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Graduate Medical Education (GME) and Indirect Medical Education (IME)


The Hall Consulting Services (HCS) staff has been continuously involved in GME/IME auditing and review since the enactment of section 1886(h) of the Social Security Act, (as added by section 9202 of the Consolidated Omnibus Budget Reconciliation of 1985 [COBRA]) was implement to establish the current Medicare graduate medical education payment system. 


Since the inception of the Medicare GME/IME provisions, HCS personnel experience includes functioning both as fiscal intermediaries and consultants.  As a result, HCS’s staff has a very detail background on the evolution of numerous policies, interpretations, CMS instructions, PRRB case issue positions, CMS administrator decisions and legal court decisions concerning GME and IME issues.


HCS has directly filed for a number of GME and IME audit issues in Medicare reopenings and appeals for hospital clients in sizes ranging from 125 to 1,500 patient beds.  In addition, HCS has audited, reviewed and analyzed a large number of approved graduate medical education programs that varied from 15 interns/residents to over 1,400 interns/residents. Over the years, HCS has developed a detailed systematic approach which can be customized to any particular hospital size.


The largest Medicare subsidy is the direct graduate medical education and indirect medical education hospital payments which is an extra payment made to teaching hospitals for the operation of their graduate medical programs to train interns and residents. The GME and IME calculated payments are  added-on to the DRG-based payments of acute care prospective payment system (PPS) hospitals.

Graduate Medical Education (GME)


Section 1886 (h)(2) of the Social Security Act sets forth a payment methodology for the determination of a hospital-specific, base-period per resident amount (PRA) that is calculated by dividing a hospital’s allowable costs of GME for the base period by its number of residents in the base period.  Currently, PPS hospital’s GME costs are determined by multiplying its “average per resident amount” by the weighted number of full-time equivalent (FTE) residents working in all areas of the hospital and the hospital’s Medicare share of total inpatient days.







Indirect Medical Education (IME)


Section 1886(d)(5)(B) of the Act provides that prospective payment hospitals that have residents in an approved GME program receive an additional payment to reflect the higher indirect operating costs associated with GME.  The regulations regarding the calculation of this additional payment, known as the IME adjustment, is located in existing sections 413.75 and 413.83 of the Medicare regulation. 


The size of the IME adjustment depends on the hospital’s teaching intensity and total Federal Inpatient PPS Payments.  The teaching intensity is measured by the hospital’s number of residents trained per inpatient bed, which is referred to as the resident-to-bed ratio. 



HCS’s GME and IME audit approach includes but is not limited to the following review items:


  1. Intern/resident rotation schedules and supporting documentation


  1. Intern/resident time measurement detail:

  • CMS one workday threshold

  • Direct patient care services

  • Non-patient care services

  • Non-provider setting work

  • Resident duty or work hours


    1. Review and/or quantify the impact of an addition of a “New GME Program(s)”


    1. GME program compliance and review

    1. Interns/resident record profile review and compliance:

  • Weighting I & R FTE count

  • Resident prior year work experience review

  • Education background review

  • Foreign medical graduate resident analysis


    1. GME Base Year Review:

  • Per resident amount (PRA)

  • Average per resident amount


    1. GME current year expenses and cost reclassifications


    1. GME overhead cost and worksheet B-1 statistics




    Next Service: Review of Prior Audited Medicare/Medicaid Cost Reports