MEDICAID SHORTFALL AND THIRD PARTY PAYMENTS.

SEC. 203. MEDICAID SHORTFALL AND THIRD PARTY PAYMENTS. (a) In General.—Subsection (g) of section 1923 of the Social Security Act (42 U.S.C. 1396r-4) is amended to read as follows: “(g) Limit on Amount of Payment to Hospital.— “(1) In general.— “(A) Amount of adjustment subject to uncompensated costs.—A payment adjustment during a fiscal year shall not be considered to be consistent with subsection (c) with respect to a hospital (other than a hospital described in paragraph (2)(B)) if the payment adjustment exceeds an amount equal to— “(i) the costs incurred during the year of furnishing hospital services by the hospital to individuals described in subparagraph (B) minus— “(ii) the sum of— “(I) payments under this title (other than under this section) for such services; and “(II) payments by uninsured patients for such services. “(B) Individuals described.—For purposes of subparagraph (A), the individuals described in this clause are the following: “(i) Individuals who are eligible for medical assistance under the State plan or under a waiver of such plan and for whom the State plan or waiver is the primary payor for such services. “(ii) Subject to subparagraph (C), individuals who have no health insurance (or other source of third party coverage) for services provided during the year, as determined by the Secretary. “(C) Exclusion of certain payments.—For purposes of subparagraph (B)(ii), 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 coverage. “(2) Application of limits for certain hospitals.— “(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 described in subparagraph (B) if the payment adjustment exceeds the higher of— “(i) the amount determined for the hospital and fiscal year under paragraph (1)(A); and “(ii) the amount determined for the hospital under paragraph (1)(A) as in effect on January 1, 2020. “(B) Hospitals described.—A hospital is described in this subparagraph for a fiscal year if, for the most recent cost reporting period, the hospital is in at least the 97th percentile of all hospitals with respect to— “(i) the number of inpatient days for such period that were made up of patients who (for such days) were entitled to benefits under part A of title XVIII and were entitled to supplemental security income benefits under title XVI (excluding any State supplementary benefits paid with respect to such patients); or “(ii) the percentage of total inpatient days that were made up of patients who (for such days) were described in clause (i).” . (b) [42 U.S.C. 1396r-4 note] Effective Date.—The amendment made by this section shall take effect on October 1, 2021, and shall apply to payment adjustments made under section 1923 of the Social Security Act (42 U.S.C. 1396r-4) during fiscal years beginning on or after such date.