skip to content
Thank you for visiting First Coast Service Options' Medicare provider website. This website is intended exclusively for Medicare providers and health care industry professionals to find the latest Medicare news and information affecting the provider community.
To enable us to present you with customized content that focuses on your area of interest, please select your preferences below:
Select which best describes you:
Select your location:
Select your line of business:
This website provides information and news about the Medicare program for health care professionals only. All communication and issues regarding your Medicare benefits are handled directly by Medicare and not through this website. Information for Medicare beneficiaries is only available on the medicare.gov website.
En Español
Text Size:
Send a link to this page
[Multiple email adresses must be separated by a semicolon.]
Last Modified: 7/25/2018 Location: FL, PR, USVI Business: Part A

Direct graduate medical education (GME) adjustment

Section 1886(h) of the Act “Payments for Direct Graduate Medical Education (GME) Costs.--“, as added by section 9202 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Public Law 99-272) and implemented in regulations at existing 413.75 external pdf file through 413.83 external pdf file, establish 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 a base period by its number of residents in the base period. The base period is, for most hospitals, the hospital's cost reporting period beginning in FY 1984 (that is, the period beginning October 1, 1983, through September 30, 1984). Medicare direct GME payments are calculated by multiplying the PRA times the weighted number of full-time equivalent (FTE) residents working in all areas of the hospital (and non-hospital sites, when applicable), and the hospital's Medicare share of total inpatient days.
Section 1886(h) (4)(F) “Payments for Direct Graduate Medical Education Costs.--“ of the Act established limits on the number of allopathic and osteopathic residents that hospitals may count for purposes of calculating direct GME payments. For most hospitals, the limits were the number of allopathic and osteopathic FTE residents training in the hospital's most recent cost reporting period ending on or before December 31, 1996.
Under section 1886(h)(4)(E) “Payments for Direct Graduate Medical Education Costs.--“ of the Act, a hospital may count residents training in non-hospital settings for direct GME purposes (and under section 1886(d)(5)(B)(iv) of the Act, for Indirect Medical Education (IME) purposes, if the residents spend their time in patient care activities and if ". . . the hospital incurs all, or substantially all, of the costs for the training program in that setting." The implementing regulations, at 413.78(d) external pdf file, effective January 1, 1999, require that, in addition to incurring all or substantially all of the costs of the program at the non-hospital setting, there must be a written agreement between the hospital and the non-hospital site (in place prior to the time the hospital begins to count the residents training in the non-hospital site) stating that the hospital will incur all or substantially all of the costs of training in the non-hospital setting. The regulations further specify that the written agreement must indicate the amount of compensation provided by the hospital to the non-hospital site for supervisory teaching activities. Effective for cost reporting periods beginning on or after July 1, 2007 and before July 1, 2010, "all or substantially all of the costs for the training program" in the non-provider setting is defined as at least 90 percent of the total of the costs of the residents' salaries and fringe benefits (including travel and lodging where applicable) and the portion of the cost of teaching physician's salaries attributable to non-patient care direct GME activities.
The Affordable Care Act (ACA) amended section 1886(h)(4)(E) of the Act for direct GME purposes (and section 1886(d)(5)(B)(iv) of the Act for IME purposes), effective July 1, 2010, to allow a hospital to count residents training in non-provider settings if the residents are engaged in patient care activities and if the hospital incurs the costs of the stipends and fringe benefits of the resident during the time the residents spend in that setting. In addition, effective July 1, 2009, for direct GME purposes only, the time residents spend in certain non-patient care activities that occur in a non-provider setting that is primarily engaged in furnishing patient care may also be counted. For IME purposes, residents training in non-provider settings must spend their time in patient care activities in order to be counted. The implementing regulations at 413.78(g) for direct GME and at 412.105(f)(1)(ii)(E) for IME require that the hospital must either have a written agreement with the non-provider setting, or the hospital must pay for the costs of the stipends and fringe benefits of the residents concurrently during the time the residents spends in that setting. In addition, section 5503 of the ACA provides for reductions in the direct GME and IME FTE resident caps for certain hospitals, and authorizes "redistribution" to certain hospitals of the estimated number of FTE resident slots resulting from the reductions.
Section 5503 of the ACA provides for reductions in the direct GME and IME FTE resident caps for certain hospitals, and authorizes a "redistribution" to certain hospitals of the estimated number of FTE resident slots resulting from the reductions. Effective for portions of cost reporting periods occurring on or after July 1, 2011 for direct GME and IME, a hospital's FTE resident caps will be reduced by 65 percent of the "excess" resident slots if its "reference resident level" is less than its "otherwise applicable resident limit
Prior to the passage of the ACA, generally, if a teaching hospital closed, its direct GME and IME FTE resident cap slots would be "lost," because those slots are associated with a specific hospital's Medicare provider agreement that has terminated. Section 5506 of the ACA addresses this situation by instructing the Secretary to establish a process by regulation that would redistribute slots from teaching hospitals that close to hospitals that meet certain criteria, with priority given to hospitals located in the same Core Based Statistical Area (CBSA) or in a contiguous CBSA as the closed hospital.

Audit documentation for GME

Copies of all rotation schedules, in electronic format if available, for all residents to support the full time equivalent (FTE) counts reported on the cost report.
Resident files (including Curriculum Vitae, certifications, leave of absence support, etc).
Copies of current year written agreements to support outside rotations.
Support for the “all or substantially all” calculation (90 percent calculation).
Current year accreditation for each residency program.
If provider is not using the Interns/Residents Information System (IRIS) report to support the cost report FTE counts, an electronic version of the excel spreadsheet must be made available to the auditor.
A legend that will explain where the rotations take place.
First Coast Service Options (First Coast) strives to ensure that the information available on our provider website is accurate, detailed, and current. Therefore, this is a dynamic site and its content changes daily. It is best to access the site to ensure you have the most current information rather than printing articles or forms that may become obsolete without notice.