[Federal Register: March 1, 2001 (Volume 66, Number 41)]
[Notices]
[Page 12940-12954]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr01-64]
Printable CHGME March 1, 2001 Federal Register notice(Adobe Acrobatâ„¢,
you must have the free Acrobatâ„¢ Reader)
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Resources and Services Administration
Children's Hospitals Graduate Medical Education (CHGME) Payment
Program: Final Eligibility and Funding Criteria and List of Eligible
Hospitals and Proposed Methodology for Determining FTE Resident Count,
Treatment of New Children's Teaching Hospitals, and Calculating
Indirect Medical Education Payment
AGENCY: Health Resources and Services Administration, HHS.
ACTION: Final notice and additional provisions proposed for comment.
-----------------------------------------------------------------------
SUMMARY: This notice sets forth final eligibility, funding criteria,
payment methodology and performance measures for the Children's
Hospitals Graduate Medical Education Payment (CHGME) program,
authorized by section 340E of the Public Health Service Act (42 U.S.C.
256e), amended by Pub. L. 106-310, The Children's Health Act, 2000. It
includes a list of hospitals potentially eligible for the CHGME
program. The notice also requests comments on proposed criteria for:
determining FTE resident count, the treatment of new children's
teaching hospitals, and the methodology for indirect medical education
(IME) payments. In compliance with the Paperwork Reduction Act of 1995,
the Department obtained Office of Management and Budget (OMB) approval
on an emergency clearance to any data collections imposed on the public
(OMB No. 0915-0247). The Department has requested approval for
extension of OMB clearance to any data collections imposed on the
public by this notice. Any changes to this collection will not become
effective until approved by OMB.
DATES: Interested persons are invited to comment by April 2, 2001. All
comments received on or before April 2, 2001 will be considered in the
development of the final notice concerning the proposed methodology.
The Department will address comments individually or by group and
publish a final notice on these comments in the Federal Register.
ADDRESSES: Submit all written comments concerning this notice to
Barbara Brookmyer, Division of Medicine and Dentistry, Bureau of Health
Professions, Health Resources and Services Administration, Room 9A-27,
Parklawn Building, 5600 Fishers Lane, Rockville, Maryland 20857; or by
[[Page 12941]]
e-mail to ChildrensHospitalGME@hrsa.gov.
FOR FURTHER INFORMATION CONTACT: Barbara Brookmyer, Division of
Medicine and Dentistry; telephone (301) 443-1058.
SUPPLEMENTARY INFORMATION: The CHGME program, as authorized by section
340E of the Public Health Service (PHS) Act (the Act) (42 U.S.C..
256e), provides funds to children's hospitals to address disparity in
the level of Federal funding for children's hospitals that result from
Medicare funding for graduate medical education (GME). Pub. L. 106-310
amended the CHGME statute to extend the program through Federal fiscal
year (FFY) 2005.
On June 19, 2000, the Secretary published a notice in the Federal
Register (65 FR 37985) setting forth proposed rules to implement the
CHGME Program. During the comment period, the Department received 21
comments from hospitals, hospital and professional associations,
Medicare counseling companies, other Federal agencies, and individuals.
The Secretary thanks the respondents for the quality and the
thoroughness of their comments. As a result of these comments, the
Department has made numerous revisions and clarifications in this final
notice. The comments and the Department's responses to the comments are
discussed below. This Notice also reflects amendments to the CHGME
statute made by Pub. L. 106-310, the Children's Health Act, 2000,
enacted on October 17, 2000. As required by these amendments,
subsequent to the publication of this notice, the Department will
promulgate them as codified regulations through additional rulemaking
procedures in accordance with Title 5 of the United States Code.
Provisions Proposed for Comment
The Department is soliciting comments on the following proposed
provisions within these rules: (1) The criteria for FTE resident count;
(2) the treatment of new children's teaching hospitals with respect to
resident count; and (3) the methodology for IME payments. The first and
second issues result from amendments made to the CHGME statute. The
third proposal relating to IME payments were not addressed in the
Department's June 19, 2000, Federal Register notice.
I. Funding
The Department will make CHGME program payments in FFY 2001 as
payments were made in FFY 2000, dividing the available funding based on
the CHGME authorization statute with approximately one-third of the
funds for direct medical education (DME) payments and two-thirds to IME
payments. Should a FY 2001 appropriation act alter this plan, the CHGME
program will revise the payment plan accordingly.
The CHGME statute, as amended, sets forth the following funding
process for DME and IME payments:
1. Calculation of payments: The Secretary must determine the
amounts to be paid for DME and IME before the beginning of each fiscal
year for which payments will be made.
2. Withholding: the Secretary must withhold up to 25 percent from
each interim installment for DME and IME as necessary to ensure that a
hospital will not be overpaid on an interim basis.
3. Revised Counts: The Secretary must determine, prior to the end
of the fiscal year, any changes to the number of residents reported by
a hospital in its application for the current fiscal year to determine
the final amount payable to the hospital for the current fiscal year
for both DME and IME payments.
4. Reconciliation: The Secretary then must pay any balance due or
recoup any overpayments made to each hospital.
II. Withholding and Reconciliation
The CHGME statute, prior to its amendment, provided for a
withholding and reconciliation process designed to increase the
accuracy of the DME payments made to hospitals. The amendments revised
this provision to include IME payments in the withholding and
reconciliation process.
In FFY 2000, the Department did not implement the withholding and
reconciliation process for DME payments provided for in the CHGME
program statute due to inadequate time and restrictions in the FFY 2000
Appropriations Act. The FFY 2000 Appropriations Act required all
appropriated funds to be obligated in FFY 2000, thus prohibiting
carryover funds to be awarded to hospitals in FFY 2001. To the extent
possible, the Department will implement the CHGME program's withholding
and reconciliation process for both DME and IME payments beginning in
FFY 2001.
As revised, the CHGME statute requires the Secretary to withhold up
to 25 percent from each installment payment for both DME and IME as
necessary to ensure that a hospital will not be overpaid on an interim
basis. To distribute the funds withheld, prior to the end of the fiscal
year the Secretary must determine any changes to the number of
residents reported by a hospital in its application for the current
fiscal year in order to determine the final amount payable to the
hospital for the current fiscal year for both DME and IME payments.
Then, the Secretary must pay any balance due or recoup any overpayments
made to each hospital.
As provided by statute, a hospital may request a hearing on the
Secretary's payment determination by the Provider Reimbursement Review
Board under section 1878 of the Social Security Act (42 U.S.C. 1395oo),
implemented by regulations at 42 CFR subpart R.
The Secretary will include in the reconciliation process funds that
are returned to the Department during a fiscal year by the termination
of hospitals from the CHGME program. These funds will be distributed to
the remaining children's hospitals as part of reconciliation payments.
III. Eligible Hospitals
Pub. L. 106-310 amended the CHGME statute to revise the definition
of an eligible hospital, effective October 17, 2000. As revised, a
``children's hospital'' eligible to participate in the CHGME program
meets the following criteria:
1. It participates in an approved GME program;
2. It has a Medicare provider agreement;
3. It is excluded from the Medicare inpatient prospective payment
system (PPS) under section 1886(d)(1)(B)(iii) of the Social Security
Act and its accompanying regulations; and
4. It is a ``freestanding'' children's hospital.
Several respondents indicated that the Department may have omitted
additional potentially eligible hospitals from the list included in the
June 19, 2000, Federal Register notice due to the proposed eligibility
requirement published in that notice that a hospital have a provider
agreement with a unique Medicare provider number as a ``children's
hospital'' under section 1886(d)(1)(B)(iii) of the Social Security Act.
The Department agreed with the respondents and for FFY 2000, used
the following eligibility for the CHGME program;
A ``children's hospital'' eligible to apply for CHGME funds in FFY
2000 was a hospital that met all of the following criteria:
1. More than 50% of its inpatients were individuals under 18 years
of age;
2. It participated in an approved GME program;
3. It is excluded from the Medicare PPS under section 1886(d)(1)(B)
of the Social Security Act; and
4. It was a ``freestanding'' children's hospital. For purposes of
the CHGME
[[Page 12942]]
program, the term ``freestanding'' excludes a hospital that shares a
Medicare provider number with a health care system. Although an
independent listing in the American Medical Association Directory or
being separated physically from an adult hospital affiliate may be
indicative of ``freestanding,'' for the purposes of the CHGME program,
they do not alone make a hospital ``freestanding.''
Several respondents indicated a concern with the term ``hospital
system'' and suggested clarifying the definition of a ``freestanding''
hospital.
The Department recognizes the ambiguity of the terms ``hospital
system'' and ``freestanding,'' particularly in today's rapidly changing
world of health care delivery. Some ``freestanding'' hospitals also may
be affiliated with or are part of larger systems. For purposes of
eligibility in the CHGME program, the Department intends to exclude
those children's hospitals that operate under a Medicare hospital
provider number assigned to a larger health care entity that would
allow the children's hospital to receive Medicare GME payments as part
of the larger health care entity. The Department will maintain its
definition of ``freestanding'' as stated in the eligibility criteria.
