Potential GME Impact Following CMS 2025 IPPS Proposed Rules

On April 10, Centers for Medicare & Medicaid Services published the 2025 IPPS Proposed Rules. There are several new proposed rules which can impact the ability of hospitals to create new programs.

Specifically, there are five areas CMS has proposed changing that will impact eligibility for CMS funding for new programs:

• Newness of Residents

• Newness of Program Director and Faculty

• Number of Residents to Constitute a “Small” Program for Rural Sites

• One Hospital Sponsoring Two Programs in Same Specialty

• Commingling of New and Existing Residents

Please note that CMS has only issued proposed rules regarding the Newness of Residents criteria, meaning CMS could finalize their position on this issue in the final rules, which have historically been published in early August. However, CMS is issuing a Request for Information (RFI) regarding the other criteria listed, allowing CMS to study these issues further before proposing rules.

Regardless, CMS’s comments in the proposed 2025 IPPS rules reflect CMS’s current stance on these issues. The healthcare industry would benefit from paying close attention and providing guidance to CMS, ensuring that any final rules reflect industry concerns and do not inadvertently diminish the ability of the development of new GME programs, nor create rules that severely restrict new GME program’s ability to create a quality GME program.

While we will investigate and provide insights into each of these focus areas, it is imperative your hospital or health system provide input and feedback to CMS on these rules if you are planning on building new programs in the future or your ability to fund new programs may be at risk.

The comment period closes June 10 at 5 pm EST.

https://www.regulations.gov/document/CMS-2024-0131-0025

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Historically, CMS has not provided concrete parameters for what constitutes a “new” program. While the elements CMS evaluates include the accreditation status of the program, “newness” of Program Director, “newness” of faculty, and “newness” of residents, there are many permutations and combinations of these factors that impact if a program is truly “new” and its ability to create new federal funding. Most importantly, some of these rulings contradict the ACGME’s requirements for new programs.

Newness of Residents

As a benchmark, Germane Solutions has historically recommended programs to only fill their first class of residents and to not match additional PGY levels with transfer residents (due to the lack of clarity from CMS). With these proposed rules, CMS strives to clarify insights into this area. While this proposed rule indicates that 90% of the newly matched program’s residents over the 5-year cap development period need to be new, the feedback from individuals across the country will impact that final percentage.

We are personally excited to have some clarification, rather than leaving the determination up to the MAC and their review multiple years after the program has been operational. Overall, we are not against this new rule and believe new programs should truly be “new”. The 90% also gives some flexibility for programs to bring in a few PGY 2 or 3s to help with integration and improve the program's quality.

Furthermore, the mere presence of residents from existing programs in reality has very little to do with whether that program is new. Rather, we believe CMS should focus primarily on how they fund residents from existing programs— not use the presence of residents from existing programs as a reason to decide whether the program is new; especially considering that CMS can easily determine if the program is new by confirming that all PGY 1 slots are filled by new residents for all 5-years of the FTE cap development period.

CMS needs to grasp that when a program admits an existing program resident into a PGY 2 or PGY 3 slot, this decision has no effect on the newness of the program. A program’s decision to admit a PGY 2 or PGY 3 resident is generally done for one of two reasons. First, experienced residents enrich the learning experience for new residents, thus enhancing the program's quality. Second, the program is typically being a good community steward by agreeing to train PGY 2 or PGY 3 residents (likely due to extenuating circumstances specific to that resident).

It may make sense for CMS to limit their participation in funding existing program residents as new program residents, but it is not appropriate for CMS to use the presence of existing program residents as justification for deciding whether the program is new. Additionally, when CMS decides a program specialty is not new, CMS does not provide any funding for the program specialty as a new GME program, forever solidifying the fact there is no FTE cap nor long-term funding for that specialty program.

Newness of Program Director

The ACGME states a Program Director is required to have 3 years of educational and or administrative experience. While this was a recent change by the ACGME to add in “or administrative experience,” largely, the ACGME still expects Program Directors to have at least 3 years of experience in GME leadership positions within the last 5 years. CMS has proposed that the new Programs Directors should be out of GME for approximately 10 years to meet the “newness” criteria. There are several reasons why this would not provide the best learning experience for residents and would likely cause the quality of the new program to be diminished. In general, Program Directors are either identified internally as those who are serving as a core faculty member for an existing program or recruited from an existing program to meet these requirements.

