To amend title XVIII of the Social Security Act to provide opportunities for additional residency slots in participating teaching hospitals and to expand the primary care bonus to certain underserved specialties and to amend the Internal Revenue Code of 1986 to provide tax incentives for practicing-teaching physicians.

Summary: Improving Physician Access in Teaching Hospitals (PATH) Act of 2011 - Amends title XVIII (Medicare) of the Social Security Act with respect to distribution of additional resident positions as they affect calculation of payments for direct graduate medical education (DME) costs.

States that, if a hospital's resident level for each of the five most recent cost reporting periods is less than the otherwise applicable resident limit, then the otherwise applicable resident limit shall be reduced by the difference between it and the highest reference resident level for any of those five cost reporting periods. Excepts from this reduction requirement a hospital: (1) located in a rural area with fewer than 250 beds, or (2) that has had in effect a voluntary residency reduction plan.

Requires the Secretary of Health and Human Services (HHS) to increase the otherwise applicable resident limit (create additional residency slots) for applicant hospitals according to a specified formula that takes into account the aggregate reduction in limits attributable to this Act.

Expands the primary care bonus to certain underserved specialties, such as psychiatry or neurology.

Amends the Internal Revenue Code to allow a small physician practice residency credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improving Physician Access in 
Teaching Hospitals (PATH) Act of 2011''.

SEC. 2. DISTRIBUTION OF ADDITIONAL RESIDENCY SLOTS.

    Section 1886(h) of the Social Security Act (42 U.S.C. 1395ww(h)) is 
amended--
            (1) in paragraph (7)(E), by inserting ``paragraph (9),'' 
        after ``paragraph (8),''; and
            (2) by adding at the end the following:
            ``(9) Distribution of additional residency positions.--
                    ``(A) Reductions in limit based on unused 
                positions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), if a hospital's resident level (as 
                        defined in paragraph (7)(C)(i)) for each of the 
                        5 most recent cost reporting periods (ending 
                        before the date of the enactment of this 
                        paragraph) of the hospital for which a cost 
                        report has been settled (or, if not, submitted 
                        subject to audit) as determined by the 
                        Secretary is less than the otherwise applicable 
                        resident limit (as defined in paragraph 
                        (8)(H)(iii)), effective for portions of cost 
                        reporting periods occurring on or after the 
                        paragraph (9) effective date (as defined in 
                        subparagraph (E)), the otherwise applicable 
                        resident limit shall be reduced by the 
                        difference between such otherwise applicable 
                        resident limit and the highest such reference 
                        resident level for any of such 5 cost reporting 
                        periods.
                            ``(ii) Exception.--Clause (i) shall not 
                        apply to--
                                    ``(I) a hospital located in a rural 
                                area with fewer than 250 beds; or
                                    ``(II) a hospital that has had in 
                                effect a voluntary residency reduction 
                                plan under paragraph (6) or pursuant to 
                                section 402 of Public Law 90-248.
                    ``(B) Requirements for additional residency 
                slots.--
                            ``(i) In general.--The Secretary shall 
                        increase the otherwise applicable resident 
                        limit for hospitals that submit an application 
                        under this subparagraph by such number as the 
                        Secretary may approve for portions of cost 
                        reporting periods occurring on or after the 
                        paragraph (9) effective date. The aggregate 
                        number of increases in the otherwise applicable 
                        resident limit under this subparagraph shall be 
                        equal to the sum of--
                                    ``(I) the aggregate reduction in 
                                such limits attributable to 
                                subparagraph (A) (as estimated by the 
                                Secretary); and
                                    ``(II) 1,000 for portions of cost 
                                reporting periods occurring during the 
                                12-month period beginning on the 
                                paragraph (9) effective date, 1,000 
                                additional positions for portions of 
                                cost reporting periods occurring during 
                                the 12-month period beginning 1 year 
                                after such effective date, 1,000 
                                additional positions for portion of 
                                cost reporting period occurring during 
                                the 12-month period beginning 2 years 
                                after such effective date, and such 
                                number of additional positions for 
                                portions of the 2 subsequent cost 
                                reporting periods as the Secretary may 
                                determine necessary to support 
                                residency training programs in 
                                specialities that exceed 3 years.
                            ``(ii) Consideration in redistribution.--In 
                        determining for which hospitals the increase in 
                        the otherwise applicable resident limit is 
                        provided under this subparagraph, the Secretary 
                        shall take into account--
                                    ``(I) data provided by the Health 
                                Resources and Services Administration 
                                as a national standard to exhibit a 
                                specific demand in the health care 
                                workforce, as well as the 
                                Administration's projected demand and 
                                supply for physicians in the specialty 
                                of medicine involved; and
                                    ``(II) the demonstrated likelihood 
                                of the hospital filling positions made 
                                available under this paragraph within 
                                the first 3 cost reporting periods 
                                beginning on or after the paragraph (9) 
                                effective date.
                        The Secretary shall give special consideration 
                        for up to 25 additional positions in the case 
                        of a hospital that demonstrates the likelihood 
                        of filing such positions during the first cost 
                        reporting period beginning on or after such 
                        effective date.
                            ``(iii) Limitation.--In no case shall the 
                        number of additional positions made available 
                        to a hospital under this paragraph exceed 25 in 
                        the first cost reporting period or 75 for all 
                        cost reporting periods.
                    ``(C) Priority for additional positions resulting 
                from hospital closures.--With respect to additional 
                positions described in subparagraph (B)(i)(I) which are 
                derived from a reduction in limits under subparagraph 
                (A) for a hospital that closed (in this subparagraph 
                referred to as a `closed hospital'), the Secretary 
                shall distribute the increase to hospitals in the 
                following priority order:
                            ``(i) First, to other hospitals for the 
                        program or programs under which the hospital 
                        had a cooperative arrangement with the closed 
                        hospital under which residents in the graduate 
                        medical education program of the closed 
                        hospital also rotated through the other 
                        hospital.
                            ``(ii) Second, to other hospitals that are 
                        members of the same affiliated group of 
                        hospitals as the closed hospital.
                            ``(iii) Third, to other hospitals that are 
                        located in the same or contiguous core-based 
                        statistical area as the closed hospital.
                    ``(D) Preference.--After applying subparagraph (C) 
                and the special consideration under subparagraph (B), 
                in determining for which hospitals the increase in the 
                otherwise applicable resident limit is provided under 
                subparagraph (B), the Secretary shall give preference 
                to hospitals--
                            ``(i) that submit an application for new 
                        residents in primary care and geriatric 
                        medicine and in other specialties as determined 
                        to be in demand under subparagraph (B)(ii)(I); 
                        and
                            ``(ii) that emphasize training in community 
                        health centers and other community-based or 
                        hospital-sponsored clinics, and private 
                        physicians' offices, including physician 
                        groups.
                    ``(E) Paragraph (9) effective date defined.--In 
                this paragraph, the term `paragraph (9) effective date' 
                means July 1 of the year that begins after the date of 
                the enactment of this paragraph.
                    ``(F) Affiliation.--The provisions of this 
                paragraph shall be applied to hospitals which are 
                members of the same affiliated group (as defined by the 
                Secretary under paragraph (4)(H)(ii)) and the reference 
                resident level for each such hospital with respect to 
                the cost reporting period that results in the smallest 
                difference between the reference resident level and the 
                otherwise applicable resident limit.''.

