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

ACPE System Center Accreditation and Medicare Pass-Through Reimbursement

ACPE is a recognized accreditor of the U.S. Department of Education, to accredit programs of Clinical Pastoral Education (CPE) and Certified Educator CPE. There are two primary types of accredited centers: 1) An Institution Sponsored or Free Standing Center that offers accreditation to a single entity and 2) A System Center Accreditation (with independent component sites) that offers multi-campus institutions a single accreditation, administered by the administrative System Center (host) and extends to each independent component site. Although component sites are connected by a central accreditation, each site must meet the defined criteria as if it were an independently accredited center. The System Center Accreditation is designed to be a cost-effective means for a multi-campus institution to offer CPE programs at multiple sites.

Medicare Pass-Through Eligibility
As a nationally recognized accreditor, accreditation with ACPE is an initial qualifier for CPE programs that wish to claim funds for residency programs, provided that the host institution is a recipient of Medicare funds and that the center meets the following criteria that are explained in the Federal Register, where it specifies that reimbursement is possible for the 1600 hour training (4 units of CPE) that are required for Board Certification. 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. These criteria are applicable for not only the institution/free standing center, but also for the system center and each component site of the accredited system.

To be eligible for reimbursement, each component site must individually demonstrate compliance with each item listed below. What follows are some examples of the ways that system centers and components are able to demonstrate that they meet each of the criteria. In all cases, ACPE Certified Educators should be in regular communication with their reimbursement departments for clarification.

  1. Directly incur the training costs: an educator’s time and salary must be clearly delineated in a detailed budget as well as the salary of the residents and all associated costs. These must be contained wholly in the component site budget. A central cost/operations model will likely not meet the required criteria.
  2. Have direct control of the program curriculum: Each component site must have a site-specific handbook and curriculum that is in compliance with ACPE standards and in line with the mission of the hospital system. While there may be system-wide objectives, policies, and procedures, each component site should have site-specific features. Staff should be well versed in the particular programs offered as well as understanding that each program is unique to that location and that the curriculum is designed for that specific site. A centralized model for curriculum design will likely not meet the required criteria.
  3. Control the administration of the program: Tuition, payroll, and day-to-day operations must be localized for each site. The money coming in and the money going out (for tuition and salaries) must be to and from the same entity. Additionally, certificates of completion for the unit must have the name of the component site on it and not the system center name, as this is an additional form of proof that the component site controls the administration of the program. Centers should keep copies of these certificates in their files for future audits. To state it another way, there needs to be congruency with the name of the operating entity for incoming and outgoing funds, the name of the center in all materials, both internal and external, and the name of the center providing the certificate at the end of the unit. A centralized operations/administration that does not allow each component site to have control of its program will likely not meet the required criteria.
  4. Employ the teaching staff: there must be clear documentation that the educator is employed and paid by the component site. While an educator need not be employed full time, the portion of the salary that is dedicated to education in the CPE program at the specific site must be clearly articulated and be commensurate with the time spent in this endeavor. If the educator is paid solely from the administrative center, the component site will likely not meet the required criteria for employing the teaching staff.
  5. Provide and control both classroom instruction and clinical training: for residency programs, all 400 hours (100 educational and 300 clinical) must be held at the component site that is applying for pass-through funds. Any educational or clinical hours completed at different component site are not eligible for reimbursement and will likely increase scrutiny of the program.
In summary, an Accredited System Center and its component sites are equally eligible for Medicare Pass-Through reimbursement if each site can successfully demonstrate the criteria listed above. Unfortunately, auditors are looking for every possible way to deny a hospital’s funding. With clear supporting documents and attention to the criteria and the requirements of each item, an accredited system center and its component sites should be eligible for pass-through funds for their residency programs.
For questions on this topic or about this document, please contact Marc Medwed, Associate Executive Director.