1. The A, B, C’s of the CHGME Payment Program From Policy to Payments
U.S. Department of Health and Human Services Health Resources and Services Administration Bureau of Health Professions Division of Medicine and Dentistry Graduate Medical Education Branch 1

2. A Historical Overview of Federal Graduate Medical Education (GME) Funding2

3. America’s Teaching Hospitals
In 1965, with the inception of Medicare, Congress recognized that teaching hospitals enhanced the quality of patient care and offered that the costs of this education should be borne by society. 3

4. Payments for Direct and Indirect Graduate Medical Education
Direct Medical Education (DME) payments cover the direct cost of GME such as stipends and fringe benefits for residents, and salaries and fringe benefits for faculty.
Indirect Medical Education (IME) payments cover expenditures such as the cost of treating more severely ill patients, and processing diagnostic tests because of the training of residents. 4

5. Distribution of Medicare GME Payments
In non-metropolitan counties: 70 out of 2,241 short-term non-federal general hospitals (3.1%) (Slifkin and Dalton 1996)
In metropolitan counties: 1,069 hospitals out of 2,823 (37.9%) 5

6. Patient Care Provided by Freestanding Children’s Hospitals:
Freestanding children’s hospitals represent 1% of all short-term acute care hospitals.
Children hospitalized in the U.S. account for:
39% of all admissions;
49% of all inpatient days; and
59% of all costs, which equates to $10 billion worth of care every year. 6

7. The Children’s Hospitals Graduate Medical Education (CHGME) Payment Program
Addressing the Disparity in Federal GME Funding to Freestanding Children’s Hospitals 7

8. CHGME Payment Program Purpose
The CHGME Payment Program provides funds to children’s hospitals to support the training of pediatric and other residents in GME programs. This program compensates for the disparity in the level of Federal GME funding for teaching hospitals for pediatrics versus other types of hospitals. 8

9. Delegation of Authority
Department of Health and Human Services
Health Resources and Services Administration
Bureau of Health Professions 9

10. The Impact of the CHGME Payment Program on Freestanding Children’s Hospitals in FY 200810

11. CHGME Payment Program Children’s Hospitals Characteristics
In FY 2008:
82 children’s hospitals, nationwide, were potentially eligible(1) to participate in the CHGME Payment Program;
56 children’s hospitals located in 30 states and territories received CHGME Payment Program funding;
On average:
Almost 50% of the patients that children’s teaching hospitals treat are low income;
Freestanding children’s hospitals provided care to 40% of patients enrolled in Medicaid and SCHIP(2) ; and
Freestanding children’s hospitals provided care to 6.46% of uninsured patients.
(1) Hospitals with a 3300 series Medicare Provider Number
(2) * According to American Academy of Pediatrics (2007) 11

12. From Policy to Payments…12

13. Budget Authority
The federal spending process may consist of two sequential steps: authorization and appropriation.
Both the Senate and the House each have authorizing committees and appropriations committees.
First, Bills may be introduced to authorizing committees, which are responsible for recommending programs to be approved, establish program objectives and set appropriation limits.
Next, appropriations committees recommend the actual level of spending that will be allowed for the programs. This is called "budget authority.” 13

14. Authorization
An authorization is an act or a permanent law that may obligate funding for a program or agency. These laws:
establish, continue, or modify federal programs;
are sometimes necessary under House and Senate rules (or under statute) for the Congress to appropriate budget authority for programs;
are effective for one year, a fixed number of years, or an indefinite period and may be reauthorized;
are provided either as definite amounts of money or for "such sums as may be necessary“ (indefinite). 14

15. The CHGME Payment Program’s Statutory Authorization by Fiscal Year (FY)
$280 million
$90 million for DME
$190 million for IME
FY 2001:
$285 million
$95 million for DME
FY 2002 through FY 2005:
Such sums as may be necessary
FY 2007 through FY 2012:
$330 million
$110 million for DME
$220 million for IME 15

16. Appropriation
An appropriation is a provision of federal funds for specified purposes, through an annual appropriations act or a permanent law.
The Congress may extend a program by providing "unauthorized appropriations“, unless expressly prohibited by the underlying law.
Some Federal programs have never received explicit authorizations of appropriations, but receive appropriations because the authority to obligate and spend funds is considered inherent in the original underlying law or act. 16

17. Mandatory Spending
Mandatory (or Direct) spending (budget authority and outlays) is spending controlled by laws other than annual appropriations acts such as funding for most major entitlement programs (e.g. Social Security and Medicare). 17

18. Non-Direct Spending
Discretionary (or non-direct) spending is spending (budget authority and outlays) controlled in annual appropriations acts such as funding for the CHGME Payment Program.
The authorizing committees’ role is to enact laws that provide a basis for operating programs and guidance to the Appropriations Committees. That guidance is usually expressed in terms of an authorization of appropriations (both definite or indefinite). 18

19. FY 2008 Funding Disbursed to Participating Hospitals
In FY 2008, the CHGME Payment Program disbursed more than $288 million to children’s teaching hospitals.
Total Fund Distribution:
DME: $96 million
IME: $192.1 million
Hospital Disbursement (Median):
DME: $1,212,116
IME: $2,103,540 19

20. CHGME Payment Program Governing Rules and Regulations20

21. Regulatory Guidance
Federal Register (FR) is the official daily publication for proposed final rules, and notices issued by Federal agencies and organizations, as well as executive orders and other presidential documents. A notice published in the FR may also be referenced as an Federal Register Notice (FRN).
Code of Federal Regulations (CFR) is the collection and organization of the rules published in the Federal Register. The CFR is written to explain in detail what the laws may not specify or address, such as what procedures are to be followed and descriptions of the special situations which can arise. 21

