ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE HOSPITALS.

SEC. 13821. ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE HOSPITALS. (a) Disproportionate Share Hospitals Required to Provide Minimum Level of Services to Medicaid Patients.— (1) In general.— Section 1923 (42 U.S.C. 1396r–1) is amended— (A) in subsection (a)(1)(A), by striking “requirement” and inserting “requirements”; (B) in subsection (b)(1), by striking “requirement” and inserting “requirements”; (C) in the heading to subsection (d), by striking “Requirement” and inserting “Requirements”; (D) by adding at the end of subsection (d) the following new paragraph: “(3) No hospital may be defined or deemed as a disproportionate share hospital under a State plan under this title or under subsection (b) or (e) of this section unless the hospital has a medicaid inpatient utilization rate (as defined in subsection (b)(2)) of not less than 1 percent.”; (E) in subsection (e)(1)— (i) by striking “and” before “(B)”, and (ii) by inserting before the period at the end the following: “, and (C) the plan meets the requirement of subsection (d)(3) and such payment adjustments are made consistent with the last sentence of subsection (c)”; and (F) in subsection (e)(2)— (i) in subparagraph (A), by inserting “(other than the last sentence of subsection (c))” after “(c)”, (ii) by striking “and” at the end of subparagraph (A), (iii) by striking the period at the end of subparagraph (B) and inserting “, and”, and (iv) by adding at the end the following new subparagraph: “(C) subsection (d)(3) shall apply”. (2) Effective date.— The amendments made by this subsection shall apply to payments to States under section 1903(a) of the Social Security Act for payments to hospitals made under State plans after— (A) the end of the State fiscal year that ends during 1994, or (B) in the case of a State with a State legislature which is not scheduled to have a regular legislative session in 1994, the end of the State fiscal year that ends during 1995; 107 STAT. 630without regard to whether or not final regulations to carry out such amendments have been promulgated by either such date. (b) Limiting Amount of Hospital Payment Adjustment to Uncovered Costs.— (1) In general.— Section 1923 (42 U.S.C. 1396r–4) is amended by adding at the end the following new subsection: “(g) Limit on Amount of Payment to Hospital.— “(1) Amount of adjustment subject to uncompensated costs.— “(A) In general.— A payment adjustment during a fiscal year shall not be considered to be consistent with subsection (c) with respect to a hospital if the payment adjustment exceeds the costs incurred during the year of furnishing hospital services (as determined by the Secretary and net of payments under this title, other than under this section, and by uninsured patients) by the hospital to individuals who either are eligible for medical assistance under the State plan or have no health insurance (or other source of third party coverage) for services provided during the year. For purposes of the preceding sentence, payments made to a hospital for services provided to indigent patients made by a State or a unit of local government within a State shall not be considered to be a source of third party payment. “(B) Limit to public hospitals during transition period.— With respect to payment adjustments during a State fiscal year that begins before January 1, 1995, subparagraph (A) shall apply only to hospitals owned or operated by a State (or by an instrumentality or a unit of government within a State). “(C) Modifications for private hospitals.— With respect to hospitals that are not owned or operated by a State (or by an instrumentality or a unit of government within a State), the Secretary may make such modifications to the manner in which the limitation on payment adjustments is applied to such hospitals as the Secretary considers appropriate. “(2) Additional amount during transition period for certain hospitals with high disproportionate share.— “(A) In general.— In the case of a hospital with high disproportionate share (as defined in subparagraph (B)), a payment adjustment during a State fiscal year that begins before January 1, 1995, shall be considered consistent with subsection (c) if the payment adjustment does not exceed 200 percent of the costs of furnishing hospital services described in paragraph (1)(A) during the year, but only if the Governor of the state certifies to the satisfaction of the Secretary that the hospital’s applicable minimum amount is used for health services during the year. In determining the amount that is used for such services during a year, there shall be excluded any amounts received under the Public Health Service Act, title V, title XVIII, or from third party payors (not including the State plan under this title) that are used for providing such services during the year. 107 STAT. 631 “(B) Hospitals with high disproportionate share defined.— In subparagraph (A), a hospital is a ‘hospital with high disproportionate share’ if— “(i) the hospital is owned or operated by a State (or by an instrumentality or a unit of government within a State); and “(ii) the hospital— “(I) meets the requirement described in subsection (b)(1)(A), or “(II) has the largest number of inpatient days attributable to individuals entitled to benefits under the State plan of any hospital in such State for the previous State fiscal year. “(C) Applicable minimum amount defined.— In subparagraph (A), the ‘applicable minimum amount’ for a hospital for a fiscal year is equal to the difference between the amount of the hospital’s payment adjustment for the fiscal year and the costs to the hospital of furnishing hospital services described in paragraph (1)(A) during the fiscal year.”. (2) Conforming amendments.— Section 1923 is amended— (A) in subsection (c) in the matter preceding paragraph (1), by striking “subsection (f)” and inserting “subsections (f) and (g)”; and (B) in subsection (e)(2) (as amended by subsection (a)(1)(F))— (i) by striking “and” at the end of subparagraph (B); (ii) by striking the period at the end of subparagraph (C) and inserting “, and”; and (iii) by adding at the end the following new subparagraph: “(D) subsection (g) shall apply.”. (3) Effective date.— (A) In general.— Except as provided in subparagraph (B), the amendments made by this subsection shall apply to payments to States under section 1903(a) of the Social Security Act for payments to hospitals made under State plans after— (i) the end of the State fiscal year that ends during 1994,or (ii) in the case of a State with a State legislature which is not scheduled to have a regular legislative session in 1994, the end of the State fiscal year that ends during 1995; without regard to whether or not final regulations to carry out such amendments have been promulgated by either such date. (B) Delay in implementation for private hospitals.— With respect to a hospital that is not owned or operated by a State (or by an instrumentality or a unit of government within a State), the amendments made by this subsection shall apply to payments to States under section 1903(a) for payments to hospitals made under State plans for State fiscal years that begin during or after 1995, without regard to whether or not final regulations 107 STAT. 632to carry out such amendments have been promulgated by such date.