ACS Views on Legislative, Regulatory, and Other Issues

Graduate Medical Education—

• Background
• Other Activity: COGME and MedPAC
• Resident Work Hours

• ACS letter to The Honorable Phil English on the Higher Education Act, 5/24/05
• Letter to The Honorable Mark McClellan, MD, PhD, 6/12/04 (Re: Comments on Proposed Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates, Proposed Rule [CMS-1428-P]
• ACS Letter to COGME on Workforce Study, 4/30/04
• Physician Coalition Senate Letter on Higher Education Act, 4/19/04
• Physician Coalition House Letter on Higher Education Act, 4/19/04
• ACS Senate Letter on Higher Education Act, 3/30/04
• ACS House Letter on Higher Education Act, 3/30/04
• Letter to Secretary Thompson on Unused Resident Positions, 3/8/04
• Letter to David C. Leach, 8/1/02
• Letter to David C. Leach, 6/6/02

July 12, 2004

The Honorable Mark McClellan, MD, PhD
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Room 443-G
Hubert H. Humphrey Building
200 Independence Avenue, SW
Washington, DC 20201

RE: Medicare Program; Proposed Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates: Proposed Rule [CMS-1428-P]

Dear Dr. McClellan:

On behalf of the 66,000 Fellows of the American College of Surgeons, I am pleased to submit the following comments in response to the Proposed Rule for the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2005 Rates, which was published in the May 18, 2004 Federal Register.

The College is a voluntary educational and scientific organization dedicated to the ethical and competent practice of surgery, and to the provision of high quality care for the surgical patient. In addition, the College establishes standards on practice, disseminates medical knowledge, and provides information on surgical issues to the general public. As such, we take great interest in the opportunities for quality medical education for future surgeons.

Graduate Medical Education

The College's comments focus on Graduate Medical Education, specifically those provisions of the proposed rule relating to two aspects: the redistribution of unused residency positions and volunteer training in the nonhospital setting.

Redistribution of Unused Residency Positions

CMS is proposing to implement a provision of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) that redistributes unused residency slots to teaching hospitals for purposes of calculating both direct graduate medical education (DGME) and indirect graduate medical education (IME) payments. The top 75 percent of the available slots (the difference between the cap and the largest number of positions filled in the last three cost reporting periods) will be redistributed to other hospitals based on a set of criteria.

Criteria for determining hospitals that will receive increases in the residency caps

We have a comment on the criteria for determining that a hospital will receive an increase in their resident caps. The MMA contains a requirement that a hospital that seeks an increase in its resident limit must submit a "timely application" to the Secretary of the Department of Health and Human Services. The proposed rule says that the application must include a Center for Medicare & Medicaid Services (CMS) Evaluation Form for each residency program for which the hospital intends to use the requested cap increase. In its application, a hospital must demonstrate the likelihood that it will fill the slots within the first three cost reporting periods beginning on or after July 1, 2005 by meeting one or more of four criteria.

The criteria requiring that a hospital demonstrates its current resident count exceeds its cap or that a loss of accreditation would occur if the hospital does not increase its FTE residents appear straightforward and reasonable (criteria 3 and 4, respectively). However, we are concerned with the requirements for associated documentation for the remaining two criteria, which are demonstrating that a hospital is simply either establishing a new residency program or expanding an existing program.

"Demonstrated Likelihood" Criteria 1

Although the requirement for documentation may be reasonable, the timeframe established by CMS is simply not feasible. In order for a hospital to demonstrate that it has established a new residency program or that it is expanding an existing program, the proposed rule provides that it may submit an application to the Accreditation Council on Graduate Medical Education (ACGME) or the American Osteopathic Association (AOA) by December 1, 2004. Essentially, this would require a hospital to apply to ACGME or AOA prior to knowing whether it will be granted the additional slots. We would ask that CMS reevaluate the timeframe outlined in the proposed rule and determine whether the requirements for submission and reviewing all of the required information could be altered to be less disruptive and burdensome for hospitals and residency programs.

One alternative would be to accept a letter from a residency program showing that it has sought and received expansion approval from its academic medical center's Graduate Medical Education (GME) Committee (ACGME requires that GME Committee approve such requests). Another alternative might be a letter from the academic medical center's Dean, Vice Chancellor, Provost or other such appropriate person stating that institutional authorization has been granted to a residency program for expansion. Also, getting information from the respective Residency Review Committee (RRC) regarding the program's status, including the length of cycle and number of citations could provide a good indicator of the quality of the new or expanded program and the likelihood of the program's success and its need for new slots. Yet, another alternative would be to extend the deadline to July 1, 2005 which would allow about a year for this process and which coincides with the academic medical year calendar.

It should also be noted that an application for residency expansion is a complex, extensive document that cannot be prepared in the roughly six-month time frame from this notice of proposed rule making to the December 1st deadline. A request for expansion often triggers an "early" site visit by the specialty's RRC and site visitor schedules are booked six to 12 months in advance.

