Public funding of graduate medical education (GME) represents a significant investment in the physician workforce. GME funding includes a complex mixture of payments through Medicare, Medicaid, the Veterans Administration, the Health Resources and Services Administration, state government appropriations, patient care revenue, and grants. Total GME funding nationwide approaches $20 billion dollar annually. The largest proportion is through the Medicare program that makes payments to hospitals for residency training programs. About one-third of Medicare GME payments are “direct” payments for costs such as resident and faculty salaries, educational materials, building space, and other operational costs. About two-thirds of the Medicare GME payments are for “indirect” costs that are calculated for each hospital based on the ratio of residents to Medicare inpatient beds. Each hospital has “caps” for the number of residents supported through Medicare direct graduate medical education payments and indirect graduate medical education payments. The second largest proportion of payments is through state Medicaid programs. Each state has a different formula for making Medicaid GME payments. Patient care revenue may offset some GME costs but is insufficient to cover all residency program expenses. The most recent federal change in GME funding is the Consolidated Appropriations Act of 2021. There have been many efforts to support rural hospital graduate medical education, but the regulations are complex and nuanced. Residency program directors should be well versed in GME funding and its many regulations and nuances to avoid pitfalls that may adversely affect their programs.