22. Federal Register Notice
ADVANCE FEDERAL NOTICE
The CHGME Payment Program may publish "Notices of Intent" in the FR to inform the public about an issue under consideration and to encourage additional views.
PROPOSED FEDERAL NOTICE
When a formal proposal is developed, the CHGME Payment Program publishes a “Proposed Notice" in the FR, that gives the timeframe in which written comments may be submitted.
FINAL FEDERAL NOTICE
Ultimately, a "Final Notice" is published, and the notice specifies the date when the new guidance becomes effective.
REGULATORY AGENDA PLAN
The CHGME Payment Program has plans to publish an agenda in the CFR that summarizes policy-significant notices. 22

23. Governing Federal Statutes23

24. Governing Federal Statutes
CHGME Payment Program Specific:
Healthcare Research and Quality Act, 1999 (Public Law , Section 340E of the Public Health Service Act)
The Children’s Health Act, 2000 (Public Law , Title XX)
Amendment to Section 340E of the Public Health Service Act (Public Law )
Children’s Hospital GME Support Reauthorization Act of 2006 (Public Law ) 24

25. Governing Federal Statutes continued.
CHGME Payment Program Related:
Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Public Law ), also known as the Medicare Modernization Act (MMA) of 2003
Section 422, Section 502, Section 713
Social Security Act, Section 1886
42 CFR
42 CFR
42 CFR –
42 CFR 25

26. Federal Register Notices26

27. Federal Register Notices
CHGME Payment Program Specific:
65 FR of June 13, 2000
65 FR of June 19, 2000
66 FR of March 1, 2001
66 FR of July 20, 2001
67 FR of September 25, 2002
67 FR of November 13, 2002
68 FR of October 22, 2003
CHGME Payment Program Related:
63 FR of May 12, 1998 27

28. CHGME Payment Program Eligibility Requirements28

29. Hospital Eligibility Criteria
By statute (P.L ), an eligible children’s hospital must meet the following criteria:
it participates in an approved GME program;
it has a Medicare Provider Agreement;
it is excluded from the Medicare inpatient prospective payment system (PPS) under section 1886(d)(1)(B)(iii) of the Social Security Act, and its accompanying regulations(1); and
it is a “freestanding” hospital.
(1) A hospital with a 3300 series Medicare provider number
would meet this criteria (i.e., ). 29

30. Changes in Hospital Eligibility
A hospital remains eligible for payments as long as it trains residents as a “freestanding” children’s hospital during the FY for which CHGME Payment Program payments are made.
Hospitals which become ineligible for payments:
must notify HRSA immediately of the change in status and the date it became ineligible; and
will be liable for the reimbursement, with interest, of any funds received during the period after it became ineligible. 30

31. Payment Methodology
CHGME Payment Program funding to individual hospitals is based upon a hospital’s: 
rolling average of the weighted resident FTE count for DME payments; and the
rolling average of unweighted resident FTE count for IME payments.  31

32. Approved GME Programs and the Residents they Train32

33. What is an Approved Training Program?
An approved training program means a program that meets one of the following criteria:
is approved by the:
Accreditation Council for Graduate Medical Education (ACGME);
Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association;
Commission on Dental Accreditation of the American Dental Association;
Council of Podiatric Medicine Education of the American Podiatric Medical Association; or 33

34. What is an Approved Training Program continued?
may count towards certification of the resident in a specialty or subspecialty listed in the current edition of the Directory of Graduate Medical Education Programs (published by the American Medical Association) or the Annual Report and Reference Handbook (published by the American Board of Medical Specialties); or
is approved by the ACGME as a fellowship program in geriatric medicine; or
is a program that would be accredited except for the accrediting agency’s reliance upon an accreditation standard that requires an entity to perform an induced abortion or require, provide, or refer for training in the performance of induced abortions, or make arrangements for such training, regardless of whether the standard provides exceptions or exemptions. 34

35. Resident Eligibility Requirements
To be counted, a resident:
must be in an approved training program*; and
be a graduate of an accredited medical school in the U.S. or Canada; or
have passed the United States Medical Licensing Examination (USMLE) Parts I & II (in the case of international medical graduates)
*See 42 CFR (b) 35

36. Accredited Medical Schools in the U.S. or Canada
An accredited U.S. or Canadian medical school is a school that meets the standards necessary for accreditation (and is accredited) by the:
Liaison Committee on Medical Education of the American Medical Association;
American Osteopathic Association;
Commission on Dental Accreditation; or the
Council on Podiatric Medical Education. 36

37. International Medical Graduates (IMGs)
An IMG [also known as a foreign medical graduate (FMG)] is a resident who is not a graduate of a medical, osteopathy, dental, or podiatry school, respectively, accredited or approved as meeting the standards necessary for accreditation by the:
Liaison Committee on Medical Education of the American Medical Association;
American Osteopathic Association;
Commission on Dental Accreditation; or the
Council on Podiatric Medical Education. 37

38. Counting Residents 38

39. Resident Counts
Resident counts are based on the number of residents training at the hospital complex and certain non-hospital/non-provider settings/sites throughout the hospital’s fiscal year.
Residents are counted as full-time equivalents based on the total time necessary to fill a full-time residency slot for the year. 39

40. Resident FTE
A resident FTE is measured in terms of time worked during a residency training year. It is not a measure of individual residents who are working.
If a full-time resident spends all time that is part of the approved training program in the hospital complex or qualified non-hospital site, the resident is counted as 1.0 FTE.
No resident may count as more than 1.0 FTE. 40

41. Partial Resident FTE
A partial resident FTE is a resident who does not spend all (the) time that is part of the approved training program in the hospital complex or qualified non-provider setting. 41

