As residency programs and hospitals close, residents must find alternative programs in which to complete training, and hospitals must assess the payment implications of taking on so-called "displaced residents." Confusion often arises between the rules related to program closure versus hospital closure. CMS adopted rules for transferring Medicare GME-funded positions from one hospital to another in the event of a residency program closure, and the Affordable Care Act included a provision (section 5506) for the permanent redistribution of a hospital's GME positions upon hospital closure.
The following are key differences between the two:
| Residency program closure | Teaching hospital closure |
|---|---|
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One or more residency programs may close. |
All programs close. |
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The teaching hospital remains open. |
The teaching hospital itself closes. |
|
The hospital closing the program may choose whether to temporarily loan training slots to another hospital. |
CMS is required to permanently redistribute slots from closed hospitals through the section 5506 slot redistribution process. |
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Resident training slots may be transferred temporarily to another teaching hospital that accepts the displaced residents, and will revert to the original hospital upon each displaced resident's graduation. |
Permanent slots redistributed through the section 5506 process only take effect after any temporary slots expire, upon each displaced resident's graduation. |
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Residents must be physically present at the hospital that is closing the program (or on standard vacation) on the last or next-to-last day of the program (i.e., they cannot be training in another hospital) to be considered a "displaced" resident with respect to whom a temporary slot transfer may be made to support further training. |
Residents must be physically present at the closing hospital (or on standard vacation) on the last or next-to-last day of the resident's program (i.e., they cannot be training in another hospital) to be considered a "displaced" resident with respect to whom a permanent slot award may be made to a hospital applying under ranking criteria 1 and 3 of the section 5506 application, for applicant hospitals that have committed to taking over all or a portion of the closed program. |
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A hospital hosting a displaced resident is only eligible for a temporary cap increase if the hospital is training over its cap. |
A hospital hosting displaced residents is only eligible for a permanent cap increase if the hospital is training over its cap. |
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A hospital hosting a displaced resident has 60 days after beginning to train the resident to submit a request to its MAC regarding temporary funding transfers. |
Hospitals have 90 days to apply for a permanent slot award after a section 5506 closed hospital redistribution announcement is published in the display copy of the Federal Register. |
The GME @ Dentons team listed above is happy to answer any questions you may have about program or hospital closures, the section 5506 application process for closed hospital slots, or broader inquiries about Medicare funding of graduate medical education.
Upcoming speaker event
Dentons partner Lori Mihalich-Levin will speak on the topic of program and hospital closures at the upcoming American Health Lawyers Association's Academic Medical Centers and Teaching Hospitals Institute on January 30 in Arlington, VA, in a session entitled "Where Do the Residents Go?: CMS GME Rules and Policies on Displaced Residents."
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