TAGME Financial Management 4 — Questions and Answers
Question 1: A teaching hospital's GME cap is set at 250 FTE residents. It currently trains 310 residents. Medicare pays for how many FTEs at the direct GME rate?
- 310 FTEs at full rate
- 250 FTEs at full rate, 60 at half rate
- 250 FTEs only; the remaining 60 receive no Medicare GME funding (Correct answer)
- 310 FTEs at a blended reduced rate
Correct answer: 250 FTEs only; the remaining 60 receive no Medicare GME funding
CMS pays direct GME at the full per-resident amount only up to the hospital's FTE cap; residents above the cap generate no additional Medicare GME payment.
Question 2: Which of the following is a direct cost typically included in calculating the per-resident amount (PRA) for Medicare GME funding?
- Malpractice insurance premiums for faculty attendings
- Resident salaries, benefits, and program administrative costs (Correct answer)
- Hospital overhead costs allocated to the GME department
- Costs of uninsured patient care at the teaching hospital
Correct answer: Resident salaries, benefits, and program administrative costs
The PRA is based on direct costs attributable to training residents, including salaries, benefits, and program administration, not faculty malpractice or hospital overhead.
Question 3: A GME administrator is asked to perform a 'gap analysis' for the upcoming budget cycle. What does this process involve?
- Comparing current program outcomes to ACGME milestone benchmarks
- Identifying the difference between projected funding and projected program expenses (Correct answer)
- Analyzing gaps in resident clinical scheduling coverage
- Reviewing missing documentation in resident personnel files
Correct answer: Identifying the difference between projected funding and projected program expenses
A budget gap analysis identifies the shortfall or surplus between anticipated revenue sources and expected expenditures for the planning period.
Question 4: A program is considering adding two new fellowship positions. The incremental cost per fellow is $95,000/year. If the hospital's Medicare GME cap has room for two additional FTEs and the PRA is $60,000, what is the net annual cost to the program per fellow?
- $35,000 (Correct answer)
- $60,000
- $95,000
- $155,000
Correct answer: $35,000
Net cost per fellow = $95,000 total cost − $60,000 Medicare PRA reimbursement = $35,000 annual net cost to the program.
Question 5: Under IRS rules, resident stipends are subject to which of the following?
- FICA (Social Security and Medicare) tax exemption for all residents
- Federal income tax withholding as employee compensation (Correct answer)
- Only state income tax; residents are exempt from federal withholding
- No taxation because stipends are considered educational grants
Correct answer: Federal income tax withholding as employee compensation
Resident stipends are treated as wages and are subject to federal income tax withholding; they are generally also subject to FICA unless a student FICA exception applies.
Question 6: A GME budget includes a line item for 'fringe benefits' at 32% of resident salaries. If total resident salaries are $2.4 million, what is the fringe benefit budget?
- $640,000
- $768,000 (Correct answer)
- $832,000
- $960,000
Correct answer: $768,000
$2,400,000 × 0.32 = $768,000 in fringe benefits.
Question 7: Which type of financial audit focuses specifically on whether GME funds were spent in compliance with federal regulations and institutional policies?
- Financial statement audit
- Operational audit
- Compliance audit (Correct answer)
- Performance audit
Correct answer: Compliance audit
A compliance audit evaluates whether spending conforms to applicable laws, regulations, and institutional policies—exactly the scope needed for GME fund oversight.
TAGME Financial Management 4
A teaching hospital's GME cap is set at 250 FTE residents.
It currently trains 310 residents.
Medicare pays for how many FTEs at the direct GME rate?