42. When would a resident be counted as a Partial FTE?
A resident will count as a partial FTE based on the proportion of time worked at the children’s hospital and qualified non-provider settings relative to the total time worked in a full-time residency slot if the resident:
is part-time;
rotates to other hospitals as part of the approved training program sponsored by the children’s hospital;
is in a program sponsored by another hospital and spends one or more rotations at the children's hospital;
is on maternity leave;
joins or leaves a program mid-year; or
passes the USMLE mid-year. 42

43. Weighting FTE Residents
Residents are divided into two categories:
those in their initial residency period; and
those beyond their initial residency period. 43

44. Initial Residency Period (IRP)
For allopathic residency programs, the IRP is:
the minimum number of years of formal training required for initial board eligibility in a specialty as specified in the current Directory of Residency Training Programs.
For osteopathy, dentistry, and podiatry programs, the IRP is:
the minimum number of years of formal training necessary to satisfy the requirements of the approving body for those programs. 44

45. Counting Residents Beyond their IRP
Residents who are beyond their IRP, are weighted by a factor of 0.5 (or ½). 45

46. Where are residents counted?
Residents are counted in:
the hospital complex; and in
non-provider settings 46

47. Hospital Complex
The time a resident spends anywhere within the hospital complex* may be included in the resident FTE count for CHGME Payment Program purposes.
*See 42 CFR 47

48. Non-Provider Settings
The time residents spend in non-provider (or non-hospital) settings such as freestanding clinics, nursing homes, and physicians’ offices in connection with approved programs may be included in determining the number of FTE residents in the calculation of a hospital’s resident count if certain conditions are met.
42 CFR 48

49. Research Time
The research conducted must be part of the residency program and the resident must carry out the research in:
the children’s hospital; or
in a non-hospital site where the research involves direct patient care and the compensation for both the residents and the faculty are paid by the children’s hospital. 49

50. Data Sources for Completing the CHGME Payment Program Application
Tying it all together… 50

51. Worth Saying Again…
CHGME Payment Program funding to individual hospitals is based upon a hospital’s: 
rolling average of the weighted resident FTE count for DME payments; and the
rolling average of unweighted resident FTE count for IME payments.  51

52. Rolling Average
The rolling average is the average of the resident FTE counts reported by the hospital for the:
most recently filed Medicare cost report (MCR) [or the most recently completed Medicare cost reporting period];
the previously filed MCR (or the previously completed Medicare cost reporting period); and
the penultimate filed MCR (or the penultimate completed Medicare cost reporting period). 52

53. Rolling Average continued.
The rolling average is based upon the number of:
allopathic and osteopathic residents following application of the “cap”, where applicable; and the
residents in dentistry and podiatry. 53

54. The Cap and Cap Year
The “cap” is the number of unweighted resident FTEs enrolled in a hospital’s allopathic and osteopathic residency programs during the “cap year” (the most recent cost reporting period ending on or before December 31, 1996). 54

55. Which Residency Programs are included in the 1996 cap?
For allopathic and osteopathic residency programs:
The unweighted FTE count in the hospital’s most recent MCR period ending on or before December 31, 1996 is included in the cap.
For dental and podiatric residency programs:
Dental and podiatric residency programs are exempt from the cap, but are included in the FTE counts for all relevant years included in the rolling average. 55

56. Medicare Modernization Act of 2003, Section 422
Impact of Section 422, Redistribution of Unused Resident Positions, on the CHGME Payment Program:
Reduction to 1996 Base Year Cap
Children’s hospitals whose cap has been reduced under §422 of the MMA will report and be paid based on the new and reduced cap “for portions of cost reporting periods occurring on or after July 1, 2005.” The current 1996 cap will be used for prior MCR periods.
Increase to 1996 Base Year Cap
Effective for portions of cost reporting periods and discharges occurring on or after July 1, 2005, the CHGME PP will not include resident FTEs counted against the §422 cap in the 3-year rolling average calculation for purposes of DME and IME payments. 56

57. Establishing and Adjusting a Hospital’s Cap
Hospitals that were not in existence for the most recent cost reporting period ending on or before December 31, 1996 do not have a cap and are, therefore, limited or “capped” to a resident FTE count of zero “0”. Hence, hospitals must obtain (or adjust) their cap in order to receive CHGME Payment Program funding. 57

58. Establishing and Adjusting a Hospital’s Cap continued.
To provide an adjustment to a cap, the CHGME Payment Program will allow hospitals to add resident FTEs to their cap based on the following Medicare and CHGME Payment Program regulations:
the formation of a new residency program within the first 3 years after the first program in a hospital begins training residents as described in 42 CFR (e)*; or
the execution of an affiliation agreement for an aggregate cap. 58

59. Medicare GME Affiliation Agreement (for Aggregate Cap)
Adjustments to the cap can be accomplished through an affiliation agreement in accordance with the CMS May 12, 1998 FRN (63 FR 26338).
The effective date and length of the affiliation agreement for an aggregated cap must be clearly documented in the agreement.
The affiliation agreement must be filed with all necessary CMS FIs on or before (the) June 30th that precedes the CHGME Payment Program initial application deadline.
Example:
If the CHGME Payment Program initial application deadline is August 1, The affiliation agreement must be filed on or before June 30, 2009. 59

60. Data Sources for Hospitals that File Full MCRs
Hospitals that file a full MCR (report residents on CMS 2552 Worksheet E-3, Part IV and Part VI, where applicable) must use the data as reflected in:
the most recently filed MCR for the period ending on or before December 31, 1996 (“cap year”);
the most recently filed MCR;
the previously filed MCR; and
the penultimate filed MCR. 60

