Teaching Hospital

Key facts

Residency accreditation

Accreditation Council for Graduate Medical Education (ACGME)

Medicare teaching payments

Direct graduate medical education (DGME) and indirect medical education (IME)

IME regulation

42 CFR 412.105

Resident caps

Set by the Balanced Budget Act of 1997, based on 1996 resident counts

New Medicare-funded slots

1,000 authorized by the Consolidated Appropriations Act, 2021

What is a teaching hospital?

After medical school, physicians complete residency training in hospitals and affiliated clinics. Hospitals that sponsor or host residency and fellowship programs are teaching hospitals. The largest are academic medical centers, which combine a teaching hospital with a medical school and a research enterprise, but many community hospitals also train residents.

There is no single legal definition. Medicare effectively identifies teaching hospitals by whether they receive graduate medical education (GME) payments, and CMS uses that test to build its Open Payments teaching hospital list. Researchers often call a hospital a major teaching hospital when its ratio of interns and residents to beds is at least 0.25.

How Medicare funds teaching hospitals

Medicare is the largest public funder of residency training. Its support flows through two channels, both limited by caps:

• Direct GME payments cover Medicare's share of resident salaries, teaching physician supervision and program overhead, based on a hospital-specific per-resident amount.
• The indirect medical education (IME) adjustment raises IPPS payments per discharge based on the resident-to-bed ratio, reflecting the higher costs of teaching settings.
• The Balanced Budget Act of 1997 capped the number of Medicare-funded residents at each hospital, based largely on 1996 counts.
• The Consolidated Appropriations Act, 2021 authorized 1,000 new Medicare-funded residency slots, distributed in annual rounds starting in fiscal year 2023.

Why teaching status matters

Teaching intensity shapes patient mix, research activity and costs:

• Teaching hospitals treat a large share of complex cases and often run clinical trials, making them priority sites for specialty drug launches and trial site selection.
• Residents and fellows are early-career prescribers, so knowing where programs sit helps medical affairs teams and physician recruiters plan engagement.
• Open Payments reports industry payments to teaching hospitals separately from payments to physicians, so matching industry spending to institutions starts with the teaching hospital list.
• Case mix and costs differ sharply by teaching intensity, so benchmarks for length of stay, cost or quality should compare hospitals with similar teaching status.