The A, B, C’s of the CHGME Payment Program From Policy to Payments

1. The A, B, C’s of the CHGME Payment Program From Policy to Payments U.S. Department of Health and Human ServicesHealth Resources and Services AdministrationBureau of Health ProfessionsDivision of Medicine and Dentistry Graduate Medical Education Branch

2. A Historical Overview ofFederal Graduate Medical Education (GME) Funding

3. America’s Teaching Hospitals In 1965, with the inception of Medicare, Congress recognized that teaching hospitals enhanced the quality of patient care and offered that the costs of this education should be borne by society.

4. Payments for Direct and Indirect Graduate Medical Education Direct Medical Education (DME) payments cover the direct cost of GME such as stipends and fringe benefits for residents, and salaries and fringe benefits for faculty. Indirect Medical Education (IME) payments cover expenditures such as the cost of treating more severely ill patients, and processing diagnostic tests because of the training of residents.

5. Distribution of Medicare GMEPayments In non-metropolitan counties: 70 out of 2,241 short-term non-federal general hospitals (3.1%) (Slifkin and Dalton 1996) In metropolitan counties: 1,069 hospitals out of 2,823 (37.9%)

6. Patient Care Provided by Freestanding Children’s Hospitals: Freestanding children’s hospitals represent 1% of all short-term acute care hospitals. Children hospitalized in the U.S. account for: 39% of all admissions; 49% of all inpatient days; and 59% of all costs, which equates to $10 billion worth of care every year.

7. The Children’s Hospitals Graduate Medical Education (CHGME) Payment Program Addressing the Disparity in Federal GME Funding to Freestanding Children’s Hospitals

8. CHGME Payment Program Purpose The CHGME Payment Program provides funds to children’s hospitals to support the training of pediatric and other residents in GME programs. This program compensates for the disparity in the level of Federal GME funding for teaching hospitals for pediatrics versus other types of hospitals.

9. Delegation of Authority Department of Health and Human Services Health Resources and Services Administration Bureau of Health Professions

10. The Impact of the CHGME Payment Program on Freestanding Children’s Hospitals in FY 2008

11. CHGME Payment Program Children’s Hospitals Characteristics In FY 2008: 82 children’s hospitals, nationwide, were potentially eligible(1) to participate in the CHGME Payment Program; 56 children’s hospitals located in 30 states and territories received CHGME Payment Program funding; On average: Almost 50% of the patients that children’s teaching hospitals treat are low income; Freestanding children’s hospitals provided care to 40% of patients enrolled in Medicaid and SCHIP(2) ; and Freestanding children’s hospitals provided care to 6.46% of uninsured patients. (1) Hospitals with a 3300 series Medicare Provider Number (2) * According to American Academy of Pediatrics (2007)

12. From Policy to Payments…

13. Budget Authority The federal spending process may consist of two sequential steps: authorization and appropriation. Both the Senate and the House each have authorizing committees and appropriations committees. First, Bills may be introduced to authorizing committees, which are responsible for recommending programs to be approved, establish program objectives and set appropriation limits. Next, appropriations committees recommend the actual level of spending that will be allowed for the programs. This is called "budget authority.” http://www.whitehouse.gov/

14. Authorization An authorization is an act or a permanent law that may obligate funding for a program or agency. These laws: establish, continue, or modify federal programs; are sometimes necessary under House and Senate rules (or under statute) for the Congress to appropriate budget authority for programs; are effective for one year, a fixed number of years, or an indefinite period and may be reauthorized; are provided either as definite amounts of money or for "such sums as may be necessary“ (indefinite). http://www.senate.gov/

15. The CHGME Payment Program’s Statutory Authorization by Fiscal Year (FY) FY 2000: $280 million $90 million for DME $190 million for IME FY 2001: $285 million $95 million for DME $190 million for IME FY 2002 through FY 2005: Such sums as may be necessary FY 2007 through FY 2012: $330 million $110 million for DME $220 million for IME

16. Appropriation An appropriation is a provision of federal funds for specified purposes, through an annual appropriations act or a permanent law. The Congress may extend a program by providing "unauthorized appropriations“, unless expressly prohibited by the underlying law. Some Federal programs have never received explicit authorizations of appropriations, but receive appropriations because the authority to obligate and spend funds is considered inherent in the original underlying law or act. http://www.senate.gov/

