Arthroscopic Rotator Cuff (ARC) is a minimally invasive surgery of the shoulder. ARC training for surgeons is challenging due to confined space, anatomical complexity, requirement of complex hands-eye coordination skills, subjectivity, and low fidelity in existing training mediums. We therefore offer a virtual reality based photorealistic medical simulation, Virtual Rotator Cuff Arthroscopic Skill Trainer (ViRCAST) for objective training. In this study, as a part of ViRCAST, we introduce a virtual reality-based bone drilling simulation. Bone drilling task is one of the most important tasks that surgeons need to perform before anchor placement in ARC. Realistic simulation of bone drilling with force feedback is complex due to real-time mesh modification and simulation constraints. We introduce a GPU based realtime bone drilling simulation for ViRCAST using an adaptive mesh refinement technique. Our GPU based solution improves the drilling simulation realism by enhancing mesh resolution without sacrificing the simulation performance.