(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 initial residency period, which is 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. A resident training beyond the initial residency period is counted as 0.5 FTE, unless his or her chosen specialty is in general surgery or 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; and
8. Emergency medicine.
(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 $50,000 per FTE resident, the hospital’s annual allocation shall be reduced to a sum equaling no more than $50,000 per FTE resident. The funds calculated for that hospital in excess of $50,000 per FTE resident shall be redistributed to participating hospitals whose annual allocation does not exceed $50,000 per FTE resident, using the same methodology and payment schedule specified in this section.
(5) 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 prior 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.
(6) The agency may adopt rules to administer this section.