A number of respondents asserted that other entities such as
children's units within PPS hospitals and, in some cases, PPS hospitals
themselves should be eligible for CHGME funds, if they meet the other
eligibility criteria, since they also may suffer from the allegedly
inequitable internal distribution of GME funds under 1886(h) of the
Social Security Act.
The Department does not agree with these comments. The intent of
the CHGME Act is to create parity in GME payments among all hospitals
providing GME. It is clear that primarily two factors cause this
disparity in children's hospitals: (1) low Medicare utilization; and
(2) PPS-exempt status. While there may be some GME payment disparity
among PPS hospitals that serve children and among children's units
within PPS hospitals, unlike ``freestanding'' children's hospitals
which are only eligible to receive DME payments, they are eligible to
receive both DME and IME payments.
One respondent requested the Department to clarify how waiver from
the PPS system by a State would affect eligibility. Currently, Maryland
is the only PPS-waivered State. A State's PPS status has no effect on
the CHGME eligibility criteria. Hospitals in PPS-waivered States must
still meet all the eligibility criteria of the CHGME program.
Two respondents brought to the Department's attention the
inconsistency in using the term ``accredited'' instead of the term
``approved'' to refer to a GME training program. The Department agrees
with this comment and will consistently refer to these training
programs as ``approved'' in accordance with the Medicare program's
definition of hospitals eligible to receive funds for GME, 42 U.S.C.
256e(b)(1); 42 CFR 413.86.
Based on the revised eligibility criteria, the Department has
identified the below-listed hospitals as potentially eligible for
participation in the CHGME program and will send these hospitals
applications for FFY 2001 through FFY 2005. This list is not a final
determination of eligibility. A hospital omitted from this list,
including a new hospital, can obtain an application by download form
the CHGME Web Site: http://bhpr.hrsa.gov/childrenshospitalgme.
Medicare
Provider No.
|
Facility name
|
City
|
State
|
01-3300 |
Children's Hospital of Alabama |
Birmingham |
AL |
03-3301 |
Los Ninos Hospital |
Phoenix |
AZ |
04-3300 |
Arkansas Children's Hospital |
Little Rock |
AR |
05-3300 |
Valley Children's Hospital, California |
Madera |
CA |
05-3301 |
Children's Hospital Medical Center |
Oakland |
CA |
05-3302 |
Children's Hospital of Los Angeles |
Los Angeles |
CA |
05-3303 |
Children's Hospital and Health Center |
San Diego |
CA |
05-3304 |
Children's Hospital of Orange County.. |
Orange |
CA |
05-3304 |
Children's Hospital of Orange County.. |
Orange |
CA |
05-3305 |
Lucile Salter Packard Children's Hospital. |
Palo Alto |
CA |
05-3306 |
Children's Hospital at Mission |
Mission Viejo |
CA |
05-3307 |
Children's Recovery Center of Northern Campbell |
California |
CA |
05-3308 |
Healthbridge Children's Rehab Hospital |
Orange |
CA |
06-3301 |
The Children's Hospital... |
Denver |
CO |
07-3300 |
Connecticut Children's Medical Center |
Hartford |
CT |
08-3300 |
Alfred I. Dupont Institute. |
Wilmington. |
DE |
093300 |
Children's Hospital National Medical Center. |
Washington |
DC |
10-3300 |
All Children's Hospital |
St. Petersburg |
FL |
10-3301 |
Miami Children's Hospital |
Miami |
FL |
11-3300 |
Egleston Children's Hospital at Emory |
Atlanta. |
GA |
11-3301 |
Scottish Rite Medical Center--Atlanta |
Atlanta |
GA |
12-3300 |
Kapiolani Women's & Children's Medical Center |
Honolulu |
HI |
14-3300 |
Children's Memorial Hospital.... |
Chicago. |
IL |
14-3301 |
Larabida Children's Hospital |
Chicago. |
IL |
15-3300 |
St. Vincent's Children's Specialty Hospital |
Indianapolis |
IN |
17-3300 |
Children's Mercy Hospital South |
Overland Park |
KS |
19-3300 |
Children's Hospital.. |
New Orleans |
LA |
21-3300 |
Mt. Washington Pediatric Hospital |
Baltimore |
MD |
21-3301 |
Kennedy Krieger Institute |
Baltimore |
MD |
22-3300 |
Franciscan Children's Hospital & Rehabilitation
Center |
Brighton |
MA |
22-3302 |
The Children's Hospital |
Boston. |
MA |
23-3300 |
Children's Hospital of Michigan |
Detroit |
MI |
24-3300 |
Gillette Children's Hospital |
Saint Paul |
MN |
24-3301 |
Children's Hospitals and Clinics-- Saint Paul. |
Saint Paul. |
.MN |
24-3302 |
Children's Hospitals and Clinics-- Minneapolis |
Minneapolis |
MN . |
26-3301 |
St. Louis Children's Hospital |
Saint Louis |
MO |
26-3302 |
Children's Mercy Hospital |
Kansas City |
MO |
28-3300 |
Boys Town National Research Hospital |
Omaha |
NE |
28-3301 |
Children's Memorial Hospital |
Omaha |
NE |
31-3300 |
Children's Specialized Hospital |
Mountainside |
NJ |
32-3307 |
Carrie Tingley Hospital |
Albuquerque |
NM |
33-3301 |
Blythdale Children's Hospital |
Valhalla |
NY |
36-3300 |
Children's Hospital Medical Center |
Cincinnati |
OH |
36-3301 |
Convalescent Hospital for Children |
Cincinnati |
OH |
36-3302 |
Rainbow Babies and Children's Hospital |
Cleveland |
OH |
36-3303 |
Children's Hospital Medical Center |
Akron. |
OH |
36-3304 |
Cleveland Clinic Children's Rehabilitation Hospital |
Cleveland |
OH |
36-3305 |
Children's Hospital. |
Columbus |
OH |
36-3306 |
Children's Medical Center |
Dayton |
OH |
36-3307 |
Tod Children's Hospital |
Youngstown |
OH |
39-3300 |
J.D. McCarty Center for Children with Developmental
Disabilities |
Norman |
OK |
37-3301 |
Children's Medical Center |
Tulsa |
OK |
39-3302 |
Children's Hospital of Pittsburgh |
Pittsburgh |
PA |
39-3303 |
Children's Hospital of Philadelphia |
Philadelphia |
PA |
39-3304 |
Children's Home of Pittsburgh |
Pittsburgh |
PA |
39-3306 |
Temple University |
Philadelphia |
PA |
39-3307 |
St. Christopher's Hospital for Children |
Philadelphia |
PA |
40-3301 |
University Pediatric Hospital |
San Juan. |
PR |
44-3302 |
St. Jude Children's Research Hospital |
Memphis |
TN |
44-3303 |
East Tennessee Children's Hospital |
Knoxville |
TN |
45-3300 |
Cook Ft. Worth Children's Medical Center |
Fort Worth. |
TX |
45-3301 |
Driscoll Children's Hospital |
Corpus Christi |
TX |
45-3302 |
Children's Medical Center of Dallas |
Dallas |
TX |
45-3304 |
Texas Children's Hospital |
Houston |
TX |
45-3305 |
Christus Santa Rosa Children's Hospital. |
San Antonio |
TX |
45-3306 |
Coveneant Children's Hospital |
Lubbock |
TX |
45-3308 |
Pediatric Center for Restorative Care |
Dallas |
TX |
45-3309 |
Beacon Health Westchase |
Houston |
TX |
46-3301 |
Primary Children's Medical Center |
Salt Lake City |
UT |
49-3300 |
Cumberland Hospital--The Brown Schools of Virginia |
New Kent |
VA |
49-3301 |
Children's Hospital--King's Daughters |
Norfolk |
VA |
49-3302 |
Children's Hospital |
Richmond |
VA |
50-3300 |
Children's Hospital & Regional Medical Center |
Seattle |
WA |
50-3301 |
Mary Bridge Children's Health Center |
Tacoma |
WA |
52-3300 |
Children's Hospital of Wisconsin |
Milwaukee |
WI |
----------------------------------------------------------------------------------------------------------------
IV. Loss of Eligibility
Several respondents noted that there should be a distinction
preserved between hospitals that lose their eligibility to participate
in the CHGME program and hospitals that retain their eligibility, but
for some defined period have no residents rotating through the
hospitals.
The Department agrees with the need to clarify the definition of
loss of eligibility for the CHGME program. A hospital is eligible to
participate in the CHGME program if it trains residents as a
freestanding children's hospital in the FFY for which the CHGME
payments are being made. Reporting residents on Medicare cost reports
is irrelevant to the eligibility of the hospital. Hospitals that do not
report residents to Medicare remain eligible for the CHGME program if
they continue to train residents as a freestanding children's hospital
in the FFY for which the payment amounts are established.
Any hospital which loses its eligibility during the course of a FFY
must notify HRSA immediately of the change in status and the date on
which it became ineligible. The Department will then terminate the
hospitals payments under the CHGME program. The hospital will be liable
for the reimbursement, with interest, of any funds received during a
period after it became ineligible.