SEC. 3. EXPANDING PRIMARY CARE BONUS TO CERTAIN UNDERSERVED 
              SPECIALTIES.

    (a) In General.--Section 1833(x)(2)(A) of the Social Security Act 
(42 U.S.C. 1395l(x)(2)(A)) is amended--
            (1) in clause (i)--
                    (A) by striking ``or'' at the end of subclause (I);
                    (B) by striking ``and'' at the end of subclause 
                (II) and inserting ``or''; and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(III) is a physician (as 
                                described in section 1861(r)(1)) who is 
                                in an underserved specialty, such as 
                                psychiatry or neurology, as specified 
                                by the Secretary, or other specialty 
                                identified by the Secretary to be in 
                                demand; and''; and
            (2) in clause (ii), by inserting after ``(ii)'' the 
        following: ``in the case of an individual described in 
        subclause (I) or (II) of clause (i),''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to payments for items and services furnished on or after January 
1, 2012.

SEC. 4. SMALL PHYSICIAN PRACTICE RESIDENCY CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45S. SMALL PHYSICIAN PRACTICE RESIDENCY CREDIT.

    ``(a) In General.--For purposes of section 38, the amount of the 
small physician practice residency credit determined under this section 
for any taxable year with respect to a qualified small physician 
practice is the sum of the following:
            ``(1) Overall amount.--The per resident dollar amount 
        multiplied by the number of qualified teaching hospital 
        residents who provide services to, and are trained by, such 
        practice during the taxable year and who are in their first, 
        second, or third post-graduate year of medical residency.
            ``(2) Bonus.--The sum of--
                    ``(A) 50 percent of the per resident dollar amount 
                multiplied by the number of such residents who are in 
                their first post-graduate year of medical residency 
                during the taxable year; and
                    ``(B) 25 percent of the per resident dollar amount 
                multiplied by the average number of such residents who 
                are not counted under subparagraph (A) and are in their 
                second post-graduate year during the taxable year.
    ``(b) Qualified Small Physician Practice.--For purposes of this 
section, the term `qualified small physician practice' means any trade 
or business of providing physicians' services (as defined in section 
1861(q) of the Social Security Act), which may be a community health 
center, that is owned and operated by a doctor of medicine or 
osteopathy if fewer than 50 individuals are employed in such trade or 
business (including new training sites) and the trade or business 
includes as part of the practice the training of doctors of medicine or 
osteopathy in a rotation covering at least 6 months in the taxable 
year. All persons treated as a single employer under subsection (a) or 
(b) or section 52 or subsection (m) or (o) of section 414 shall be 
treated as a single trade or business for purposes of the preceding 
sentence.
    ``(c) Qualified Teaching Hospital Residents.--For purposes of this 
section, the term `qualified teaching hospital resident' means any 
resident (within the meaning of subparagraph (I) of section 1886(h)(5) 
of the Social Security Act) in an approved medical residency training 
program (as defined in subparagraph (A) of such section) which provides 
services to the qualified small physician practice (while utilizing the 
technologies and supplies of such practice) for a period not less 
than--
            ``(1) 4 weeks in the case of a primary care resident (as 
        defined in subparagraph (H) of such section); or
            ``(2) 2 weeks in the case of any other resident.
    ``(d) Per Resident Dollar Amount.--For purposes of this section, 
the term `per resident dollar amount' means, in the case of a qualified 
small physician practice that includes as part of the practice the 
training of doctors of medicine or osteopathy in a rotation covering--
            ``(1) at least 6 months but less than 9 months in the 
        taxable year, $2,500; or
            ``(2) at least 9 months in the taxable year, $3,000.
    ``(e) Residents Not Taken Into Account More Than Once.--A qualified 
teaching hospital resident shall be taken into account under subsection 
(a) for the taxable in which the period described in subsection (c) 
ends and shall not be so taken into account for any other taxable 
year.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of such Code (defining current year business credit) is amended 
by striking ``plus'' at the end of paragraph (35), by striking the 
period at the end of paragraph (36) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(37) the small physician practice residency credit 
        determined under section 45S(a).''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45S. Small physician practice residency credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.