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Cap Available for Redistribution to Teaching Hospitals – Section 5506 Rounds 21 and 22

As part of the 2025 IPPS Proposed Rules released on April 10, 2024, CMS announced two recent hospital closures which will utilize the Section 5506 Cap Redistribution Process for allocating its GME funding cap to other hospitals.

The section 5506 process was put into place back on March 23, 2008, as a measure to preserve cap from closed hospitals and distribute to eligible receiving hospitals. Prior to the implementation of the Section 5506 process, the cap from closed hospitals essentially disappeared.

This posed problems for future and ongoing funding of residents who were in training programs at these closed programs. The section 5506 distribution process helps the cap follow the residents where they are training in the future to help support the ongoing operations of the program paired with temporary cap transfers.

To date, there have been 22 rounds of redistributions from closed hospitals including the two below with GME funding cap present. The two hospitals that are redistributing their cap as part of rounds 21 and 22 are:

  • McLaren St. Luke’s Hospital (36-0090) located in Maumee, Ohio, which closed on May 9th, 2023. 14.93 FTEs of DGME and IME are eligible for redistribution

  • South City Hospital (26-0210) located in St. Louis, Missouri, closed on November 18th, 2023. 67.54 IME FTEs and 74.00 DGME FTEs are eligible for redistribution

Hospitals that wish to apply to receive slots must submit applications by July 9, 2024.

If your hospital or health system is considering applying for cap redistribution through Section 5506, please contact us for our assistance and guidance.



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