REDUCTION OF BAD DEBT TREATED AS AN ALLOWABLE COST.

SEC. 3201. REDUCTION OF BAD DEBT TREATED AS AN ALLOWABLE COST. (a) Hospitals.—Section 1861(v)(1)(T) of the Social Security Act (42 U.S.C. 1395x(v)(1)(T)) is amended— (1) in clause (iii), by striking “and” at the end; (2) in clause (iv)— (A) by striking “a subsequent fiscal year” and inserting “fiscal years 2001 through 2012”; and (B) by striking the period at the end and inserting “, and”; and (3) by adding at the end the following: “(v) for cost reporting periods beginning during fiscal year 2013 or a subsequent fiscal year, by 35 percent of such amount otherwise allowable.” . (b) Skilled Nursing Facilities.—Section 1861(v)(1)(V) of such Act (42 U.S.C. 1395x(v)(1)(V)) is amended— (1) in the matter preceding clause (i), by striking “with respect to cost reporting periods beginning on or after October 1, 2005” and inserting “and (beginning with respect to cost reporting periods beginning during fiscal year 2013) for covered skilled nursing services described in section 1888(e)(2)(A) furnished by hospital providers of extended care services (as described in section 1883)”; (2) in clause (i), by striking “reduced by” and all that follows through “allowable; and” and inserting the following:“reduced by— “(I) for cost reporting periods beginning on or after October 1, 2005, but before fiscal year 2013, 30 percent of such amount otherwise allowable; and “(II) for cost reporting periods beginning during fiscal year 2013 or a subsequent fiscal year, by 35 percent of such amount otherwise allowable.” ; and (3) in clause (ii), by striking “such section shall not be reduced.” and inserting“such section— “(I) for cost reporting periods beginning on or after October 1, 2005, but before fiscal year 2013, shall not be reduced; “(II) for cost reporting periods beginning during fiscal year 2013, shall be reduced by 12 percent of such amount otherwise allowable; “(III) for cost reporting periods beginning during fiscal year 2014, shall be reduced by 24 percent of such amount otherwise allowable; and “(IV) for cost reporting periods beginning during a subsequent fiscal year, shall be reduced by 35 percent of such amount otherwise allowable.” . (c) Certain Other Providers.—Section 1861(v)(1) of such Act (42 U.S.C. 1395x(v)(1)) is amended by adding at the end the following new subparagraph: “(W)(i) In determining such reasonable costs for providers described in clause (ii), the amount of bad debts otherwise treated as allowable costs which are attributable to deductibles and coinsurance amounts under this title shall be reduced— “(I) for cost reporting periods beginning during fiscal year 2013, by 12 percent of such amount otherwise allowable; “(II) for cost reporting periods beginning during fiscal year 2014, by 24 percent of such amount otherwise allowable; and “(III) for cost reporting periods beginning during a subsequent fiscal year, by 35 percent of such amount otherwise allowable. “(ii) A provider described in this clause is a provider of services not described in subparagraph (T) or (V), a supplier, or any other type of entity that receives payment for bad debts under the authority under subparagraph (A).” . (d) [42 U.S.C. 1395f note] Conforming Amendment for Hospital Services.—Section 4008(c) of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 1395 note), as amended by section 8402 of the Technical and Miscellaneous Revenue Act of 1988 and section 6023 of the Omnibus Budget Reconciliation Act of 1989, is amended by adding at the end the following new sentence: “Effective for cost reporting periods beginning on or after October 1, 2012, the provisions of the previous two sentences shall not apply.”.