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Graduate Medical = Education:=20 Resident Physician Shortage Reduction = Act of=20 2009

Proposed Law to = Raise Cap on=20 Medicare-supported Residency Positions = by=20 15,000

By: Richa= rd=20 F. Minicucci & Linds= ay=20 Maleson [1]

3D"Lindsay 3D"Richard In May, = Senator Bill=20 Nelson (D-FL) introduced the Resident = Physician=20 Shortage Reduction Act of 2009 in the = Senate,=20 and Representative Joseph Crowley (D-NY) = introduced identical legislation in the = House of=20 Representatives.[2] This bill = proposes to amend=20 Title XVIII of the Social Security Act = to=20 increase the number of = Medicare-supported=20 residency positions across the United = States by=20 15%, or approximately 15,000 positions. = [3]The bill also = proposes=20 changes in the distribution of currently = available positions and encourages the = creation=20 of new positions in primary care and = general=20 surgery programs.

Teaching hospitals and = other=20 graduate medical education institutions=20 currently receive funding for = approximately=20 100,000 medical resident positions = nationwide, a=20 number that was set by the Balanced = Budget Act=20 (BBA) of 1997 to reflect the level of = funding in=20 place on December 31, 1996. Since then, = only=20 minor adjustments have been made to the=20 BBA-established cap, and the overall = number of=20 federally funded residency positions has = remained the same even as programs have = expanded=20 significantly and the need for = physicians has=20 grown. [4]

The Resident Physician = Shortage=20 Reduction Act of 2009, if enacted as = proposed,=20 will increase the overall number of=20 Medicare-supported residency positions,=20 redistribute currently unused positions, = and=20 relax the current standards by which=20 calculations for determining full-time=20 equivalency of residents are made.

Increasing = the number=20 of Medicare-funded = positions

The Act proposes a = two-part=20 system for the distribution of newly = created=20 Medicare-supported residency slots. Of = the=20 approximately 15,000 positions that will = be=20 newly funded, one-third will be reserved = for use=20 by institutions that are already = operating=20 residency programs over their current = Medicare=20 cap levels. The remaining two-thirds = will be=20 made available to any teaching hospital = seeking=20 to expand or create new residency = programs.

In order to obtain new = positions=20 out of the one-third reserved for = hospitals=20 operating programs over cap limits, an=20 institution must establish that:

It is training at = least 10=20 residents above its cap; and

It is training at = least 25% of=20 its residents in general surgery and = primary=20 care[5] and will continue = to do so=20 for a minimum of 10 years after = receiving new,=20 funded positions.

The number of slots = allotted to=20 an institution pursuant to the over-cap=20 provision will be the product of the = total=20 number of new positions available, and = the=20 number of positions by which the = particular=20 hospital is exceeding its cap divided by = the=20 total number of resident positions by = which all=20 hospitals exceed the total current cap. = For=20 example, if Hospital X has enrolled 14 = residents=20 above its cap and hospitals nationwide = have=20 enrolled 7,000 residents over the = aggregate cap,=20 then Hospital X would be eligible for = funding=20 for a maximum of 30 positions above its = current=20 cap. [6]Essentially, = hospitals that=20 are most over their cap will be eligible = for the=20 greatest number of slots under this = provision of=20 the proposed legislation.

The remaining = two-thirds of the=20 newly created positions will be made = available=20 to any institution looking to expand its = current=20 programs or to create new programs, = provided=20 that the institution can demonstrate the = likelihood that it will fill the = positions=20 within three years of receiving them.=20 Institutions will be eligible to receive = funding=20 for up to 50 additional slots from this = pool,=20 with preference given to:

Institutions seeking = primary=20 care and general surgery slots that will = remain=20 designated as such for at least 10 = years,=20 provided that the institution will not = lower the=20 overall number of primary care and = general=20 surgery positions available after = receiving=20 funding for the new slots;
Institutions that = emphasize=20 training in community-based and clinical = settings;
Institutions located = in states=20 that have more medical students than = currently=20 available residency positions;[7] and
Institutions located = in states=20 that have low resident-to-population = ratios. [8]

Institutions will be = expected to=20 file applications for additional funding = regardless of which type of position = they=20 pursue. No application procedure has = been=20 established as of yet. Institutions that = are=20 currently operating over their cap = limits will=20 be permitted to apply for positions from = both=20 the pool reserved for over-cap = institutions and=20 the general pool.

