Optimizing GME Pass Through Reimbursement for Residency Training Programs - PowerPoint Presentation

1. Optimizing GME Pass Through Reimbursement for Residency Training ProgramsThomas W. Woller, M.S., FASHPSenior Vice President, Pharmacy ServicesAurora Health CareMilwaukee, Wisconsin

2. DisclaimerASHP and Mr. Woller provide general information on the subject matter of GME pass-through funding mechanics.This information is not meant to substitute for your own research into applicability to obtain GME pass-through funding at your organization, a thorough review of direct and indirect costs associated with GME pass- through funding, or a discussion with your finance office.

3. Overview of PresentationProgram justificationNon-CMS funding sourcesMedicare pass through basicsMedicare pass through rulesPass through exampleAreas for optimizationPotholes and auditsScenarios

4. Residency Programs JustificationCMS GME reimbursementDirect and indirectNon-CMS funding sourcesStaffingProjects/servicesQualitative benefitsEnhance overall teachingChallenge staff to excelRecruitment advantage

5. Non-CMS Sources of Residency FundingStates (historically Texas, Minnesota)VA HospitalsColleges of PharmacyPharmaceutical IndustryHospitals and Health SystemsNote that PGY-2 programs are not eligible for pass-through fundingDepartment of DefenseASHP Foundation, NACDS, other organizationsOthers

6. Other Contributions by ResidentsProjects to improve quality of careNew servicesProvision of patient careParticipation in the teaching of Pharm.D. studentsCost reduction strategiesLearning environmentRecruitmentStaffing

7. Staffing Contributions of Residents6 residents in the example 2 shifts every other weekend (1.2 FTE)Not quite 1.2 FTE due to trainingReplace pharmacists on the schedulePharmacist average salary $120,000 + FB (30%)Value of resident staffing = $187,200Careful with this justification; finance might want to reduce your RPh allotment correspondingly

8. Medicare cost report basicsAll Medicare certified hospitals are required to file a cost report annually Filed with a fiscal intermediary or Medicare Administrative Contractor (MAC)History of cost reports adds to confusionIntended to define allowable costs and the “share” of those costs to be covered by the federal governmentSubject to review and audit by MACIn contemporary terms, most reimbursement by Medicare is determined through means other than the cost report; Direct Medical Education remains as an element determined through the cost report

9. Medicare funding of pharmacy residenciesDirect costs of medical education are excluded from operating costs under PPS and other payment provisionsReimbursement is on a reasonable cost basisCOBRA 1986 changed Medicare payment for medical, dental, osteopathic and podiatry residencies; Not pharmacy and other paramedical programsPastoral care, ultrasound, rad tech, etc.Indirect costs are also reimbursed; roughly 30% but varies based on number of medical residents/interns

10. CMS Reimbursement-basic requirementsApproved educational program-- PGY-1 programs onlyAccreditation by ASHP Based on percentage of inpatient Medicare pharmacy revenueRetroactive reimbursement is possible (with caution)CMS cost report filed for the fiscal year in questionCost report is the tool used for the reimbursementDirect and indirect costs includedIncludes provision for Medicare Plus Choice patientsEntity filing cost report must be the operator of the programAugust 1, 1998 AJHP

11. Definition of approved educational activitiesNursing or allied health programFormally organized and planned program of studyOperated by provider submitting cost reportEnhance the quality of inpatient care at the providerLicensed (if applicable) or accredited by the recognized national professional organization for the particular activity.ASHP is specifically listed as the organization for pharmacy42CFR §413.85

12. Operator of the ProgramDirectly incur the training costsHave direct control over the “curriculum”Have direct control over the administration of the programEmploy the teaching/training staffProvide classroom instruction (where required) and clinical training* 42CFR §413.85(f)

13. “Absent evidence to the contrary, the provider that issues the degree, diploma, or other certificate upon successful completion of an approved education program is assumed to meet all of the criteria set forth in paragraph (F)(1) of this section and to be the operator of the program”42CFR §413.85(f)

14. Eligible Costs for Medicare ReimbursementResident salaries and fringe benefitsAccreditation feesPreceptor salaries and fringe benefitsTravel by residentCosts for recruitmentDues, subscriptions, books, other materialsSubtract out payments, if any

