A state university health care system wished to develop and implement a graduate medical education (GME) supplemental payment program. The aim of the program was to garner payments up to the client’s hospital-specific limit (HSL) as a disproportionate share hospital (DSH). To help the client and the state achieve these ends, Sellers Dorsey collaborated with both the university health system and state Medicaid officials to design an effective new payment program that would increase payments without disrupting the GME program that was already in place.

The Collaboration

To begin this work, our team of experts first investigated the state’s existing Medicaid GME payment program and programs like it in other states. Following this initial research, we then calculated GME costs using available cost reports and proposed GME methodology options to optimize reimbursement as well as the likelihood of CMS approval. One of the unique benefits of this kind of payment program is that it is based on Medicaid managed care inpatient volume along with direct and indirect GME costs, but when the payments come into play, they’re made directly to the hospital from the state. With all these factors and considerations in mind, we helped the university develop policy rationale to support the program and estimated the potential gain in federal funds from this methodology. We also assisted with drafting public notices and the state plan amendment, and we provided guidance on how to propose the program to state officials.

The Results

Less than a year after work on the project began, CMS gave their approval and monthly payments began flowing to the university hospital under the terms of the new program. This new GME payment, as intended, is helping the university health system achieve funding up to its HSL, and it does not interfere with the state’s other GME payment program that was already in place.