but reopenable, the hospital gets the benefit of
a reset without further review by the MAC.
If, for open or reopenable cost reports, there is a PRA
and/or FTE caps reported on the HCRIS web posting, and the hospital
believes its PRA in fact was established based on not more than 3.0
FTEs, or its IME and/or direct GME FTE caps were based on not more than
3.0 FTEs, a hospital has a 1-time opportunity to request
reconsideration by its MAC which must be submitted electronically and
received by the MAC on or before July 1, 2022.
Hospitals that disagree with the 1-time MAC determination
may appeal to the PRRB, assuming all conditions for appeal are met.
Eligible hospitals for resets are those only that have a
PRA base period that started prior to enactment and/or FTE cap building
window that occurred/closed in a cost reporting period that started
prior to enactment (December 27, 2020).
FTE cap resets will only be based on new programs started
after enactment and 5 years after (by December 26, 2025).
Hospitals that qualify for a PRA reset may use as the new
PRA base period either the earliest cost reporting period beginning
between enactment and 5 years after in which they train FTES in a new
program, or the first cost reporting period beginning after issuance of
this final rule with comment period. In any case, residents need not be
on duty during the first month of the cost reporting period from which
the per resident amount is established.
Effective with cost reporting periods beginning on or
after December 27, 2020, a PRA would be established if a hospital
trains less than 1.0 FTE as a result of participating in a Medicare GME
affiliation agreement. Otherwise, no PRA would be established until a
hospital trains at least 1.0 FTE. In any case, residents need not be on
duty during the first month of the cost reporting period from which the
per resident amount is established.
Effective with cost reporting periods beginning on or
after December 27, 2020, a hospital must report training of less than
1.0 FTE on its Medicare cost report if that training is as a result of
participating in a Medicare GME affiliation agreement. Otherwise, a
hospital must report FTEs on its Medicare cost report when it trains at
least 1.0 FTE.
Hospitals eligible to reset their PRAs would get a new PRA
replacing their old PRA(s); hospitals eligible to reset their FTE caps
would receive an FTE cap adjustment equal to the sum of the original
FTE cap and the new program FTE cap adjustment.
We are finalizing regulation text changes to the following:
42 CFR 413.77(e)(1)(iv) to reflect that hospitals
qualifying for a PRA reset may use as the new PRA base period either
the earliest cost reporting period beginning between enactment and 5
years after in which they train FTEs in a new program, or the first
cost reporting period beginning after issuance of this final rule with
comment period.
42 CFR 413.78(b) regarding when a hospital must report
FTEs on its Medicare cost report.
42 CFR 413.79(e)(1) and (8) to reflect the circumstances
under which a new program FTE cap would be established, and how an
adjusted FTE cap would be calculated.
C. Organ Acquisition Payment Policies
1. Background
a. History of Medicare Organ Acquisition Policies
The Medicare Program supports organ transplantation by providing an
equitable means of payment for the variety of organ acquisition
services. Medicare excludes organ acquisition costs from the inpatient
hospital prospective diagnosis-related group (DRG) payment for an organ
transplant, and separately reimburses transplant hospitals \4\ (THs)
for the organ acquisition costs on a reasonable cost basis (42 CFR
412.2(e)(4) and 412.113(d)).\5\
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\4\ Under 42 CFR 482.70 a transplant hospital is a hospital that
furnishes organ transplants and other medical and surgical specialty
services required for the care of transplant patients.
\5\ In accordance with 42 CFR 412.113(d), organ acquisition
costs incurred by hospitals with approved transplant programs are
paid for on a reasonable cost basis.
---------------------------------------------------------------------------
Medicare's current organ acquisition policy is modeled after the
kidney acquisition policy that was implemented for kidney transplants
following the Social Security Amendments of 1972 (Pub. L. 92-603) that
extended Medicare coverage to individuals with end stage renal disease
(ESRD) who required dialysis or transplantation. In July 1973, CMS
(then the Bureau of Health Insurance \6\ (BHI)) issued Intermediary
Letters (ILs) which set forth procedures and policies for Medicare
reimbursement for kidney transplants. The IL 73-25 \7\ (July 1, 1973)
set forth policies for the reimbursement for kidney transplants and
dialysis, including policies for hospital reimbursement for the
acquisition of a kidney from cadaveric and living donors for transplant
into a Medicare beneficiary. In IL 73-25, the BHI commented that as it
received and analyzed data and studied reimbursement methodology, it
would develop and issue more detailed reimbursement instructions to
support the delivery of quality services in an efficient manner. In
July 1974, the BHI issued IL 74-23,\8\ which set forth
[[Page 73469]]
additional policies for Medicare reimbursement of kidney acquisition
costs, many of which remain in place currently. In 1978, to clarify
that the Secretary of the Department of Health and Human Services (the
Secretary) has authority and to provide reimbursement for the costs
incurred in connection with kidney donations, Congress enacted
legislation that added special provisions relating to coverage under
the Medicare Program for ESRD (Pub. L. 95-292). This legislation added
section 1881 to the Social Security Act that set forth Medicare payment
for kidney transplantation and the coverage of kidney procurement costs
and living donor expenses, including Part A and Part B benefits for the
living donor.\9\ As CMS stated in the 1978 Federal Register (43 FR
44803), the purpose of section 1881 of the Act was to encourage kidney
transplantation and the scope of Medicare benefits to cover all
reasonable preparatory, operation and post-operation expenses
associated with a kidney donor, through the actual period of recovery.
---------------------------------------------------------------------------
\6\ To implement the Medicare statute, the Social Security
Administration was reorganized and the Bureau of Health Insurance
(BHI) was established on July 30, 1965. The BHI then became
responsible for the development of health insurance policy before
the creation of the Health Care Financing Administration (HCFA),
later renamed the Centers for Medicare & Medicaid (CMS). CMS
Milestones 1937-2015 (July 2015).
\7\ https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-proposed-rule-home-page.
\8\ Id.
\9\ H. Rep. 95-549 (July 29, 1977), section III.B.; S. Report
95-714 (March 22, 1978), section III.B.
---------------------------------------------------------------------------
Over the years through various rulings and national coverage
determinations, Medicare has added coverage for transplantation of non-
renal organs such as heart, liver or lungs; we modeled our
reimbursement for the acquisition costs for non-renal organs based on
our earlier kidney acquisition policies. Medicare's organ acquisition
payment policy is mostly set forth in CMS Pub. 15-1, chapter 31,\10\
the Provider Reimbursement Manual (herein referred to as PRM) and in
Medicare regulations at 42 CFR 412.2(e)(4), 412.100, 412.113(d),
413.200, 413.202, and 413.203. The entities involved in organ
acquisition, which we will further define and discuss herein, are THs,
donor community hospitals (Medicare-certified non-transplant
hospitals), organ procurement organizations (OPOs), some of which are
hospital-based OPOs (HOPOs), and histocompatibility laboratories.
---------------------------------------------------------------------------
\10\ CMS Pub. 15-1, chapter 31 can be found at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021929) (Prior to the creation of chapter 31, the
kidney acquisition policy was set forth in CMS Pub. 15-1, chapter
27, Outpatient Maintenance Dialysis Reimbursement).
---------------------------------------------------------------------------
Section 1102 of the Act authorizes the Secretary to publish rules
and regulations necessary for the efficient administration of the
functions with which the Secretary is charged under the Act. Section
1871(a) of the Act authorizes the Secretary to prescribe such
regulations as may be necessary to carry out the administration of the
insurance programs under this title. In this final rule, we are
codifying into the Medicare regulations some longstanding Medicare
organ acquisition payment policies, with clarifications where
necessary, and codifying some new organ acquisition payment policies
with modifications based on public comments. We are finalizing our
proposals to move existing organ acquisition payment regulations, or
portions of existing kidney acquisition regulations, within title 42 of
the CFR part 412, subpart G and part 413, subpart H, to a new part 413,
subpart L, so that all organ acquisition payment policies are housed
together. We are also finalizing our proposal to codify into new
subpart L certain policies pertaining to organ acquisition, as set
forth in section 733 of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (Pub. L. 108-173) and section 17006 of the
21st Century Cures Act (Pub. L. 114-255), in accordance with their
statutory effective dates. We are also finalizing our proposal to make
conforming changes and technical corrections to the regulations, where
necessary.
We are aware of OIG audits reporting that some OPOs have billed the
Medicare Program for unallowable expenditures.\11\ There have also been
recent Congressional oversight interest and inquiries into OPO
financial management.\12\ We believe the provisions that follow will
provide clarity and allow providers and stakeholders to more easily
locate and understand organ acquisition payment policy, resulting in
more accurate payment based on reasonable cost principles.
---------------------------------------------------------------------------
\11\ https://oig.hhs.gov/oas/reports/region9/90800033.pdf;
https://oig.hhs.gov/oas/reports/region9/90900087.pdf; https://oig.hhs.gov/oas/reports/region9/90500034A.pdf; https://oig.hhs.gov/oas/reports/region9/91102039.pdf.
\12\ https://oversight.house.gov/news/press-releases/oversight-subcommittee-launches-investigation-into-poor-performance-waste-and;
https://www.young.senate.gov/newsroom/press-releases/young-joins-finance-committee-members-to-probe-us-organ-transplant-system;
https://www.congress.gov/117/chrg/CHRG-117hhrg44569/CHRG-117hhrg44569.pdf.
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b. Overview of Medicare Reimbursement in Transplantation
Medicare reimburses THs for organ acquisition costs, the transplant
surgery, inpatient, and post-transplant costs for the Medicare
recipients, but through different payment systems. Medicare Part A pays
for hospital costs of a transplant surgery and certain follow-up care
through a DRG payment and the organ acquisition costs associated with a
transplant on a reasonable cost basis. In general, Medicare Part B pays
for the physician services and other services furnished to eligible
Medicare beneficiaries. CMS established Conditions of Participation
(CoP) for hospitals under 42 CFR part 482, subpart E. Transplant
programs, located within a TH that has a Medicare provider agreement,
must meet the applicable hospital CoPs at Sec. Sec. 482.1 through
482.70 and the transplant program CoPs, located at Sec. Sec. 482.72
through 482.104, and additional requirements in order to be eligible to
participate in the Medicare Program.
OPOs coordinate the procurement, preservation and transportation of
organs from deceased donors, and maintain a system for locating
prospective recipients for organ transplantation. Section 1138 of the
Act sets forth hospital protocols for the identification of potential
organ donors and the standards for OPOs. To be an OPO, an entity must
meet the applicable requirements of both the Act and the Public Health
Service Act (the PHS Act). The statutory functions of an OPO are also
set forth in 42 U.S.C. 273; section 371 of the PHS Act. Section 1138(b)
of the Act provides the statutory qualifications and requirements that
an OPO must meet in order to be reimbursed under the Medicare or
Medicaid Program for certain organ procurement costs. CMS established
Conditions for Coverage (CfCs) OPOs must meet in order to receive
payment under Medicare or Medicaid for organ procurement costs in the
regulations at 42 CFR part 486, subpart G. Section 1138(b)(1)(A) of the
Act specifies that payment may be made for organ procurement costs only
if the agency is a qualified OPO operating under a grant made under
section 371(a) of the PHS Act or has been certified or re-certified by
the Secretary as meeting the standards to be a qualified OPO. Among
those requirements, each OPO must be a member of, participate in, and
abide by the rules and requirements of the Organ Procurement
Transplantation Network (OPTN) that are approved by the Secretary (see
42 CFR 486.320).
Medicare reimburses THs for organ acquisition costs under
reasonable cost principles \13\ under section 1861(v) of the Act, based
on the TH's ratio of Medicare usable organs to total usable organs.
Medicare authorizes payment to designated OPOs for kidney acquisition
costs, under reasonable cost
[[Page 73470]]
principles \14\ in accordance with section 1861(v) of the Act, based on
the OPO's ratio of Medicare usable kidneys to total usable kidneys (see
section 1881(b)(2)(A) of the Act).
---------------------------------------------------------------------------
\13\ See 42 CFR 412.113(d); HCFA Ruling 87-1 (April 1987); CMS
Ruling 1543-R (December 2006).
\14\ Id. Section 1138(b)(1)(F) of the Act; 42 CFR
413.1(a)(1)(ii)(A); 413.200(a).
---------------------------------------------------------------------------
Histocompatibility laboratories provide laboratory services to
ensure compatibility between donor organs and potential recipients in
preparation for transplants. Section 1881(b)(2)(A) of the Act
authorizes Medicare reimbursement for the cost incurred by a
histocompatibility laboratory in accordance with sections 1861(v) or
1886 of the Act (if applicable). Histocompatibility laboratories are
either independent or hospital-based. A histocompatibility laboratory
is ``independent'' unless it is considered a department of the hospital
and subject to control of the hospital.\15\ Section 413.200(a) requires
the reasonable costs of services furnished by histocompatibility
laboratories be reimbursed in accordance with the principles contained
in 42 CFR 413.60 and 413.64.
---------------------------------------------------------------------------
\15\ 43 FR 58371 (December 14, 1978).
---------------------------------------------------------------------------
2. Organ Acquisition Payment Policy
We received approximately 400 timely pieces of correspondence
regarding the proposals and policies discussed in this section of this
final rule with comment period. Comment summaries and responses are
included in each lettered section.
a. Terminology Notes and Proposed Definitions
(1) Use of Consistent Terminology
Throughout this final rule, we will use consistent terminology such
as ``transplant hospital'' and ``transplant program.'' These terms have
been defined in other CMS regulations at 42 CFR 482.70 as follows:
Transplant hospital means a hospital that furnishes organ
transplants and other medical and surgical specialty services required
for the care of transplant patients.
Transplant program means an organ-specific transplant program
within a transplant hospital (as defined in this section).
The regulations in 42 CFR parts 412 and 413 had previously used
``transplantation center'' to mean a ``transplant program.'' Our PRM
also uses ``certified transplant center'' to mean a TH, but we proposed
to use consistent language in this rule to avoid confusion. In section
X.B.2.m.(1). of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, we proposed conforming changes to some existing regulations to
ensure that ``transplant hospital'' and ``transplant program'' are used
consistently and as described in this section.
Comment: Some commenters expressed appreciation for CMS' use of
consistent terminology.
Response: We appreciate the commenters' support. Throughout this
final rule, we will refer to a hospital that has an approved organ-
specific transplant program as a TH, and we will use ``transplant
program'' to refer to the organ-specific program itself.
(2) Definitions
In addition to the proposals to use consistent terminology, in the
preamble to the proposed rule we proposed to add specific definitions
into the regulations by adding Sec. 413.400, entitled ``Definitions,''
to new subpart L of 42 CFR, part 413. We also proposed to move all
definitions in existing Sec. 413.200(b) ``Definitions,'' to new Sec.
413.400 to maintain this regulation with all other organ acquisition
regulations in proposed new subpart L of part 413. Further, we proposed
to revise some of the definitions proposed to be moved from Sec.
413.200(b) to new Sec. 413.400, as noted in the following discussion.
We received no comments on our proposal to move all definitions in
existing Sec. 413.200(b) to new Sec. 413.400, thus we are finalizing
our proposal as proposed.
For organ acquisition payment purposes, an ``organ'' means a human
kidney, liver, heart, lung, pancreas, or intestine (or multivisceral
organs when transplanted at the same time as an intestine) as defined
in 42 CFR 486.302. Effective October 1, 2004, organs also include
pancreata procured for the purpose of acquiring pancreatic islet cells
for transplantation into individuals who are participating in a
National Institute of Diabetes and Digestive and Kidney Diseases
clinical trial. Section 733 of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (Pub. L. 108-173) requires
Medicare to pay for items and services that are reasonable and
necessary routine patient care costs related to acquisition and
delivery of pancreatic islet cells for transplantation into Medicare
beneficiaries included in a National Institute of Diabetes and
Digestive and Kidney Diseases clinical trial of islet cell transplants.
We proposed to codify our definition for ``organ'' in Sec.
413.400, new subpart L. We noted that the proposed definition of organ
is for Medicare organ acquisition payment purposes and differs from the
definition set forth in 42 CFR 486.302 CfC for OPOs.
The CMS OPO CfCs final rule (85 FR 77898 published December 2,
2020) defines ``organ'' under 42 CFR 486.302, to mean a human kidney,
liver, heart, lung, pancreas, or intestine (or multivisceral organs
when transplanted at the same time as an intestine). The pancreas
counts as an organ even if it is used for research or islet cell
transplantation. The OPO CfC final rule (85 FR at 77947) describes the
inclusion in the performance measures for OPO certification of
pancreata used for research in the definition of organ as necessary in
order to meet the statutory requirements of section 371(c) of the
Public Health Service Act that provides that pancreata procured by an
OPO and used for islet cell transplantation or research shall be
counted for purposes of certification or recertification (85 FR 77902).
However, for Medicare payment purposes, an organ procured for research
is not counted as a Medicare organ in Medicare's share of organ
acquisition costs, except where explicitly required by law. Therefore,
in order to mitigate potential stakeholder confusion, we proposed a
definition of ``organ'' for organ acquisition payment purposes that
differs from the definition set forth in the OPO CfCs.
Comment: Several commenters requested CMS expand the definition of
``organ'' to include vascular composite allografts (VCAs), in alignment
with the OPTN's definition of organ applicable to the OPTN under 42 CFR
121.2, and be included in organ counts for OPOs and THs so Medicare can
calculate a share of acquisition costs for VCAs. A few commenters
suggested the proposed definition of organ reimbursement be expanded to
include other clinical trials and disease states.
Response: Our definition of organ in Sec. 413.400 is for organ
acquisition payment purposes that are outlined in the statute or
adopted through the regulatory process to be paid outside of the IPPS.
We have historically not included VCAs in the definition of organ for
OPO CfCs because VCA transplantation is generally very localized and
rarely performed.\16\ According to OPTN data, in 2019, only
approximately 15 such transplants occurred, the vast majority being the
transplantation of a uterus (12 transplants). In 2020, there were five
[[Page 73471]]
VCA transplants; in 2021 (through November 19, 2021), there were four
VCA transplants.\17\ Although it is not clear from the OPTN data
whether these VCA transplant recipients were Medicare beneficiaries,
inclusion of VCAs as organs would require a separate assessment of the
impact throughout all CMS policies and regulations, and could lead to
changes that would be beyond the scope of this rule. Although we may
reconsider this issue in the future if VCA transplants become more
common procedures, we are not expanding the definitions of ``organs''
to include VCAs for organ acquisition payment purposes in this final
rule.
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\16\ See 85 FR 77906. The OPTN database was accessed on July 11,
2020 and number of transplants for abdominal wall, head & neck
(cranial facial), head & neck (scalp), GU: Penile, GU: Uterus, upper
limb: Bilateral, upper limb: Unilateral, and VCA were counted for
2018 and 2019. In 2018, there were 11 transplants.
\17\ https://insights.unos.org/OPTN-metrics/.
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As noted, the proposed definition at Sec. 413.400 specifically
included in the definition of ``organ'' pancreata procured on or after
October 1, 2004, for the purpose of acquiring pancreatic islet cells
for transplantation into individuals who are participating in a
National Institute of Diabetes and Digestive and Kidney Diseases
(NIDDK) clinical trial. This rule implements Medicare's payment for the
acquisition and delivery of pancreatic islet cells for transplantation
into Medicare beneficiaries included in a NIDDK clinical trial of islet
cell transplants required by section 733 of the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (Pub. L. 108-173).
Section 733 requires routine costs, transplantation and appropriate
related items and services for the acquisition and delivery of the
pancreatic islet cell transplantation for Medicare beneficiaries who
are participating in a clinical investigation of pancreatic islet cell
transplantation. In light of this specific statutory requirement, we
believe it would be inappropriate to expand the definition of organ in
Sec. 413.400 to include other clinical trials and disease states as
commenters suggested.
After consideration of public comments, we are finalizing our
definition of ``organ'' for acquisition payment purposes, as proposed,
at Sec. 413.400, in new subpart L, with modifications based on
comments received to clarify the definition of pancreata for organ
acquisition payment purposes, by adding the public law citation to the
definition. In this regard, we are finalizing that an organ, for organ
acquisition payment purposes, includes pancreata procured on or after
October 1, 2004, for the purpose of acquiring pancreatic islet cells
for transplantation into individuals who are participating in a
National Institute of Diabetes and Digestive and Kidney Diseases
clinical trial in accordance with section 733 of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003.
In the proposed rule, we proposed to include the definition of
Organ Procurement Organization (OPO) as it currently exists in Sec.
413.200(b). As defined in 42 CFR 486.302, an OPO means an organization
that performs or coordinates the procurement, preservation, and
transport of organs and maintains a system for locating prospective
recipients for available organs. An OPO can be a HOPO or an independent
OPO. An OPO is ``independent'' unless it is considered a department of
the hospital and subject to control of the hospital.
Comment: Several commenters also requested we amend the proposed
definition of ``OPO'' to reflect that the OPTN, and not the OPO,
maintains the system for identifying and locating prospective
beneficiaries for available organs.
Response: We appreciate the commenters' suggestion; however, we
respectfully disagree with modifying the definition as commenters
suggest. OPOs do have a system for locating prospective beneficiaries
for available organs. We do not believe our definition will cause
confusion with respect to the separate functions of the OPTN. After
consideration of the public comments we received, we are finalizing our
proposed definition of ``OPO'' as proposed.
Additionally, we proposed to codify the definition of a hospital-
based organ procurement organization (HOPO) as an OPO that is
considered a department of the TH and reports organ acquisition costs
it incurs on the TH's Medicare cost report (MCR).\18\ The proposed
definition is consistent with the description of HOPO in the PRM, and
is commonly known in the organ acquisition and transplant community. We
proposed to codify our proposed definition in Sec. 413.400, new
subpart L. As of March 12, 2021, there are 7 HOPOs in operation.\19\
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\18\ Hospital and Health Care Complex Cost Report, currently
Form CMS-2552, OMB No. 0938-0050.
\19\ Information available at https://optn.transplant.hrsa.gov/members/; accessed March 12, 2021.
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We also proposed that a transplant hospital/HOPO (TH/HOPO) refers
to a transplant hospital, or a transplant hospital that operates a HOPO
(as defined previously in this section) and performs organ procurement
activities as one entity reported on the transplant hospital's MCR. We
proposed to codify our proposed definition in Sec. 413.400 new subpart
L.
Comment: A commenter recommended the definition of HOPO should be
separate from the definition of TH/HOPO due to differences in various
organ acquisition reporting and operational activity between a HOPO and
a transplant program.
Response: We agree that there are differences in various organ
acquisition reporting and operational activity between a HOPO and a
transplant program. We note that in the proposed rule, we proposed a
separate definition for ``HOPO.'' However, we also proposed a
definition of TH/HOPO, to indicate that a TH/HOPO means a transplant
hospital and a transplant hospital with a hospital based OPO, which is
an OPO owned and operated by the hospital. In this context, the HOPO is
reimbursed through the transplant hospital's cost report as a
department of the hospital and does not file a cost report separately
from the transplant hospital nor is it reimbursed separately. We are
codifying our proposed definitions of HOPO and TH/HOPO, as proposed, at
Sec. 413.400, in new subpart L.
In the proposed rule, we also proposed to revise the terminology
``freestanding'' as it currently exists in 42 CFR 413.200(b) in
relation to OPOs, to be ``independent OPO (IOPO)'' because this
terminology is more widely used in the industry. We also proposed to
revise the IOPO definition by adding a third distinguishing factor. The
proposed definition for an IOPO will mean an OPO that files a MCR
separate from a hospital and meets all of the following: (1) Is not
subject to the control of a hospital with respect to the hiring,
firing, training, and paying of employees; (2) is not considered as a
department of a hospital for insurance purposes (including malpractice
insurance, general liability insurance, worker's compensation
insurance, and employee retirement insurance); and (3) reports organ
acquisition costs it incurs on the IOPO MCR.\20\ In the preamble to the
FY 2022 IPPS/LTCH PPS proposed rule, we proposed to clarify that an
IOPO that wishes to have the cost of its pre-transplant services
reimbursed under Medicare must agree to certain requirements specified
in 42 CFR 413.200(c). If an IOPO operates a histocompatibility
laboratory, the costs of its histocompatibility laboratory are included
on the IOPO's MCR. We received no comments on this proposal;
[[Page 73472]]
therefore, we are codifying our proposed definition of IOPO, as
proposed, at Sec. 413.400, in new subpart L.
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\20\ Organ Procurement Organizations and Histocompatibility
Laboratory, currently Form CMS-216, OMB. No. 0938-0102.
---------------------------------------------------------------------------
In the FY 2022 IPPS/LTCH PPS proposed rule, we stated that a
histocompatibility laboratory performs laboratory services to determine
the degree of histocompatibility between donor organs and potential
recipients. We also proposed to include a definition of
``histocompatibility laboratory'' as it currently exists in Sec.
413.200(b) with a technical correction. We proposed to make a technical
correction to the cross-reference to Sec. 413.2171(d) because this
regulation citation is no longer correct. We proposed that
``histocompatibility laboratory'' means a laboratory meeting the
requirements set forth in 42 CFR 493.1227 and providing the services
for the acquisition of kidneys or other organs for transplantation. We
received no comments on this proposal; therefore, we are finalizing our
proposed definition of histocompatibility laboratory, as proposed, at
Sec. 413.400, in new subpart L.
We proposed that standard acquisition charge (SAC) means a charge
as defined in proposed new Sec. 413.404 in section II.C.2.c. of this
final rule with comment period. We received no comments on this
proposal; therefore, we are codifying our proposed definition of SAC,
as proposed, at Sec. 413.400, in new subpart L.
We also proposed to add the definitions for ``transplant hospital''
and ``transplant program'' that currently exist in 42 CFR 482.70 in
Sec. 413.400, to new subpart L.
Comment: A few commenters supported our clarification of transplant
hospital and transplant program.
Response: We thank the commenters for their support. We are
codifying our proposed definitions for ``transplant hospital'' and
``transplant program,'' as proposed, at Sec. 413.400, in new subpart
L.
b. Provisions Related to Organ Acquisition Costs
(1) Proposed Items and Services Considered Organ Acquisition Costs
In this final rule with comment period, we are adding Sec.
413.402(a) to new subpart L to specify that costs incurred in the
acquisition of organs from a living donor or a cadaveric donor by the
hospital or by an OPO, as appropriate, are organ acquisition costs. To
make necessary policy revisions and clarifications of acquisition costs
for kidneys as well as for non-renal organs, in the proposed rule we
proposed to revise Sec. 412.100(b), by removing the list of organ
acquisition costs found in that paragraph and re-codifying them with
some revisions by adding Sec. 413.402(b) to new subpart L.
We proposed to codify at proposed Sec. 413.402(b) that the costs
of acquiring organs (kidneys and non-renal organs) covered by Medicare
Part A are: (1) Tissue typing, including tissue typing furnished by
independent laboratories; (2) donor and beneficiary evaluation; (3)
other costs associated with excising organs, such as general routine
and special care services provided to the donor; (4) operating room and
other inpatient ancillary services applicable to the donor; (5)
preservation and perfusion costs; (6) OPTN registration fees; (7)
surgeons' fees for excising cadaveric organs (currently limited to
$1,250 for kidneys); (8) transportation of the excised organ to the TH;
(9) costs of organs acquired from other hospitals or OPOs; (10)
hospital costs normally classified as outpatient costs applicable to
organ excisions (services include donor and recipient tissue typing,
work-up, and related services furnished prior to admission); (11) costs
of services applicable to organ excisions which are rendered by
residents and interns not in approved teaching programs; and (12) all
pre-admission services applicable to organ excisions, such as
laboratory, electroencephalography, surgeons' fees for cadaveric
excisions, and the costs of physicians' services.
We proposed to apply the existing elements of kidney acquisition
costs found in Sec. 412.100(b) to all organs, with clarifying
revisions as described. These items and services are currently
specified in Sec. 412.100(b) (for kidneys only) and also discussed in
sections 3101, 3102, and 3103 of the PRM. We proposed to revise Sec.
412.100(b) to reference that kidney acquisition costs are specified in
new Sec. 413.402(b) of this chapter.
We proposed to add Sec. 413.402(b)(6) to new subpart L to include
the costs for the OPTN registration of a beneficiary for a kidney
transplant as specified in Sec. 412.100(b)(6) and also include the
costs for registration of a beneficiary for a non-renal transplant. The
OPTN registration fee is assessed for all transplant candidates placed
on the OPTN waiting list.\21\ We proposed to limit these registration
fees to the OPTN registration fee. Reasonable cost principles, as set
forth in section 1861(v) of the Act and as specified in 42 CFR 413.1(b)
and 413.9, do not permit Medicare to pay for duplicate services. In the
proposed rule, we asserted that any registration fee outside of the
OPTN registration fee would be considered unnecessary and duplicative
under reasonable cost principles for Medicare organ acquisition costs.
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\21\ The hospital CoPs at 42 CFR 482.45(b)(1) require each TH to
be a member of the OPTN and abide by its rules, which for THs
include registering potential transplant recipients on the OPTN
registry as described in section 1.2.D of the OPTN Bylaws, available
at https://optn.transplant.hrsa.gov/media/1201/optn_bylaws.pdf.
---------------------------------------------------------------------------
Payment mechanisms for certain kidney acquisition costs differ
depending on whether the donor is living or is cadaveric. Our provision
will codify that surgeon fees are included as kidney acquisition costs
paid through the Medicare cost report only when the kidney excision
occurs with a cadaveric donor. When a living donor enters the hospital
for the actual kidney excision--and the recipient is a Medicare
beneficiary--surgeon fees for excising the kidney are still considered
kidney acquisition costs, but are not included as kidney acquisition
costs on the cost report or paid through the cost report. Instead, the
surgeon bills these surgeon fees to Medicare Part B using the
transplant recipient's Medicare Beneficiary Identifier (MBI), and
Medicare pays for living kidney donor surgeon fees through the claims
processing system. Congress enacted section 1881(d) of the Act in 1978,
which (in part) entitled living donors to benefits under Medicare Part
B with respect to the kidney donation, as if the donor were eligible
for Medicare, and allowed the Secretary to prescribe in regulation how
that would occur. CMS regulations at 42 CFR 410.55 and 410.163,\22\
require Medicare Part B to pay for medical and other health services
furnished in connection with a kidney donation if the kidney is
intended for a Medicare beneficiary with ESRD and without deductibles
or co-insurance. As such, our proposed codification of Part A kidney
acquisition costs related to donor surgeon fees only focuses on
surgeons' fees for cadaveric excisions.
---------------------------------------------------------------------------
\22\ 51 FR 41332.
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Section 371(b)(3)(F) of the PHS Act, 42 U.S.C. 273(b)(3)(F),
requires that OPOs provide or arrange for the transportation of donated
organs to transplant centers. We proposed to codify our longstanding
policy in PRM section 3101 that Medicare covers the transportation of
donated organs as an organ acquisition cost as authorized by section
371(b)(3)(F) of Public Health Service Act.
We proposed to add Sec. 413.402(b) to new subpart L to specify the
acquisition costs given at Sec. 412.100(b) of this chapter, with minor
clarifying revisions,
[[Page 73473]]
and to revise Sec. 412.100(b) to cross-reference Sec. 413.402(b). We
also proposed to make additional revisions, technical corrections and
conforming changes to Sec. 412.100 in sections II.C.2.b.(1). and
II.C.2.m.(2). of this final rule with comment period.
Finally, we have received inquiries over the years from various
stakeholders about whether costs resulting from services to living
kidney donors with complications are organ acquisition costs. We
proposed to codify that policy in Sec. 413.402(c) in new subpart L, to
provide greater clarity to stakeholders. We discuss details of our
policy and proposed codification related to living donor complications
in section II.C.2.e.(4). of this final rule with comment period.
Comment: Many commenters appreciated our proposals to codify policy
and to locate organ acquisition policies in a common location in the
regulations. However, several commenters were concerned that our
proposal to limit registry fees to the OPTN fee at proposed at Sec.
413.402(b)(6) would shift costs of registry fees to transplant
hospitals for living donors or donors participating in kidney-paired
donations, would discourage living donor transplants, and could
jeopardize health equity, particularly for kidney-only programs.
Commenters requested that CMS not limit registry fees to the OPTN fee
only and cited a 2014 letter from CMS that stated that transplant
hospitals can engage in contracts with third-parties that provide
services to facilitate transplantation and place the costs of those
services on their cost reports. A commenter supported CMS not covering
the fee charged by the current contractor that operates the OPTN, while
other commenters supported CMS' covering that fee. A commenter objected
to CMS referring to the OPTN contractor fee services as ``duplicative''
of the OPTN registry and described the services the contractor performs
to facilitate and support organ transplantation.
Response: We appreciate commenters' support for our proposals to
codify organ acquisition cost policies in one location in the Code of
Federal Regulations and thank commenters for sharing their concerns
about the proposed registry fee costs. We agree that the OPTN
contractor and other registries can provide valuable services that
support and encourage transplantation. After further researching
registry fee information provided in the comments, we are clarifying
that we cover as registry fees only the reasonable fees for actually
registering a potential recipient for an organ transplant.
We also agree with commenters that the services other registries
provide may differ from those provided by the OPTN. For example, we
agree with commenters that third-party registries can provide services
beyond those of the OPTN to facilitate living organ donation,
particularly related to paired kidney donation, and increase a
potential transplant recipient's ability to receive a living donor
transplant. As such, we do not believe that all additional registry
fees would be ``duplicative'' of the OPTN services. We believe covering
the reasonable and necessary costs of registry fees that are not
duplicative will support transplantation. Therefore, we are finalizing
our proposal with modifications, so that Medicare covers as organ
acquisition costs at Sec. 413.402(b)(6) the OPTN registration fee, and
the reasonable and necessary cost of other fees, such as the
registration fees for a kidney paired exchange, to register candidates
for organ or kidney transplants. These allowable registry fees must
support or promote organ transplantation and must not be duplicative in
nature. We will monitor the registry fees reported and may refine our
policy if needed in future rulemaking.
Comment: Many commenters disagreed with our proposal at Sec.
413.402(b)(8) that organ acquisition costs include costs to transport
the excised organ to the transplant hospital, but excludes costs for
transporting the cadaveric donor. Some commenters suggested that the
exclusion of transportation costs for the cadaveric donor was a new
policy proposal and believed that the proposal was eliminating costs
for transportation of the cadaveric donor from the donor hospital to an
OPO. Some commenters opined that the proposal would impede operations
of OPOs that may operate organ recovery centers. Several commenters
cited 42 U.S.C. 273(b)(3)(F), (requiring OPOs to provide or arrange for
transportation of donated organs to transplant centers), and asserted
that this section does not prohibit transportation of the donor (as
opposed to individual organs) when the transportation is for the
purpose of transplantation. A few commenters suggested that CMS permit
transportation of the cadaveric donor to an off-site recovery facility
when it could be proven that the overall costs of acquisition would be
lower.
Commenters raised three other scenarios where a cadaveric donor may
require transportation to another hospital: (1) When the donor
hospital's protocol does not permit organ excision when cardiac death
has occurred; (2) when clinical outcomes could be compromised because
the donor hospital is not geographically located within reasonable
proximity to needed transportation infrastructure, such as an airport,
when the organ must be flown to the intended recipient; and (3) where
the donor hospital does not have the capacity at that time to
accommodate organ procurement. The commenters opined that in these
situations, transporting the donor avoided the loss of transplantable
organs or increased the likelihood of the organs' viability. Another
commenter requested clarification as to whether it was permissible for
the donor to be moved from the donor hospital to the transplant
hospital. A commenter requested that the proposed codification of
transportation costs remain as it was written in Sec. 412.100(b).
Finally, a commenter sought clarification of transportation costs
for transporting non-renal organs. The commenter noted that the non-
renal organs travel with the surgeon on the plane, so there is no
incremental cost for transportation of the organ. The commenter stated
that it would be administratively burdensome for the OPO and the
transplant hospital to apportion the transportation costs and requested
exclusion of the non-renal transportation in this situation, as there
is no ``cost'' associated with the organ transportation.
Response: The current Medicare organ acquisition payment policy
does not include transportation costs for a cadaveric donor. However,
we agree with commenters that 42 U.S.C. 273(b)(3)(F) does not prohibit
Medicare from covering transportation of the cadaveric donor. We
appreciate the scenarios commenters provided relating to transportation
of a cadaveric donor and believe that broadening coverage of
transportation costs would more strongly support organ procurement and
transplantation. We also agree with commenters that it would be
reasonable to allow transportation costs of a cadaveric donor when that
donor is transported to avoid loss of potentially transplantable
organs, or to preserve clinical outcomes.
The lack of clarity of the existing payment policy was evident in
some of the comments, which is why we are being more specific in our
codification of the payment policy regarding transportation costs. For
the reasons noted in this section of this final rule with comment
period, we are finalizing our proposed codification at Sec.
413.402(b)(8) with modifications in
[[Page 73474]]
response to public comments, to cover as an organ acquisition cost
transportation of the excised organ to the transplant hospital, and of
the cadaveric donor to procure organs when it is necessary to preserve
clinical outcomes or to avoid loss of potentially transplantable
organs. We believe this modification to our current policy is
responsive to commenters' concerns, and will support organ procurement,
address potential disparities in rural areas, and improve clinical
outcomes.
Regarding the transportation of non-renal organs, the commenter
described a scenario in which the commenter believed there is no
additional cost incurred for organ transportation when the transplant
team travels to procure and retrieve the organ. In this scenario we
agree that there is not a transportation cost incurred for the organ
and therefore no need to apportion the travel costs. However, under the
general requirements at Sec. Sec. 413.20 and 413.24 to maintain
records for items submitted on the Medicare cost report for proper cost
finding and payment, the OPO and transplant hospital would have to
maintain accurate records for the number of organs procured without
transportation costs and the number of organs procured with
transportation costs in order to properly allocate overhead costs. We
note that when an OPO does not incur transportation costs for all
organs, the transportation costs for kidneys would be reduced from the
accumulated costs statistic in order to equitably allocate overhead
costs.
Comment: Commenters requested clarification of whether
transportation of recovery staff, including donor family support staff,
would be allowable organ acquisition costs. A different commenter
referred to procuring multiple organs which had no incremental cost for
transportation beyond the charter flight travel costs for the
procurement team. This commenter stated that the OPO has no control
over the cost of charter transportation, stating it would require
contracts with multiple transportation providers that may not be known
to the OPO until the transportation has been arranged.