If CMS institutes a policy that requires a lag time in GME experience for the future Program Director, this would significantly diminish the already small number of Program Directors available. It also encourages more outdated and less innovative training opportunities that have been recently developed. We believe this CMS policy would have the unintended consequence of severely restricting the quality of the new GME program.

Generally, CMS is concerned when an existing GME program relocates from one hospital to another and then identifies this as a “new program”. CMS has already stated they will not allow new program funding for CMS payment purposes when this occurs. Additionally, to prevent this exact problem, CMS now wants to place restrictions on the ability of Program Directors to move from one hospital to another hospital.

Not only is this an onerous proposed solution to a problem CMS has historically addressed, but it also is not a relevant issue when the recruited Program Director is from a different city, CBSA, or state as the recruiting hospital. New programs need to find experienced Program Directors from wherever they can, and CMS policies should make this easier not harder for new GME programs. As a minimum, CMS must eliminate any time requirement outside of the specialty as a condition for considering the program director to be new.

Newness of Faculty

As mentioned previously, faculty have always been considered part of CMS’s criteria when evaluating a new program. While we agree a new program should be comprised of new faculty, the proposed rulings require 50% of the faculty to be new (ensuring that faculty has not taught in that specialty program previously). While we believe this criterion has merit, it would make it difficult for some specialties to become approved by the ACGME, since the faculty need to demonstrate prior research and scholarly activity which normally only occurs in an academic setting. Additionally, restricting the hiring of experienced faculty would likely affect the quality of the teaching program. If 50% of the faculty is required to be new, meaning 50% of the faculty has no previous teaching experience, the ACGME would need to review its policies that require prior teaching and/or scholarly activity for programs to receive Initial Accreditation.

Definition of a “Small” GME Program

While the definition of a “small” program depends on the sponsoring institution, training location, and specialty, CMS is requesting feedback on how to create a standard definition of a “small” program. The proposed size and definition of a “small” program is 16 or fewer residents. CMS is trying to determine a standard to provide some flexibility to the rules outlined above for rural areas and areas of need. CMS has historically provided some flexibility for rural hospitals related to their cap development period, and we are pleased to see that CMS is continuing to acknowledge that GME growth in rural areas is more difficult than in urban areas by allowing some flexibility or building in considerations to the future rulings.

One Hospital Sponsoring Two Programs in Same Specialty and Commingling of Residents

The opportunity to start two programs of the same specialty or “duplicative programs” at the same hospital is something that CMS has approved of historically if it could be demonstrated that they met the  “newness” criteria. This is an area CMS is now looking for feedback on and is investigating what reasons exist for needing 2 separately approved programs. Our team has historically seen benefit for duplicative programs for primary care and various larger teaching tracks that are desired by the hospital or health system.

CMS is also looking for feedback on resident “commingling” between new and existing programs. While this is something that happens across the country where programs are sharing their didactics and educational resources between new and existing programs, CMS wants to ensure that this is not being taken to the “extreme”. The fear is that programs are creating new, duplicative programs that are not differentiated and circumventing the rules. While we are not aware of any programs taking this approach, CMS is welcoming comments on the subject to influence the future final rule.

While there are normally impacts to GME in the CMS rules, this is the first time in many years that multiple areas are up for discussion and feedback. We encourage all teaching hospitals to reach out and provide your feedback to help shape future legislation. If these changes create negative consequences and limit funding for new program development in the future, the existing physician shortage will be exacerbated even more.

Lastly, Germane Solutions will publish two additional blogs that are pertinent to GME institutions: one that reviews the distribution of cap, similar to Section 126, and one that concentrates on cap redistribution opportunities for closed hospitals.

If you have any questions regarding these recently proposed changes and how they may impact your organization, please contact us. We will be happy to meet and discuss how these proposed rulings apply to your current environment and strategy.

Link to 2025 IPPS Proposed Rules: https://public-inspection.federalregister.gov/2024-07567.pdf