Medicare Residency Program Fairness Act of 2006 - Amends title XVIII (Medicare) of the Social Security Act with respect to payments to hospitals for the direct graduate medical education (DGME) costs of inpatient hospital services, particularly the redistribution among qualifying hospitals of unused resident positions which figure in the calculation of DGME costs.
Requires a specified adjustment to the reduction of Medicare resident positions for rural and small urban hospitals, where that reduction was based on a cost report subsequently settled, whether as a result of an appeal or otherwise, if the reference resident level under such settled cost report is higher than the resident level used for the reduction.