Teaching hospitals are often responsible for the clinical training of three different categories of trainees:  

1. Interns, or trainees in their first year of residency training
2. Residents, or trainees who have completed medical school and are training in a clinical program for which they will become eligible for specialty certification 
3. Fellows, or trainees in specialty and subspecialty programs who have already completed their initial residency period

Though the Medicare regulations refer to all three categories of trainee simply as "residents," teaching hospitals often encounter Medicare reimbursement issues that are unique to fellowship training. These questions arise because fellows tend to be able to practice more independently, may already be licensed to practice medicine by the state where they are training and may be training in a less-structured or more informal program.

One common issue that arises with respect to fellowships is how the hospital should be reimbursed for the fellow's training and service. That is, for example, whether the hospital should count someone who is referred to as a "fellow" toward its resident FTE count for direct and indirect graduate medical education (GME) payments, bill for the fellow's services as a physician or claim reasonable cost payment for "unapproved" programs.

For direct and indirect GME payments, Medicare will reimburse teaching hospitals only for trainees who are in "approved medical residency training programs," where an "approved" program is one that is approved by the Accreditation Council for Graduate Medical Education (ACGME), the American Osteopathic Association (AOA), the American Dental Association (ADA) or the American Podiatric Medical Association (APMA), or one that leads to board certification by the American Board of Medical Specialties (ABMS). The Medicare program also has special rules regarding when the services performed by a fellow may be billed under the physician fee schedule and when a hospital may claim reasonable cost payment using a line of the Medicare hospital cost report designated for "unapproved" programs.

If you are a teaching hospital that is training fellows, you will need to answer some key questions to determine how to be paid appropriately by the Medicare program, including:

• Is the fellow part of an approved program?
• If the fellow is part of an unapproved program, is the fellowship program at issue one that is a formally organized, planned and standard course of study?
• Where is the fellow's training taking place?
• Is the fellow licensed in the state where the training is taking place?
• If the fellow is counted for GME payment purposes, are the FTEs being weighted appropriately under the direct GME reimbursement rules?
• Is the fellow following Medicare's moonlighting rules for any service performed outside the scope of the residency training program?

Answering these questions will allow you to determine how Medicare categorizes the trainees in your fellowship training programs for payment purposes and will ensure you receive the appropriate reimbursement for the fellows' training and service.