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The Health Care Financing Administration (HCFA) today announced regulations for Medicare payment to hospitals for the training of nurses and allied health professionals and clinical psychologists.

A final rule on payments to hospitals for the costs of nursing and allied health education announced today will be published in the Federal Register on Jan. 12. The rule addresses HCFA's overall payment policy for provider-operated approved nursing and allied health education programs under Medicare. It clarifies policies previously established in the Provider Reimbursement Manual and other documents, but not specifically addressed in current regulations.

In addition, HCFA today announced a proposed rule on Medicare reasonable cost payment to hospitals for the costs of clinical psychology training. It also was to be published in the Federal Register on Jan. 12.

Under federal law and existing regulations, Medicare pays on a reasonable cost basis for a participating hospital's net costs of approved nursing and allied health education programs, if these programs are operated by the provider. The cost of these approved education programs are excluded from the inpatient hospital prospective payment system and from the target amount calculations subject to a rate-of-increase ceiling for hospitals and hospital units excluded from the prospective payment system.

The final rule on nursing and allied health education programs announced today finalizes a proposed rule issued by HCFA in 1992 and includes criteria for determining whether an education program is provider operated and, therefore, eligible for reasonable cost payment.

In addition, the regulatory provisions carry out a requirement specified in OBRA 1989 and implement changes required by OBRA 1990 to specify allowable costs for approved educational activities and establish when these costs would be eligible for pass-through under the prospective payment system.

In the proposed rule HCFA also addressed language in the Balanced Budget Act of 1997 that encourages reasonable cost payment for clinical psychologist training.

Many clinical psychology education programs contain portions of clinical training that are operated by providers in provider settings, not by educational institutions. HCFA has evaluated these clinical training portions and believes that, while the entire program may not be provider operated, the clinical training portion might be consistent with the considerations underlying Medicare's general provider-operated criteria.

Therefore, the clinical psychology training regulation proposed today would broaden the applicability of the general provider-operated criteria to allow a provider to receive reasonable cost payment if it is operating the clinical training portion of a qualified clinical psychology training program.

These proposed provisions on clinical psychology training would assist HCFA in fulfilling the Secretary's commitment to improve mental health services to Medicare beneficiaries by promoting the funding of education programs for professionals who will treat Medicare beneficiaries with mental health problems and at the same time provide greater access to care.

The nursing and allied health education regulation proposed in 1992 addressed criteria to define provider-operated approved nursing and allied health education programs and to identify the net costs associated with payments for these programs. HCFA also proposed to grandfather reasonable cost payment for the clinical training costs of certain nonprovider-operated programs to comply with the requirements of OBRA 1990. In addition, HCFA proposed to clarify the policy for determining which nursing and allied health educational activities are considered normal operating costs of a provider. HCFA received 31 timely comments in response to the proposed rule.

In the final rule on nursing and allied health education, HCFA generally is adopting the provisions of the 1992 proposed regulation, with some modifications. HCFA is adopting as final the criteria that it proposed to use to identify nursing and allied health education providers. Specifically, the provider must:

• Directly incur the training costs.
  
  
• Directly control the program curriculum.
  
  
• Control the administration of the program, including collection of tuition.
  
  
• Employ the teaching staff.
  
  
• Provide and control both classroom instruction and clinical training (where classroom instruction is a requirement for program completion).
  

HCFA is adopting as final the proposed changes to the regulations to provide that the clinical training costs of certified registered nurse anesthetists (CRNAs) who are medically directing student anesthetists during surgical procedures are not allowable under the pass-through provision for reasonable cost payment if the CRNA may bill for the services under the Medicare Part B CRNA fee schedule.

In response to public comments, rather than retaining the listing of approved accredited programs (which has become outdated), HCFA has deleted the listing and the regulation now states that all programs must be recognized by the appropriate accrediting body or continue to maintain their accreditation status to receive Medicare payment for nursing and allied health education activities on a reasonable cost basis (in addition to meeting the other payment requirements in the regulations). A determination as to whether a provider-operated program not already approved meets the definition of an approved program will be made by the Medicare fiscal intermediaries.

The final policy on nursing and allied health education becomes effective 60 days after today's publication in the Federal Register. Since this regulation embodies policies already in use, its impact on the number of professionals being trained is likely to be minimal.

The proposed rule on clinical psychology training would revise Medicare's policy on Medicare payment for approved nursing and allied health education programs to allow a provider to receive pass-through reasonable cost payment if it is operating the clinical training portion of a clinical psychology training program.

Building on the criteria set for nursing and allied health education, HCFA is proposing the following criteria for providers to meet to be eligible to receive pass-through reasonable cost payment basis for the net costs of the clinical training program of a clinical psychology training program.

• The provider must directly incur the clinical training costs.
  
  
• The provider must have direct control of the clinical training curriculum.
  
  
• The provider must control the administration of the clinical training portion, including collection of tuition of the clinical training portion (where applicable), control the maintenance of payroll records of teaching staff of the clinical training portion and/or students (where applicable), and be responsible for day-to-day clinical training operation. (A provider may contract with another entity to perform some administrative functions, but the provider must maintain control over all aspects of the contracted functions.)
  
  
• The provider must employ the teaching staff of the clinical training portion.