This April, the Centers for Medicare & Medicaid Services (CMS) released its annual proposed updates to the Inpatient Prospective Payment System (IPPS) rule. The 2025 IPPS rule contains several propositions that could significantly affect teaching hospitals and sponsors of graduate medical education (GME) programs. One such proposal includes revisions to criteria for “newness” of GME programs, particularly in terms of resident recruitment, faculty composition, program director (PD) experience, program eligibility, and rural healthcare dynamics. Given the long-term implications for hospital reimbursement, it is critical that teaching hospitals and academic health systems review and understand CMS’s proposed changes related to this criteria in order to prepare for the inevitable impacts.
CMS’s Proposed Changes to the GME Program Newness Criteria
- Threshold for Transferring Trainees: The proposed rule stipulates that at least 90% of individual resident trainees must have no previous training in the new program’s covered specialty. This limit aims to promote diversity in training experiences and ensure newness of programs; however, for small programs with fewer than 12 positions, adhering to this threshold—that is, attracting a sufficient number of residents and fellows without prior training in the specialty—may be difficult.
- Faculty Experience: CMS proposes that 50% of faculty in a new GME program should either have no previous experience teaching in the covered specialty or should not have held a relevant teaching position in the past 10 years. The proposal would allow up to 50% of the program’s faculty to be sourced from existing programs in the same specialty, with the caveat that each faculty member must come from a different program. This raises concerns about the number of experienced versus inexperienced faculty members and may impact the quality of education for future trainees. Additionally, it will necessitate changes to the faculty recruitment strategy for hospitals seeking to establish new GME programs and could impact the feasibility of establishing new programs in areas where faculty recruitment is a challenge.
- PD Requirements: The proposed rule also suggests imposing a limit on PD experience by mandating that new PDs cannot have been employed as a PD in the covered specialty for a defined period (e.g., 5 or 10 years). While designed to ensure fresh perspectives and prevent stagnation, this requirement could conflict with existing accreditation standards requiring a minimum duration of educational and administrative experience for PDs and create undue burden on hospitals looking to develop GME programs.
- Evaluation of Rural Reclassified Teaching Hospitals: CMS is considering prohibiting rural reclassified teaching hospitals from receiving a cap increase for rotations from new programs in specialties in which the hospital already trains residents. Trainees who rotate at hospitals outside of their primary training location largely do so because they are being offered a unique learning opportunity not available elsewhere. As such, limiting reimbursement for rotations at other hospitals may restrict trainees' access to these important opportunities.
- Sponsoring Two Programs in the Same Specialty: In the update, CMS also proposes prohibiting the creation of new GME programs in a hospital where an existing program in the same specialty already exists. This is intended to prevent redundancy and optimize resource allocation; however, it will negatively impact programs developed to fulfill unique circumstances, such as the need for specialized training or capacity limitations in certain geographic areas.
Section 5506 Cap Redistribution
In addition to the revised newness criteria, the 2025 IPPS proposed rule contains notice of closure of two teaching hospitals and communicates the opportunity to apply for the newly available slots under section 5506 of the Patient Protection and Affordable Care Act. The closures of McLaren St. Luke’s Hospital in Maumee, Ohio, and South City Hospital in St. Louis, Missouri, constitute the 21st and 22nd rounds of the section 5506 cap redistribution application and selection process, respectively. Through these rounds, CMS will collectively reallocate 82.47 IME cap slots and 88.93 DGME cap slots. CMS regulations provide a 90-day window for receipt of applications, meaning hospitals that wish to apply for a portion of the available FTE cap space must submit applications by July 9, 2024.
Additional information on considerations and how to apply can be found in our previous blog posts located here and here.
Fail to Plan, Plan to Fail
We encourage stakeholders to review the proposed changes and proactively develop mitigation strategies to limit the potential impact on new-program development at their sites. Striking the right balance between honoring regulatory requirements and recognizing the practical realities of accreditation, future-physician training, and healthcare delivery is paramount to fostering excellence in and ensuring the financial sustainability of GME programs. The propositions outlined in the 2025 IPPS update may create difficulty for teaching hospitals to achieve this balance, and careful planning will be critical to avoiding obstacles and delays to continued GME growth and new-program development.
Contact Us
