The CMS formula has unfairly penalized hospitals for training partners

Teaching hospitals are encouraging the decision of a federal judge leading CMS to recalculate payments they say have been unfairly penalized for educating classmates.

The nearly 50 teaching hospitals listed as plaintiffs in the lawsuit argued that the CMS formula used to calculate payments was “arbitrary and capricious” because it led to hospitals being paid less if they housed colleagues over a specific limits. The judge agreed that the formula was contrary to Medicare status and ordered CMS to recalculate direct payments for graduate medical education owed to the plaintiff hospitals.

The case is the result of five consolidated lawsuits that challenged the 2005 payments.

Hospital DGME payments, calculated annually, depend on the number of residents – fresh apprentices outside the medical school working under the supervision of attending physicians – and hospital staff trained during the year, measured in full-time equivalents. Not all doctors take scholarships after their residency, but they typically add one to three years of study in a particular area of ​​subspecialty, according to the Association of American Medical Colleges.

Hospitals have challenged a set of Medicare regulations designed to implement a couple of statutes. The first statute gave tenants half the weight of residents when it comes to calculating payments. The second is the Medicare limit for the number of resident FTEs that can be used to calculate DGME payments and reduce payments if hospitals exceed that limit. For most hospitals, the FTE cap is equal to the number of resident FTEs claimed in their 1996 Medicare cost reports, according to King & Spalding, which represented the plaintiffs’ hospitals in the case.

In response to these statutes, CMS has implemented a formula for calculating DGME payments that adjusts the FTE account of a downstream hospital if it is in excess of the cap.

“For every colleague you train after you get to your stage, you will receive less reimbursement than a hospital that trains up to its stage,” said Mark Polston, a partner at King & Spalding. “It’s a phenomenon that Congress has never anticipated. It puts a sanction on hospitals that teach fellows.”

Polston could not say whether the CMS formula caused medical schools to form fewer companies, but he said the decision will be useful in developing these programs going forward.

“It will be a good decision for the teaching of hospitals and academic medical centers because it gives them a little more flexibility as far as the training of colleagues is concerned,” he said. “More to the point, it adequately compensates them for the training of those partners in a way that the Medicare program had not had in the past.”

U.S. District Court Judge Timothy Kelly’s decision means CMS must recalculate payments to hospital attorneys. The decision does not force the agency to change its existing formula for calculating DGME payments, even if the plaintiff hospitals hope to do so anyway, Polston said. The ruling certainly paves the way for other teaching hospitals to challenge their own DGME reimbursements under the current formula, he added.

CMS may appeal the May 17 decision, even if it hasn’t yet done so. CMS spokesman Tony Rosa wrote in an email that CMS does not comment on pending lawsuits or litigation.

Each of the plaintiffs in the case points to hospitals that train residents in addition to their FTE caps and also train others, according to King & Spalding. The list includes a number of prominent teaching hospitals: Yale-New Haven Hospital, Montefiore Medical Center, Mount Sinai Medical Center, Maimonides Medical Center, Banner University Phoenix Medical Center, Memorial Hermann-Texas Medical Center and others.

Kelly was not convinced by the government’s argument that hospitals had waived their right to challenge CMS regulation because they did not raise objections during their notice and comment period when the regulation was adopted in 1997. .

The sentence accepts the plaintiffs’ motion for summary judgment and rejects the same motion filed by the defendant, the U.S. Department of Health and Human Services.

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