Court Rules That HHS Must Recalculate Hospitals’ Medicare Pay For Training Physicians – Food, Drugs, Healthcare, Life Sciences | #education | #technology | #training

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Court Rules That HHS Must Recalculate Hospitals’ Medicare Pay For Training Physicians

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Following a recent federal court ruling, hospitals can expect an
increase in Medicare reimbursements for training physicians in
their residency programs. 

In Milton S. Hershey Medical Center v. Becerra, No.
19-2680, the United States District Court for the District of
Columbia (the “DDC”) ruled that the Department of Health
and Human Services (“HHS”) unlawfully changed the
statutorily-assigned weighting factors used to calculate
reimbursements to hospitals for resident stipends, supervisory
physician salaries, and administrative costs related to training
residents and fellows. These reimbursements, known as direct
graduate medical education (“DGME”) payments, are, in
part, determined by the weighted average number of full-time
equivalent (“FTE”) residents employed by the

The challenged regulation was originally promulgated in 1997 and
operates to reduce the weighted number of FTEs a hospital may claim
for reimbursement when that hospital’s unweighted FTE count
exceeds the number of FTE residents for the hospital’s most
recent cost reporting period ending on or before December 31, 1996
(the “1996 cap”). In other words, when a
hospital exceeds the 1996 cap, its weighted FTE count is reduced
commensurate with the amount by which the hospital exceeds the

The DDC held that “the text of the statute does not give
the Secretary [of HHS] the latitude to decide, under these
conditions, to change the weights that Congress assigned to
residents and fellows when he calculates the FTE residents for each
hospital.” Accordingly, the DDC remanded the matter to
HHS to recalculate Plaintiffs’ reimbursement payments
consistent with the Court’s opinion.

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