Checking for Teaching Activities in Seemingly Non-Teaching Hospitals

 Authors: Zana Hekmat, Analyst &
 Scott Masin, MBA, Manager


The Why?

As a non-teaching hospital planning for new Graduate Medical Education (GME) growth, it is paramount to check for past teaching activity when determining the feasibility of GME residency and fellowship programs. Any teaching activity that has gone without notice on the hospital’s Medicare Cost Reports (MCRs) could adversely impact the future reimbursement opportunities of the organization. For instance, if a supposed non-teaching hospital does result in having GME activity on the hospital’s MCR, it is likely that their Per Resident Amount (PRA) and Full-Time Equivalent (FTE) Cap have been set low or perhaps at zero. An FTE cap is the maximum number of full-time residents/fellows for which an urban hospital can obtain Centers for Medicare and Medicaid Services (CMS) funding within a 5-year window. Specifically, an urban hospital needs to optimize its GME footprint before the five years elapses to preserve long-term funding in the future. If this presumed non-teaching urban hospital has FTE caps set at zero, this would mean that future residents/fellows will not be reimbursed through Direct Graduate Medical Education (DGME) payments and Indirect Medical Education (IME) payments.

A PRA is the amount of allowable direct cost to train a resident/fellow. Similar to the FTE Cap, once established, the PRA is permanent and cannot be modified or reset. It is important to note that a new teaching hospital's PRA is established in the first full year of resident/fellow rotations as reported in the hospital’s historical MCRs. If a hospital incidentally accepted one external resident/fellow for an outside rotation, CMS could claim this fundamentally transformed a hospital from a non-teaching to a teaching institution. As a result, your hospital will not be eligible to receive DGME payments through Medicare, due to the PRA being triggered from the time the resident/fellow first rotated at the hospital. Without this funding stream from CMS, it increases the difficulty of starting new, financially sustainable GME programs.

Interested in GME development but unsure of previous GME activity?

Germane is available to assist your organization with reviewing previous cost reports to provide clarity on your future financial outlook and sustainability for GME programs. Germane has worked with many institutions to create favorable outcomes from previous cost reporting errors. Our finance professionals can help identify vital funding considerations and provide consultative solutions that can significantly impact the future finances of your organization. With our team of subject matter experts in cost reporting and CMS regulations, we can determine the best plan of action moving forward for GME development through financial analysis, modeling, and decision-making support.

With the high cost of expense reporting mistakes, the complicated path to GME implementation and financial improvement should not be walked alone. Let us know if you are interested in understanding how previous GME rotations or cost reporting errors may affect your plans for future GME development!

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