Response: We differentiate ``transportation'', which refers to the
organ or the cadaveric donor, from ``travel,'' which includes travel
costs of physicians or other practitioners that recover organs under
contract or arrangement with the OPO, as well as recovery personnel if
necessary, either from its own staff or under contract or arrangement,
to ensure that all usable organs are recovered in a manner that, to the
extent possible, preserves them for transplantation. These reasonable
travel costs are allowable organ acquisition costs under Sec.
413.402(b)(9) as they are costs of organs acquired from other hospitals
or OPOs. If multiple organs are procured, the travel costs for the
procurement team should be apportioned equitably to all organs.
We are concerned by the commenter's statement that the OPO ``has no
control'' over the cost of air charters, and we remind stakeholders
that reasonable cost principles apply to all organ acquisition costs.
Reasonable cost includes all necessary and proper costs incurred in
furnishing the services, as defined in 42 CFR 413.9. For example, in
this scenario an OPO might have contracts with multiple transportation
providers and could negotiate a reasonable price for air charters.
Comment: Several commenters were concerned that the specific
language we used in proposing to codify allowable organ acquisition
costs for proposed Sec. 413.402(b)(3) (other costs associated with
excising organs, such as general routine and special care services) and
proposed Sec. 413.402(b)(4) (operating room and other inpatient
ancillary services) as set forth in section X.B.2.b.(1). of the
preamble of the FY 2022 IPPS/LTCH PPS proposed rule, does not match the
language that currently exists in the relevant sections of Chapter 31
of the Provider Reimbursement Manual (PRM) or may be subject to
misinterpretation by a MAC auditor to apply only to living donors.
Commenters requested clarification of whether the organ acquisition
costs incurred for these services will be covered for both living and
cadaveric donors.
Response: We agree with commenters that other costs associated with
excising organs, such as general routine and special care services
provided to the donor specified in proposed Sec. 413.402(b)(3) and
operating room and other inpatient ancillary services applicable to the
donor in proposed Sec. 413.402(b)(4) should be clarified to specify
that they apply to both living and cadaveric donors. The commenters'
suggestions are consistent with the existing policy and could avoid
misinterpretation of the policy. Additionally, in reviewing the
language, we realized that ``special care services'' was not clear, and
we added language to give two examples (intensive care unit or critical
care unit services) so providers could better understand.
Therefore, in response to commenters and to clarify language, we
are finalizing our proposed regulation text with modifications to
clarify the regulation text at Sec. 413.402(b)(3) and Sec.
413.402(b)(4). The final regulation at Sec. 413.402(b)(3) now
specifies that other costs associated with excising organs, such as
general routine and special care services (for example, intensive care
unit or critical care unit services), provided to the living or
cadaveric donor are organ acquisition costs. The final regulation at
Sec. 413.402(b)(4) now specifies that operating room and other
inpatient ancillary services applicable to the living or cadaveric
donor are organ acquisition costs. After our regulations are effective,
we will make conforming changes to the manual.
Comment: A commenter requested that CMS consider the full spectrum
of ``uncompensated costs'' related to organ procurement and
transplantation, including overhead and administrative costs.
Response: Overhead and administrative costs that may be allowable
are allocated to allowable cost centers, including to organ acquisition
cost centers. See 42 CFR 413.24(d), and also the cost reporting
instructions for hospitals and for OPOs regarding how general and
administrative (that is, overhead) costs are allocated (for hospitals,
PRM 15-2, chapter 40, cost reporting instructions Sec. 4020, and for
OPOs PRM 15-2, chapter 33, cost reporting instructions Sec. 3311,
available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935). We have
clarified the regulation text at Sec. 413.402(a) to specify that there
are administrative and general costs that may be allowable and included
on the cost report for an OPO or TH/HOPO.
Comment: A commenter questioned whether living donor specimen
storage, recently required by the OPTN, will be covered as an organ
acquisition cost.
Response: Prior to the OPTN implementing policy changes to align
with the 2020 Public Health Services guidelines, hospitals and OPOs
should have been following the Public Health Services guidelines. This
cost associated with this specimen storage should be treated similar to
all other specimen storage and not included as an organ acquisition
cost.
Comment: A commenter requested that CMS consider ``uncompensated''
costs related to organ procurement and transplantation for pathologists
and other specialists contracted under third party contracts that are
indispensable to the organ recovery and transplantation process.
Response: Regarding the costs of pathologists and other specialists
under third-party contracts, we are unclear what commenters are
referring to, and
[[Page 73475]]
without more context, are unable to modify the final rule to address
this comment.
Comment: Many commenters believed that some of our proposals were
intended to be retroactive rules to codify existing organ acquisition
payment policy. Other commenters believed that the rules would be
prospective from the effective date of the final rule and that the
agency did not intend to establish retroactive rules.
Response: We did not propose to establish retroactive rules under
section 1871(e)(1)(A) of the Act. Our final rules will generally be
effective upon the effective date of the final rule. This FY 2022 IPPS
final rule with comment period will be effective on the effective date
specified in the DATES section of this final rule with comment period,
unless a later date is specified. We note that a limited number of the
final regulations expressly include the effective date of earlier
statutes that have already established substantive standards.
Specifically, the final rule at Sec. 413.406 includes an effective
date of October 1, 2004, from section 733 the Medicare Modernization
Act of 2003, as it relates to Medicare coverage of islet cell
transplants. This is not a new policy change nor would it now result in
a substantive change, as the statute was already effective.
(2) Cost Reporting, Billing, and Payment of Organ Acquisition Costs
Both THs and OPOs can acquire organs for transplantation;
therefore, both THs and OPOs can have organ acquisition costs. A TH can
acquire organs from either a cadaveric donor or a living donor, while
OPOs acquire organs from cadaveric donors. In accordance with
requirements at Sec. 413.24(f), at the end of its fiscal year a TH/
HOPO files an annual hospital cost report (currently Form CMS-2552)
\23\ and an IOPO files an annual OPO/histocompatibility cost report
(currently Form CMS-216).\24\ Organ acquisition costs incurred by a TH/
HOPO are included on the appropriate organ acquisition cost center on
its hospital MCR. Organ acquisition costs incurred by an IOPO (or by a
histocompatibility laboratory, as authorized in section 1881(b)(2)(A)
of the Act and discussed in section II.C.2.d.(3). of this final rule
with comment period) are included in the appropriate organ acquisition
cost center on its MCR.
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\23\ OMB No. 0938-0050, expires March 31, 2022.
\24\ OMB No. 0938-0102, expires November 30, 2024.
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Currently, Medicare pays THs prospective payment amounts based on a
DRG for the actual organ transplant; Medicare also reimburses THs for
reasonable costs associated with acquiring organs for transplantation
into Medicare beneficiaries (Sec. 412.113(d)). CMS excludes from the
prospective payment amounts inpatient hospital organ acquisition costs
for hearts, kidneys, livers, lungs, pancreas, and intestines (or
multivisceral organs) incurred by approved THs, as specified in Sec.
412.2(e)(4). Medicare makes payment for organ acquisition costs
incurred by hospitals with approved transplantation programs on a
reasonable cost basis, as specified in Sec. 412.113(d), and in
accordance with the principles of reasonable cost as set forth in
section 1861(v) of the Act and in 42 CFR 413.1 and 413.9.
Currently, when the TH cost report is settled, the Medicare
contractor calculates the Medicare organ acquisition costs by
multiplying the total of all allowable organ acquisition costs by the
ratio of Medicare usable organs to total usable organs, for each organ
type. The contractor reconciles the TH's Medicare organ acquisition
costs by comparing the total interim payment amounts paid for organ
acquisition costs under Sec. 413.64(f) to the total actual Medicare
organ acquisition costs, and either pays amounts owed or collects from
the TH any overpayment.
The statute at section 1881(b)(2)(A) of Act authorizes Medicare to
pay THs for services provided by OPOs for kidney acquisition. Medicare
does not directly reimburse OPOs as these services are not covered
until the transplant occurs at the TH. OPOs receive an interim payment
based on their kidney SAC which is paid directly to them by the TH that
receives the kidney procured. Medicare pays IOPOs for kidney
acquisition indirectly, through the reconciliation of actual costs
incurred for kidney acquisition to actual kidney SAC payments received,
as part of cost report settlement in accordance with Sec.
413.200(e)(2), to ensure that the Medicare Program is paying its
appropriate share. There is no explicit requirement for Medicare to pay
IOPOs for non-renal organs in the same way; we do not currently
reconcile and settle IOPO non-renal organ acquisition costs. Similar to
kidney acquisition costs, IOPOs are paid an interim rate (SAC) directly
by the TH (or other IOPO) which receives the non-renal organs the IOPO
procures. Kidney and non-renal SACs are discussed in more detail in
section II.C.2.c. of this final rule with comment period.
(3) Services Not Considered Organ Acquisition Costs
Medicare does not pay for certain costs incurred by OPOs, in
accordance with section 1861(v)(1)(A) of the Act, and in the proposed
rule we proposed to establish rules identifying those specific items.
These activities or services include incurred costs found to be
unreasonable or unnecessary in the efficient delivery of health care
services, and are not limited to: \25\
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\25\ PRM 15-1, ch 31, Sec. 3108.C.
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Burial and funeral expenses for the cadaveric donor,
including transportation of the cadaveric donor before and after
excision for funeral services or for burial (burials and funerals are
not costs of acquiring organs and are not mentioned in section
371(b)(3) of the PHS Act (42 U.S.C. 273(b)(3)), which lists a number of
activities or services that OPOs perform); \26\
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\26\ 42 U.S.C. 273(b)(3).
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Costs associated with the transportation of a living donor
\27\ (there are programs outside of Medicare that may pay for
transportation costs for living donors); \28\
---------------------------------------------------------------------------
\27\ 42 U.S.C. 273(b)(3)(F). This section requires OPOs to
provide or arrange for the transportation of donated organs to
transplant centers.
\28\ 85 FR 59438, September 22, 2020; see also the National
Living Donor Assistance Center website at https://www.livingdonorassistance.org/About-Us/Mission-Background.
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Costs incurred prior to a potential cadaveric donor being
declared dead;
Fees or in-center payments for donor referrals (all
hospitals are required to timely notify OPOs of imminent deaths; \29\
PRM 15-2, chapter 40, section 4013 stipulates that, ``No amounts or
fees paid to a donor, their estate, heirs, or assigns in exchange for
an organ or for the right to remove or transplant an organ are included
in organ acquisition costs.'');
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\29\ 42 CFR 482.45.
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Costs associated with OPO sponsored seminars where
continuing education credits are given \30\ except when the attendee is
an OPO staff member; and
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\30\ See CMS Pub. 15-1, chapter 4 for more information regarding
allowable costs of educational activities.
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Certain costs incurred for administrator's duties
associated with professional organizations (when these costs are not
reasonable).
Comment: A few commenters encouraged us to allow OPO-sponsored
seminars with continuing education credits as allowable organ
acquisition costs, noting that it would improve and advance the organ
transplant system. Another commenter questioned whether
[[Page 73476]]
seminars without continuing education credits would be covered.
Response: The reasonable cost of an OPO-sponsored seminar that
provides continuing education credits, may be an allowable
administrative and general cost (included as organ acquisition costs)
limited to the OPO staff (as described at Sec. 486.326(b)) if the
seminar is related to patient care and meets the requirements at Sec.
413.9. The reasonable cost of an OPO-sponsored seminar that provides
continuing education credits to attendees who are not on the OPO's
staff is not an allowable organ acquisition cost as these costs are
absorbed by the attendee or their employer and do not benefit the OPO.
The reasonable cost of an OPO-sponsored seminar that does not
provide continuing education credits, regardless of whether it is
provided to the OPO staff, may be an allowable administrative and
general cost to the OPO if it relates to patient care and meets the
requirements at Sec. 413.9.
OPO-sponsored seminar costs are the direct costs associated with
providing the seminar such as retaining speakers, supplies, meeting
room fees, and meals (excluding alcohol) where necessary.
Based on comments received, we are codifying at Sec. 413.402(d)
that organ acquisition costs do not include OPO-sponsored seminar costs
associated with attendees who are not on the OPO's staff and receiving
continuing education credits.
Comment: A commenter requested that CMS clarify which
Administrator's duties associated with professional organizations are
not covered.
Response: Regarding certain costs incurred for administrator's
duties associated with professional organizations, Sec. 413.9(a)
allows Medicare coverage of costs that are reasonable and related to
the care of beneficiaries, as discussed in the previous comment
response. The reasonable cost of membership in professional
organizations would be allowable if the function and purpose of the
organization can be reasonably related to the development and operation
of patient care facilities and programs, or the rendering of patient
care services (see PRM 15-1, Sec. 2138). Membership costs and costs
related to the organization's meetings and conferences are allowable as
described in Sec. 2138.1. However, Sec. 2138.4 notes that the
Medicare Program will look to comparable providers as well as to the
justification by the individual provider in determining the
reasonableness of the claimed costs related to memberships. Costs to
the Medicare Program for individuals serving in administrative roles
for professional organizations may be more than the costs for an
ordinary member of a professional organization, as those in
administrative roles for the organization may have to attend additional
meetings, etc. as part of their duties. However, professional
organization costs for those in administrative roles that are
unreasonable would not be allowable. An example of unreasonable costs
would be if an individual in an administrative role for a professional
organization attended a meeting held at a luxury resort, where lodging
costs were substantially more expensive than usual (see 42 CFR
413.9(c)(3)). We have revised the text in the preamble at II.C.2.b.(3)
of this final rule with comment period to explain the rationale to
exclude certain administrator duty costs that are not reasonable. As
discussed at the end of section II.C.2.b.(3). of this final rule with
comment period, after considering public comments, we have codified
costs that are not related to organ acquisition at Sec. 413.402(d).
Comment: Several commenters stated that CMS should revise the
preamble language pertaining to costs not covered by Medicare that
reads, ``Costs incurred prior to a potential donor being declared brain
dead (healthcare costs incurred prior to declaration of death are the
responsibility of the potential donor's health insurance).'' Commenters
noted that some donors are declared dead based on cardiac or
circulatory death, and the phrasing should not be limited to brain
death only. Finally, we received several comments related to covering
costs prior to declaration of death.
Response: We agree with commenters and have corrected the preamble
text in this final rule in response to these comments. We agree with
the commenters who stated that our language in section X.B.2.b.(3). of
the preamble of the FY 2022 IPPS/LTCH PPS proposed rule about costs
incurred prior to a potential donor ``being declared brain dead''
should be revised to read ``being declared dead'', to include those
donors who die from cardiac death. Finally, the summary of comments and
responses related to covering costs prior to declaration of death are
in section II.C.2.l. of this final rule with comment period.
Comment: A commenter supported the continued exclusion from
Medicare coverage of the transportation of the cadaveric donor for
burials or funerals; another commenter challenged part of our rationale
for non-coverage, writing that section 371(b)(3) of the PHS Act does
not represent an all-inclusive list of allowable services for OPOs.
Response: We thank the commenter for supporting our policy.
Regarding our rationale for non-coverage of transportation of cadaveric
donors for funeral services or for burial, our policies regarding items
and services that are covered as organ acquisition costs are based, in
general, on whether the item or service is related to acquiring organs
for transplantation. We agree with the commenter who stated that
section 371(b)(3) of the PHS Act does not specify every item or service
covered as an organ acquisition cost. When an item is not explicitly
cited, we must determine if it meets the general principle of being
related to acquiring organs for transplantation. Costs of transporting
a donor for burial or for a funeral are not cited in the PHS Act as
covered costs, but are also not costs of acquiring organs for
transplantation. Therefore, we are maintaining our policy that
transporting a deceased donor for a funeral or for burial is not
related to the acquisition of organs, and is not an allowable cost.
In summary, effective for cost reporting periods beginning on or
after the effective date of this final rule with comment period, we are
finalizing the provisions made in section II.C.2.b. of this final rule
with comment period as proposed, except for the following
modifications:
In Sec. 413.402(a) to specify that there are
administrative and general costs that may be allowable and included on
the cost report for an OPO or TH/HOPO.
In Sec. 413.402(b)(3) to specify that organ acquisition
costs include other costs associated with excising organs, such as
general routine and special care services (for example, intensive care
unit or critical care unit services), provided to the living or
cadaveric donor.
In Sec. 413.402(b)(4) to specify that organ acquisition
costs include operating room and other inpatient ancillary services
applicable to the living or cadaveric donor.
In Sec. 413.402(b)(5) to clarify the regulation by adding
the word ``organ'' so we are specifying that organ preservation and
perfusion costs are organ acquisition costs.
In Sec. 413.402(b)(6) to specify that organ acquisition
costs include Organ Procurement and Transplantation Network
registration fees and the reasonable and necessary cost of other fees
to register candidates for organ transplants. These allowable registry
fees must support or promote organ transplantation and must not be
duplicative in nature.
In Sec. 413.402(b)(8) to specify that organ acquisition
costs include
[[Page 73477]]
transportation of the excised organ to the transplant hospital; and of
the cadaveric donor to procure organs when it is necessary to improve
clinical outcomes or to avoid loss of potentially transplantable
organs.
In Sec. 413.402(b)(12) to remove the reference to
surgeons' fees for cadaveric excisions as it is duplicative of Sec.
413.402(b)(7).
In section II.C.2.b.(3). of this final rule with comment
period, to change ``declared brain dead'' to read ``declared dead''.
In section II.C.2.b.(3). of this final rule with comment
period, to indicate that the cost of OPO-sponsored seminars that
provide continuing education credits is not covered unless the attendee
is an OPO staff member.
In section II.C.2.b.(3). of this final rule with comment
period, to revise the rationale for not covering certain costs of
administrator duties for those in professional organizations to
indicate that costs that are unreasonable would be excluded.
While we did not propose to codify the items and services not
covered as OPO organ acquisition costs described in the proposed rule,
after consideration of the public comments we received seeking
clarification or suggesting changes, we believe it is prudent to codify
the list of examples of items and services not considered to be organ
acquisition costs. As such, in this final rule we are codifying at
Sec. 413.402(d), costs not related to organ acquisition in which we
specify that items or services that are not related to acquiring an
organ for transplantation, or that are not reasonable under section
1861(v)(1)(A) of the Act, or that are non-allowable administrative and
general costs, or that are not related to patient care under 42 CFR
413.9 of the regulations are not considered organ acquisition costs.
Examples of items or services that are not organ acquisition costs
include, but are not limited to: Donor burial and funeral expenses,
transportation of the cadaveric donor after organ procurement for
funeral services or for burial; transportation costs for a living
donor; fees or in-center payments for donor referrals; costs associated
with and incurred for OPO-sponsored seminars where continuing education
credits are given and where the attendee is not on the OPO's staff (as
described at Sec. 486.326(b)); and unreasonable costs incurred for
administrator's duties associated with professional organizations.
c. Provisions Related to Standard Acquisition Charges
Because a number of the SAC comments received addressed proposals
in multiple subsections, the comment summaries and our responses are at
the end of section II.C.2.c. of this final rule with comment period.
(1) General
We proposed to clarify and codify Medicare's policy regarding TH/
HOPO SACs in new subpart L, Sec. 413.404, as discussed herein. The IL
74-23, issued in July 1974, set forth the policies and procedures for a
hospital to develop standard kidney acquisition charges for the
acquisition of kidneys from living or cadaveric donors. Over the years,
as Medicare added coverage for non-renal transplants, Medicare used
these same policies and procedures for THs to develop living and
cadaveric SACs for non-renal organs and OPOs to develop cadaveric SACs
for non-renal organs.
A SAC for an organ is an amount that represents the estimated costs
a TH or an OPO expects to incur to acquire an organ. The SAC does not
represent the actual acquisition cost for an individual organ. Instead,
the SAC generally represents the average of the total organ acquisition
costs associated with procuring either cadaveric donor organs or living
donor organs, by organ type.
A TH or OPO cannot bill Medicare directly for the cost of procuring
an organ because procuring an organ is not a covered service when
performed independent of a Medicare covered transplant, and it is not
always known at the time of organ procurement whether the potential
recipient is a Medicare beneficiary. However, the reasonable costs of
procuring an organ are reimbursable when billed in connection with a
Medicare covered transplant. When a TH bills Medicare for the
transplant, it bills the DRG charge for the organ transplant and uses
its SAC to bill Medicare for the procured organ (currently using
revenue code 081X).\31\ THs develop categories of living or cadaveric
SACs, by organ type (for example, heart, liver or lung). When a TH/HOPO
or IOPO furnishes an organ to another TH/HOPO or IOPO, we proposed that
it must bill the receiving TH/HOPO or IOPO its SAC. We proposed to
codify these provisions pertaining to SACs at proposed new Sec.
413.404(a) in new subpart L.
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\31\ Medicare internet Only Manual 100-04, Medicare Claims
Processing Manual, Chapter 3, Section 90, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.
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(2) Transplant Hospitals and HOPOs
We proposed to codify provisions pertaining to SACs for TH/HOPOs
for living and cadaveric donors at proposed new Sec. 413.404(b) in new
subpart L, as described in this section.
(a) Living Donor Standard Acquisition Charge
We proposed to codify Medicare's longstanding policy regarding a
TH's standard acquisition charges for living donors at proposed new
Sec. 413.404(b)(3)(i) in new subpart L as discussed herein, because
these policies remain relevant. THs must develop a SAC for living donor
organs, by organ type (for example kidney, liver, or lung). THs/HOPOs
must develop a SAC for cadaveric organs, by organ type. The living
donor SAC is an average organ acquisition cost the transplant hospital
incurs to procure an organ from a living donor. As medicine and
transplantation have advanced, Medicare now covers transplants into
beneficiaries from living donors for kidneys, lungs, and portions of
livers or intestines, and a living donor SAC must be established for
each of these organs.
A TH must establish a living donor SAC before the TH bills its
first living donor transplant to Medicare. The TH develops the initial
living donor SAC for each living donor organ type, by estimating the
reasonable and necessary organ acquisition costs it expects to incur
for services furnished to living donors, and pre-admission services
furnished to recipients of living donor organs during the hospital's
cost reporting period. The TH divides the estimated amount by the
projected number of usable living donor organs to be procured by the TH
during the hospital's cost reporting period. A TH calculates its
subsequent years' living donor SAC for each living organ type by using
the transplant hospital's actual organ acquisition costs for the living
donor organ type from the prior year's MCR, adjusted for any changes in
the current year. The TH divides these costs by the actual number of
usable living donor organs procured by the TH during that prior cost
reporting period. Currently, when a TH/HOPO furnishes an organ to
another transplant hospital or OPO, it must bill the receiving TH or
OPO its SAC, by organ type, or the hospital's standard departmental
charges that are reduced to cost. The TH/HOPO includes the actual
incurred cost for organ procurement services in the organ acquisition
cost center on the hospital's MCR.
We proposed that the costs that may be used to develop the living
donor SAC
[[Page 73478]]
include, but are not limited to: Costs of tissue typing services,
including those furnished by independent laboratories; costs of
physician pre-admission transplant evaluation services; OPTN
registration fees; costs for donor and recipient evaluation and workup
furnished prior to admission for transplantation; other costs
associated with procurement, for example, general routine and special
care services related to the donor; costs of operating room and other
inpatient ancillary services related to the donor; preservation and
perfusion costs; and transportation costs of the excised organ. We
proposed to codify these provisions at proposed new Sec.
413.404(b)(3)(i) in new subpart L.
(b) Cadaveric Donor Standard Acquisition Charge
In the proposed rule, we proposed to codify Medicare's longstanding
policy regarding TH/HOPO standard acquisition charges for cadaveric
donors and the costs that may be included in the cadaveric donor SAC in
new subpart L, Sec. 413.404(b)(3)(ii) because these policies remain
relevant. The cadaveric donor standard acquisition charge (cadaveric
donor SAC) is an average cost that a TH/HOPO incurs to procure an organ
from a cadaveric donor. The TH/HOPO calculates its initial cadaveric
donor SAC for each cadaveric organ type, by estimating the reasonable
and necessary costs it expects to incur in procuring cadaveric organs,
combined with the expected costs of acquiring cadaveric organs from
OPOs or other THs. The TH/HOPO divides this estimated amount by the
projected number of usable cadaveric organs to be procured by the TH/
HOPO within the TH's cost reporting period.
The TH/HOPO calculates its subsequent years' cadaveric donor SAC
for each cadaveric organ type, by using the transplant hospital's
actual organ acquisition costs for the cadaveric donor organ type from
the prior year's Medicare cost report, adjusted for any changes in the
current year. The TH/HOPO divides this estimated amount by the actual
number of usable cadaveric donor organs procured by the TH/HOPO during
that prior cost reporting period. ``Usable'' organs are discussed in
section II.C.2.h.(2). of this final rule with comment period.
Where the TH/HOPO furnishes the organ to an OPO or another TH, the
TH/HOPO uses its cadaveric donor SAC to bill the OPO or the TH
receiving the organ. We also proposed that costs that may be used to
develop the cadaveric donor SAC include, but are not be limited to:
Costs of organs acquired from other THs or OPOs; costs of
transportation of the excised organs; surgeons' fees for excising
cadaveric organs (currently limited to $1,250 for kidneys); costs of
tissue typing services, including those furnished by independent
laboratories; preservation and perfusion costs; general routine and
special care service costs; and operating room other inpatient
ancillary service costs.
(3) Independent OPO Standard Acquisition Charge
In the proposed rule, we proposed that new Sec. 413.404(c) in new
subpart L would specify Medicare's longstanding policy regarding IOPO
standard acquisition charges for cadaveric donors because these
policies remain relevant. An OPO is required under section 371(b)(1)(C)
of the PHS Act (42 U.S.C. 273(b)(1)(C)) to have an agreement with the
Secretary to be reimbursed under Medicare for the procurement of
kidneys. The IOPO's Medicare contractor establishes the kidney SAC,
which is considered an interim rate as currently specified in Sec.
413.200(d) (proposed to be added to new subpart L as Sec. 413.420(d)),
and which consists of an estimate of the reasonable and necessary costs
the IOPO expects to incur procuring cadaveric kidneys during the IOPO's
cost reporting period. The contractor divides the estimated amount by
the projected number of usable \32\ cadaveric kidneys procured. The
IOPO's Medicare contractor may adjust the kidney SAC during the year,
if necessary, for cost changes. Because the contractor must establish
and may adjust, if necessary, the kidney SAC, the IOPO cannot charge or
change its kidney SAC without the contractor's approval.
---------------------------------------------------------------------------
\32\ See discussion of usable organs in section II.C.2.h.(2). of
this final rule with comment period.
---------------------------------------------------------------------------
The Medicare contractor develops an IOPO's initial kidney SAC based
on the IOPO's budget information. The kidney SAC for subsequent years
is based on the IOPO's cost report, that is, costs of operating during
its prior cost reporting year and the number of usable cadaveric
kidneys procured during that cost reporting period. These standard
charges are the basis for the interim rate (that is, the kidney SAC)
paid by the TH to the IOPO. When the IOPO bills the TH for its kidney
acquisition services, the TH is responsible for paying the IOPO's
interim rate (that is, its kidney SAC). The IOPO's submitted cost
report is used to reconcile kidney acquisition costs under Sec.
413.200(d) (proposed to be added as Sec. 413.420(d)).
An OPO is required under (42 U.S.C. 273(b)(1)(B)) to have
accounting and other fiscal procedures (as specified by the Secretary)
necessary to assure the fiscal stability of the organization. As such,
an IOPO establishes non-renal SACs based on its costs of procuring
organs, similar to procedures followed by transplant hospitals. An IOPO
develops its SACs for each type of non-renal organ, by estimating the
reasonable and necessary costs it expects to incur for services
furnished to procure cadaveric donor non-renal organs during the IOPO's
cost reporting period. The IOPO divides this estimated amount by the
projected number of cadaveric donor non-renal organs the IOPO expects
to procure within its cost reporting period.
When an IOPO receives an organ from another IOPO, the receiving
IOPO is responsible for paying the procuring IOPO's SAC. The IOPO uses
its own SAC and not the SAC paid to another IOPO, when billing a TH
receiving the organ. For example, IOPO A has a SAC of $35,000 and IOPO
B has a SAC of $50,000. IOPO A receives an organ from IOPO B and pays
IOPO B their SAC of $50,000. IOPO A furnishes the organ to the TH and
bills the TH its SAC of $35,000.
Comment: Some commenters provided feedback regarding ``imported''
organs, or organs one OPO receives from another OPO or from a
transplant hospital. A commenter noted that when an OPO receives an
organ from another OPO, the receiving OPO must pay the procuring OPO's
SAC, but then only charge the TH its own SAC, regardless of whether the
amount is higher or lower than the procuring OPO's SAC. The commenter
opined that given the revised allocation methodologies now in use,
there has been a dramatic increase in the number of organs exchanged
between OPOs. Other commenters noted increased costs, such as
transportation, due to the new allocation methodologies. A few
commenters requested that an OPO's SAC for any imported organ (renal or
non-renal) incorporate the cost of the imported organ to ensure that
the OPO can bill the transplant hospital an amount sufficient to fully
recoup the costs incurred for procuring the imported organ from another
OPO. A commenter requested that CMS clarify whether OPOs will need to
administratively handle all imported organs coming into the servicing
OPO's area. By ``administratively handle,'' it seems the commenter
refers to the OPO's arrangement for the acquisition, preservation and
transportation of donated organs, and procedures to obtain payment for
organs provided to transplant hospitals.
[[Page 73479]]
Response: The costs of ``imported'' organs are recorded as organ
acquisition costs, in accordance with the finalized rule at Sec.
413.402(b)(9), since these are the costs of organs acquired from other
hospitals or OPOs. If these costs are incorporated into the OPOs' SACs,
the OPO should be able to recoup its costs for imported organs
transplanted into Medicare beneficiaries. The MAC calculates the IOPO's
kidney SAC based on its actual costs from the prior year. However, the
IOPO can ask the MAC to adjust its kidney SAC during the year if it can
support a change in the cost basis, such as might occur if the OPO has
an increased amount of imported organ costs.
Likewise, because the IOPO develops its own SACs for non-renal
organs by estimating its expected costs for the coming year, it can
include the estimated cost of non-renal organs received from another
OPO or TH in its expected acquisition costs when developing its non-
renal SACs. We are clarifying that similar to our policy for IOPO
kidney SACs, if an IOPO experiences cost changes, the IOPO is permitted
to adjust the non-renal SAC amount during the year if it can support a
change in the cost basis. Therefore, we are modifying the proposed
regulation at Sec. 413.404(c)(1) to add paragraph (iii) to state that
an IOPO may adjust its non-renal SACs during the year if necessary to
account for cost changes.
Finally, we are clarifying that our proposals did not make
pronouncements as to whether an OPO is required to administratively
process all imported organs coming into its servicing area. OPOs are
required to administratively process organs pursuant to the allocation
methodologies set forth by HRSA.
Comment: A commenter noted that there is no comparable
reconciliation for non-renal organs procured by OPOs as there is for
kidneys. The commenter stated that the only way a divergence of SAC-
based revenue and actual costs is recognized is through the following
year's estimated SAC, and was concerned that continuation of this
policy may result in fewer non-renal organs being made available for
transplant. The commenter suggested CMS consider the policy further
before codifying in the Code of Federal Regulations.
Response: We appreciate this comment, and agree that there is not
currently a reconciliation for non-renal organs procured by OPOs as
occurs with kidneys. Requiring reconciliation of non-renal organs could
ensure that Medicare reasonable cost principles are followed, and may
support non-renal organ transplantation. We did not propose to
reconcile non-renal organs procured by OPOs; however, we will review
this further and consider addressing in future rulemaking.
Comment: A commenter stated that several OPOs charge a SAC fee with
add-ons to their non-renal SAC amounts, such as additional surgeon
fees, transportation, or other extra costs. The same commenter opined
that some non-renal SACs are over-inflated and questioned if the MACs
could approve and publish the non-renal SACs. This commenter noted that
with limited regulations, these issues could only be referred to the
Office of Inspector General (OIG).
A different commenter provided an example where a transplant
hospital may only receive $20,000 from the OPO for services to maintain
the cadaveric donor when an OPO harvests two lungs, two kidneys and a
heart; however, the OPO charges the hospital $70,000 for one kidney.
Two commenters noted that transplant hospitals are sometimes paid by
OPOs an amount far less than what their SAC payment at cost would
warrant. A commenter opined that under current policy, the OPO
underpayment does not negatively impact transplant hospitals because
transplant hospitals must offset 100 percent of the revenue received
from OPOs from allowable organ acquisition costs on the Medicare cost
report. This commenter added that a transplant hospital could forego
all payments from the OPO and would remain whole through its Medicare
cost report filing.
Response: Our final regulation at Sec. 413.404(a)(3) would require
that an IOPO that furnishes an organ to a TH bill the TH its IOPO SAC.
Billing amounts in addition to the SAC would be inappropriate as the
SAC is developed by incorporating all the allowable costs of procuring
an organ, and is an average charge rather than the actual cost of a
particular procurement. As such, there should be no billing of the SAC
plus additional amounts, nor any need to do so. As noted in a previous
comment response in this section, if an IOPO experiences increased
costs that the current SAC is not covering, the IOPO can ask its MAC to
adjust its kidney SAC as specified in proposed Sec. 413.404(c)(2)(iv),
or the IOPO can adjust its non-renal SAC amounts if needed due to cost
changes.
Additionally, an OPO is required under 42 U.S.C. 273(b)(1)(B) to
have accounting and other fiscal procedures (as specified by the
Secretary) necessary to assure the fiscal stability of the
organization. These fiscal procedures could include carefully
estimating costs for the upcoming year when developing its non-renal
SAC, so that the non-renal SAC is an average charge sufficient to cover
procurement costs of non-renal organs. The SAC should be a reasonable
estimate of average costs rather than an inflated estimate of average
costs.
We believe codifying organ acquisition payment policies as we are
doing in the regulation text is a step towards making our policies
clearer to all stakeholders and to increasing compliance. If a MAC
identifies systemic issues such as inappropriate or abusive fiscal
procedures by OPOs, it can and should refer those OPOs to the OIG. We
appreciate this comment about inflated SAC amounts and oversight of
non-renal SACs, and are considering options for future rulemaking to
strengthen policies where needed to ensure that organ acquisition costs
are paid on a reasonable cost basis, and that inappropriate fiscal
procedures do not impede organ procurement or transplantation.
The commenter's example appears to be a situation where a
transplant hospital provided services to a cadaveric donor, but did not
procure the organs; in the example, the OPO arranged for the
procurement. As such, it would not be appropriate for the TH to bill
the OPO its SAC, as the TH is not procuring the organ. This is
discussed further in section II.C.2.l. of this final rule with comment
period pertaining to donor community hospitals and transplant hospitals
that incur costs for providing services to a cadaveric donor, as
authorized by the OPO so that an OPO can arrange for organ procurement.
In the situation where a transplant hospital actually procures the
organs and furnishes them to an IOPO, in accordance with the policy
finalized at Sec. 413.404(a), the transplant hospital should bill its
appropriate organ-specific SAC(s) to the IOPO, and the IOPO should pay
the TH the billed SAC amount(s).
Finally, if a TH were to forego all payments from an OPO for the
services the TH provides, it could affect the hospital's cash flow and
could affect the OPO's year-end reconciliation of kidney acquisition
costs. However, we agree with the comment that THs must offset their
acquisition costs by the revenue received from OPOs, and that the
reconciliation process should ensure that THs remain whole.
Comment: A commenter supported our efforts to standardize the way
in which SACs for any organ are calculated. However, the commenter
cautioned that inclusion of certain extraordinary expenses in SACs
could result in inequitable allocation of costs
[[Page 73480]]
among providers, including Medicare, while being a possible barrier to
innovation. The commenter suggested those extraordinary expenses be
identified and segregated from the expenses included in the SAC. As an
example, the commenter stated that perfusion technologies, (i.e.
technologies that may be used to preserve, assess and in some cases
recondition organs prior to transplantation), which are new and
relatively expensive, have been costs historically borne by THs, but
now are costs first borne by OPOs and passed to the TH as a charge in
addition to the SAC. The commenter stated that requiring OPOs to
include these charges in their SAC may not be financially feasible for
the OPO, and may force the OPO to eliminate its offering of these new
technologies. Similarly, the commenter stated that revised allocation
methods result in organs traveling greater distances to recipients,
requiring OPOs to incur higher transportation expenses. If these costs
are included in the SAC, the commenter believes that communities with
higher rates of donation will bear an inequitable share of significant
transportation costs that should instead be charged directly to the
transplant hospitals incurring the cost. The commenter believed that if
OPOs are required to include all costs in the SAC, regardless of the
amount or frequency of the expense, doing so could result in an
inequitable yet material shift of expenses among providers and
suggested CMS act to avoid that outcome.
Response: We appreciate the commenter's support for our SAC
proposals. However, we do not believe that an IOPO's inclusion of
allowable procurement costs in its organ acquisition costs creates
inequities, including costs for expensive items such as innovations or
increased procurement-related travel. Costs that an IOPO incurs to
procure an organ should be recorded by the IOPO, which would allow them
to be included in the IOPO's organ-specific SAC amounts, pursuant to
Sec. Sec. 413.402 and 413.404. The SAC calculation spreads the IOPO's
total costs of procuring an organ over all the organs procured, as
described in the proposed regulation at Sec. 413.404(c). Organ
acquisition costs are passed on to the TH when the IOPO procures an
organ for the TH and bills the TH its organ-specific IOPO SAC. Our
payment system for organ procurement is designed to cover the costs of
organ acquisition on a reasonable cost basis, and we believe it
incentivizes innovation. Therefore, we are not adopting this
commenter's suggestion about excluding certain extraordinary expenses
from the SAC calculation. Finally, we note that the finalized
regulation at Sec. 413.404(a)(3) requires the IOPO to bill the TH its
SAC, not its SAC plus additional charges.
In summary, we are finalizing our proposals as proposed in Sec.
413.404 of subpart L, except for the following modifications and
clarifications:
In section II.C.2.b.(1). of this final rule, we modified
the proposed registry fees and the proposed transportation costs
covered as organ acquisition costs to provide expanded coverage of
these costs. To conform to these final changes, we modified the SAC
regulation text related to costs used to develop the living donor SAC
at Sec. 413.404(b)(3)(i)(D)(3) to refer to registry fees specified at
Sec. 413.402(b)(6), and at Sec. 413.404(b)(3)(i)(D)(8) to refer to
transportation costs of the excised organ as specified at Sec.
413.402(b)(8)(i). Similarly, we modified the SAC regulation text
related to costs used to develop the cadaveric donor SAC at Sec.
413.404(b)(3)(ii)(C)(2) to refer to transportation costs as specified
at Sec. 413.402(b)(8).
In Sec. 413.404(b)(3)(i)(D)(7) and Sec.