15. Medicare Pass Through Example711 bed community teaching hospital6 residentsMedicare accounts for 50% of inpatient pharmacy revenueJustification of program requested by VPDirect GME, indirect GME and other

16. Direct Expenses – Preceptor and Resident SalariesTitleHrs/year% of FTESalary/FTETotal DollarsDirector31215%$ 160,000$ 24,000Manager, Clinical Svs31215%$ 130,000$ 19,500Clinical Specialist3774180%$ 120,000$ 216,000Sub-Total $ 259,500Fringe Benefits (30%)$ 77,850Total Preceptor Salary/Benefits$ 337,350Resident Salary$ 390,000(6 residents @ $50,000/yr plus 30% for fringes)

17. Direct ExpensesPreceptor salaries/fringes$ 337,350Resident Salaries/fringes$ 390,000Other direct expenses$ 24,000Total Direct Expenses$ 751,350Medicare percentage (inpatient pharmacy revenue) X 0.50Total Direct Reimbursement$ 375,675

18. Indirect ReimbursementApproximately 30% of direct reimbursementDirect reimbursement is $375,675Indirect reimbursement is $112,703

19. New ExpensesResident salaries & benefits$ 390,000Other expenses$ 24,000Total New Expenses$ 414,000

20. Overview of Financial Justification – 6 ResidentsNew expenses$ 414,000Reimbursement - Direct$ 375,675 - Indirect$ 112,703 - Staffing $ 187,200New income$ 484,119$ 675,578Net$ 261,578

21. ROI CalculationNew income (return) = $675,578New expenses (investment) = $414,000ROI = 1.63 Return is annual

22. Opportunities for OptimizationResidency related travelPreceptor, RPD, residentsSupplies, books, services, fees, duesRecruitmentTravel, materials, lodging, meals, timePreceptor timeTraining, prep time, fringes, interviewingAccreditation fees and expensesIt’s who pays the bill that mattersConsider impact on college and contractual relationships as an opportunity for optimization

23. Potholes and auditsCosts incurred by non-hospital entitiesOff-site learning experiencesPreceptor who are not employed by the entity (watch control)Internal understanding of nuances of pass-throughMedical vs. Pharmacy residentsNot for students, fellows, other training programsStatus of cost report; single vs. multi-siteRoll-up of cost centers in cost reportPoor documentation and operator statusTime studiesWording on accreditation certificateAuditors

24. Audit experiencesRequest for detail on time reporting, costs, accreditation letter, certificates, “allowable number of residents”, schedules, program curriculum, contractsInclusion of community program, PGY-2, other non-qualified programsInclusion of time spent on off-site experiencesMany instances of challenge of “control”Look back is long, sometimes more than a decade; keep recordsCoordinated through reimbursement leads at the hospital; varying degrees of involvement of pharmacy staff

25. Nursing & Allied ChecklistPlease indicate the name of the nursing or allied health program.List out the specialty that this program leads to.Was there any tuition related to the program? If so, does the provider collect this? If so, please identify any tuition on the trial balance. Was this tuition offset on worksheet A-8? Please identify. If not, please explain why.Please explain who administers the program. If operated by an outside entity, such as a college, university, etc., please provide copies of any agreements with the entity. Were there any arrangements with other entities?Does the provider control both classroom and clinical training? Does an outside entity provide and control either of these (i.e., college, university, joint venture, etc.)? Please explain.

26. Nursing & Allied Checklist (cont’d)Please provide a listing of students for the FYE 12/31/03. Does the provider issue the degree (certification) for the program? If so, please submit a copy for the students who received this in FYE 12/31/03. If not, please explain who does issue the degree, and their relationship with the hospital.Please provide a copy of the syllabus with a list and description of the classes provided.Please provide a copy of the program catalog.Please provide a copy of the admission policy to get into the program.Please provide a copy of the program curriculum. Does any other entity provide the training for any part of the curriculum?Does any of the cost claimed for pass through payment relate to direct hands-on patient care? If so, please explain.Please identify who employs the teaching staff.

27.