CMS Pub. 100-04, ch. 3, § 140.2.5.4.1

There is a cap on the number of FTE residents that may be counted for purposes of

calculating the teaching adjustment, not the number of residents teaching institutions can

hire or train. The FTE resident cap is identical in freestanding teaching rehabilitation

hospitals and in distinct part rehabilitation units with GME programs. The cap is the

number of FTE residents that trained in the IRF during a “base year.”

An IRF’s FTE resident cap is determined based on the final settlement of the IRF’s most

recent cost reporting period ending on or before November 15, 2004. IRFs that first began

training residents after November 15, 2004 will initially receive an FTE cap of zero. The

FTE caps for new IRFs (as well as existing IRFs) that start training residents in a new

GME program (as defined in §413.79(1)) may be subsequently adjusted in accordance

with the policies that are being applied in the IPF PPS (as described in

§412.424(d)(1)(iii)(B)(2)), which in turn are made in accordance with the policies

described in 42 CFR 413.79(e).

For other types of Medicare providers (including long-term care hospitals) that have been

training residents and are currently converting to IRFs, the fiscal intermediary will

determine an FTE resident cap for purposes of the IRF teaching status adjustment,

applicable beginning with the new IRF’s payments under the IRF PPS based on the FTE

count of residents during the predecessor facility’s most recent cost reporting period

ending on or before November 15, 2004. If the predecessor facility did not begin training

residents until after November 15, 2004, the facility would initially receive an FTE cap of

zero. The FTE caps for new IRFs (as well as existing IRFs) that start training residents

in a new GME program (as defined in §413.79(1)), may be subsequently adjusted in

accordance with the policies that are being applied in the IPF PPS (as described in

§412.424(d)(1)(iii)(B)(2)), which in turn are made in accordance with the policies

described in 42 CFR 413.79(e).

Once established, the FTE resident cap for the teaching status adjustment for the new IRF

will be subject to the same rules and adjustments as any IRF’s FTE resident cap. CMS

will monitor this policy closely to ensure that it is not being inappropriately manipulated.

IRFs are not permitted to aggregate the FTE resident caps used to compute the IRF PPS

teaching status adjustment through affiliation agreements. Residents with less than full-time status and residents floating through the rehabilitation hospital or unit for less than a

full year are counted in proportion to the time they spend in their assignment with the IRF

(for example, a resident on a full-time, 3-month rotation to the IRF would be counted as

0.25 FTEs for purposes of counting residents to calculate the ratio). No FTE resident time

counted for purposes of the IPPS IME adjustment is allowed to be counted for purposes

of the teaching status adjustment for the IRF PPS.

The denominator used to calculate the teaching status adjustment under the IRF PPS is

the IRF’s average daily census (ADC) from the current cost reporting period. If a

rehabilitation hospital or unit has more FTE residents in a given year than in the base year

(the base year being used to establish the cap) payments are based on the lower number

(the cap amount) in that year. If a rehabilitation hospital or unit were to have fewer FTE

residents in a given year than in the base year (that is, fewer residents than its FTE

resident cap) an adjustment in payments in that year is based on the lower number (the

actual number of FTE residents the facility hires and trains).

Effective for cost reporting periods beginning on or after October 1, 2011, the IRF FTE

resident caps may be temporarily adjusted to reflect interns and residents added because of

another IRF’s closure or the closure of another IRF’s residency training program. An IRF

is only eligible for the temporary cap adjustment if training the additional interns and

residents would cause the IRF to exceed its FTE resident cap. In addition, an IRF that

closes a medical residency training program must agree to temporarily reduce its FTE cap

before other IRFs can receive temporary adjustments to their caps for training the IRF’s

interns and residents. IRFs may qualify for the temporary cap adjustment for cost

reporting periods beginning on or after October 1, 2011 if they are already training interns

and residents displaced by IRF closures or residency training program closures that

occurred prior to October 1, 2011.