I 
109TH CONGRESS 
1ST SESSION H. R. 4403 
To amend title XVIII of the Social Security Act to clarify Congressional 
intent regarding the counting of residents in a nonhospital setting under 
the Medicare Program. 
IN THE HOUSE OF REPRESENTATIVES 
NOVEMBER 18, 2005 
Mr. HULSHOF (for himself and Mr. TANNER) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Energy and Commerce, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to clarify 
Congressional intent regarding the counting of residents 
in a nonhospital setting under the Medicare Program. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Community and Rural 
Medical Residency Preservation Act of 2005’’. 
SEC. 2. FINDINGS. 
Congress finds the following:
(1) The Medicare program has a long history of 
supporting residency training in ambulatory sites. 
These sites include physician offices, nursing homes, 
and community health centers, all of which are cor-
nerstones of ambulatory training for graduate med-
ical education programs. Such sites provide an im-
portant educational experience due to the broad 
range of patients treated. 
(2) Training in ambulatory settings is critical 
to residents’ medical education, ensuring they will be 
exposed to practice settings similar to those in which 
they may ultimately practice. It is particularly im-
portant for residency programs in primary care spe-
cialties. 
(3) Beginning in 1987, hospitals were allowed 
to count the time resident physicians spent in non- 
hospital settings for the purpose of direct graduate 
medical education (DGME) payments, subject to 
agreements between the hospital and the non-hos-
pital site where training occurred. To qualify, the 
hospital was required to incur ‘‘all or substantially 
all’’ of the costs associated with the resident. In 
1989, the Health Care Financing Administration 
(HCFA) defined ‘‘all or substantially all’’ of costs as 
the resident salaries and benefits.
(4) Through the Balanced Budget Act of 1997, 
Congress further reinforced its commitment to am-
bulatory training by altering the financial formula to 
include payments for indirect medical education 
(IME) costs. This requirement was met if the hos-
pital paid the residents’ stipends and benefits. Effec-
tive January 1, 1999, the Center for Medicare & 
Medicaid Services (CMS), on its own authority, 
changed its regulatory definition of ‘‘all or substan-
tially all’’ to require hospitals to also incur ‘‘the por-
tion of the cost of teaching physicians’ salaries and 
fringe benefits attributable to direct graduate med-
ical education’’. 
(5) Despite the fact that CMS recognized the 
use of volunteer supervisory physicians in the pre-
ambles of two regulations and a program memo-
randum, CMS intermediaries have begun denying, 
retroactively through audits, the time residents 
spend in non-hospital settings in situations where 
faculty are volunteering their services. This has the 
effect of significantly reducing the IME and DGME 
payments a hospital or teaching program receives 
for residents training in non-hospital settings.
SEC. 3. CLARIFICATION OF CONGRESSIONAL INTENT RE-
GARDING THE COUNTING OF RESIDENTS IN A 
NONHOSPITAL SETTING. 
(a) 
DIRECT
GRADUATE
MEDICAL
EDUCATION 
(DGME) PAYMENTS.— 
(1) IN
GENERAL.—Section 1886(h)(4)(E) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(h)(4)(E)) is amended by adding at the end 
the following new sentences: ‘‘For purposes of the 
preceding sentence, the term ‘all, or substantially all, 
of the costs for the training program’ means the sti-
pends and benefits provided to the resident and 
other amounts, if any, as determined by the hospital 
and the entity operating the nonhospital setting. The 
hospital is not required to pay the entity any 
amounts other than those determined by the hospital 
and the entity in order for the hospital to be consid-
ered to have incurred all, or substantially all, of the 
costs for the training program in that setting.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to portions of cost re-
porting periods occurring after the date of the enact-
ment of this Act. 
(b) INDIRECT MEDICAL EDUCATION (IME) PAY-
MENTS.—
(1) IN GENERAL.—Section 1886(d)(5)(B)(iv) of 
such Act (42 U.S.C. 1395ww(d)(5)(B)(iv)) is 
amended by adding at the end the following new 
sentences: ‘‘For purposes of the preceding sentence, 
the term ‘all, or substantially all, of the costs for the 
training program’ means the stipends and benefits 
provided to the resident and other amounts, if any, 
as determined by the hospital and the entity oper-
ating the nonhospital setting. The hospital is not re-
quired to pay the entity any amounts other than 
those determined by the hospital and the entity in 
order for the hospital to be considered to have in-
curred all, or substantially all, of the costs for the 
training program in that setting.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to discharges occurring 
after the date of the enactment of this Act. 
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