Several respondents questioned the Department's legal authority to
collect interest from ineligible institutions during a reimbursement
process. They requested clarification on the applicability of interest
to amounts paid to hospitals later deemed to be ineligible as opposed
to overpayments to eligible hospitals that may be required to reimburse
the Department after a reconciliation process for the DME and IME
payments.
The Federal Debt Collection Act requires the Department to collect
interest on the recovery of CHGME funds, just as on any debt owed to
the Federal Government. There is no interest due on payments recovered
under the reconciliation process because this is not a debt owed to the
government.
V. Determining FTE Resident Counts for DME
Residency FTE Reporting Period
As amended, the CHGME statute provides that the Secretary make
interim payments to hospitals ``based on the number of residents
reported in the hospital's most recently filed Medicare cost report
prior to the application date for the FFY for which the interim payment
amounts are established. In the case of a hospital that does not report
residents on a Medicare cost report, such interim payments shall be
based on the number of residents trained during the hospital's most
recently completed cost report filing period.'' For hospitals that
report resident counts to Medicare, the most recently filed cost
[[Page 12944]]
report reflects the average of the actual FTE resident count for that
filing period and the prior two cost report filing periods.
Hospitals that do not report resident counts to Medicare are to
report the number of FTE residents trained during their most recently
completed Medicare cost report filing period. This number reflects the
average of the actual FTE residents trained during the most recently
completed Medicare cost report filing period and the prior two cost
report filing periods.
If the cost reporting period ends less than 5 months prior to the
CHGME program's application deadline, hospitals that do not report
residents to Medicare may use either the FTE resident count in the most
recently completed cost report year or the FTE resident count in the
previous cost report year. The determination of the 5-month period is
based on the Medicare program's policy that hospitals have 5 months
from the completion of the cost report year to file the Medicare cost
report.
Several respondents objected to the use of the FFY for calculating
the FTE resident count in the FFY 2000 CHGME application process. They
asserted that most hospitals use either an academic year (7/1-6/30) or
the Medicare cost reporting period.
Prior to amendment, the CHGME statute required the Secretary to
make CHGME payments ``for each of fiscal years 2000 and 2001''
(emphasis added). For FFY 2000, the Department interpreted ``fiscal
year'' to mean that payments were to be based on the FTE resident
counts for FFYs (from October 1 of each year through September 30 of
the following year), rather than the hospital cost reporting period or
the hospital academic year.
To assist hospitals in determining FTE resident counts based on the
FFY required in the FFY 2000 CHGME application, tables contained in the
application materials instructed hospitals on how to convert their data
to the applicable FFY. In addition, the Department presented four
technical assistance workshops to hospitals and related association
staff to give advice on how to complete the necessary application forms
and how to convert an academic/hospital accounting period to a FFY.
Counting FTE Residents in FFY 2000
The methodology described by the Department in its June 19, 2000,
Federal Register notice regarding the determination of a hospital's FTE
resident count, generated considerable comment. Some respondents felt
that it was unfair to allow hospitals that had not previously filed
Medicare cost reports to recreate their resident count. Some
respondents felt that all hospitals should be allowed to recreate their
resident count because of the significant inaccuracies in the
previously filed Medicare cost reports. Other respondents questioned
the Department's proposed adoption of the Medicare GME resident
counting methodology. Simpler methods were suggested that would
eliminate the use of ``caps'', or ``rolling averages.''
Section 340E(c)(1)(B) of the CHGME statute requires that the
average number of FTE residents in the hospital's approved residency
programs be determined according to section 1886(h)(4) (42 U.S.C.
1395ww(h)(4)) of the Social Security Act. This section is implemented
by regulations at 42 CFR 413.86(f), (g), (h), and (i). These provisions
indicate: how to determine the total and weighted numbers of FTE
residents; the required documentation and certification for purposes of
application for Medicare payments by hospitals for cost reporting
periods; and the application of the ``caps'' (described in sec.
1886(h)(4)(f) of the Social Security Act; 42 U.S.C. sec.
1395ww(h)(4)(f)) and ``rolling averages'' (described in sec.
1886(h)(4)(g) of the Social Security Act; 42 U.S.C. sec.
1395ww(h)(4)(g)) to FTE resident counts prior to weighting. The
Department notes that dental and podiatric residents are not included
in the resident FTE cap. Hospitals must certify the accuracy of their
FTE resident counts and apply the Medicare cap and rolling average to
this count. Since the Act specifically references use of caps and
rolling averages for DME, the Department does not have discretion to
accept the respondents' suggestion.
For FFY 2000 applications, the Department was more flexible in the
FTE resident counts accepted due to the short time frame hospitals had
from publication of the June 19, 2000, Federal Register notice to the
application deadline. Most respondents agreed with the Department's
requirement that resident counts from Medicare hospital cost reports
determine the CHGME resident counts. However, some objected because
they may have under reported their resident counts on their past
Medicare cost reports. Since the Medicare utilization and reimbursement
was so low among the children's hospitals, many Fiscal Intermediaries
(FIs) and hospitals paid little attention to the counts submitted or to
correcting and auditing the counts.
According to regulations, the FIs have 180 days from the reopening
request and submission of all supporting data to finalize a cost
report. Several hospitals wanted the Department to instruct Medicare
FIs to respond quickly to their requests to reopen cost reports and
adjust resident counts to more accurately reflect the actual training
programs.
The Department contacted the majority of hospitals' FIs, and, in
accordance with existing rules and regulations, many of the CHGME
program applicant hospital's FIs were able to expedite the review and
revision process for new FTE resident counts. On average, these reviews
were completed within a one-week period.
Clearly, hospitals that have never submitted Medicare cost reports
have no comparable validated counts to submit on their CHGME program
applications. Therefore, these hospitals must determine FTE resident
counts through the methodology described in the application. The
accuracy of the resident counts, as all information filed by hospitals,
is subject to audit by the Department and the General Accounting
Office.
Several respondents requested clarification on counting time spent
by a resident on required research. The Department is using the
Medicare regulation 42 CFR 413.86(f) to apply to counting research
time. In brief, the research conducted by the resident must be part of
the residency program and the resident must carry out the research in
either:
1. The children's hospital (clinical or bench research); or
2. In a nonhospital site where the research involves direct patient
care and the salaries of both the resident and the supervising faculty
are paid by the children's hospital.
Respondents were concerned that the CHGME program could
inadvertently cause a shift in the primary care focus of pediatric GME.
General pediatrics residency training programs require a significant
amount of training (at least 50%) to occur in ambulatory care settings
such as freestanding clinics and physicians' offices. Respondents
asserted that the CHGME program payments should reflect the cost of
training in both inpatient and outpatient settings.
The Department recognizes the important of the primary care focus
in general pediatrics residency training, which implements the
Department's own goal of improving public access to primary care. All
resident training in ambulatory care settings may be included in the
resident FTE resident count as long as the hospital funds the faculty
and resident cost of this training
[[Page 12945]]
through a written agreement between the hospital and the ambulatory
care setting, according to 42 CFR 413.86(f)(3) and (4).
One respondent requested that the Department provide a waiver of
the requirement to obtain written agreements with participating
ambulatory care sites. They contend that since children's hospitals
were not able to claim significant GME payments, many failed to obtain
written agreements with their participating ambulatory care sites.
Hospitals will not be required to submit such written agreements to
the Department with their annual applications to the CHGME program.
Hospitals should be prepared to produce such agreements in any
subsequent audit carried out by the Department.
One respondent was concerned about what they perceived as the
``arbitrary 5-year limit'' for the initial residency periods.
The Department follows Medicare rules regarding the use of the
initial residency period. The Medicare rules reduce counts for all
hospitals that train residents beyond their initial residency period
(i.e., fellows) with regard to the DME and IME portions of the GME
reimbursement. In addition, this 5-year limit is not arbitrary, but
rather reflective of the minimum number of years required for the
resident to reach initial board eligibility.
Several respondents suggested that the Department require that
hospitals submit their Intern and Residents Information System (IRIS)
diskettes as the primary source of data for validating their resident
counts. This source would then provide a consistent method for
verifying submitted counts. Another respondent indicated that the data
on the IRIS diskettes are rarely completed correctly, frequently
contained inaccurate data and duplicated resident counts between two
hospitals.
The department recognizes that the submission of IRIS diskettes by
hospitals to the CHGME program may potentially reduce the
administrative burden of reporting among those hospitals that submit
IRIS diskettes for Medicare. There are several reasons, however, that
the use of the IRIS diskettes as the primary source of data for the
CHGME program would not be feasible: (1) Not all hospitals
participating in the CHGME program submit IRIS diskettes to Medicare so
there would not be a consistent source of information for all hospitals
participating in the program; (2) information required by the CHGME
program in its FFY 2000 applications included some information not
available on the IRIS diskettes--the ``conversion'' of FTE resident
counts based on the Medicare cost reporting period to an FTE resident
count based on the FFY; (3) the CHGME program will not have access to
the IRIS diskettes from those hospitals that may potentially be double
counting residents so there would be no way to validate the IRIS data
from hospitals participating in the program.