413.404(b)(3)(ii)(C)(5), to add the word `organ' to conform to the
final regulation text at Sec. 413.404(b)(5).
In Sec. 413.404(c)(1) to add paragraph (iii) to specify
that an IOPO may adjust its non-renal SACs during the year if necessary
to account for cost changes.
In Sec. 413.404(a)(2), we added `organ acquisition' to
more clearly specify the total costs.
In Sec. 413.404(b)(3)(i), we added `organ acquisition' to
more clearly specify the average cost; and in Sec.
413.404(b)(3)(i)(C)(1)(i), we added `organ acquisition' to more clearly
specify the reasonable and necessary costs.
In Sec. 413.404(a)(3), we removed the phrase `transplant
hospital' and clarified that when a TH/HOPO or IOPO furnishes an organ
to another TH/HOPO or IOPO, it bills its SAC to the TH/HOPO or IOPO
receiving the organs.
In Sec. 413.404(b)(2), we replaced `provides' with
`furnishes,' and corrected the acronym OPO to change it to IOPO.
In Sec. 413.404(b)(3)(i)(C)(1), we added `donor' to more
clearly specify the living SAC, and in Sec.
413.404(b)(3)(ii)(B)(2)(ii) we added `donor' to more clearly specify
cadaveric organs;.
In Sec. 413.404(b)(3)(i)(C)(2), we added `years' to more
clearly specify the subsequent living donor SAC, and in Sec.
413.404(b)(3)(ii)(B)(2) we added `years' to more clearly specify the
subsequent cadaveric donor SAC; in Sec. 413.404(b)(3)(i)(D)(5), to
clarify what special care services are we added a parenthetical phrase
that gives intensive care unit or critical care unit services as
examples of special care services.
Corrected grammatical errors in the regulation text, to
ensure that parallel structure exists, that singular pronouns describe
singular nouns, and that subjects and verbs agree.
d. Accounting for Outpatient Costs and Laboratory Services
In our proposed rule in section X.B.2.d. of the preamble of the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25662), we explained that
outpatient costs including pre-transplant evaluation service costs were
described for kidneys in ILs, as well as in the Medicare Claims
Processing Manual and in a CMS Change Request.\33\ After non-renal
organs were covered for transplantation through a CMS Ruling (for heart
transplants) and through NCDs (other non-renal organs),\34\ payment
policies were subsequently implemented through notice-and-comment
rulemaking.\35\
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\33\ Part A Intermediary Letter, July 01, 1973 No. 73-25 and
Part B Intermediary Letter, No. 73-22; July 1973; Medicare Claims
Processing Manual (IOM 100-04, chapter 3, section 90.1.1.A.
(available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf); and change request 6978, available
at (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R2008CP.pdf).
\34\ See CMS Ruling 87-1, April 1987; National Coverage
Determinations Manual, IOM 100-03, chapter 1, Part 4, section 260
(available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/ncd103c1_Part4.pdf).
\35\ 52 FR 33034, September 1, 1987 (heart); 55 FR 8545, March
8, 1990 and 56 FR 15013, April 12, 1991 (liver); 60 FR 6537,
February 2, 1995 (lung); 64 FR 41497, July 30, 1999 (pancreas); 66
FR 39828, August 1, 2001 (intestine, with reasonable cost coverage
of acquisition costs beginning October 1, 2001).
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(1) Outpatient Costs
Section 3102.A. of the PRM describes how to account for certain
hospital outpatient costs applicable to a potential organ transplant.
The TH's organ acquisition costs include donor and recipient work-ups
furnished prior to admission and costs of services rendered by interns
and residents not in an approved teaching program. These costs would
typically be billed to Medicare Part B. However, these costs are
predominantly cadaveric donor related, incurred without an identifiable
beneficiary, and are included in the TH's organ acquisition cost
center.
[[Page 73481]]
(2) Pre-transplant Evaluation and Laboratory Services
Section 3102.C. of the PRM specifies that pre-transplant evaluation
services for recipients and donors provided by the TH, including
laboratory services, are paid through the organ acquisition costs of
the TH. When pre-transplant laboratory tests are performed by the TH,
the TH accumulates these costs in its organ acquisition cost center.
The TH also includes the reasonable charges paid for physician tissue
typing services provided to living donors and recipients.
(3) Histocompatibility Laboratory Services
Histocompatibility laboratories are required by the statute at
section 1881(b)(2)(A) of the Act to be paid on a reasonable cost basis,
in accordance with section 1861(v) of the Act. Section 413.200 sets
forth the payment policy for services furnished by histocompatibility
laboratories in connection with kidney acquisition and transplantation.
When the laboratory services are performed by a histocompatibility
laboratory, the Medicare contractor establishes interim rates which are
used by the laboratory in billing a TH. The contractor disseminates
information on the interim rates to all THs, OPOs, and other
contractors, or posts the information on its website. The TH pays the
laboratory the approved interim rate. When the laboratory bills an OPO
for services, the OPO is responsible for paying the interim rate. The
contractor determines the final payment to the histocompatibility
laboratory for kidney-related transplant tests by reconciling interim
payments and reasonable costs during final settlement of the MCR. We
note that in section X.B.2.m.(6). of the preamble of the FY 2022 IPPS/
LTCH PPS proposed rule, we proposed to move revised text from Sec.
413.200(b) to Sec. 413.400, and Sec. 413.200(a), and (c) through (g),
to Sec. 413.420.
Comment: A commenter stated that our proposed rule gave no
consideration to the 50 separately certified freestanding
Histocompatibility Laboratories (HLA). The commenter stated that these
labs provide services to OPOs and Medicare-certified transplant centers
for patients in all phases of the transplant process and the
Coordination of Benefits process. The commenter stated there has been
no discussion of how Medicare utilization is determined for final
reimbursement nor has there been an analysis of the effect of the
proposed regulatory change on the payments to the free-standing
histocompatibility laboratories, and urged CMS to convene a working
group about this.
Response: We appreciate the work of HLAs, and believe that our
final policies for OPOs should not impact HLAs because OPOs and TH/
HOPOs will continue to pay HLAs an interim rate that is established by
the Medicare contractor for providing pre-transplant services. We did
not make any proposals related to HLA operations or payment and
appreciate the commenter's recommendation to convene a working group.
However, we will monitor the effects of this final rule with comment
period for any unintended consequences and consider changes impacting
HLAs in future rulemaking.
We are finalizing the policies as set forth in section X.B.2.d. of
the preamble of the FY 2022 IPPS/LTCH PPS proposed rule without any
changes.
e. Accounting for the Cost of Services Provided to Living Kidney Donors
Section 1881(d) of the Act sets forth Medicare coverage for living
kidney donors. Under section 1881(d) of the Act, any individual who
donates a kidney for transplant surgery shall be entitled to benefits
under parts A and B of Medicare with respect to such donation. The Act
requires that reimbursement for the reasonable expenses incurred by
such an individual with respect to a kidney donation shall be made
(without regard to the deductible, premium, and coinsurance
provisions), in such manner as may be prescribed by the Secretary in
regulations,\36\ for all reasonable preparatory, operation, and post-
operation recovery expenses associated with such donation. It further
provides that payments for post-operation recovery expenses shall be
limited to the actual period of recovery. Medicare's coverage is
limited to those donor expenses that are incurred directly in
connection with the kidney donation.
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\36\ 42 CFR 409.18, 42 CFR 409.89 (Part A); 42 CFR 410.55, 42
CFR 410.163 (Part B).
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(1) Hospital Services to a Living Kidney Donor
When a living donor receives hospital outpatient services (before
admission for excising the donor kidney) for a medical evaluation in
anticipation of a kidney donation, costs of all hospital services
applicable to medical evaluation are considered kidney acquisition
costs. When the living donor subsequently enters the hospital for the
actual excision, the hospital costs of services rendered to the donor
will continue to be treated as kidney acquisition costs under Part
A.\37\
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\37\ 42 CFR 409.18.
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The donor of a kidney for a Medicare transplant is covered for an
unlimited number of days of inpatient care in connection with the organ
removal operation. Days of inpatient hospital care used by the donor in
connection with the organ removal operation are not charged against
either party's utilization record.
Comment: A commenter objected to our use of ``admitted'' to
describe a living kidney donor who receives a medical evaluation at the
hospital in anticipation of kidney donation. The commenter stated that
these pre-donation evaluations occur on an outpatient basis, therefore
the patient is not ``admitted.''
Response: We agree with this commenter, and have revised the
language in this and in the following subsection accordingly.
(2) Physician Services to a Living Kidney Donor
When a living donor receives hospital outpatient services (before
admission for excising the donor kidney) for a medical evaluation in
anticipation of a kidney donation, costs of all physicians' services
applicable to medical evaluation are considered kidney acquisition
costs. When a living donor is admitted to a hospital for the kidney
excision, physician services are no longer considered kidney
acquisition costs and are not reimbursable under Part A. Under the
Medicare Physician Fee Schedule, surgical excision of living donor
kidneys is included in the global surgery policy, with a reasonable
post-surgical follow-up defined as 90 days.\38\ This standard 90-day
post-operative period includes all services by the primary surgeon
during this period unless the service is for a condition or issue
unrelated to the diagnosis for which the surgery is performed or is for
an added course of treatment other than normal recovery from the
surgery. During the donor's inpatient stay for the excision surgery and
during any subsequent donor inpatient stays resulting from a direct
complication of the organ donation, physician services are billed under
Part B. They are billed in the normal manner but under the recipient's
MBI at 100 percent of the fee
[[Page 73482]]
schedule,\39\ with no deductible or coinsurance.\40\
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\38\ See Addendum B in 59 FR 63515, for CPT code 50320, which is
for living donor kidney excision.
\39\ 42 CFR 410.55 and 410.163.
\40\ 42 CFR 410.55 and 410.163. See also the kidney policy for
living donors, which is described in the Medicare Benefit Policy
Manual 100-02, chapter 11, section 140.5, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf and billing instructions in the Medicare Claims
Processing Manual 100-04, chapter 3, section 90.1.1.F. and G.,
available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c03.pdf.
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(3) Living Kidney Donor Follow-Up
Costs incurred by the TH for routine kidney donor follow-up care
are included in the TH's organ acquisition cost center. For routine
follow-up care, the period of postoperative recovery ceases when the
donor no longer exhibits symptoms related to the kidney donation.
Beyond the 90-day global payment period, routine follow-up services are
billed to Part B using the recipient's MBI. Routine follow-up services
billed to Medicare by a physician other than the operating physician
for up to 3 months following donation surgery must be billed using the
recipient's MBI. The Medicare Administrative Contractor will review
claims for services rendered more than 3 months after kidney donation
surgery. Medicare may cover routine follow-up examinations up to 6
months after the kidney donation to monitor for possible complications.
In all of these situations, the kidney donor is not responsible for co-
insurance or deductible amounts.\41\
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\41\ 42 CFR 410.163.
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The OPTN collects follow-up data at 6 months, 12 months, and 24
months post-donation.\42\ Routine clinical visits to comply with the
OPTN follow-up data collection are not allowable nor reportable as
organ acquisition costs on the MCR and cannot be billed to Medicare.
These follow-up visits are intended as a precautionary measure to
provide proactive assessment of the organ function of a living donor in
the near-term following removal of an organ intended for transplant.
However, medical services for a living kidney donor who experiences a
complication directly related to the kidney donation procedure can be
billed under the Medicare transplant recipient's MBI. Also, as
described in section II.C.2.e.(4) of this final rule with comment
period, hospital services for a living non-renal organ donor who
experiences complications directly related to the non-renal organ
donation must be reported on the Medicare cost report as organ
acquisition costs.
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\42\ Information from https://optn.transplant.hrsa.gov/resources/guidance/procedures-to-collect-post-donation-follow-up-data-from-living-donors/, accessed on March 16, 2021.
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Comment: Several commenters interpreted our proposal as eliminating
payments for living donor follow-up. A commenter requested that CMS
clarify that the 90-day reference is for physician services and that
there is no specified time limit for hospital services to be considered
allowable organ acquisition for routine living donor follow-up. Several
commenters disagreed with our assertion that the living donor follow-up
visits required by the OPTN were not for meeting the medical needs of
the donor, and requested that CMS allow these costs.
Response: We greatly appreciate living donors and their altruistic
decision on behalf of another person. Given the confusion on our policy
that was made clear in comments, we wish to clarify that payments for
living donor follow-up are not being eliminated, and reiterate that we
did not propose any changes to our existing policies related to living
donor follow-up visits. We are also clarifying that our reference to
the 90-day global payment period is referring to the surgeon's follow-
up period after surgery; Medicare may cover routine follow-up
examinations up to 6 months after the kidney donation to monitor for
possible complications. Finally, we continue to believe that the OPTN-
required living donor follow-up data collection is not primarily
focused on the medical needs of individual living donors and that this
data collection is primarily for collecting longer term data on the
effects of living donation. While we appreciate that this data
collection may benefit future living donors, we are continuing our
existing policy that Medicare does not cover or pay for this OPTN-
required data collection.
(4) Provisions Related to Living Donor Complications
In section X.B.2.e.(4). of the preamble of the FY 2022 IPPS/LTCH
PPS proposed rule, we stated that living kidney donor complications
related to the surgery to remove a kidney, which occur after the date
of discharge, are not considered kidney acquisition costs. Living
kidney donor complications are statutorily authorized to be paid under
Part A or Part B in section 1881(d) of the Act, with no liability for
deductibles or coinsurance.\43\ Under 42 CFR 409.18, Medicare covers
costs incurred for living kidney donor complications only if they are
directly related to the kidney donation. Rather than being paid as
kidney acquisition costs, costs incurred for complications arising
after the kidney donor's discharge date are billed under the Medicare
transplant recipient's MBI, including facility costs and physician
services. The contractor reviews costs for kidney donor complications
billed under the transplant recipient's MBI. We proposed to codify this
longstanding policy by adding 42 CFR 413.402(c) to new subpart L.
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\43\ Section 1881(d) of the Act; 42 CFR 409.18, 409.89 for Part
A costs; 42 CFR 410.55 and 410.163 for Part B costs.
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Comment: A commenter was concerned that CMS is narrowing the
definition of complications by underscoring in proposed Sec.
413.402(c)(2) the requirement that any complications be directly
attributable to a kidney donation. The commenter did not find a
specific basis for such a narrow scope in section 1881(d) of the Act.
The commenter stated that the language in Sec. 413.402(c) could be
confusing as proposed paragraph (c)(1) notes that certain complications
post-discharge are not kidney acquisition costs, which could have a
``chilling effect.'' The commenter suggested CMS change ``directly
attributable'' to ``reasonably related.''
Response: We proposed to codify the existing policy for living
kidney donor complications in accordance with our statutory authority
section 1881(d) of the Act. Section 1881(d) of the Act entitles an
individual who donates a kidney for transplant surgery to Medicare
benefits under parts A and B, for all reasonable preparatory,
operation, and post-operation recovery expenses, limited to the actual
period of recovery, associated with such donation. Prior to the
enactment of section 1881 of the Act, Medicare covered post donation
complications for living kidney donors, as outlined in the IL 74-23.
Regarding the commenter's opposition to our using the phrase
``directly attributable'' in the regulation text, we are changing the
language in the final regulation at Sec. 413.402(c)(1) to replace
``directly attributable'' with ``directly related'' to match the
language used in 42 CFR 409.18(b), which specifies that Medicare pays
for postoperative recovery services directly related to the kidney
donation. We disagree with the commenter that there is no specific
basis for such a narrow scope in section 1881(d) of the Act, as we do
not believe that our original language or this revised language is a
stricter policy than that permitted by the statutory language, and note
that the statute explicitly permits the Secretary to define how
reimbursement occurs for the reasonable expenses incurred by a
[[Page 73483]]
living donor with respect to a kidney donation in regulations.
We believe our proposed regulation text at Sec. 413.402(c)(1) that
living kidney donor complications are not considered organ acquisition
costs, was unclear and was misunderstood. Living kidney donor
complications are organ acquisition costs, but they are not reported on
the cost report or paid through the cost report as organ acquisition
costs, because of the statutory authority in section 1881(d) of the
Act. Instead, the costs of living kidney donor complications are
billable under Medicare Part A and B using the Medicare kidney
transplant recipient's MBI as established by regulations. The costs and
charges associated with the living kidney donor complications are
reported on the cost report as normal patient care expenses and not
organ acquisition costs or charges. Payment is made through the claims
processing system. Therefore, we make a distinction about covered organ
acquisition costs that are paid through the Medicare cost report as
organ acquisition costs. To make this distinction clearer, we are
removing language that living kidney donor complications are not
considered kidney acquisition costs from the proposed regulation text
at Sec. 413.402(c)(1), and specifying that costs of living kidney
donor complications must not be reported as kidney acquisition costs on
the Medicare cost report.
Comment: Several commenters were concerned that CMS' proposed
codification of the payment policy for living kidney donor
complications only focused on kidneys and did not address living donor
complications associated with non-renal organs. Commenters noted that
our proposed language generally followed the language in PRM 15-1,
Sec. 3105.B, but changed the word ``organ'' to ``kidney.'' Commenters
requested that CMS affirm that it will continue covering post-discharge
complications related to living organ donation for all organs furnished
to Medicare beneficiaries. Commenters stated that the policy given in
PRM 15-1 Sec. 3105 is not specific to kidney and that if coverage of
living donor complications for non-renal organs were to cease, it could
limit the availability of living donor non-renal organs.
Response: We appreciate this comment and believe that covering
living donor complications for all organs, renal and non-renal, more
strongly supports living organ donation. As discussed in a previous
comment response, we have explicit statutory authority to cover living
kidney donor complications in accordance with section 1881(d) of the
Act. Living kidney donor complications are separately billable under
Medicare Part A and B using the Medicare kidney transplant recipient's
MBI. The payment for living kidney donor complications is made through
the claims processing system, and living kidney donor complications are
not reported as kidney acquisition costs on the cost report.
While we do not have a similar statutory authority to pay for
living non-renal donor complications in the same manner, we do consider
the hospital costs related to living non-renal donor complications to
be organ acquisition costs. We recognize that there was a change to our
policy manuals that resulted in this confusion on how to bill, report,
or obtain payment for living non-renal donor complications.
Therefore, we are clarifying that certain costs for living non-
renal donor complications are included in organ acquisition costs when
the living non-renal donor complication is directly related to the
living non-renal organ donation. These hospital costs for living non-
renal donor complications are not separately billable to Medicare using
the recipient's MBI, but must be reported and paid through the
hospital's MCR as organ acquisition costs. We believe these
clarifications in response to comments will expand our proposed
codification to cover both living kidney donor complications and
hospital costs related to living non-renal donor complications, but
through different reporting and payment mechanisms.
In response to public comments, we are modifying our proposal to
codify living kidney donor complications and based on comments received
to clarify appropriate billing, reporting and payment under Sec.
413.402(c)(1) to specify that living kidney donor complications
directly related to the kidney donation, which occur after the date of
the donor's discharge, must not be reported as kidney acquisition costs
on the Medicare cost report. We are also codifying our proposals under
Sec. 413.402(c)(1)(A) to specify that Medicare covers reasonable costs
incurred for living kidney donor complications only if they are
directly related to a kidney donation for a covered transplant into a
Medicare beneficiary and Sec. 413.402(c)(1)(B) to specify that living
kidney donor complications are paid through the claims processing
system under Medicare Part A or Part B, as applicable for the services
provided, with no donor liability for deductibles or coinsurance.
Living kidney donor complications are billed under the MBI of the
transplant recipient.
Based on comments received, we are also codifying a provision for
living non-renal donor complications under Sec. 413.402(c)(2) to
specify that hospital costs incurred for living non-renal donor
complications directly related to the non-renal organ donation, which
occur after the date of the donor's discharge, are not paid through the
claims processing system but are reported as organ acquisition costs on
the hospital's Medicare cost report. In response to comments, we are
also codifying under Sec. 413.402(c)(2)(A) to specify that Medicare
covers reasonable hospital costs incurred for living non-renal organ
donor complications only if they are directly related to a non-renal
organ donation for a covered transplant into a Medicare beneficiary and
Sec. 413.402(c)(2)(B) to specify that hospital costs incurred for
living non-renal organ donor complications are reported as organ
acquisition costs on the hospital's Medicare cost report, and paid
through the cost report on a reasonable cost basis.
We believe that finalizing these modifications to our proposed
regulation text at Sec. 413.402(c) is responsive to commenters,
clarifies the regulations, and supports living organ donation.
Comment: Commenters were also concerned that CMS did not specify an
effective date and thus perceived the proposal to be effective
retroactively. Commenters requested that CMS clarify that these
policies are effective October 1, 2021.
Response: As discussed previously, the proposals being finalized in
section II.C.2. of this final rule with comment period are effective
for cost reporting periods beginning on or after the effective date of
this final rule with comment period, unless otherwise specified. None
of our proposals were proposed to be retroactive except for the
codification of two statutory provisions, which were effective in
accordance with their statutory effective dates and which are discussed
in a response in section II.C.2.b.(1). of this final rule with comment
period. We are finalizing our proposals in section II.C.2.e. of this
final rule with comment period with modifications, effective for cost
reporting periods beginning on or after the effective date of this
final rule with comment period.
f. Accounting for the Cost of Services Provided to Transplant
Recipients
Certain costs related to organ transplant recipients are not organ
acquisition costs, but instead are billed
[[Page 73484]]
under Part B to the transplant recipient's MBI. These costs include
standard backbench preparation services; physician services for the
surgeon who performs the transplant (and sometimes performs other
surgical procedures at the time of the transplant) and provides 90 days
of post-operative surgical care; \44\ and/or immunosuppressant therapy
management; and recipient laboratory services which occur after
discharge from the hospital. See the Medicare Claims Processing Manual,
IOM 100-04, chapter 12, sections 30.6.3, 40.1, and 40.4 for more
details on these services.\45\
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\44\ See Addendum B in 59 FR 63516, for CPT codes 50360 and
50365 for kidney transplantation.
\45\ Available online at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c12.pdf.
---------------------------------------------------------------------------
We received no comments on this section.
g. Codification of Statutory Provisions Related to Pancreata Used for
Pancreatic Islet Cell Transplants
Our longstanding policies related to pancreata used for pancreatic
islet cell transplants were discussed in our proposed rule. Section 733
of the Medicare Prescription Drug, Improvement and Modernization Act of
2003 \46\ (MMA) requires Medicare to pay for items and services that
are reasonable and necessary routine patient care costs related to
acquisition on or after October 1, 2004, and delivery of pancreatic
islet cells for transplantation into Medicare beneficiaries
participating in a National Institute of Diabetes and Digestive and
Kidney Diseases clinical trial of islet cell transplants. The pancreata
procured for islet cell transplants require the same quality and care
to procure as pancreata procured for solid organ transplants.
Therefore, as described in section II.C.2.a.(2). of this final rule
with comment period, we are defining for organ acquisition payment
purposes, pancreata, procured on or after October 1, 2004, for the
purpose of acquiring pancreatic islet cells for transplantation into
individuals who are participating in a National Institute of Diabetes
and Digestive and Kidney Diseases clinical trial, to be an organ.
Accordingly, pancreata procured for islet cell transplants are treated
as solid organs for procurement purposes, and pancreata procured for
covered islet cell transplants must be assigned a full standard
acquisition charge. We proposed to codify this policy by adding Sec.
413.406 in part 413, new subpart L, in accordance with the statute.
There are other clinical trials of islet cell transplants that are not
funded by the National Institute of Diabetes and Digestive and Kidney
Diseases, but section 733 of the MMA does not authorize Medicare
coverage for those trials under title XVIII of the Act.
---------------------------------------------------------------------------
\46\ Section 733 of the Medicare Prescription Drug, Improvement
and Modernization Act of 2003 (Pub. L. 108-173); 42 U.S.C. 1395l.
---------------------------------------------------------------------------
We received no comments on this section, and are finalizing this
rule as proposed, with clarifying modifications to add the statutory
effective date (for pancreata procured on or after October 1, 2004) to
the regulation text at Sec. 413.406(a). We are also adding language to
Sec. 413.406(b) to clarify that pancreata procured under paragraph (a)
of Sec. 413.406, for covered islet cell transplants, must be assigned
a full standard acquisition charge and be treated as solid organs for
procurement purposes.
h. Calculation of Medicare's Share of Organ Acquisition Costs, Counting
of Organs
(1) General
Medicare currently calculates its share of organ acquisition costs
for THs/HOPOs by multiplying the total allowable organ acquisition
costs by the ratio of Medicare usable organs (the numerator) to total
usable organs (the denominator) reported on the Medicare hospital cost
report.\47\ To ensure that a TH/HOPO's organ acquisition costs are
accurately allocated to the Medicare Program, THs/HOPOs must accurately
count and report Medicare usable organs and total usable organs on
their MCRs.
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\47\ CMS Pub. 15-2, chapter 40, section 4028.
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For IOPOs, Medicare currently calculates its share of kidney
acquisition costs by multiplying the total allowable kidney acquisition
costs by the ratio of Medicare usable kidneys (the numerator) to total
usable kidneys (the denominator) reported on the Medicare IOPO cost
report.\48\ Similarly, IOPOs must accurately count and report on their
MCRs the number of kidneys they procure and furnish to THs or other
OPOs, to ensure that kidney acquisition costs are accurately allocated
to the Medicare Program.
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\48\ CMS Pub. 15-2, chapter 33, section 3312.
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(2) Medicare Usable Organs, Total Usable Organs, Medicare Usable
Kidneys, and Total Usable Kidneys
Currently, Medicare reimburses THs/HOPOs for their reasonable costs
incurred to acquire ``Medicare usable organs.'' For Medicare to
calculate its share of organ acquisition costs, currently the THs/HOPOs
must include the following as Medicare usable organs: \49\ (1) Organs
transplanted into Medicare beneficiaries; (2) organs transplanted into
Medicare beneficiaries that were partially paid by a primary insurance
payor in addition to Medicare; (3) organs furnished to other THs or
IOPOs; (4) kidneys transplanted into Medicare Advantage (MA)
beneficiaries for dates of service on or after January 1, 2021; \50\
(5) kidneys furnished to United States military renal transplant
centers (MRTCs) with a reciprocal sharing agreement with the HOPO in
effect prior to March 3, 1988, and approved by the contractor; and (6)
pancreata procured on or after October 1, 2004, for the purpose of
acquiring pancreatic islet cells for transplantation into Medicare
beneficiaries participating in a National Institute of Diabetes and
Digestive and Kidney Diseases clinical trial in accordance with section
733 of the MMA, as discussed in section II.C.2.g. of this final rule
with comment period.\51\ (For counting purposes, the TH/HOPO does not
count pancreata procured for islet cell transplant as a solid organ,
but counts the number of Medicare beneficiaries who received these
islet cell injections as the proxy for Medicare usable organs. For
example, if a TH/HOPO procured pancreata for islet cell transplant and
injected these islet cells into three Medicare beneficiaries and four
non-Medicare patients during its cost reporting period, the TH/HOPO
enters three in the Medicare usable organ count, and seven in the total
usable organ count, on its Medicare hospital cost report.)
---------------------------------------------------------------------------
\49\ In accordance with PRM Sec. 3115.A. and CMS Pub. 15-2,
chapter 40, section 4028.3.
\50\ Section 17006 of the 21st Century Cures Act, (Pub. L. 114-
255). Section 17006(c) of the Cures Act amended section
1852(a)(1)(B)(i) of the Act to exclude coverage for organ
acquisitions for kidney transplants from the Medicare benefits an MA
plan is required to cover for an MA enrollee, including as covered
under section 1881(d) of the Act. Effective January 1, 2021, these
costs will be covered under the original Medicare FFS program. The
MA kidney transplants will be included in the numerator and
denominator on the MCR to determine Medicare's share of kidney
acquisition costs. (85 FR 33796, 33824, June 2, 2020).
\51\ Section 733 of the Medicare Prescription Drug, Improvement
and Modernization Act of 2003 (Pub. L. 108-173)); 42 U.S.C. 1395l.
---------------------------------------------------------------------------
In our proposed rule, we stated that Medicare does not intend to
share in the cost of acquiring organs not transplanted into Medicare
beneficiaries (except those organs designated for transplant but
subsequently determined to be unusable). To calculate Medicare's share,
organs not transplanted into Medicare beneficiaries must be counted as
total usable organs in the denominator of the fraction of Medicare
usable organs to total usable organs.
[[Page 73485]]
THs/HOPOs must include the following as total usable organs: (1)
Medicare usable organs; (2) organs excised with the intention to be
used for research; (3) organs excised and either transplanted or
furnished to other THs or OPOs; (4) organs obtained from another OPO or
transplant hospital and either transplanted or furnished to other THs
or OPOs; (5) organs furnished to veterans' hospitals or organs sent
outside the United States under 42 CFR 413.203; (6) organs transplanted
into non-Medicare beneficiaries, under Sec. 413.203; (7) organs for
which the transplant was totally or partially paid by primary insurance
other than Medicare; (8) organs for which the transplant was covered by
a MA plan for dates of service prior to January 1, 2021; (9) kidneys
furnished to United States MRTCs with or without a contractor-approved
reciprocal sharing agreement with the HOPO in effect prior to March 3,
1988; and (10) pancreata procured on or after October 1, 2004, for the
purpose of acquiring pancreatic islet cells for transplantation into
participants in a National Institute of Diabetes and Digestive and
Kidney Diseases clinical trial in accordance with the MMA,\52\ as
discussed in section II.C.2.g. of this final rule with comment period.
---------------------------------------------------------------------------
\52\ Id.
---------------------------------------------------------------------------
Medicare also currently reimburses IOPOs for their reasonable costs
incurred to procure ``Medicare kidneys.'' Organ acquisition costs are
not paid directly by Medicare to an IOPO. The IOPO is reimbursed for
its services by the TH, subject to later reconciliation by Medicare for
kidneys. Medicare currently calculates its share of kidney acquisition
costs by multiplying the total allowable kidney acquisition costs by
the ratio of Medicare usable kidneys (the numerator) to total usable
kidneys (the denominator) reported on the Medicare IOPO cost report.
For Medicare to calculate its share of Medicare kidney acquisition
costs, the IOPO must include the following as Medicare kidneys: (1)
Kidneys furnished to THs; (2) kidneys furnished to OPOs; and (3)
kidneys furnished to United States MRTCs with a reciprocal sharing
agreement with the IOPO in effect prior to March 3, 1988, and approved
by the contractor. Medicare kidneys do not include kidneys furnished to
VA hospitals, military hospitals, or kidneys furnished to foreign
countries or transplanted into non-Medicare beneficiaries, in
accordance with 42 CFR 413.202.
IOPOs must also count total usable kidneys in the denominator of
the fraction of Medicare usable kidneys to total usable kidneys. IOPOs
must include the following in total usable kidneys: (1) Medicare usable
kidneys; (2) kidneys procured with the intention to be used for
research; (3) kidneys procured and furnished to other THs or OPOs; (4)
kidneys procured from another OPO or transplant hospital and either
transplanted or furnished to other THs or OPOs; (5) kidneys furnished
to veterans' hospitals or organs sent outside the United States in
accordance with 42 CFR 413.203; (6) kidneys for which the transplant
was covered by a MA plan for dates of service prior to January 1, 2021;
and (7) kidneys furnished to United States MRTCs with or without a
contractor-approved reciprocal sharing agreement with the IOPO in
effect prior to March 3, 1988. Currently, organs excised by THs/HOPOs
that are furnished to other THs or IOPOs, or kidneys furnished to MRTCs
under an approved reciprocal sharing agreement in effect prior to March
3, 1988, are presumed to be transplanted into Medicare beneficiaries,
even if they are not. Similarly, some kidneys that an IOPO procures and
furnishes to other IOPOs, THs, or MRTCs under an approved reciprocal
sharing agreement in effect prior to March 3, 1988, are presumed to be
transplanted into Medicare beneficiaries, even if they are not. These
categories do not have a distinction to determine whether the organs
are actually transplanted into Medicare beneficiaries. In this regard,
Medicare organ acquisition payment policy includes the presumption that
some organs are transplanted into Medicare beneficiaries, despite the
category name that suggests organs and kidneys are transplanted into
Medicare beneficiaries: ``Medicare usable organs'' or ``Medicare
kidneys.'' As a result, through unintended consequences, Medicare
currently shares in the organ acquisition costs for some organs that
are not actually transplanted into Medicare beneficiaries.
When Medicare added the ESRD benefit to Medicare coverage in 1972,
Medicare presumed that most kidney transplant recipients would be
Medicare beneficiaries receiving the ESRD benefit, and thus Medicare
would pay a larger share of kidney acquisition costs.\53\ As Medicare
added benefits for transplantation of non-renal organs and included the
costs to procure non-renal organs, Medicare cost reporting instructions
incorporated the presumption that the ultimate transplant recipient was
unknown, but likely a Medicare beneficiary. Thus, when a TH furnishes
an organ to another TH or to an OPO, or when an OPO furnishes an organ
to another OPO or TH, Medicare assumed that some of the unknown
transplant recipients are Medicare beneficiaries, and permits those
organs to be counted as Medicare usable organs in the numerator of the
fraction for Medicare usable organs to total usable organs, to be
assured that Medicare is paying its share of organ acquisition costs.
---------------------------------------------------------------------------
\53\ Intermediary Letter 73-25 (July 1973) and 54 FR 5619,
February 6, 1989.
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However, Medicare declared its intention and a methodology to
calculate its share of acquisition costs, for kidneys transplanted into
Medicare beneficiaries only, in a 1978 Federal Register final rule with
comment.\54\ Specifically, for each kidney transplant performed on a
Medicare beneficiary, the transplanting hospital shall receive a
prescribed amount of reimbursement from Medicare for the pre-
transplantation services of an OPA [organ procurement organization] or
laboratory having such an agreement. The 1978 final rule set forth that
an OPO's cost report must provide a complete accounting of the cost
incurred by the agency or laboratory in providing covered services, the
total number of Medicare beneficiaries for whom services were furnished
by the agency or laboratory, and any other necessary data to enable the
intermediary to determine the reasonable cost of covered services to
Medicare beneficiaries. [Emphasis added.] Additionally, if the
intermediary determines that the interim rate payments exceeded the
reasonable cost of the services furnished, then the OPA or
histocompatibility laboratory must pay the excess amount per Medicare
patient to the intermediary. [Emphasis added.] These multiple
declarations in the 1978 final rule establish Medicare's intention to
pay for kidney acquisition costs incurred for kidneys transplanted into
Medicare beneficiaries and were originally codified at 42 CFR 405.436
and later moved to 42 CFR 413.178 (currently reserved).
---------------------------------------------------------------------------
\54\ 43 FR 58370, December 14, 1978.
---------------------------------------------------------------------------
The longstanding policy that Medicare must only share in organ and
kidney acquisition costs for Medicare beneficiaries is also set forth
in 42 CFR 413.202 and 413.203. Section 413.202 requires OPOs to
separate from Medicare allowable costs, acquisition costs for procuring
kidneys furnished to foreign transplant centers and kidneys
transplanted in non-Medicare patients. Similarly, Sec. 413.203
requires THs to
[[Page 73486]]
separate from Medicare allowable costs, acquisition costs for procuring
organs furnished to foreign transplant centers and organs transplanted
in non-Medicare patients. In a 1988 proposed rule, CMS expressed belief
that allowing all kidneys to be counted as Medicare kidneys was not
aligned with anti-cross subsidization principles set forth in section
1861(v)(1)(A) of the Act. 53 FR 6672 at 6673 (March 2, 1988). CMS
stated that the Medicare Program has always paid the total costs of
OPAs [OPOs] because we assumed that all kidneys procured were for
Medicare beneficiaries. However, we now realize that this assumption is
incorrect and that technology has allowed a significant number of
kidneys to be shipped overseas. Since the Medicare Program has been
paying the cost of procuring kidneys shipped overseas or transplanted
into non-Medicare beneficiaries, we believe that some action needs to
be taken. We believe it is necessary to amend the regulations in order
to effectuate the statutory principles embodied in section
1861(v)(1)(A) of the Act. Section 1861(v)(1)(A) of the Act requires
that the cost of services be borne by the appropriate payor.
Accordingly, the cost associated with the kidneys not used by Medicare
beneficiaries must be borne by the responsible individual or third-
party payor. Medicare is precluded from paying any costs associated
with kidneys not used by Medicare beneficiaries. 53 FR 6672 at 6673
(March 2, 1988).
Medicare's decades-old presumption that most kidney transplant
recipients are Medicare beneficiaries was also applied to non-renal
organs because of the lack of organ tracking capabilities over the
years and has led Medicare to reimburse THs and OPOs for organ
acquisition costs for organs that were not actually transplanted into
Medicare beneficiaries. Similar to the beliefs expressed in the 1988
proposed rule, we believe that organ tracking capabilities allow
transplant hospitals and OPOs to discern organ recipients' health
insurance payor information so that organ acquisition costs can be more
appropriately assigned to the Medicare Program for organs transplanted
into Medicare beneficiaries. The Scientific Registry of Transplant
Recipients (SRTR) \55\ collects and maintains data from the OPTN that
identifies, among other things, transplant recipients and their health
insurance payors. Data obtained from SRTR show the percentage of
transplants where Medicare was the recipients' payor to all transplant
recipients' payors, by organ type. We compared the SRTR data for years
2017 and 2018, to the Medicare share ratio for Medicare usable organs
(including kidneys) to total usable organs, for 2017 and 2018. Table 1
reflects these data. In the majority of organ types, the SRTR
percentages of transplant recipients who were actual Medicare
beneficiaries were lower than the Medicare share percentages for those
same years. Although there is a difference in the calendar year data
from SRTR and the cost reporting fiscal year data from the MCR, these
data show that the majority of SRTR's percentage of Medicare transplant
recipients was less than the percentages of Medicare's share compared
to 2017 and 2018 submitted MCR data from the Worksheet D-4.
---------------------------------------------------------------------------
\55\ Section 373 of the Public Health Service (PHS) Act requires
the operation of Scientific Registry of Transplant Recipients (SRTR)
to support ongoing evaluation of the scientific and clinical status
of solid organ transplantation. The U.S. Congress passed the
National Organ Transplant Act (NOTA; Pub. L. 98-507) in 1984.
