SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Graduate Opportunities in Medical 
Education Distribution Act of 2016''.

SEC. 2. REDISTRIBUTING UNUSED RESIDENCY POSITIONS TO HOSPITALS IN 
              STATES WITH SHORTAGES OF RESIDENTS AND HEALTH 
              PROFESSIONALS.

    (a) In General.--Section 1886(h) of the Social Security Act (42 
U.S.C. 1395ww(h)) is amended--
            (1) in paragraph (4)(F)(i), by striking ``(7) and (8)'' and 
        inserting ``(7), (8), and (9)'';
            (2) in paragraph (4)(H)(i), by striking ``(7) and (8)'' and 
        inserting ``(7), (8), and (9)'';
            (3) in paragraph (7)(E), by striking ``paragraph (8)'' and 
        inserting ``paragraph (8) or (9)'' before the period at the 
        end; and
            (4) by adding at the end the following new paragraph:
            ``(9) Distribution of additional residency positions.--
                    ``(A) Reductions in limit based on unused 
                positions.--
                            ``(i) Making of determinations.--Not later 
                        than 180 days after the date of the enactment 
                        of this paragraph and each four years 
                        thereafter, the Secretary shall make a set of 
                        reduction determinations (as defined in clause 
                        (ii)).
                            ``(ii) Set of reduction determinations 
                        defined.--For purposes of this paragraph, the 
                        term `set of reduction determinations' means 
                        determinations with respect to each hospital of 
                        whether, with respect to the one-year period 
                        ending on the date of such set of reduction 
                        determinations (referred to in this paragraph 
                        as the `measurement period' for such set of 
                        reduction determinations), the hospital's 
                        reference resident level (as defined in 
                        subparagraph (F)(i)) for such period was less 
                        than the otherwise applicable resident limit 
                        (as defined in subparagraph (F)(iii)) for such 
                        hospital and period.
                            ``(iii) Reduction based on determination.--
                        In the case that, with respect to the 
                        measurement period for a set of reduction 
                        determinations, the Secretary determines under 
                        this subparagraph that the reference resident 
                        level of a hospital for such period was less 
                        than the otherwise applicable resident limit 
                        for such hospital and period, effective for 
                        portions of cost reporting periods occurring 
                        after the date of such set of reduction 
                        determinations and on or before the date of any 
                        subsequent set of reduction determinations 
                        under clause (i) (referred to in this paragraph 
                        as the `consequence period' for such set of 
                        reduction determinations), the otherwise 
                        applicable resident limit for such hospital 
                        shall be reduced by 65 percent of the 
                        difference between such otherwise applicable 
                        resident limit for the hospital and measurement 
                        period and such reference resident level for 
                        the hospital and measurement period (or, in the 
                        case that the Secretary determines that, with 
                        respect to the consequence period immediately 
                        preceding such consequence period, the hospital 
                        was a hospital described in clause (ii) of 
                        subparagraph (B) that did not meet the 
                        requirements of such clause, by the number 
                        described in clause (iv)).
                            ``(iv) Number described.--The number 
                        described in this clause, with respect to a 
                        hospital and consequence period (referred to in 
                        this clause as the `target consequence 
                        period'), is the greater of--
                                    ``(I) the number by which the 
                                otherwise applicable resident limit for 
                                such hospital would be reduced for the 
                                target consequence period under clause 
                                (iii) without the application of this 
                                clause; and
                                    ``(II) the number by which the 
                                otherwise applicable resident limit for 
                                such hospital was increased for the 
                                consequence period that immediately 
                                preceded the target consequence period.
                            ``(v) Exception.--This subparagraph shall 
                        not apply to a hospital located in a rural area 
                        (as defined in subsection (d)(2)(D)(ii)) with 
                        fewer than 250 acute care inpatient beds.
                            ``(vi) Determination timing.--In the case 
                        of a reduction determination made in a year by 
                        the Secretary under clause (i) that is not the 
                        first such reduction determination so made, the 
                        Secretary shall make such determination on a 
                        date that is not later than March 31 of such 
                        year.
                    ``(B) Distribution.--
                            ``(i) In general.--With respect to each set 
                        of reduction determinations under subparagraph 
                        (A)(i), the Secretary shall, in accordance with 
                        the succeeding provisions of this paragraph, 
                        increase the otherwise applicable resident 
                        limit for each qualifying hospital that submits 
                        an application under this subparagraph by such 
                        number as the Secretary may approve for 
                        portions of cost reporting periods occurring 
                        during the consequence period for such set of 
                        reduction determinations. The aggregate number 
                        of increases in the otherwise applicable 
                        resident limit under this subparagraph for such 
                        consequence period shall be equal to the 
                        aggregate reduction in such limits attributable 
                        to subparagraph (A) (as estimated by the 
                        Secretary) for such consequence period.
                            ``(ii) Requirements.--A hospital that 
                        receives an increase in the otherwise 
                        applicable resident limit under this 
                        subparagraph for a consequence period shall 
                        ensure that, during such consequence period, 
                        the positions resulting from the increase under 
                        this paragraph will be filled. The Secretary 
                        may determine whether a hospital has met the 
                        requirements under this clause during such 
                        consequence period in such manner and at such 
                        time as the Secretary determines appropriate, 
                        including at the end of such period.
                    ``(C) Capacity considerations in redistribution.--
                In determining which hospitals are to receive increases 
                in their otherwise applicable resident limits under 
                subparagraph (B) for a consequence period for a set of 
                reduction determinations, the Secretary shall take into 
                account the demonstrated likelihood of each such 
                hospital filling the positions made available under 
                this paragraph within such consequence period, as 
                determined by the Secretary.