One respondent commented that the Medicare provision for FTE
adjustments in the context of an affiliated group cap requires a
retroactive adjustment to account for situations in which the group
remains under its aggregate cap, but individual hospitals exceed their
individual caps (allowable under Medicare rules, so long as the
aggregate cap is not exceeded). This respondent proposed that the FFY
2000 and 2001 counts would need to be adjusted after audits of the
respective hospital cost reports. The respondent stated that since the
Department proposed no reconciliation for FFY 2000, the hospital might
be disadvantaged.
The Department is aware that it would be difficult for hospitals to
estimate adjustments to their aggregate cap. In FFY 2000, there were no
children's hospitals claiming an adjustment to their cap based on a
written affiliation agreement. Given the recent legislative changes,
hospitals will no longer have to estimate adjustments to their
aggregate cap. Hospitals will report the actual adjustment made to the
aggregate cap as reported on their Medicare cost reports.
One respondent questioned the accuracy of examples B and D on page
37988 of the Federal Register notice of June 19, 2000. The Department
clarifies these examples as follows:
Example B: One respondent questioned the accuracy of the 1999
resident count. This example is correct as written. The two residents
added to the hospital count for the period 7/1/99 to the end of the
cost reporting year 12/31/99 would add 1.0 FTE to the count because the
residents only were counted for one-half of the cost reporting year.
One-half of two FTEs equals one FTE.
Example D: The respondent stated that the 1999 resident count would
not be reduced if the hospital is incurring all or substantially all of
the training costs for the three residents in the continuity clinic.
The Department agrees with the respondent's observation; however, this
example demonstrates how to estimate the number of FTEs in 1996, when
there was a substantial change to the number of FTEs trained. To
determine the number of FTEs trained during the 1996 cost report year,
subtract the 1.5 FTEs which were added to the program in 1997 from the
1999 number of 25 FTEs to arrive at the cap of 23.5 FTEs.
Proposed Criteria for Determining FTE Resident Counts Beginning in FFY
2001
The Department invites comments on the following proposed criteria
for determining FTE resident counts. The comments will be considered by
the Department in developing final criteria for determining FTE
resident counts to be used for the purposes of the CHGME program in
determining payment to eligible hospitals. These final criteria will be
published in a subsequent Federal Register notice and applied to the
CHGME program beginning in FFY 2001.
The Department wants to use the most accurate and valid data it can
obtain on a hospital's resident counts. Beginning in FFY 2001, for
hospitals that report residents to Medicare, the application
requirement will be as follows:
1. For the most recent cost reports ending on or before December
31, 1996, a hospital must report the latest settled FTE resident count
or a preliminary FI determined resident count. All preliminary FI
determined counts must be determined according to HCFA and Medicare
criteria. Hospitals may not use the ``preliminary'' numbers that were
used for the FFY 2000 CHGME program unless those FTE resident counts
have since become finalized or are validated according to HCFA and
Medicare standards.
2. For all other settled cost reports, a hospital must report the
latest settled count. For a settled report that has been reopened, a
hospital must report the latest settled count or, if available, the
most recent ``preliminary'' FI determined FTE count.
3. For cost reports which have never been settled, a hospital must
report, in order of decreasing priority:
a. The most recent ``preliminary'' FI determined FTE resident
count;
b. The ``amended'' FTE resident count; or
c. The ``as filed'' FTE resident count.
Resident count requirements remain unchanged for hospitals that do
not report residents to Medicare but have been operating a residency
training program. If these hospitals wish to revise their FTE resident
counts, they must submit a detailed explanation of the revision with
supporting documentation. For hospitals that have previously filed
Medicare cost reports, the Department will use the cost reports filed
with the FIs to verify the resident counts submitted.
[[Page 12946]]
Proposed Criteria for ``New Children's Teaching Hospitals''
Because of the amendment revising the reporting of residents using
the most recently filed Medicare cost report, the Department will need
to propose a method for ``new children's teaching hospitals'' to report
residents for application for funding under the CHGME program.
Accordingly, the Department invites comments on the proposed criteria
for reporting FTE residents by new children's teaching hospitals. The
comments will be considered by the Department in developing final
criteria for determining FTE resident counts in ``new children's
teaching hospitals''. These final criteria will be published in a
subsequent Federal Register notice and applied to the CHGME program
beginning in FFY 2001.
The Department defines a ``new children's teaching hospital'' as a
children's hospital that began training residents from an already
existent residency training program, less than three cost report
periods prior to the FFY in which CHGME payments are being made. In
order to participate in the CHGME program, a ``new children's teaching
hospital'' must meet all necessary eligibility criteria.
These ``new children's teaching hospitals'' are distinct from those
teaching hospitals that are participating in a new medical residency
training program, defined under 42 CFR 413.86(g)(9) as ``a medical
residency that receives initial accreditation by the apporpriate
accrediting body or begins training residents on or after January 1,
1995.'' Medicare regulations at 42 CFR 413.86(g)(6)(i) and (g)(7) set
forth criteria for applying the ``caps and rolling averages'' in these
teaching hospitals with new residency training programs.
Establishing the Cap
``New children's teaching hospitals'' that did not train residents
during the most recent cost report period ending on or before December
31, 1996, would have a cap of zero. These hospitals may receive an
adjustment to their cap through an affiliation agreement specifying an
aggregate cap as described in 63 FR 26338, published May 12, 1998,
which establishes the process for application of an aggregate FTE cap
in accordance with section 1886(h)(4)(H) of the Social Security Act.
To the extent that it is reasonable and feasible, the CHGME program
will implement the HCFA final rule cited above. If a ``new children's
teaching hospital'' elects to establish the cap through an affiliation
agreement, it must comply with 63 FR 26338, published May 12, 1998, in
accordance with section 1886(h)(4)(H) of the Social Security Act. For
purposes of the CHGME program, however, the following exceptions to the
HCFA final rule are proposed; these exceptions would be in effect only
during the first year of a hospital's application for the CHGME
program.
(1) For the first year of the affiliation agreement, an effective
date must be specified for purposes of the CHGME program. The effective
date does not need to be July 1 for purposes of the CHGME program.
However, for the first year of the agreement, an effective date of July
1 will apply for purposes of the Medicare program (63 FR 26338,
published May 12, 1998, in accordance with section 1886(h)(4)(H) of the
Social Security Act.). Subsequent to the first year of the affiliation
agreement, the effective date must comply with the above cited Federal
Register final rule which specifies a date for all affiliation
agreements.
(2) The affiliation agreement must be for a minimum of 1 year and
must include a full academic year (July 1-June 30 period).
(3) The effective date and length of the affiliation agreement for
an aggregate cap must be clearly documented in the agreement.
(4) The affiliation agreement must be filed with all the necessary
HCFA fiscal intermediaries and HRSA.
``New children's teaching hospitals'' will calculate their FTE
resident count using the full value of the cap as determined by the
affiliation agreement. The Department recognizes that the cap in ``new
children's teaching hospital's'' first Medicare cost report may not
agree with the cap specified by the affiliation agreement as Medicare
does not apply an affiliation agreement for an aggregate cap until July
1 (63 FR p. 26338, published May 12, 1998, in accordance with section
1886(h)(4)(H) of the Social Security Act.) As a children's hospital's
cost report period may not be July 1-June 30, it may potentially
receive a prorated cap for its first Medicare cost reporting period.
Establishing FTE Resident Counts and Payments
In general, the FTE resident count from each hospital reflects the
residents trained during the Medicare cost report period, limited by
the unweighted FTE resident count from the most recent cost report
period ending on or before December 31, 1996 (the cap). Payments to
each hospital are based on the average of the FTE resident count for
the Medicare cost report and the prior two cost reports (3-year rolling
average). The Department proposes that the ``new children's teaching
hospitals'' training residents who were originally trained in a program
that received and will continue to receive funds under the CHGME
program wait until they have completed a Medicare cost report period
before applying for payments from the CHGME program. These hospitals
would also need to apply the 3-year rolling average consistent with
Medicare regulations. Over a 3-year period, the ``new children's
teaching hospital'' will gradually increase the number of FTE residents
that can be claimed on the CHGME application as the children's hospital
that previously received during for those FTE residents gradually
decreases its resident count.
The Department proposes the following methodology for determining
FTE resident counts and payment for ``new children's teaching
hospitals'' training residents that were never previously claimed for
CHGME payment:
1. Since payments under the CHGME program are based on FTE resident
counts from a completed cost report filing period, ``new children's
hospitals'' training residents never previously claimed for CHGME
payment that have not completed a cost report filing period at the time
of the CHGME program application would not have an FTE resident count
to report to the program. The Department proposes that these ``new
children's teaching hospitals'' submit FTE resident counts to the CHGME
program according to the following methodology in their initial
application:
a. Divide the number of FTE residents trained from the effective
date, specified for purposes of the CHGME program, of the affiliation
agreement to the application deadline by the number of days during this
period to produce the average number of FTEs per day.
b. Multiply the average number of FTEs per day by the number of
days the hospital will train residents during the FFY in which payments
are being made.