61. Data Sources for Hospitals that File Low/No-Utilization MCRs
Hospitals that file low or no-utilization MCRs (do not report residents to Medicare on CMS 2552, Worksheet E-3, Part IV), must use the data as reflected in their hospital records for:
the most recently completed MCR period ending on or before December 31, 1996 (“cap year”);
the most recently completed MCR period;
the previously completed MCR period; and
the penultimate MCR period. 61

62. Hospitals that Have Not Completed 3 MCR Periods
If a hospital has completed at least one (1), but not more than two (2) full Medicare cost reporting periods, CHGME Payment Program funding to the children’s hospital will be based upon data from the hospital’s “most recently filed” or “most recently completed” Medicare cost reporting period until three (3) full Medicare cost reporting periods have been completed. 62

63. Hospitals that Have Not Completed a Full MCR Period
Hospitals that are eligible to receive CHGME Payment Program funding without having completed a full Medicare cost reporting period will report to the CHGME Payment Program their resident FTE counts and other related hospital financial data based on the data available for the following period: from the date it became eligible to participate in the CHGME Payment Program to the CHGME Payment Program application
deadline (66 FR 37980). 63

64. Calculating Resident FTEs for an Incomplete MCR Period
A hospital that has not completed a full MCR period, but is eligible to begin receiving CHGME Payment Program funding without having completed a full Medicare cost reporting period, will use the methodology described in the July 20, 2001 FRN (66 FR 37980) to convert a partial cost reporting period resident FTE count to a full cost reporting period resident FTE count based upon its period of eligibility. 64

65. How to Apply for CHGME Payment Program Funding…
From Regulation to Application 65

66. Application Cycle
For hospitals to be considered for inclusion in the CHGME Payment Program, they must comply with statutory eligibility requirements and participate in the CHGME Payment Program’s application cycle, which consists of specific processes for any given FY. These processes are guided by the CHGME Payment Program’s statutes. 66

67. FY 2010 Application Cycle Initial application and payments (1):
Application forms available: July 1, 2009
Application deadline: August 1, 2009
Payments: Beginning on or about October, 2009 (2):
Resident FTE Assessment Process (1):
October 1, 2009 through March 1, 2010
Reconciliation application and payments (1):
Application forms available: April 1, 2010
Application deadline: May 1, 2010
Payments: Beginning on or about July 2010(3)
Dates are subject to change.
Payments contingent upon availability of funds.
These payments are adjusted based upon the Resident FTE Assessment process and the reconciliation applications. 67

68. Initial Application Process
For children’s hospitals meeting all statutory and eligibility requirements, to receive CHGME Payment Program funding, they must submit a completed initial application in accordance with the established deadlines.
Upon receipt by the CHGME Payment Program, the hospital’s initial application undergoes an extensive review and subsequent Resident FTE Assessment (audit) to ensure that the hospital has completed all applicable forms in accordance with all governing rules, regulations, instructions and guidance. 68

69. What forms and supporting documentation do I need?
The following forms and documentation are needed:
HRSA 99: Hospital Demographic and Contact Information (aka “Face Page”)
HRSA 99-1: Determination of Weighted and Unweighted Resident FTE Counts (aka “FTE Form”)
HRSA 99-2: Determination of Indirect Medical Education Data Related to the Teaching of Residents (aka “IME Form”)
HRSA 99-3: Hospital Certification
HRSA 99-4: Government Performance and Results Act Tables (aka “GPRA Tables”) reconciliation only
HRSA 99-5: Application Checklist
Documentation in Support of Data Reported in the above forms 69

70. Application Cover Letter, Forms, and Instructions70

71. HRSA 99: Hospital Demographic and Contact Information (aka “Face Page”) 71

72. HRSA 99-1: Determination of Weighted and Unweighted Resident FTE Counts (aka “FTE Form”)72

73. Accuracy of Resident Counts
Hospitals are responsible for the accuracy of the resident counts submitted to HRSA and are subject to audit.
Hospitals are not required to submit documentation to support resident counts reported on their CHGME Payment Program application. However, hospitals should be prepared to produce documentation in accordance with 42 CFR (d) in any subsequent audit carried out by the Department. Hospitals that do not report resident FTE counts to Medicare are not exempt from this policy. 73

74. Certification of Supporting Documentation
The information (documentation in support of residents included in the FTE count for a particular cost reporting period) must be certified by an official of the hospital and, if different, an official responsible for administering the residency program.
42 CFR (d) 74

75. Availability of Supporting Documentation
Documentation must be readily available and retained by the individual identified in HRSA 99 section 5 at the time the initial application for funding is forwarded to the CHGME Payment Program for consideration. This individual should be able to forward this information to the CHGME Payment Program or CHGME FI upon request. 75

76. HRSA 99-2: Determination of Indirect Medical Education Data Related to the Teaching of Residents (aka “IME Form”) 76

77. Calculating IME Data for an Incomplete MCR Period
A hospital that has not completed a full MCR period, but is eligible to begin receiving CHGME Payment Program funding without having completed a full Medicare cost reporting period, will use the methodology described in the July 20, 2001 FRN (66 FR 37980) to calculate the case mix index, number of discharges, bed count, and inpatient days based upon its period of eligibility. 77

78. Calculating Inpatient Days
The number of inpatient days for the current MCR period is equivalent to the sum of the entire midnight census counts including nursery days for the MCR period reported on line 1.01 on the HRSA 99-2.
This value must be taken to two decimal points (i.e., 38.34). 78

79. Calculating Inpatient Discharges
The number of inpatient discharges for the current MCR period is equivalent to the sum of all inpatient discharges including healthy newborns for the MCR period reported on line 1.01 of the HRSA 99-2.
This value must be taken to two decimal points (i.e., 38.34). 79