Redistributing = unused=20 Medicare-funded slots

The Act calls for (1) = the=20 redistribution of positions that have = been=20 vacant for all of the five most recent=20 cost-reporting periods, (2) the = redistribution=20 of slots from institutions that have = closed=20 since the cap was previously set by the = BBA in=20 1997, and (3) the preservation of slots = at=20 institutions that are acquired by other=20 entities.

Institutions with = residency=20 positions that have remained vacant for = all of=20 the five most recent cost reporting = periods will=20 have their cap limits reduced by the = number of=20 vacant positions. Only rural-area = hospitals,=20 hospitals that have participated in = voluntary=20 reduction programs pursuant to = =C2=A71886(h)(6) of=20 the Social Security Act, and hospitals = that have=20 participated in a demonstration project = approved=20 as of October 31, 2003 under =C2=A7402 = of Public Law=20 90-248 will be exempt from these = mandatory=20 reductions in cap limits.

The Act also provides = for the=20 redistribution of residency positions = from=20 hospitals and programs that have closed = since=20 the BBA=E2=80=99s passage in 1997. The = number of slots=20 redistributed under this provision will = equal=20 the number of slots previously held by = the=20 closed institutions. Priority for these=20 positions will be given to hospitals = located in=20 the same core-based statistical area as, = or one=20 contiguous to, the closed institution. = If no=20 such hospital exists or requests the = positions,=20 hospitals located in the same state as, = followed=20 by those located in the same geographic = region=20 of the country as, the closed = institution will=20 be considered, and institutions = requesting these=20 slots must be able to establish that = they are=20 likely to fill them within three = years.

With regard to = institutions that=20 are acquired by other entities, the Act = provides=20 that the number of residency positions = at the=20 institution will remain the same as it = was=20 immediately prior to the acquisition, as = long as=20 the hospital continues to operate = similar=20 programs and services and continues to = serve a=20 similar volume of patients. Acquiring = entities=20 may also elect to be reevaluated as new=20 providers for the purpose of determining = the=20 number of funded slots to which it is=20 entitled.

Calculating = full-time=20 equivalency status

The Act calls = for the=20 relaxation of standards regarding how = full-time=20 equivalency (FTE) status is calculated = for=20 residents. If enacted as proposed, the = Act will=20 include time spent by residents in = non-hospital=20 settings, including community-based = clinical=20 settings, seminars and didactic = conferences, and=20 time spent on vacation, sick leave, or = other=20 approved leave in FTE calculations. Only = time=20 spent on research unrelated to the = diagnosis or=20 treatment of a particular patient will = be=20 excluded from calculations.

Responses from the = medical=20 community

Many national medical=20 organizations have urged their members = to=20 support the Resident Physician Shortage = Act,=20 including the Association of American = Medical=20 Colleges (AAMC), the American Medical=20 Association (AMA), the American College = of=20 Physicians (ACP), the American Hospital=20 Association (AHA), and the American = Osteopathic=20 Association (AOA).

Writing on = behalf of the=20 AMA, Dr. Michael Maves said, =E2=80=9CWe = believe that=20 the =E2=80=98Resident Physician Shortage = Reduction Act=20 of 2009=E2=80=99 plays an important role = in addressing=20 the projected physician shortage and = ensuring=20 access to care by increasing the number = of=20 [Graduate Medical Education] positions,=20 providing teaching hospitals with the=20 flexibility to cover training in = non-hospital=20 settings, and allowing continued = resident=20 physician training in communities that = face a=20 teaching hospital closure to preserve = ongoing=20 residency training and access to = care.=E2=80=9D=20 [9]

Conclusion

The Resident Physician = Shortage=20 Reduction Act of 2009 is currently in = committee=20 in both the Senate and the House of=20 Representatives. As the proposed bill = moves=20 through the legislative process, there = are some=20 ways in which institutions can begin to = prepare=20 themselves to best take advantage of the = Act=E2=80=99s=20 provisions should it become law.

Institutions that are = currently=20 operating over their funding caps should = examine=20 the eligibility requirements for = acquiring new=20 residency positions to determine whether = they=20 are postured to receive new positions = under this=20 portion of the legislation. Likewise,=20 institutions currently operating under = their cap=20 limits should consider whether they are = at risk=20 of having their funding reduced. In = addition,=20 institutions considering program = expansion or=20 creation should take into consideration = the=20 Act=E2=80=99s expressed preference for = primary care and=20 general surgery programs and = community-based=20 training programs.

