The payment rules for Medicare graduate medical education (GME) reimbursement inherently incentivize training during a resident's "initial residency period" (IRP), which is defined as the minimum accredited length for each specialty. Although Medicare indirect medical education payments are not tied to the length of a resident's training, direct graduate medical education (DGME) payments are reduced by half after a resident's IRP has expired.

Given the funding implications of the IRP, teaching hospitals need to know how long each resident's IRP "clock" will run, and when it is set to expire. CMS establishes an IRP for a given resident when that resident first matches into an approved program. The resident's IRP does not change, even if the resident later switches specialties. For example, if a resident begins training in a surgery program (with an IRP of five years) and later changes to internal medicine (with an IRP of three years), the teaching hospital will experience no reduction in Medicare DGME payments during the resident's training, because the resident will not have exceeded the five-year IRP clock. The reverse situation, however, leads to a potential funding problem for the hospital: if a resident who begins training in internal medicine switches to surgery, that resident will spend some number of years training beyond the assigned three-year clock, and the hospital's DGME payments will be reduced by half for any training beyond the resident's first three years. A resident does not receive a new IRP or an extension to the original IRP if the resident decides to pursue a fellowship after completing an approved training program.

CMS' general rule is that the IRP clock will not run during periods of extended leave, like maternity leave or a year spent exclusively doing research. CMS does not, however, have a centralized database of all residents and their IRPs, which places the burden on teaching hospitals—in conjunction with their Medicare administrative contractors—to keep track of each trainee's individual circumstances.

Though the most common reason for training beyond the IRP is fellowship training, other circumstances raise questions about how much time remains on an individual's IRP clock, including:

  • Participating in transitional and preliminary year programs;
  • Needing to repeat a year of training;
  • Changing specialties (as mentioned above);
  • Participating in a program with extended research training (e.g., the Holman Research Pathway);
  • Participating in a combined residency program (e.g., internal medicine and pediatrics);
  • Taking leave covered by the Family and Medical Leave Act; and