The United States Court of Appeals for the First Circuit dealt a blow to
graduate medical education programs on November 17, 2008, when it issued
an opinion upholding the Secretary of the Department of Health and Human
Services' ("Secretary") interpretation of the IME regulation excluding time spent
by residents engaged in research activities. In Rhode Island Hospital v. Leavitt,
No. 07-2673 (1st Cir. Nov. 17, 2008), Rhode Island Hospital (RIH) appealed
the Centers for Medicare and Medicaid Services' (CMS) reduction of its fulltime
equivalent (FTE) resident count used to calculate its IME adjustment by
12.06 FTE residents in fiscal year (FY) 1996. CMS claimed that the governing
Medicare regulations precluded including research time in the FTE count. The
United States District Court for the District of Rhode Island had previously
ruled that the Secretary's denial of research time was contrary to the plain
language of the governing FTE regulation, 42 C.F.R. § 412.105(g)(1), but the
First Circuit disagreed.
The IME regulation includes two basic requirements for a resident's time to be
included in the FTE count. First, the resident must be enrolled in an approved
teaching program. Second, the resident must be assigned to an area of the
hospital subject to the inpatient prospective payment system (IPPS) or an
outpatient department, or assigned to an entity under the ownership or control
of the hospital if certain requirements are met. The District Court had
concluded that CMS could not exclude time spent by residents in research if
they were enrolled in an approved teaching program and assigned to a
qualifying area of the hospital. Thomas W. Coons and Kristin C. Cilento examine this case and how it affects providers.
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