All institutions = sponsoring=20 graduate medical education programs must = have a=20 strategic vision for the size and mix of = their=20 current and future programs. This = strategic=20 vision must take into account the = academic=20 strength of each program, its viability = within=20 the institution, and its accreditation = status.=20 Approval from the ACGME or AOA will be = required=20 for the expansion or creation of = accredited=20 training programs to be funded by = Medicare.

Graduate Medical = Education=20 Practice Group attorneys Richard F. = Minicucci=20 (rminicucci@nixonpeabody.co= m)=20 and Lindsay Maleson (lmaleson@nixonpeabody.com)=20 are uniquely qualified to assist = sponsoring=20 institutions in planning for any law = that may be=20 enacted regarding residency training = positions.=20 The following link will bring you to a=20 description of the GME Practice = Group=E2=80=99s=20 services:h= ttp://www.nixonpeabody.com/services_overview.asp?SID=3D171.

We hope you find the = commentary=20 and insights provided by Art Boll, a = national=20 consultant in specialized financial, = operational=20 and strategic issues associated with = academic=20 medical organization and teaching = hospitals, and=20 former Congressman Thomas M. Reynolds, a = member=20 of Nixon Peabody=E2=80=99s Government = Relations &=20 Public Policy practice, thought = provoking. We=20 invite you to submit questions and=20 comments.

Special thanks to Stephanie Ehresman = for=20 significant contribution to this = article.
[ Back to Reference = ]

See S.973, = http://www.govtrack.us/congress/billtext.xpd?bill=3Ds111-973=20 and H.R. 2251, http://www.op= encongress.org/bill/111-h2251/text=20 for full text and lists of = co-sponsors.
[ Back to Reference = ]

The 15,000-position estimate assumes = that=20 CMS will calculate the number of new = positions=20 by taking 15% of all currently = funded=20 residency positions, including = fellowship and=20 non-primary care residency positions=20 (100,000).
[ Back to Reference = ]

<= U>http://billnelson.senate.gov/news/details.cfm?id=3D312498&.= =20
[ Back to Reference = ]
Title XVIII, =C2=A71886(h)(5)(H) of = the Social=20 Security Act defines =E2=80=9Cprimary = care resident=E2=80=9D as=20 =E2=80=9Ca resident enrolled in an = approved medical=20 residency training program in family = medicine,=20 general internal medicine, general = pediatrics,=20 preventive medicine, geriatric medicine, = or=20 osteopathic general practice.=E2=80=9D = See http://www.= ssa.gov/OP_Home/ssact/title18/1886.htm.
[ Back to Reference = ]
A hospital operating over its = Medicare cap=20 is entitled to the product of the total = number=20 of new positions available (15,000) and = the=20 quotient of the number of positions by = which the=20 hospital exceeds its limit (14 in this = example)=20 and the total number of positions by = which=20 hospitals nationwide exceed cap limits=20 (approximately 7,000 as of Medicare = fiscal year=20 2006, see http= ://www.aamc.org/newsroom/presskits/gme-thebasics.pdf,=20 page 34).The calculation is 15,000 x = (14/7,000),=20 or 15,000 x .002, which gives the result = of 30=20 new positions for Hospital X.
[ Back to Reference = ]
Based on data contained in the 2007 = State=20 Physician Workforce Data Book, created = by the=20 AAMC=E2=80=99s Center for Workforce = Studies (See <= U>http://www.aamc.org/workforce/statephysiciandatabooksept08.pdf,= =20 pages 18 and 24), there were 16 states = in 2007=20 that had more medical students enrolled = than=20 resident positions available. They were = the=20 District of Columbia, Florida, Iowa, = Kansas,=20 Kentucky, Louisiana, Maine, Missouri, = Nebraska,=20 Nevada, North Dakota, Oklahoma, South = Dakota,=20 Vermont, Virginia, and West Virginia. =
[ Back to Reference = ]
It is unclear at this stage how a = =E2=80=9Clow=E2=80=9D=20 resident-to-population ratio will be = defined=20 under the Act. The rate of medical = residents per=20 100,000 people in the United States is = 35.6=20 (based on data published in the 2007 = State=20 Physician Workforce Data Book, page 24, = see=20 footnote 6). Only 14 states and the = District of=20 Columbia have a resident rate equal to = or=20 greater than the national average of = 35.6, while=20 31 states plus D.C. have a resident rate = of 25=20 or greater. The ten states with the = lowest=20 resident rate per 100,000 people are = Montana=20 (2.1), Idaho (3.1), Alaska (4.6), = Wyoming (8.0),=20 Nevada (8.8), South Dakota = (13.7),Mississippi=20 (16.6), Florida (16.9), North Dakota = (17.3), and=20 Oklahoma (19.8). Only one other state = has a=20 resident rate below 20(Arizona, = 19.9).
[ Back to Reference = ]
See http://www.ama-assn.org/ama1/pub/upload/mm/16/ama-supporting-s97= 3.pdf.
Other=20 organizations have expressed similar = sentiments.=20 See http://www.aamc.org/advocacy/library/workforce/corres/2009/05050= 9.pdf=20 (letter from the AAMC); h= ttp://www.acponline.org/advocacy/physician_shortageact.pdf=20 (letter from the ACP); <= U>http://www.ahanews.com/ahanews_app/jsp/display.jsp?dcrpath=3DAHANEWS/AH= ANewsArticle/data/AHA_News_090526_AHA_backs&domain=3DAHANEWS = (news bulletin from the AHA expressing = support=20 for the Act); http://www.osteopathic.org/index.cfm?PageID=3Dmc_residentphysician<= /U>=20 (press release announcing AOA = endorsement of=20 Act). Criticism of the Act has included = that it=20 fails to go far enough to ensure = creation or=20 expansion of primary care = positions. =20
[ Back to Reference = ]

