1. CMS funding for postdoctoral psychology fellowship programs
Kirk Stucky Psy.D. ABPP (Rp, Cn)
Barbara Wolf Ph.D.
Consortium for Advanced Psychology Training Postdoctoral Fellowship in Clinical Health Psychology
4/18/09
Kirk Stucky Psy.D. ABPP

2. Article
Stucky, K., Buterakos, J., Crystal, T., & Hanks, R. (2008). Acquiring CMS funding for an APA accredited postdoctoral Psychology Fellowship program. Training and Education in Professional Psychology. Vol. 2, Iss. 3, pp

3. Basic summary
In 2001 Congress reinterpreted existing legislation allowing hospital based, postdoctoral psychology training programs that were APA accredited to file for and receive allied health reimbursement through the Center for Medicare / Medicaid Services (CMS). This became effective on March 13, 2001.

4. Funding shifts
Historically physician and other allied health training programs have received government funding, while psychology training has been non-funded. This new legislation symbolized a shift in federal health policy and recognized psychology as a valuable discipline within the health care system.

5. Brief history
Government funding for training programs in graduate medical education was established in 1965 when new federal legislation was passed regarding Medicare and Medicaid. This tradition has been based on the government’s desire to support and maintain high quality health care services for the elderly and poor in the United States.

6. The social securities Amendments of 1965 (Public law 89-97)
“Since the inception of Medicare in 1965, we have recognized an obligation to share in the costs of educational activities sponsored by participating providers until the community at large chose to bear them in some other manner. Medicare has historically reimbursed providers for the program’s share of costs associated with approved educational activities. The activities may be broken down into three general categories, each with distinct payment policies:” (Federal Register, 2001, pp. 3358)

7. Training models
Nursing and other allied health programs operated by colleges and universities are considered to be programs in which the costs are borne by the community.
These CMS funds are only provided for particular educational programs that, according to industry norms, qualify an individual to be employed in a specialty in which the person could not have been employed before unless they completed a particular educational program.

8. Training models
"The academic medical community often justifies Medicare GME funding, especially the indirect adjustment, as necessary to support the multiple missions of medical schools and teaching hospitals. These missions include educating the next generation of physicians; providing quality patient care to the poor, the uninsured and those with the most medically complex conditions; supporting excess medical care capacity and other stand-by-resources required to prepare for medical emergencies; maintaining the lead in medical technology; and performing groundbreaking research." (Dickenson, 2004)

9. What are CMS pass through dollars?
Additional dollars a hospital can receive for the training of various clinicians in a formally organized program of study that is maintained in order to enhance the quality of patient care in an institution. (Federal Register, 2001).
Called “pass through” because they are identified as separate from other funds paid to a hospital by CMS (e.g. the prospective payment system) and paid separately (i.e. pass through) on a reasonable cost basis.

10. What are CMS pass through dollars?
CMS provides three general types of “pass through dollars” for educational programs.  
Approved Graduate Medical Education (GME) programs for physician training only
Approved Nursing and Allied Health (paramedical) programs operated by a hospital for a variety of specialties (nurses, technicians, psychologists,…)
Other educational programs and activities (covered on a per case basis)

11. Direct Graduate Medical Education (DGME )
Direct payment varies for each hospital and is based on a “hospital specific per resident amount.”
In 1997, hospitals were capped on the number of residents Medicare would pay for. The limit was based on 1996 residents that trained in specific hospitals.
Cover the direct costs of training residents such as salary and benefits, teaching physician salaries, and other related overhead expenses.

12. Indirect Graduate Medical Education
The indirect medical education reimbursements are provided to teaching hospitals in recognition of the higher costs associated with treating patients there as compared to non teaching hospitals.

