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Invited Commentaries

New Opportunities for Expanding Rural Graduate Medical Education to Improve Rural Health Outcomes: Implications of the Consolidated Appropriations Act of 2021

Hawes, Emily M. PharmD1; Holmes, Mark PhD2; Fraher, Erin P. PhD, MPP3; Zamierowski, Alyssa MBA4; Pauwels, Judith MD5; Sanner, Louis A. MD, MSPH6; Rains, Jacob7; Page, Cristen P. MD, MPH8

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doi: 10.1097/ACM.0000000000004797
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It is well documented that people living in rural areas experience worse health outcomes than their urban and suburban counterparts. 1 Physician shortages in many rural communities are a key contributing factor, as many studies have shown the link between primary care supply and health outcomes. 2 Since physicians are more likely to practice where they train, graduate medical education (GME) is a critical tool to address shortages and improve health outcomes for rural populations. 3 GME partnerships between participating sites in urban, rural, and other practice settings play an important role in enhancing physician supply in workforce shortage areas.

Federal funding through the Centers for Medicare and Medicaid Services (CMS) represents the largest source of funding for GME training in the United States and is a key determinant in the geographic and specialty composition of GME nationally. 4 Because of the historically hospital-centric role of GME, less than 1% of Medicare spending for GME training goes to programs in rural areas. 5,6 Components of the Medicare payment structure have historically disadvantaged rural hospitals and limited the development of training programs in rural and underserved areas. 5 However, new opportunities for improved Medicare funding are available for hospitals planning to develop new GME programs or expand existing ones in rural locations.

The Consolidated Appropriations Act (CAA) of 2021 and the subsequent CMS regulation changes contain multiple provisions that seek to address disparities in Medicare funding for rural GME, including funding for an increase in rural GME positions (Section 126), expansion of rural training opportunities (Section 127), and relief for hospitals that have very low resident payments and/or caps (Section 131). 7 These changes have significant implications for bolstering GME in both rural hospitals and collaborating urban academic medical centers. In this commentary, we will provide background on the issues that have historically impeded GME training in rural regions, summarize the implications of each rule change for rural hospitals, and provide guidance for institutions seeking to avail themselves of the opportunities presented by the CAA. Importantly, these changes include several deadlines throughout 2022 and 2023, so qualifying institutions must act immediately. Table 1 includes resources that offer additional information and guidance on implementation for each Section of the CAA addressed below.

Table 1:
Resources for Implementation of the Rural Health Care Training Policy Changes in the Consolidated Appropriations Act of 2021 (CAA)

CAA Section 126: Increasing Rural GME Positions


The Balanced Budget Act of 1997 imposed a national cap on the number of funded residency training positions or “slots.” 6 One slot is measured as one full-time equivalent (FTE) resident over a 1-year period, with caps based on a calculation of total FTEs for residency training periods at that hospital at the end of the first 5 years hosting trainees. Urban centers in the northeastern United States were the home to the majority of GME training at the time the national cap was executed, contributing to a higher concentration of funded slots in these areas. 3 Demographic change has accelerated this imbalance with population growth—but not federally funded residency slots—increasing across the south and west.

The Balanced Budget Refinement Act of 1999 (BBRA) amended this to allow FTE cap increases for urban hospitals creating rural training tracks (RTTs) with separate accreditation. 3,6 The amendment limited the window for expanding this cap to 5 years after establishing an initial RTT. Hospitals can fill slots above this cap but do not receive funding for any positions that exceed their allocation. To qualify for more funded slots, rural hospitals have historically needed to launch new, separately accredited programs. This has disadvantaged rural hospitals, which often have fewer resources to fund training above caps and less infrastructure to support separate accreditation and robust FTE expansion within the 5-year window.


CAA Section 126 seeks to address disparities in the geographic distribution of training through a new allocation of funded GME slots distributed to institutions with a focus on underserved areas. The provision creates an additional 1,000 funded slots phased in at a maximum of 200 per year, with the first allocation available for 2023. 8 It specifies 4 categories of hospitals eligible to receive new slots with a minimum of 10% allocated to each category over the 5-year period. Two of these categories are (1) rural hospitals and (2) hospitals serving a designated Health Professional Shortage Area (HPSA); priority is placed on hospitals with fewer than 250 beds. 8,9

Regardless of qualifying category, a hospital is prioritized if at least 50% of training occurs in a geographic or population HPSA with an exception for programs where significant training occurs at Indian Health Service facilities. 8 Although the restrictions on the number of slots available each year and the administrative burden of associated deadlines may limit the impact of this change, the availability of new funded positions for the first time in decades is promising for rural and urban medical centers that have faced challenges expanding GME in rural areas with insufficient federal funding.


