Health Law Daily Final rule preamble shows update to regulation was clarification, not change
Wednesday, July 25, 2018

Final rule preamble shows update to regulation was clarification, not change

By Patricia K. Ruiz, J.D.

A provider’s full-time equivalent (FTE) resident caps for graduate medical education (GME) and indirect medial education (IME) should be calculated under the 2012 version of the applicable federal regulation, and not the 2007 version, the CMS administrator held, reversing the decision of the Provider Reimbursement Review Board (PRRB). According to the administrator, the Final rule preamble of the original regulation reflected the policy set forth in the 2012 version of the regulation; thus, the 2012 regulation was a clarification of existing policy (Beaumont Hospital, Wayne vs. Wisconsin Physicians Services, CMS Administrator Decision, Review of PRRB Decision No. 2018-D33, June 21, 2018).

PRRB decision. Beaumont Hospital, Wayne (Beaumont) is a Medicare-certified short-term acute care hospital (see Board rules amendment to regulation was a change, not a clarification, June 5, 2018). It started a new family medicine residents training program on July 1, 2004. Under federal regulation, Beaumont had three years to establish FTE caps for its new program. Wisconsin Physicians Service, its Medicare contractor, did not compute Beaumont’s FTE cap until 2013. Beaumont appealed the FTE cap determination, disputing the methodology used in calculating the FTE cap. The PRRB sought to determine whether the provider is entitled to higher DGME and IME FTE resident caps for its new family medicine resident training program. It held that the Medicare contractor improperly calculated Beaumont’s GME and IME FTE resident caps.

Change to regulation. The PRRB found that the 2007 version of the applicable regulation and the 2012 version of the regulation treat out-rotations differently for the purposes of identifying the rotations involved in the training program. The 2007 regulation discusses out-rotations and states that "if residents are spending an entire program year or year . . ." The 2012 regulation modified the section to state, "if the residents are spending portions of a program year (or year)." The PRRB also could not find any evidence that the methodology detailed in the 2012 regulation was CMS’ policy prior to that implementation. Thus, the board found that the 2012 regulation is not a clarification, but a change to the way out-rotations are handled. It ruled that the contractor must use the 2007 method to calculate Beaumont’s FTE cap.

Administrator review. The administrator disagreed with the PRRB’s findings, finding that the PRRB was incorrect in concluding that the 2012 regulations are a change in policy form the 2007 regulations and in concluding that the two regulations treat full year out-rotations differently than partial out-year rotations. The administrator noted that CMS specifically addressed rotations to other hospitals for whole year and partial year out-rotations in the July 30, 1999, final rule preamble. The policy set forth is consistent with the statutory and regulatory mandates regarding the counting of FTEs set forth in the Social Security Act when the inpatient prospective payment system (IPPS) was established. Thus, it was reasonable for CMS to consider the 2012 text modification a clarification of existing and mandated policy. The administrator found that the Medicare contractor was correct in adjusting Beaumont’s DGME and IME FTE caps to account for out-rotations and that the methodology utilized was consistent with law, regulation, and program instructions. Further, considering all three years of the cap-building period in the cap adjustment was appropriate, as it provided a more complete picture of the actual rotations.

Companies: Beaumont Hospital, Wayne; Wisconsin Physicians Services

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