42 CFR §422.324

1. (a)MA organizations may receive direct graduate medical education payments for the time that residents spend in non-hospital provider settings such as freestanding clinics, nursing homes, and physicians' offices in connection with approved programs.
2. (b)MA organizations may receive direct graduate medical education payments if all of the following conditions are met:
   1. (1)The resident spends his or her time assigned to patient care activities.
   2. (2)The MA organization incurs “all or substantially all” of the costs for the training program in the non-hospital setting as defined in § 413.75(b) of this chapter.
   3. (3)There is a written agreement between the MA organization and the non-hospital site that indicates the MA organization will incur the costs of the resident's salary and fringe benefits and provide reasonable compensation to the non-hospital site for teaching activities.
3. (c)An MA organization's allowable direct graduate medical education costs, subject to the redistribution and community support principles specified in § 413.85(c) of this chapter, consist of—
   1. (1)Residents' salaries and fringe benefits (including travel and lodging where applicable); and
   2. (2)Reasonable compensation to the non-hospital site for teaching activities related to the training of medical residents.
4. (d)The direct graduate medical education payment is equal to the product of—
   1. (1)The lower of—
      1. (i)The MA organization's allowable costs per resident as defined in paragraph (c) of this section; or
      2. (ii)The national average per resident amount; and
   2. (2)Medicare's share, which is equal to the ratio of the number of Medicare beneficiaries enrolled to the total number of individuals enrolled in the MA organization.
5. (e)Direct graduate medical education payments made to MA organizations under this section are made from the Federal Supplementary Medical Insurance Trust Fund.