80. Calculating Case Mix Index
The Case Mix Index (CMI) for the current MCR period is equivalent to the sum of the diagnosis-related group (DRG) weights for all discharges during the MCR period identified on line 1.01 of the HRSA 99-2 divided by the number of discharges.
All hospitals must submit a CMI on all patient discharges using the appropriate CMS DRG version, excluding healthy newborns.
This value must be taken to four decimal points (i.e., ). 80

81. Intern/Resident to Bed Ratio
To comply as closely as possible with Medicare rules and regulations, the Department applies a cap on the Intern/Resident to Bed (IRB) ratio, similar to the cap applied by CMS pursuant to regulations at 42 CFR (a)(1). 81

82. IRB Ratio and Cap
The IRB ratio for the current MCR period is equal to the 3-year unweighted FTE rolling average divided by the bed count.
Per 42 CFR (a)(1), the current IRB ratio may not exceed (is capped at) the ratio for the hospital’s most recent prior cost reporting period. 82

83. Determining and Applying the IRB Ratio
Calculate the relevant FY IRBs:
Calculate the IRB for the current MCR period (based on 3-year rolling average).
Calculate the IRB for the previous MCR period.
Compare the two IRBs (The IRB “cap” is the lower of the two numbers). 83

84. IRB Ratio Calculation Example
Data from the current MCR period (i.e., most recently filed MCR or most recently completed MCR period):
The unweighted FTE rolling average was 78.
The bed count was 153.
The current MCR period IRB is [78/153]
Data from the previous MCR period:
The unweighted FTE count for the prior MCR period was 73.
The bed count was 138.
The prior MCR period IRB is [73/138]
The IRB “cap” would be (the lesser of the two). 84

85. Exceptions and Adjustments to the IRB Cap
An IRB cap adjustment is made for hospitals that have increases in their (1) Medicare GME Affiliation Agreement cap, (2) add-ons due to exceptions, and (3) resident FTE count in their current year’s MCR. 85

86. Exceptions and Adjustments to the IRB Cap continued.
To determine if an adjustment must be made to the IRB cap, three (3) questions must be asked and answered:
Did the hospital’s Medicare GME affiliation agreement cap increase?
Did the hospital’s resident FTE count increase?
If the hospital’s resident FTE count did not increase, has the hospital been training above its cap? 86

87. Exceptions and Adjustments to the IRB Cap continued.
Q1: Did the hospital’s Medicare GME affiliation agreement cap increase?
To answer this question, check the hospital’s current MCR year Medicare GME affiliation agreement and compare it to the prior MCR year Medicare GME affiliation agreement cap.
If the current Medicare GME affiliation agreement cap has not increased, no adjustment is made.
If the current Medicare GME affiliation agreement cap is higher, proceed to Step 2. 87

88. Exceptions and Adjustments to the IRB Cap continued.
Q2: Did the hospital’s resident FTE count increase?
To answer this question, check whether the current MCR year FTE count increased?
If the current MCR year increased:
Determine the incremented increase in the current MCR year’s FTE count relative to the prior year’s FTE count.
Add that amount to the numerator of the prior year’s IRB ratio, but not to exceed the amount by which the Medicare GME affiliation agreement cap increased in the current year.
If the current MCR year did not increase:
Proceed to question 3. 88

89. Exceptions and Adjustments to the IRB Cap continued.
Q3: Has the hospital been training above its cap?
If the hospital has been training above its Medicare GME affiliation agreement cap, calculate the number of additional slots in the current MCR year Medicare GME affiliation agreement cap and add that number to the prior MCR year FTE count.
If the hospital has not been training over its Medicare GME affiliation agreement cap, no adjustment is made. 89

90. HRSA 99-3: Hospital Certification90

91. HRSA 99-4: Government Performance and Results Act Tables (aka “GPRA Tables”)91

92. Government Performance and Results Act (GPRA) of 1993
The CHGME Payment Program is subject to the GPRA of 1993.
The Act provides Congress with the information necessary to determine the success of government programs. Measures evaluated include effectiveness, efficiency and continuous improvement. 92

93. Current Performance Measures
Maintain the number of FTE residents participating:
in and rotating into an approved residency program sponsored by the program eligible children's teaching hospitals and other institutions (On-site Training).
in an approved residency program sponsored by the program eligible children's teaching hospitals who rotate to other sites (Off-site Training).
Monitor the:
proportion of hospital's gross revenue from patient care attributed to public insurance (Medicaid, Medicare, SCHIP), and uninsured patients.
percentage of hospitals funded by the program with negative total margins.
hospital allowable operating expenses. 93

94. HRSA 99-5: Application Checklist94

95. Availability and Certification of Supporting Documentation95

96. Availability of Supporting Documentation
Documentation must be readily available and retained by the individual identified in HRSA 99 section 5 at the time the initial application for funding is forwarded to the CHGME Payment Program for consideration. This individual should be able to forward this information to the CHGME Payment Program or CHGME FI upon request. 96

97. FY 2010 Application Cycle Initial application and payments (1):
Application forms available: July 1, 2009
Application deadline: August 1, 2009
Payments: Beginning on or about October, 2009 (2):
Resident Full Time Equivalent (FTE) Assessment Process (1):
October 1, 2009 through March 1, 2010
Reconciliation application and payments (1):
Application forms available: April 1, 2010
Application deadline: May 1, 2010
Payments: Beginning on or about July 2010 (3)
Dates are subject to change.
Payments contingent upon availability of funds.
These payments are adjusted based upon the Resident FTE Assessment process and the reconciliation applications. 97

