Deeper Than the Headlines – Graduate Medical Education (GME) Payments

One of the OIG’s most recent published audit reports explains their review of Graduate Medical Education (GME) payments. The OIG’s purpose in performing this review was to determine whether CMS ensured that hospitals in selected MAC jurisdictions claimed Medicare GME reimbursement in accordance with Federal requirements.  According to the OIG, they have previously found that hospitals in six Medicare Administrative Contractor (MAC) jurisdictions counted residents (including interns) as more than one full-time equivalent (FTE) and, as a result, received excess Medicare graduate medical education (GME) reimbursement.

Since the beginning of the Medicare program, it has shared in the costs of educational activities incurred by hospitals participating in Medicare. CMS, which administers Medicare, make two types of payments to teaching hospitals to support GME programs for physicians and other healthcare practitioners. Direct GME payments are Medicare’s share of the direct costs of training residents, such as salaries and fringe benefits of residents and faculty and hospital overhead expenses. Indirect GME payments cover the additional operating costs that teaching hospitals incur in treating inpatients, such as the costs associated with using more intensive treatments, treating sicker patients, and ordering more tests. A hospital claims reimbursement for both direct and indirect GME, in part, based on the number of FTE residents that the hospital trains and the portion of the time those residents spend working at the hospital. FTE status is based on the total time necessary to fill a residency slot. If a resident is assigned to more than one hospital, the resident counts as a partial FTE based on the proportion of time worked in qualifying hospital areas to the total time worked by the resident. A hospital cannot claim the time spent by residents training at another hospital.

For payment purposes, the total number of FTE residents is the 3-year “rolling average” of the hospital’s actual FTE count for the current year and the preceding two cost-reporting. No individual may be counted as more than one FTE.  Each time a hospital claims GME reimbursement for a resident, it must provide CMS with information on the resident’s program, year of residency, dates, and locations of training (including training at other hospitals), and percentage of time working at those locations.

The Intern and Resident Information System (IRIS) is a CMS software application that hospitals use to collect and report information on residents working in approved residency programs at teaching hospitals. Hospitals receiving direct or indirect GME payments must submit, with each annual Medicare cost report, IRIS data files that contain information on their residents, including, but not limited to, the dates of each resident’s rotational assignment. One purpose of the IRIS is to ensure that no resident is counted by the Medicare program as more than one FTE employee in the calculation of payments for the costs of direct and indirect GME. The findings of the OIG concluded that CMS generally ensured that hospitals in selected MAC jurisdictions claimed Medicare GME reimbursement in accordance with Federal requirements. However, in seven of their eight audits, they identified some instances in which teaching hospitals did not always comply with Federal requirements when claiming Medicare GME reimbursement for residents. Specifically, they found that hospitals in the six MAC jurisdictions reviewed claimed GME reimbursement for residents who were claimed by more than one hospital for the same period and whose total FTE count exceeded one, totaling $3,953,446 in excess Medicare GME reimbursement. The overstated FTE counts and excess reimbursement occurred because CMS did not have adequate procedures to ensure that hospitals do not count residents as more than one FTE. For example, CMS did not review the IRIS data submitted by hospitals to detect whether a resident had overlapping rotational assignments (i.e., working at more than one hospital during the same period) or require the MACs to perform this work. In response to the OIG’s audits, the MACs indicated that their SOWs with CMS did not include instructions and did not include funding for them to analyze IRIS data to ensure that residents are not counted as more than one FTE. However, the MACs stated that they may conduct limited reviews of the IRIS data under certain circumstances. Additional procedures, they stated, would be outside of the scope of their SOWs.

The OIG recommended that CMS take steps to ensure that no resident is counted as more than one FTE. This could include implementing policies and procedures to analyze IRIS data or requiring MACs to determine if residents claimed by hospitals in their jurisdiction were claimed as more than one FTE. Because the OIG audits covered only six MAC jurisdictions across various fiscal periods, OIG believes that, if CMS took steps to ensure that all MAC jurisdictions implemented procedures, it could achieve significant cost savings.