Hospitals interested in applying for additional FTE-cap slots should review the resources listed in Table 1 to assess eligibility and access the CMS online application system. 8 While the deadline for the first allocation has passed, programs should begin planning for the next application cycle in the spring of 2023.

CAA Section 127: Expanding Rural Training Opportunities


Following the 1999 BBRA, urban hospitals launching RTTs qualified for an increase in funded slots above their historic cap. However, rural hospitals could only qualify for payment by participating in a separately accredited RTT as a new program by CMS criteria (i.e., new program director, new faculty, separately recruited residents). Not only did these requirements present challenges for financial sustainability, but the need for separate accreditation posed an additional constraint for lower-resourced rural hospitals, who were not able to share accreditation infrastructure with their associated urban program. Due to Accreditation Council for Graduate Medical Education (ACGME) complexities for accrediting training for most specialties, separate accreditation has historically been done only for family medicine programs, thus limiting the development of RTTs in other needed specialties.


CAA Section 127 implements multiple changes that increase opportunities for expanding and funding rural tracks. The provision institutes a new definition for a “rural track program” (RTP) as a program, whether separately accredited or not, where residents spend time in both urban and rural settings and the time spent training in a rural place is greater than 50% of the total training time for residents in the program (or track) as a whole. Of note, the qualifying criteria for rural status—any area outside a metropolitan Core-Based Statistical Area (CBSA)—has not changed; this has created barriers for some potential RTP locations in large western state counties that have rural areas combined with larger urban communities. 10,11 Although advantages and disadvantages of separate accreditation need to be considered, removing the requirement of separate accreditation for RTPs has the potential to remove a significant barrier for expanding rural GME across a broad range of specialties.

This provision further supports FTE cap expansion for urban hospitals that already have an RTP if they develop RTPs in the same specialty at new locations or in different specialties at new or existing RTP locations. Unlike the previous legislation that limited cap increases for rural tracks to participatory urban hospitals, Section 127 also allows rural hospitals to increase their cap without the program being separately accredited or considered a new program by CMS criteria. 10,11

In addition to cap adjustments, the provision also seeks to address disparities in reimbursement. Previously, sponsoring institutions received part of their reimbursement based on a 3-year rolling average of resident FTEs, which often resulted in lower funding for rural programs during the start-up years. Section 127 removes this averaging for new RTPs starting after October 2022, as well as for RTPs that started before this date but are still in their cap-building period. 10,11 Although individual participating hospitals are still subject to a cap on new funded slots after 5 years, Section 127 presents rural hospitals and partnering urban centers with new opportunities to grow rural GME training and obtain new CMS funding across multiple specialties.


Sponsoring institutions and existing programs, including those sponsored by urban or rural hospitals, looking to develop an RTP at a new location or to create an RTP in a different specialty should review resources listed in Table 1. These resources offer information on accreditation and financial considerations for new and existing RTPs, steps for requesting ACGME RTP designation, and CMS documentation requirements for adjusting FTE caps. The CMS rule changes related to RTPs go into effect on or after October 1, 2022.

CAA Section 131: Resetting Low Caps and Funding


It is widely appreciated that GME funding is complex. Two key elements of the Direct GME reimbursement mechanism, though, are the per resident amount (PRA) and the FTE cap. 12 The former is often driven by a historical funding amount, inflated to current dollars, and the latter may be restricted by the number of funded residents in the program’s first year. In some circumstances, therefore, decisions made in the late 1990s may artificially be restricting the options currently available to the teaching hospital. Anecdotally, some of these PRA amounts and/or caps are a result of programmatic decisions that did not fully appreciate the long-term ramifications. For example, a hospital without GME programs may not have realized that a rotating resident qualified the hospital as a “teaching hospital,” unwittingly subjecting the hospital to low FTE and/or PRA caps. This has been true of many rural hospitals accepting resident rotators to increase interest in their rural communities, who may not become aware that a PRA was set until they begin to launch a residency program. This is especially damaging to rural hospitals that often lack adequate resources to fund positions.