98. Statutory Payment Requirements
The Secretary will:
Determine the amount to be paid for DME and IME before the beginning of each FY.
Withhold up to 25% from each installment payment for both DME and IME to ensure that a hospital will not be overpaid on an interim basis.
Distribute funds withheld prior to the end of the FY. 98

99. FY 2010 Application Cycle Initial application and payments (1):
Application forms available: July 1, 2009
Application deadline: August 1, 2009
Payments: Beginning on or about October, 2009 (2):
Resident Full Time Equivalent (FTE) Assessment Process (1):
October 1, 2009 through March 1, 2010
Reconciliation application and payments (1):
Application forms available: April 1, 2010
Application deadline: May 1, 2010
Payments: Beginning on or about July 2010 (3)
Dates are subject to change.
Payments contingent upon availability of funds.
These payments are adjusted based upon the Resident FTE Assessment process and the reconciliation applications. 99

100. Overview of the Resident FTE Assessment Program
100

101. Resident FTE Assessment Program
The Resident FTE Assessment Program requires that participating children’s hospitals comply with requests from the CHGME FIs, within the time constraints provided, as any changes to resident FTE counts in one children’s hospital’s application for CHGME Payment Program funding affect the distribution of dollars among all eligible children’s hospitals.
CHGME FIs, also known as auditors, use and build upon work previously conducted by CHGME and/or Medicare FIs in prior years.
101

102. FY 2010 Application Cycle Initial application and payments (1):
Application forms available: July 1, 2009
Application deadline: August 1, 2009
Payments: Beginning on or about October, 2009 (2):
Resident Full Time Equivalent (FTE) Assessment Process (1):
October 1, 2009 through March 1, 2010
Reconciliation application and payments (1):
Application forms available: April 1, 2010
Application deadline: May 1, 2010
Payments: Beginning on or about July 2010 (3)
Dates are subject to change.
Payments contingent upon availability of funds.
These payments are adjusted based upon the Resident FTE Assessment process and the reconciliation applications.
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103. Reconciliation Application Process
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104. Reconciliation Application
For children’s hospitals to continue receiving CHGME Payment Program funding:
they must complete and submit a reconciliation application in accordance with established deadlines;
the resident FTE counts reported by children’s hospitals in their reconciliation applications must be for the same MCR period(s) identified in the hospital’s initial application for the subject FY and consistent with those reported in the CHGME FIs final Resident FTE Assessment Report to be accepted by the CHGME Payment Program;
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105. What forms and supporting documentation do I need?
The following forms and documentation are needed:
HRSA 99: Hospital Demographic and Contact Information (aka “Face Page”)
HRSA 99-1: Determination of Weighted and Unweighted Resident FTE Counts (aka “FTE Form”)
HRSA 99-2: Determination of Indirect Medical Education Data Related to the Teaching of Residents (aka “IME Form”)
HRSA 99-3: Hospital Certification
HRSA 99-4: Government Performance and Results Act Tables (aka “GPRA Tables”) reconciliation only
HRSA 99-5: Application Checklist
Documentation in Support of Data Reported in the above forms (MCRs and CHGME FI report at reconciliation)
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106. Hospitals that Used Data From an Incomplete MCR at the Time of the Initial Application Cycle
At the time of the reconciliation application if a hospital has filed an MCR by the CHGME Payment Program reconciliation application deadline, the hospital will report the “actual” resident FTE count, CMI, discharges, bed count, and inpatient days data from that MCR period.
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107. Hospitals that Used Data from an Incomplete MCR at the Time of the Initial Application Cycle
At the time of the reconciliation application if a hospital has not filed an MCR by the CHGME Payment Program reconciliation application deadline, the hospital will use the methodology described in the July 20, 2001 FRN, with an appropriate adjustment to the timeframe (beginning of the FY for which payments are made to the CHGME Payment Program reconciliation application deadline date) to determine and report its revised resident FTE count, CMI, discharges, bed count, and inpatient days.
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108. Submitting an application for CHGME PP funding
An application for CHGME Payment Program funding should include the following completed and signed, where applicable, forms and documents:
HRSA 99
HRSA 99-1
HRSA 99-2
HRSA 99-3
HRSA 99-4 (submit at reconciliation only)
HRSA 99-5
Documentation in Support of Data Reported in the above forms (i.e., Worksheet E-3, Part IV for each MCR period reflected in the HRSA 99-1)
One (1) complete copy of the application package, including cover letter and other supporting documentation.
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109. Reconciliation and Recoupment of Funding
The Secretary will:
Determine any changes to the numbers of residents reported by the hospital in its application for DME and IME payments.
Pay any balance due, or recoup any overpayment made to or from each hospital.
Include in the reconciliation, funds that are returned to the Department during a FY by the termination of a hospital from the CHGME Payment Program.
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110. From Application to Calculation
Coming Full Circle
From Application to Calculation
110