2. After the initial application year, a ``new children's teaching
hospital'' training residents that were never previously claimed for
CHGME payment will submit its actual FTE resident count from the most
recently completed Medicare cost report period rather than using the 3-
year rolling average. Once these hospitals have completed three
Medicare cost report periods, the 3-year rolling average will apply.
Hospitals eligible for the CHGME program participating in a new
medical residency training program, defined
[[Page 12947]]
under 42 CFR 413.86(g)(9), will follow Medicare regulations regarding
the determination of their cap and 3-year rolling average (42 CFR
413.86(g)(6)(i) and (g)(7)). If the hospital has not completed a
Medicare cost report period to submission of the CHGME application, it
will follow the methodology described above for ``new children's
teaching hospitals'' training residents not previously claimed by the
CHGME program in the calculation of its FTE resident count.
VI. Determining Direct Medical Education Payments
Wage Adjustment in Standardizing Per Resident Amounts
The per resident amount applicable to a specific children's
teaching hospital (prior to pro-rata reduction) is determined by
multiplying the Medicare PPS labor-related share of the per resident
amount by the FY 1999 hospital wage index and adding the non-labor
related share to the result. Respondents expressed concern regarding
use of the PPS labor-related share to standardize wages in determining
the national standard per resident amount because the pediatric
population is not represented in the wage index calculations. They
asserted that since children's hospitals are PPS exempt and are not
required to complete the wage index portion of the Medicare cost
report, this factor does not reflect the children's hospital
population.
The Secretary recognizes that the wage data used to develop the PPS
labor-related share is based on PPS hospitals which would not include
information from PPS-exempt hospitals. Accordingly, the Department
analyzed Medicare cost reports to develop a more accurate estimate of
the labor-related share of the per resident amount. As the analytically
derived labor-related share does not vary significantly from the
Medicare labor-related share, for FFY 2000 the Department used the
Medicare PPS labor-related share of 71.1 percent in the calculation of
direct medical education payments. In FFY 2001 and beyond, the
Secretary will use the most recent Medicare PPS labor-related share
calculation.
The Federal Register notice published in June 19, 2000, for the
CHGME program announced that the Secretary would publish a computed
national per resident amount in the final notice. The Secretary has
determined that the national average per resident amount for cost
reporting periods ending in FFY 1997 is $67,688. After updating for
inflation as specified in the statute, the FFY 2000 national average
per resident amount is $71,709.
VII. Determining Indirect Medical Education Payments
The Federal Register notice of June 19, 2000, sought comments on
the case mix measure to be used for determining IME payments. Due to
lack of time, this notice omitted a detailed methodology for
distribution of the IME funds. The Secretary also stated that this
final Federal Register notice would include this methodology for public
comment subject to revision in another final Federal Register notice.
After considering suggestions submitted by respondents, the
Department is proposing IME payment methodology for FFY 2001 organized
by: (1) The purpose and use of payments under the program, (2) case
mix, (3) number of FTE residents, (4) teaching intensity factor, (5)
patient volume, (6) outpatient services, and (7) determination of
payments. Interested parties are invited to submit comments on the
proposed rules for a 30-day period. After consideration of the
comments, the Department will publish the final IME methodology in the
Federal Register and apply it to the determination of IME payments
beginning in FFY 2001.
Purpose and Use of IME Payments
The CHGME statue requires the Secretary to make payments for IME
associated with operating approved graduate medical residency training
programs for each of fiscal years 2000 through 2005. Section
340E(b)(1)(B) describes IME payments as covering ``expenses associated
with the treatment of more severely ill patients and the additional
costs relating to teaching residents in such programs.''
Section 340E(d)(2) of the Act requires the Secretary to determine
IME payments by considering:
1. Variations in case mix among children's hospitals; and
2. The hospitals' number of FTE residents in approved training
programs.
One respondent commented that the educational purposes of the CHGME
program take precedence over what he described as imitation of the
Medicare system in developing the payment methodologies. This commenter
recommended that the calculation for IME payments incorporate the costs
associated with providing training opportunities in rural and
underserved areas.
The Department agrees that the CHGME program's purpose is to
provide reimbursement to children's hospitals for costs associated with
training residents.
Although the CHGME statute describes factors that the Secretary
must consider in developing payment methodology, the statute does not
reference the type of training, such as training in rural and
underserved areas. Nevertheless, the CHGME payment methodology which
incorporates the Medicare FTE resident count does allow for an
adjustment to the FTE resident cap for residents training in rural
areas (42 CFR 413.86(g)(4) and (11)).
One respondent expressed concern that the CHGME program payments
would be disbursed only for inpatient training. The respondent stated
it was essential for payments to be disbursed to children's hospitals
to defray the costs of training in both inpatient and outpatient
settings. The respondent cited the pediatrics Residency Review
Committee of the Accreditation Council for Graduate Medical Education's
requirements that at least 50 percent of resident training take place
in ambulatory settings and the recommendation of the Council on
Graduate Medical Education that clinical education should occur in
settings representative of the environment in which graduates will
eventually practice.
These payments do reflect the cost of training residents in
outpatient facilities in the hospital calculation of FTE resident
count. Hospitals may include residents rotating through outpatient
facilities and in ambulatory outpatient clinics, as provided in 42 CFR
413.86(f)(3) and (4). However, the CHGME program has no statutory
authority to prescribe how hospitals are to use the funds received from
the program.
One respondent indicated that the Federal Register notice of June
19, 2000, did not state that the IME payments will be wage-adjusted,
whereas Medicare DME and IME payments are both wage-adjusted.
The Department agrees with this comment and revised the IME
calculation used in FFY 2000 and proposed for FFY 2001, accordingly.
For FFY 2000, the Department incorporated a wage adjustment into the
formula for calculating IME payments by adjusting the labor-related
share of the hospital operating cost for geographic differences by
using the hospital wage index for FFY 1999. In FFY 2001, the Department
will incorporate the same wage adjustment in its calculation of IME
payments.
[[Page 12948]]
Determination of Case Mix
Two respondents suggested that the case mix index (CMI) be excluded
from the formula for distributing FFY 2000 funds because no
standardized CMI and Diagnosis Related Group (DRG) weights exist for
children's hospitals nationwide.
The Department does not have the discretion to exclude the CMI from
the IME formula because the CHGME statute explicitly requires the use
of case-mix in determining IME payments under the program.
The Department received several comments on the development and
utilization of a uniform CMI for all hospitals applying for funding
from the CHGME program, as follows:
1. Five respondents supported the use of one CMI system for
determining the IME payments to eliminate inconsistency among hospitals
by using a variety of case mix index systems.
2. One respondent stated that ``converting'' CMIs derived from
different CMI systems, such as HCFA-DRG and All-Payer Refined DRG
systems, was not possible.
3. Four respondents recommended the use of the HCFA-DRG CMI system;
one respondent suggested that version 15 of the HCFA-DRG system, with
appropriate Medicare weights, should be used as the standard.
4. One respondent suggested providing a default value for hospitals
that cannot provide a HCFA-DRG CMI.
The Department agrees that CMIs must be based on one system to
assure equitable distribution of IME funds to hospitals. Due to
insufficient implementation time, the Department could not establish a
single CMI requirement for FFY 2000. Nevertheless, all but five of the
56 children's hospitals applying for FFY 2000 CHGME program funds were
eventually able to furnish one of three versions of a HCFA-DRG CMI
(versions 15, 16 or 17).
One respondent commented that case mix methodologies to be employed
in determining IME payments should include both inpatient and
outpatient care delivered by the hospital as well as factor in costs
associated with providing residency training in rural and urban
underserved areas, to avoid creating financial incentives that reduce
education in primary care pediatrics.
The Department agrees that payment systems should not produce
incentives that reduce education in primary care pediatrics. However,
all current case-mix systems rely totally on hospital inpatient data
based on reporting for the Uniform Hospital Discharge Data System which
includes only inpatient data. No present CMI reflects both inpatient
and outpatient care.
For FFY 2000, the Secretary used the average of all CMIs from the
27 hospitals that furnished a CMI based on HCFA-DRG version 15 as a
default CMI for those hospitals unable to furnish a HCFA-DRG CMI. For
the hospitals that supplied a CMI from version 16 or 17 of the HCFA-
DRGs, the Secretary adjusted the version 16 or 17 reported by the
hospital by the percentage difference in the CMI between the HCFA-DRG
version 15 and the reported HCFA-DRG version according to the following
table.
|
Average FFY 1998
relative weight
(HCFA v.15)
|
Average FFY1999
relative weight
(HCFA v. 16)
|
Average FFY2000
relative weight
(HCFA v. 17)
|
All cases excluding newborn |
0.9711 |
1.0005 |
0.9639 |
Percent change from v. 15 |
\1\3.03 |
\1\-0.74 |
\1\ percent |
For FFY 2000, hospitals were asked to remove DRG 391, newborn
births, from the calculation of their CMI. Given the time frame for
CHGME program implementation in FFY 2000, it was difficult to create an
accurate conversion factor including DRG 391 due in part to variability
in hospitals reporting a CMI including DRG 391.