CAA Section 131 seeks to remedy this by allowing certain hospitals to apply to reset low PRAs and low FTE caps while also clarifying rules to lessen the chance of setting a low or zero PRA or starting a cap-setting period for GME-naive hospitals that accept rotating residents. The regulation categorizes hospitals into older teaching hospitals that set a low PRA and FTE cap before October 1997 (“Category A”) and newer teaching hospitals that set a low PRA and FTE cap between October 1997 and December 2020 (“Category B”). 12,13 Application criteria differ between categories based on FTE and are specified in Figure 1.

Figure 1:
Overview of the Consolidated Appropriations Act of 2021 Section 131 hospital categorization process. This is an oversimplified model of 4 categories of hospitals based on graduate medical education history. Review data in the HCRIS file (see in Table 1) to confirm your hospital’s category. The Centers for Medicare and Medicaid Studies has issued a deadline of July 1, 2022, for any hospital to review its HCRIS files, and if any data discrepancies with hospital documentation are noted, to formally contest the data with the hospital’s MAC. If a hospital is still in its initial cap-building period, the rule changes do not apply. Abbreviations: FTE, full-time equivalent; HCRIS, Healthcare Cost Report Information System; PRA, per resident amount; MAC, Medicare Administrative Contractor.

For hospitals that have not previously claimed residents, also known as “never claimer” hospitals, no PRA will be set, nor will the 5-year window for an FTE cap begin, until the hospital claims one or more resident FTEs in a fiscal cost report year. Hospitals are also no longer required to report this to CMS on cost reports until they train one or more FTEs in that year. However, hospitals that have been training one or more FTEs in a fiscal cost report year after December 27, 2020, are still at risk for low or zero PRA caps either if they fail to claim them now or if they are unable to account for the costs of training residents. Furthermore, any program that enters into an affiliation agreement where they share a cap with another hospital will also be subject to a PRA cap, even below the one FTE threshold. 12,13


CMS uses the data provided in the hospital’s cost reports to determine eligibility. Under some circumstances, these data may be at odds with actual residency activity. All hospitals should review the Healthcare Cost Report Information System (HCRIS) data via the resources in Table 1 to confirm accuracy of the hospital’s PRA/cap history and to determine how the hospital is categorized as defined in Figure 1. The deadline for Category A and B hospitals to contact their Medicare Administrative Contractor to contest inaccurate HCRIS data is July 1, 2022. These hospitals have 2 fiscal cost report years after December 27, 2020, to request a reset of their PRA if currently training over the required minimum; the deadline is December 27, 2025, to reset a PRA if currently below the required minimum, and to add a new cap for new programs started before that deadline. 13 Hospitals must act immediately to avoid future limits on potential reimbursement.

Limitations and Future Considerations

Although the CAA legislation and resultant regulatory changes have addressed important barriers burdening rural GME program development, the practical effect of these changes may be limited by several factors. Section 126 prioritizes residency slots by HPSA scores, which will not apply to many rural areas, and the overall number of slots offered is quite small. Section 127 changes are significant and helpful, but tie funding to engagement of an urban hospital with the rural location, limiting the ability of strong rural hospitals to use this mechanism. Although Section 131 clarifies the establishment of a “teaching hospital” as training one or more resident FTEs in a fiscal cost report year, the limited time frame may pose too significant a burden on under-resourced facilities. Additionally, the legislation does not address 2 fundamental issues with rural GME funding: (1) the codified underpayment of most rural hospitals in comparison with urban ones because of the inability of Sole Community Hospitals and Critical Access Hospitals to receive indirect medical education payments except in limited circumstances; and (2) the definition of “rural” based on nonmetropolitan CBSAs, which penalizes many communities, particularly those in sparsely populated states with large geographic counties. 14 Additional policy change is necessary to grow and sustain residency training in needed specialties in rural areas.


The legislative, financing, and accreditation changes brought about by the CAA create new opportunities for funded positions in rural and underserved areas that will augment the expansion of rural GME training, and consequently the physician workforce, to underserved communities. These changes represent significant progress and demonstrate the importance of federal policy to bolster GME nationally. Additional legislation targeted to address remaining barriers to starting and sustaining rural programs has the potential to create even broader impacts for rural training and rural communities.


The authors would like to thank Randall Longenecker, MD, for contributing to the development of resources to assist with Consolidated Appropriations Act of 2021 implementation.


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