111. Payment Process Flowchart
111

112. Calculating Payments
112

113. Direct Medical Education Methodology and Payment Calculation
113

114. Total $$ for DME According to statute:
1/3 of total dollars are allocated to DME
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115. DME Payments
Payments to a children’s hospital for the DME expenses for a fiscal year is a function of:
the updated per resident amount as determined under subsection (c)(2) of 340E; and
the average number of FTE residents in the hospital’s approved graduate medical residency program as determined under section 1886(h)(2) of the Social Security Act
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116. Data Needed for Calculation of DME Payment to Hospital:
National per resident amount
Three years Rolling average of weighted residents FTEs
Weighted residents FTEs claimed against §422 of the MMA (“new cap”)
Hospital specific wage index (WI)
Labor related share
Non-labor related share
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117. DME Formula DME Payi = ZDME*
X*(WFTE1996capi+WFTE§422capi)*(LBRS*WIi+NLBRS)
X*(WFTE1996capi+WFTE§422capi))*(LBRS*WIi+NLBRS)
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118. DME Formula Where: DME Payi -- Direct GME payment to hospital “i”
ZDME Total funds available for direct GME payments
X National average per resident amount
WFTE1996capi Weighted number of FTE residents subject to the cap
WFTE§422capi Weighted number of FTE residents subject to the §422 of the MMA
WI CMS Wage index (for the county in which the hospital is located)
LBRS Labor related share (0.697)
NLBRS Non-labor related share (0.303)
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119. Payment Calculation for DME
Calculate the relative DME value for the individual hospital;
Sum the relative values across all hospitals;
Compute the hospital’s share of DME funds by dividing each hospital’s relative value by the sum of all relative values; and
Multiply the hospital’s share by the total DME payment pool.
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120. DME Case Presentation
The total $$ amount available for disbursement to children’s hospitals is $15 million.
1/3 of total funds, or $5 million, are allocated for DME payments to all eligible children’s hospitals.
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121. Data Reported by Children’s Hospitals
Weighted Resident FTE Rolling Average “1996 cap”
Weighted Resident FTE Added due to §422 of MMA
Wage Index
Charlie’s Angels Children’s Center
92.19
0.00
0.9310
Shirley Temple Children’s Hospital
71.5
5.60
1.1969
Good Times Children’s Center
25.5
12.62
0.4621
City of Angels Children’s Center
6.5
1.5521
Total
195.69
18.22
n/a
121

122. Computing Charlie’s Angels Children’s Center ‘s Relative Value
(WFTE1996capi +WFTE§422capi)* (0.697*WIi+0.303) =
( ) * (0.697* )
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123. DME Relative Value for Eligible Children’s Hospitals
Charlie’s Angels Children’s Center
Shirley Temple Children’s Hospital
Good Times Children’s Center
City of Angels Children’s Center
Total
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124. Computing Charlie’s Angels Children’s Center’s Share
Hospital’s Relative Value
Sum of All Hospitals’ Relative Values = /
124

125. Eligible Children’s Hospitals Share of DME
Relative Value
Hospital Share of DME
Charlie’s Angels Children’s Center
Shirley Temple Children’s Hospital
Good Times Children’s Center
City of Angels Children’s Center
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126. Hospital’s share of DME* Total DME pool
Hospital DME Payout
Hospital’s share of DME* Total DME pool =
* 5,000,000
$2,106,822.81
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127. DME Payout for Eligible Children’s Hospitals
Relative Value
Hospital Share of DME
DME Payout
Charlie’s Angels Children’s Center
$2,106,822.81
Shirley Temple Children’s Hospital
$2,105,018.48
Good Times Children’s Center
$572,058.89
City of Angels Children’s Center
$216,099.81
Total
n/a
$5,000,000
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128. Indirect Medical Education Methodology and Payment Calculations
128

129. Total $$ for IME According to statute:
2/3 of total dollars are allocated to IME
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130. IME Payments CHGME Payment Program statute:
requires that the Secretary make payments for IME to children’s hospitals operating approved GME programs.
describes IME payments as covering expenses associated with treatment of severely ill patients and the additional costs relating to teaching residents in such programs.
considers variation in case mix and number of FTE residents in approved training programs.
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131. Data Needed for Calculation of IME Payment to Hospital:
NoD - Number of inpatient discharges
CMI - Case mix index (For FY2010 CHGME Payment Program funding, hospitals must use CMS DRG Version 25 with the appropriate CMS Version 25 weights reported to the ten-thousandth decimal place.*)
WI - Hospital specific wage index, labor and non labor related shares
Rolling average of unweighted resident FTEs subject to the 1996 cap
Number of unweighted of resident FTEs subject to §422 of the MMA cap
Number of inpatient beds in the hospital complex
IRB – Intern and resident-to-bed ratio
* This is updated annually by the CHGME Payment Program.
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132. IME Payi = ZIME * NoDi*CMIi*(WIi*0.697+0.303)*Adjusti
IME Formula (1)
IME Payi = ZIME * NoDi*CMIi*(WIi* )*Adjusti n
 NoDi*CMIi*(WIi* )*Adjusti
i=1
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133. IME Formula (2) Where: Adjusti ={1.35*[(1+IRB1996capi) ^0.405 -1]} +
{0.66*[(1+IRB§422MMA)^ ]}
And,
The IRB is the intern and resident-to bed ratio
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134. Medicare Modernization Act of 2003, Section 502
Section 502 of the MMA of 2003 modified the formula multiplier (teaching intensity factor) to be used in the calculation of the IME adjustment.  Prior to passage of the MMA, the formula multiplier for the IME adjustment was fixed at 1.35 for FY 2003 and thereafter. The new legislation modifies the formula multiplier mid-way through FY 2004 and provides for a new schedule of formula multipliers for FYs 2005 and thereafter, as follows:
For discharges occurring on or after April 1, 2004, and before October 1, 2004 —1.47;
For discharges occurring during FY 2006—1.37;
For discharges occurring during FY 2007—1.32; and
For discharges occurring on or after October 1, 2008—1.35.
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135. MMA 2003, Section 502 Medicare vs. CHGME Payment Program
Application of the teaching intensity factor for Medicare purposes:
Example:
A hospital applies for and receives Medicare funding based on its 12/31/2000 fiscal year end (FYE).  In accordance with Medicare regulations, IME payments for this hospital would be calculated based on two different teaching intensity factors because its discharge data for this FYE crosses FYs.  For discharges that occurred during FY 2000 (October 1, 1999 through September 30, 2000) the hospital would use a factor of 1.47 and for discharges that occurred during FY 2001 (October 1, 2000 through September 30, 2001) the hospital would use a factor of    
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136. MMA 2003, Section 502 Medicare vs. CHGME Payment Program
Application of the teaching intensity factor for CHGME Payment Program purposes:
CHGME Payment Program:
If the same hospital applies for and receives CHGME Payment Program funding based on its 12/31/2000 FYE, in accordance with CHGME Payment Program regulations, IME payments for this hospital would be calculated based on the FY in which payments (to the hospital) will be made.  If the hospital applied for FY 2002 CHGME Payment Program funding (to be paid out from October 1, 2001 through September 30, 2002) the IME payments for that hospital would be calculated based upon the FY 2002 teaching intensity factor (1.35) irrespective of the hospital’s patient discharge data.
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137. CHGME Payment Program Implementation of MMA 2003, Section 502
After evaluating the impact of Section 502 of the MMA of 2003 on CHGME Payment Program IME payments, the CHGME Payment Program:
For FY 2004:
Calculated an average of the two multipliers and then applied this average to children’s hospitals receiving FY 2004 CHGME Payment Program funding.    The average was calculated as follows:  [6 months (October 1, 2003 – March 31, 2004) x months (April 1, 2004 – September 30, 2004) x 1.47] / 12 months = 1.41.
For FY 2005 and beyond:
Will replace the multiplier currently reflected in the IME payment formula in the database with the multiplier identified for the FY in which payments will be made (e.g., FY 2010 IME payments will be calculated using the multiplier associated with discharges for that year which is 1.35).
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138. Payment Calculation for IME
Calculate the relative IME value for the individual hospital;
Sum the relative values across all hospitals;
Compute the hospital’s share of IME funds by dividing each hospital’s relative value by the sum of all relative values; and
Multiply each hospital’s relative value by the total IME pool.
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139. IME Case Presentation
The total $$ amount available for disbursement to children’s hospitals is $15 million.
2/3 of total funds, or $10 million, are allocated for IME payments to all eligible children’s hospitals.
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140. Data Reported By Children’s Hospitals
Number of Discharges
CMI
Wage
Index
# of Beds
UNWGT FTE Rolling Average (1996 cap)
Added UNWGTFTEs (§422 of MMA)
Charlie’s Angels Children’s Center
17,434
1.71
0.9310
225
107.00
0.00
Shirley Temple Children’s Hospital
9,543
1.50
1.1969
314
73.60
7.00
Good Times Children’s Center
360
0.71
0.4621 79
30.20
15.00
City of Angels Children’s Center
6,604
1.05
1.5521
120
10.50
140