Table 1--Overall Organ-Specific Ratios, Medicare Share From Cost Report Data vs. SRTR Medicare Payor Ratio, 2017
and 2018 *
----------------------------------------------------------------------------------------------------------------
2017 Medicare 2018 Medicare
ratio (Medicare 2017 SRTR ratio of ratio (Medicare 2018 SRTR ratio of
Organ type usable organs/ actual transplants usable organs/ actual transplants
total usable with Medicare as total usable with Medicare as
organs) (%) payor (%) organs) (%) payor (%)
----------------------------------------------------------------------------------------------------------------
Kidney.......................... 68.2 58.9 67.8 58.6
Heart........................... 42.0 31.6 42.8 33.0
Liver........................... 39.1 28.4 38.6 29.2
Lung............................ 44.2 43.9 46.6 45.7
Pancreas........................ 61.6 49.1 58.0 45.8
Intestine....................... 18.1 14.7 14.9 15.4
----------------------------------------------------------------------------------------------------------------
* Scientific Registry of Transplant Recipients. Request for Information. Requested on 01/29/2021.
Data from the OPTN also show the percentage of organs transplanted
in 2018, by organ type, that were paid by Medicare, including Medicare
Fee-For-Service and Medicare Choice, and other non-Medicare payor
categories. These data are reflected in Table 2.
Table 2--Overall Organ-Specific Payor Ratios Including Non-Medicare Payors', From OPTN 2018 [supcaret]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Private Medicaid/CHIP Medicare Medicare FFS
Organ type (%) insurance (%) (%) Choice (%) (%) Other * (%) Total (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Kidney.................................................. 30.2 7.1 14.0 42.7 6.0 100.00
Liver................................................... 48.2 18.4 10.7 18.6 4.2 100.00
Pancreas................................................ 9.8 4.2 1.1 3.3 **81.6 100.00
Heart................................................... 44.7 18.2 15.0 17.9 4.1 100.00
Lung.................................................... 41.5 9.3 22.4 23.3 3.5 100.00
Intestine............................................... 40.4 37.5 7.7 7.7 6.7 100.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
[supcaret] Organ Procurement and Transplantation Network. Accessed on 09/13/2021.
Note: Combination transplants (heart/lung, kidney/pancreas) are included under each affected organ type.
* Other includes transplants covered by donations, foreign governments, free care, Veteran's Administration, other government, self-pay, or unknown.
[[Page 73487]]
** This percentage is due to 833 kidney/pancreas transplants that were in the OPTN database with ``unknown'' as the payor type.
We believe that the capability exists to track the location and
disposition of organs, from the time organs are excised from donors
until they are transplanted into recipients. Organ tracking capability
may allow THs and OPOs the ability to know the identity of all organ
transplant recipients and the donor from whom the recipient's
transplanted organ was excised. Knowing the identity of all organ
transplant recipients, and the donor from whom the recipient's
transplanted organ was excised, allows THs and OPOs the ability to also
know whether a transplant recipient is a Medicare beneficiary. OPTN
policy provides that OPOs use organ tracking capability,\56\ and some
THs also optionally use organ tracking capability. Per OPTN policies,
THs and OPOs report information to the OPTN on the identity of
transplant recipients and donors.\57\ Additionally, the OPTN data
collection forms show what data elements are currently being
collected.\58\ The Data System for Organ Procurement and
Transplantation Network,\59\ (OMB form No. 0915-0157, expiration August
31, 2023), collects the recipient's and payor's information for the
transplant. The identity of the recipient and the recipient's payor is
required to be reported. THs, histocompatibility laboratories, and
organ procurement organizations submit required information to the
OPTN's organ matching system that links all 57 OPOs, 254 THs and 150
histocompatibility labs to list patients for transplant, and matches
patients with available donor organs.\60\
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\56\ OPTN Policy 16, https://optn.transplant.hrsa.gov/media/1200/optn_policies.pdf.
\57\ OPTN Policy 18, https://optn.transplant.hrsa.gov/media/1200/optn_policies.pdf.
\58\ https://unos.org/data/data-collection/.
\59\ https://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0915-0157#.
\60\ https://optn.transplant.hrsa.gov/members/.
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By way of knowing the identity of the recipient, the providers can
further discern whether a recipient is a Medicare beneficiary by
contacting the recipient TH or OPO to discern such payor information.
Therefore, we believe it is possible for THs and OPOs to report, on
their respective MCRs, the number of organs and kidneys transplanted
into Medicare beneficiaries, eliminating the reason for Medicare organ
acquisition payment policy to presume that some organs and kidneys are
transplanted into Medicare beneficiaries, when they are not.
We believe it is necessary to update Medicare organ acquisition
payment policy to recognize organ tracking capabilities and the ability
for OPOs and THs/HOPOs to discern the identity of the recipient into
whom the excised organ is transplanted, and whether that recipient is a
Medicare beneficiary. Doing so will result in Medicare more accurately
paying its share of organ acquisition costs. We believe it is necessary
to require that THs and OPOs report on their cost reports only organs
and kidneys transplanted into Medicare beneficiaries as Medicare usable
organs and Medicare kidneys, respectively. Doing so will also help
safeguard the Medicare Trust Fund and ensure that Medicare
appropriately pays only its share of organ acquisition costs, and that
acquisition costs for organs not transplanted into Medicare
beneficiaries are not borne by Medicare. The Medicare reasonable cost
principles, upon which Medicare organ acquisition payment policy is
based, and the prohibition of cross-subsidization articulated in
section 1861(v) of the Act require the cost of services be borne by the
appropriate payor.
While all OPOs, and some THs, use an organ tracking capability, we
believe that THs that do not use an organ tracking capability can also
ascertain the exact recipient, and thus recipient's payor, when an
organ is excised in their hospital and furnished to another TH or OPO.
We understand that some THs that do not use an organ tracking
capability still track organs they furnish to other THs or OPOs by
using manual, written methodologies. In this regard, THs can determine
the organ recipient from their records and by verifying the insurance
payor of the recipient with the transplant recipient's hospital.
Additionally, THs can contact the OPO to which they furnished the
organ, and because the OPTN directs OPOs to use an organ tracking
system, the OPO can relay the recipient's information and recipient's
payor to the TH. Likewise, Medicare contractors, who review MCRs
submitted by THs and OPOs, can confirm Medicare usable organs and
Medicare usable kidneys reported by THs and OPOs with supporting
documentation from provider's records.
Medicare kidneys include, for cost reporting statistical purposes
and counting, kidneys procured by an OPO and furnished to a MRTC for
transplant, in accordance with certain longstanding arrangements that
existed before March 3, 1988, approved by the contractor. However, due
to organ tracking capability, and to achieve equitable treatment among
all OPOs (for OPOs that do not have long-standing arrangements with
military THs), and to also achieve appropriate Medicare expenditures
for kidney acquisition costs, we no longer believe it is appropriate to
allow such kidneys to be designated as Medicare kidneys under such
arrangements. Because organ tracking capability permits OPOs the
ability to know a donor's transplant recipient, and thus their payor's
identity, it is no longer necessary for Medicare to continue to apply
its longstanding policy to deem and count all kidneys an OPO excises
at, or furnishes to, a MRTC as Medicare kidneys for purposes of
apportioning Medicare's share of the kidney acquisition costs.
In the proposed rule we proposed to add Sec. 413.408(a) to new
subpart L to specify that THs/HOPOs must accurately count and report
Medicare usable organs and total usable organs on their Medicare
hospital cost reports to ensure that costs to acquire Medicare usable
organs are accurately allocated to Medicare for services provided to
Medicare beneficiaries. We also proposed to add Sec. 413.408(b) to new
subpart L to specify that for cost reporting periods beginning on or
after October 1, 2021, for THs/HOPOs, Medicare usable organs include
only organs transplanted into Medicare beneficiaries (including kidneys
for MA beneficiaries with dates of service after January 1, 2021),
organs for which Medicare has a secondary payer liability \61\ for the
organ transplant, and pancreata procured for the purpose of acquiring
pancreatic islet cells acquired for transplantation into Medicare
beneficiaries participating in a National Institute of Diabetes and
Digestive and Kidney Diseases clinical trial.
---------------------------------------------------------------------------
\61\ Medicare secondary payer is governed by section 1862(b)(2)
of the Act and 42 CFR 411.20 through 411.39.
---------------------------------------------------------------------------
We also proposed to add Sec. 413.408(c) to new Subpart L to
specify that for cost reporting periods beginning on or after October
1, 2021, for THs/HOPOs, total usable organs include: (1) Medicare
usable organs; (2) organs excised with the intention to be used for
research; (3) organs excised and either transplanted or furnished to
other transplant hospitals or OPOs; (4) organs obtained from another
OPO or transplant hospital and either transplanted or furnished to
other transplant hospitals or OPOs; (5) organs furnished to veterans'
hospitals
[[Page 73488]]
or organs sent outside the United States; (6) organs transplanted into
non-Medicare beneficiaries; (7) organs for which the transplant was
totally or partially paid by primary insurance other than Medicare; (8)
organs for which the transplant was covered by a MA plan for dates of
service prior to January 1, 2021; (9) kidneys furnished to United
States MRTCs with or without a contractor-approved reciprocal sharing
agreement with the HOPO in effect prior to March 3, 1988; and (10)
pancreata procured for the purpose of acquiring pancreatic islet cells
for transplantation into participants in a National Institute of
Diabetes and Digestive and Kidney Diseases clinical trial.
We also proposed to remove Sec. 413.203, and add Sec. 413.408(d)
to new subpart L, so that all organ acquisition policies are housed
together, to specify that a TH's total costs for all organs are reduced
by the costs associated with procuring organs that are furnished to
foreign transplant centers or transplanted in patients other than
Medicare beneficiaries; and to specify that THs must separate costs for
procuring organs that are furnished to foreign transplant centers and
organs transplanted in patients other than Medicare beneficiaries from
Medicare allowable costs prior to final cost settlement by the Medicare
contractors. The separation of cost is achieved using the Medicare
ratio set forth in proposed Sec. 413.408(e).
We also proposed to add Sec. 413.408(e) to new subpart L to
specify that for cost reporting periods beginning on or after October
1, 2021, Medicare's share of organ acquisition costs for a TH/HOPO is
calculated by multiplying the total allowable organ acquisition costs
by the ratio of Medicare usable organs transplanted into Medicare
beneficiaries, as specified in proposed Sec. 413.408(b), to total
usable organs, as specified in proposed Sec. 413.408(c).
For rules pertaining to counting kidneys and calculating Medicare's
share of kidney acquisition costs for IOPOs, in the proposed rule, we
proposed to add Sec. 413.410(a) to new subpart L to specify that IOPOs
must accurately count and report Medicare usable kidneys and total
usable kidneys on their Medicare IOPO cost reports to ensure that costs
to acquire Medicare usable kidneys are accurately allocated to
Medicare. We also proposed to add Sec. 413.410(b) to new subpart L to
specify that, for cost reporting periods beginning on or after October
1, 2021, for IOPOs, Medicare kidneys include only kidneys transplanted
into Medicare beneficiaries.
We also proposed to add Sec. 413.410(c) to new subpart L to
specify that for cost reporting periods beginning on or after October
1, 2021, for IOPOs, total usable kidneys include: (1) Medicare usable
kidneys; (2) kidneys procured with the intention to be used for
research; (3) kidneys procured and furnished to other transplant
hospitals or OPOs; (4) kidneys procured from another OPO or transplant
hospital and either transplanted or furnished to other transplant
hospitals or OPOs; (5) kidneys furnished to veterans' hospitals or
organs sent outside the United States; (6) kidneys for which the
transplant was covered by a MA plan for dates of service prior to
January 1, 2021; and (7) kidneys furnished to United States MRTCs with
or without a contractor-approved reciprocal sharing agreement with the
IOPO in effect prior to March 3, 1988.
We proposed to remove Sec. 413.202 and add Sec. 413.410(d) to new
subpart L, to specify that an IOPO's total costs for all kidneys is
reduced by the costs associated with procuring kidneys furnished to
foreign transplant centers or transplanted in patients other than
Medicare beneficiaries; and to specify that IOPOs must separate costs
for procuring kidneys furnished to foreign transplant centers and
kidneys transplanted in patients other than Medicare beneficiaries from
Medicare allowable costs prior to final settlement by the Medicare
contractors. The separation of cost is achieved using the Medicare
ratio set forth in proposed Sec. 413.410(e).
We also proposed to add Sec. 413.410(e) to new subpart L to
specify that for cost reporting periods beginning on or after October
1, 2021, Medicare's share of kidney acquisition costs is calculated by
multiplying the total allowable kidney acquisition costs by the ratio
of Medicare usable kidneys, as specified in proposed Sec. 413.410(b),
to total kidneys, as specified in proposed Sec. 413.410(c).
Comment: Commenters overall were not supportive of CMS' proposals
for THs and OPOs to count only organs and kidneys transplanted into
Medicare beneficiaries as Medicare usable organs and Medicare usable
kidneys, to calculate Medicare's share of organ acquisition costs for
THs and kidney acquisition costs for OPOs. Many commenters, including
children's hospitals, stated they would experience a loss of revenue.
Some commenters opined that this proposal would shift costs to others
within the organ acquisition and transplantation ecosystem, and have
the effect of raising procurement costs, although details on
specifically how or which costs would increase, or how a shift in cost
would occur were not provided. A commenter suggested that the policy
proposal will inappropriately transfer organ acquisition costs for some
Medicare beneficiaries from Medicare to the transplant hospitals that
excise organs and furnish them to other THs or OPOs.
Response: We appreciate the lifesaving contributions that THs and
OPOs make within the transplant community and we understand commenters'
concerns over the potential loss of revenue they may experience
stemming from our proposal to limit Medicare's organ acquisition costs
to costs incurred for organs actually transplanted into Medicare
beneficiaries. After consideration of the public comments we received,
we believe these concerns warrant further review; therefore, we are not
finalizing our proposed policy with respect to counting organs for
determination of Medicare's share of organ acquisition costs as
proposed at Sec. Sec. 413.408 and 413.410, but may consider this
policy in future rulemaking.
Commenters did not provide substantive information or data to
explain how or why they believe costs to acquire organs would increase
under our proposed policy and it is not clear to us how such costs
would increase absent revenue from Medicare for organ acquisition costs
for organs not transplanted into Medicare beneficiaries. We do not
believe that the proposed policy would inappropriately transfer organ
acquisition costs for some Medicare beneficiaries from Medicare to the
transplant hospitals that excise organs and furnish them to other THs
or OPOs.
When a TH excises and furnishes an organ to another TH or OPO, or
when an OPO furnishes an organ to a TH or another OPO, the TH or OPO
furnishing the organ currently receives revenue from the recipient TH
to which the organ was furnished; the recipient TH is in turn
reimbursed by the transplant recipient's payor. Even when the
transplant recipient is not a Medicare beneficiary, the TH that excises
and furnishes the organ to the recipient TH receives an additional
payment from Medicare, because the current Medicare organ counting
policy allows that organ to be counted as a Medicare usable organ and
assumes that the organ is transplanted into a Medicare beneficiary. (If
the organ is a kidney, the OPO receives a reconciliation payment from
Medicare based on the assumption that the kidney was transplanted into
a Medicare beneficiary.) If a TH incurs costs to provide services to
maintain a cadaveric donor after declaration of
[[Page 73489]]
death and consent to donate is given, then the TH accumulates and
enters those charges as organ acquisition costs on the TH's cost
report, charges the OPO for the services rendered, and offsets the
revenue received from the OPO for the organ acquisition costs
associated with organs furnished to Medicare beneficiaries. In this
regard, the TH receives revenue for its costs incurred in exchange for
providing the services to the cadaveric donor, either from the OPO to
which the organ was furnished, or as an amount included in its
acquisition costs on its cost report.
If all payors within the transplant ecosystem are paying their
share of organ acquisition costs for organs acquired for transplant
into their insured recipients or Medicare beneficiaries, then there
should not be an increase of an amount of unreimbursed acquisition
costs.
We understand commenters' views that this proposal would result in
organ acquisition costs that have been historically paid by Medicare to
no longer be paid by Medicare if the organs were not transplanted into
Medicare beneficiaries and that THs and OPOs will need to modify their
organ tracking and billing processes in order to recoup any loss of
revenue they may experience. We also acknowledge commenters' pointing
out that children's hospitals may experience a loss of revenue because
they traditionally have very low Medicare utilization. Specifically, we
acknowledge that they noted that under the proposal, children's
hospitals would experience a loss of revenue because they will only be
able to count organs actually transplanted into Medicare beneficiaries,
which occurs rarely with pediatric organs transplanted into adults.
In response to this proposal to count only organs transplanted into
Medicare beneficiaries as Medicare usable organs, we have heard
stakeholders' concerns that the process of tracking organs, to report
only organs transplanted into Medicare beneficiaries on the Medicare
cost report, is perceived to be burdensome. We have also heard
stakeholders' concerns regarding the financial impacts from the loss of
revenue from Medicare stemming from this policy proposal and the value
of studying impacts to patients. We are not finalizing this proposal at
this time to allow more time to better understand these and other
concerns that commenters have raised, including those related to organ
tracking processes, as we continue our efforts to ensure Medicare more
accurately pays its share of organ acquisition costs as well as adhere
to the statutory prohibition of cross-subsidization articulated in
section 1861(v) of the Act.
Comment: Many commenters suggested either a withdrawal of the
proposal or a delayed implementation date to allow THs additional time
to re-negotiate contracts with other payors to make up for the
decreased revenue they may experience stemming from the proposal. Some
commenters requested that CMS delay implementation to conduct a study
on the financial impact upon the transplant community as a result of
the proposal. Some commenters believed that Medicare's impact estimate
was underestimated and imprecise when using SRTR data reflecting organs
transplanted into Medicare beneficiaries; in this regard, commenters
believed the SRTR data to be underreported with recipients' payor
information from transplanting THs. A commenter suggested that CMS
calculate and use an ``in-house'' Medicare ratio for THs, as a proxy to
apply to the number of organs the TH/HOPO furnishes to other hospitals
or OPOs which are transplanted into Medicare beneficiaries. Other
commenters requested that Medicare study and publish a hospital
specific impact analysis resulting from these proposals.
Response: We thank commenters for sharing their concerns and
requests for a delayed implementation of the proposed policy so that
stakeholders may renegotiate their contracts with other payors, or
conduct further analyses of their financial impacts. We agree that
additional time may be needed for stakeholders to renegotiate their
contracts and update their tracking and billing processes; therefore,
we are not finalizing our policies proposed at Sec. Sec. 413.408 and
413.410 at this time in order to further consider the public comments
and financial impacts as a consequence of those proposed policies.
In response to comments about the impact analysis included in the
proposed rule, we note that our impact estimate in the proposed rule
was projected as a savings to the Medicare Program and was based on
data collected by the OPTN and reported by the SRTR that categorizes
transplant recipients by payor. THs and OPOs are required to submit
information to the OPTN that are used to match donors and recipients,
including the recipient's primary payor information at the time of the
recipient's registration. The OPTN requires the organ recipient's payor
information be updated by the transplanting hospital at the time of
transplant. The SRTR derives its data from the OPTN database and we
believe that these data were the best available data and a reasonable
proxy for Medicare's share of organ acquisition costs for organs a TH
excises and furnishes to other THs or OPOs. (See the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25665.) We also acknowledge commenters'
suggestions that we could estimate the percent of organs a TH furnishes
to other THs or OPOs that are transplanted into Medicare beneficiaries,
by using a TH's data to calculate an in-house ratio of organs
transplanted into Medicare beneficiaries within the TH's own hospital,
and by applying that in-house Medicare ratio, as a proxy, to the organs
a transplant hospital furnishes to other THs or OPOs.
In response to commenters' requests that CMS conduct additional
analyses, we will conduct additional analyses of impacts upon THs,
children's hospitals, and OPOs before we consider revising this policy
in future rulemaking on counting organs as proposed at Sec. Sec.
413.408 and 413.410.
Comment: Some commenters stated that Medicare's current organ
acquisition payment policy was intentionally devised decades ago to
ensure that Medicare provided an incentive to hospitals to participate
in organ transplantation. A few commenters provided copies of a 1995
letter authored by CMS personnel that explained cost reporting
instructions and audit adjustments for recording organs procured by
hospitals and HOPOs, (and kidneys procured by OPOs), that were
furnished to other hospitals and OPOs as Medicare usable organs and
Medicare usable kidneys. Commenters opined that the methodologies
discussed in the 1995 letter were an incentive for hospitals and OPOs
to procure organs.
Response: We appreciate commenters bringing to our attention a 1995
letter authored by CMS personnel, however, we believe this letter
explains the Medicare usable organ and Medicare usable kidney
acquisition policies as they existed when the letter was authored. The
1995 letter explains that a TH or OPO that excises kidneys and
furnishes them to other THs and OPOs do not have control over the
disposition of the kidneys, and do not know whether these kidneys are
actually transplanted, and if they are transplanted, whether they are
transplanted into Medicare beneficiaries. We understand that commenters
may perceive the policies outlined in the 1995 letter as providing a
financial incentive for OPOs and THs to excise and furnish organs to
other THs and OPOs. This was not the intention. Medicare has allowed
THs
[[Page 73490]]
and OPOs to count all organs and kidneys excised and furnished to other
THs and OPOs as Medicare usable organs or Medicare usable kidneys and
required the offset of revenue; however, when revenue did not reflect
the actual costs incurred, Medicare likely paid for more than its
share. As we discussed in the preamble to the proposed rule, capability
now exists to track the location and disposition of organs, from the
time organs are excised from donors until they are transplanted into
recipients. As such, we no longer believe the methodology outlined in
the 1995 letter aligns with Medicare's anti-cross subsidization
principles, as well as reasonable cost principles upon which Medicare's
organ acquisition cost reimbursement policies are based. As stewards of
the Medicare Trust Fund, it is important to establish and maintain
policies that align with Medicare's anti-cross subsidization principles
to ensure that Medicare pays for costs incurred for the care of
Medicare beneficiaries. Other payors that may be responsible for organ
acquisition costs for organs transplanted into their patients must
likewise bear the cost of organ acquisition costs for their patients.
Although we no longer believe the methodology outlined in the 1995
letter aligns with Medicare's anti-cross subsidization principles, or
reasonable cost principles upon which Medicare's organ acquisition cost
reimbursement policies are based, we understand stakeholders' concerns
regarding loss of revenue and the perceived burdens to implement this
proposal warrant further consideration and thus we are not finalizing
the organ counting proposal. We may revisit this proposal in future
rulemaking.
Comment: Many commenters expressed appreciation for the
clarification and codification of organ acquisition payment policies
and CMS's goal to make more precise payments for organ acquisition
costs from the Medicare Trust Fund. A commenter who supported the
proposal stated that the current Medicare usable organ counting policy
was adopted 35 years ago when most organ donors were trauma patients at
a transplant center but stated today less than a third of donors are
trauma patients. It seems the commenter was suggesting that organs are
procured from trauma patients at a transplant center less frequently
today and more organs are being procured from other hospitals or by
OPOs and sent to THs or OPOs for transplant elsewhere.
Response: We appreciate commenters' support of our intention to
clarify and codify organ acquisition payment policies and our goal to
make more precise payments for organ acquisition costs from the
Medicare Trust Fund. We agree that over the past 35 years, the
transplant ecosystem and circumstances have changed, such that more
organs today are excised at one location and transported elsewhere for
transplant.
Comment: Many commenters expressed concern with THs and OPOs having
to track organs and report on the Medicare cost report only organs
transplanted into Medicare beneficiaries, as Medicare usable organs.
Some commenters stated that their administrative costs would increase
under the proposed policy. Some commenters suggested that CMS develop a
centralized organ tracking system and other commenters suggested that
the OPTN allow all THs and OPOs access to a centralized database with
updated recipients' payor information. Some commenters stated that THs
were not required to update OPTN data with recipients' payor
information at the time of transplant, resulting in outdated OPTN payor
data for transplant recipients and likely underreporting Medicare as a
payor. Some commenters opined that a TH that excised and furnished
organs to other THs or OPOs would be unable to have access to organ
recipients' payor data in the OPTN database. Other commenters suggested
that the OPTN require THs to update their OPTN data with their
transplant recipients' payor information at the time of transplant to
avoid having outdated payor information if a recipient's payor status
changed at the time of transplant. Some commenters opined that a TH
that excises and furnishes organs to other THs or OPOs would be unable
to have access to organ recipients' payor data in the OPTN database.
Some commenters stated that a recipient's insurance information is
entered into the OPTN database when the recipient is first placed on a
waiting list for an organ, but the recipient's insurance status may
change over time and not be updated in the OPTN database, remaining the
same as when the recipient was first placed on the waiting list. A
commenter suggested that the Medicare contractor provide verification
as to whether a Medicare usable organ recorded on the cost report was
actually transplanted into a beneficiary. Another commenter suggested
that the Medicare contractor routinely provide beneficiary insurance
status to the OPOs, instead of the OPOs contacting the transplant
center to which they furnished the organ to discern whether the organ
recipient was a Medicare beneficiary.
Response: We appreciate commenters' concerns regarding the burden
in implementing this policy and accordingly have decided not to issue a
final rule on counting of organs as proposed at Sec. Sec. 413.408 and
413.410 at this time.
Although we are not finalizing our proposals at Sec. Sec. 413.408
and 413.410, we are aware that OPOs have access to the OPTN database
and to the identity of the recipients of each organ procured by that
OPO. We also understand that all THs know the correct up-to-date
primary payor of each of their transplant recipients (and the Medicare
beneficiary status) at the time of transplant as this information is
necessary for the TH to accurately submit its claim for reimbursement
for the procedure. We note that OPOs, donor hospitals, and THs rely on
a close collaborative relationship involving information sharing to
ensure that organs are successfully procured and appropriately placed
with transplant recipients. Many OPO commenters acknowledged that they
are in contact with recipient transplant hospitals to which the organ
was furnished. We believe that during these communications,
collaborations and encounters, when OPOs and THs coordinate the organ
acquisition and transportation between the OPO and the TH, the OPO
could reasonably determine whether the organ recipient is a Medicare
beneficiary.
OPTN rules require that THs update their OPTN data with their
transplant recipients' payor information at the time of hospital
discharge but no later than six weeks after the recipient's transplant.
Under 42 CFR 121.11(b)(2), OPOs and THs are required to submit to the
OPTN, and the Scientific Registry, as appropriate, and to the Secretary
information regarding transplant candidates, transplant recipients,
donors of organs, transplant program costs and performance, and other
information that the Secretary deems appropriate. Additionally, the
OPTN Policy 18 sets forth data submission requirements regarding
transplant recipients that THs must submit, with accuracy, to the OPTN
following the organ transplant. The Data System for Organ Procurement
and Transplantation Network,\62\ (OMB 0915-0157, expiration August 31,
2023), collects information on recipients and recipients' payors for
the organ transplant. The OPTN data collection system contains data
entry fields to capture a recipient's primary payor information. We
understand that an OPO or TH that excises and furnish organs to a
recipient TH or OPO, may not have access to the OPTN data for the organ
recipient in order to determine
[[Page 73491]]
the primary payor and realize that more work may be needed to ensure
that the excising TH or OPO have access to this OPTN data in the future
to discern the organ recipient's payor identity.
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\62\ https://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=0915-0157#.
---------------------------------------------------------------------------
We do not believe it is the role of the Medicare contractors to
provide verification or payor information for a TH or OPO to discern
whether an organ may be considered a Medicare usable organ and recorded
as such on the Medicare cost report. A framework to discern a
recipient's payor status already exists within the OPTN database. We
note that 42 CFR 413.20 sets forth requirements that providers maintain
sufficient financial records and statistical data for proper
determination of costs payable under the Medicare Program and must
furnish such information to the contractor as necessary to assure
proper payment from Medicare.
We acknowledge the concerns raised by commenters warrant further
consideration and thus we are not finalizing the organ counting
proposal and may revisit this proposal in future rulemaking.
Comment: A commenter indicated that the proposal was contrary to 42
CFR 412.113(d), which sets forth that payment for organ acquisition
costs incurred by hospitals with approved transplant centers are made
on a reasonable cost basis.
Response: We do not believe our proposals are contrary to Sec.
412.113(d), which describes other payments made to hospitals under the
prospective payment systems, and sets forth that payment for organ
acquisition costs incurred by hospitals with approved transplant
centers are made on a reasonable cost basis. Under the proposal, costs
incurred by hospitals with approved transplant centers will continue to
be paid by Medicare on a reasonable cost basis for the acquisition of
organs transplanted into Medicare beneficiaries.
Comment: A commenter requested that CMS make a policy declaration
with respect to revenue offsets under this proposal for organs that a
TH/HOPO excises and furnishes to other THs or OPOs, or kidneys that an
IOPO furnishes to THs or other OPOs, that would not be counted as
Medicare usable organs. This commenter pointed out that there would be
an underpayment of the organ acquisition costs attributable to Medicare
beneficiaries if a revenue offset were required for organs that are not
transplanted into Medicare beneficiaries. Under the current policy,
because organs that a TH/HOPO excises and furnishes to other THs or
OPOs are deemed or assumed to be Medicare usable organs, the revenue
the excising TH/HOPO or OPO receives from the OPO or TH to which the
organ is furnished must be offset from the excising TH/HOPO's organ
acquisition costs. However, if an organ is not a Medicare usable organ,
the revenue the excising TH/HOPO or IOPO receives must not be offset or
deducted from the excising TH/HOPO's or the IOPO's organ acquisition
costs.
Response: We agree with the commenter's concerns regarding revenue
offsets that are not required for organs that are not transplanted into
Medicare beneficiaries. Current Medicare hospital and IOPO cost
reporting instructions require a TH that excises and furnishes, or an
IOPO that furnishes, organs to other OPOs or THs, to offset or reduce
its organ acquisition costs by the amount of revenue received from the
TH or OPO, to which the organ was furnished when the organ is a
Medicare usable organ.\63\ Although we are not finalizing the organ
counting policies as proposed in Sec. Sec. 413.408 and 413.410,
Medicare still requires these revenue offsets in the Medicare cost
report. Doing so will accurately account for the organ acquisition
costs attributable to Medicare.
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\63\ For Medicare hospital cost reports, see CMS Pub. 15-2,
chapter 40, section 4028.3. For IOPO cost reports, see CMS Pub. 15-
2, chapter 33, sections 3309 and 3311.
---------------------------------------------------------------------------
Comment: Some commenters stated that the proposed policy presented
privacy or Health Insurance Portability and Accountability Act of 1996
(HIPAA) concerns with THs and OPOs disclosing or receiving the payor
status of an organ recipient.
Response: Although we are not finalizing our proposed rule at
Sec. Sec. 413.408 and 413.410 at this time, we do not believe there
should be uncertainties regarding information sharing, privacy, or
HIPAA concerns, especially considering the numerous consent forms
patients sign as a matter of course for medical treatment. The HIPAA
Privacy Rule permits disclosure of information, without an individual's
authorization, for payment related operations. Medicare is seeking to
make more accurate payments for organ acquisition costs by proposing to
pay acquisition costs for organs that are actually transplanted into
Medicare beneficiaries. We believe that a patient's disclosure of their
payor information is consistent with Medicare's payment goals and is
the minimum necessary information required to ensure accurate payment
from Medicare. We believe that disclosure that an organ recipient is a
Medicare beneficiary is permissible under the HIPAA Rule. Additionally,
patient consent forms should allow for OPOs or THs to discern whether a
recipient was a Medicare beneficiary without invoking HIPAA Privacy
Rule violations because the patient has provided consent for such
disclosure. Under regulations at 45 CFR 164.501 that set forth the
privacy of individually identifiable health information, the definition
of payment means activities undertaken by a health care provider to
obtain or provide reimbursement for the provision of health care. Thus,
the disclosure of the organ recipient's payor status falls within this
scope of payment, such that there would be no HIPAA Privacy Rule
violations for a TH or OPO to disclose a recipient's payor information
to another TH or OPO. We believe that any information sharing, privacy
or HIPAA regulatory concerns can be abated with amendments to existing
financial consent forms, if necessary, whereby organ transplant
recipients can consent to have their health insurance payor information
released.
Comment: Some commenters questioned how they could determine
whether Medicare has a secondary payer liability to count an organ as a
Medicare usable organ. Several commenters disagreed with the proposal
they perceived as requiring a TH that excises and furnishes organs to
another TH or OPO to count those organs as Medicare usable organs when
Medicare has a secondary payer liability.
Response: We appreciate commenters' concerns. Although we are not
finalizing the organ counting proposals in proposed Sec. Sec. 413.408
and 413.410 in this final rule with comment period, we wish to clarify
for commenters that our proposals to codify, at Sec. 413.414, our
longstanding manual provisions with respect to organ acquisition costs
and counting organs when Medicare is a secondary payer pertains only to
a TH that performs the transplant. In this regard, a TH that excises
and furnishes an organ to another TH or OPO does not have a possibility
of a secondary payer payment from Medicare because the excising TH did
not perform the transplant and receive the DRG payment. Thus, the
transplanting TH, not the excising TH that furnishes organs to others,
needs to compare the total cost of the transplant DRG amount and the
organ acquisition costs, to the payment received from the primary payer
to determine if there is a secondary payer liability from Medicare for
the transplanting TH's organ acquisition costs. The Medicare secondary
payer provisions with respect
[[Page 73492]]
to how the TH would determine whether Medicare has secondary payer
liability for organ acquisition costs are discussed in II.C.2.j. of
this final rule with comment period.
Comment: A commenter suggested that the proposals could lead to
more widespread use of organ recovery centers. Stakeholder sentiment is
that the current policy has served as a disincentive to transport
deceased donors from THs to organ recovery centers. This is because a
TH cannot include on its Medicare cost report organs excised at an ORC
from a cadaveric donor that was transported from the TH to the ORC for
removal of the organs in the ORC. A commenter misconstrued the proposal
as permitting THs to count as Medicare usable organs, those organs
transplanted into Medicare beneficiaries that had been recovered in an
OPO's organ recovery center from a cadaveric donor that had been
transported from the TH to the OPO's organ recovery center. A commenter
requested that CMS finalize a policy that allows THs to include as
Medicare usable organs, any organs recovered in an OPO's organ recovery
center from cadaveric donors that were transported from the TH to the
organ recovery center.
Response: We appreciate commenters' concerns. However, an OPO's
operation of an organ recovery center is outside of the scope of our
proposals.
Comment: Some commenters suggested that the proposal to count only
organs transplanted into Medicare beneficiaries as Medicare usable
organs will increase wait times, waitlist mortality and morbidity for
ESRD-eligible Medicare beneficiaries. Many commenters opined that the
proposal would decrease organ supply and limit the number of organs
that can be procured or procured ``in a financially sustainable''
manner.
Response: We appreciate commenters' concerns. Although we are not
finalizing the organ counting proposal at this time and may further
consider in future rulemaking, our proposal was intended to ensure that
Medicare pays its share of organ acquisition costs for organs procured
and transplanted into Medicare beneficiaries, protect the Medicare
Trust Fund, and not impede organ supply or transplantation. Commenters
did not provide specific details to support their assertion that these
policy proposals would increase wait times, waitlist mortality and
morbidity for ESRD-eligible Medicare beneficiaries and decrease organ
supply. However, we interpret the comments to mean that THs and OPOs
may be less likely to procure organs as a result of any decrease in
revenue they may experience from the proposal to count as Medicare
usable organs only organs transplanted into Medicare beneficiaries,
even when organs are furnished to transplant recipients for whom
financial responsibility rests with other payors. We note that OPOs
have existing statutory duties, under 42 U.S.C 273, to conduct and
participate in systematic efforts to acquire all useable organs from
potential donors. OPOs also must meet the CfCs under 42 CFR 486.344
that require them to have written protocols for donor evaluation and
management and organ placement and recovery that must meet current
standards of practice and that are designed to maximize organ quality
and optimize the number of donors and the number of organs recovered
and transplanted per donor.
On December 2, 2020, CMS published a final rule that finalized two
new outcome measures for OPOs, the organ donation rate and
transplantation rate measures, with the goal of increasing the supply
of organs available for transplants (85 FR 77898). We believe that
these outcome measures will incentivize OPOs to recover more organs
that will ultimately be available for transplantation. However, if an
OPO's performance on the outcome measures does not improve
sufficiently, CMS will open the designated service area (DSA) and allow
other high performing OPOs to compete for the open DSA.
We also note that pursuant to the finalized SAC policy at Sec.
413.404, THs establish SACs by organ type prior to their first
transplant.\64\ If the TH believes their SACs are insufficient, they
have the ability to increase their SACs \65\ or negotiate with other
payors to avoid cost reimbursement disparities.
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\64\ See 413.404(b)(3)(i)(C)(1) and 413.404(b)(3)(ii)(B)(1).
\65\ See 413.404(b)(3)(i)(C)(2) and 413.404(b)(3)(ii)(B)(2).
---------------------------------------------------------------------------
Comment: A few commenters opined that our proposal was ``to only
reimburse kidney transplants for MA patients starting January 1, 2021''
and opined that CMS proposed retroactive policy provisions at proposed
Sec. Sec. 413.408(b)(1) and (c)(8) and 413.410(b) and (c)(6) without
explanation. The commenters seemed to question why only kidneys, and
not all organs, transplanted into MA beneficiaries were included in the
calculation of Medicare's share of organ acquisition costs for THs and
OPOs.
Response: Although we are not finalizing our proposed rule at
Sec. Sec. 413.408 and 413.410 at this time, we wish to clarify that we
did not propose in a retroactive manner, to include kidneys
transplanted into MA beneficiaries as Medicare usable kidneys for
purposes of calculating Medicare's share of kidney acquisition costs.
In the preamble to the proposed rule, we proposed to codify, (at
proposed Sec. Sec. 413.408(b)(1) and (c)(8) and 413.410(b) and
(c)(6)), the statutory provision that requires Medicare to pay for
kidney acquisition costs for MA beneficiaries on a reasonable cost
basis for dates of service starting on January 1, 2021.\66\
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\66\ See 86 FR 25664, and 25702, and 25703.
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The provisions of the 21st Century Cures Act, passed in 2016 (Pub.
L. 114-255), changed Medicare's reimbursement methodology for the
acquisition costs of kidneys transplanted into MA beneficiaries. In the
preamble to the FY 2022 IPPS/LTCH PPS proposed rule, we explained in a
footnote the genesis for this statutory provision (see 86 FR 25664).
Section 17006(c) of Public Law 114-255 amended section 1852(a)(1)(B)(i)
of the Act to exclude coverage for organ acquisitions for kidney
transplants from the Medicare benefits an MA plan is required to cover
for an MA enrollee, including as covered under section 1881(d) of the
Act. As such, effective January 1, 2021, in accordance with the
statutory provisions these costs are covered under the original
Medicare FFS program and paid on a reasonable cost basis. (For more
information, see the June 2, 2020 final rule (85 FR 33824). Kidneys
procured for MA beneficiaries are included as Medicare usable kidneys,
and are included in the numerator and denominator on the MCR to
determine Medicare's share of kidney acquisition costs, despite our not
finalizing Sec. Sec. 413.408 or 413.410 at this time. Procurement
costs for non-renal organs and transplants continue to follow existing
reimbursement methodologies through MA for MA beneficiaries.