Beginning in FFY 2001, all applicant hospitals must submit a CMI,
based on the discharges from the most recently completed cost report
period, using HCFA-DRG Version 17 with the appropriate HCFA Version 17
weights reported to the ten-thousandth decimal place; all DRGs must be
included in the calculation of this CMI. In subsequent years, the
version of the HCFA-DRG to be used by hospitals will be updated
annually.
If a children's hospital eligible to participate in the CHGME
program has not completed a Medicare cost report period prior to
submission of an application to the CHGME program, it would base its
CMI on discharges from the day it became eligible for the CHGME program
until the CHGME application deadline.
While the Department recognizes that the HCFA-DRG based CMI was not
designed to be used with children's hospitals, this CMI system has been
proposed as the most reasonable choice. Currently, the most commonly
used case mix index system is based on CMIs. This system, however, does
not exist for outpatient services. For future use, the Department
intends to investigate the feasibility of developing a case mix index
that is more reflective of the relative resource utilization
experienced by children's hospitals in both an inpatient and an
outpatient setting.
Determining the Number of FTE Residents for IME Payments
One respondent stated that resident counts should not be used as a
separate factor because it is already included in the measure of
teaching intensity, and the purpose of IME payments is to compensate
for higher patient care costs, not the number of residents.
The Department agrees that resident counts should be incorporated
only in the teaching intensity measure in the IME formula. The IME
formula used in FFY 2000 and proposed for FFY 2001 and future years
include the resident count only in the teaching intensity measure.
Many respondents provided comments concerning the difficulty
hospitals anticipated in reopening their Medicare cost reports and
making any necessary corrections to their FTE resident counts used to
develop caps and rolling averages.
The June 19, 2000, Federal Register notice proposed using an
unweighted FTE resident count for the IME portion of the payment and to
apply the caps and rolling averages to the IME resident count,
consistent with Medicare's application to its IME count. However,
during the application process, the administrative difficulty of
obtaining an unweighted FTE count from October 1, 1997, to September
30, 2000, became clear. The unweighted resident FTE count was not
reported on the HCFA-2552, E-3, Part IV worksheet until the Medicare
cost report period beginning on or after October 1, 1997. For some
hospitals, this occurred as late as their 1999 Medicare cost report.
While it would have been possible to eventually determine the
unweighted count for all
[[Page 12949]]
the years necessary in order to calculate a 3-year rolling average, it
would have been additionally administratively burdensome to children's
hospitals, fiscal intermediaries and HRSA. As a result, the payments
for FFY 2000 would have been delayed.
To resolve these difficulties, for FFY 2000, the Department did not
apply either the caps or the rolling averages to the unweighted
resident FTE count in calculating the IME payments. Since the CHGME
statute does not require application of ``caps and rolling averages''
to the FTE resident count for IME payment (as it does for the DME
payment), the Department calculated the unweighted FTE resident count
from the application forms and the cost reports.
In addition, the Department's June 19, 2000, Federal Register
notice stated that the resident count for the IME portion would be
based upon 42 CFR 412.105(a)(1). That regulation was cited in error
because it refers to the determination of a ratio rather than an actual
number.
For FFY 2001, the Secretary believes that hospitals will have had
sufficient notice and time to adjust their unweighted FTE counts from
1996 through 1999 and to obtain their unweighted numbers from their
FIs. Therefore, beginning with FFY 2001, the Secretary will apply the
``caps and rolling averages'' consistent with Medicare regulation 42
CFR 412.105(f), with the exception of 42 CFR 412.105(f)(1)(ii)(A) as it
refers to the ``PPS sections'' of the hospital, in calculating IME
payments.
Factoring in Teaching Intensity
The Federal Register notice of June 19, 2000, proposed the addition
of a teaching intensity factor to the statutorily required case-mix and
FTE resident count in determining IME payments. The Secretary used the
current Prospective Payment System (PPS) operating teaching intensity
factor of 6.5 percent per 0.1 interns and residents-to-bed ratio (IRB)
to determine IME payments for FFY 2000.
The Department calculated the IRB using the unweighted FTE resident
count and the number of beds reported by each hospital to Medicare for
the most recently completed fiscal year. For those hospitals that did
not report this information to Medicare, the Department used the number
of available beds on July 1, 2000. According to Medicare regulations at
42 CFR 412.105(b), the Department defined ``hospital beds'' as
``available beds,'' which are beds that are permanently maintained for
inpatients in rooms and wards, excluding beds and bassinets in the
healthy newborn nursery.
Several respondents suggested measures of teaching intensity in the
formula for determining IME payments to hospitals. Two recommended
using a resident-to-bed ratio, and two recommended a resident-to-
average daily census (RADC) ratio. One respondent recommended a
resident-to-bed ratio, stating that either ratio was feasible but noted
that Medicare uses a resident-to-bed ratio. One respondent recommended
the RADC ratio stating that, the ADC is more appropriate because it
measures actual activity, while the number of beds might not change
even when the patient volume changes.
For FFY 2001, the Department invites comment on:
1. The proposed continuation of the use of the Medicare IRB-based
teaching intensity factor in the calculation of IME payments. The CHGME
program would use the most current PPS IRB in its calculation of IME
payments;
2. Application of a cap on the IRB ratio, similar to the cap
applied by the Medicare program, 42 CFR 412.105(a)(1), whereby the
ratio may not exceed the ratio for the hospital's most recent prior
cost reporting period. Application of this cap will not be initiated
until FFY 2002 due to the proposed change in the definition of bed
count;
3. Suggestions on alternative teaching intensity factors, such as
the Medicare RADC-based teaching intensity factor (2.8 percent per 0.1
percent increase in RADC ratio) or any other analytically justified
teaching intensity factor; and
4. The proposed definition of ``bed count'' to be used in
calculating the Medicare IRB teaching intensity factor--the sum of all
available beds per day in the most recently completed cost report
filing period, including beds and bassinets in the healthy newborn
nursery, divided by the number of days in that period. If a children's
hospital eligible to participate in the CHGME program has not completed
a Medicare cost report period prior to submission of an application to
CHGME program, it would base its ``bed count'' on the sum of all
available beds per day, including beds and bassinets in the healthy
newborn nursery, in the period from the day it became eligible for the
CHGME program until the CHGME application deadline, divided by the
number of days in that period.
In addition, the Department intends to explore for future proposal
the development of other measures of teaching intensity which may be
more appropriate for children's hospitals.
Patient Volume
Since the IME payment is cover ``expenses associated with the
treatment of more severely ill patients and the additional costs
relating to teaching residents in such programs,'' the patient volume
in a particular hospital is an important factor in its calculation. For
FFY 2000, the Department used inpatient discharges from the hospital's
most recently completed fiscal year as the measure of patient volume
for IME payments. Beginning in FFY 2001, the Department will use
inpatient discharges for the hospital's most recently completed
Medicare cost report filing period as the measure of patient volume for
IME payments.
If a children's hospital eligible to participate in the CHGME
program has not completed a Medicare cost report period prior to
submission of an application to the CHGME program, its patient volume
will be calculated by the following methodology:
a. Divide the number of inpatient discharges from the date the
hospital became eligible to the CHGME application deadline by the
number of days during this period to produce the average number of
discharges per day.
b. Multiply the average number of discharges per day by the number
of days the hospital will provide inpatient care as a hospital eligible
to participate in the CHGME program during the FFY in which payments
are being made.
Outpatient Services
Since a large component of training programs in children's
hospitals involves training in ambulatory outpatient settings, the
Department will explore the development of a factor to indicate the
resources associated with training in outpatient settings. Any such
factor will be proposed for comment in a subsequent Federal Register
notice.
Determining IME Payments to Hospitals
For FFY 2000, the Department used the following formula to
calculate IME payments:
[[Page 12950]]
[GRAPHIC] [TIFF OMITTED] TN01MR01.000
Where:
i = individual hospital
n = the total number of hospitals participating in the CHGME program
WI = area wage index for hospitali
NoD = number of discharges for hospitali
CMI = average case mix index for hospitali
IME Pay = IME payment to individual hospitali for the CHGME
program
Z = total funds available for IME
The Department used the current Medicare teaching intensity factor
of 1.6((1 + residents-to-bed ration).405 -1). Residents
indicated the unweighted actual FTE resident count during FFY 2000
without application of the cap. The bed count was based on the number
of beds reported on a hospital's most recently filed Medicare cost
report or the number of available beds on July 1, 2000. The bed count
did not include bassinets.
This FFY 2000 IME payment formula used by the CHGME program was
derived from the following basic formula:
Yi = X (.711*WIi + .289)*
NoDi*CMIi*IMEi
Where:
X = national average cost per case
i = individual hospital
WI = area wage index for hospitali
NoD = number of discharges for hospitali
CMI = average case mix index for hospitali
IME = IME educational adjustment factor for hospitali
Y = IME payment to individual hospitali
Because the CHGME program has a filed appropriation, a hospital's
individual payment reflects its share of the sum of IME payments to all
hospitals, multiplied by the total funds available for IME, as in the
following formula:
[GRAPHIC] [TIFF OMITTED] TN01MR01.001
Since the national average cost per case appears in both the
numerator and denominator of the formula, it does not impact the
calculation of a hospital's IME payment and may be removed from the
final formula.
