The Medicare Prescription Drug Improvement and Modernization Act of 2003 (DIMA) includes several provisions affecting teaching hospitals in addition to the provision that redistributes unused resident positions (see story on page 1, "Medicare Prescription Drug Legislation Mandates Redistribution of Unused Resident Positions"). The DIMA increases the indirect medical education (IME) adjustment from the current 5.5% for every 10% increase in the ratio of interns and residents to beds to 6.0% on April 1, 2004; to 5.8% on October 1, 2004; and to 5.55% on October 1, 2005. This change will provide teaching hospitals in New York State with approximately $100 million more than current law would provide during that time period. On October 1, 2006, however, the IME adjustment would be reduced to 5.35%, which would reduce payments to New York's teaching hospitals by approximately $25 million. On October 1, 2007, the IME adjustment would return to the current level of 5.5%.

Exception to Initial Residency Period for Two- Year Geriatric Programs
The DIMA clarifies that one- or two-year geriatric programs are not to be counted against a resident's initial residency period (IRP). The general Medicare rule is that a resident's IRP is calculated on the basis of the minimum number of years required in order to attain first Board eligibility. In the usual case, a geriatric fellowship would not be considered within the IRP since it follows a categorical residency program that leads to Board eligibility.

Clinical Base-Year Clarification
The Conference Agreement that accompanies the DIMA includes a clarification regarding the determination of the IRP for residents pursuing training in a specialty that requires a clinical base-year of training. For certain specialties that require a year of broad-based clinical training prior to the more specialized years of the training (e.g., diagnostic radiology, dermatology, etc.), residents often satisfy that clinical base-year requirement by training in the first year of a three-year categorical residency program, such as general internal medicine, rather than in a one-year freestanding transitional-year program. For those residents who train in the first year of the three-year categorical residency program, the Medicare program assigns them an IRP of "3" despite the fact that they had no intention of completing their training in this three-year program and go on to the more specialized training in the second year. This lower IRP assignment has resulted in downweighting in the final year or years of the more specialized years of the resident's training and lower direct GME payments.

Greater New York Hospital Association (GNYHA) and other organizations had been advocating with the Centers for Medicare & Medicaid Services (CMS) to address this issue within the inpatient rule-making process in 2003, but it was not addressed in either the proposed or final rule. The Conference Agreement states:

The conferees also clarify that under section 1886(h) (5)(f), the initial residency period for any residency for which the ACGME [Accreditation Council for Graduate Medical Education] requires a preliminary or clinical year of training is to be determined in the resident's second year of training.

GNYHA is very pleased that the conferees chose to clarify this point, and will work with CMS to try to ensure that this clarification is incorporated into the Medicare direct GME reimbursement system.