Financial Management Flashcards

A program director informs you mid-fiscal year that a resident unexpectedly matched into a fellowship, creating a vacant PGY-3 slot for the final 4 months. The vacant position's salary and benefits budget cannot be redirected. Under ACGME financial stewardship principles, what is the MOST appropriate action regarding the unspent salary funds?

Answer: Return the funds to the sponsoring institution's GME office and document the vacancy for accreditation purposes

Unspent resident salary and benefits funds from a vacant position must be returned to the sponsoring institution's GME office per institutional financial governance policies. These funds are earmarked for specific FTE positions and cannot be unilaterally reallocated by the program administrator without institutional authorization. Documenting the vacancy is also critical for ACGME complement reporting and financial audits.

Your GME office is preparing for a CMS Medicare GME cost report audit. The auditor questions whether a resident rotating at an affiliated site qualifies as an 'in-program' rotation for Direct Graduate Medical Education (DGME) cost reporting. Which factor is MOST determinative in establishing the resident's eligibility for DGME reimbursement at the primary teaching hospital?

Answer: Whether the primary teaching hospital maintains the written training agreement and retains responsibility for the resident's compensation

Under CMS regulations (42 CFR §413.78), a resident on an approved rotation at an affiliated site is counted for DGME purposes at the primary teaching hospital if that hospital maintains the written training agreement (WTA) with the affiliate AND retains financial responsibility for the resident's compensation. The WTA and compensation responsibility are the decisive factors — not the resident's physical location ratio or the affiliate's census.

A sponsoring institution receives a new 5-year grant from HRSA to fund two additional residency positions in a shortage specialty. During year 3, HRSA modifies the grant terms, reducing allowable indirect cost recovery from 26% to 18%. The program administrator must revise the budget. Which approach BEST reflects sound grant financial management in this scenario?

Answer: Submit a formal budget modification request to HRSA and identify direct cost offsets to compensate for the reduced indirect recovery

When a federal grant's terms are modified mid-award, the administrator must submit a formal budget modification (budget revision) to the awarding agency per 2 CFR §200.308. Identifying direct cost offsets — such as reducing supply costs or deferring non-essential purchases — compensates for lost indirect recovery while keeping the program compliant. Silently absorbing the shortfall violates federal reporting requirements, and unilaterally terminating funded positions could trigger grant non-compliance penalties.

When calculating your program's Indirect Medical Education (IME) adjustment for Medicare payment purposes, which of the following CORRECTLY describes how moonlighting hours affect the resident-to-bed (r/b) ratio used in the IME formula?

Answer: Internal moonlighting hours are included in the r/b ratio; external moonlighting hours at non-affiliated sites are excluded

Per CMS rules, internal moonlighting (services provided within the teaching hospital or its provider-based departments) counts toward the IME resident-to-bed ratio because the hospital bears supervisory and financial responsibility. External moonlighting at non-affiliated hospitals is excluded from the primary teaching hospital's IME calculation because those hospitals bear their own costs and claim their own IME. Specialty match and duty hour status are not the determining criteria.

Your institution is considering converting a residency program from a hospital-sponsored model to a university-sponsored model for administrative efficiency. From a CMS Medicare GME reimbursement standpoint, which is the MOST significant financial risk of this structural change?

Answer: The hospital may lose its existing GME FTE cap slots if CMS determines there has been a change in the 'approved medical residency program' ownership

CMS GME FTE caps are attached to the hospital as a Medicare provider and are tied to the approved residency program as it existed during the cap base years. A change in program sponsorship that CMS deems a change in 'ownership' of the approved program can jeopardize the hospital's ability to retain its historical FTE cap slots, potentially reducing the cap and permanently lowering DGME and IME payments. This is a critical, often underestimated financial risk in program restructuring. The other options misstate CMS rules.

A program administrator discovers that $14,000 in educational funds was spent by the prior coordinator on conference registrations for residents who subsequently did not attend and for whom no refunds were obtained. The expenditures occurred 18 months ago and are within the statute of limitations for institutional audit. What is the MOST appropriate immediate action?

Answer: Report the finding to the institutional compliance or internal audit office and cooperate fully with any investigation

Expenditures for goods or services not received ($14,000 in unrecoverable conference fees) represent a potential compliance issue, including possible waste or misappropriation of institutional funds. The appropriate action is immediate disclosure to the institutional compliance or internal audit office, consistent with most institutions' financial integrity policies and, where applicable, federal compliance obligations. Self-investigation or suppression of the finding exposes the administrator to personal liability. Recovering funds from residents is legally inappropriate — they were not party to the purchasing decision.