CMS Announces New GME Cap Increases Under Sections 126 and 4122

Margot Flowers
3 days ago
2 min read

On December 18, 2025, the Centers for Medicare & Medicaid Services (CMS) released the latest round of GME cap increase awardees under two key initiatives (Section 126 and Section 4122) of the Consolidated Appropriations Act (HR 133). These awards represent important progress in expanding Medicare-supported residency training opportunities in alignment with national workforce needs.

Section 126 Cap Increase: Round 4 Results

Section 126 makes 1,000 additional Medicare-funded Graduate Medical Education (GME) Full-Time Equivalent (FTE) residency positions available to qualifying hospitals. To be eligible, hospitals must meet at least one of the following criteria:

Be located in a rural area or treated as rural under federal law
Train residents in excess of their current Medicare GME cap
Be located in states with new medical schools or branch campuses
Serve areas designated as Health Professional Shortage Areas (HPSAs)

In the Round 4 distribution, CMS awarded additional IME and/or DGME cap slots to 95 hospitals across 32 states. These awards represent the continued effort to strategically grow GME capacity where it is most needed.

To date, 800 of the total 1,000 FTE positions authorized under Section 126 have been distributed across four rounds.

Looking Ahead:

Round 5 applications are due March 31, 2026
Award announcements will be made on January 31, 2027
Awarded cap increases will go into effective on July 1, 2027

Section 4122: Psychiatry-Focused Expansion

In response to the successful implementation of Section 126, CMS introduced Section 4122, an additional round of 200 new residency positions. Although authorized under a separate section, Section 4122 follows the same application and eligibility framework as Section 126, with one key difference:

To address growing mental health workforce shortages, 50% of the awarded positions (100 FTEs) were required to support psychiatry residency or fellowship programs.

On December 18, 2025, CMS announced that 74 hospitals across 30 states received awards through Section 4122. Of the 200 total cap positions, 104.43 IME slots and 109.02 DGME slots were allocated specifically to psychiatry training programs.

Staying Informed and Strategic

These distributions mark a meaningful step forward in GME expansion, especially in high-need specialties and underserved areas. At Germane Solutions, we continue to monitor CMS policy developments and support institutions in evaluating eligibility, preparing applications, and strategically aligning new residency positions with institutional goals.

If your hospital is considering applying for Round 5 or exploring strategies to expand residency training, our Finance and Strategy teams are here to help.