CMS finalizes new Medicare residency slot implementation

Hospitals serving the highest-need areas and unserved populations will get priority for new Medicare-funded residency slots, the Centers for Medicare and Medicaid Services said in a long-awaited final rule published Friday.

The additional spots will be phased in over five years, and funding will total roughly $1.8 billion over the next 10 years. The first 200 slots will be announced Jan. 31, 2023. The policy is part of CMS’ final inpatient prospective payment system for 2022.

Congress mandated the residency additions earlier this year. This is the largest expansion of the Graduate Medical Education program in over 25 years, according to CMS. The additions come during a time when healthcare faces severe staffing shortages.

Locations designated as health professional shortage areas will be prioritized for new residency slots. Rural teaching hospitals will be eligible for increases to the cap on the number of residents they can host.

“Doctors are most likely to practice in the areas where they do their residencies. Having additional residents train in the very areas that need the most support can not only bolster the numbers of providers in these underserved areas, but also train them with a unique understanding of the specific needs of these communities,” Dr. Meena Seshamani, director of the Center for Medicare, said in a news release.

Hospitals establishing new full-time residency programs will receive additional residence positions and per-resident amounts, too.

Hospital stakeholders were divided over CMS’ proposals for how to distribute the slots in comments on the rule earlier this year. CMS went with the policy option supported by rural hospitals. The American Hospital Association and Association of American Medical Colleges wrote in comments that CMS’ proposal to prioritize distributing the slots to health professional shortage area scores wouldn’t reflect Congress’ intent.

“We are disappointed that CMS did not accept our comment to distribute residency slots to hospitals based on the four criteria set out in the legislation,” Ivy Baer, AAMC’s senior director and regulatory counsel, wrote in an email.

CMS asked for feedback in the final rule on alternatives to health professional shortage area scores for measuring health disparities when deciding how to dole out additional slots.

The agency didn’t finalize a proposal that would have changed the definition of patients who are deemed eligible for inclusion in the Medicaid fraction of a hospital’s disproportionate patient percentage after receiving numerous comments on the issue.

The final rule also clarifies organ acquisition payment policies. Donor community hospitals and transplant hospitals will bill procurement organizations the lesser of charges reduced to negotiated rates. But CMS decided not to finalize a proposal related to Medicare’s share of organ acquisition costs and other payment policies.