13. Allied health programs
Unlike DGME payments, allied health programs typically receive less than the average cost per trainee. Additionally, while GME programs can be funded or controlled outside of the hospital (i.e. participating provider) CMS requires that allied health programs are run and funded by the hospital.
CMS considers all psychology training programs as “allied health”

14. History summary
1. Graduate Medical Education (GME) has received funding through the Medicare Program for quite some time, but little fiscal attention has been paid to psychology training programs
2. Medicine and nursing have traditionally enjoyed a “virtual monopoly” on GME training dollars and have often viewed the efforts of other health care professions to secure similar funds as a threat to their own training revenues

15. Dr. Stucky Practical issues Nuts and bolts
Future recommendations / thoughts

16. New development
In 2001, Congress reinterpreted existing legislation allowing hospital based, postdoctoral psychology training programs that were accredited by the American Psychological Association (APA) to apply for and receive allied health pass through reimbursement from the Center for Medicare / Medicaid Services (CMS). This became effective on March 13, 2001

17. New development
The APA sent out a Practice Organization Action Alert titled Update on Medicare Funding for Psychology Internship Training Programs on November 28, 2001 to make psychologists aware of this change (Marilyn Richmond, Assistant Executive Director for Government Relations, personal communication, November 28, 2001). A section from that practice alert stated;

18. APA Practice Organization Action Alert, 11/28/01
“I am pleased to tell you that HHS (U.S. Department of Health and Human Services) has very recently informed us that hospital-based psychology post-doctoral programs that are accredited by the American Psychological Association (APA) may now apply for Medicare funding of their programs.  Unlike psychology internship training programs, post-doctoral programs required no rulemaking but rather an agency interpretation of current rules to allow for funding, and HHS has now interpreted the current funding requirements to allow for post-doctoral program funding.”

19. Why aren’t more programs getting CMS funds?
Lack of information regarding the process required to obtain CMS funding.
Lack of organization among APA accredited postdoctoral programs
Failure to adequately educate and inform eligible programs
Many excellent and eligible postdoctoral programs are not APA accredited
Current structure of some programs

20. Requirements
There are five requirements that must be met in order to qualify for these funds. The first four are called “provider-operated criteria” and the fifth is a minimum standard of accreditation.

21. #1 Hospital based The program must be hospital based
Thus, other community based programs are not eligible.
All funded allied health programs (e.g. nursing, radiology tech, etc) are hospital based.

22. #2 Hospital employs trainees
The hospital must incur the costs associated with both the clinical training and classroom instruction if that is a requirement for completion of the program. The hospital has to budget and pay for the cost of books, supplies, faculty salaries, and trainee’s salaries.

23. #3 Services in facility
Postdoctoral fellowship programs in which the majority of work is outpatient would not be eligible
Programs that have inpatient and outpatient activities for trainees can only count inpatient related activities.

24. #4 Hospital control of training
The hospital is required to have administrative control over the program and its day-to-day function.
The hospital must directly control the programs curriculum and determine the requirements for graduation.

25. #4 Hospital control of training
The hospital can enter into an agreement with a college or university to provide some basic course requirements. However, the hospital must financially incur the majority of training costs and independently award the degree.
If the university absorbs some costs then these costs cannot be claimed by the program.
Thus, a university based program that places its postdoctoral fellows at a hospital would not be eligible

26. Why not internship or non-hospital based programs?
postdoctoral programs are by definition “post degree” which is similar to physician residencies.
it was not necessary to write “new law” or rewrite current legislation. This would have been required to fund internships, which occur prior to degree completion.
CMS funding has historically only been available for hospital based programs because of the way in which the original legislation was written.

27. Why not internship or non-hospital based programs?
Essentially, implementing CMS funding for hospital based psychology fellowship programs only required reinterpretation of existing legislation (personal communication APA Government Relations, September 26, 2007).

28. Current status
APPIC directory 4/12/09 listed 124 postdoctoral programs
32 were APA approved programs
16 of those were veterans affairs medical centers or military based programs
11 others were affiliated with a hospital
The web page does not currently list the programs currently receiving CMS funding.

