(1) The Statewide Medicaid Residency Program is established to improve the quality of care and access to care for Medicaid recipients, expand graduate medical education on an equitable basis, and increase the supply of highly trained physicians statewide. The agency shall make payments to hospitals licensed under part I of chapter 395 for graduate medical education associated with the Medicaid program. This system of payments is designed to generate federal matching funds under Medicaid and distribute the resulting funds to participating hospitals on a quarterly basis in each fiscal year for which an appropriation is made.
(2) On or before September 15 of each year, the agency shall calculate an allocation fraction to be used for distributing funds to participating hospitals. On or before the final business day of each quarter of a state fiscal year, the agency shall distribute to each participating hospital one-fourth of that hospital’s annual allocation calculated under subsection (4). The allocation fraction for each participating hospital is based on the hospital’s number of full-time equivalent residents and the amount of its Medicaid payments. As used in this section, the term: (a) “Full-time equivalent,” or “FTE,” means a resident who is in his or her residency period, with the initial residency period defined as the minimum number of years of training required before the resident may become eligible for board certification by the American Osteopathic Association Bureau of Osteopathic Specialists or the American Board of Medical Specialties in the specialty in which he or she first began training, not to exceed 5 years. The residency specialty is defined as reported using the current residency type codes in the Intern and Resident Information System (IRIS), required by Medicare. A resident training beyond the initial residency period is counted as 0.5 FTE, unless his or her chosen specialty is in primary care, in which case the resident is counted as 1.0 FTE. For the purposes of this section, primary care specialties include:
1. Family medicine;
2. General internal medicine;
3. General pediatrics;
4. Preventive medicine;
5. Geriatric medicine;
6. Osteopathic general practice;
7. Obstetrics and gynecology;
8. Emergency medicine; and
9. General surgery.
(b) “Medicaid payments” means the estimated total payments for reimbursing a hospital for direct inpatient services for the fiscal year in which the allocation fraction is calculated based on the hospital inpatient appropriation and the parameters for the inpatient diagnosis-related group base rate, including applicable intergovernmental transfers, specified in the General Appropriations Act, as determined by the agency.
(c) “Resident” means a medical intern, fellow, or resident enrolled in a program accredited by the Accreditation Council for Graduate Medical Education, the American Association of Colleges of Osteopathic Medicine, or the American Osteopathic Association at the beginning of the state fiscal year during which the allocation fraction is calculated, as reported by the hospital to the agency.
(3) The agency shall use the following formula to calculate a participating hospital’s allocation fraction:
HAF=[0.9 x (HFTE/TFTE)] + [0.1 x (HMP/TMP)]
HAF=A hospital’s allocation fraction.
HFTE=A hospital’s total number of FTE residents.
TFTE=The total FTE residents for all participating hospitals.
HMP=A hospital’s Medicaid payments.
TMP=The total Medicaid payments for all participating hospitals.
(4) A hospital’s annual allocation shall be calculated by multiplying the funds appropriated for the Statewide Medicaid Residency Program in the General Appropriations Act by that hospital’s allocation fraction. If the calculation results in an annual allocation that exceeds two times the average per FTE resident amount for all hospitals, the hospital’s annual allocation shall be reduced to a sum equaling no more than two times the average per FTE resident. The funds calculated for that hospital in excess of two times the average per FTE resident amount for all hospitals shall be redistributed to participating hospitals whose annual allocation does not exceed two times the average per FTE resident amount for all hospitals, using the same methodology and payment schedule specified in this section.
(5) The Graduate Medical Education Startup Bonus Program is established to provide resources for the education and training of physicians in specialties which are in a statewide supply-and-demand deficit. Hospitals eligible for participation in subsection (1) are eligible to participate in the Graduate Medical Education Startup Bonus Program established under this subsection. Notwithstanding subsection (4) or an FTE’s residency period, and in any state fiscal year in which funds are appropriated for the startup bonus program, the agency shall allocate a $100,000 startup bonus for each newly created resident position that is authorized by the Accreditation Council for Graduate Medical Education or Osteopathic Postdoctoral Training Institution in an initial or established accredited training program that is in a physician specialty in statewide supply-and-demand deficit. In any year in which funding is not sufficient to provide $100,000 for each newly created resident position, funding shall be reduced pro rata across all newly created resident positions in physician specialties in statewide supply-and-demand deficit.
(a) Hospitals applying for a startup bonus must submit to the agency by March 1 their Accreditation Council for Graduate Medical Education or Osteopathic Postdoctoral Training Institution approval validating the new resident positions approved in physician specialties in statewide supply-and-demand deficit in the current fiscal year. An applicant hospital may validate a change in the number of residents by comparing the number in the prior period Accreditation Council for Graduate Medical Education or Osteopathic Postdoctoral Training Institution approval to the number in the current year.
(b) Any unobligated startup bonus funds on April 15 of each fiscal year shall be proportionally allocated to hospitals participating under subsection (3) for existing FTE residents in the physician specialties in statewide supply-and-demand deficit. This nonrecurring allocation shall be in addition to the funds allocated in subsection (4). Notwithstanding subsection (4), the allocation under this subsection may not exceed $100,000 per FTE resident.
(c) For purposes of this subsection, physician specialties and subspecialties, both adult and pediatric, in statewide supply-and-demand deficit are those identified in the General Appropriations Act.
(d) The agency shall distribute all funds authorized under the Graduate Medical Education Startup Bonus Program on or before the final business day of the fourth quarter of a state fiscal year.
(6) Beginning in the 2015-2016 state fiscal year, the agency shall reconcile each participating hospital’s total number of FTE residents calculated for the state fiscal year 2 years before with its most recently available Medicare cost reports covering the same time period. Reconciled FTE counts shall be prorated according to the portion of the state fiscal year covered by a Medicare cost report. Using the same definitions, methodology, and payment schedule specified in this section, the reconciliation shall apply any differences in annual allocations calculated under subsection (4) to the current year’s annual allocations.
(7) The agency may adopt rules to administer this section.