"Demonstrated Likelihood" Criteria 2

CMS proposes that an alternative method that a hospital can use to demonstrate that it has either established a new residency program or is expanding an existing program is to submit a cover page of the hospital's employment contracts with residents who are or will be participating in the new or expanded residency program: again, the timing of this requirement is ill conceived. The creation or expansion of a residency program would have to be approved for a hospital to know that it could contract with those new (or additional) residents. They find out in March which of their program choices they have been paired within the National Residency Matching Program and they begin their residency program the following July. Clearly, the timing of the match and the requirement for submission of an employment contract to demonstrate proof of a new or expanded program will prove to be problematic.

In addition, we believe the option presented by CMS of providing documentation that the specialty has a national resident fill rate of 95 percent is not as strong an indicator of the quality of training programs as the option of providing documentation that the hospital's current programs have a fill rate of at least 95 percent. We believe the local criterion is a better reflection of the quality of a particular hospital's training program, while the national fill rate criterion does more to demonstrate existing demand for residency programs for a particular specialty.

In regard to the 95 percent specialty fill rate criterion and any other areas in which CMS is accounting for the fill rate of General Surgery residency programs, CMS should consider only Categorical Surgery residents in any General Surgery residency "fill rates" count, not Non-designated Preliminary Surgery residents. The General Surgery Categorical position is for individuals who want to complete training in general surgery. The Non-designated Preliminary Surgery position is designed for individuals who will complete only one year of general surgical training prior to completing a residency in another specialty.

CMS Evaluation of Applications for Increases in FTE Resident Caps

A hospital must meet a "demonstrated likelihood" that it will be able to fill an increase in their residency cap by meeting one of four criteria. The primary criteria by which CMS must base its decision on how to redistribute the slots is set in statute and, because they are not subject to CMS discretion, the College will not comment on them.

CMS has turned the four criteria into six priority criteria for determining the order in which hospitals would be eligible to receive unused residency positions. We would like some clarification as to how Federal or military programs would be treated under this section of the rule. Several of the six priority categories that CMS has established based on the legislated criteria include hospitals having the only specialty training program in the state. In regards to these priority categories, we would appreciate CMS clarifying the treatment of Federal or military specialty programs. Essentially, would Federal and military specialty programs that operate in a particular state "count" as a specialty program in that state if no other specialty program existed in that state? Or, to put the question differently, would a hospital qualify under these criteria if the only other resident program in the state were at a Federal or military hospital?

CMS has proposed a set of ten evaluation criteria within each of the six priority criteria mentioned above. These criteria, which would be used to evaluate the applications for unused residency slots, as constructed appear reasonable and could potentially result in a fair redistribution of unused residency slots.

However, we do have one comment of evaluation criterion one which requires that a hospital requesting an increase in its residency cap have a Medicare inpatient utilization that is greater than 60 percent as reflected in at least two of the hospital's three most recent audited cost reporting periods for which there is a settled cost report. The CMS indicates that it chose the 60 percent Medicare inpatient utilization rate because it will identify hospitals where Medicare beneficiaries will benefit the most from the presence of a residency program, and it is consistent with the utilization percentage required for Medicare-dependent, small rural hospitals (MDHs). In addition, CMS states that this criterion identifies a type of hospital that warrants atypical treatment by the Medicare program because it is so reliant on Medicare funding.

Although the Medicare inpatient percentage is one indicator of these factors, the College would suggest that in place of the 60 percent Medicare inpatient hospital utilization, CMS consider hospitals that are eligible for Medicare Disproportionate Share Hospital (DSH) payments. We believe that using this criterion could better capture institutions that frequently serve as safety net providers, while fulfilling many of those objectives set out in the rule for the 60 percent Medicare inpatient utilization category. Hospitals primarily qualify for Medicare DSH payments based on the percentage of Medicare inpatient days attributable to patients eligible for both Medicare Part A and Supplemental Security Income (SSI), as well as the percentage of total inpatient days attributable to patients eligible for Medicaid but not Medicare Part A. Including Medicare DSH eligible hospitals would place additional residents in hospitals that would best utilize their training in a way that benefits Medicare beneficiaries as well as underserved patients.

Moratorium on Disallowance of Family Practice Residents Training in Nonhospital Settings

As mandated by the MMA, the proposed rule creates a one-year moratorium on CMS invoking regulations regarding financial arrangements between hospitals and teaching physicians in osteopathic and allopathic family practice programs training at nonhospital sites. Contingent upon all other criteria being met, CMS will permit hospitals to claim family practice residents training at nonhospital sites regardless of the financial arrangement agreed upon to compensate for supervisory physician activities. While we strongly agree that it is appropriate for a moratorium to be offered to allow potentially disruptive regulatory changes in the GME program to be considered, we do not believe it is appropriate that it has only been extended to family practice. Particularly, since CMS has not provided any projection on differential impact of recent change in GME policy, we believe that this moratorium should not be limited to family practice residents, but rather extend to all residency programs that train interns and residents in nonhospital settings.

