You asked for information on the Capital Area Health Consortium and its relationship to the University of Connecticut Health Center and graduate medical education activities in Connecticut.

BACKGROUND

The University Of Connecticut School Of Medicine (UConn SOM) has affiliated with seven Hartford-area hospitals for the education of medical residents and fellows: John Dempsey Hospital, Connecticut Children's Medical Center, Hartford Hospital/Institute of Living, St. Francis Hospital and Medical Center, the Hospital of Central Connecticut, Hospital for Special Care, and the Veteran's Hospital-Newington campus. These seven facilities make up the Capital Area Health Consortium (CAHC).

CAHC, by contract with UConn SOM, administers salary and benefits for all residency and fellowship programs. It also works closely with the UConn SOM's Office of Graduate Medical Education (GME) and participates on GME committees. The consortium is the official employer of all of the residents. CAHC's board is made up of representatives from each of the seven institutions.

The GME Office is part of the School of Medicine and is responsible for administering the activities that are common to all of the residency programs. The GME Office must coordinate activities regarding employment issues with CAHC. Additional activities of the office include assisting international graduates in obtaining appropriate visas, keeping permanent training records on residents, providing the appropriate state agencies with a list of all residents employed, notifying hospitals and other health care institutions of the names of all the residents, and supporting the individual departments in carrying out their responsibility to conduct GME programs.

The UConn SOM sponsors 44 Accreditation Council for Graduate Medical Education (ACGME)-approved residency and fellowship programs and eight non-ACGME sponsored programs. These 50 or so programs sponsor close to 600 residents and fellows.

GME FUNDING

By virtue of the hospitals' participation in the UConn residency program, millions of dollars in GME reimbursement are reflected in each participating hospital's “bottom line.” GME monies go directly to the hospitals based on reports they submit to the federal Centers for Medicare and Medicaid Services (CMS); UConn provides data to each hospital to help them complete their reports. But neither the CAHC nor the UConn SOM receives any GME dollars from CMS for their work in administering the program, according to Joann Lombardo, director of UConn Health Center's Government Relations for Health Affairs.

In FY 07, the John Dempsey Hospital received $18.5 million in GME reimbursement from CMS, Hartford Hospital-$36.1 million, St. Francis Hospital - $23.7 million, and the Hospital of Central Connecticut - $7.2 million. For FY 08, John Dempsey received $19.7 million. Data on GME reimbursements for the other facilities will not be available until the FY 08 Medicare Cost reports are filed after the fiscal year ends on September 30, 2008, according to Lombardo.

RESIDENCY ASSIGNMENTS AND SALARY AND FRINGE BENEFIT COSTS

As noted above, the UConn SOM is responsible for assigning residents to the hospitals (done by residency program directors) and then tracking those assignments. Based on these assignments, the SOM determines the cost of salary and fringe benefits for each resident. SOM provides funding to the CAHC, which in turn cuts the residents' checks. The UConn Health Center then bills each hospital for the resident's salary and fringe benefits. According to Lombardo, this system has generally served the program well, but the SOM has often found itself in the position of having "upfronted” funds and then having to wait, sometimes for a long period, for the other hospitals to reimburse it. Last year, the SOM had to undertake an “aggressive effort” to clear up a significant level of accounts receivable from the participating hospitals for the GME program, according to Lombardo. At times, the arrerage exceeded $16 million.

On June 30, 2007, the GME account had $12.6 million in receivables outstanding; since the health center was in deficit at the time, this put it in the position of having to pay the state interest for covering these obligations. Most hospitals are now current, although the Veterans Administration is over one year in arrears and the Connecticut Children's Medical Center is behind by over two, reports Lombardo. SOM still makes the full payment to CAHC even though the accounts receivable from these two facilities is over $8 million.

DIRECT AND INDIRECT COSTS OF GME

UConn Health Center emphasizes that it is important to note that because the SOM receives no direct or indirect medical education money from Medicare, it recently developed and improved its system for identifying these costs and appropriately allocating them to ensure appropriate financial support for this effort. This was done in cooperation with each participating institution. Beyond the resident salary and fringe benefits, direct costs include support for program directors, support staff, and key teaching faculty; program operational costs; and the SOM's central GME office. These direct costs are now billed to each hospital based on the type of residency programs that use each participating hospital's facility, and the actual number of residents assigned there.

These direct costs however, do not reflect the indirect costs and value of additional elements that are necessary for the SOM to carry out its role as the institutional sponsor, according to Lombardo. Such indirect costs include (1) recognized infrastructure costs (e.g., utilities, space, library, etc.) and (2) a “scholarship premium,” which represents the embedded cost of the “a scholarship with an active research component” element of the residency accreditation requirements. Maintaining accreditation through this connection of the residency and fellowship programs to the school's academic and research activities is critical, according to UConn.

To date, SOM has not been reimbursed for indirect costs, including the GME-related cost component and can no longer continue to bear this cost alone, according to Lombardo. Starting in FY 09, SOM is instituting an indirect cost rate of 15% of each participating hospital's current direct GME bill. It was applied to the current academic year effective July 1, 2008. The total value of this to the health center is $5.3 million.

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