IME
also known as: Indirect Medical Education · IME Adjustment
An adjustment to Medicare IPPS payments that compensates teaching hospitals for the higher per-discharge costs of training residents.
The Indirect Medical Education (IME) adjustment increases each Medicare IPPS payment to a teaching hospital, in proportion to the hospital's intern-and-resident-to-bed (IRB) ratio. The mathematical formula is roughly:
IME % = 1.35 × (1 + IRB)^0.405 − 1.35
So a hospital with IRB = 0.25 gets ~5-6% IME adjustment; a heavily-trained academic medical center with IRB = 0.70 might get 18-22%.
IME compensates teaching hospitals for two empirical realities: (1) cases admitted to teaching hospitals tend to be more complex even within the same MS-DRG, and (2) the presence of residents drives additional testing, consults, and longer lengths of stay. Whether the IME adjustment "overpays" is hotly debated; MedPAC has periodically recommended reducing it.
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