To meet the future unmet demand for physicians, several hospitals have elected “rural status” to increase their IME full-time equivalent (FTE) cap by 30% and obtain access to additional FTE slots for new residency programs. Even with the advantages provided by “rural status,” many teaching hospitals remain over their IME FTE cap.
Medicare Affiliation Agreements
The upcoming deadline for establishing affiliation agreements is June 30, 2024. As hospitals continue to consolidate into larger health systems, teaching hospitals should consider Medicare GME affiliation agreements between their system hospitals. 42 CFR Section 413.75 and 42 CFR Section 413.79 provide guidance on Medicare graduate medical education (GME) affiliated groups that allow health systems to aggregate IME and DGME resident FTE caps for hospitals that share rotations.
To enter into a Medicare GME affiliation agreement, the hospitals must meet one of the following criteria:
- Two or more hospitals that are located in the same urban or rural area or in a contiguous area and meet the rotation requirements in §413.79(f)(2).
- Two or more hospitals that are not located in the same or in a contiguous urban or rural area, but meet the rotation requirement in §413.79(f)(2), and are jointly listed as:
- The sponsor, primary clinical site, or major participating institution for one or more programs as these terms are used in the most current publication of the Graduate Medical Education Directory; or
- The sponsor is listed under “affiliations and outside rotations” for one or more programs in operation in Opportunities, Directory of Osteopathic Postdoctoral Education Programs.
- Two or more hospitals that are under common ownership and, effective for all Medicare GME affiliation agreements beginning July 1, 2003, meet the rotation requirement in §413.79(f)(2).
Entering into a Medicare GME affiliation agreement allows teaching hospitals to fully utilize available FTE cap amounts and the differences that might exist in IME and DGME reimbursement between hospitals. For example: if a teaching hospital has a higher per resident amount (PRA) and a higher Medicare utilization, then a Medicare GME affiliation agreement may be utilized to improve overall reimbursement for the health system, by transferring FTE cap from a hospital with a lower PRA and lower Medicare utilization.
This can be an effective strategy for health systems to improve overall systemwide reimbursement and give the system more opportunities to train new residents and establish new programs. Even if hospitals are not under common ownership, Medicare GME affiliation agreements are an added strategy that should still be considered for hospitals located in the same area when those hospitals share rotations.
GME reimbursement strategies are complex and require increased collaboration between hospitals; and, if executed properly, these strategies can yield significant financial benefits for your health system.
If you would like to learn more about Medicare GME affiliation agreements for your organization, please reach out to a professional.