                    ``(D) Priority in redistribution.--Subject to 
                subparagraph (C), the Secretary shall select, with 
                respect to a set of reduction determinations under 
                subparagraph (A)(i), the qualifying hospitals that will 
                receive increases under subparagraph (B) in the 
                otherwise applicable resident limits for such hospitals 
                for the consequence period for such set of reduction 
                determinations. The Secretary shall make such selection 
                in a manner that distributes the positions made 
                available to hospitals for such consequence period 
                under this paragraph in accordance with the following:
                            ``(i) The Secretary shall, with respect to 
                        such positions that are so made available for 
                        such consequence period, make--
                                    ``(I) 70 percent of such positions 
                                available to hospitals located in low 
                                resident-to-population States (as 
                                defined in subparagraph (F)(iv)); and
                                    ``(II) 30 percent of such positions 
                                available to hospitals located in high 
                                HPSA-to-population States (as defined 
                                in subparagraph (F)(v)).
                            ``(ii) The Secretary shall, in accordance 
                        with clause (i), make such positions available 
                        for such consequence period in a manner that 
                        prioritizes the distribution of such positions 
                        to hospitals that are anticipated to fill such 
                        positions with individuals from residence 
                        programs located in the State in which such 
                        hospitals are located.
                    ``(E) Application of per resident amounts for 
                primary care and nonprimary care.--With respect to 
                additional residency positions in a hospital 
                attributable to the increase provided under this 
                paragraph, the approved FTE per resident amounts are 
                deemed to be equal to the hospital per resident amounts 
                for primary care and nonprimary care computed under 
                paragraph (2)(D) for that hospital.
                    ``(F) Definitions.--In this paragraph:
                            ``(i) Reference resident level.--The term 
                        `reference resident level' means, with respect 
                        to a hospital and measurement period, the 
                        resident level for the cost reporting periods 
                        of the hospital occurring during such 
                        measurement period and for which a cost report 
                        has been settled (or, if not, submitted 
                        (subject to audit)), as determined by the 
                        Secretary.
                            ``(ii) Resident level.--The term `resident 
                        level' has the meaning given such term in 
                        paragraph (7)(C)(i).
                            ``(iii) Otherwise applicable resident 
                        limit.--The term `otherwise applicable resident 
                        limit' means, with respect to a hospital and 
                        period, the limit otherwise applicable under 
                        subparagraphs (F)(i) and (H) of paragraph (4) 
                        on the resident level of the hospital for such 
                        period, determined without regard to this 
                        paragraph but taking into account paragraph 
                        (7)(A).
                            ``(iv) Low resident-to-population states.--
                                    ``(I) In general.--The term `low 
                                resident-to-population State' means a 
                                State that has a smaller applicable 
                                number than do at least 75 percent of 
                                all States.
                                    ``(II) Applicable number.--For 
                                purposes of subclause (I), the term 
                                `applicable number' means, with respect 
                                to a State, the number that results 
                                from dividing the number of residents 
                                in the State by the number of 
                                individuals residing in the State.
                            ``(v) High hpsa-to-population states.--
                                    ``(I) In general.--The term `high 
                                HPSA-to-population State' means a State 
                                that has a larger applicable number 
                                than do at least 90 percent of all 
                                States.
                                    ``(II) Applicable number.--For 
                                purposes of subclause (I), the term 
                                `applicable number' means, with respect 
                                to a State, the number that results 
                                from dividing the number of areas in 
                                the State designated by the Health 
                                Resources & Services Administration of 
                                the Department of Health and Human 
                                Services as Health Professional 
                                Shortage Areas by the number of 
                                individuals residing in the State.
                    ``(G) 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)).''.
    (b) IME.--
            (1) In general.--Section 1886(d)(5)(B)(v) of the Social 
        Security Act (42 U.S.C. 1395ww(d)(5)(B)(v)), in the second 
        sentence, is amended by striking ``subsections (h)(7) and 
        (h)(8)'' and inserting ``subsections (h)(7), (h)(8), and 
        (h)(9)''.
            (2) Conforming amendment.--Section 1886(d)(5)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by 
        adding at the end the following clause:
                            ``(xii) For discharges occurring on or 
                        after the date that is 180 days after the date 
                        of the enactment of this clause, insofar as an 
                        additional payment amount under this 
                        subparagraph is attributable to resident 
                        positions distributed to a hospital under 
                        subsection (h)(9)(B), the indirect teaching 
                        adjustment factor shall be computed in the same 
                        manner as provided under clause (ii) with 
                        respect to such resident positions.''.
    (c) Conforming Amendment.--Section 422(b)(2) of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173), as amended by section 5503 of the Patient Protection and 
Affordable Care Act (Public Law 111-148), is amended by striking 
``paragraphs (7) and (8)'' and inserting ``paragraphs (7), (8), and 
(9).''.
Graduate Opportunities in Medical Education Distribution Act of 2016 This bill amends title XVIII (Medicare) of the Social Security Act to redistribute unused residency positions for which graduate medical education costs are paid under Medicare. Specifically, the Centers for Medicare &amp; Medicaid Services must: (1) reduce a hospital's resident limit by a specified amount if the hospital has unused residency positions and is not a rural hospital with fewer than 250 acute care inpatient beds, and (2) increase the resident limit for each qualifying hospital that applies for an increase. In aggregate, the number of increased positions shall equal the number of reduced positions. The bill establishes specified priorities and capacity considerations with respect to redistribution.
Graduate Opportunities in Medical Education Distribution Act of 2016