For FFY 2001, the CHGME program will use the same formula that was
used in FFY 2000. If the PPS IRB teaching intensity factor to be used
in FFY 2001 is different from 6.5 percent to .1 interns and residents-
to-bed ratio, the teaching intensity factor in the equation to
calculate IME payments would be altered accordingly.
Children's Hospitals With Average Lengths of Stay Greater Than or Equal
to 30 Days
In calculating IME payments for FFY 2000, it became apparent that
certain hospitals with lengths of stay greater than or equal to 30 days
were significantly disadvantaged by the formula utilized to calculate
the IME payments. These hospitals provided a variety of services,
including rehabilitative services, that required their patients to
remain as inpatients for a prolonged period of time. The Department
proposes to apply an adjustment factor in the calculation of IME
payments for children's hospitals with average lengths of stay greater
than or equal to 30 days.
The Department found that when using the HCFA-DRG based CMI to
measure relative resource allocation in the IME payment formula, it did
not adequately account for the resources required to treat patients in
children's hospitals with significantly long lengths of stay because
the HCFR-DRG was developed based on different classes of patients in
hospitals with shorter lengths of stay. For example, functional status,
which is not measured by the DRG system, accounts for systematic
differences in the cost of rehabilitation stays for the same diagnosis.
Since the length of stay is a major factor in determining the
relative costliness of an inpatient stay, the Department proposes an
adjustment factor based on the average length of stay (ALOS) to more
adequately reflect the relative costliness of patients treated by the
children's hospitals with significantly long lengths of stay. For
hospitals with ALOS greater than or equal to 30 days, the adjustment
factor is the ALOS for the individual hospital divided by the average
ALOS for all hospitals with ALOS less than 30 days.
The IME calculation will use one formula to calculate IME payments
for hospitals with an average length of stay less than 30 days and a
second formula to calculate payments for hospitals with an average
length of stay greater than or equal to 30 days, as follows:
Where:
NoD=number of discharges for hospital
CMI=average case mix index for hospital using HCFA v. 17
LOSadj=average length of stay (ALOS) per hospital with ALOS > or = 30
days/ALOS for all hospitals with ALOS 30 days)
WI=area wage index for hospital
IME=IME adjustment factor for hospital
Z=total dollars available for CHGME program IME payments
IME Pay=total IME payments to hospital
i=individual hospital with ALOS 30 days
j=individual hospital with ALOS > or = 30 days
m=total number of hospitals with ALOS > or = 30 days participating in
the CHGME program
n=total number of hospitals with ALOS 30 days participating in the
CHGME program
residents=average number of unweighted FTE residents in the most
recently completed cost reporting period with application of the cap.
beds=sum of available beds, including beds and bassinets in the healthy
newborn nursery, in the most recently completed cost report filing
period, divided by the number of days in that period.
For children's hospitals with ALOS 30 days, the following formula
will be used in FY 2001 to calculate the IME payment.
[[Page 12951]]
[GRAPHIC] [TIFF OMITTED] TN01MR01.002
For children's hospitals with ALOS > or = 30 days, the following
formula will be used in FY 2001 to calculate the IME payment:
[GRAPHIC] [TIFF OMITTED] TN01MR01.003
VIII. Evaluation Criteria
General Comments on Reporting
Respondents generally supported the collection of some performance
data, although a number of respondents raised concerns about the
potential reporting burden. Most respondents favored the use of
existing hospital data systems for the reports, whenever possible. Two
respondents asserted that these performance measures are unnecessary.
The Government Performance and Results Act (GPRA) requires the
Department to collect, analyze and submit reports on the performance of
its legislative programs. Therefore, the Department must collect
information on performance measures for the CHGME program. To the
extent the CHGME program is successful, aggregated hospital data
reported should reflect this success. The reports will not affect the
specific payment amounts made to participating hospitals.
The Department will reduce this reporting burden by eliminating the
requirement for reporting rotations to rural and underserved areas.
However, the Department will continue to request data on the number of
FTE residents participating in children's hospital approved residency
training program; the percentage of gross revenue associated with
patient care; hospital total and operating margins; and patient-related
operating costs. The period for which the performance goals are
measured is the most recently filed Medicare cost report. Hospitals
that do not file Medicare cost reports should submit data from the most
recently completed Medicare cost reporting period.
GPRA Performance Measures for CHGME Program
Beginning in FFY 2001, the CHGME program will use the following
GPRA performance measures:
Maintain the number of FTE residents receiving training in
the hospitals funded by the program;
Maintain the number of FTE residents sponsored by
hospitals funded by the program;
Monitor the proportion of the hospital's gross revenue
from patient care attributed to public insurance (Medicaid, Medicare,
State Children's Health Insurance Program (SCHIP)), uncompensated care,
and uninsured patients;
Monitor the percentage of hospitals, funded by the
program, with negative total margins; and
Monitor the hospital's allowable operating costs.
Some respondents requested clarification of performance elements
and necessary data requirements. These data requirements are described
below:
1. A ``sponsoring institution'' is an institution that assumes the
ultimate responsibility for a graduate medical education program.
According to the Accreditation Council for Graduate Medical Education
(ACGME), the following are the institutional requirements for a
sponsoring institution: (1) A residency program must operate under the
authority and control of a sponsoring institution; (2) there must be a
written statement of institutional commitment to GME that is supported
by the governing authority, the administration, and the teaching staff;
(3) sponsoring institution must be in a substantial compliance with the
Institutional Requirements and must ensure that their ACGME-accredited
programs are in substantial compliance with the Program Requirements;
and (4) an institution's failure to comply substantially with the
Institutional Requirements may jeopardize the accreditation of all of
its sponsored residency programs.
2. Medicaid refers to any funding provided by Title XIX including
that from Medicaid HMOs. Payments for Disproportionate Share Hospitals
(DSH) are also included in gross revenue for Medicate patient care.
3. State Children's Health Insurance Program (SCHIP) refers to
funding provided under Title XXI.
4. ``Uncompensated Care'' means bad debt and charity.
``Uncompensated care'' does not include contractual allowances. The
definition of ``uncompensated care'' is to be used for purposes of the
CHGME program only. ``Uninsured patients'' means those patients that
are self-pay.
For hospitals which do not file Medicare cost reports--(a)
operating margin is net income from service to patients (net patient
revenues - total operating expenses)/net patient revenues (total
patient revenues - contractual allowances) * 100; and (b) total margin
is net income from all sources (net patient revenue + all other income
- total operating-other expenses)/total hospital revenues (net patient
revenues + total other income) * 100.
For hospitals completing Medicare cost reports (HCFA-2552-96), the
[[Page 12952]]
margins should be calculated from Worksheet G-3:
Operating margin = (Line 5/Line 3) * 100
Total margin = (Line 31/(Line 3 + Line 25)) * 100
In calculating hospital operating costs, hospitals should include
allowable operating costs based on Medicare cost reports.
IX. Other Laws Applicable to the CHGME Program
HHS is responsible to Congress and the U.S. taxpayers for carrying
out its mission in compliance with applicable rules and regulations.
HHS seeks to ensure integrity and accountability in its financial
assistance programs. Applicants for and recipients of HHS funds are
responsible for and must adhere to all applicable Federal statutes,
regulations, and policies.
Legal Implication of Application
To be considered for support, an applicant must be an eligible
entity and must submit a complete application in accordance with the
established deadline. The application must be signed by an authorized
representative of the applicant organization. This person is the
designated representative of the hospital in matter related to the
award of HHS financial assistance. HHS does not specify the
organizational location of the applicant's representative; however, it
requires the designation of such an official as the focal point for the
organization's responsibilities as the recipient of HHS funds.
The signature of an authorized representative of the applicant on
the application attests that:
1. All information contained in the application is true and
complete, and in conformance with Federal requirements and the
organization's own policies and requirements; and
2. The applicant organization's intent to comply with all
assurances and certifications referenced in the application.
Civil and criminal penalties apply to any certification, assurance
or submission made to HHS made in connection with any program
administered by HHS. Even if the application for funding is not
granted, the applicant may be subject to penalties if the information
contained in it, including its assurances, is found to be false,
fictitious, or fraudulent. The applicable provisions are summarized
below:
The Program Fraud and Civil Remedies Act of 1986, 31 U.S.C. 3801,
provides for the administrative imposition by HHS of civil penalties
and assessments against persons who knowingly make false, fictitious,
or misleading claims to the Federal Government for money, including
money representing grants, loans, or benefits. A civil penalty of not
more than $5,000 may be assessed for each such claim. If a grant is
awarded and payment is made on a false or fraudulent claim, an
assessment of not more than twice the amount of the claim may be made
in lieu of damages, up to $150,000. Regulations at 45 CFR Part 79
specify the process for imposing civil penalties and assessments,
including hearing and appeal rights.
The Criminal False Claims Act, 18 U.S.C. 287 and 1001, provides for
criminal prosecution of a person who knowingly makes or presents any
false, fictitious, or fraudulent statements or representations or
claims against the United States. Such person may be subject to
imprisonment of not more than 5 years and a fine.
