Medicare GME PRIMER
OGME Development
Initiative
Direct Graduate Medical
Education (DGME) Payment
• Payment for Medicare’s share of the costs of
training physicians, including resident salaries and
fringe benefits, supervisory physician compensation,
and program administration and overhead costs
• Product of the hospital’s per resident amount
(PRA), Medicare utilization rate, and number of full
time equivalent (FTE) residents
Indirect Medical
Education (IME)
• Recognizes that teaching hospitals have higher
patient care costs due to treating sicker patients,
offering more services and technology and training
residents who order more tests and are inherently
less efficient in providing patient care
• Product of the hospital’s teaching intensity, DRG
payments and the IME adjustment factor for the
current fiscal year
FTE Cap
• Establishes a limit on the number of FTE residents
Medicare will pay for
• For most hospitals, caps are based on resident
counts in cost reporting periods ending on or before
12/31/96
• A new teaching hospital’s cap is set at the highest
number of residents in any program year in the
program’s 5th year
• Cap restricts program flexibility and opportunities
for expansion
3-Year Rolling Average
• Reduces the FTE cap over time if a hospital fails to
fill all of its Medicare-funded resident positions
• Interacts with the cap to limit the number of
residents Medicare will pay for
• Is the average of the hospital’s FTE resident count
in the current cost reporting period and the counts
in the two preceding periods
“New” Teaching Hospitals
• Hospitals that start new GME programs for the first
time on or after January 1, 1995
• Resident cap will be established based on the
number of residents in all programs in the 5th year
after the hospital becomes a teaching hospital
• With certain exceptions, once caps are set, urban
hospitals cannot add Medicare-funded positions
• Rural hospitals can increase their caps by adding
new specialty programs
“New Teaching Hospital”
• Can share resident rotations with existing
teaching hospitals (each hospital counts the
time residents train there up to existing caps)
• Beware of sharing rotations with nonteaching
hospitals - doing so can result in low caps &
per-resident amounts for the other hospitals,
whether or not they seek Medicare payment
Per Resident Amount
(PRA)
• Hospital-specific amount used in calculating a
teaching hospital’s DGME payment
• PRA is multiplied by the hospital’s number of FTE
residents and its Medicare utilization rate to
calculate DGME payment
• PRAs for “new” teaching hospitals will be set at the
lesser of program costs or the locality-adjusted
national average
Initial Residency Period
(IRP)
• Equals the minimum number of years required for
board eligibility in a resident’s specialty
• For payment purposes, residents are counted as 1.0
FTE during their IRPs, up to a maximum of 5 years,
and as .5 FTE thereafter
• If a resident changes specialty, the IRP will be the
minimum number of years required by the first
specialty
Medicare Affiliation
Agreements
• Allow hospitals that share in resident rotations to
apply their FTE resident caps on an aggregate basis
• Used to temporarily transfer FTEs from one
affiliated hospital to another to account for resident
rotations
• Offer relief to hospitals at risk for losing FTEs
because their programs are under cap
• The number of FTEs for the affiliated group may
not exceed the combined caps of the individual
hospitals
Nonprovider Rules
• For DGME purposes, a hospital can count all time
residents spend training in nonhospital settings such
as physician offices & clinics if it pays resident
stipends & benefits for time spent there
• For IME purposes, a hospital can count the time
residents spend in patient care activities in such
settings if it pays resident stipends and benefits for
time spent there
For Further Information
OGME Development Initiative
1 (800) 621-1773, ext. 8010
OGMEDevelopment@osteopathic.org