Medicare Pass-Through


Medicare Pass-Through Funds for Residency Programs

The information contained in this document is not intended to serve as advice or guidance for an individual center. Rather it is designed as an overview of some of the questions related to Medicare Pass-Through funding and the experiences that our centers and staff have had in this area.

As many of you are aware, the world of reimbursement for Medicare is one that is complex and often inconsistent. There are many institutions, both within ACPE and outside of ACPE, that are undergoing audits for previous years. Many of these audits are being conducted by non-allied health professionals, so their understanding of how our programs operate and function on a daily basis is limited, which sometimes leads to confusion and additional work to demonstrate a center’s compliance with the regulations.

As a reminder, pass-through funds are only potentially available for programs that qualify a person to be employed in a specialty in which that person could not be employed without this particular educational program. Since it is the industry norm for hospitals to employ only board-certified chaplains (a process that requires 1,600 hours of CPE), then a residency of 1,600 hours (4 units) or a residency of 1,200 hours (3 units) with a pre-requisite unit of 400 hours, that are designed to enable persons to achieve board certification are eligible for reimbursement, provided that they meet the conditions outlined below.

Even though this is a federally funded program, its implementation and oversight is done on a regional basis. In talking with many of centers and with others who are facing similar challenges, what has become clear is that there is a wide variation in interpretation of what is allowable and what is not, and even within a specific region, these interpretations are inconsistently applied to programs.

However, there are particular items that it is safe to say are “must haves” for a center to be eligible to receive pass-through funds for their residency programs. The following basic information is from the Federal Register, and is a good starting point. Click here to view the Federal Register documents: 42 CFR 413.85 – Cost of Approved Nursing and Allied Health Education Activities. This section includes the five basic requirements for a hospital to be considered the operator of an approved program, the hospital MUST:

  1. directly incur the training costs;
  2. have direct control of the program curriculum;
  3. control the administration of the program (includes collection of tuition, payroll, day to day program operation);
  4. employ the teaching staff;
  5. provide and control both classroom instruction and clinical training.
An important item to note is that the Centers for Medicare and Medicaid Services (CMS) requires that there be consistency in the names of the entities that are used in the reimbursement process. Therefore, it is important to check with your reimbursement offices to ensure that the name of the hospital is consistent with the name of your CPE center (if it has a name), as this is one of the first items that is checked to determine ownership and provision of the program. Reimbursement funds must be claimed by the same entity that is paying the costs of the program, i.e. they must have the same name.

Additionally, the residency must take place fully within the institution from which the reimbursement is sought, i.e. a resident must learn and fulfill their clinical hours in the same hospital that is filing for reimbursement—they cannot fulfill their hours at another location, even within the same hospital system. This is also an important consideration for Accredited System Centers whose component sites wish to file for pass through dollars. With a system accreditation, component sites are considered independent operators of their programs. Therefore, each site that files independently will need to show proof of the criteria listed above, clearly showing that although their program shares the accreditation status of the main center, it is independent in its ownership of the program. Some of the documentation for this includes the site specific handbook.

While accreditation is required for program eligibility to receive funds, it is the responsibility of each center to maintain and provide documentation and evidence that it meets the criteria set forth in the Federal Register.

Here are some additional areas that we know are concerns of the auditors:

  • Review operating agreements with educational institutions to determine how control of the program is discussed and that it matches reality.
  • Contractors have cited diplomas listing the provider’s and university’s name as violating the “operator” principle, i.e. the names of the entities are not matching.
  • Track funding to ensure provider is incurring all costs (i.e., avoid the community support prohibition).

Here is a partial list of documentation/proof that our centers have shared with us that auditors have asked for as part of the auditing process:

  • List of Residents, along with rotation/work schedules, as proof of their work within the institution.
  • Certificates of Accreditation from ACPE.  If you have a gap in the dates of your certificates due to the meeting schedule of the Accreditation Commission, request a letter from the ACPE office stating that you have been continuously accredited.
  • Original graduation certificates for students who completed your program. Face sheets have not been accepted as proof that students completed the program.
  • List of employed teaching staff and their job descriptions.
  • Administrative records on the collection of tuition and fees that show the entity is collecting them and where they are deposited.
  • Administrative records that demonstrate that your hospital incurs the costs of running the CPE program, i.e. Certified Educator salaries, etc.
  • Copies of all curriculum/syllabi for each unit as demonstration of the provision of and the direct control of the education.  Handbooks, orientation schedules, and other materials that you provide to students are useful for this purpose.
Please remember that accreditation is required for your center to be eligible to apply for Medicare Pass-Through funding; however, please also understand that even though you satisfy the requirements for accreditation (either as a single center or as a system center), Medicare might require additional agreements and documentation to demonstrate who has control over your programs and the nature of relationships that exist between the system component sites and the administrative center. In some cases, we have learned that ACPE’s definitions of how an accredited system functions is not specific enough for a system center to rely solely on to justify its functioning.

A final caveat—Medicare Pass-Through funding, although there are many policies, forms, and explanations out there, is very much open to interpretation by the regional auditors, so it is advisable for you to be in regular communication with your reimbursement team in your hospital as well as with your regional representative.

If you have additional questions that we might use for an FAQ section or information based on your own experiences that you think would be helpful to share with the larger ACPE community, please email

For questions on this topic or about this document, please contact Marc Medwed, Associate Executive Director.