To amend titles XIX and XVIII of the Social Security Act, as amended by the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, with respect to payment of disproportionate share hospitals (DSH) under the Medicare and Medicaid programs.

Summary: Directs the Secretary of Health and Human Services (HHS) to report to Congress on the Medicare DSH (disproportionate share hospital) payment system, taking into account the impact of the health care reforms under the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA), in reducing the number of uninsured individuals.

Requires the Secretary to make specified adjustments to the Medicare DSH payment system, including an additional payment to hospitals based on the amount of uncompensated care they have provided, if there is a significant decrease in the national rate of uninsurance as a result of corrected PPACA.

Amends title XVIII (Medicare) of the Social Security Act (SSA), as amended by PPACA and HCERA, to eliminate certain current requirements for adjustments to Medicare DSH payments.

Amends SSA title XIX (Medicaid), as amended by PPACA and HCERA, to postpone specified Medicaid DSH reductions scheduled for FY2014-FY2020 until FY2018-FY2024.

SECTION 1. MEDICARE DSH REPORT AND PAYMENT ADJUSTMENTS IN RESPONSE TO 
              COVERAGE EXPANSION INSTEAD OF PPACA AND HCERA REVISIONS.

    (a) DSH Report.--Not later than January 1, 2016, the Secretary of 
Health and Human Services shall submit to Congress a report on Medicare 
DSH taking into account the impact of the health care reforms carried 
out under the Patient Protection and Affordable Care Act, as amended by 
the Health Care and Education Reconciliation Act of 2010, in reducing 
the number of uninsured individuals. The report shall include 
recommendations relating to the following:
            (1) The appropriate amount, targeting, and distribution of 
        Medicare DSH to compensate for higher Medicare costs, Medicaid 
        reimbursement shortfalls, and uncompensated care associated 
        with serving low-income beneficiaries (taking into account 
        variations in the empirical justification for Medicare DSH 
        attributable to hospital characteristics, including bed size), 
        consistent with the original intent of Medicare DSH.
            (2) The appropriate amount, targeting, and distribution of 
        Medicare DSH to hospitals given their continued uncompensated 
        care costs, to the extent such costs remain.
    (b) Payment Adjustments in Response to Coverage Expansion.--
            (1) In general.--If there is a significant decrease in the 
        national rate of uninsurance as a result of corrected PPACA (as 
        determined under paragraph (2)(A)), then the Secretary of 
        Health and Human Services shall, beginning no earlier than 
        fiscal year 2018, implement the following adjustments to 
        Medicare DSH:
                    (A) In lieu of the amount of Medicare DSH payment 
                that would otherwise be made under section 
                1886(d)(5)(F) of the Social Security Act, the amount of 
                Medicare DSH payment shall be an amount based on the 
                recommendations of the report under subsection (a)(1) 
                and shall take into account variations in the empirical 
                justification for Medicare DSH attributable to hospital 
                characteristics, including bed size.
                    (B) Subject to paragraph (3), make an additional 
                payment to a hospital by an amount that is estimated 
                based on the amount of uncompensated care provided by 
                the hospital based on criteria for uncompensated care 
                as determined by the Secretary, which shall exclude bad 
                debt.
            (2) Significant decrease in national rate of uninsurance as 
        a result of this act.--For purposes of this subsection--
                    (A) In general.--There is a ``significant decrease 
                in the national rate of uninsurance as a result of 
                corrected PPACA'' if there is a decrease in the 
                national rate of uninsurance (as defined in 
                subparagraph (B)) from 2012 to 2014 that exceeds 8 
                percentage points.
                    (B) National rate of uninsurance defined.--The term 
                ``national rate of uninsurance'' means, for a year, 
                such rate for the under-65 population for the year as 
                determined and published by the Bureau of the Census in 
                its Current Population Survey in or about September of 
                the succeeding year.
            (3) Uncompensated care increase.--
                    (A) Computation of dsh savings.--For each fiscal 
                year (beginning with fiscal year 2018), the Secretary 
                shall estimate the aggregate reduction in the amount of 
                Medicare DSH payment that would be expected to result 
                from the adjustment under paragraph (1)(A).
                    (B) Structure of payment increase.--The Secretary 
                shall compute the additional payment to a hospital as 
                described in paragraph (1)(B) for a fiscal year in 
                accordance with a formula established by the Secretary 
                that provides that--
                            (i) the estimated aggregate amount of such 
                        increase for the fiscal year does not exceed 50 
                        percent of the aggregate reduction in Medicare 
                        DSH estimated by the Secretary for such fiscal 
                        year; and
                            (ii) hospitals with higher levels of 
                        uncompensated care receive a greater increase.
    (c) Definitions.--In this section:
            (1) The term ``Medicare DSH'' means adjustments in payments 
        under section 1886(d)(5)(F) of the Social Security Act (42 
        U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 
        furnished by disproportionate share hospitals.
            (2) The term ``corrected PPACA'' means the Patient 
        Protection and Affordable Care Act, as amended by the Health 
        Care and Education Reconciliation Act of 2010.
    (d) Elimination of HCERA Provision.--Section 1886 of the Social 
Security Act (42 U.S.C. 1395ww), as amended by sections 3133 and 10316 
of the Patient Protection and Affordable Care Act and section 1104 of 
the Health Care and Education Reconciliation Act of 2010, is amended--
            (1) in subsection (d)(5)(F)(i), by striking ``Subject to 
        subsection (r), for'' and inserting ``For''; and
            (2) by striking subsection (r).

SEC. 2. MEDICAID DSH REVISIONS.

    Section 1923(f)(7)(A) of the Social Security Act (42 U.S.C. 1396r-
4(f)(7)(A)), as amended by sections 2551(a)(4) and 10201(e)(1) of the 
Patient Protection and Affordable Care Act and section 1203(a) of the 
Health Care and Education Reconciliation Act of 2010, is amended--
            (1) clause (i), by striking ``2014 through 2020'' and 
        inserting ``2018 through 2024''; and
            (2) in subclauses (I) through (VII) of clause (ii), by 
        striking ``2014'', ``2015'', ``2016'', ``2017'', ``2018'', 
        ``2019'', and ``2020'' and inserting ``2018'', ``2019'', 
        ``2020'', ``2021'', ``2022'', ``2023'', and ``2024'', 
        respectively.