IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL (MDH) PROGRAM.

SEC. 5003. IMPROVEMENTS TO THE MEDICARE-DEPENDENT HOSPITAL (MDH) PROGRAM.(a) 5-Year Extension.—(1) Extension of Payment Methodology.—Section 1886(d)(5)(G) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amended—(A) in clause (i), by striking “October 1, 2006” and inserting “October 1, 2011”; and(B) in clause (ii)(II)—(i) by striking “October 1, 2006” and inserting “October 1, 2011”; and(ii) by inserting “or for discharges in the fiscal year” after “for the cost reporting period”.(2) Conforming amendments.—(A) Extension of target amount.—Section 1886(b)(3)(D) of such Act (42 U.S.C. 1395ww(b)(3)(D)) is amended—(i) in the matter preceding clause (i)—(I) by striking “beginning” and inserting “occurring”; and(II) by striking “October 1, 2006” and inserting “October 1, 2011”; and120 STAT. 32(ii) in clause (iv), by striking “through fiscal year 2005” and inserting “through fiscal year 2011”.(B) Permitting hospitals to decline reclassification.—Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 1395ww note) is amended by striking “through fiscal year 2005” and inserting “through fiscal year 2011”.(b) Option To Use 2002 as Base Year.—Section 1886(b)(3) of such Act (42 U.S.C. 1395ww(b)(3)) is amended—(1) in subparagraph (D), by inserting “subject to subparagraph (K),” after “(d)(5)(G)),”; and (2) by adding at the end the following new subparagraph:“(K)(i) With respect to discharges occurring on or after October 1, 2006, in the case of a medicare-dependent, small rural hospital, for purposes of applying subparagraph (D)—“(I) there shall be substituted for the base cost reporting period described in subparagraph (D)(i) the 12-month cost reporting period beginning during fiscal year 2002; and“(II) any reference in such subparagraph to the ‘first cost reporting period’ described in such subparagraph is deemed a reference to the first cost reporting period beginning on or after October 1, 2006.“(ii) This subparagraph shall only apply to a hospital if the substitution described in clause (i)(I) results in an increase in the target amount under subparagraph (D) for the hospital.”.(c) Enhanced Payment for Amount by Which the Target Exceeds the PPS Rate.—Section 1886(d)(5)(G)(ii)(II) of such Act (42 U.S.C. 1395ww(d)(5)(G)(iv)(II)) is amended by inserting “(or 75 percent in the case of discharges occurring on or after October 1, 2006)” after “50 percent”.(d) Enhanced Disproportionate Share Hospital (DSH) Treatment for Medicare-Dependent Hospitals.—Section 1886(d)(5)(F)(xiv)(II) of such Act (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended by inserting “or, in the case of discharges occurring on or after October 1, 2006, as a medicare-dependent, small rural hospital under subparagraph (G)(iv)” before the period at the end.