Comment: A commenter suggested that proposed Sec. 413.408(d) may
lead to doubling the estimated non-Medicare organ and kidney
acquisition costs because the proposed regulation at Sec. 413.408(d)
proposes to reduce the costs associated with procuring organs furnished
to foreign transplant centers or costs associated with transplanting
organs in patients other than Medicare beneficiaries, and the Medicare
ratio that is applied to total costs already removes these non-Medicare
costs. The commenters suggested removing proposed Sec. 413.408(d), as
it appears to be unnecessary since the calculation of
[[Page 73493]]
Medicare allowable costs is achieved through proposed Sec. 413.408(b),
(c), and (e).
Response: We appreciate commenters' concerns and note this comment
also applies to proposed Sec. 413.410(d) pertaining to Medicare's
share of kidney acquisition costs. We are not finalizing the proposed
counting policy in Sec. Sec. 413.408 and 413.410, we may further
consider this issue as we consider additional rulemaking.
i. Provisions Related to Intent To Transplant, and Counting En Bloc,
Research, and Discarded Organs
In the FY 2022 IPP/LTCH PPS proposed rule, we set forth our policy,
pertaining to intent to transplant, counting en bloc organs, research
organs, and discarded organs for THs and OPOs (86 FR 25667 through
25668). These policies provide for the proper calculation of Medicare's
share of organ acquisition costs that are used for the appropriate
allocation of organ acquisition costs on the MCR. The calculation of
Medicare's share of organ acquisition costs is discussed in section
II.C.2.h.(1). of this final rule with comment period. The methodology
of counting organs to calculate Medicare's share of organ acquisition
costs is used for the allocation of organ acquisition costs on the MCR
and differs from Medicare's organ counting policy to assess OPOs'
performance, which is set forth under the OPO CfCs, 42 CFR part 486,
subpart G. To calculate Medicare's share of organ acquisition costs,
when organ procurement is attempted, but no organ is actually retrieved
(or the organ is instead discarded), proper counting of the organ must
occur to ensure that overhead costs are appropriately allocated to
Medicare and non-Medicare payors. However, cost allocation is not a
factor when counting organs for evaluating an OPO's performance under
the CfCs.
(1) Principle of Intent To Transplant
Medicare presumes that THs and OPOs intend to procure all donor
organs that are medically suitable for transplant.\67\ We proposed to
add Sec. 413.412(a)(1) to new subpart L, to specify, for organ
acquisition payment purposes, an organ is intended for transplant when
the OPO or TH designates it for transplant prior to the time the donor
enters the hospital's operating room for surgical excision/recovery of
the organ(s). Regardless of whether the OPO or TH procures organs for
transplant, it incurred cost in attempting to procure organs.\68\ We
proposed to add Sec. 413.412(a)(2) to new subpart L, to specify, OPOs
and THs must identify the costs associated with the recovered and
unrecovered organs and apportion those costs to the appropriate cost
centers by organ type.
---------------------------------------------------------------------------
\67\ 86 FR 25668.
\68\ 86 FR 25668.
---------------------------------------------------------------------------
Comment: A commenter appreciated CMS clarifying and codifying long-
standing CMS policy regarding intent to transplant, counting en bloc,
research and discarded organs because it will help ensure more accurate
reporting of total usable organs, Medicare usable organs, and organ
statistics on the MCR.
Response: We appreciate the commenter's support for our
clarifications of the policy regarding intent to transplant, counting
en bloc, research and discarded organs. For additional clarity, we also
note that an OPO or TH can demonstrate that it did not intend to
procure a particular organ, if an instance such as one of the following
occurs: The donor does not meet the criteria for eligible death as
specified by the OPTN; the organ has been eliminated for eligibility
because of donor information; the organ has been ruled out by
laboratory data prior to the donor entering the operating room for
excision of organs; the family does not provide consent to donate the
organ or the donor is not a registered organ donor; or the search for a
recipient for that particular organ has ended unsuccessfully prior to
the donor's entrance into the operating room.
After consideration of the public comments we received, we are
finalizing our proposals regarding intent to transplant under Sec.
413.412(a).
(2) Counting and Cost Allocation of En Bloc Organs
In the proposed rule, we set forth our policy for counting en bloc
organs for cost allocation purposes (86 FR 25668). We proposed to add
Sec. 413.412(b) to new subpart L, to specify our policy for counting
en bloc organs for Medicare cost allocation purposes and to specify
that en bloc organs can be en bloc lungs or en bloc kidneys.
We proposed to add Sec. 413.412(b)(1) to new subpart L to specify
that OPOs and THs count en bloc lungs or en bloc kidneys procured and
transplanted en bloc (two organs transplanted as one unit) as one total
usable organ. En bloc organs transplanted into a Medicare beneficiary
count as one Medicare usable organ or one Medicare usable kidney.
We proposed to add Sec. 413.412(b)(2) to new subpart L to specify
that OPOs and THs count en bloc lungs and en bloc kidneys procured en
bloc but separated and transplanted into two different recipients as
two total usable organs. For each organ transplanted into a Medicare
beneficiary, count each as one Medicare usable organ or one Medicare
usable kidney.
Comment: A commenter suggested CMS' proposals relative to counting
en bloc organs does not take into consideration added costs of
procuring and transplanting multiple organs. This commenter perceived
our proposal to codify our longstanding policy for counting en bloc
organs procured for transplant as a change in policy. The commenter
further indicated that this policy will reduce Medicare reimbursement
and is inconsistent with Congressional intent to ensure Medicare
payment policies expand access to transplantation-related services.
Response: We did not propose changes to Medicare's policy for
counting en bloc organs for organ acquisition payment purposes. Our
proposals are intended to codify our longstanding policy for counting
en bloc organs procured for transplant as was previously set forth in
manual provisions. In this regard, we did not propose changes that
would change or affect how Medicare's share of costs is calculated to
acquire en bloc organs for transplant. Our intent is to ensure that
Medicare pays only its fair share of en bloc organ acquisition costs.
After consideration of the public comments we received, we are
finalizing our proposals regarding counting of en bloc organs under
Sec. 413.412(b), with modification to remove the references to Sec.
413.408(b) and Sec. 413.410(b) because those provisions are not being
finalized.
(3) Research Organs
In the proposed rule, we set forth our policy regarding counting of
organs excised and used for research for Medicare cost allocation
purposes (86 FR 25668). We proposed to clarify that for organ
acquisition cost allocation purposes, a ``research organ'' is an organ
procured and used for research regardless of whether it is transplanted
as part of clinical care (with the exception of pancreata previously
discussed in section II.C.2.h.(2). of this final rule with comment
period). We proposed to add Sec. 413.412(c) to new subpart L to
specify that organs used for research are not counted as Medicare
usable organs in Medicare's share of organ acquisition costs (except
pancreata previously discussed in section II.C.2.h.(2). of this final
rule with comment period). We also proposed to clarify that Medicare
shares
[[Page 73494]]
in the costs of organs that are designated for transplant prior to the
time the donor entered the hospital's operating room, but subsequently
determined to be unusable and donated to research. The costs incurred
are allocated among all remaining usable organs.
We proposed to add Sec. 413.412(c)(1)(i) to new subpart L to
specify that OPOs and THs do not count organs designated for research
activities prior to the time the donor entered the hospital's operating
room for surgical removal of the organs as Medicare usable organs. We
proposed to add Sec. 413.412(c)(1)(ii) to specify that OPOs and THs
count organs designated for research activities prior to the time the
donor entered the hospital's operating room for surgical removal of the
organs, as total usable organs.
We proposed to add Sec. 413.412(c)(2) to new subpart L to specify
that OPOs and THs do not count organs designated for transplant prior
to the time the donor entered the hospital's operating room for
surgical removal of the organs but subsequently determined to be
unusable and donated to research, as Medicare usable organs or total
usable organs.
Comment: Overall, commenters disagreed with CMS' proposal relative
to counting organs intended for research (excluding certain pancreata
procured to acquire pancreatic islet cells for transplantation under
proposed Sec. 413.408) and suggested our proposal reflects a change in
CMS' current policy. Several of these commenters requested we exclude
organs designated for research from the count of total usable organs
for the purpose of allocating costs.
A few commenters noted that the instructions in the IOPO MCR manual
would need to be updated if our proposal was finalized because
currently IOPOs are instructed to exclude organs intended for research
from total organs and offset the revenue received from these organs
against allowable cost. A commenter suggested that including organs
intended for research in total usable organs results in a duplicative
removal of costs for these organs because of the current MCR
instructions. This commenter questioned whether CMS intended to include
research organs in the allocation of all organ costs (hospital related
organ procurement costs, organ acquisition overhead costs, and
Medicare's share of total organ costs); and suggested the proposed rule
would lower the costs reimbursed by Medicare, resulting in higher
acquisition fees for research organs.
Several commenters requested clarification on the application of
our proposed policy relative to organs intended for research. One such
commenter requested examples of factual scenarios, similar to those CMS
provided in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25669
through 25673) for accounting of kidney paired donation.
Response: We acknowledge commenters' concerns with our proposal for
counting organs including research organs. Our proposal was intended to
clarify the current policy for counting research organs to ensure that
Medicare pays its fair share of organ acquisition costs and does not
fund non-reimbursable activities such as research. Under 42 CFR
413.90(a), costs incurred for research purposes, over and above usual
patient care, are not includable as Medicare allowable costs.
After consideration of the public comments received, we are not
finalizing our proposed policy with respect to counting research organs
in total usable organs, as proposed under Sec. 413.412(c)(1) and (2),
and may consider it in future rulemaking. However, we are finalizing at
Sec. 413.412(c) that the only research organs that may be included as
Medicare usable organs are pancreata procured for the purpose of
acquiring pancreatic islet cells for transplantation into Medicare
beneficiaries who are participating in a National Institute of Diabetes
and Digestive and Kidney Diseases clinical trial of islet cell
transplantation in accordance with section 733 of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003.
Comment: Many commenters disagreed with the impact our proposal
would have on Medicare's share of organ acquisition costs. These
commenters indicated under the current policy Medicare covers certain
donor-related costs such as testing, hospitalization, or operating room
costs. These commenters claimed CMS's proposal would shift donor-
related expenses and organ acquisition costs to research organizations
and would negatively impact the affordability and availability of
research organs and the advancement of clinical research. Several
commenters also suggested our proposed policy stands at direct odds
with the Biden Administration's commitment to advance clinical
research.
Several commenters requested CMS not finalize the policy because of
the financial impact and the impact on the availability of organs for
research. Commenters suggested an impact analysis is needed on the
potential negative effects of the proposed changes. A few commenters
requested we delay the implementation of this proposal by one year, so
as not to hinder medical research and to allow OPOs time to reapportion
this significant shift in acquisition costs for research organs and
medical research institutions to attempt to redirect financial
resources to cover this additional cost.
Response: We acknowledge the commenters' concerns. Our proposals
were not intended to impact the affordability and availability of
organs used for research. However, we recognize that our proposals may
impact the cost researchers and other institutions face for research
organs, and may require them to pursue other methods of funding. In
accordance with 42 CFR 413.90(b)(1), funds for research activities are
provided under many Federal programs and by other tax supported
agencies. Also, many foundations, voluntary health agencies, and other
private organizations, as well as individuals, sponsor or contribute to
the support of medical and related research.
We appreciate the commenters' concerns that our proposals relative
to counting organs intended for research for cost allocation purposes
may impede the continuation of research or clinical advancement. CMS
supports efforts to advance clinical research and understands that
providing organs for research supports researchers in discovering new
treatments. We note that OPOs are required to conduct and participate
in systemic efforts, including professional education, to acquire all
usable organs from potential donors. (42 U.S.C. 273(b)(3)(B)). CMS's
recent regulatory amendments for OPOs is aimed at increasing organ
supply and transplantations.
We acknowledge the commenters' requests not to finalize the policy
because of the financial impact and the impact on the availability of
organs for research. We also acknowledge commenters' requests that we
delay the implementation of this proposal by one-year and allow OPOs
time to redirect financial resources to cover the costs associated with
research organs.
After consideration of the public comments received, we are not
finalizing our proposed policy at Sec. 413.412(c)(1) and (2) with
respect to THs or OPOs counting organs used for research, as Medicare
usable organs or total usable organs, depending upon whether the organs
were originally designated for research or designated for transplant.
Additionally, as discussed in section II.C.2.h. of this final rule with
comment period, we are not finalizing our proposal at Sec.
413.408(c)(2) to require
[[Page 73495]]
TH/HOPOs to include organs excised with the intention to be used for
research in total usable organs. We are also not finalizing our
proposal at Sec. 413.410(c)(2) to require OPOs to include organs
excised with the intention to be used for research in total usable
organs. We may consider these issues further as we consider future
rulemaking.
In this final rule with comment period, we are finalizing our
proposal under Sec. 413.412(c) to require that organs used for
research are not counted as Medicare usable organs in Medicare's share
of organ acquisition costs (except pancreata for islet cell transplants
as specified in Sec. 413.406(a)) and kidneys used for research are not
counted as Medicare usable kidneys in Medicare's share of kidney
acquisition costs.
Comment: A commenter questioned whether the collection for
umbilical cords (currently, not classified as human organs) for
research is impacted by our proposal.
Response: Our proposal was specific to organs defined in Sec.
413.400 of this final rule with comment period, which does not include
umbilical cords. Accordingly, this comment is outside of the scope of
this rule.
Comment: A commenter requested CMS clarify that organs intended for
research will not count towards its denominator in the donation rate
and transplantation rate measures. This commenter requested CMS explain
how OPOs would know whether patients that are participating in the
``two kidney trials'' would continue to be reimbursed by Medicare.
Response: Comments on donation and transplantation rate measures
relate to CfCs and are outside of the scope of this rule. Our
proposals, which we are not finalizing, were related to counting organs
to determine Medicare's share of organ acquisition costs and differ
from counting organs for evaluating an OPO's performance under the
outcome measures at Sec. 486.318. We are unclear to which ``two kidney
trials'' the commenter is referring. Currently, as required under
section 733 of the MMA, Medicare pays for the cost to acquire
pancreatic islet cells for transplantation into Medicare beneficiaries
participating in a NIDDK clinical trial.
(4) Counting and Cost Allocation of Discarded/Unusable Organs
In the proposed rule, we set forth our policy regarding counting of
discarded/unusable organs for Medicare cost allocation purposes (86 FR
25668). In the proposed rule, we proposed to add Sec. 413.412(d) to
new subpart L, to specify that an organ is not counted as a Medicare
usable organ or a total usable organ if the excising surgeon
determines, upon initial inspection or after removal of the organ, that
the organ is not viable and not medically suitable for transplant and
the organ is determined to be unusable and discarded. This includes
organs that are determined to be unusable and subsequently donated to
research as previously described in section II.C.2.i.(3). of this final
rule with comment period.
Comment: A commenter suggested that the proposed policy requires
unrecovered organs be counted in the denominator of the Medicare
fraction, which results in allocation of all related costs to non-
Medicare payors; however, organs that are recovered but determined to
be unusable or discarded are excluded from the denominator. This
commenter suggested that both unrecovered organs, and unusable or
discarded organs should be excluded from the denominator of the
Medicare fraction and the costs should be treated as overhead costs of
the Program and allocated pro rata between Medicare and other payors.
Another commenter requested we count organs intended for transplant at
the time of entry into the operating room and subsequently determined
to be unusable and donated for research as Medicare usable organs. A
commenter also questioned whether allowable costs for obtaining organs
that are discarded without being used for research will be paid or if
such costs can be included in our MCR or SAC calculations.
Response: We thank the commenters for their comments and appreciate
their recommendations. We are clarifying our longstanding policy that
organs determined to be unusable or discarded are not included in the
count of Medicare usable or total usable organs. The cost of
unrecovered organs, and unusable or discarded organs must be included
in the appropriate organ cost center on the Medicare cost report. In
addition, the costs associated with unusable or discarded organs are
equitably allocated amongst the remaining usable organs and included in
the SAC calculation set forth in Sec. 413.404.
In light of the numerous comments received surrounding the
treatment of research organs, we are finalizing our proposal under
Sec. 413.412(d) with modification to require that an organ is not
counted as a Medicare usable organ or a total usable organ if the
excising surgeon determines, upon initial inspection or after removal
of the organ, that the organ is not viable and not medically suitable
for transplant and the organ is determined to be unusable and discarded
and removing the language relative to organs that are determined to be
unusable and subsequently donated to research. We may consider
addressing organs subsequently donated to research in future
rulemaking.
Comment: A commenter suggested that the proposed changes to the
calculation of Medicare's share of organ acquisition costs discourages
the procurement of marginal organs that may end up being unusable
organs.
Response: We disagree with the commenter. Our longstanding policy
requires THs and OPOs to exclude unusable organs or organs procured and
subsequently determined unusable from the numerator and the denominator
of the Medicare share calculation. Excluding these organs from the
count allows the costs to be included and spread out amongst all the
remaining transplantable organs and shared by all payors. We
acknowledge that this policy was not clear in the treatment of organs
determined unusable and subsequently donated to research; however, our
proposal was to treat these organs the same way we treat unusable
organs. We received numerous comments on the treatment of research
organs in general, and on the counting of research organs and;
therefore, decided not to finalize this portion of our proposal. As
such, we are finalizing our proposal under Sec. 413.412(d) with
modification to remove the language relative to organs that are
determined to be unusable and subsequently donated to research. We may
consider addressing organs subsequently donated to research in future
rulemaking.
Comment: A commenter noted IOPOs have always been required to
report organs intended for research or transplant but discarded on the
appropriate MCR worksheets for cost allocation purposes. This commenter
requested we revise the IOPO cost report (CMS-216) accordingly.
Response: We acknowledge the commenter's request; however, because
we are not finalizing our policy as proposed, we are not revising the
Medicare cost report, (CMS-216) as the commenter suggested. We are
finalizing our proposal under Sec. 413.412(d) with modification to
require that an organ is not counted as a Medicare usable organ or a
total usable organ if the excising surgeon determines, upon initial
inspection or after removal of the organ, that the organ is not viable
and not medically suitable for transplant and the organ is determined
to be unusable and discarded, and removed the language relative to
organs that are determined to be unusable and subsequently donated
[[Page 73496]]
to research. We may consider addressing organs subsequently donated to
research in future rulemaking.
j. Provisions Related to Medicare as Secondary Payer--Organ Acquisition
Costs and Medicare Organ Count
If a Medicare beneficiary has a primary health insurer other than
Medicare and that primary health insurer has primary liability for the
transplant and organ acquisition costs, the Medicare Program may share
a liability for organ acquisition costs as a secondary payer in certain
instances. Medicare prohibits secondary payment if the provider is
either obligated to accept, or voluntarily accepts, as payment in full,
a primary payment that is less than its charges. See 42 CFR 411.32(b).
When a provider or supplier is obligated to accept as full payment an
amount less than its charges, Medicare considers that lower amount to
be the provider's charges. (For more information see the October 11,
1989, final rule (54 FR 41728)). In this final rule, we are codifying
into the regulations the organ acquisition cost reimbursement policy
with regard to Medicare secondary payer policy.
To determine whether the provider is contractually obligated to
accept the primary insurer's payment as payment in full, and thus
whether Medicare has zero liability as a secondary payer, it is
necessary to review the provider or supplier's agreement with the
primary insurer. If the primary insurer's agreement requires the TH to
accept the primary insurer's payment as payment in full for the
transplant and the associated organ acquisition costs, Medicare has
zero liability as a secondary payer with no payment obligation for the
transplantation costs or the organ acquisition costs, and the organ at
issue is not counted as a Medicare usable organ.
When the primary insurer's agreement does not require the provider
to accept the payment from the primary insurer as payment in full and
the payment the provider receives from the primary insurer for the
transplant and the organ acquisition costs is insufficient to cover the
entire cost, Medicare may have a secondary payer liability for the
organ acquisition costs. To determine whether Medicare has a secondary
payer liability, it is necessary for the provider to submit a bill to
its Medicare contractor and to compare the total cost of the
transplant, including the transplant DRG amount and the organ
acquisition costs, to the payment received from the primary payer. The
provider's Medicare remittance advice may or may not show that Medicare
has a liability because the remittance advice only reflects the
transplant portion of the payment. Thus, the provider will need to
compare the total Medicare cost (the transplant DRG and the organ
acquisition costs) to the payment from the primary payer to determine
whether Medicare has a liability for the organ acquisition costs. If
the payment from the primary payer is greater than the cost of the
transplant DRG and the organ acquisition costs, there is no Medicare
liability and the organ must not be counted as a Medicare usable organ.
If the payment from the primary payer is less than the transplant DRG
and the organ acquisition costs, there is a Medicare secondary payer
liability and the organ is counted as a Medicare usable organ. In this
circumstance, the payment from the primary payer is pro-rated between
the transplant DRG payment and the organ acquisition payment. If the
organ is counted as Medicare usable, the organ acquisition portion of
the primary payment must be included on the appropriate line as a
revenue offset on the TH's MCR (currently Form CMS-2552). This is
consistent with the cost reporting instructions in CMS Pub. 15-2, (PRM-
2) chapter 40, section 4028.
Consider the following example as an illustration of Medicare's
payment of organ acquisition costs as a secondary payer. A TH
transplants a patient that has private health insurance and Medicare.
The private health insurance is primary and Medicare is secondary. The
private health insurance pays the TH $70,000 for the transplant and the
organ acquisition costs; there is no requirement in the primary
insurer's agreement with the provider for the TH to accept this payment
as payment in full. If Medicare was the primary payer, the combined
payment to the TH would have been $100,000 ($60,000 for the transplant
and $40,000 for the organ acquisition costs). The TH compares the
primary payer payment to the total amount Medicare would have paid if
it had been primary (the transplant DRG and organ acquisition costs).
The TH prorates the primary payer's payment of $70,000 between a
portion of the transplant DRG and a portion of the organ acquisition
costs. The TH determines the primary payer amount for the transplant
DRG payment is $42,000 ($70,000 payment from the primary payer x
[$60,000 for the transplant portion from Medicare/$100,000 combined
Medicare payment]) and for organ acquisition costs is $28,000 ($70,000
payment from the primary payer x [$40,000 for the organ acquisition
portion from Medicare/$100,000 combined Medicare payment]). The TH
counts the organ as a Medicare usable organ on its MCR and offsets the
primary payment amount ($28,000) as revenue received, thereby reducing
Medicare's liability.
In the proposed rule, we proposed to add Sec. 413.414(a) to new
subpart L to set forth the general principle that if a Medicare
beneficiary has a primary health insurer other than Medicare and that
primary health insurer has primary liability for the transplant and
organ acquisition costs, the Medicare Program may share a liability for
organ acquisition costs as a secondary payer in certain instances. To
determine whether Medicare has liability as a secondary payer for organ
acquisition costs, it is necessary to review the TH's agreement with
the primary insurer. In the proposed rule, we also proposed to add
Sec. 413.414(b) to new subpart L to set forth the circumstances when
Medicare has no secondary payer liability for organ acquisition costs.
If the primary insurer's agreement requires the TH to accept the
primary insurer's payment as payment in full for the transplant and the
associated organ acquisition costs, Medicare has zero liability as a
secondary payer with no payment obligation for the transplantation
costs or the organ acquisition costs, and the organ at issue is not a
Medicare usable organ. We also proposed to add Sec. 413.414(c) to new
subpart L to set forth the policy for when Medicare may have a
secondary payer liability for organ acquisition costs, which is based
upon the provider's agreement with the primary insurer that does not
require the provider to accept the payment from the primary insurer as
payment in full, and the payment from the primary payer for the
transplant and the organ acquisition costs is less than the provider's
costs for the transplant and the organ acquisition costs. When the
primary insurer's agreement does not require the TH that performs the
transplant to accept the payment from the primary insurer as payment in
full and the payment the TH receives from the primary insurer for the
transplant and organ acquisition costs is insufficient to cover the
entire cost, Medicare may have a secondary payer liability for the
organ acquisition costs. To determine whether Medicare has a secondary
payer liability for the organ acquisition costs, it is necessary for
the TH that performs the transplant to submit a bill to its Medicare
contractor and to compare the total cost of the transplant, including
the transplant DRG amount and the organ acquisition costs, to the
payment received from the
[[Page 73497]]
primary payer. If the payment from the primary payer is greater than
the cost of the transplant DRG and the organ acquisition costs, there
is no Medicare liability and the organ cannot be counted as a Medicare
usable organ. If the payment from the primary payer is less than the
transplant DRG and the organ acquisition costs, there is a Medicare
secondary payer liability and the organ is counted as a Medicare usable
organ. In this circumstance, the payment from the primary payer is pro-
rated between the transplant DRG payment and the organ acquisition
payment and the portion of the payment applicable to organ acquisition
will be used on the cost report to reduce the Medicare organ
acquisition costs.
Comment: A commenter suggested that when Medicare is required to
pay for medical services furnished in connection with a kidney donation
for a Medicare beneficiary with ESRD, the kidney should also be counted
as a Medicare usable organ, regardless of whether the provider is
``either obligated to accept, or voluntarily accepts, as payment in
full, a primary payment that is less than its charges.'' This commenter
suggested that the proposal to codify the Medicare secondary payer
provisions with respect to organ transplants is inconsistent with the
statute or Congressional intent. This commenter stated that many
commercial payers make no separate payment, nor identify a prorated
amount, for organ acquisition costs outside of a DRG, and suggested
that when Medicare pro-rates the primary payer's reimbursement between
the transplant DRG and the organ acquisition payment, Medicare reduces
its responsibility for organ acquisition cost. The commenter disagreed
with this approach and believes it is arbitrary and capricious to allow
third-party payers to dictate the level of liability Medicare has for
organ acquisition costs.
Response: We appreciate the commenter's perspective; however, we
note that the Medicare secondary payer policy is well established in
statute at section 1862(b) of the Act and in the regulations at Sec.
411.32, and applies to many aspects of Medicare reimbursement outside
of transplant and organ acquisition cost reimbursement. We note that
Medicare secondary payer policy is independent of commercial payers'
approach to organ acquisition costs. As discussed in the proposed rule,
Sec. 411.32 sets forth the basis for Medicare secondary payments, and
establishes that Medicare prohibits secondary payment if the provider
is either obligated to accept, or voluntarily accepts, as payment in
full, a primary payment that is less than its charges. In the proposed
rule, we proposed to codify Medicare's longstanding policy with respect
to Medicare secondary payer and organ acquisition costs so that THs
that perform transplants can discern whether Medicare has a secondary
payer liability for organ acquisition costs incurred by the
transplanting hospital.
In section II.C.2.h.(2). of this final rule with comment period, we
also addressed comments received pertaining to counting organs as
Medicare usable organs when Medicare has secondary payer liability, in
which we explained that only the transplant hospital that performs the
transplant counts as a Medicare usable organ, an organ transplanted for
which Medicare has a secondary payer liability for the organ
transplant.
After consideration of the public comments we received, we are
codifying the provisions related to Medicare as secondary payer for
organ acquisition costs and counting Medicare usable organs as proposed
at Sec. 413.414 in new subpart L, with modifications at Sec.
413.414(c)(3)(ii) to clarify that only the TH that performs the
transplant counts the organ as a Medicare usable organ when there is a
Medicare secondary payer liability.
k. Proposed Organ Acquisition Charges for Kidney Paired Exchanges
In a directed living kidney donation, the donor names a specific
recipient who will receive the donor's kidney.\69\ Because the donor
and recipient are known prior to the organ excision and
transplantation, the organ acquisition costs can be appropriately and
accurately matched to the recipient's account. In a non-directed
donation, the donor does not name a specific recipient for the kidney
and instead, the donor is matched with a recipient in need.\70\ Kidney
paired exchanges are similar to directed living donations; however,
when the living donor and recipient do not match, they can consent to
participate in a kidney paired exchange program. Kidney paired
exchanges can occur when two or more living donor/recipient pairs match
each other and the donated kidneys from two or more donors are
exchanged so each recipient receives a compatible kidney for
transplantation.
---------------------------------------------------------------------------
\69\ https://www.kidney.org/transplantation/livingdonors/general-information-living-donation.
\70\ Id.
---------------------------------------------------------------------------
In a kidney paired exchange, the living donor and matched recipient
may have their procedures performed at different THs. When a recipient
and donor elect to participate in a kidney paired exchange, the costs
of the initial living donor evaluations are incurred by the originally
intended recipient's TH, regardless of whether the living donor
actually donates to their originally intended recipient, a kidney
paired exchange recipient, or does not donate at all. The Medicare
organ acquisition payment policy for kidney paired donations is
currently set forth at PRM section 3106. In the proposed rule, we
proposed to codify Medicare's organ acquisition payment policy with
respect to KPD transactions to ensure that the kidney acquisition costs
in a kidney paired exchange are documented so that the kidney
acquisition costs are appropriately and accurately assigned to the
transplant recipient's account, and appropriate organ acquisition
payment outcomes are achieved, consistent with a directed donation.
The costs of all hospital and physician services for pre-transplant
living donor and recipient evaluations become acquisition costs and are
included in the MCR of the recipient's TH, regardless of whether the
recipient is a Medicare beneficiary. Additionally, all total usable
kidneys and all Medicare usable kidneys are recorded by the transplant
hospital on its MCR so that Medicare's share of kidney acquisition
costs can be computed; this is true regardless of whether the
transplant results from a KPD or from a directed donation. In a kidney
paired exchange, once the donor and recipient are matched, any
additional tests requested by the recipient's TH, and performed by the
donor's TH, are billed to the recipient's TH as charges reduced to cost
(using the donor's TH's cost to charge ratio) and included as
acquisition costs on the recipient TH's MCR, regardless of whether an
actual donation occurs, and regardless of whether the recipient is a
Medicare beneficiary. When a donor's TH procures and furnishes a kidney
to a recipient's TH, the donor's TH bills the recipient's TH the donor
TH's kidney SAC, or alternatively, its standard departmental charges
reduced to cost, for the reasonable costs associated with procuring,
packaging and transporting the kidney. The donor's TH records these
costs on its MCR as kidney acquisition costs and offsets any payments
received from the recipient's TH against its kidney acquisition costs.
The recipient's TH records as part of its kidney acquisition costs, the
amounts billed by the donor's TH for the reasonable costs associated
with procuring, packaging, and transporting the organ, as well as any
additional
[[Page 73498]]
testing performed and billed by the donor's TH.
In the scenario where a donor's TH does not procure a kidney, and
instead the donor travels to the recipient's TH and the recipient's TH
procures the organ from the donor, the reasonable costs associated with
the organ procurement are included on the MCR of the recipient's TH. As
discussed in section II.C.2.b.(3). of this final rule with comment
period, transportation and travel expenses of the living donor are not
allowable Medicare costs. Programs outside of Medicare, such as that of
the National Living Donor Assistance Center,\71\may pay for
transportation costs for living donors.
---------------------------------------------------------------------------
\71\ https://www.livingdonorassistance.org/; accessed on
November 30, 2021.
---------------------------------------------------------------------------
Example. The following is an example of the accounting of organ
acquisition costs in a kidney paired exchange for Medicare cost
reporting purposes.
(Step 1), the Participants. There are 4 THs: TH A, TH B, TH C, and
TH D. Each TH has a potential transplant recipient in need of a kidney
and each recipient has a willing, but poorly matched, donor; thus, all
donors and recipients enter into a kidney paired exchange. Each
recipient and donor pair have been evaluated at their respective TH.
TH A. Recipient A is a patient of TH A. TH A evaluates
three potential living donors for Recipient A before a donor, Donor A,
is identified. The costs of these evaluations are reported as kidney
acquisition costs on TH A's cost report. Recipient A and Donor A do not
match each other but both agree to participate in a KPD exchange.
TH B. Recipient B is a patient of TH B. TH B evaluates two
potential living donors for Recipient B before a donor, Donor B, is
identified. The costs of these evaluations are reported as kidney
acquisition costs on TH B's cost report. Recipient B and Donor B do not
match each other but both agree to participate in a KPD exchange.
TH C. Recipient C is a patient of TH C. TH C evaluates
three potential living donors for Recipient C before a donor, Donor C,
is identified. The costs of these evaluations are reported as kidney
acquisition costs on TH C's cost report. Recipient C and Donor C do not
match each other but both agree to participate in a KPD exchange.
TH D. Recipient D is a patient of TH D. TH D evaluates
three potential living donors for Recipient D before a donor, Donor D,
is identified. The costs of these evaluations are reported as kidney
acquisition costs on TH D's cost report. Recipient D and Donor D do not
match each other but both agree to participate in a KPD exchange.
(Step 2), the KPD Match. Through the KPD exchange it is determined
that Recipient A matches Donor C; Recipient B matches Donor D;
Recipient C matches Donor A; and Recipient D matches Donor B.
(Step 3), After the KPD Match.
Recipient C's TH requests Donor A's TH perform an
additional test that was not included in Donor A's initial evaluation.
Donor A's TH performs the additional test and bills Recipient's C's TH,
charges reduced to cost, for the additional tests of Donor A. The
amounts billed by TH A to TH C are included in TH C's MCR as organ
acquisition costs for Recipient C.
Donor B elects to travel to TH D for the procurement and
any additional testing. (Note: The cost of travel for a living donor is
not an allowable organ acquisition cost.)
Donor A, Donor C, and Donor D remain at their original
intended recipients' THs (TH A, TH C and TH D, respectively) where they
were evaluated and where their organ procurement will occur.
(Step 4), Procuring, Packaging and Transporting the Kidneys.
TH A procures Donor A's kidney and packages and transports
it to TH C for Recipient C. TH A bills TH C, charges reduced to cost,
for the reasonable costs associated with procuring, packaging and
transporting the kidney as well as any additional testing requested by
TH C that was not included in the initial evaluation of Donor A. Donor
A's TH records these costs on its MCR as kidney acquisition costs and
offsets any payments received from TH C against its kidney acquisitions
costs.
TH B does not procure a kidney. Donor B elects to travel
to TH D for the procurement. TH D procures Donor B's kidney and records
these costs on its cost report as kidney acquisition costs. TH B
receives a kidney from TH D for transplant into recipient B. TH B
records the amounts it pays to TH D on TH B's MCR as kidney acquisition
costs.
TH C procures Donor C's kidney and packages and transports
it to TH A for Recipient A. TH C bills TH A, charges reduced to cost,
for the reasonable costs associated with procuring, packaging and
transporting the kidney as well as any additional testing requested by
TH A that was not included in the initial evaluation of Donor C. Donor
C's TH records these costs on its MCR as kidney acquisition costs and
records any payments received from TH A on TH C's MCR to offset its
kidney acquisitions costs.
TH D procures Donor D's kidney and packages and transports
it to TH B for recipient B. TH D bills TH B, charges reduced to cost,
for the reasonable costs associated with procuring, packaging and
transporting the kidney, as well as any additional testing requested by
TH B that was not included in the initial evaluation of Donor D. Donor
D's TH records these costs on its MCR as kidney acquisition costs and
records any payments received from TH B on TH D's MCR to offset its
kidney acquisitions costs. TH B records the amounts it pays to TH D for
Donor D's kidney on TH B's MCR as kidney acquisition costs.
The following tables summarize the KPD exchange described
previously.
Table 3--Summary of Kidney Paired Donation Exchange Example
----------------------------------------------------------------------------------------------------------------
TH A TH B TH C TH D
----------------------------------------------------------------------------------------------------------------
Recipient Recipient A Recipient B Recipient C Recipient D
----------------------------------------------------------------------------------------------------------------
Number of evaluations........... Evaluates 3 Evaluates 2 Evaluates 3 Evaluates 3
potential donors potential donors potential donors potential donors
before Donor A is before Donor B is before Donor C is before Donor D is
identified. identified. identified. identified.
----------------------------------------------------------------------------------------------------------------
Donor........................... Donor A: Recipient Donor B: Recipient Donor C: Recipient Donor D: Recipient
A and Donor A do B and Donor B do C and Donor C do D and Donor D do
not match each not match each not match each not match each
other but agree other but agree other but agree other but agree
to a KPD exchange. to a KPD exchange. to a KPD exchange. to a KPD
exchange.
KPD match....................... Recipient A Recipient B Recipient C Recipient D
matches with matches with matches with matches with
Donor C. Donor D. Donor A. Donor B.
[[Page 73499]]
After the match................. TH A performs TH B does not TH C procures TH D procures
additional tests procure kidney kidney from Donor kidney from Donor
and procures from Donor B for C for TH A. D for TH B. Donor
kidney from Donor TH D. Donor B B travels to TH D
A for TH C. travels to TH D. for the kidney
procurement.
----------------------------------------------------------------------------------------------------------------
Table 4--Summary of Accounting for Kidney Pair Donation Example
----------------------------------------------------------------------------------------------------------------
Accounting
-----------------------------------------------------------------------------------------------------------------
$12,000 incurred $9,000 incurred by $15,000 incurred $20,000 incurred
Cost of evaluations by TH A TH B by TH C by TH D
----------------------------------------------------------------------------------------------------------------
Counting Medicare usable kidneys 2 Medicare usable 1 Medicare usable 2 Medicare usable 2 Medicare usable
kidneys: 1 kidney kidney: 1 kidney kidneys: 1 organ kidneys: 1 kidney
procured/ received/ procured/ procured/
furnished and 1 transplanted. furnished and 1 furnished and 1
kidney received/ kidney received/ kidney procured/
transplanted. transplanted. transplanted.
Donor costs associated with TH A bills TH C No bills sent to TH C bills TH A TH D bills TH B
procuring, packaging and $18,000 for costs TH D. $10,000 for costs $14,000 for costs
transporting the kidney to the incurred to incurred to incurred to
recipient THs. procure Donor A's procure Donor C's procure Donor D's
kidney. kidney. kidney.
Recipient costs associated with TH A receives a TH B receives a TH C receives a No bills received
procuring, packaging and bill from TH C bill from TH D bill from TH A from TH B. TH D
transporting the kidney bill by for $10,000 for for $14,000 for for $18,000 for claims all costs
Donor THs. costs incurred to costs incurred to costs incurred to after initial
procure Donor C's procure Donor D's procure Donor A's evaluation for
kidney. kidney. kidney. Donor B.
Kidney acquisition costs $12,000 evaluation $9,000 evaluation $15,000 evaluation $20,000 evaluation
recorded on MCR. costs of TH A. costs of TH B. costs of TH C. costs of TH D.