With:=20 Art Boll, President, Germain = Solutions

Question:=20 If enacted as proposed, would the = Resident Physician Shortage Reduction = Act of=20 2009 provide relief for hospitals = operating well=20 over their cap?

Answer:=20 There are approximately 1,100 teaching=20 hospitals, of which 400 currently train = over 200=20 residents each. Most of these larger = teaching=20 hospital programs are over their = resident FTE=20 (Full Time Equivalents) cap, some by = substantial=20 amounts. I am aware of several large = hospitals=20 that are 150+ residents over their cap. = I have=20 heard anecdotal comments about one = institution=20 being several hundred residents over its = cap. If=20 one-third of the expanded residency = slots, or=20 approximately 5,000 slots, are available = for=20 hospitals over the cap, that will = translate into=20 only 10 to 15 residents actually being = available=20 per major teaching hospital while the = bill, in=20 theory, would provide relief of 50 = residents per=20 hospital. The bill may not help large = teaching=20 hospitals get back or below their = current cap=20 levels. These hospitals could also = pursue the=20 10,000 new positions that would be = available if=20 this bill is passed as proposed, but = doing so=20 will not directly help them since they = will have=20 to add =E2=80=9Cnew=E2=80=9D residents = to get =E2=80=9Cnew=E2=80=9D cap=20 positions.

Question:=20 Will approximately 10,000 new = slots for=20 starting or expanding residency programs = address=20 the need for additional physicians?

Answer:=20 This bill, if passed, will hopefully = provide=20 some relief to a large number of = hospitals that=20 would like to start or expand = Medicare-supported=20 residency programs. Funded residency = positions=20 have been capped for each teaching = hospital for=20 over 10 years. I think most hospitals = will have=20 to consider taking advantage of this = bill if it=20 is passed. The impending physician = shortages,=20 especially in primary care, are = encouraging=20 hospitals to train and retain their own = primary=20 care physicians and general surgeons for = their=20 medical staff. The question is whether = there=20 will be enough physicians graduating = from=20 medical schools to fill these new slots. = If=20 indeed 10,000 new funded resident slots = become=20 available, each year there will need to = be a=20 large number of graduates from medical = schools=20 to fill them. Assuming an average = residency=20 program length of 3=E2=80=934 years, = 2,500 to 3,300=20 additional medical school graduates each = year=20 will be needed to fill these newly = funded=20 residency positions. With new medical = schools=20 (allopathic, osteopathic, and = international)=20 being created each year and established = medical=20 schools increasing class sizes = (20=E2=80=9330%), there=20 should be adequate numbers of physicians = graduating from medical school to fill = these new=20 slots.

Question:=20 How stiff will competition be for = obtaining any of the 15,000 new = slots?

Answer:=20 There clearly will be competition for = both pools=20 of new resident caps. Similar to the = Medicare=20 Modernization Act process, CMS will = interpret=20 the bill, if and when it is passed, and = set=20 forth priorities and criteria that will = be used=20 to allocate the =E2=80=9Cnew=E2=80=9D = resident slots.

Question:=20 What can teaching institutions do = now to=20 posture themselves to receive new slots = under=20 the Act?