The Civil False Claims Act, 31 U.S.C. 2739, provides for imposition
of penalties and damages by the United States, through civil
litigation, against any person who knowingly makes a false or
fraudulent claim for payment, makes or uses a false record or false
statement to get a false claim paid or approved, or conspires to
defraud the Government to get a false claim paid. A ``false claim'' is
any request or demand for money or property made to the United States
or to a contractor, grantee, or other recipient, if the Government
provides or will reimburse any portion of the funds claimed. Civil
penalties of $5,000 to $10,000 may be imposed for each false claim,
plus damages of up to three times the amount of the false claim.
45 CFR Part 74 authorizes HHS to recover funds administratively.
Record Retention and Access
Financial and programmatic records, supporting documents,
statistical records, and all other records of a participating hospital
that are required by the terms of the award or may reasonably be
considered pertinent to the award, must be retained for the time period
specified in 45 CFR Part 74, Subpart D. Access to these records is also
governed by the provisions of 45 CFR Part 74, Subpart D.
Audit
HHS, or any other authorized Federal agency, may conduct an audit
to determine whether the applicant hospital has complied with all
governing laws and regulations in its application for funding. Any and
all information submitted to HHS by an applicant or participating
hospital during or after the award of funds is subject to review in an
audit.
Hospitals must comply with OMB requirements for audits. OMB
Circulars explain the scope, frequency, and other aspects of the audit.
OMB Circular A-128, Audits of State and Local Governments, contains the
requirements for audits of governmental hospitals. OMB Circular A-133,
Audits of Institutions of Higher Education and Other Nonprofit
Institutions, issued March 8, 1990, establishes the audit requirements
for institutions of higher education and other nonprofit institutions
receiving Federal awards. The main features of this Circular are as
follows:
1. Nonprofit institutions receiving Federal awards of:
a. $100,000 or more a year shall have an audit made in accordance
with the Circular. However, if the awards are under one program, the
institution can have either an audit made in accordance with the
Circular or have an audit made of the one program only. Individual
program audits must conform to the reporting requirements set forth in
General Accounting Office publication, government Auditing Standards,
1988 revision.
b. At least $25,000 but less than $100,000 a year must have an
audit made in accordance with the Circular or the requirements of each
Federal award.
c. Less than $25,000 a year are exempt from Federal audits but must
have their records available for review by Federal agencies.
An audit made in accordance with OMB Circular A-133 will be in lieu
of any financial audit required under individual Federal awards.
However HHS will perform any additional audits necessary to carry out
its responsibilities under Federal law or regulation.
Hospitals must submit a copy of audit reports to the National
External Audit Resources, HHS Office of Audit Services, 323 West 8th
Street, Lucas Place, Room 514, Kansas City, MO 64105.
Suspension, Termination, and Withholding of Support
If a hospital has failed to materially comply with the terms and
conditions of the CHGME program, HHS may suspend the award, pending
corrective action, or may terminate the award for cause.
Suspension: Temporary withdrawal of a hospital's authority to
obligate funds, pending either corrective action by the
[[Page 12953]]
hospital, as specified by HHS, or a decision by HHS to terminate the
award.
Termination: Permanent withdrawal by HHS of a hospital's authority
to obligate previously awarded funds before that authority would
otherwise expire. HHS regulations at 45 CFR Part 76 provide for the
debarment and suspension of individuals and institutions from
eligibility to receive grants and other forms of financial assistance
under HHS discretionary programs. (Also see Executive Order 12549,
Debarment and Suspension.)
Fraud, Waste and Abuse
HHS encourages anyone who becomes aware of the existence or
apparent existence of fraud, abuse, and waste of HHS financial
assistance to report this to the HHS Inspector General's Office in
writing or on the Inspector General's Hotline. The toll-free number is
1-800-368-5779. All telephone calls will be confidential. Address
written complaints to Inspector General, HHS, Room 5250, 200
Independence Avenue SW, Washington, D.C. 20201.
Economic and Regulatory Impact
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, when rulemaking is
necessary, to select regulatory approaches that provide the greatest
net benefits (including potential economic, environmental, public
health, safety distributive and equity effects). In addition, under the
Regulatory Flexibility Act (RFA of 1980), if a rule has a significant
economic effect on a substantial number of small entities, the
Secretary must specifically consider the economic effect of a rule on
small entities and analyze regulatory options that could lessen the
impact of the rule.
Executive Order 12866 requires that all regulations reflect
consideration of alternatives of costs, of benefits, of incentives, of
equity, and of available information. Regulations must meet certain
standards, such as avoiding an unnecessary burden. Regulations which
are ``significant'' because of cost, adverse effects on the economy,
inconsistency with other agency actions, effects on the budget, or
novel legal or policy issues, require special analysis.
The Department has determined that the only burden this action will
impose on children's hospitals is the resources required to submit an
application to the CHGME program. Therefore, in accordance with the RFA
and the Small Business Regulatory Enforcement Act of 1996, which
amended the RFA, the Secretary certifies that this action will have a
significant impact on a substantial number of small entities in that
this action will provide significant funding to eligible children's
hospitals. However, since this action will not impose a significant
burden on a substantial number of small entities, we have not examined
any alternatives for reducing the burden on children's hospitals. The
Secretary has also determined that this action does not meet with
criteria for a major rule as defined by Executive Order 12866 and would
have no major effect on the economy of Federal expenditures.
We have determined that the proposed rule is not a ``major rule''
within the meaning of the statute providing for Congressional Review of
Agency Rulemaking, 5 U.S.C. 801. Similarly, the proposed rule will not
have effects on States, local and tribal governments and on the private
sector such as to require consultation under the Unfunded Mandates
Reform Act of 1995.
Further, Executive Order 13132 establishes certain requirements
that an agency must meet when it promulgates a rule that imposes
substantial direct compliance costs on State and local governments,
preempts State law, or otherwise has Federalism implications. We have
reviewed this action under the threshold criteria of Executive Order
13132, Federalism, and, therefore, have determined that this action
would not have substantial direct effects on the rights, roles, and
responsibilities of States.
Paperwork Reduction Act of 1995
In accordance with section 3507(a) of the Paperwork Reduction Act
(PRA) of 1995, the Department is required to solicit public comments,
and receive final Office of Management and Budget (OMB) approval, on
collections of information. As indicated, in order to implement the
Children's Hospital Graduate Medical Education Payment Program (CHGME),
certain information is required as set forth in this notice in order to
determine eligibility for payment. In accordance with the PRA, we are
submitting to OMB at this time the following requirement for seeking
review of these provisions. A 30-day notice was published in the
Federal Register on November 7, 2000, to provide for public comment and
to request a review of the information collection associated with
CHGME.
Collection of Information: The Children's Hospital Graduate Medical
Education Program.
Description: Data is collected on the number of full-time
equivalent residents in applicant children's hospital training programs
to determine the amount of direct and indirect expense payments to
participating children's hospitals. Indirect expense payments will also
be derived from a formula that requires the reporting of case mix index
information from participating children's hospitals. Hospitals will be
requested to submit such information in an annual application.
Description of Respondents: Children's hospitals operating approved
graduate medical residency training operations.
Estimating Annual Reporting: The estimated average annual reporting
for this data collection is approximately 150 hours per hospital. The
estimated annual burden is as follows:
Form name |
Number of respondents |
Responses per respondent |
Total responses |
Hours per response |
Total hour burden |
HRSA-99-1: |
|
|
|
|
|
(Annual) |
54 |
1 |
54 |
99.9 |
5,395 |
(Reconciliation) |
54 |
1 |
54 |
8 |
432 |
HRSA-99-2 (IME) |
54 |
1 |
54 |
14 |
756 |
HRSA-99-4 (Required GPRA tables) |
54 |
1 |
54 |
28 |
1,512 |
Total |
54 |
1 |
54 |
|
8095 |
[[Page 12954]]
National Health Objectives for the Year 2000
The Public Health Service is committed to achieving the health
promotion and disease prevention objectives of Healthy People 2000, and
its successor, Healthy People 2010. These are Department-led efforts to
set priorities for national attention. The CHGME program is related to
the priority area 1 (Access to Quality Health Services) in Health
People 2010, which is available online at http://www.health.gov/
healthypeople.
Education and Service Linkage
As part of its long-range planning, HRSA will be targeting its
efforts to strengthening linkages between Department education programs
and programs which provide comprehensive primary care services to the
underserved.
Smoke-Free Workplace
The Department strongly encourages all award recipients to provide
a smoke-free workplace and promote abstinence from all tobacco
products, and Public Law 103-227, the Pro-Children Act of 1994,
prohibits smoking in certain facilities that receive Federal funds in
which education, library, day care, health care, and early childhood
development services are provided to children.
This program is not subject to the Public Health Systems Reporting
Requirements.
Dated: February 6, 2001.
Claude Earl Fox,
Administrator.
Tommy G. Thompson,
Secretary.
[FR Doc. 01-5008 Filed 2-28-01; 8:45 am]
BILLING CODE 4160-15-M |