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Upcoming Deadlines for Rural Elections That Offer Additional Residency Opportunities

Rural status redesignation offers many advantages for a health system’s residency strategy.
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With many hospitals affiliating with larger health systems and the opportunity to request additional residency slots from Section 126 of the Consolidated Appropriations Act (CAA), 2021, now might be a good time to revisit your health system’s residency strategy.

In 2018, CMS eliminated its prohibition for hospitals located in geographically urban areas to simultaneously hold an effective “Medicare Geographic Classification Review Board (MGCRB) reclassification” for wage index purposes and a “rural designation” for all other payment purposes. For teaching hospitals, this meant: (1) a 30% increase in their Medicare 1996 base-year indirect medical education (IME) resident full-time equivalent (FTE) cap, and 2) additional Medicare IME reimbursement for new graduate medical education (GME) residency programs—all without jeopardizing reimbursement under a lower applied rural wage index.

Since 2018, there has been a significant increase in urban teaching hospitals redesignating to rural status, and we estimate there are still approximately 232 hospitals that might benefit from this designation.

Rural Redesignation Teaching Hospitals by Federal Fiscal Year

CMS Data Sources:

Rural status redesignation has other advantages, including:

  • Ability to obtain other Medicare Special Designation status, e.g., Rural Referral Center, Sole Community Hospital, Medicare Dependent Hospital, Critical Access Hospital, and Rural Emergency Hospital
  • Lowered threshold for qualification in the 340B drug pricing program from 11.75% to 8% through Rural Referral Center enrollment
  • Relaxed criteria for MGCRB wage index reclassifications

For hospitals with June 30 year-ends, a rural request may need to be filed prior to June 30 to be strategically positioned to obtain advantages from these opportunities. Hospitals with September 30 or December 31 year-ends should start to consider the impacts that rural elections might have on residency programs.

If you want to learn more about rural redesignations or other special Medicare designations for your organization, please contact one of our professionals.

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