Answer: My=20 advice would be to begin planning and = preparing=20 for this event. Address any = accreditation issues=20 and begin internal planning and = consensus=20 building to help establish the business = case to=20 pursue these residency positions if the = bill is=20 passed. This decision is never easy = because=20 there will be internal competition = within a=20 hospital to expand existing programs as = well as=20 potentially starting new programs (i.e., = primary=20 care) that will qualify under the new=20 provisions. Hospital leadership will = need to=20 understand the costs/financing = implications and=20 the medical staff will need to weigh in. = Start=20 now to internalize this opportunity and = begin=20 planning to position your organization = for a=20 successful outcome. Each residency slot = may have=20 a future reimbursement value of = $1=E2=80=932 million=20 dollars. Residency programs, if aligned = with the=20 strategic and operational needs of a = hospital,=20 are a powerful tool to accomplish a = hospital=E2=80=99s=20 current and future goals.

Question:=20 What factors should teaching = institutions=20 be considering now as part of their=20 pre-planning?

Answer: If=20 your hospital is over the cap, = it=E2=80=99s a no=20 brainer; you will throw your hat in the = ring for=20 the 5,000 or so slots that will be in = that pool.=20 The benefit of pursuing slots for = hospitals over=20 the cap will always exceed the cost, = since the=20 costs of operating the residency program = are=20 already in place. Going after resident = slots in=20 the second pool of new residents is a = more=20 complicated equation. For these resident = slots,=20 the hospital will need to incur new = costs to add=20 them (i.e., faculty salaries, resident = stipends,=20 etc.). Expanding residency programs in = New York=20 and Michigan will have a strong business = case=20 because of favorable payor treatment of = GME=20 costs. For other states, a key variable = will be=20 the cost of building your own primary = care=20 medical staff through a residency = program versus=20 recruiting these physicians = ($200=E2=80=93$300K each),=20 if you can even find them. Historically, = many=20 graduating residents have stayed in the=20 community where they trained. This has = changed=20 dramatically in the last 5=E2=80=938 = years for many=20 reasons. Clearly, this should be a core=20 objective of any expanding primary = care-based=20 residency program or general surgery = program. To=20 bring a financial perspective to this = topic, a=20 recent article estimated the number of = smaller=20 hospitals in New York State that might = close=20 simply because the general surgeons, who = are the=20 economic backbone of these hospitals, = are=20 nearing retirement, and the hospitals = may not be=20 able to replace them because of general = surgeon=20 shortages. [1] The article = highlights the=20 importance of this specialty in rural = and=20 smaller hospitals.

Submit=20 A Question Or Comment On This = Article

Zuckerman, Randall; Doty, Brit; = Gold,=20 Michael; Bordley, James; Dietz, Patrick; = Jenkins, Paul; Heneghan, Steven, = =E2=80=9CGeneral=20 Surgery Programs in Small Rural New York = State=20 Hospitals: A Pilot Survey of Hospital=20 Administrators,=E2=80=9D J. Rural = Health, vol. 22, pp.=20 339-342 (2006).
[ Back to Reference = ]

=20 Perspectives from The Hill: The Resident = Physician Shortage Reduction Act =

By:=20 Thom= as=20 M. Reynolds=20

Senate Bill 973 was introduced in May = by=20 Senator Bill Nelson (D-FL). There are = six=20 co-sponsors including Senators Charles = Schumer=20 (D-NY), Harry Reid (D-NV), and Patrick = Leahy=20 (D-VT). Identical legislation, HR 2251, = was=20 introduced in the House by = Representative Joseph=20 Crowley (D-NY) in May and currently has = 34=20 co-sponsors.=20

In the Senate, the Bill was referred = to the=20 Finance Committee. In the House, the = Bill was=20 referred to the Committee on Ways and = Means with=20 an additional referral to the Energy and = Commerce Committee. There has been no = committee=20 activity to date.

The Bill has strong proponents from=20 legislators representing teaching = hospital=20 constituencies throughout the country, = and with=20 key lawmakers' sponsorship has a good = chance of=20 success. It is most likely that the Bill = would=20 pass not as a free-standing piece of = legislation=20 but attached to other significant health = reform=20 legislation passing through the House = and the=20 Senate awaiting the President's = signature.

In addition, similar provisions to = lift the=20 cap on Medicare-sponsored residency = positions=20 have been incorporated into the = =E2=80=9CPreserving=20 Patient Access to Primary Care Act of = 2009,=E2=80=9D=20 introduced by Representative Schwartz = (D-PA),=20 and are expected to be included in a = companion=20 bill by Senator Cantwell (D-WA). We may = see more=20 of this legislation attached to other = pending=20 health care bills.=20 =

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