January 12, 2022

For years, the healthcare industry has struggled through an increasing shortage of clinical practitioners.  It seemed that every long-term forecast of the situation pointed to a dire drop-off in the number of healthcare providers in the decade ahead.  This was due, in part, to a dramatic downturn in medical residency funding and an increasingly aging population—which will require a sharp increase in medical services.  There are simply not enough doctors to handle the tsunami of patients heading their way in the next several years as the massive baby boomer generation continues to reach retirement age.

Then, there was COVID.  With the advent of difficult circumstances and occasional chaos, many physicians and nurses experienced long hours and burn-out during the protracted pandemic.  This led to many in the industry changing careers or seeking early retirement.  This, in turn, led to an exacerbation of the staffing shortage and a more acute sense of burnout for those left behind.  Last month, however, the federal government implemented new rules designed to provide at least a modicum of relief.

Feeding the Pipeline

On Dec 17, 2021, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that seeks to address the current doctor-shortage crisis by funding additional medical residency positions in hospitals serving rural and underserved communities.  The Fiscal Year (FY) 2022 Inpatient Prospective Payment System (IPPS) Final Rule (FR) establishes policies to distribute 1,000 new Medicare-funded physician residency slots to qualifying hospitals, phasing in 200 slots per year over five years.  The agency estimates that funding for the additional residency positions, once fully phased in, will total approximately $1.8 billion over the next 10 years.

In implementing a section of the Consolidated Appropriations Act (CAA) of 2021, CMS provided for the largest increase in Medicare-funded residency slots in over 25 years.  According to CMS Administrator Chiquita Brooks-LaSure:

CMS recognizes the importance of encouraging more health professionals to work in rural and underserved areas, and the need to train and retain physicians to improve access to health care in these communities.  The CAA created a tremendous opportunity for us to address health care inequities, and CMS is grateful to Congress for their action on this important issue.

The FR indicated that the government will prioritize hospitals with training programs in areas demonstrating the greatest need for providers, as determined by Health Professional Shortage Areas. The first round of 200 residency slots will be announced by January 31, 2023 and will become effective July 1, 2023.  In other words, CMS will be prioritizing applications from qualifying hospitals that serve geographic areas and underserved populations with the greatest need.

In addition, CMS is implementing section 127 of the CAA, Promoting Rural Hospital GME Funding Opportunity, which allows rural teaching hospitals participating in an accredited rural training track (RTT) to receive increases to their FTE caps.  According to the director of the Center for Medicare, Dr. Meena Seshamani:

Doctors are most likely to practice in the areas where they do their residencies. Having additional residents train in the very areas that need the most support can not only bolster the numbers of providers in these underserved areas, but also train them with a unique understanding of the specific needs of these communities.

Finally, the FR implements section 131 of the CAA, which establishes new medical residency training programs after hosting medical resident rotators for short durations in the past.  Some hospitals inadvertently limited their ability to receive Medicare funding for residents in a new training program by accepting residents that rotated to the hospital from other training programs in past years.  This FR restores that ability to qualifying hospitals that begin a new medical residency training program within the first five years after enactment.  Section 131 allows these hospitals, which often serve underserved communities, to receive additional residency positions and increased PRAs.

The FY 2022 IPPS FR is displayed at the Federal Register and can be viewed by going to the following link: https://www.federalregister.gov/public-inspection/current.

A Drop in the Bucket?

Some will be quick to point out that all this is “too little, too late.”  America’s healthcare system is in danger of being woefully short in staffing and that trend will only continue into the foreseeable future.  The FR discussed above is a step in the right direction, but will it be sufficient to adequately address the needs of hospitals in both the short and long term?  Remember that it’s not just a shortage of doctors that we are facing, which these residency programs are designed to alleviate; many hospitals are already being depleted of nurses.  The current crisis is so bad in some states that hospital departments are being shut down and national guard medical teams are being called in to fill the void.

In addition, the provisions of the FR won’t produce a single doctor until sometime in the latter half of this decade.  What do hospitals do in the meantime?  The situation becomes all the more precarious with the as-yet unresolved COVID situation.  We don’t know at this point if the new strains of that virus will put a further strain on frontline doctors and nurses.  All hospitals can do for the time being is plan for the unexpected..

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