Establishing a Teaching Hospital – Determining FTEs and Other Need-to-Know Items

Based on the Healthcare Cost Report Information System (HCRIS) data from cost reports with fiscal years ending July 31, 2021 through June 30, 2022, there appears to be approximately 130 hospitals that are involved in training residents in the initial years of an approved graduate medical education (GME) program: more so, 90 of these 130 hospitals do not have a previously established FTE cap. The Indirect Medical Education (IME) and Direct Graduate Medical Education (DGME), FTE cap determine the amount of osteopathic and allopathic FTEs that will be fully funded by Medicare. The Centers for Medicare and Medicaid Services (CMS) has established extensive criteria for determining whether an approved GME program is in fact “new”.

For hospitals that participate in training residents in a new program for the first time on or after October 1, 2012, CMS allows each program five (5) program years, the “cap-building window”, to build the program; as a result, during the cost reporting years that coincide with the first five program years of the program, the FTEs associated with residents in these new programs are not subject to the cap or the three-year rolling average calculation. Consequently, any misstatements in the convoluted calculations for determining the annually filed components for IME and DGME, specifically the Prior Year Intern-to-Bed Ratio and Adjusted Rolling Average FTEs, can have a significant impact on the associated Medicare reimbursement.

The fifth program year of the first new program is used for calculating the hospital’s permanent FTE cap, which is calculated as the largest number of FTE residents in any postgraduate year multiplied by the Initial Residency Period for that specific residency program. Information required for this calculation comes from IRIS reports, accreditation letters, and extensive communication with the GME Program Coordinator. Excluding situations in which a geographically urban hospital with a previously established FTE cap reclassifies to rural for IPPS, the FTE cap determined through this calculation will be permanent.

Typically, the permanent FTE cap will be communicated to the hospital by the Medicare Administrative Contractor through the Interim Rate Review and finalized during the Desk Review and/or Audit that includes the final year of the cap-building window; however, operational decisions associated with the hospital’s funded FTE slots will have to be made months and years prior to MAC conducting its official review.

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Jesse Parker is the Director of Reimbursement for The Rybar Group. He offers expertise in the area of healthcare regulatory reimbursement and financial and governmental reimbursement audits for healthcare organizations and government entities.

Reach out to Jesse for more information regarding the GME program and related reimbursement opportunities. He can be reached at 810-853-6176 or via email at jparker@therybargroup.com.

Focusing exclusively in the healthcare arena, The Rybar Group brings in-depth industry knowledge to help clients create solutions designed to identify opportunities for revenue generation, isolate root causes for underperformance, accelerate cash in the door and support long-term margin improvement. The Rybar Group does not dabble in reimbursement and revenue cycle solutions; we specialize in it.