141. Computing Charlie’s Angels Children’s Center’s “Adjusti”
Adjut1 = 1.35*{[1+107/225] ^ } +
0.66*{[1+0/225] ^0.405 – 1} =
141

142. Computing Charlie’s Angels Children’s Center’s Relative Value=
17,434*1.71*(0.697* )*
142

143. IME Relative Value for Eligible Children’s Hospitals
Charlie’s Angels Children’s Center
Shirley Temple Children’s Hospital
Good Times Children’s Center
City of Angels Children’s Center
Total
143

144. Computing Charlie’s Angels Children’s Center’s Share
Hospital’s Relative Value
Sum of All Hospitals’ Relative Values = /
144

145. Eligible Children’s Hospitals Share of IME
Relative Value
Hospital Share of IME
Charlie’s Angels Children’s Center
Shirley Temple Children’s Hospital
Good Times Children’s Center
City of Angels Children’s Center
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146. Hospital’s share of IME * Total IME pool
Hospital IME Payout
Hospital’s share of IME * Total IME pool =
* 10,000,000
$7,202,919.66
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147. IME Payout for Eligible Children’s Hospitals
Relative Value
Hospital IME Share
IME Payout
Charlie’s Angels Children’s Center
$7,202,919.66
Shirley Temple Children’s Hospital
$2,261,774.51
Good Times Children’s Center
41,766.56
City of Angels Children’s Center
493,539.26
Total
n/a
10,000,000
147

148. DME & IME Payouts for Children’s Hospitals
DME Payout
IME Payout
Charlie’s Angels Children’s Center
$2,106,822.81
$7,202,919.66
Shirley Temple Children’s Hospital
$2,105,018.48
$2,261,774.51
Good Times Children’s Center
$572,058.89
41,766.56
City of Angels Children’s Center
$216,099.81
493,539.26
Total
$5,000,000
10,000,000
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149. Notifying Hospitals of Payments and Overpayments Requiring Recoupment
If the CHGME Payment Program determines that a hospital has been overpaid, the hospital will be notified, in writing, of the overpayment and provided procedures for returning the overpayment to the Department. The hospital will have 30 days to return the overpayment. Overpayments returned to the Department within the 30-day period will be returned to the CHGME Payment Program for disbursement to the other participating children’s hospitals. Hospitals that do not return overpayments to the Department within the specified time will accrue interest. In addition, the Department of the Treasury may offset other Federal payments due to the participating children’s hospital until the overpayment is recouped in full.
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150. Other Laws Applicable to the CHGME Payment Program
Legal Implications of Application
Record Retention and Access
Audit
Suspension, Termination and Withholding of Support
Fraud, Waste and Abuse
Economic and Regulatory Impact
Upon request, hospitals must be prepared to present any and all documents in support of
their CHGME Payment Program application.
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151. Looking Ahead
Success Stories Associated with CHGME Payment Program Funding
CHGME Payment Program Web site (
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152. That’s All Folks!
152

153. For questions, please contact…
HHS/HRSA/BHPr/DMD/GMEB
Parklawn Building
5600 Fishers Lane Room 9A-05
Rockville, MD 20857
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