17. Mandatory Spending Mandatory (or Direct) spending (budget authority and outlays) is spending controlled by laws other than annual appropriations acts such as funding for most major entitlement programs (e.g. Social Security and Medicare). http://www.senate.gov/

18. Non-Direct Spending Discretionary (or non-direct) spending is spending (budget authority and outlays) controlled in annual appropriations acts such as funding for the CHGME Payment Program. The authorizing committees’ role is to enact laws that provide a basis for operating programs and guidance to the Appropriations Committees. That guidance is usually expressed in terms of an authorization of appropriations (both definite or indefinite). http://www.senate.gov/

19. FY 2008 Funding Disbursed to Participating Hospitals In FY 2008, the CHGME Payment Program disbursed more than $288 million to children’s teaching hospitals. Total Fund Distribution: DME: $96 million IME: $192.1 million Hospital Disbursement (Median): DME: $1,212,116 IME: $2,103,540

20. CHGME Payment Program Governing Rules and Regulations

21. Regulatory Guidance Federal Register (FR) is the official daily publication for proposed final rules, and notices issued by Federal agencies and organizations, as well as executive orders and other presidential documents. A notice published in the FR may also be referenced as an Federal Register Notice (FRN). Code of Federal Regulations (CFR) is the collection and organization of the rules published in the Federal Register. The CFR is written to explain in detail what the laws may not specify or address, such as what procedures are to be followed and descriptions of the special situations which can arise. http://www.gpoaccess.gov/fr/about.html

22. Federal Register Notice ADVANCE FEDERAL NOTICE The CHGME Payment Program may publish "Notices of Intent" in the FR to inform the public about an issue under consideration and to encourage additional views. PROPOSED FEDERAL NOTICE When a formal proposal is developed, the CHGME Payment Program publishes a “Proposed Notice" in the FR, that gives the timeframe in which written comments may be submitted. FINAL FEDERAL NOTICE Ultimately, a "Final Notice" is published, and the notice specifies the date when the new guidance becomes effective. REGULATORY AGENDA PLAN The CHGME Payment Program has plans to publish an agenda in the CFR that summarizes policy-significant notices. http://www.archives.gov/federal-register/index.html

23. Governing Federal Statutes

24. Governing Federal Statutes CHGME Payment Program Specific: Healthcare Research and Quality Act, 1999 (Public Law 106-129, Section 340E of the Public Health Service Act) The Children’s Health Act, 2000 (Public Law 106-310, Title XX) Amendment to Section 340E of the Public Health Service Act (Public Law 108-490) Children’s Hospital GME Support Reauthorization Act of 2006 (Public Law 109-307)

25. Governing Federal Statutes continued. CHGME Payment Program Related: Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Public Law 108-173), also known as the Medicare Modernization Act (MMA) of 2003 Section 422, Section 502, Section 713 Social Security Act, Section 1886 42 CFR 412.105 42 CFR 413.65 42 CFR 413.75 – 413.83 42 CFR 415.152

26. Federal Register Notices

27. Federal Register Notices CHGME Payment Program Specific: 65 FR 37136 of June 13, 2000 65 FR 37985 of June 19, 2000 66 FR 12940 of March 1, 2001 66 FR 37980 of July 20, 2001 67 FR 60241 of September 25, 2002 67 FR 68879 of November 13, 2002 68 FR 60396 of October 22, 2003 CHGME Payment Program Related: 63 FR 26318 of May 12, 1998

28. CHGME Payment Program Eligibility Requirements

29. Hospital Eligibility Criteria By statute (P.L. 106-310), an eligible children’s hospital must meet the following criteria: it participates in an approved GME program; it has a Medicare Provider Agreement; 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(1); and it is a “freestanding” hospital. (1)A hospital with a 3300 series Medicare provider number would meet this criteria (i.e., 55-3300).

30. Changes in Hospital Eligibility A hospital remains eligible for payments as long as it trains residents as a “freestanding” children’s hospital during the FY for which CHGME Payment Program payments are made. Hospitals which become ineligible for payments: must notify HRSA immediately of the change in status and the date it became ineligible; and will be liable for the reimbursement, with interest, of any funds received during the period after it became ineligible.

31. Payment Methodology CHGME Payment Program funding to individual hospitals is based upon a hospital’s: rolling average of the weighted resident FTE count for DME payments; and the rolling average of unweighted resident FTE count for IME payments.

