Payment to Hospitals and Units Excluded from IPPS for Direct Graduate Medical Education (DGME) and Nursing and Allied Health

(N&AH) Education for Medicare Advantage (MA) Enrollees (Rev. 1472, Issued: 03-06-08, Effective: 05-23-07, Implementation: 04-07-08)

During the period January 1, 1998 through December 31, 1998, hospitals received 20 percent of the fee-for-service DGME and operating IME payment. This amount increased by 20 percentage points each consecutive year until it reached 100 percent in calendar year (CY) 2002.

Non-IPPS hospitals and units may submit their MA claims to their respective A/B MACs (A) to be processed as no-pay bills so that the MA inpatient days can be accumulated on the Provider Statistics & Reimbursement Report (PS&R) (report type 118) for DGME payment purposes through the cost report. 

This applies to the following hospitals and units excluded from the IPPS:

• Rehabilitation units

• Psychiatric units 

• Rehabilitation hospitals 

• Psychiatric hospitals 

• Long-term Care hospitals 

• Children’s hospitals 

• Cancer hospitals

In addition, this applies to all hospitals that operate a nursing or an allied health (N&AH) program and qualify for additional payments related to their MA enrollees under 42 CFR §413.87(e). These providers may similarly submit their MA claims to their respective A/B MACs (A) to be processed as no-pay bills so that the MA inpatient days can be accumulated on the PS&R (report type 118) for purposes of calculating the MA N&AH payment through the cost report.

Non-IPPS hospitals, hospitals with rehabilitation and psychiatric units, and hospitals that operate an approved N&AH program must submit claims to their regular A/B MAC (A) with condition codes 04 and 69. The provider uses Condition code 69 to indicate that the claim is being submitted as a no-pay bill to the PS&R report type 118 for MA enrollees in non-IPPS hospitals and non-IPPS units to capture MA inpatient days for purposes of calculating the DGME and/or N&AH payment through the cost report.

The A/B MAC (A) submits the claim to the Common Working File (CWF). The CWF determines if the beneficiary is a MA enrollee and what his/her plan number and effective dates are. The plan must be a MA plan, per 42 CFR §422.4. Upon verification from CWF that the beneficiary is a MA enrollee, the A/B MAC (A) adds the MA plan number and an MA Pay Code of “0” to the claim. For fee-for-service claims that were previously paid and posted to history for the same period (due to late posting of MA enrollment data), an L-1002 Automatic Cancellation Adjustment Report will be sent to the A/B MAC (A) when a DGME-only or a N&AH-only claim from a non-IPPS hospital or unit is accepted for payment by CWF. No deductible or coinsurance is to be applied against this claim nor is the beneficiary's utilization updated by CWF for this stay. If CWF enrollment records do not indicate that the beneficiary is a MA enrollee, CWF rejects the claim and the A/B MAC (A) notifies the hospital of this reason. The hospital may resubmit the claim after 30 days to see if the enrollment data has been updated. No interim bills should be submitted for DGME-only or N&AH-only claims and no Medicare Summary Notices should be prepared for these claims.

The DGME payments are made using the same interim payment calculation A/B MACs (A) currently employ. Specifically, A/B MACs (A) must calculate the additional DGME payments using the inpatient days attributable to MA enrollees. As with DGME and N&AH education payments made under fee-for-service, the sum of these interim payment amounts is subject to adjustment upon settlement of the cost report. Note that these DGME and/or N&AH payments apply both to IPPS and non-IPPS hospitals and units

Teaching hospitals that operate GME programs (see 42 CFR §413.86) and/or hospitals that operate approved N&AH education programs (see 42 CFR §413.87) must submit separate bills for payment for MA enrollees. The MA inpatient days are recorded on PS&R report type 118. For services provided to MA enrollees by hospitals that do not have a contract with the enrollee’s plan, non-IPPS hospitals and units are entitled to any applicable DGME and/or N&AH payments under these provisions. Therefore, such hospitals and units should submit bills to their A/B MAC (A) for these cases in accordance with this section’s instructions. In addition to submitting the claims to the PS&R report type 118, hospitals must properly report MA inpatient days on the Medicare cost report, Form 2552-96, on worksheet S-3, Part I, line 2 column 4, and worksheet E-3, Part IV, lines 6.02 and 6.06.