Administrative Code

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Virginia Administrative Code
Title 12. Health
Agency 30. Department of Medical Assistance Services
Chapter 70. Methods and Standards for Establishing Payment Rates; In-Patient Hospital Care

12VAC30-70-281. Payment for direct medical education costs of nursing schools, paramedical programs, and graduate medical education for interns and residents.

A. Direct medical education costs of nursing schools and paramedical programs shall continue to be paid on an allowable cost basis.

1. Payments for these direct medical education costs shall be made in estimated quarterly lump sum amounts and settled at the hospital's fiscal year end.

2. Final payment for these direct medical education (DMedEd) costs shall be the sum of the fee-for-service DMedEd payment and the managed care DMedEd payment. Fee-for-service DMedEd payment is the ratio of Medicaid inpatient costs to total allowable costs, times total DMedEd costs. Managed care DMedEd payment is equal to the managed care days times the ratio of fee-for-service DMedEd payments to fee-for-service days.

B. Effective with cost reporting periods beginning on or after July 1, 2002, direct graduate medical education (GME) costs for interns and residents shall be reimbursed on a per-resident prospective basis, subject to cost settlement as outlined in this subsection except that on or after April 1, 2012, payment for direct GME for interns and residents for Type One hospitals shall be 100% of allowable costs as outlined in subsection C of this section.

1. The methodology provides for the determination of a hospital-specific base period per-resident amount to initially be calculated from cost reports with fiscal years ending in state fiscal year 1998 or as may be rebased in the future and provided to the public in an agency guidance document. The per-resident amount for new qualifying facilities shall be calculated from the most recently settled cost report. This per-resident amount shall be calculated by dividing a hospital's Medicaid allowable direct GME costs for the base period by its number of interns and residents in the base period yielding the base amount.

2. The base amount shall be updated annually by the moving average values in the Virginia-Specific Hospital Input Price Index as described in 12VAC30-70-351. The updated per-resident base amount will then be multiplied by the weighted number of full-time equivalent (FTE) interns and residents as reported on the annual cost report to determine the total Medicaid direct GME amount allowable for each year. Payments for direct GME costs shall be made in estimated quarterly lump sum amounts and settled at the hospital's fiscal year end based on the actual number of FTEs reported in the cost reporting period. The total Medicaid direct GME allowable amount shall be allocated to inpatient and outpatient services based on Medicaid's share of costs under each part.

C. Effective April 1, 2012, Type One hospitals shall be reimbursed 100% of Medicaid allowable fee-for-service (FFS) and managed care organization (MCO) GME costs for interns and residents.

1. Type One hospitals shall submit annually separate FFS and MCO GME cost schedules, approved by the agency, using GME per diems and GME ratios of cost to charges (RCCs) from the Medicare and Medicaid cost reports and FFS and MCO days and charges. Type One hospitals shall provide information on managed care days and charges in a format similar to FFS.

2. Interim lump sum GME payments for interns and residents shall be made quarterly based on the total cost from the most recently audited cost report divided by four and will be final settled in the audited cost report for the fiscal year end in which the payments are made.

D. Direct medical education shall not be a reimbursable cost in freestanding psychiatric facilities licensed as hospitals.

E. The Department of Medical Assistance Services (DMAS) shall make supplemental payments to hospitals for qualified graduate medical residencies. Residency programs and hospital partners shall submit applications for this funding each year. Applications are available on the DMAS website at The applications shall be scored, and the top applicants shall receive funding. The supplemental payment for each new qualifying residency slot will be $100,000 annually and will be made for up to four years. Payments shall be made quarterly. Additional criteria include:

1. Sponsoring institutions or the primary clinical site must be:

a. Physically located in Virginia;

b. An enrolled hospital provider in Virginia Medicaid and continue as a Medicaid-enrolled provider for the duration of the funding;

c. Not subject to a limit on Medicaid payments by the Centers for Medicare and Medicaid Services; and

d. Accredited through either the American Osteopathic Association or the American Council for Graduate Medical Education.

2. Applications must:

a. Be complete and submitted by the posted deadline;

b. Request funding for primary care, such as general pediatrics, general internal medicine, or family practice, or high-need specialty residencies; and

c. Provide substantiation of the need for the requested primary care or specialty residency.

3. Programs that are awarded funding in the fall must attest by June 1 that the residents have been hired for the start of the academic year and have continued employment with the program each year thereafter.

Statutory Authority

§ 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Historical Notes

Derived from Virginia Register Volume 16, Issue 18, eff. July 1, 2000; amended, Virginia Register Volume 19, Issue 18, eff. July 1, 2003; Volume 31, Issue 9, eff. February 13, 2015; Volume 34, Issue 11, eff. February 21, 2018; Volume 36, Issue 8, eff. January 8, 2020.

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