29. Current status
As far as we know only three programs in the country have been audited and are receiving CMS funding (as of 2008)
Hurley Medical Center
Rehabilitation Institute of Michigan
University of Texas Medical Branch

30. Concerns APA has no list of programs receiving CMS funds.
APA has no specific information regarding the availability of CMS funding or how to apply for it.
No written guidelines for programs interested in CMS funding (personal communication APA government relations personnel, 9/27/07) (website search 3/18/09

31. Preparation
Obtain Accreditation: CMS will want a copy of your accreditation letter. If you are part of a consortium or have a collaborative relationship with other institutions they may ask why the programs did not all apply for CMS funding together.
Program Costs: Expect CMS to request a detailed general ledger and how the Finance Department determined the program costs.

32. Preparation
Time Studies: CMS will probably look at the time studies for each faculty member and will want to verify costs

33. Preparation
Other sources of funding: CMS may investigate if the hospital receives any funding from outside institutions (4th standard), which supports training. If so this may affect the program’s eligibility for funds or how much funding can be received.

34. Application and auditing process
 Step 1: Determine overall program costs including postdoctoral fellow salaries, administrative costs, etc.

35. Application and auditing process
 Step 2: Conduct faculty and fellow time studies
Conduct quarterly faculty time studies to determine the percentage of time faculty spend in postdoctoral training.
Conduct quarterly postdoctoral fellow time studies to determine the percentage of time they spend providing services on different hospital units.

36. Application and auditing process
Time studies
Where faculty and fellows spend their time
Involvement in medical education
Outpatient versus inpatient time
Time dedicated to supervision, didactics, etc
Faculty time dedicated to meetings and additional preparation

37. Application and auditing process
Step 3: Submit the Medicare Cost Report (which includes the data for all allied health and GME programs) to the fiscal intermediary each year. The hospital Finance Department will know who the fiscal intermediary is for your facility.

38. Application and auditing process
 Step 4: CMS reviews the Medicare Cost Report and sends an initial settlement to the hospital. They are supposed to review the cost report and if they owe the hospital money they pay a tentative settlement (i.e. a portion of that amount).

39. Application and auditing process
 Step 5: CMS payments come biweekly. The hospital receives a letter from the fiscal intermediary annually to indicate how these interim payments are calculated.

40. Application and auditing process
 Step 6: The CMS money received goes into a large hospital pool that is then allocated to the Medicare Program. The Finance Department records and keeps track of these payments.

41. Application and auditing process
 Step 7: After the cost report is submitted, the fiscal intermediary visits the host hospital and conducts an audit of the cost report, including all of the allied health programs filed in the cost report. When the audit is completed, a final determination is made by the fiscal intermediary regarding the amount of money they owe the hospital or what the hospital owes to them.

42. Application and auditing process
 Step 8: If CMS makes a final determination that is unsatisfactory to the hospital there is an appeal process.

43. How is the CMS funding determined?
The total costs directly related to the operation of the fellowship and any indirect overhead costs.
The fellow’s entire salary would be included in the total cost because it is directly related to the program.

44. How is the CMS funding determined?
These costs do not include usual patient care costs that would be present in the absence of the educational activity such as salary costs for supervisors who oversee other clinical activities. If a psychologist has multiple roles including supervisor, clinician, and administrator only the portion of their time that can be directly attributed to the operation of the training program can be claimed.

45. How is the CMS funding determined?
The percentage of Medicare bed days in the hospital influences the percentage of reimbursement
The hospital may receive reasonable cost reimbursement for the clinical training and incremental costs only. The incremental costs would include, but are not limited to, the costs of administrative and clerical support staff that are dedicated to the training program. Overhead costs directly related to maintaining the fellowship program are also allowable.

46. Example
Hospital A has three trainees and four faculty. The trainees salary and benefits cost the hospital $150,000 a year. The four faculty salaries and benefits total $500,000, but on average only 30% of their time is dedicated to the fellowship program (e.g. $150,000). The total overhead costs are $30,000. The incremental costs including an administrative secretary $40,000.

