On November 15, the Centers for Medicare & Medicaid Services (CMS) announced the recipients of the second of five GME cap slot distributions. These distributions are part of a unique opportunity created by the Consolidated Appropriations Act (CAA) to award 1,000 new cap slots to established teaching hospitals over a five-year period.
Round Two Award Results
In round two, CMS awarded 200 new caps slots to 99 hospitals across 28 states. These new slots represent approximately $30 million in annual incremental CMS GME reimbursement for these hospitals. New York had the most hospitals awarded (18), followed by Florida (11), Illinois (8), Arizona (6), Georgia (6), and North Carolina (6).
Round two distribution statistics and hospital finances include the following:
- The median cap increases were 2.25 and 2.41 for DGME and IME, respectively. These median cap increases are lower than those in round one (DGME was 2.37, IME was 2.52).
- Primary care was the most awarded specialty, with 18 family medicine programs and 15 internal medicine programs receiving slots. Psychiatry (18), surgery (9), and obstetrics and gynecology (6) were the other top-awarded specialties.
- For specialties that received fewer awards, the Health Provider Shortage Areas (HPSA) scores were typically higher.
- HPSA scores ranged from 14 to 21, a narrower range than in round one (11 to 22).
Key Takeaways
Hospitals that received awards in previous rounds were successful in getting additional FTEs.
In this second round of awards, CMS granted slots to some of the same hospitals—and even to the same specialties within those hospitals—as in round one.
- 51 of the 99 hospitals in round two also received cap slots in round one.
- Out of those 51 hospitals, 28 hospitals received additional cap slots to the same specialties that were awarded in round one.
Small cap changes can have an enormous impact.
While the average cap increase of 2.02 slots may seem small, even a minor cap change can have a significant fiscal impact. Based on the national average reimbursement per resident of $150,000,[1] the median cap increase equates to $112,500 in DGME and $241,000 in IME reimbursement—an annual total of approximately $353,500 for one hospital.
DGME-only and IME-only slots are being awarded.
Even if hospitals may only qualify for DGME or IME slots (e.g., under cap for one and over cap for the other, prior rural reclassification), they could still receive awards. In round two, about 30% of awardees received only one component (i.e., DGME or IME increase), compared to 70% of hospitals that received awards for both.
How Can ECG help?
ECG partnered with nine hospitals and health systems to identify and evaluate opportunities for round two and prepare applications. All nine of these hospitals received cap slot increases. In total, these hospitals received an increase of 20.33 DGME and 23.82 IME cap slots, resulting in a total of approximately $3.4 million in new annual reimbursement.[2]
Whether you need assistance with the application or are seeking resources and tools, ECG is here to help. Applications for the third round of cap distribution open in January 2024 and are due by March 31, 2024.
Please contact Michelle Sonia with any questions or to discuss strategies for pursuing this extraordinary opportunity.
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Edited by: Matt Maslin
[1] Based on cost report data obtained from the Healthcare Cost Reporting Information System (HCRIS) for the period September 1, 2020, to August 31, 2023. Typically, DGME represents about one-third of the funding and IME represents the remaining two-thirds.
[2] The reimbursement estimate is conservative. The reimbursement rate used in the estimate was $150,000 per FTE. Based on actual cost report inputs, some of these hospitals have reimbursement rates as high as $250,000, which would increase the value significantly.