$18,000 for costs .................. $10,000 for costs $14,000 for costs
billed to TH C. billed to TH A. billed to TH B.
$10,000 billed $14,000 billed $18,000 billed $8,000 for costs
from TH C. from TH D. from TH A. incurred to
procure Donor B's
kidney at TH D.
-------------------------------------------------------------------------------
Subtotal.................... $40,000........... $23,000........... $43,000........... $42,000.
Offset on MCR amounts received ($18,000) received No payment ($10,000) received ($14,000) received
from recipient TH. Amounts in ( from TH C. received from TH from TH A. from TH B.
) denote a negative number. D.
-------------------------------------------------------------------------------
Net cost recorded on MCR.... $22,000........... $23,000........... $33,000........... $28,000.
----------------------------------------------------------------------------------------------------------------
In the proposed rule, we proposed to codify into the regulations
the Medicare organ acquisition payment policy for kidney paired
exchanges, as set forth in PRM section 3106. Consistent with this
provision, we also proposed to add Sec. 413.416(a) to new subpart L to
specify that when a recipient and donor elect to participate in a
kidney paired exchange, the costs of the initial living donor
evaluations are incurred by the originally intended recipient's TH,
regardless of whether the living donor actually donates to their
originally intended recipient, a kidney paired exchange recipient, or
does not donate at all. We also proposed to add Sec. 413.416(b) to new
subpart L to specify that in a kidney paired exchange, regardless of
whether an actual donation occurs, once the donor and recipient are
matched, any additional tests requested by the recipient's TH and
performed by the donor's TH, are billed to the recipient's TH as
charges reduced to cost (using the donor's TH's cost to charge ratio)
and included as acquisition costs on the recipient TH's MCR. We also
proposed to add Sec. 413.416(c) to new subpart L to specify that in a
kidney paired exchange, when a donor's TH procures and furnishes a
kidney to a recipient's TH, all costs must be reasonable and necessary
and (1) the donor's TH bills the recipient's TH the donor TH's charges
reduced to cost or the TH's applicable SAC for the reasonable costs
associated with procuring, packaging and transporting the kidney; (2)
the donor's TH records these costs associated with procuring, packaging
and transporting the kidney on its MCR as kidney acquisition costs and
offsets any payments received from the recipient's TH against these
kidney acquisition costs; and (3) the recipient's TH records as part of
its kidney acquisition costs, the amounts billed by the donor's TH for
the reasonable costs associated with procuring, packaging, and
transporting the organ as well as any additional testing performed and
billed by the donor's TH. We also proposed to add Sec. 413.416(d) to
new subpart L to specify that, in a kidney paired exchange--(1) when a
donor's TH does not procure a kidney, but the donor travels to the
recipient's TH for the organ procurement, the reasonable costs
associated with the organ procurement are included on the MCR of the
recipient's TH; and (2) travel expenses of the living donor are not
allowable Medicare costs. In section II.C.2.c.(2). of this final rule
with comment period, we finalized the proposal to add Sec.
413.404(b)(2) to specify that when a TH/HOPO furnishes an organ to
another TH or IOPO, it must bill the receiving TH or IOPO its SAC by
organ type, or the hospital's standard departmental charges that are
reduced to cost.
We did not receive comments on the proposal to codify Medicare's
organ acquisition payment policy with respect to KPD transactions and
as such, we are
[[Page 73500]]
finalizing these provisions as proposed in Sec. 413.416.
l. Provisions Requiring Donor Community Hospitals to Charge OPOs
Reasonable Costs, Charges Reduced to Cost
Medicare-certified hospitals that are not THs but collaborate with
OPOs to procure organs from cadaveric donors for transplantation are
hereinafter referred to as ``donor community hospitals''. To
participate in the Medicare Program, donor community hospitals and THs
have organ procurement responsibilities and must have an agreement with
a designated OPO to timely notify the OPO of individuals whose death is
imminent or who have died in the hospital (42 CFR 482.45(a)(1)). The
OPO then implements its donation protocol and, when appropriate (after
declaration of death and consent to donate), will arrange for the
procurement of all medically suitable cadaveric donor organs for
transplant, at the donor community hospital or TH. In this regard,
donor community hospitals and THs may incur costs for services provided
to cadaveric organ donors following declaration of death and consent to
donate through the procurement of the organs (for example, use of the
hospitals operating room, staff, and ventilators to maintain the
viability of the cadaveric donor organs).
Currently, when a donor community hospital incurs costs for
services provided to the cadaveric donor, as authorized by the OPO
following the declaration of death and consent to donate, it bills the
OPO its customary charges (not reduced to cost) or a negotiated rate.
(PRM-1 section 3107). Donor community hospital billing procedures are
described in IL 74-23, published July 1, 1974, which provides, ``where
the excising hospital is not a TH, it will bill its customary charges
for those services used in excising the cadaver kidney.'' Thereafter,
the OPO includes the charges from the donor community hospital on its
cost report as part of the OPO's organ acquisition costs. At the end of
its accounting period, the TH/HOPO uses these amounts to calculate its
renal and non-renal SAC amounts for the following year, and the IOPO
uses these amounts to calculate its non-renal SAC amounts for the
following year. Medicare contractor's also use these amounts to
calculate the IOPO's kidney SAC for the following year.
When the IOPO furnishes an organ to a TH (or other OPO), the IOPO
bills the TH (or other OPO) the IOPO's SAC for the specific organ type.
Currently, when a TH/HOPO furnishes an organ to another TH or OPO, it
must bill its SAC or its standard departmental charges reduced to cost.
The OPO's SAC is a charge which reflects an average of the total actual
costs the OPO incurs to furnish an organ and reflects amounts the OPO
is charged by the donor community hospital for services the donor
community hospital provides to cadaveric donors. THs then include these
SACs they have paid to OPOs to procure organs as allowable acquisition
costs in their bills to Medicare, which Medicare pays. Therefore,
because the OPO's incurred costs are passed on to and paid by the TH,
and because the TH then includes these amounts as organ acquisition
costs on its cost report, this chain of incurred costs results in
Medicare paying these donor hospital charges (that are not reduced to
cost) when it reconciles the organ acquisition costs on the TH cost
report.
Stakeholders have made CMS aware that some donor community
hospitals are charging OPOs amounts that are in excess of reasonable
costs for services provided to cadaveric organ donors, resulting in
Medicare paying more than reasonable costs for the acquisition of
cadaveric donor organs for transplant. In one instance, an OPO
identified a donor community hospital in its designated service area
that billed amounts in excess of reasonable costs. CMS reviewed the
donor community hospital's bills to the OPO and the donor community
hospital's MCR information to evaluate the costs associated with those
charges. CMS computed, using the hospitals cost-to-charge ratios (CCR),
that the charges billed by the donor community hospital in the amount
of $194,000, equated to a cost of $11,000. Thus, the donor community
hospital's actual costs were approximately 6 percent of their billed
charges.
Organ acquisition costs are reimbursed under Medicare's principles
of reasonable cost established under section 1861(v) of the Act. Donor
community hospitals (and THs) are Medicare-certified hospitals and must
follow Medicare's reasonable cost principles under section 1861(v) of
the Act. Because the services donor community hospitals provide to
cadaveric donors, and thus charge to OPOs, are included as organ
acquisition costs on OPOs' cost reports, these charges are also subject
to Medicare's principles of reasonable cost established under section
1861(v) of the Act, and 42 CFR 413.5 and 413.9.
In a 1978 final rule with comment, CMS similarly noted that THs
have no basis for determining the reasonableness of the charges made by
the OPO.\72\ CMS observed that services furnished by OPOs, if they are
not part of the transplant hospital, are billed to transplant
hospitals, which pay the charges shown on the bill. The charges then
become allowable costs of the hospitals.\73\ When donor community
hospitals charge OPOs amounts not reduced to costs, and the OPOs pay
the charges shown on the bill, those charges become incorporated as
organ acquisition costs to the TH and are subsequently shared by
Medicare; thus, Medicare's reasonable cost principles applicable to
organ acquisition costs are not observed. We note that organs recovered
from donor community hospitals comprised 62 percent of all transplanted
organs in 2017 and 2018.\74\ We recognize that because THs bill the
OPOs' charges to Medicare, Medicare is paying more than reasonable
costs for these services that become organ acquisition costs.
---------------------------------------------------------------------------
\72\ 43 FR 58370 (December 14, 1978).
\73\ Id.
\74\ Scientific Registry of Transplant Recipients. Request for
Information. Requested on 02/08/2021.
---------------------------------------------------------------------------
Because these charges become allowable organ acquisition costs of
the TH, we believe that donor community hospitals should be required to
reduce their charges to cost for services provided to cadaveric donors
and billed to OPOs, in accordance with reasonable cost principles given
in section 1861(v) of the Act and in our regulations at 42 CFR 413.5
and 413.9. Doing so will result in conformance to Medicare reasonable
cost principles, and result in reduced costs to the OPOs, subsequently
reducing cadaveric donor SACs billed to THs or OPOs, which may benefit
other payors, as well as Medicare. Donor community hospitals are
reimbursed either a DRG payment by Medicare (if the patient is a
Medicare beneficiary), or a payment from other payers, for services
provided to a potential organ donor prior to declaration of death and
consent to donate. For services provided after declaration of death and
consent to donate, if our provision is implemented, donor hospitals
will be reimbursed by OPOs for their reasonable costs in accordance
with Medicare's principles of reimbursement. Therefore, a donor
community hospital would see a reduction in reimbursement from OPOs,
because the donor hospital was previously permitted to bill the OPO its
customary charges or negotiated rates. However, donor community
hospitals would still have their reasonable costs reimbursed.
We believe that an equitable and accurate methodology to reduce a
donor
[[Page 73501]]
community hospital's charges to cost would be to use the most recently
available hospital-specific CCR. Using the hospital-specific CCR would
be unique to each donor community hospital and would more accurately
compensate them for services provided to cadaveric organ donors, as
opposed to using an alternative like the statewide CCR. Because
contractors recalculate each hospital's specific CCR on an ongoing
basis, whenever more recent cost report data is available, the
hospital's specific CCR is arguably more accurate and more closely
aligned with creating a uniform charge to cost structure.
One methodology we considered to reduce a donor community
hospital's charges to cost was to require the donor community hospital
to use its statewide average operating CCR and apply this statewide
average CCR to its charges. The statewide average operating CCR is
updated annually in the FY IPPS/LTCH rule and is a transparent source
of data. We note that the statewide average operating CCR published in
the FY 2021 IPPS/LTCH final rule was 0.272 for urban hospitals and
0.336 for rural hospitals. Using a statewide average CCR would even out
any instances in which a hospital's operating costs fall above or below
established parameters. However, because it is an average, it would not
accurately represent the variability in actual hospital specific CCRs.
Therefore, using a statewide CCR may not adequately serve the purpose
of reducing charges to cost.
Stakeholders have suggested that some donor community hospitals are
improperly billing OPOs for services provided to cadaveric donors prior
to the declaration of death and consent to donate. This would be
inappropriate because hospital services provided prior to declaration
of death and consent to donate are billable to the donor's insurance in
the same manner hospital services are billable to an individual
receiving services, regardless of whether the payor is Medicare. We
reiterate that when a donor community hospital or TH incurs costs for
providing services to a cadaveric donor, as authorized by the OPO, only
those costs incurred after the declaration of the donor's death and
consent to donate are permitted to be billed to the OPO. The OPO must
accept bills from donor community hospitals and THs for costs only
incurred after the declaration of death and consent to donate.
Contractors will review OPO cost reports to ensure that donor community
hospitals and THs charge OPOs for cadaveric donor costs incurred after
declaration of death and consent to donate.
We proposed to add Sec. 413.418(a) in new subpart L, to specify
that a donor community hospital (a Medicare-certified non-transplant
hospital) incurs organ acquisition costs for donor organ procurement
services, authorized by the OPO following declaration of death and
consent to donate.
We proposed to add Sec. 413.418(b) in new subpart L, to specify
that for cost reporting periods beginning on or after October 1, 2021,
when a donor community hospital incurs costs for services furnished to
a cadaveric donor, as authorized by the OPO, the donor community
hospital must bill the OPO its customary charges that are reduced to
cost by applying its most recently available hospital specific cost-to-
charge ratio for the period in which the service was rendered.
Comment: A few commenters suggested that if Medicare does not cover
expenses prior to a donor's death, there would be uncompensated donor
testing which may become the responsibility of the donor's family or
other third-party payers.
Response: OPOs and THs are responsible for all costs for donor
evaluation and medical management once declaration of death and consent
for donation occurs. Generally, Medicare does not cover costs of
services incurred for a potential organ donation as organ acquisition
costs unless those costs occur after the declaration of death and
consent to donate is obtained. Therefore, costs of services incurred
for a potential organ donor prior to declaration of death and consent
to donate must not be included on the OPO cost report.
Comment: A commenter supported our proposal and noted when entities
continue to engage in improper billing they violate CMS reasonable cost
principles, and drive up the overall cost of organ donation and
procurement. Several commenters appreciated our concerns that some
donor community hospitals bill OPOs more than cost for services
provided to cadaveric donors and generally supported our proposal to
require donor community hospitals to bill the OPO its customary charges
reduced to cost for such services. However, some of these supporters
that were OPOs indicated they have successfully negotiated competitive
``per-case'' rates with donor hospitals and stated there may be
instances where OPOs have negotiated lower ``per-case'' rates than
charges reduced to cost. These commenters suggested that our policy, if
finalized as proposed, would unintentionally interfere with
longstanding arrangements many OPOs have with donor community
hospitals. Some supporters of our proposal underscored the importance
of considering stakeholder input to create evidence-based policy.
Response: We appreciate the commenter's support for our proposal.
We agree that when entities continue to engage in improper billing they
violate CMS reasonable cost principles, and drive up the overall cost
of organ donation and procurement. Our proposal was not intended to
interfere with longstanding arrangements whereby OPOs and donor
community hospitals have negotiated per-case rates that align with
Medicare's reasonable cost principles. We agree that flexibility should
be afforded to OPOs and donor community hospitals by allowing for
alternative charge arrangements like per-case rates currently in place
between some OPOs and donor community hospitals, however, as long as
the amount is less than customary charges adjusted to cost.
Comment: Several commenters disagreed with our proposal and claimed
it would increase administrative burden, which could delay payment. A
commenter suggested to reduce donor community hospital administrative
burden, donor community hospitals could continue normal billing
practices, and either the OPOs or CMS could apply a cost to charge
calculation using the public CCRs found in the IPPS Impact Files.
Response: We disagree with commenters' assertions that our proposal
would increase administrative burden. We also disagree with the
suggestion that OPOs or CMS should apply the CCR on behalf of the donor
community hospitals. The current policy allows donor community
hospitals to bill customary charges (or negotiated rates) to OPOs for
services provided to the cadaveric donor; therefore, these hospitals
have established billing practices in place and will not incur added
burden as a result of our proposal. In addition, 42 CFR 413.24(f)
requires all Medicare-certified donor community hospitals to file an
MCR on an annual basis. Therefore, the information required to reduce
charges to cost is readily available to donor community hospitals.
Comment: Some commenters claimed limiting amounts paid to donor
community hospitals would limit the number of organs available for
transplant. Another commenter stated when donor community hospitals
charge, and OPOs pay amounts greater than cost, the policy provides a
clear financial benefit to these hospitals. Another commenter stated
because donor community hospitals are not
[[Page 73502]]
reimbursed for organ acquisition-related costs on the MCR they will
have no incentive to support the costs associated with a deceased
donor.
Several commenters suggested concern that some donor community
hospitals may not work cooperatively with OPOs as a result of this
proposal. One of these commenters acknowledged reports of some donor
community hospitals billing ``outlandishly high charges'' for costs
associated with organ recovery, but indicated their experience with
donor community hospitals works because of negotiated acquisition fees
in place. This commenter acknowledged that Medicare's CoPs require
cooperation between hospital staff and OPOs, but questioned whether
enforcement of those cooperation requirements is a priority.
Response: We appreciate commenters' concerns that the proposal
would limit amounts paid to donor community hospitals. We acknowledge
that when donor community hospitals bill, and OPOs pay, amounts greater
than cost, the donor community hospital benefits financially. In the
proposed rule, we noted that a donor community hospital would see a
reduction in reimbursement from OPOs, because the donor community
hospital was previously permitted to bill the OPO its customary charges
or negotiated rates. However, donor community hospitals will still be
paid for their services provided to potential donors, at amounts that
recognize Medicare's reasonable cost principles.
In addition, donor community hospitals must work with OPOs per the
Medicare requirements for CoPs at 42 CFR 482.45. These regulations
require that donor community hospitals notify OPOs, in a timely manner,
of individuals whose death is imminent or who have died in the hospital
to assure that the OPO can determine medical suitability for organ
donation. The regulations also require that the hospital work
cooperatively with its designated OPO to educate staff on donation
issues and maintain potential donors while necessary testing and
placement of potential donated organs, tissues, and eyes take place.
Our proposal to require donor community hospitals to charge OPOs
amounts that are reduced to its cost does not impede hospitals'
compliance with Medicare CoPs. Hospitals will still be paid for their
services provided to potential donors, at amounts that recognize
Medicare's reasonable cost principles. As such, we believe that our
proposal should not impact the number of organs available for
transplant or cooperation between OPOs and donor community hospitals
because OPOs and donor community hospitals must continue to work
together, as required under Medicare CoPs, to procure all available
organs for transplant.
Comment: Many commenters suggested alternatives to our proposal to
require donor community hospitals to bill OPOs charges reduced to cost.
These commenters suggested that CMS require donor community hospitals
to bill OPOs an amount no more than customary charges adjusted to cost,
but allow for alternative charge arrangements like per-case rates
currently in place between some OPOs and donor community hospitals, as
long as the amount is less than customary charges adjusted to cost. A
few commenters suggested CMS establish a maximum price ceiling instead
of a universal price so that these per-case rates, often perceived to
be more competitive, can remain in place. A commenter requested we
temporarily withdraw the proposal and develop a donor community
hospital SAC methodology that would permit such hospitals to charge
(and OPOs to pay) rates above actual, reasonable cost. A few commenters
suggested CMS work with stakeholders to develop a model to account for
the cost of delayed or canceled operating room procedures and use this
model when an OPO and a donor community hospital do not have a
negotiated a standard acquisition charge. Finally, several commenters
requested our proposals be delayed to allow time for an impact
analysis.
Response: We appreciate commenters' suggestions to withdraw the
proposed policy and develop a SAC for donor community hospitals that
would permit OPOs to pay charges greater than cost, but respectfully
disagree. The SAC generally represents the average of the total actual
costs associated with procuring either cadaveric donor organs or living
donor organs and is based on Medicare's reasonable cost principles,
which do not allow for payment of amounts greater than reasonable cost.
We believe that flexibility should be afforded to OPOs and donor
community hospitals and THs by allowing for alternative charge
arrangements like per-case rates currently in place between some OPOs
and donor community hospitals, as long as the amount is less than
customary charges adjusted to cost. Because of this flexibility, we do
not believe that we need to develop a model, as commenters suggest, to
account for the cost of delayed or canceled operating room procedures
and to use this model when an OPO and a donor community hospital do not
have a negotiated standard acquisition charge. We also do not believe
that our proposals should be delayed so that an impact analysis can be
conducted. As we discussed in the proposed rule, we believe the impact
is not estimable because we do not have information to calculate the
effects on revenue and costs to donor community hospitals, OPOs, or
transplant hospitals.
Comment: A few commenters suggested that CMS should specify that
the proposal to require that donor community hospitals bill OPOs
customary charges that are reduced to cost should not apply only to
donor community hospitals, but also to THs that bill OPOs for services
provided to cadaveric donors. A commenter claimed our proposal is
inconsistent with past position on hospitals maintaining uniform and
customary charge structures that apply universally to all payers and
requested we withdraw our proposal.
Response: We agree that THs provide services to cadaveric donors,
placing them in a similar situation as donor community hospitals when
billing amounts to OPOs for services provided to cadaveric donors
following the declaration of death and consent to donate, as authorized
by the OPO. We believe that a TH must bill the OPO its customary
charges that are reduced to cost by applying its most recently
available hospital-specific CCR for the period in which the service was
rendered, or a negotiated rate. We note that charges for services
provided to cadaveric donors become organ acquisition costs, and
payment for such aligns with Medicare's reasonable cost principles
under which organ acquisition costs are paid and does not run afoul of
CMS requirements for hospitals to maintain uniform and customary charge
structures. As such, we do not believe it is necessary to withdraw our
proposal.
Comment: Some commenters suggested CMS institute an oversight
mechanism for enforcing our proposal, as they perceive no requirement
for donor community hospitals to negotiate rates with OPOs.
Response: Providers under the Medicare program are required to
submit Medicare cost reports on an annual basis 42 CFR 413.24(f). We
believe that Medicare contractors' review and audit of hospitals'
submitted cost reports serve as an existing oversight mechanism for
enforcing our proposal.
Comment: Some commenters requested specific instructions be issued
to hospitals for the appropriate billing of their charges reduced to
cost, and questioned which hospital CCRs should
[[Page 73503]]
be used in the calculation, and whether it should be based on final
cost reports or on interim cost reports. Other commenters questioned
whether OPOs will be required to validate the CCRs used by hospitals,
where CMS will publish the hospital specific files, or if hospitals
will be required to furnish their hospital specific CCR in cases where
they have case rates or flat rates with the OPO. A commenter stated
that use of the most recently available MCR could understate costs due
to increasing healthcare costs. A commenter suggested, when the most
recently available MCR is used, an update factor should be applied to
ensure the cost represents the costs for the period in which the
service was actually provided. Another commenter questioned whether
hospitals should bill OPOs for physician professional fees at cost, or
whether OPOs should pay physician charges based on the Medicare
physician fee schedule to ensure that OPOs are not overpaying hospitals
for physician services.
Response: We are clarifying that a donor community hospital must
use the most recently available hospital specific CCR, included in the
provider-specific file published on the CMS website, \75\ for the
period in which the service was rendered. The hospital-specific CCR is
the same CCR that is used in the IPPS outlier calculation. A donor
community hospital must provide, upon request from the OPO or TH, its
hospital-specific CCR for review, or comparison in cases where they
have case rates or flat rates with the OPO. If the donor community
hospital or TH believes its most recently available CCR does not
convert charges to reflect its actual cost, we believe instead of
applying an update factor, it would be reasonable for the hospital to
follow the procedures outlined in the Medicare Claims Processing
Manual, (CMS Pub. 100-04), chapter 3, section 20.1.2.1. for use of an
alternative CCR. Finally, we appreciate the commenters' concern about
OPOs overpaying hospitals for physician services; however, we believe
that OPOs either employ or contract with physicians to provide services
in a donor community hospital. In addition, our proposal only addressed
charges as they relate to hospital services provided to cadaveric
donors.
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\75\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ProspMedicareFeeSvcPmtGen/psf_text.
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After consideration of the public comments we received, we are
finalizing our proposal with modifications based on comments received
to specify at Sec. 413.418(a) in new subpart L, that a donor community
hospital (a Medicare-certified non-transplant hospital) and a
transplant hospital incur organ acquisition costs for donor organ
procurement services, authorized by the OPO following declaration of
death and consent to donate. We are also finalizing our proposal with
modifications, to specify at Sec. 413.418(b) that for cost reporting
periods beginning on or after the effective date of this final rule
with comment period, when a donor community hospital or a transplant
hospital incurs costs for services furnished to a cadaveric donor, as
authorized by the OPO, the donor community hospital or transplant
hospital must bill the OPO the lesser of its customary charges that are
reduced to cost by applying its most recently available hospital
specific cost-to-charge ratio for the period in which the service was
rendered, or a negotiated rate.
m. Revisions, Technical Corrections, and Conforming Changes to 42 CFR
Part 412, Subparts A, E, G, and H and to Part 413, Subparts A, C, and H
(1) Conforming Changes to Terminology in 42 CFR Parts 412 and 413
In section X.B.2.a.(1). of the preamble of the FY 2022 IPPS/LTCH
PPS proposed rule and in section II.C.2.a.(1). of this final rule with
comment period, we noted terminology differences in the use of
``transplantation center'', where the regulations in 42 CFR part 412,
subparts A, E, G, and H and in Part 413, subparts A, C, and H use the
term to mean an organ-specific transplantation program that is within a
TH. We proposed to conform the language in the regulation text to the
terminology used in the CoPs at Sec. 482.70 by replacing the term
``transplantation center'' and its various permutations with the term
``transplant program'' and its various permutations. We proposed to
make this conforming change in the text of the following regulations:
Sec. Sec. 412.1(a)(1)(ii), 412.2(e)(4), 412.71(b)(3), 412.90(d),
412.100 (in the title and in the text at Sec. Sec. 412.100(a)(1)),
412.113(d), 412.116(c), and 413.40(a)(3). We also proposed to update
the terminology to replace ``organ procurement agency'' and its various
permutations with ``organ procurement organization'' and its various
permutations. Further, we proposed to replace the acronym ``OPAs'' with
``OPOs''. We proposed to make these terminology changes to the
regulation text at Sec. Sec. 412.100(b) and 413.1(a)(2)(v) to conform
to the terminology used in the CoPs found in 42 CFR part 482. Finally,
we proposed to change ``renal'' to ``kidney'' in Sec. Sec.
412.71(b)(3), 412.90(d), in the title and paragraph (a) of Sec.
412.100, and in Sec. 412.116(c), to conform to the terminology used in
the CoPs at Sec. 482.104.
We did not receive comments on these proposals and are finalizing
these provisions as proposed.
(2) Revisions, Technical Corrections, and Conforming Changes to Sec.
412.100
In the proposed rule, we proposed to revise the text currently
found in Sec. 412.100(a) and (b) to change ``expenses'' to ``costs''
and to remove the word ``estimated'' from Sec. 412.100(a)(1). We also
proposed to make a technical correction to remove from Sec.
412.100(a)(1) cross-references to CoPs which no longer exist, and
replace them with Sec. 482.104, and proposed to add language to
clarify that CMS adjusts inpatient prospective payment system (IPPS)
rates for inpatient operating costs. We proposed to revise Sec.
412.100(a)(1) to state that CMS adjusts the inpatient prospective
payment system (IPPS) rates for inpatient operating costs determined
under subparts D and E of this part for hospitals with approved kidney
transplant programs (discussed at Sec. 482.104) to remove the net
costs associated with kidney acquisition.
Additionally, we proposed to revise Sec. 412.100(a)(2) to clarify
the language, and to specify that Medicare payment for kidney
acquisition costs includes only those costs for kidneys transplanted
into Medicare beneficiaries. We proposed to revise Sec. 412.100(a)(2)
to specify the following:
Payment for Medicare kidney acquisition costs, as set
forth in subpart L of part 413 of this chapter, is made on a reasonable
cost basis apart from the prospective payment rate for inpatient
operating costs.
IPPS payment to the hospital is adjusted in each cost
reporting period to reflect an amount necessary to compensate the
hospital for reasonable costs of Medicare kidney acquisition.
In section X.B.2.b.(1). of the preamble of the FY 2022 IPPS/LTCH
PPS proposed rule, we proposed to revise Sec. 412.100(b) by revising
and relocating the list of organ acquisition costs given in that
paragraph and adding the list as paragraph (b) in proposed Sec.
413.402 of new subpart L. Further, we proposed to revise Sec.
412.100(b) to make it clearer that kidney acquisition costs must be
incurred. Finally, we proposed to revise Sec. 412.100(b) to add
language that the items and services covered as kidney acquisition
costs are specified in Sec. 413.402(b).
[[Page 73504]]
We did not receive comments on the proposals made in section
X.B.2.m.(2). of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, and are finalizing our provisions as proposed.
(3) Revisions and Conforming Changes to 42 CFR 412.113(d)
In addition to the conforming change discussed in section
X.B.2.m.(1). of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, we proposed to revise the regulation text at Sec. 412.113(d) to
reference the organ acquisition policies given in new subpart L of part
413, rather than to maintain the existing cross-reference to the
definition of organ given in Sec. 486.302.
We did not receive comments on this proposal and are finalizing the
provision as proposed.
(4) Technical Corrections and Conforming Changes to Sec. 413.1
In addition to the conforming change discussed in section
X.B.2.m.(1). of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, we revised the text in Sec. 413.1(d)(2)(i) to put it into list
form. We also proposed to revise the text related to kidney acquisition
costs to refer to organ acquisition costs as specified in part 413
subpart L.
We did not receive comments on this proposal and are finalizing the
provision as proposed.
(5) Revisions to 42 CFR 413.40(a)(3)
In addition to the proposed conforming changes discussed in section
X.B.2.m.(1). of the preamble of the FY 2022 IPPS/LTCH PPS proposed
rule, we set forth a technical correction and a revision to paragraph
(a)(3) of Sec. 413.40. We proposed to revise the regulation text that
references heart, kidney, and liver acquisition costs to refer to organ
acquisition costs as specified in part 413 subpart L so that the
language reflects all solid organs for which Medicare covers organ
acquisition costs and directs readers to the organ acquisition cost
regulations in part 413, subpart L.
We did not receive comments on this proposal and are finalizing the
provision as proposed.
(6) Regulatory Changes to Sec. 413.200
We proposed to remove the regulation found at 42 CFR 413.200
specifying payment of independent organ procurement organizations and
histocompatibility laboratories. We proposed to add Sec. 413.400 to
contain revised text from Sec. 413.200(b), and to add Sec. 413.420 to
contain the remaining regulation text from Sec. 413.200 (a) and (c)
through (g), along with a revised title, so that the content of Sec.
413.200, with revisions, is located with other regulations specific to
organ acquisition in part 413, new subpart L. We proposed to make a
technical correction or revisions to two of the three definitions found
in Sec. 413.200(b), as described in section II.C.2.a.(2). of this
final rule with comment period. We proposed to add these definitions to
proposed Sec. 413.400, as described in section II.C.2.a.(2). of this
final rule with comment period.
We proposed to relocate and revise the regulation title and
regulation text currently existing in Sec. 413.200 in paragraphs (a),
and (c) through (g), by adding Sec. 413.420 to specify payment to
independent organ procurement organizations and histocompatibility
laboratories for kidney acquisition costs and by adding paragraphs (a),
and (c) through (g) with the text from those same paragraphs in Sec.
413.200. We proposed to make conforming changes to the regulation text
in Sec. 413.420(a), and (c) through (g), to distinguish independent
OPOs (IOPOs) from all OPOs where appropriate, in accordance with the
proposed definition of IOPO in Sec. 413.400. We also proposed to add
paragraph (b) to Sec. 413.420 to provide a cross-reference to the
definitions in Sec. 413.400 of new subpart L. Therefore, the proposed
new Sec. 413.420 would maintain the same paragraph structure as the
existing Sec. 413.200. Finally, we proposed minor revisions to clarify
the regulation text, including changing language from passive to active
tense, changing verbs from future tense to present tense, and editing
to improve readability.
We did not receive comments on these proposals and are finalizing
the provisions as proposed.
3. Solicitation of Comments Regarding Surgeon Fees for Cadaveric Donor
Excisions
Since 1987, we have limited the amount an OPO may reimburse a
physician for cadaveric kidney donor retrieval services. Chapters 27
and 31 of the PRM limit the physician payment for cadaveric kidney
retrieval to $1,250 per donor (one or two kidneys). The history behind
the limitation on physician payment may be based on a July 1974 $400
physician services limitation on excising kidneys in community
hospitals that do not participate in Medicare, which was noted in a
Part A Intermediary Letter (IL No. 74-23, July 1974); it may also be
based in part on the 1983 median cost paid by OPOs for surgical
excision of cadaveric kidneys, which was approximately $800.\76\
Although the payments made to physicians for organ retrieval services
associated with other types of organ transplants have increased,
cadaveric kidney retrieval rates have remained capped at $1,250. We
have received several requests to change the amount we pay for
cadaveric kidney retrievals. In the CY 2009 Revisions to Payment
Policies Under the Physician Fee Schedule and Other Revisions to Part B
for CY 2009 (hereafter, Physician's Fee) proposed rule (73 FR 38580 and
38581), we solicited public comments and data that are reflective of
organ retrieval service costs for all types of organs. At that time, we
did not have data upon which to base a change in payment. We stated
that we may use this information to determine the extent to which a
recalculation of the payment for cadaveric organ retrieval services
performed by a physician is warranted and to inform any future
rulemaking on this subject. We received four timely public comments in
response to our request for information and data for use in updating
the organ retrieval physician payment amount included in organ
acquisition costs, which were discussed in detail in the CY 2009
Physicians Fee Schedule final rule (73 FR 69864). However, we did not
receive any data that would be useful in evaluating the appropriateness
of the $1,250 per donor surgeon fee limit for cadaveric kidney
retrievals.
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\76\ Organ Transplants: Hearings before the Subcommittee on
Investigations and Oversight, of the House Committee on Science and
Technology. 98th Cong. 43 (1983) (testimony of Carolyne K. Davis,
Ph.D., Administrator, Health Care Financing Administration).
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For this final rule, we used 2017 cost report data from 48 OPOs to
calculate a surgeon fee cost per local kidney for each provider, by
dividing the kidney surgeon fee costs reported on Worksheet A-2, line
13, column 3 of the MCR by the number of local kidneys reported on
Worksheet S-1, Part 1, Line 1, column 1 of the MCR. Excluding three
providers with extremely low surgeon fees per local kidney (ranging
from $0 to $231), the average surgeon fee cost per local kidney was
$745. These provider-reported data suggest that the $1,250 limit on
surgeon fees for cadaveric donor kidney retrievals is sufficient and
allows for some higher cost excisions. However, we have received
comments suggesting that this limit needs to be reconsidered.
While we did not propose to change the physician payment limit for
cadaveric kidney retrieval, we solicited information on the physician
effort and resources required to procure a
[[Page 73505]]
cadaveric kidney for transplantation. Specifically, we solicited data
or other information on surgical time, dry runs (number and percentage
of retrievals in which an organ is not recovered), travel and wait
times, as well as the incremental time required for extended criteria
donors and donors after cardiac death. Additionally, we solicited
resource information to determine the difference in procuring one
kidney or a pair of kidneys from a single donor. We indicated in the
proposed rule that the comments we received may inform development of
future proposals related to surgeon fee payment for organ retrieval
from cadaveric donors.
Comment: Commenters were generally appreciative of this comment
solicitation. A commenter did not support increasing surgeon fees for
cadaveric kidney removal, and stated that CMS should consider whether
an increase to surgeon fees and the additional cost burden to the
Medicare Trust Fund would result in an increase in the number of
kidneys available for transplant. This commenter stated that many
existing OPO practices already maximize kidney donation within the
current payment limit and without incurring additional costs, and those
practices should not be disrupted.
Some commenters supported increasing surgeon fees. Most of these
commenters stated that the current limit of $1,250 is inadequate
relative to the surgical, travel, dry run, and wait times. Some
commenters cited increased travel costs resulting from new kidney
allocation policies, and medical and technological advancements in
donor management which have added to the cost of surgical procurement.
A commenter noted that procuring marginal kidneys increases the
complexity of organ recovery and the frequency of intra-operative
findings that result in the abandonment of the effort. Some commenters
added that DCD procurements add complexity to the procurement process
and require surgeons to learn new skills. A commenter stated that the
entire vasculature (including the aorta and vena cava) and en-bloc
kidneys are dissected out and removed from the donor body, and then
separated outside.
A commenter stated that an OPO sometimes pays more than $1,250 to
ensure surgeons are readily available to excise kidneys; the commenter
stated amounts over $1,250 are not reimbursable and must be absorbed by
other non-renal or tissue revenue, with this cost shift increasing SAC
fees for non-renal organs, or, when covered by tissue revenue,
requiring the OPO to pay for costs that are a result of services
provided to a Medicare beneficiary. This commenter encouraged CMS to
ensure that the costs attributable to Medicare beneficiaries are
appropriately covered.
A commenter questioned if the cadaveric kidney retrieval cap of
$1,250 also applies to the transplant hospitals, and if so, how the
retrieval cap applies when multiple organs are excised. This commenter
also questioned if CMS has an established cap on surgeon fees for the
excision of other organs.
Another commenter stated that CMS' use of 2017 cost report data is
flawed, as most OPOs only contract and pay their kidney surgeons $1,250
per donor (due to Medicare's limitation), so the cost report worksheet
A-2 data would only reflect the limitation on surgeon fees as cost, and
the average kidney surgeon fee cost per kidney should be around $1,250.
A few commenters suggested that CMS formally survey transplant
programs to collect the data necessary to rebase payments for this
service. Another suggested CMS establish an annual process to solicit
stakeholder input to update pricing. A commenter recommended that CMS
apply at least an inflationary increase to the historical $1,250 rate
while continuing to collect community data to support an updated fee.
Another commenter welcomed additional opportunities for OPOs to collect
and provide relevant data beyond this 60-day comment window.
Response: We appreciate these comments, and may consider them if we
undertake future rulemaking related to surgeon fees for recovering
cadaveric kidneys.
III. Collection of Information Requirements
A. Statutory Requirement for Solicitation of Comments
Under the Paperwork Reduction Act (PRA) of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA of 1995 requires that
we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the FY 2022 IPPS/LTCH PPS proposed rule, we solicited public
comment on the following provision of this final rule comment period
that contain information collection requirements (ICRs).
As discussed in section II.B.3. of this final rule with comment
period, teaching hospitals would be able to submit electronic
applications to CMS for resident slot increase requests. The burden
associated with these requests is captured in an information collection
request currently available for public review and comment. The 60-day
notice published on October 22, 2021 (86 FR 58664). We note that the
application included in this information collection has yet to be
approved. Comments can be submitted as part of October 22, 2021 60-day
notice or as part of the subsequent 30-day Federal Register notice. We
will review and respond to any comments received on either notice.
IV. Regulatory Impact Analysis
A. Statement of Need
1. Changes to the IME and Direct GME Payments
This final rule with comment period is necessary in order to make
Medicare payment and policy changes to the statutory methodology for
determining payments to hospitals for the direct costs of approved GME
programs and the IME adjustment under the IPPS for hospitals that have
residents in an approved GME program, as described in more detail in
section IV.C. of this final rule with comment period. The primary
objective of the IPPS is to create incentives for hospitals to operate
efficiently and minimize unnecessary costs, while ensuring that
payments are sufficient to adequately compensate hospitals for their
legitimate costs in delivering necessary care to Medicare
beneficiaries. In addition, we share national goals of preserving the
Medicare Hospital Insurance Trust Fund.