47. Hospital A

48. Example
30% of Hospital A’s total bed days are dedicated to serving patients with Medicare.
In this example, Hospital A qualifies for approximately 30% funding of its total costs and receives $111,000 a year from CMS to support the program.

49. How funds are received?
When the pass through reimbursement is calculated, all of the costs of the allied health programs are combined and paid in one lump sum together.

50. How funds are received? This creates several issues.
1. CMS notices any significant increase in the amount of funds a hospital is requesting (i.e. claiming a new program).
2. The program director will need to educate the hospital regarding the percentage of those funds that should be dedicated to supporting the psychology program.

51. Appeal Process
If CMS makes an adjustment or disallows the costs of a specific program (i.e. does not agree to pay the additional costs) there is a process in place. In the appeal, the host hospital can make a case for why the program is an allied health program and should be funded by pass through dollars. In challenging a CMS decision, a list of reasons is required with detailed documentation supporting your arguments.

52. Closing / Discussion
Will psychology training ever be included in the GME program, especially predoctoral internships?

53. Answer Highly unlikely
This would require the revision of long standing legislation and an act of Congress in an era where health care spending is under ever increasing scrutiny.  
It is more likely that psychology will continue to be viewed by CMS as an allied health discipline.

54. Closing / Discussion
In the authors opinion this issue parallels psychology’s efforts to obtain parity for services, medical staff membership, and hospital privileges. Unfortunately, the majority of psychologists practicing in hospitals today are currently considered allied health staff by their respective institutions.
What more can we do to change this?

55. Answer Seek medical staff membership Participate in medical education
Sit on hospital committees
Round with physician colleagues and educate them with regard to independent practice and credentialing
Promote board certification and higher training standards

56. Discussion/ Question
Historically, psychology has been in a precarious situation when attempting to find sources of revenue to support training programs.
no access to GME funds
CMS Part B funds are not designated for services provided by trainees, including technician codes.  

57. Problem / answer?
**This has effectively created a Catch-22 situation for psychology training programs that are attempting to survive in fiscally challenging times. Currently, only a limited number of programs qualify for CMS funding of trainees, but those ineligible programs that provide services to patients with Medicare cannot or are not supposed to bill for their services because they are trainees.

58. Answer
A change in this policy is highly unlikely and threatens the economic viability of internship and postdoctoral training programs throughout the country.
How is our profession supposed to adequately prepare psychologists in non CMS funded programs when these barriers exist? These issues highlight the importance of obtaining CMS training dollars for more programs in the country.

59. Future directions
More APA accredited, hospital based postdoctoral fellowships would promote multiple agendas in professional psychology.
A few of those potential benefits are listed here although we are sure there are others we have not mentioned.

60. Benefits
The availability of training dollars would promote the expansion of psychology services within hospitals.

61. Benefits
Second, increasing numbers of psychologists familiar with hospital practice would no doubt improve the overall quality of patient care.

62. Benefits
Third, medical staff membership might become more common as psychologists sit on hospital committees and participate in the medical education of physician residents.

63. Benefits
Fourth, funding legitimizes psychology and teaching hospitals would no doubt become more interested in developing psychology training programs that compliment physician residencies.

64. Benefits
Fourth, funding legitimizes psychology and teaching hospitals would no doubt become more interested in developing psychology training programs that compliment physician residencies.

65. Benefits
Fifth, hospital based training programs would naturally encourage parallel training of physicians and psychologists.

66. Benefits
Sixth, CMS funding would allow training programs to more easily absorb the cost of providing services to patients with Medicare and Medicaid while ensuring that the next generation of psychologists are competent and capable in caring for this population.

67. Summary
We need comprehensive, readily available guidelines with regard to obtaining CMS funding.
APPIC should give strong consideration to developing a formal committee or task force to increase awareness and encourage more widespread APA accreditation of postdoctoral programs.

68. Summary
Your Finance Department has the knowledge and expertise required to submit the application.
The psychologists can help them understand the program so that direct and indirect costs can be accurately determined.
If the psychologists do not speak up regarding eligibility for funds no one else will.