Graduate Medical Education November 18, 2010

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Aff d bl Care Affordable C Act A t (ACA)

Two final rules that implement provisions of the Affordable Care Act relating to: payments to hospitals for direct graduate medical education (GME) and indirect medical education (IME) costs; and new limitations on certain physician referrals to hospitals in which they have an ownership or investment interest interest.

A. Proposed Changes Relating to Payments to Hospitals for Direct GME and IME Costs

GME and IME Changes

Definition of Resident and Primary Care Resident Existing definition: “participates” in an approved medical residency program… New definition: “formally formally accepted , enrolled and participating” participating in an approved medical residency program…

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GME and IME Changes

Counting Resident Time in Non-Provider Settings Section 5504 of ACA Hospital incurs the costs of the I&R salaries and fringe b benefits fit GME – Cost report periods beg. on or after July 1, 2010 IME – Discharges on or after July 1, 2010 More than one hospital can incur training costs, but must determine a proportional share of costs, requires written agreement g No cost report reopening, unless hospital has valid appeal as of March 23, 2010. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Counting Resident Time in Non-Provider Settings Section 5504 of ACA g Resident Time in Non-Provider Settings g Counting Elimination of “All or Substantially All” Requirement for Non-Provider Setting Effective for cost reporting periods beginning on or after J l 1 July 1, 2007 2007, and db before f JJuly l 1 1, 2010 2010.

© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Tracking Resident Training Time in Non-Provider Settings Hospitals required to maintain records of the amount of time residents spend in non-provider settings and compare that time to a “base year.” Base year: Cost reporting period beginning on or after July 1, 2009 and before June 30, 2010 Total unweighted direct GME FTE count Additional cost reporting requirements Primary care FTEs on program-specific basis Non-primary care aggregate © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Allowable Didactic and Scholarly Activities GME – effective for cost reporting period beginning on or after July 1, 2009, allowable in hospital and non-provider settings IME – effective for cost reporting periods beginning on or after Jan. Jan 1, 1 1983, 1983 allowable in hospital hospital, including outpatient departments Does not include research No cost report reopening, unless hospital has appeal as of March 23 23, 2010 © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Definition of Non-Provider Setting Primarily engaged in furnishing patient care, treatment of patients Primary mission patient care: Doctors’ offices, community health clinics Primary mission other than patient care: Medical or dental school (education) (education), hotel or convention center (hospitality, meeting services)

© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Section 5504 of ACA Non-Allowable Research: Develop new medical treatment, evaluate new medical treatments, etc. not associated with a particular patient. GME – Non Non-hospital hospital settings, cost reporting periods beginning of or after July 1, 2000. IME Hospital settings IMEsettings, cost reporting periods beginning Jan. 1, 1983,

© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

With respect to the recordkeeping requirement: Proposing that rotation schedules be the source for establishing the amount of time that residents spend training in nonhospital sites, both in the base year and in subsequent years. Cost reporting periods beginning on or after July 1, 2009 and before June 30, 2010 be the base year against which we will compare subsequent years' years data to determine if the amount of nonhospital training that occurs in subsequent years increases relative to that base year. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Hospitals only need to maintain records of the direct GME FTE count of resident training time in nonhospital settings settings. Proposing to include several additional lines on the Medicare cost report for hospitals to submit these data. Hospitals would be required to report these data on a program-specific basis for their primary care programs, and on an overall hospital basis for their nonprimary care programs. programs These data will help CMS identify whether barriers to resident training in nonhospital sites continue to exist. © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes

Section 5505(a) and (b) of ACA Approved Leaves of Absence: Count vacation, sick leave, and other approved leave in FTE count, if leave does not prolong total time in the approved program Effective for cost reporting periods beginning on after Jan. 1, 1983 Count leave based on where resident assigned at leave time; otherwise assign proportionally to hospitals based on otherwise, training time.

© 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes Reductions to Hospitals FTE Caps

Section 5503 of ACA - FTE Cap Reductions Effective July 1, 2011 FTE resident caps will be reduced if the “reference resident l level” l” iis lless th than th the ““otherwise th i applicable li bl resident id t limit.” The reduction is 65% of the difference. Reference level – Highest resident level out of three most recent cost reporting periods ending before March 23, 2010. Otherwise applicable resident limit – 1996 Cap adjusted for new programs, affiliation agreements, displaced residents and 422 reduction d ti © 2010 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. 30039BOS

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GME and IME Changes Reductions to Hospitals FTE Caps

FTE Cap Reductions Exceptions Rural Hospitals with