In this final rule with comment period, we are finalizing policies
to implement sections 126, 127, and 131 of the CAA of 2021. Section 126
makes available 1,000 new Medicare-funded GME positions (but not more
than 200 new positions for a fiscal year), to be distributed beginning
in FY 2023, with priority given to hospitals in 4 statutorily-specified
categories. Section 127 of the CAA makes statutory changes relating to
the determination of both an urban and rural hospital's FTE resident
limit for direct GME and IME payment purposes with regard to residents
[[Page 73506]]
training in an accredited rural training track, and to the 3-year
rolling average used to calculate payments for these hospitals. Section
131 of the CAA makes statutory changes to the determination of direct
GME PRAs and direct GME and IME FTE resident limits of hospitals that
hosted a small number of residents for a short duration. We expect
these changes will make appropriate Medicare GME payments to hospitals
for Medicare's share of the direct costs to operate the hospital's
approved medical residency program, and for IPPS hospitals the indirect
costs associated with residency programs that may result in higher
patient care costs, consistent with the law.
We expect that these changes will ensure that the outcomes of these
Medicare payment policies are reasonable and provide equitable
payments, while avoiding or minimizing unintended adverse consequences.
2. Changes to the Organ Acquisition Payment Policies
In the FY 2022 IPPS/LTCH/PPS proposed rule, we proposed Medicare
payment and policy changes to the methodology for counting Medicare
organs by transplant hospitals, and Medicare kidneys by OPOs, for
calculation of Medicare's share of organ acquisition costs, however, in
this final rule with comment period, we are not finalizing the proposed
organ counting policy, and may revisit the policy in future rulemaking.
Therefore, the Medicare organ counting policy is not addressed in the
regulatory impact analysis of this final rule with comment period.
In this final rule with comment period, we are finalizing certain
longstanding organ acquisition payment policies to better support organ
availability and transplantation. We are finalizing a policy related to
amounts billed to OPOs for organ acquisition costs when a donor
community hospital or transplant hospital incurs costs for services
furnished to a cadaveric donor, to ensure that billing is in accord
with reasonable cost principles. We are also finalizing existing
payment policies to clarify and codify definitions, organ acquisition
costs, and examples of items or services that are not organ acquisition
costs; to allow certain additional registry fees and transportation
costs; to codify existing policies related to living organ donor
complications and clarify accounting and payment methods; to codify
existing policies related to standard acquisition charges, acquisition
of pancreata for islet cell transplants, Medicare as a secondary payor,
kidney-paired donations, and payment to independent OPOs and
histocompatibility laboratories for kidney acquisition costs. We expect
these codifications will provide greater understanding of organ
acquisition payment policies to the organ procurement and transplant
community, and that our allowing certain additional costs will support
organ transplantation and improve health equity. We expect these
changes will result in clarity and consistency with Medicare's
reasonable cost principles.
B. Overall Impact
We have examined the impacts 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
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the 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 Orders 12866 and 13563 direct 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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule: (1) Having an
annual effect on the economy of $100 million or more in any 1 year, or
adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating a serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with significant regulatory action(s) and/or with economically
significant effects ($100 million or more in any 1 year). Based on our
estimates, OMB's Office of Information and Regulatory Affairs has
determined this rulemaking is ``economically significant'' as measured
by the $100 million threshold, and hence also a major rule under
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of
1996 (also known as the Congressional Review Act). Accordingly, we have
prepared a RIA that to the best of our ability presents the costs and
benefits of the rulemaking.
The analysis in this RIA, in conjunction with the remainder of this
document, demonstrates that this final rule with comment period is
consistent with the regulatory philosophy and principles identified in
Executive Orders 12866 and 13563, the RFA, and section 1102(b) of the
Act. This final rule with comment period would affect payments to a
substantial number of small rural hospitals, as well as other classes
of hospitals, and the effects on some hospitals may be significant.
Finally, in accordance with the provisions of Executive Order 12866,
the Executive Office of Management and Budget has reviewed this final
rule with comment period.
C. Detailed Economic Analysis
1. Effects of the Changes to IME and Direct GME Payments
The CAA of 2021 contained 3 provisions affecting Medicare direct
GME and IME payments to teaching hospitals. Section 126 of the CAA
makes available 1,000 new Medicare-funded GME positions, with 200 slots
to be distributed in 5 rounds over 5 years starting in FY 2023, with
priority given to hospitals in 4 categories. Section 127 of the CAA,
effective for cost reporting periods beginning on or after October 1,
2022, makes changes relating to the determination of both an urban and
rural hospital's FTE resident limit for direct GME and IME payment
purposes with regard to residents training in an accredited rural
training track, and the application of the 3-year rolling average to
the payment calculation of these hospitals. Section 131 of the CAA
makes changes to the determination of direct GME PRAs and direct GME
and IME FTE resident limits of hospitals that hosted a small number of
residents for a short duration, based on new programs started on or
after enactment (December 27, 2020) and 5 years after (December 26,
2025). We provided details for implementing these 3 GME CAA provisions
in section II.B. of this final rule with comment period. Following is a
table showing the
[[Page 73507]]
estimated cost of implementation of these 3 GME CAA provisions:
Table 5--Cost Impact of CAA 2021 GME Provisions
[In $millions]
----------------------------------------------------------------------------------------------------------------
FY Section 126 Section 127 Section 131
----------------------------------------------------------------------------------------------------------------
2021............................................................ 0 0 10
2022............................................................ 0 0 30
2023............................................................ 10 0 60
2024............................................................ 60 10 90
2025............................................................ 120 10 130
2026............................................................ 180 10 150
2027............................................................ 240 20 170
2028............................................................ 290 20 180
2029............................................................ 300 20 180
2030............................................................ 310 20 190
2031............................................................ 320 20 190
----------------------------------------------------------------------------------------------------------------
In summary, the Office of the Actuary estimates an increase of $10
million in Medicare payments to teaching hospitals for FY 2021, an
increase in Medicare payments to teaching hospitals of $860 million for
FYs 2022 through 2026 (over 5 years). In total, for FYs 2021 through
2031, Medicare payments to teaching hospitals are estimated to increase
by $3.30 billion.
2. Effects of the Organ Acquisition Payment Policy
In section X.C.2. of the preamble of the FY 2022 IPPS/LTCH PPS
proposed rule, we proposed to codify into the Medicare regulations some
longstanding Medicare organ acquisition payment policies, with
clarifications where necessary, and to codify some new organ
acquisition payment policies. In section II.C.2.a of this final rule
with comment period, we discuss clarifications and codification of
longstanding definitions related to organ acquisition. These final
policies are not expected to have an impact on expenditures because the
finalized policies pertain to changes to definitions and usage of
consistent terminology. In section II.C.2.b of this final rule with
comment period, we discuss the revisions to and codification of
longstanding policies related to items or services that are organ
acquisition costs, which we are modifying to allow certain additional
organ recipient registry fees and cadaveric donor transportation costs.
To the extent that these provisions have an impact on expenditures,
that impact is not estimable because we do not have information to
calculate the change in registry fee costs or transportation costs. In
sections II.C.2.c. and II.C.2.d. of this final rule with comment
period, we discuss our final policies related to standard acquisition
charges and outpatient costs and laboratory services related to organ
acquisition, however, these final policies are not expected to have an
impact on expenditures.
In section II.C.2.e. this final rule with comment period, we also
discuss revisions to and codification of longstanding policies related
to Medicare coverage of living donor complications. To the extent that
these provisions have an impact on expenditures, that impact is not
estimable because we do not have cost data pertaining to non-renal
living donors to calculate the increase in cost from codifying policies
specifying reporting and payment of costs for non-renal living donor
complications. In sections II.C.2.f. and II.C.2.g. of this final rule
with comment period, we discuss final policies related to services to
transplant recipients and the codification of a statutory policy
related to pancreatic islet cell transplants, which are not expected to
have an impact on expenditures.
In section II.C.2.h. of this final rule with comment period, we
discuss the organ counting policy, however, we are not finalizing our
proposed policy and as such, there are no impacts on expenditures. In
section II.C.2.i. of this final rule with comment period, we discuss
final policies related to intent to transplant, and counting en bloc,
research, and discarded organs which are not expected to have an impact
on expenditures. In sections II.C.2.j. and II.C.2.k. of this final rule
with comment period, we discuss the codification of longstanding organ
acquisition policies related to Medicare as a secondary payor and
accounting for kidney-paired donations, respectively, which are not
expected to have an impact on expenditures.
Additionally, in section II.C.2.l. of this final rule with comment
period, we discuss finalized policy codifications for donor community
hospitals' (Medicare-certified non-transplant hospitals) and THs'
charges for services provided to cadaveric donors. To the extent that
these provisions have an impact on expenditures, that impact is not
estimable because we do not have information, such as the cost of
services and number of cadaveric donors to whom services are provided
to calculate the effects on donor community hospitals, or transplant
hospitals for services provided to organ procurement organizations.
Based on the Scientific Registry of Transplant Recipient (SRTR) data,
we recognize that organs recovered from donor community hospitals
comprised 62 percent of all transplanted organs in 2017 and 2018.\77\
Under the current policy, donor community hospitals bill customary
charges or negotiated rates and not charges reduced to cost. Because
our final policy requires donor community hospitals and THs to bill the
lesser of charges reduced to cost or a negotiated rate, we anticipate a
cost savings to the Medicare Trust Fund.
---------------------------------------------------------------------------
\77\ Scientific Registry of Transplant Recipients. Request for
Information. Requested on 02/08/2021.
---------------------------------------------------------------------------
In section II.C.2.m. of this final rule with comment period, we
finalized technical corrections, clarifications, conforming changes,
and redesignations in the regulations, which are not expected to have
an impact on expenditures. Finally, in section II.C.3. of this final
rule with comment period, we solicited comments on the existing cap on
surgeon fees for cadaveric kidney excisions and provided a summary of
the comments received; there is no expected impact of the comment
solicitation.
Comment: With regard to the organ counting proposal, some
commenters believed that Medicare's impact
[[Page 73508]]
estimate was underestimated and imprecise when using SRTR payor data to
estimate organs transplanted into Medicare beneficiaries. One commenter
suggested we calculate and use an ``in-house'' Medicare ratio for TH/
HOPOs, as a proxy to apply to the number of organs the TH/HOPO
furnishes to other hospitals or OPOs which are transplanted into
Medicare beneficiaries. Other commenters requested that Medicare study
and publish a hospital specific impact analysis resulting from these
proposals. Some commenters also raised concerns about the effects of
this proposal on children's transplant hospitals.
Response: We thank commenters for bringing to our attention the
need for additional analyses to better understand the effects of the
Medicare usable organ and kidney counting proposal. Our proposed rule
impact estimation methodology determined Medicare organ acquisition
costs using 2018 cost data by organ type, by multiplying total
acquisition costs by the SRTR payor data ratio for Medicare as the
payor. We summed these organ-specific Medicare organ acquisition costs,
and compared that total with the total Medicare organ acquisition costs
calculated using the same methodology, but using the Medicare ratio
from the cost report data rather than the SRTR ratio; the difference
between the two Medicare organ acquisition cost amounts was the
estimated savings for a single year.
After consideration of the public comments we received, we are not
finalizing our organ counting proposals, and may revisit this proposal
in future rulemaking.
D. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed or final
rule, we should estimate the cost associated with regulatory review.
Due to the uncertainty involved with accurately quantifying the number
of entities that will review the rule, we assume that the total number
of unique commenters on last year's proposed rule will be the number of
reviewers of this proposed rule. We acknowledge that this assumption
may understate or overstate the costs of reviewing this rule. It is
possible that not all commenters reviewed last year's rule in detail,
and it is also possible that some reviewers chose not to comment on the
proposed rule. For these reasons we believe that the number of past
commenters would be a fair estimate of the number of reviewers of this
rule. We welcomed any public comments on the approach in estimating the
number of entities that would review the proposed rule. We did not
receive any public comments specific to our solicitation.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this proposed rule,
and therefore for the purposes of our estimate we assume that each
reviewer reads approximately 50 percent of the rule. We sought public
comments on this assumption. We did not receive any public comments
specific to our solicitation.
Using the wage information from the BLS for medical and health
service managers (Code 11-9111), we estimate that the cost of reviewing
this rule is $114.24 per hour, including overhead and fringe benefits
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average
reading speed, we estimate that it would take approximately 4.16 hours
for the staff to review half of this final rule with comment period.
For each entity that reviews the rule, the estimated cost is $475.24
(4.16 hours x $114.24). Therefore, we estimate that the total cost of
reviewing this rule is $270,886.80 ($475.24 x 570).
E. Alternatives Considered
This final rule with comment period contains a range of policies.
It also provides descriptions of the statutory provisions that are
addressed, identifies the finalized policies, and presents rationales
for our decisions and, where relevant, alternatives that were
considered.
1. Alternatives Considered for Distribution of Additional Residency
Positions Under the Provisions of Section 126 of the CAA
Section 126(a) of the CAA amended section 1886(h) of the Act by
adding a new section 1886(h)(9) of the Act requiring the distribution
of additional residency positions to qualifying hospitals. Section
1886(h)(9)(A) of the Act requires that for FY 2023, and for each
succeeding fiscal year until the aggregate number of FTE residency
positions distributed is equal to 1,000, the Secretary shall initiate
separate rounds of applications from hospitals for these additional
residency positions.
After consideration of public comments, we are finalizing our
proposal with modifications, that applicant hospitals are eligible for
distribution of residency positions under section 126 if they meet the
definition of any one or more of the statutory categories, Category
One, Category Two, Category Three, or Category Four, as described in
section II.B.3. of this final rule with comment period. Based on the
residency training program for which the hospital is applying, the
hospital will choose, if applicable, either a geographic or population
HPSA where residents spend at least 50 percent of their training time.
Hospitals will attest to meeting this 50 percent training criterion.
The HPSA scores associated with the geographic or population HPSAs
chosen by hospitals that qualify under the aforementioned criteria will
be ranked from highest to lowest and the 200 residency positions
available for each FY will be prioritized in this manner, with each
applicant hospital receiving up to 5.0 FTEs based on the length of the
program associated with the hospital's application.
We considered alternative approaches for distribution of additional
residency positions under the provisions of section 126 of the CAA. An
alternative we considered was to distribute 200 additional residency
positions for FY 2023 entirely among hospitals that qualify in Category
One, Category Two, Category Three, and/or Category Four, with higher
priority given to applications from hospitals that qualify in more
categories. We would distribute 1.0 FTE to each hospital that qualified
under all four categories, prorating only in the event that the number
of hospitals that qualified under all four categories exceeds 200.
However, given that we believe the additional residency positions
distributed under section 126 of the CAA should be consistent with the
Administration's goal of advancing health equity in underserved
communities, we believe prioritizing applications based on HPSA scores
is a feasible means to achieve this goal. Therefore, we are not
finalizing our proposed alternative.
2. Alternatives Considered for Counting Organs Used To Determine
Medicare's Share of Organ Acquisition Costs
After consideration of public comments, we considered two
alternatives for counting organs used to determine Medicare's share of
organ acquisition costs: (1) Withdrawing the proposal; or (2)
finalizing the proposal but with a delay or a delay with a transition.
Although we believe our proposed organ counting policy is appropriate
and consistent with Medicare's anti cross-subsidization principles at
section 1861(v) of the Act, and our regulations at 42 CFR 413.5, which
do not permit the Medicare program to bear the costs of non-Medicare
patients, we have decided to not finalize the proposal to allow more
time to better understand concerns that
[[Page 73509]]
commenters have raised. We would like more time to thoroughly evaluate
some of the concerns raised by commenters, such as those related to
tracking the payor status of the organ recipients, to ensure that the
policy can be operationalized by all OPOs and THs without a disruption
to the transplantation ecosystem. We also recognize commenters'
concerns about other changes occurring in the transplantation ecosystem
which compete for time and resources, such as adapting to the new organ
allocation system and initiatives to increase kidney transplantation.
Therefore, we decided we are not finalizing our proposal at this time,
and may revisit this proposal in future rulemaking.
F. Accounting Statement and Table
As required by OMB Circular A-4 (available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in Table 6 showing the
classification of the impact associated with the provisions of this
final rule with comment period as they relate to Medicare GME payments
to hospitals from FY 2021 to FY 2031. Table 6 provides our best
estimate of the change in Medicare payments to providers as a result of
the changes to the Medicare GME payments presented in this final rule
with comment period. All expenditures are classified as transfers to
Medicare providers.
Table 6--Accounting Statement: Classification of Estimated Expenditures
From FY 2021 to FY 2031
------------------------------------------------------------------------
Category 7% Discount rate 3% Discount rate
------------------------------------------------------------------------
Annualized Monetized Transfers.. $245.25 Million... $277.30 Million.
---------------------------------------
From Whom to Whom?.............. Federal Government to Medicare
Providers (Teaching Hospitals).
------------------------------------------------------------------------
G. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small government
jurisdictions. We estimate that most hospitals and most other providers
and suppliers are small entities as that term is used in the RFA. The
great majority of hospitals and most other health care providers and
suppliers are small entities, either by being nonprofit organizations
or by meeting the SBA definition of a small business. Table 7 details
the size standards for those industries that may be affected by this
rule, though we expect that General Medical and Surgical Hospitals
would be most affected.
Table 7--Size Standards by Affected Industry
------------------------------------------------------------------------
NAICS industry Size standard
NAICS Code description (in millions)
------------------------------------------------------------------------
622110......................... General Medical and $41.5
Surgical Hospitals.
622210......................... Psychiatric and 41.5
Substance Abuse
Hospitals.
622310......................... Specialty (except 41.5
Psychiatric and
Substance Abuse)
Hospitals.
------------------------------------------------------------------------
For purposes of the RFA, all hospitals and other providers and
suppliers are considered to be small entities. Because all hospitals
are considered to be small entities for purposes of the RFA, the
hospital impacts described in this final rule with comment period are
impacts on small entities. Individuals and States are not included in
the definition of a small entity. MACs are not considered to be small
entities because they do not meet the SBA definition of a small
business.
HHS's practice in interpreting the RFA's reference to a
``significant economic impact on a substantial number of small
entities'' is to consider effects economically ``significant'' if
greater than 5 percent of small providers reach a threshold of 3 to 5
percent or more of total revenue or total costs. Based on our analysis
described in section IV.C. this final rule with comment period, we
believe that the overall impact on hospitals as a whole, and thus on
small entities specifically, of the provisions of this final rule with
comment period will not exceed the 3 to 5 percent threshold discussed
previously. Therefore, the Secretary has determined that this final
rule with comment period will not have significant economic impact on a
substantial number of small entities. We note that for some hospitals,
these estimates may represent the total expected impact on their
inpatient hospital revenue; for other hospitals, this represents only a
portion of the total expected impact, as much of their revenue comes
from non-Medicare cases. We estimate that hospitals will experience a
net benefit resulting from the GME provisions of this final rule with
comment period, as such we do not expect small entities to incur
significant costs.
This final rule with comment period contains a range of policies.
It provides descriptions of the statutory provisions that are
addressed, identifies the policies, and presents rationales for our
decisions and, where relevant, alternatives that were considered,
including those alternatives discussed in section IV.E. of this final
rule with comment period. The analyses discussed in this RIA and
throughout the preamble of this final rule with comment period
constitutes our regulatory flexibility analysis. We solicited public
comments on our estimates and analysis of the impact of our policies on
small entities. We received no public comments on those estimates and
analysis other than the comments noted in section IV.C.1. and IV.C.2.
of this final rule with comment period. As discussed in section IV.C.2.
of this final rule with comment period, there is no impact on hospitals
or OPOs in FY 2022 from the final organ acquisition policies discussed
in this final rule with comment period. Also, as discussed previously,
in this final rule with comment period we are finalizing policies to
implement section 126 of the CAA of 2021, which makes available 1,000
new Medicare-funded GME positions (but not more than 200 new positions
for a fiscal year), to be distributed beginning in FY 2023. A separate
round of applications from hospitals will be initiated for these
[[Page 73510]]
additional residency positions, and hospitals must be notified of the
number of positions distributed to them by January 31 of the fiscal
year, effective beginning July 1 of that fiscal year.
Teaching hospitals that apply timely and are awarded FTE residency
positions will experience an increase in their Medicare GME payments
once the hospital fills the positions. However, until hospitals submit
applications requesting the FTE residency positions and submit
documentation demonstrating they meet the eligibility criteria and
other requirements, we do not know which hospitals or what types of
hospitals will receive additional FTE residency positions under this
provision. To the extent that small rural hospitals apply for and
receive FTE residency positions under this provision, they will
experience an increase in their GME payments. Therefore, the Secretary
has certified that this final rule with comment period will 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 and has fewer than 100 beds. As explained previously,
to the extent that small rural hospitals apply for and receive FTE
residency positions, they will experience an increase in their GME
payments. Therefore, the Secretary has certified that this final rule
with comment period will have a significant impact on the operations of
a substantial number of small rural hospitals.
However, we note that the organ acquisition policies for transplant
hospitals will not have a significant impact, as no certified
transplant hospitals are small rural hospitals. Additionally, while
some donor community hospitals may be small rural hospitals, we are
making changes to their billing practices which should not affect
hospital operations as donor community hospitals will be paid the
lesser of their reasonable cost or a negotiated rate.
We assume that the costs for reviewing this rule is the same for
small entities as it is for larger entities. For each entity that
reviews the rule, the estimated cost is $475.24 (4.16 hours x $114.24).
Therefore, we estimate that the total cost of reviewing this rule is
$270,886.80 ($475.24 x 570).
H. Unfunded Mandates Reform Act (UMRA)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 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 2021, that
threshold is approximately $158 million. This final rule with comment
period would not impose a mandate that will result in the expenditure
by State, local, and Tribal Governments, in the aggregate, or by the
private sector, of more than $158 million in any 1 year.
I. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule with comment period) that imposes substantial direct
requirement costs on state and local governments, preempts state law,
or otherwise has Federalism implications. This rule will not have a
substantial direct effect on state or local governments, preempt
states, or otherwise have a Federalism implication.
This final rule with comment period is subject to the Congressional
Review Act provisions of the Small Business Regulatory Enforcement
Fairness Act of 1996 (5 U.S.C. 801 et seq.) and has been transmitted to
the Congress and the Comptroller General for review.
V. 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.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on December 14, 2021.
List of Subjects
42 CFR Part 412
Administrative practice and procedure, Health facilities, Medicare,
Puerto Rico, and Reporting and recordkeeping requirements.
42 CFR Part 413
Diseases, Health facilities, Medicare, Puerto Rico, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
and Medicaid Services is amending 42 CFR Chapter IV as set forth below:
PART 412--PROSPECTIVE PAYMENT SYSTEMS FOR INPATIENT HOSPITAL
SERVICES
0
1. The authority citation for Part 412 continues to read as follows:
Authority: 42 U.S.C. 1302 and 1395hh.
0
2. Section 412.1 is amended by revising paragraph (a)(1)(ii) to read as
follows:
Sec. 412.1 Scope of part.
(a) * * *
(1) * * *
(ii) Payment for other costs related to inpatient hospital services
is made on a reasonable cost basis as follows:
(A) Organ acquisition costs incurred by hospitals with approved
organ transplant programs.
(B) The costs of qualified nonphysician anesthetist's services, as
described in Sec. 412.113(c).
(C) Direct costs of approved nursing and allied health educational
programs.
(D) Costs related to hematopoietic stem cell acquisition for the
purpose of an allogeneic hematopoietic stem cell transplant as
described in Sec. 412.113(e).
* * * * *
0
3. Section 412.2 is amended by revising paragraph (e)(4) to read as
follows:
Sec. 412.2 Basis of payment.
* * * * *
(e) * * *
(4) The acquisition costs of hearts, kidneys, livers, lungs,
pancreas, and intestines (or multivisceral organs) incurred by approved
transplant programs.
* * * * *
0
4. Section 412.71 is amended by revising paragraph (b)(3) to read as
follows:
Sec. 412.71 Determination of base-year inpatient operating costs.
* * * * *
(b) * * *
(3) Kidney acquisition costs incurred by hospitals with approved
kidney transplant programs as described in Sec. 412.100. Kidney
acquisition costs in the base year are determined by multiplying the
hospital's average kidney acquisition cost per kidney times the number
of kidney transplants
[[Page 73511]]
covered by Medicare Part A during the base period.
* * * * *
0
5. Section 412.90 is amended by revising paragraph (d) to read as
follows:
Sec. 412.90 General rules.
* * * * *
(d) Kidney acquisition costs incurred by hospitals with approved
kidney transplant programs. CMS pays for kidney acquisition costs
incurred by kidney transplant programs on a reasonable cost basis. The
criteria for this special payment provision are set forth in Sec.
412.100.
* * * * *
0
6. Section 412.100 is revised to read as follows:
Sec. 412.100 Special treatment: Kidney transplant programs.
(a) Adjustments for kidney transplant programs. (1) CMS adjusts the
inpatient prospective payment system (IPPS) rates for inpatient
operating costs determined under subparts D and E of this part for
hospitals with approved kidney transplant programs (discussed at Sec.
482.104 of this chapter) to remove the net costs associated with kidney
acquisition.
(2)(i) Payment for Medicare kidney acquisition costs, as set forth
in subpart L of part 413 of this chapter, is made on a reasonable cost
basis apart from the prospective payment rate for inpatient operating
costs.
(ii) IPPS payment to the hospital is adjusted in each cost
reporting period to reflect an amount necessary to compensate the
hospital for reasonable costs of Medicare kidney acquisition.
(b) Costs of kidney acquisition. Kidney acquisition costs include
costs incurred in the acquisition of a kidney from a living or a
cadaveric donor, by the hospital or an organ procurement organization,
as appropriate. These costs are listed in Sec. 413.402(b) of this
chapter.
0
7. Section 412.105 is amended by:
0
a. Revising paragraph (a)(1)((i);
0
b. Adding paragraph (f)(1)(iv)(C)(3); and
0
c. Revising paragraphs (f)(1)(v)(F), (f)(1)(vii), and (f)(1)(x).
The addition and revisions read as follows:
Sec. 412.105 Special treatment: Hospitals that incur indirect costs
for graduate medical education programs.
(a) * * *
(1) * * *
(i) Except for the special circumstances for Medicare GME
affiliated groups, emergency Medicare GME affiliated groups, and new
programs described in paragraphs (f)(1)(vi) and (f)(1)(vii) of this
section for cost reporting periods beginning on or after October 1,
1997, and for the special circumstances for closed hospitals or closed
programs described in paragraph (f)(1)(ix) of this section for cost
reporting periods beginning on or after October 1, 2002, and for Rural
Track Programs within their 5-year cap building period described in
paragraph (f)(1)(x)(B) in cost reporting periods beginning on or after
October 1, 2022, this ratio may not exceed the ratio for the hospital's
most recent prior cost reporting period after accounting for the cap on
the number of allopathic and osteopathic full-time equivalent residents
as described in paragraph (f)(1)(iv) of this section, and adding to the
capped numerator any dental and podiatric full-time equivalent
residents.
* * * * *
(f) * * *
(1) * * *
(iv) * * *
(C) * * *
(3) Effective for portions of cost reporting periods beginning on
or after July 1, 2023, a hospital may qualify to receive an increase in
its otherwise applicable FTE resident cap if the criteria specified in
Sec. 413.79(p) of this subchapter are met.
* * * * *
(v) * * *
(F)(1) Subject to the provisions of paragraph (f)(1)(x) of this
section, effective for cost reporting periods beginning on or after
April 1, 2000, and beginning before October 1, 2022, full-time
equivalent residents at an urban hospital in a rural track program are
included in the urban hospital's rolling average calculation described
in paragraph (f)(1)(v)(B) of this section.
(2) Subject to the provisions of paragraph (f)(1)(x) of this
section, for cost reporting periods beginning on or after October 1,
2022, full-time equivalent residents at an urban hospital or rural
hospital in a Rural Track Program are excluded from the rolling average
calculation described in paragraph (f)(1)(v)(B) of this section during
the cost reporting periods prior to the beginning of the applicable
hospital's cost reporting period that coincides with or follows the
start of the sixth program year of each rural track.
* * * * *
(vii)(A) If a hospital establishes a new medical residency training
program, as defined in Sec. 413.79(l) of this subchapter, the
hospital's full-time equivalent cap may be adjusted in accordance with
the provisions of Sec. 413.79(e) of this subchapter.
(B)(1) A hospital that, as of December 27, 2020, has a full-time
equivalent cap of less than 1.0 FTE based on a cost reporting period
beginning before October 1, 1997, that begins training residents in a
new medical residency training program, as defined at Sec. 413.79(l)
of this subchapter, in a cost reporting period beginning on or after
December 27, 2020, and before December 26, 2025, may receive an
adjustment to its full-time equivalent cap when it trains at least 1.0
FTE in such new medical residency training program(s), to be calculated
in accordance with Sec. 413.79(e) of this subchapter.
(2) A hospital that has a full-time equivalent cap of no more than
3.0 FTEs based on a cost reporting period beginning on or after October
1, 1997, and before December 27, 2020, that begins training residents
in a new medical residency training program, as defined at Sec.
413.79(l) of this subchapter, in a cost reporting period beginning on
or after December 27, 2020 and before December 26, 2025, may receive an
adjustment to its full-time equivalent cap when it trains more than 3.0
FTE in such new medical residency training program(s), to be calculated
in accordance with the provisions of Sec. 413.79(e) of this
subchapter.
* * * * *
(x)(A) For rural track programs started in a cost reporting period
beginning before October 1, 2022, an urban hospital that establishes a
new residency program (as defined in Sec. 413.79(l) of this
subchapter), or has an existing residency program, with a rural track
(or an integrated rural track) may include in its FTE count residents
in those rural tracks in accordance with the applicable provisions of
Sec. 413.79(k) of this subchapter.
(B) For cost reporting periods beginning on or after October 1,
2022, an urban hospital or rural hospital that establishes a new
residency program (as defined in Sec. 413.79(l) of this subchapter)
that is a Rural Track Program (as defined at Sec. 413.75(b) of this
subchapter), or adds an additional site to a Rural Track Program, may
include in its FTE count residents in the Rural Track Program in
accordance with the applicable provisions of Sec. 413.79(k) of this
subchapter.
* * * * *
0
8. Section 412.113 is amended by revising paragraph (d) to read as
follows:
Sec. 412.113 Other payments.
* * * * *
[[Page 73512]]
(d) Organ acquisition. Payment for organ acquisition costs as
specified in part 413, subpart L, incurred by hospitals with approved
transplant programs is made on a reasonable cost basis.
* * * * *
0
8. Section 412.116 is amended by revising paragraph (c) to read as
follows:
Sec. 412.116 Method of payment.
* * * * *
(c) Special interim payments for certain costs. For capital-related
costs for cost-reporting periods beginning before October 1, 1991, and
the direct costs of medical education, which are not included in
prospective payments but are reimbursed as specified in Sec. Sec.
413.130 and 413.85 of this chapter, respectively, interim payments are
made subject to final cost settlement. Interim payments for capital-
related items for cost-reporting periods beginning before October 1,
1991, and the estimated cost of approved medical education programs
(applicable to inpatient costs payable under Medicare Part A and for
kidney acquisition costs in hospitals with approved kidney transplant
programs) are determined by estimating the reimbursable amount for the
year based on the previous year's experience and on substantiated
information for the current year and divided into 26 equal biweekly
payments. Each payment is made 2 weeks after the end of a biweekly
period of services, as described in Sec. 413.64(h)(5) of this
subchapter. The interim payments are reviewed by the intermediary at
least twice during the reporting period and adjusted if necessary.
* * * * *
PART 413--PRINCIPLES OF REASONABLE COST REIMBURSEMENT; PAYMENT FOR
END-STAGE RENAL DISEASE SERVICES; OPTIONAL PROSPECTIVELY DETERMINED
PAYMENT RATES FOR SKILLED NURSING FACILITIES
0
9. The authority citation for part 413 continues to read as follows:
Authority: 42 U.S.C. 1302, 1395d(d), 1395f(b), 1395g, 1395l(a),
(i), and (n), 1395x(v), 1395hh, 1395rr, 1395tt, and 1395ww.
0
10. Section 413.1 is amended by revising paragraphs (a)(2)(v) and
(d)(2)(i) to read as follows:
Sec. 413.1 Introduction.
(a) * * *
(2) * * *
(v) Organ procurement organizations (OPOs) and histocompatibility
laboratories.
* * * * *
(d) * * *
(2) * * *
(i) Payment for the following is described in Sec. 412.113 of this
chapter:
(A) Capital related costs for cost reporting periods beginning
before October 1991.
(B) Medical education costs.
(C) Organ acquisition costs as specified in part 413, subpart L.
(D) The costs of certain anesthesia services.
* * * * *
0
11. Section 413.40 is amended by revising paragraph (a)(3) to read as
follows:
Sec. 413.40 Ceiling on the rate of increase in hospital inpatient
costs.
(a) * * *
(3) Net inpatient operating costs include the costs of certain
preadmission services as specified in paragraph (c)(2) of this section,
the costs of routine services, ancillary services, and intensive care
services (as defined in Sec. 413.53(b)) incurred by a hospital in
furnishing covered inpatient services to Medicare beneficiaries. Net
inpatient operating costs exclude capital-related costs as described in
Sec. 413.130, the costs of approved medical education programs as
described in Sec. Sec. 413.75 through 413.83 and 413.85, and organ
acquisition costs as specified in subpart L of this part incurred by
approved transplant programs. These costs are identified and excluded
from inpatient operating costs before the application of the ceiling.
* * * * *
0
12. In Sec. 413.75 amend paragraph (b) by:
0
a. In the definition of ``Rural track FTE limitation'', by removing the
phrase ``urban hospital may include in its'' and adding in its place
the phrase ``urban hospital or rural hospital may include in its'';
0
b. Revising the definition of ``Rural track or integrated rural
track''; and
0
c. Adding in alphabetical order the definition of ``Rural Track
Program''.
The addition and revision read as follows:
Sec. 413.75 Direct GME payments: General requirements.
* * * * *
(b) * * *
Rural track or integrated rural track means, for programs started
in cost reporting periods prior to October 1, 2022, an approved medical
residency training program established by an urban hospital in which
residents train for a portion of the program at the urban hospital and
then rotate for a portion of the program to a rural hospital(s) or a
rural nonhospital site(s).
Rural Track Program means, effective for cost reporting periods
beginning on or after October 1, 2022, an ACGME-accredited program in
which residents/fellows gain both urban and rural experience with more
than half of the education and training for a resident/fellow taking
place in a rural area as defined at 42 CFR 412.62(f)(iii).
* * * * *
0
13. Section 413.77 is amended by revising paragraph (e)(1)(iii) and
adding paragraphs (e)(1)(iv) and (v) to read as follows:
Sec. 413.77 Direct GME payments: Determination of per resident
amounts.
* * * * *
(e) * * *
(1) * * *
(iii) If, under paragraph (e)(1)(ii)(A) or (B) or (e)(1)(iv)(B) of
this section, there are fewer than three existing teaching hospitals
with per resident amounts that can be used to calculate the weighted
mean value per resident amount, for base periods beginning on or after
October 1, 1997, the per resident amount equals the updated weighted
mean value of per resident amounts of all hospitals located in the same
census region as that term is used in subpart D of part 412 of this
subchapter.
(iv) A hospital that, as of December 27, 2020, has a per resident
amount based on less than 1.0 FTE in any cost reporting period
beginning before October 1, 1997, may choose to receive a recalculated
per resident amount either when it trains at least 1.0 FTE in the
earliest cost reporting period beginning on or after December 27, 2020,
and before December 26, 2025, or when it trains at least 1.0 FTE in the
first cost reporting period beginning after December 27, 2021. A
hospital that, as of December 27, 2020, has a per resident amount based
on no more than 3.0 FTEs in any cost reporting period beginning on or
after October 1, 1997, and before December 27, 2020, may choose to
receive a recalculated per resident amount either when it trains more
than 3.0 FTEs in the earliest cost reporting period beginning on or
after December 27, 2020 and before December 26, 2025, or when it trains
more than 3.0 FTE in the first cost reporting period beginning after
December 27, 2021. In either case, residents need not be on duty during
the first month of the cost reporting period. The recalculated per
[[Page 73513]]
resident amount is based on the lower of--
(A) The hospital's actual cost per resident incurred in connection
with the GME program(s) based on the cost and resident data from the
hospital's base year cost reporting period, which is, for hospitals
with a per resident amount previously based on less than 1.0 FTE,
either when it trains at least 1.0 FTE in the earliest cost reporting
period beginning on or after December 27, 2020, and before December 26,
2025, or when it trains at least 1.0 FTE in the first cost reporting
period beginning after December 27, 2021; and for hospitals with a per
resident amount previously based on not more than 3.0 FTEs, either when
it trains more than 3.0 FTEs in the earliest cost reporting period
beginning on or after December 27, 2020 and before December 26, 2025,
or when it trains more than 3.0 FTE in the first cost reporting period
beginning after ; or
(B) The updated weighted mean value of per resident amounts of all
hospitals located in the same geographic wage area is calculated using
all per resident amounts (including primary care and obstetrics and
gynecology and nonprimary care) and FTE resident counts from the most
recently settled cost reports of those teaching hospitals.
(v) Effective for a cost reporting periods beginning on or after
December 27, 2020, a per resident amount must be established if a
hospital trains less than 1.0 FTE resident and this training results
from the hospital's participation in a Medicare GME affiliation
agreement under Sec. 413.79(f). Effective for a cost reporting period
beginning on or after December 27, 2020, a per resident amount must
only be established when the hospital trains at least 1.0 FTE and does
not participate in a Medicare GME affiliation agreement under Sec.
413.79(f) for that training. Residents need not be on duty during the
first month of the cost reporting period from which the per resident
amount is established.
* * * * *
0
14. Section 413.78 is amended by revising paragraph (b) to reads as
follows:
Sec. 413.78 Direct GME payments: Determination of the total number of
FTE residents.
* * * * *
(b)(1) No individual resident may be counted as more than one FTE
based on the total time spent in training at all sites. A hospital
cannot claim the time spent by residents training at another hospital,
except as provided in paragraph (i) of this section. Except as provided
in paragraphs (c), (d), and (e) of this section, if a resident spends
time in more than one hospital or in a non-provider setting, the
resident counts as partial FTE based on the proportion of time worked
at the hospital to the total time worked. A part-time resident counts
as a partial FTE based on the proportion of allowable time worked
compared to the total time necessary to fill a full-time internship or
residency slot.
