TAGME Financial Management 2 — Questions and Answers
Question 1: A GME program receives an unexpected mid-year budget shortfall due to increased resident travel costs. Which is the BEST immediate action for the program administrator?
- Request emergency supplemental funding from the institution
- Identify underspent budget line items that can be reallocated (Correct answer)
- Reduce resident educational conference allowances without notice
- Defer all non-essential purchases until the next fiscal year
Correct answer: Identify underspent budget line items that can be reallocated
Identifying underspent line items for reallocation is the most efficient first step before seeking additional funds or cutting resident benefits.
Question 2: Under the Medicare GME payment system, what does 'IME' stand for and what does it fund?
- Institutional Medical Expenses — general hospital overhead
- Indirect Medical Education — additional costs of teaching hospitals (Correct answer)
- Internal Medicine Education — specialty-specific residency training
- Integrated Medical Expenditures — combined direct and indirect costs
Correct answer: Indirect Medical Education — additional costs of teaching hospitals
IME (Indirect Medical Education) payments compensate teaching hospitals for the higher patient care costs associated with operating a training program.
Question 3: A residency program administrator notices that moonlighting income is being reported inconsistently across residents. What is the primary financial compliance concern?
- Tax reporting obligations for the institution
- Potential violation of duty hour regulations affecting program accreditation (Correct answer)
- Inconsistent stipend calculations in the payroll system
- Misclassification of moonlighting as residency-covered work
Correct answer: Potential violation of duty hour regulations affecting program accreditation
Inconsistent moonlighting reporting raises ACGME duty hour compliance concerns that can jeopardize program accreditation.
Question 4: Which cost-accounting method allocates shared departmental overhead (e.g., administrative salaries) to individual GME programs based on resident FTE count?
- Activity-based costing
- Direct costing
- Step-down allocation (Correct answer)
- Zero-based budgeting
Correct answer: Step-down allocation
Step-down allocation distributes shared service costs sequentially to departments, often using resident FTE as the allocation driver.
Question 5: A program administrator is preparing a budget variance report showing that actual resident benefit costs exceeded budget by 18%. Which metric should be analyzed FIRST?
- Total institutional revenue for the reporting period
- Changes in resident headcount or benefit enrollment rates (Correct answer)
- Number of faculty with clinical compensation plans
- Hospital occupancy rates during the reporting period
Correct answer: Changes in resident headcount or benefit enrollment rates
Changes in resident headcount or benefit enrollment directly drive benefit cost variances and should be examined before other factors.
Question 6: When a teaching hospital negotiates a new Medicare GME cap agreement after acquiring an additional training site, what federal agency must approve the new FTE cap?
- The Joint Commission (TJC)
- Centers for Medicare & Medicaid Services (CMS) (Correct answer)
- Accreditation Council for Graduate Medical Education (ACGME)
- Health Resources and Services Administration (HRSA)
Correct answer: Centers for Medicare & Medicaid Services (CMS)
CMS administers Medicare GME funding and must approve any changes to a hospital's FTE cap, including those resulting from site acquisitions.
Question 7: A fellowship program considers purchasing simulation equipment costing $80,000. The equipment is expected to save $15,000 annually in outsourced simulation fees. What is the simple payback period?
- 3.7 years
- 5.3 years (Correct answer)
- 6.0 years
- 8.0 years
Correct answer: 5.3 years
Simple payback = $80,000 ÷ $15,000/year = 5.33 years, approximately 5.3 years.
TAGME Financial Management 2
A GME program receives an unexpected mid-year budget shortfall due to increased resident travel costs.
Which is the BEST immediate action for the program administrator?