32. Approved GME Programs and the Residents they Train

33. What is an Approved Training Program? An approved training program means a program that meets one of the following criteria: is approved by the: Accreditation Council for Graduate Medical Education (ACGME); Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association; Commission on Dental Accreditation of the American Dental Association; Council of Podiatric Medicine Education of the American Podiatric Medical Association; or

34. What is an Approved Training Program continued? may count towards certification of the resident in a specialty or subspecialty listed in the current edition of the Directory of Graduate Medical Education Programs (published by the American Medical Association) or the Annual Report and Reference Handbook (published by the American Board of Medical Specialties); or is approved by the ACGME as a fellowship program in geriatric medicine; or is a program that would be accredited except for the accrediting agency’s reliance upon an accreditation standard that requires an entity to perform an induced abortion or require, provide, or refer for training in the performance of induced abortions, or make arrangements for such training, regardless of whether the standard provides exceptions or exemptions.

35. Resident Eligibility Requirements To be counted, a resident: must be in an approved training program*; and be a graduate of an accredited medical school in the U.S. or Canada; or have passed the United States Medical Licensing Examination (USMLE) Parts I & II (in the case of international medical graduates) *See 42 CFR 413.75(b)

36. Accredited Medical Schools in the U.S. or Canada An accredited U.S. or Canadian medical school is a school that meets the standards necessary for accreditation (and is accredited) by the: Liaison Committee on Medical Education of the American Medical Association; American Osteopathic Association; Commission on Dental Accreditation; or the Council on Podiatric Medical Education.

37. International Medical Graduates (IMGs) An IMG [also known as a foreign medical graduate (FMG)] is a resident who is not a graduate of a medical, osteopathy, dental, or podiatry school, respectively, accredited or approved as meeting the standards necessary for accreditation by the: Liaison Committee on Medical Education of the American Medical Association; American Osteopathic Association; Commission on Dental Accreditation; or the Council on Podiatric Medical Education.

38. Counting Residents

39. Resident Counts Resident counts are based on the number of residents training at the hospital complex and certain non-hospital/non-provider settings/sites throughout the hospital’s fiscal year. Residents are counted as full-time equivalents based on the total time necessary to fill a full-time residency slot for the year.

40. Resident FTE A resident FTE is measured in terms of time worked during a residency training year. It is not a measure of individual residents who are working. If a full-time resident spends all time that is part of the approved training program in the hospital complex or qualified non-hospital site, the resident is counted as 1.0 FTE. No resident may count as more than 1.0 FTE.

41. Partial Resident FTE A partial resident FTE is a resident who does not spend all (the) time that is part of the approved training program in the hospital complex or qualified non-provider setting.

42. When would a resident be counted as a Partial FTE? A resident will count as a partial FTE based on the proportion of time worked at the children’s hospital and qualified non-provider settings relative to the total time worked in a full-time residency slot if the resident: is part-time; rotates to other hospitals as part of the approved training program sponsored by the children’s hospital; is in a program sponsored by another hospital and spends one or more rotations at the children's hospital; is on maternity leave; joins or leaves a program mid-year; or passes the USMLE mid-year.

43. Weighting FTE Residents Residents are divided into two categories: those in their initial residency period; and those beyond their initial residency period.

44. Initial Residency Period (IRP) For allopathic residency programs, the IRP is: the minimum number of years of formal training required for initial board eligibility in a specialty as specified in the current Directory of Residency Training Programs. For osteopathy, dentistry, and podiatry programs, the IRP is: the minimum number of years of formal training necessary to satisfy the requirements of the approving body for those programs.

45. Counting Residents Beyond their IRP Residents who are beyond their IRP, are weighted by a factor of 0.5 (or ½).

46. Where are residents counted? Residents are counted in: the hospital complex; and in non-provider settings

47. Hospital Complex The time a resident spends anywhere within the hospital complex* may be included in the resident FTE count for CHGME Payment Program purposes. *See 42 CFR 413.65

48. Non-Provider Settings The time residents spend in non-provider (or non-hospital) settings such as freestanding clinics, nursing homes, and physicians’ offices in connection with approved programs may be included in determining the number of FTE residents in the calculation of a hospital’s resident count if certain conditions are met. 42 CFR 413.78

49. Research Time The research conducted must be part of the residency program and the resident must carry out the research in: the children’s hospital; or in a non-hospital site where the research involves direct patient care and the compensation for both the residents and the faculty are paid by the children’s hospital.

50. Data Sources for Completing the CHGME Payment Program Application Tying it all together…