Last Updated on April 16, 2022 by Lee Burnett, DO, FAAFP
We gratefully acknowledge the sponsorship of the University of Texas Health Center, Tyler, for funding the transcription and editing of this section of the Proceedings of the Twenty-Second National Conference:
Peter Broderick, MD, Valley Consortium for Medical Education, Modesto, California [Dr Broderick is a Fellow of the Coastal Research Group]: I think Marianne gave a really compelling overview of the value of teaching health centers. As Kiki says, the Scripps Chula Vista program has been functioning as a teaching health center really for 16 years.
As I was sitting here, I was thinking back to the 20th National Conference in 2009, in which I talked Bill Burnett into letting me come to Monterey to do an emergency presentation to this group.
At that time, I came to tell you about the crisis at our Modesto family medicine residency Then I was the program director of the Stanislaus County Family Medicine Residency.
I will give you a brief overview on our story. We closed our county hospital, Stanislaus Medical Center, in 1997 along with many California state hospitals in the 1990s. Passage of requirements for construction of seismically safe hospitals and a poor bottom line for public hospitals made that happen.
With full disclosure in conversations with the administrators of Medicare, we moved our fully accredited family medicine residency over to a sister hospital where some of our training took place.
Twelve years later, when our Medicare GME funds were being reviewed, CMS applied provisions of the 1997 Balanced Budget Act rules on the residency transfer that had come into existence two months before we closed our hospital, but didn’t exist at that time of our earlier discussions. They intimated that we actually hadn’t done that transition properly.
Based on their contemporary interpretation in 2009, CMS concluded that our residency had in fact closed in 1997. Most surprisingly, as a consequence of this new interpretation, they requested $20 million in GME paid to our residency sponsor, the County of Stanislaus, during those preceding 12 years should be returned to Medicare.
That was the crisis that became somewhat of a national story at the time when the consequences of health care reform was the need for more family physicians. At a time when the federal government was giving money to the insurance company AIG, the federal government was taking $20 million from a poor county in California that had used the money quite legitimately to train family physicians for our region.
We were shocked and made a big deal about it. I presented that case in Monterey to many of you here today. I really want to thank all of you for the support.
Resolving the Problem
I’m going to tell you about our near death experience and how that can give you an afterlife.
We actually went through the issues and finally worked with Medicare. While we spent a tremendous effort to resolve the issue to preserve the former residency, the administrators of the Medicare program at the time were not the most facilitative government agents in advising us how to go forward..
During our negotiations, CMS released regulations that many of you probably know as the 2010 Inpatient Prospective Payment System (IPPS) rules. Within that 1200 page document, CMS defines for the first time what, in fact, constitutes a new residency.
Never before had Medicare actually weighed in on regulating what a new residency was.
Before that it had been the purview of the Accrediting Council on Graduate Medical Education (ACGME). CMS had always been recognized the ACGME or AOA as the arbiter of new accreditation status. If a closing program subsequently applied as a new program the ACGME or AOA have to vet you. Becoming a new program is not a terribly easy thing to do. The ACGME has pretty strict standards. You can’t just change your sponsoring institution. You really have to change your residency into a new entity.
It is a dubious honor that I’m one of the few program directors who fired all his residents on June 30th and hired most of them as a new program director on July 1st. But with a great deal of formality and rigorous adherence to the existing CMS policy, we closed our former residency and started a newly accredited residency called Valley Family Medicine Residency of Modesto. We went through a site visit, got fully accredited and actually recruited a full complement of residents. This program inaugurated July 1st 2010, working fully with the ACGME.
We went through a site visit, got fully accredited and actually recruited a full complement of residents. I was one of the few residencies to start with an entirely full class of three years of residents, quite an exciting thing!
We did this quite formally. We actually maintain two sets of training files, one for the old residents, one for the new residents. Through these processes, Valley Family Medicine Residency of Modesto rose from the ashes of a very challenging circumstance. We are now a 10-10-10 program.
Threatened extinction has a way of focusing your attention. What I think was really compelling about this experience was that the community got very creative about saving a residency. We did something that I’m very proud of.
Every stakeholder in the community said that they wanted to make sure that this residency training program survives. That included the Stanislaus County Board of Supervisors, which was comprised of five very fiscally conservative businessmen, who wrote a check for $10 million. Tenet Health, the hospital host also wrote a check for $10 million, because of a contractual agreement to split the training costs with the County.
An interesting twist on the Medicare interpretation of the hospital’s closure in 1997, is that the same rules they used to determine that our residency had closed were also the rules that developed the concept of residencies sponsorship by institutions other than a hospital – non-hospital entities.
Not a lot of entities took have taken advantage of this, but, in fact, non-hospital entities – health care consortia, involving community health centers, public health agencies, even a private medical group – can be the institutional sponsor for a residency and receive Direct GME payments (DGME). Those non-hospital entities are ineligible for Indirect Medical Education (IME), because those payments are still tied to the Medicare patient formulas.
There are few residency systems that are developing this non-hospital sponsorship entity option. Community health centers don’t have a really huge Medicare population. Consequently, the DGME payments really don’t compete very well unless you’re in a hospital with low numbers of Medicare patients.
The opportunity for ownership by non-hospital entities resulted from the Balanced Budget Act of 1997. Consortia have been around since the 1970s. We see them a lot on the East Coast, especially in the Northeast. They are initiated mainly by large medical schools that are looking to leverage their presence in some of the community hospitals in their region, and to do some coordination of them. If one looks at their structure, they are basically entities run by medical schools.
Although the idea of GME consortia has been out there, we felt that the idea of a community owning a residency as a consortium was pretty new. Dr Rick Flinders is here from the Santa Rosa Family Medicine Residency. I think that his group was the first in California to do so. From their own ‘near death experience’, they created a GME consortium with the Kaiser Health Plan, the Sutter Health facility and a community health center there. That was similar to the configuration we were hoping to establish.
Dr Bob Norman of the San Jose family medicine residency program presented another residency program’s response to ‘a near death experience’ to the 2009 National Conference in Monterey, in which his hospital closed precipitously and he had to find a new host down the road in O’Conner Hospital. You know, he’s still to me the rock star of residency directors. He got that program accredited and filled his class within one year, without missing a beat at all.
Interestingly though, Medicare GME now is based on revised rules about what constitutes a “new” program. It is possible that Medicare would not have allowed the O’Connor transition under their new rules. In 2006, when Rick Flinders created his new program, he only changed affiliation, not accreditation. Under the current regulations, itt is unlikely that programs could do that now, using the IPPS 2010 Medicare rules..
The Medicare administration has published a list of what entities can own or be a part of a Graduate Medical Education consortium. It’s a pretty wide list that includes health systems, public health departments, and private medical groups.
Many of us could be orphaned by a hospital that says “we’re out of here”. I really want to advocate for the idea that counties or communities can own residencies. As far as I know, no community has ever quit being a community; hospitals quit business or sell their facilities all the time. This can be very destabilizing for a residency. Hopefully, community-based ownership is a way forward.