Congress made it clear in the Balanced Budget Act of 1997 that it supports the expansion of residency training in nonhospital settings by changing the financial The incentives for GME payments to account for the time residents spend training in nonhospital sites. Some of these nonhospital sites for surgical residents are rural and community rotations that serve the patient population that Congress intended to reach by this change in policy. CMS has subsequently indicated in regulations that a hospital can count time residents spend in the nonhospital setting provided the hospital incurs "all or substantially all" of the cost of the training, including the portion of teaching physician salaries and fringe benefits attributable to supervising interns and residents. CMS requires that the hospital and nonhospital site enter into a written agreement stating that the hospital will provide reasonable compensation to the nonhospital setting and identify that amount. The problem has been that CMS has failed to recognize situations in which no supervisory costs are incurred, such as in office settings where physicians volunteer their time to train interns and residents.

The College recommends that CMS acknowledge that the use of supervising physicians who, on their own volition, agree to volunteer as supervisory faculty at nonhospital sites does not disqualify teaching hospitals from counting these residents for DGME or IME purposes. Reimbursement criteria for supervisory volunteer faculty in nonhospital settings should be consistent with the requirements of incurring "all or substantially all" of the costs of the residency program. We also request that any clarification of the rule cover all specialty areas – not just family practice – that utilize training in nonhospital sites since many specialties have resident rotations in rural communities and, upon residency completion, these physicians also provide much-needed care to underserved areas.

Furthermore, while the basic premise that DME and IME supervision payments should not remain at the hospital for those residents assigned elsewhere has some intrinsic logic, there are cogent arguments that suggest that off-site supervision is not the equivalent of supervision provided by the training hospital. For example:

• A surgeon with whom a resident spends outpatient time must be investigated, approved and monitored by the residency program in the same way as for inpatient surgeon supervisors.
• The RRC-Surgery explicitly requires outpatient care by residents as part of surgical resident involvement.
• The training hospital residency program must prove the physical presence of the resident for some office outpatient time, not the "supervising" off-site faculty.
• The residency program, not the off-site faculty, is held responsible by the academic medical center's GME committee as well as by the RRC and ACGME for all of the residents' activities.
• The residency program, not the off-site faculty, is required to ensure "adequate supervision."
• Often, concurrent teaching hospital-based supervision is required of each residency be its RRC for its off-site residents.

Clearly, the overwhelming bulk of the supervisory effort rests with the residency program, not with the off-site faculty.

We also believe that the unmeasured monetary value to the affiliated physicians bears mentioning. CMS should consider that compared to what these nonhospital sites gain. The proposed approach would be a gross overpayment to off-site faculty. For example, off-site locations may also have reduced clinical staff hours, as some of the work delegated to residents is similar or identical to what might be "incident to" work normally performed by clinical staff in offices without residents. There are also intangible benefits to the off-site faculty and for the patients who are exposed to the latest thinking and techniques from the academic medical center that the residents bring with them to the off-site location.

Elimination of the Written Requirement

The proposed rule would eliminate the requirement for a written agreement between the hospital and the nonhospital site that specifies that the hospital will incur the costs of the resident's salary and fringe benefits while the resident is training in the nonhospital site, and that the hospital is providing reasonable compensation to the nonhospital site for supervisory teaching activities. In exchange, the hospital is required to make the payment it owes the nonhospital site by the end of the month following a month in which the training had occurred. This is in contrast to the current practice of payments being made within one year of the end of the cost reporting period during which the costs were incurred.

The College strongly believes that the elimination of a written agreement is a meaningless "benefit" as RRC's all require residencies to have formal affiliation agreements with off-site hospitals and doctors. Furthermore, while the lack of a written agreement would do nothing to reduce the regulatory burden on hospitals and residency training programs, attempting to comply with the monthly payment would induce an immense burden. From a hospital finance perspective, this onerous requirement would be an accounting nightmare that hospitals' budget cycles simply would not be able to support. It is also questionable whether fiscal intermediaries that would have to monitor these monthly payments would be able to handle the additional responsibility.

At a minimum, the College would recommend granting at least a month's processing time between when hospitals get their IME and DME payments and when they are required to make their payment to the nonhospital sites. Ideally, CMS would reconsider any inclusion of this provision in the final IPPS.

OIG Study

Although it is not explicitly addressed in the proposed notice, the MMA also mandated that the Department of Health and Human Services' Office of Inspector General (OIG) conduct a study on the appropriateness of alternative payment methodologies for the costs of training residents in nonhospital settings. The report is due to Congress one year after enactment of the MMA (the day after the moratorium expires). The report will clearly not be completed in time for Congress to review the report and take action it considers appropriate prior to the expiration of the moratorium. Therefore, we urge that the duration of the moratorium be prolonged, as well as extended to all specialties so that both Congress and CMS have the opportunity to review, evaluate, and act upon the OIG report prior to any permanent changes to reimbursement policy.

In conclusion, the College wants to ensure that medical training for surgeons and other physicians is enhanced, not hurt, by any changes to the IPPS in regards to GME. The College appreciates the opportunity to offer its comments on the proposed IPPS rule and looks forward to CMS' response to our concerns in the final rule.

Sincerely,

Cynthia A. Brown
Director, Division of Advocacy and Health Policy

Revised March 7, 2005

ACS Views on Legislative, Regulatory, and Other Issues

Advocacy and Health Policy