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California Medical Residency Program Fights CMS for Funding

At the same time President Barack Obama was pitching his budget and health care reform ideas in California last week, officials from an embattled program for underserved patients in San Joaquin Valley were in Washington, D.C., arguing to restore federal funding.

Earlier this year, federal officials pulled the funding rug out from under a long-established residency program training family practice physicians in Modesto.

Officials at CMS say they’re only following the rules.

Officials from Stanislaus Family Medicine Residency Program and the county say CMS is misinterpreting the rules “and apparently making some of them up as they go along,” according to the residency program director.

Not only did the residency program have its federal funding cut off, the program and Stanislaus County have been ordered to repay $19.1 million CMS says was paid in error over the past several years.

Lawmakers, including Sen. Dianne Feinstein (D-Calif.) and Rep. Dennis Cardoza (D-Merced), as well as the California Medical Association and the California Academy of Family Physicians are arguing on behalf of the residency program — but so far to no avail.

Stanislaus County supervisors begrudgingly approved $11.1 million this week to help repay CMS and keep the family practice residency program alive through June 2010.

“But this is only a temporary fix,” said Peter Broderick, director of the Stanislaus Family Medicine Residency Program at Doctors Medical Center, which shares some of the program costs with the county.

“If we don’t get this situation resolved and get federal funding restored, this residency program will not survive. And that has terrible implications for the 70,000 patients we serve as well as for all the other residency programs in California,” Broderick said.

Venerable Program Serves Low-Income Patients

Founded in 1935, the program was originally a general practice residency at the public county hospital. It earned family medicine accreditation in 1975. When the county hospital closed in 1997, the residency program was taken over by Doctor’s Medical Center, owned by Tenet Healthcare Corporation.

The residency program is a key part of the safety net where 22% of county residents rely on Medi-Cal and 16% of the population is unemployed.

The 27 residents and 30 primary care doctors who serve as faculty for the program care for about 70,000 patients, handling about 230,000 patient visits annually, according to the California Academy of Family Physicians.

Until 2006, it was business as usual with the residency program training 27 family practice physicians and billing the federal government for support through Medicare reimbursements for education.

The three-year program, affiliated with University of California-Davis and accredited by the Accreditation Council for Graduate Medical Education, graduates nine family physicians each year.

‘Not Easy Decision For CMS’

About 18 months ago, CMS attorneys began questioning the way the program was transferred from the county hospital to the new parent hospital a decade before.

Marc Hartstein, deputy director of CMS’ hospital and ambulatory policy group, said CMS is following rules laid out in the Balanced Budget Act of 1997.

“That law puts caps on the numbers of residents in programs,” Hartstein said, adding, “This situation arises because of those caps.”

Because Tenet’s Doctors Medical Center chose not to take on the assets and liabilities of the county hospital in 1997, “that ended the cap that was associated with the previous hospital,” Hartstein said.

In essence, the residency program ceased to qualify for educational funding in 1997 under CMS’ interpretation of the regulations. Hartstein attributed the program’s funding for several years to errors by unnamed third-party administrative contractors.

Although nobody California Healthline spoke with had ever heard of anything similar, Hartstein said the Stanislaus County residency program’s situation is not unique.

“Over the years we’ve had a number of analogous situations, and it’s very important to say we always apply the rules consistently,” Hartstein said.

Asked where else CMS had dealt with similar residency situations, Hartstein said he would rather not say.

“This was not an easy decision for CMS,” Hartstein said, adding, “We are sympathetic to the situation and we did offer them a number of different options.”

Options ‘Not Viable’

CMS offered four possibilities:

  • Acquire resident caps from other Tenet hospitals;
  • Acquire resident caps from other local residency programs;
  • Change from family practice residency to osteopathic residency; or
  • Create a rural residency program.

Even if one of the CMS options could work — and most of those involved in California say they couldn’t — another stipulation from CMS makes the equation more difficult:

In order to qualify for education reimbursements, CMS says the program has to apply as a new program. And in order to qualify as “new” the program would have to close for a year and reopen with new residents, new faculty and a new director.

“Dismantling a program and turning it off for a year like a faucet is absolutely untenable,” Broderick said, adding, “We’re very willing to work toward a reasonable solution but nothing about that is reasonable. I’ve never heard anything like this. They’re making up new rules as they go. I don’t think you’ll find that written in any regulations anywhere.”

Lobbying for Solution

In a letter to Charlene Frizzera, acting administrator at CMS, Dev GnanaDev, president of the California Medical Association, and Albert Gelders, president of the Stanislaus Medical Society, ask CMS to reconsider.

“We strongly urge that the necessary and proper flexibility be exercised by CMS in order to appropriately preserve the Stanislaus Family Residency Program and support the current and future resident physicians in training. Improving health care access and workforce capacity are goals of the Obama administration. President Obama has made primary care and prevention the centerpiece of his health reform plan,” they write.

California has the most family practice residency programs in the country, with 39. Pulling the plug on any program would be wrong, doctors groups say, but they said withholding funding from a program that serves so many low-income patients in the middle of an economic downturn is especially troubling.

“The Stanislaus Family Medicine Residency Program is an integral part of the community treating the underserved and uninsured population,” GnanaDev said in a CMA statement, adding, “Closing this program will have an enormous impact on patient care, health care access and workforce capacity in Stanislaus County and around the state.”

Jeffrey Luther, president of California Academy of Family Physicians, said his organization “hopes to broker communication.”

“In as much as some of this doesn’t make sense to us on the ground, it makes me wonder what isn’t being communicated,” Luther said, adding, “If we can get representatives from CMS, the county and the residency program to sit down and talk together, maybe we can work something out.”

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