(2) Effective for a cost reporting period beginning on or after
December 27, 2020, a hospital must report FTE residents on its Medicare
cost report for a cost reporting period if it does not participate in a
Medicare GME affiliation agreement (as defined under Sec. 413.75(b)),
and the hospital trains at least 1.0 FTE in an approved program or
programs, or, if the hospital trains less than 1.0 FTE residents in an
approved program or programs and this training results from the
hospital's participation in a Medicare GME affiliation agreement (as
defined under Sec. 413.75(b)).
* * * * *
0
15. Section 413.79 is amended by--
0
a. Revising paragraph (c)(2) introductory text;
0
b. Revising paragraph (d)(7);
0
c. Adding paragraphs (e)(1)(vi), (e)(6), and (f)(8);
0
d. Revising paragraphs (k) introductory text, (k)(1), (k)(2)
introductory text, (k)(2)(i), and (k)(3);
0
e. Adding paragraph (k)(4)(i)(C);
0
f. Revising paragraph (k)(4)(ii) introductory text;
0
g. Adding (k)(4)(ii)(C);
0
h. In paragraph (k)(5)(i), removing the phrase ``An urban hospital may
not include in its rural track FTE limitation or (assuming the urban
hospital's FTE'' and adding in its place the phrase ``A hospital may
not include in its rural track FTE limitation or (assuming the
hospital's FTE'';
0
i. In paragraph (k)(5)(ii), removing the phrase ``The hospital'' and
adding in its place the phrase ``Each hospital''; and
0
j. Adding paragraphs (k)(5)(iv) and (p).
The revisions and additions read as follows:
Sec. 413.79 Direct GME payments: Determination of the weighted
number of FTE residents.
* * * * *
(c) * * *
(2) Determination of the FTE resident cap. Subject to the
provisions of paragraphs (c)(3) through (6) and (m) through (p) of this
section and Sec. 413.81, for purposes of determining direct GME
payment--
* * * * *
(d) * * *
(7)(i) Subject to the provisions under paragraph (k) of this
section, effective for cost reporting periods beginning on or after
April 1, 2000 and before cost reporting periods beginning on or after
October 1, 2022, FTE residents in a rural track program at an urban
hospital are included in the urban hospital's rolling average
calculation described in this paragraph (d).
(ii) Subject to the provisions under paragraph (k) of this section,
effective for rural track programs started in a cost reporting period
beginning on or after October 1, 2022, FTE residents in a rural track
program at an urban hospital or rural hospital are excluded from
rolling average calculation described in this paragraph (d) during the
cost reporting periods prior to the beginning of the applicable
hospital's cost reporting period that coincides with or follows the
start of the sixth program year of each rural track.
(e) * * *
(1) * * *
(vi) In the case of a hospital that, as of December 27, 2020, has a
FTE cap based on the training of less than 1.0 FTE in any cost
reporting period beginning before October 1, 1997; or based on the
training of no more than 3.0 FTEs in on a cost reporting period
beginning on or after October 1, 1997, and before December 27, 2020, if
such a hospital begins training residents in a new approved program (as
defined under Sec. 413.79(l)) in a program year beginning on or after
December 27, 2020 and before December 26, 2025, the hospital with a
previous FTE cap of less than 1.0 FTE may receive an adjusted FTE cap
when it begins to train at least 1.0 FTE in a new program(s); and the
hospital with a previous FTE cap of no more than 3.0 FTEs may receive
an adjusted FTE cap when it begins to train more than 3.0 FTEs in a new
program(s). The adjusted FTE cap is equal to the sum of the original
FTE cap and the products of the following three factors (limited to the
number of accredited slots for each program):
(A) The highest total number of FTE residents trained in any
program year during the fifth year of the first new program's existence
started in a program year beginning on or after December 27, 2020 and
before December 26, 2025, at all of the hospitals to which the
residents in the program rotate;
(B) The number of years in which residents are expected to complete
the program, based on the minimum accredited length for each type of
program.
(C) The ratio of the number of FTE residents in the new program
that trained at the hospital over the entire 5-
[[Page 73514]]
year period to the total number of FTE residents that trained at all
hospitals over the entire 5-year period.
* * * * *
(6) Effective for a cost reporting period beginning on or after
December 27, 2020, FTE resident caps must be established when the
hospital trains 1.0 or more FTE residents in a new medical residency
program (as defined under paragraph (l) of this section).
(f) * * *
(8) FTE resident cap slots added under section 126 of Public Law
116-260 may be used in a Medicare GME affiliation agreement beginning
in the fifth year after the effective date of those FTE resident cap
slots.
* * * * *
(k) Residents training in rural track programs. Subject to the
provisions of Sec. 413.81, an urban hospital that establishes a new
residency program, or has an existing residency program, with a rural
track (or an integrated rural track) may add the rotations of the
residents in those rural tracks to its FTE cap specified under
paragraph (c) of this section. An urban hospital (or, effective for a
cost reporting period beginning on or after October 1, 2022, a rural
hospital) with a Rural Track Program (as defined at section 413.75(b)
of this subchapter) may count residents in those Rural Track Programs
up to a rural track FTE limitation if the hospital complies with the
conditions specified in paragraphs (k)(2) through (7) of this section.
(1) If an urban hospital rotates residents to a separately
accredited rural track program at a rural hospital(s) for two-thirds of
the duration of the program for cost reporting periods beginning on or
after April 1, 2000, and before October 1, 2003, or for more than one-
half of the duration of the program for cost reporting periods
beginning on or after October 1, 2003, and before October 1, 2022, the
urban hospital may include those residents in its FTE count for the
time the rural track residents spend at the urban hospital, not to
exceed its rural track FTE limitation. For cost reporting periods
beginning on or after October 1, 2022, if an urban hospital rotates
residents to a Rural Track Program (as defined at section 413.75(b) of
this subchapter) at a rural hospital(s) for more than one-half of the
duration of the program, both the urban and the rural hospital may
include those residents in their FTE counts for the time the rural
track residents spend at the urban and rural hospital, respectively,
not to exceed their rural track FTE limitations. The rural track FTE
limitation is determined as follows:
(i) For rural track programs started prior to October 1, 2012, for
the first 3 years of the rural track's existence, the rural track FTE
limitation for each urban hospital will be the actual number of FTE
residents, subject to the rolling average at paragraph (d)(7) of this
section, training in the rural track at the urban hospital. For rural
track programs started on or after October 1, 2012, and before October
1, 2022, prior to the start of the urban hospital's cost reporting
period that coincides with or follows the start of the sixth program
year of the rural track's existence, the rural track FTE limitation for
each urban hospital will be the actual number of FTE residents, subject
to the rolling average at paragraph (d)(7) of this section, training in
the rural track at the urban hospital. For cost reporting periods
beginning on or after October 1, 2022, before the start of the urban or
rural hospital's cost reporting period that coincides with or follows
the start of the sixth program year of the Rural Track Program's
existence, the rural track FTE limitation for each hospital will be the
actual number of FTE residents training in the Rural Track Program at
the urban or rural hospital.
(ii) For rural track programs started prior to October 1, 2012,
beginning with the fourth year of the rural track's existence, the
rural track FTE limitation is equal to the product of the highest
number of residents, in any program year, who during the third year of
the rural track's existence are training in the rural track at the
urban hospital and are designated at the beginning of their training to
be rotated to the rural hospital(s) for at least two-thirds of the
duration of the program for cost reporting periods beginning on or
after April 1, 2000, and before October 1, 2003, or for more than one-
half of the duration of the program for cost reporting periods
beginning on or after October 1, 2003, and the number of years those
residents are training at the urban hospital. For rural track programs
started on or after October 1, 2012 and before October 1, 2022,
beginning with the start of the urban hospital's cost reporting period
that coincides with or follows the start of the sixth program year of
the rural track's existence, the rural track FTE limitation is
calculated in accordance with paragraph (e)(1) of this section. For
Rural Track Programs started on or after October 1, 2022, beginning
with the start of the urban or rural hospital's cost reporting period
that coincides with or follows the start of the sixth program year of
the rural track's existence, the rural track FTE limitation is
calculated in accordance with paragraph (e)(1) of this section.
(2) If an urban hospital rotates residents to a separately
accredited rural track program at a rural nonprovider site(s) for two-
thirds of the duration of the program for cost reporting periods
beginning on or after April 1, 2000, and before October 1, 2003, or for
more than one-half of the duration of the program for cost reporting
periods beginning on or after October 1, 2003, the urban hospital may
include those residents in its FTE count, subject to the requirements
under Sec. 413.78(d) through (g). For cost reporting periods beginning
on or after October 1, 2022, if an urban or rural hospital rotates
residents to a Rural Track Program (as defined at section 413.75(b) of
this subchapter) at a rural nonprovider site for more than one-half of
the duration of the program, the urban or rural hospital may include
those residents in its FTE count, subject to which hospital meets the
requirements under Sec. 413.78(g), not to exceed their rural track FTE
limitations. The rural track FTE limitation is determined as follows:
(i) For rural track programs started prior to October 1, 2012, for
the first 3 years of the rural track's existence, the rural track FTE
limitation for each urban hospital will be the actual number of FTE
residents, subject to the rolling average specified in paragraph (d)(7)
of this section, training in the rural track at the urban hospital and
the rural nonprovider site(s). For rural track programs started on or
after October 1, 2012, and before October 1, 2022, prior to the start
of the urban hospital's cost reporting period that coincides with or
follows the start of the sixth program year of the rural track's
existence, the rural track FTE limitation for each urban hospital will
be the actual number of FTE residents, subject to the rolling average
specified in paragraph (d)(7) of this section, training in the rural
track at the urban hospital and the rural nonprovider site(s). For
Rural Track Programs prior to the start of the urban or rural
hospital's cost reporting period that coincides with or follows the
start of the sixth program year of the rural track's existence, the
rural track FTE limitation for each respective hospital will be the
actual number of FTE residents training in the Rural Track Program at
the hospital and, subject to the requirements under Sec. 413.78(g), in
the rural nonprovider site(s).
* * * * *
(3) For rural track programs started prior to October 1, 2012, if
an urban hospital rotates residents in the rural track program to a
rural hospital(s) for
[[Page 73515]]
less than two-thirds of the duration of the program for cost reporting
periods beginning on or after April 1, 2000, and before October 1,
2003, or for one-half or less than one-half of the duration of the
program for cost reporting periods beginning on or after October 1,
2003, the rural hospital may not include those residents in its FTE
count (unless the rural track is a new program under paragraph (e)(3)
of this section, or the rural hospital's FTE count does not exceed that
hospital's FTE cap), nor may the urban hospital include those residents
when calculating its rural track FTE limitation. For rural track
programs started on or after October 1, 2012, if an urban hospital
rotates residents in the rural track program to a rural hospital(s) for
one-half or less than one-half of the duration of the program, the
rural hospital may not include those residents in its FTE count (unless
the rural track is a new program under paragraph (e)(3) of this
section, or the rural hospital's FTE count does not exceed that
hospital's FTE cap), nor may the urban hospital include those residents
when calculating its rural track FTE limitation. For cost reporting
periods beginning on or after October 1, 2022, if less than or equal to
50 percent of the duration of the training program occurs in a rural
area, neither the urban or rural hospital may receive a rural track FTE
limitation.
(4) * * *
(i) * * *
(C) For programs started in a cost reporting period beginning on or
after October 1, 2022, if less than or equal to 50 percent of the
duration of the training program occurs in a rural area, neither the
urban or rural hospital may receive a rural track FTE limitation.
(ii) For rural track programs started on or after October 1, 2012
and prior to October 1, 2022, if an urban hospital rotates residents in
the rural track program to a rural nonprovider site(s) for one-half or
less than one-half of the duration of the program, the urban hospital
may include those residents in its FTE count, subject to the
requirements under Sec. 413.78(g). The urban hospital may include in
its FTE count those residents in the rural track, not to exceed its
rural track limitation, determined as follows:
* * * * *
(C) For cost reporting periods beginning on or after October 1,
2022, if less than or equal to 50 percent of the duration of the
training program occurs in a rural area, neither the urban or rural
hospital may receive a rural track FTE limitation.
(5) * * *
(iv) Effective for cost reporting periods beginning on or after
October 1, 2022, in order for an urban or rural hospital to receive a
rural track FTE limitation, greater than 50 percent of the program must
occur in a rural area.
* * * * *
(p) Determination of an increase in the otherwise applicable
resident cap under section 126 of the Consolidated Appropriations Act
(Pub. L. 116-260). For portions of cost reporting periods beginning on
or after July 1, 2023, a hospital may receive an increase in its
otherwise applicable FTE resident cap (as determined by CMS) if the
hospital meets the requirements and qualifying criteria under section
1886(h)(9) of the Act and if the hospital submits an application to CMS
within the timeframe specified by CMS.
Subpart H--Payment for End-Stage Renal Disease (ESRD) Services
0
16. The subpart heading for Subpart H is revised to read as set forth
above.
Sec. Sec. 413.200 [Removed and Reserved]
0
17. Section 413.200 is removed and reserved.
0
18. Subpart L is added to read as follows:
Subpart L--Payment of Organ Acquisition Costs for Transplant
Hospitals, Organ Procurement Organizations, and Histocompatibility
Laboratories
Sec.
413.400 Definitions.
413.402 Organ acquisition costs.
413.404 Standard acquisition charge.
413.406 Acquisition of pancreata for islet cell transplant.
413.408 [Reserved]
413.410 [Reserved]
413.412 Intent to transplant, and counting en bloc, research, and
discarded organs.
413.414 Medicare secondary payer and organ acquisition costs.
413.416 Organ acquisition charges for kidney-paired exchanges.
413.418 Amounts billed to organ procurement organizations by donor
community hospitals and transplant hospitals for hospital services
provided to cadaveric donors in the hospital and included as organ
acquisition costs.
413.420 Payment to independent organ procurement organizations and
histocompatibility laboratories for kidney acquisition costs.
Subpart L--Payment of Organ Acquisition Costs for Transplant
Hospitals. Organ Procurement Organizations, and Histocompatibility
Laboratories
Sec. 413.400 Definitions.
As used in this subpart:
Histocompatibility laboratory means a laboratory meeting the
requirements set forth in Sec. 493.1227 of this chapter and providing
the services for the acquisition of kidneys or other organs for
transplantation.
Hospital-based organ procurement organization (HOPO) means an organ
procurement organization that is considered a department of the
transplant hospital and reports organ acquisition costs it incurs on
the transplant hospital's Medicare cost report.
Independent organ procurement organization (IOPO) means an organ
procurement organization that files a Medicare cost report separate
from a hospital and meets all of the following:
(1) Is not subject to the control of a hospital with respect to the
hiring, firing, training, and paying of employees.
(2) Is not considered as a department of a hospital for insurance
purposes (including malpractice insurance, general liability insurance,
worker's compensation insurance, and employee retirement insurance).
(3) Reports organ acquisition costs it incurs on the IOPO Medicare
cost report.
Organ, for Medicare organ acquisition payment purposes, means:
(1) A human kidney, liver, heart, lung, pancreas, or intestine (or
multivisceral organs when transplanted at the same time as an
intestine).
(2) Pancreata procured on or after October 1, 2004, for the purpose
of acquiring pancreatic islet cells for transplantation into
individuals who are participating in a National Institute of Diabetes
and Digestive and Kidney Diseases clinical trial in accordance with
section 733 of the Medicare Prescription Drug, Improvement and
Modernization Act of 2003.
Organ procurement organization (OPO) means an organization defined
in Sec. 486.302 of this chapter. OPOs can be independent or hospital
based.
Standard acquisition charge (SAC) means a charge as defined in
Sec. 413.404 of this chapter.
Transplant hospital means a hospital that furnishes organ
transplants and other medical and surgical specialty services required
for the care of transplant patients.
[[Page 73516]]
Transplant hospital/HOPO (TH/HOPO) refers to a transplant hospital,
or a transplant hospital that operates a HOPO (as previously defined in
this section) and performs organ procurement activities as one entity
reported on the transplant hospital's Medicare cost report.
Transplant program means an organ-specific transplant program
within a transplant hospital (as defined in this section).
Sec. 413.402 Organ acquisition costs.
(a) Costs related to organ acquisition. Costs recognized in
paragraph (b) of this section are costs incurred in the acquisition of
organs from a living donor or a cadaveric donor, by the hospital or an
organ procurement organization, as appropriate. Additionally, there are
administrative and general costs that may be allowable and included on
the cost report for an OPO or TH/HOPO.
(b) Types of costs. Organ acquisition costs are as follows:
(1) Tissue typing, including tissue typing furnished by independent
laboratories.
(2) Donor and beneficiary evaluation.
(3) Other costs associated with excising organs, such as general
routine and special care services (for example, intensive care unit or
critical care unit services), provided to the living or cadaveric
donor.
(4) Operating room and other inpatient ancillary services
applicable to the living or cadaveric donor.
(5) Organ preservation and perfusion costs.
(6) Organ Procurement and Transplantation Network registration
fees, and the reasonable and necessary cost of other fees, such as the
registration fees for a kidney paired exchange, to register candidates
for organ transplants. These allowable registry fees must support or
promote organ transplantation and must not be duplicative in nature.
(7) Surgeons' fees for excising cadaveric organs (currently limited
to $1,250 for kidneys).
(8) Transportation of the:
(i) Excised organ to the transplant hospital; and
(ii) Cadaveric donor to procure organs when it is necessary to
preserve clinical outcomes or to avoid loss of potentially
transplantable organs.
(9) Costs of organs acquired from other hospitals or organ
procurement organizations.
(10) Hospital costs normally classified as outpatient costs
applicable to organ excisions (services include donor and recipient
tissue typing, work-up, and related services furnished prior to
inpatient admission).
(11) Costs of services applicable to organ excisions which are
rendered by residents and interns not in approved teaching programs.
(12) All pre-admission services applicable to organ excisions, such
as laboratory, electroencephalography, and the costs of physicians'
services.
(c) Living donor complications. (1) Living kidney donor
complications. Living kidney donor complications directly related to
the kidney donation, which occur after the date of the donor's
discharge, must not be reported as kidney acquisition costs on the
Medicare cost report.
(A) Medicare covers reasonable costs incurred for living kidney
donor complications only if they are directly related to a kidney
donation for a covered transplant into a Medicare beneficiary.
(B) Living kidney donor complications are paid through the claims
processing system under Medicare Part A or Part B, as applicable for
the services provided, with no donor liability for deductibles or
coinsurance. Living kidney donor complications are billed under the
Medicare Beneficiary Identifier of the transplant recipient.
(2) Living non-renal donor complications. Hospital costs incurred
for living non-renal donor complications directly related to the non-
renal organ donation, which occur after the date of the donor's
discharge are not paid through the claims processing system but are
reported as organ acquisition costs on the hospital's Medicare cost
report.
(A) Medicare covers reasonable hospital costs incurred for living
non-renal organ donor complications only if they are directly related
to a non-renal organ donation for a covered transplant into a Medicare
beneficiary.
(B) Hospital costs incurred for living non-renal organ donor
complications are reported as organ acquisition costs on the Medicare
cost report, and paid through the cost report on a reasonable cost
basis.
(d) Costs not related to organ acquisition. (1) Items or services
that are not related or reasonable to acquire an organ for
transplantation, non-allowable administrative and general costs, or
costs that are not related to patient care, are not considered organ
acquisition costs.
(2) Examples of items or services that are not organ acquisition
costs include, but are not limited to the following:
(i) Donor burial and funeral expenses.
(ii) Transportation costs of the cadaveric donor after organ
procurement for funeral services or for burial.
(iii) Transportation costs for a living donor.
(iv) Fees or in-center payments for donor referrals.
(v) Costs associated with and incurred for OPO-sponsored seminars
where continuing education credits are given and where the attendee is
not on the OPO's staff (as described at Sec. 486.326(b)).
(vi) Unreasonable costs incurred for administrator's duties
associated with professional organizations.
Sec. 413.404 Standard acquisition charge.
(a) General. (1) Procuring an organ is not a covered service when
performed independent of a Medicare covered transplant, however, the
reasonable costs to procure an organ are reimbursable when billed in
connection with a Medicare covered transplant.
(2) The SAC represents the average of the total organ acquisition
costs associated with procuring either cadaveric donor organs or living
donor organs, by organ type.
(3) When a TH/HOPO or IOPO furnishes an organ to another TH/HOPO or
IOPO, it bills its SAC to the TH/HOPO or IOPO receiving the organ.
(b) THs/HOPOs SACs. (1) A TH/HOPO must develop a SAC for each organ
type (for example heart, liver, or lung).
(2) When a TH/HOPO furnishes an organ to another transplant
hospital or IOPO, it must bill the receiving transplant hospital or
IOPO its SAC by organ type, or the hospital's standard departmental
charges that are reduced to cost.
(3) A transplant hospital must establish SACs for living donor
organs. A TH/HOPO must establish SACs for cadaveric donor organs.
(i) Living donor SAC for transplant hospitals--(A) Definition. The
living donor SAC is an average organ acquisition cost that a transplant
hospital incurs to procure an organ from a living donor.
(B) Establishment of living donor SAC. A transplant hospital must
establish a living donor SAC (living SAC) before the transplant
hospital bills its first living donor transplant to Medicare.
(C) Calculating the living donor SAC--(1) Initial living donor SAC.
A transplant hospital calculates its initial living donor SAC for each
living organ type as follows:
(i) By estimating the reasonable and necessary organ acquisition
costs it expects to incur for services furnished to living donors, and
pre-admission
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services furnished to recipients of living donor organs during the
hospital's cost reporting period.
(ii) By dividing the estimated amount described in paragraph
(b)(3)(i)(C)(1)(i) of this section by the projected number of usable
living donor organs to be procured by the transplant hospital during
the transplant hospital's cost reporting period.
(2) Subsequent living donor SAC. A transplant hospital calculates
its subsequent years' living donor SAC for each living organ type as
follows:
(i) By using the transplant hospital's actual organ acquisition
costs for the living donor organ type from the prior year's Medicare
cost report, adjusted for any changes in the current year.
(ii) Dividing the costs in paragraph (b)(3)(i)(C)(2)(i) of this
section by the actual number of usable living donor organs procured by
the transplant hospital during that prior cost reporting period.
(D) Costs used to develop the living donor SAC. Costs that may be
used to develop the living donor SAC include, but are not limited to
the following:
(1) Costs of tissue typing services, including those furnished by
independent laboratories.
(2) Costs of physician pre-admission transplant evaluation
services.
(3) Registry fees as specified at Sec. 413.402(b)(6) of this
subpart.
(4) Costs for donor and recipient evaluations and workups furnished
prior to admission for transplantation.
(5) Other costs associated with procurement, for example, general
routine and special care services (for example, intensive care unit or
critical care unit services), related to the donor.
(6) Costs of operating room and other inpatient ancillary services
related to the donor.
(7) Organ preservation and perfusion costs.
(8) Transportation costs of the excised organ as specified in Sec.
413.402(b)(8)(i) of this subpart.
(ii) Cadaveric donor SAC for THs/HOPOs--(A) Definition. The
cadaveric donor SAC is an average cost that a TH/HOPO incurs to procure
a cadaveric donor organ.
(B) Calculating the cadaveric SAC--(1) Initial cadaveric donor SAC.
A TH/HOPO calculates its initial cadaveric SAC for each cadaveric organ
type as follows:
(i) By estimating the reasonable and necessary costs it expects to
incur to procure cadaveric organs, combined with the expected costs of
acquiring cadaveric organs from OPOs or other transplant hospitals.
(ii) By dividing the estimated amount described in paragraph
(b)(3)(ii)(B)(1)(i) of this section by the projected number of usable
cadaveric organs to be procured by the TH/HOPO within the transplant
hospital's cost reporting period.
(2) Subsequent cadaveric donor SAC. A TH/HOPO calculates its
subsequent years' cadaveric donor SAC for each cadaveric organ type as
follows:
(i) By using the transplant hospital's actual organ acquisition
costs for the cadaveric donor organ type from the prior year's Medicare
cost report, adjusted for any changes in the current year.
(ii) By dividing the costs in paragraph (b)(3)(ii)(B)(2)(i) of this
section by the actual number of usable cadaveric donor organs procured
by the TH/HOPO during that prior cost reporting period.
(C) Costs to develop the cadaveric donor SAC. Costs that may be
used to develop the cadaveric donor SAC include, but are not limited to
the following:
(1) Costs of organs acquired from other transplant hospitals or
OPOs.
(2) Costs of transportation as specified in Sec. 413.402(b)(8) of
this subpart.
(3) Surgeons' fees for excising cadaveric organs (currently limited
to $1,250 for kidneys).
(4) Costs of tissue typing services, including those furnished by
independent laboratories.
(5) Organ preservation and perfusion costs.
(6) General routine and special care service costs (for example,
intensive care unit or critical care unit services related to the
donor).
(7) Operating room and other inpatient ancillary service costs.
(c) Independent OPO SACs--(1) Non-renal SAC. An IOPO establishes
non-renal SACs based on its costs of procuring non-renal organs for
each organ type, by--
(i) Estimating the reasonable and necessary costs it expects to
incur for services furnished to procure cadaveric donor non-renal
organs during the IOPO's cost reporting period; and
(ii) Dividing the amount estimated in paragraph (c)(1)(i) of this
section by the projected number of cadaveric donor non-renal organs the
IOPO expects to procure within its cost reporting period.
(iii) An IOPO may adjust its non-renal SACs during the year if
necessary to account for cost changes.
(2) Kidney SAC. (i) General. An IOPO's Medicare contractor
establishes the kidney SAC based on an estimate of, initial year
projected or subsequent years' actual, reasonable and necessary costs
the IOPO expects to incur to procure cadaveric kidneys during the
IOPO's cost reporting period, divided by the, initial year projected or
subsequent years' actual, number of usable cadaveric kidneys the IOPO
expects to procure.
(ii) Initial year. The Medicare contractor develops the IOPO's
initial kidney SAC based on the IOPO's budget information.
(iii) Subsequent years. The kidney SAC for subsequent years is
computed using the IOPO's costs related to kidney acquisition that were
incurred in the prior cost reporting period and dividing those costs by
the number of usable cadaveric kidneys procured during that cost
reporting period. The SAC is the basis for the interim payments by the
transplant hospital to the IOPO, as set forth in Sec. 413.420(d).
(iv) The IOPO's Medicare contractor may adjust the kidney SAC
during the year, if necessary, for cost changes.
(v) The IOPO cannot use or change its kidney SAC without the
contractor's approval.
(3) Billing SACs for organs generally. When an IOPO obtains an
organ from another IOPO, the receiving IOPO is responsible for paying
the procuring IOPO's SAC. The receiving IOPO uses its SAC for each
organ type and not the procuring IOPO's SAC when billing the transplant
hospital receiving the organ.
Sec. 413.406 Acquisition of pancreata for islet cell transplant.
(a) Medicare only covers and pays for reasonable costs of
acquisition on or after October 1, 2004, of pancreata for islet cell
transplants into Medicare beneficiaries participating in a National
Institute of Diabetes and Digestive and Kidney Diseases clinical trial
of islet cell transplantation in accordance with section 733 of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003.
(b) Pancreata procured under paragraph (a), for covered islet cell
transplants must be assigned a full standard acquisition charge and be
treated as solid organs for procurement purposes.
Sec. 413.408 [Reserved]
Sec. 413.410 [Reserved]
Sec. 413.412 Intent to transplant, and counting en bloc, research,
and discarded organs and kidneys.
(a) Principle of intent to transplant for organ acquisition payment
purposes. (1) An organ is intended for transplant when the OPO or TH
designates it for transplant prior to the time the donor enters the
hospital's operating room for surgical excision/recovery of the
organ(s).
(2) OPOs and THs must identify the costs associated with the
recovered and
[[Page 73518]]
unrecovered organs and apportion those costs to the appropriate cost
centers by organ type.
(b) Counting en bloc organs. En bloc organs can be en bloc lungs or
en bloc kidneys. For Medicare cost allocation purposes, OPOs and THs
count--
(1) En bloc lungs or en bloc kidneys procured and transplanted en
bloc (two organs transplanted as one unit) as one total usable organ.
En bloc organs transplanted into a Medicare beneficiary count as one
Medicare usable organ or one Medicare usable kidney.
(2) En bloc lungs and en bloc kidneys procured en bloc but
separated and transplanted into two different recipients as two total
usable organs. For each organ transplanted into a Medicare beneficiary,
count each as one Medicare usable organ or one Medicare usable kidney.
(c) Research organs. For Medicare cost allocation purposes, organs
used for research are not counted as Medicare usable organs in
Medicare's share of organ acquisition costs (except pancreata for islet
cell transplants as specified in Sec. 413.406(a)) and kidneys used for
research are not counted as Medicare usable kidneys in Medicare's share
of kidney acquisition costs.
(d) Counting of discarded/unusable organs. An organ is not counted
as a Medicare usable organ or a total usable organ if the excising
surgeon determines, upon initial inspection or after removal of the
organ, that the organ is not viable and not medically suitable for
transplant and the organ is determined to be unusable and discarded.
Sec. 413.414 Medicare secondary payer and organ acquisition costs.
(a) General principle. If a Medicare beneficiary has a primary
health insurer other than Medicare and that primary health insurer has
primary liability for the transplant and organ acquisition costs, the
Medicare Program may share a liability for organ acquisition costs as a
secondary payer to the transplant hospital that performs the transplant
in certain instances. To determine whether Medicare has liability to
the transplant hospital that performs the transplant as a secondary
payer for organ acquisition costs, it is necessary for the transplant
hospital that performs the transplant to review the transplant
hospital's agreement with the primary insurer.
(b) Medicare has no secondary payer liability for organ acquisition
costs. If the primary insurer's agreement requires the transplant
hospital to accept the primary insurer's payment as payment in full for
the transplant and the associated organ acquisition costs, Medicare has
zero liability as a secondary payer with no payment obligation for the
transplantation costs or the organ acquisition costs, and the organ at
issue is not a Medicare usable organ.
(c) Medicare may have secondary payer liability for organ
acquisition costs. When the primary insurer's agreement does not
require the transplant hospital that performs the transplant to accept
the payment from the primary insurer as payment in full, and the
payment the transplant hospital receives from the primary insurer for
the transplant and organ acquisition costs is insufficient to cover the
entire cost, Medicare may have a secondary payer liability to the
transplant hospital that performs the transplant for the organ
acquisition costs.
(1) To determine whether Medicare has a secondary payer liability
for the organ acquisition costs, it is necessary for the transplant
hospital that performs the transplant to submit a bill to its Medicare
contractor and to compare the total cost of the transplant, including
the transplant DRG amount and the organ acquisition costs, to the
payment received from the primary payer.
(2) If the payment from the primary payer is greater than the cost
of the transplant DRG and the organ acquisition costs, there is no
Medicare liability and the transplant hospital must not count the organ
as a Medicare usable organ.
(3) If the payment from the primary payer is less than the
transplant DRG and the organ acquisition costs, there is a Medicare
secondary payer liability and all of the following must occur:
(i) The transplant hospital must pro-rate the payment from the
primary payer between the transplant DRG payment and the organ
acquisition payment.
(ii) Only the transplant hospital that performs the transplant
counts the organ as a Medicare usable organ.
(iii) The portion of the payment applicable to organ acquisition is
used on the cost report to reduce the Medicare organ acquisition costs.
Sec. 413.416 Organ acquisition charges for kidney-paired exchanges.
(a) Initial living donor evaluations. When a recipient and donor
elect to participate in a kidney paired exchange, the costs of the
initial living donor evaluations are incurred by the originally
intended recipient's transplant hospital, regardless of whether the
living donor actually donates to their originally intended recipient, a
kidney paired exchange recipient, or does not donate at all.
(b) Additional tests after a match. In a kidney paired exchange,
regardless of whether an actual donation occurs, once the donor and
recipient are matched, any additional tests requested by the
recipient's transplant hospital and performed by the donor's transplant
hospital, are billed to the recipient's transplant hospital as charges
reduced to cost (using the donor's transplant hospital's cost to charge
ratio) and included as acquisition costs on the recipient transplant
hospital's Medicare cost report.
(c) Procurement and transport of a kidney. When a donor's
transplant hospital procures and furnishes a kidney to a recipient's
transplant hospital all of the following are applicable:
(1) All costs must be reasonable and necessary.
(2)(i) The donor's transplant hospital bills the recipient's
transplant hospital.
(ii) The donor's transplant hospital bills its charges reduced to
cost, or bills its applicable kidney SAC for the reasonable costs
associated with procuring, packaging, and transporting the kidney.
(3) The donor's transplant hospital records the costs described in
paragraph (c)(2)(ii) of this section on its Medicare cost report as
kidney acquisition costs and offsets any payments received from the
recipient's transplant hospital against its kidney acquisition costs.
(4) The recipient's transplant hospital records as part of its
kidney acquisition costs--
(i) The amounts billed by the donor's transplant hospital for the
reasonable costs associated with procuring, packaging, and transporting
the organ; and
(ii) Any additional testing performed and billed by the donor's
transplant hospital.
(d) Donor's procurement occurs at recipient transplant hospital. In
a kidney-paired exchange--
(1) When a donor's transplant hospital does not procure a kidney,
but the donor travels to the recipient's transplant hospital for the
organ procurement, the reasonable costs associated with the organ
procurement are included on the Medicare cost report of the recipient's
transplant hospital; and
(2) The travel expenses of the living donor are not allowable
Medicare costs.
[[Page 73519]]
Sec. 413.418 Amounts billed to organ procurement organizations by
donor community hospitals and transplant hospitals for hospital
services provided to cadaveric donors in the hospital and included as
organ acquisition costs.
(a) General. A donor community hospital (a Medicare-certified non-
transplant hospital) and a transplant hospital incur organ acquisition
costs for donor organ procurement services, authorized by the OPO
following declaration of death and consent to donate.
(b) Amounts billed for organ acquisition costs. For cost reporting
periods beginning on or after February 25, 2022, when a donor community
hospital or a transplant hospital incurs costs for services furnished
to a cadaveric donor, as authorized by the OPO, the donor community
hospital or transplant hospital must bill the OPO the lesser of its
customary charges that are reduced to cost by applying its most
recently available hospital specific cost-to-charge ratio for the
period in which the service was rendered, or a negotiated rate.
Sec. 413.420 Payment to independent organ procurement organizations
and histocompatibility laboratories for kidney acquisition costs.
(a) Principle. (1) Covered services furnished after September 30,
1978, by OPOs and histocompatibility laboratories in connection with
kidney acquisition and transplantation are reimbursed under the
principles for determining reasonable cost contained in this part.
(2) Services furnished by IOPOs and histocompatibility
laboratories, that have an agreement with the Secretary in accordance
with paragraph (c) of this section, are paid directly by the transplant
hospital using a kidney SAC (for an IOPO) or contractor-established
rates (for a histocompatibility laboratory). (The reasonable costs of
services furnished by HOPOs or laboratories are reimbursed in
accordance with the principles contained in Sec. Sec. 413.60 and
413.64.)
(b) Definitions. Definitions relevant to this section can be found
in Sec. 413.400.
(c) Agreements with IOPOs and laboratories. (1) Any IOPO or
histocompatibility laboratory that wishes to have the cost of its pre-
transplant services reimbursed under the Medicare program must file an
agreement with CMS under which the IOPO or laboratory agrees to do all
of the following:
(i) To file a cost report in accordance with Sec. 413.24(f) within
5 months following the close of the period covered by the report.
(ii) To permit CMS to designate a contractor to determine the
interim reimbursement rate payable by the transplant hospitals for
services provided by the IOPO or laboratory and to determine the
reasonable cost based upon the cost report filed by the IOPO or
laboratory.
(iii) To provide such budget or cost projection information as may
be required to establish an initial interim reimbursement rate.
(iv) To pay to CMS amounts that have been paid by CMS to transplant
hospitals and that are determined to be in excess of the reasonable
cost of the services provided by the IOPO or laboratory.
(v) Not to charge any individual for items or services for which
that individual is entitled to have payment made under section 1861 of
the Act.
(2) The initial cost report due from an IOPO or laboratory is for
its first fiscal year during any portion of which it had an agreement
with the Secretary under paragraphs (c)(1) and (2) of this section. The
initial cost report covers only the period covered by the agreement.
(d) Interim reimbursement. (1) Transplant hospitals with approved
kidney transplant programs pay the IOPO or histocompatibility
laboratory for their pre-transplantation services on the basis of an
interim rate established by the contractor for that IOPO or laboratory.
(2) The interim rate is based on a kidney SAC or contractor
established rates, associated with procuring a kidney for
transplantation, incurred by an IOPO or laboratory respectively, during
its previous fiscal year. If there is not adequate cost data to
determine the initial interim rate, the Medicare contractor determines
it according to the IOPO's or laboratory's estimate of its projected
costs for the fiscal year.
(3) Payments made by transplant hospitals on the basis of interim
rates are reconciled directly with the IOPO or laboratory after the
close of its fiscal year, in accordance with paragraph (e) of this
section.
(4) Information on the interim rate for all IOPOs and
histocompatibility laboratories must be disseminated to all transplant
hospitals and contractors.
(e) Retroactive adjustment--(1) Cost reports. Information provided
in cost reports by IOPOs and histocompatibility laboratories must meet
the requirements for cost data and cost finding specified in Sec.
413.24. These cost reports must provide the following:
(i) A complete accounting of the cost incurred by the IOPO or
laboratory in providing covered services, the total number of Medicare
beneficiaries who received those services.
(ii) Any other data necessary to enable the contractor to determine
the reasonable cost of covered services provided to Medicare
beneficiaries.
(2) Audit and adjustment. A cost report submitted by an IOPO or
histocompatibility laboratory is reviewed by the contractor and a new
interim reimbursement rate for kidney acquisition costs for the
subsequent fiscal year is established based upon this review.
(i) A retroactive adjustment in the amount paid under the interim
rate is made in accordance with Sec. 413.64(f).
(ii) If the determination of reasonable cost reveals an overpayment
or underpayment resulting from the interim reimbursement rate paid to
transplant hospitals, a lump sum adjustment is made directly between
that contractor and the IOPO or laboratory.
(f) Payment requirements. For services furnished on or after April
1, 1988, no payment may be made for services furnished by an IOPO that
does not meet the requirements of part 486, subpart G, of this chapter.
(g) Appeals. If the amount in controversy is $1,000 or more, any
IOPO or histocompatibility laboratory that disagrees with a
contractor's cost determination under this section is entitled to a
contractor hearing, in accordance with the procedures set forth in
Sec. Sec. 405.1811 through 405.1833 of this chapter.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-27523 Filed 12-17-21; 4:15 pm]
BILLING CODE 4120-01-P