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‘‘Subpart 4—Amount Relating to Direct Costs of Graduate
Medical Education
‘‘SEC. 2241. DETERMINATION OF AMOUNT RELATING TO DI-
RECT COSTS.
‘‘(a) 
IN
GENERAL.—For 
purposes 
of 
section
2211(a)(3), the amount determined under this section for
a teaching hospital for a fiscal year is the sum of—
‘‘(1) the amount determined under subsection (b)
(relating to the General Direct-Costs Medical Edu-
cation Account); and
‘‘(2) the amount determined under subsection (c)
(relating to the Medicare Direct-Costs Medical Edu-
cation Account), subject to section 2242(d)(1)(B).
‘‘(b) PAYMENT FROM GENERAL ACCOUNT.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(1), the amount determined under this subsection
for a teaching hospital for a fiscal year is the product
of—
‘‘(A) the amount in the General Direct-
Costs Medical Education Account on the applica-
ble date under section 2201(d)(2) (once the ap-
propriation under such section is made); and
‘‘(B) the percentage determined for the hos-
pital under paragraph (2).
‘‘(2) FIXED HOSPITAL-SPECIFIC PERCENTAGE.—
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(B), the percentage determined under
this paragraph for a teaching hospital is the
mean average of the respective percentages deter-
mined under subparagraph (B) for each fiscal
year of the applicable period (as defined in sec-
tion 2231(b)(2)(B)), adjusted by the Secretary
(upward or downward, as the case may be) on
a pro rata basis to the extent necessary to ensure
that the sum of the percentages determined under
this subparagraph for all teaching hospitals is
equal to 100 percent. The preceding sentence is
subject to section 2242.
‘‘(B) RESPECTIVE
DETERMINATIONS
FOR
FISCAL
YEARS
OF
APPLICABLE
PERIOD.—For
purposes of subparagraph (A), the percentage de-
termined under this subparagraph for a teaching
hospital for a fiscal year of the applicable period
is the percentage constituted by the ratio of—
‘‘(i) the total amount of payments re-
ceived by the hospital under section 1886(h)
for cost reporting periods beginning during
the fiscal year involved; to
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‘‘(ii) the sum of the respective amounts
determined under clause (i) for the fiscal
year for all teaching hospitals.
‘‘(3) AVAILABILITY OF DATA.—If a teaching hos-
pital received the payments specified in paragraph
(2)(B)(i) during the applicable period but a complete
set of the relevant data is not available to the Sec-
retary for purposes of determining an amount under
such paragraph for the fiscal year involved, the Sec-
retary shall for purposes of such paragraph make an
estimate on the basis of such data as are available to
the Secretary for the applicable period.
‘‘(c) PAYMENT FROM MEDICARE ACCOUNT.—For pur-
poses of subsection (a)(2), the amount determined under this
subsection for a teaching hospital for a fiscal year is an
amount determined in accordance with the methodology in
effect under section 1886(h) for such year. Payments made
under section 2211 pursuant to the preceding sentence shall
be made from the Medicare Direct-Costs Medical Education
Account.
‘‘SEC. 2242. DIRECT COSTS; SPECIAL RULES REGARDING
PAYMENTS FROM GENERAL ACCOUNT.
‘‘(a) SPECIAL RULE REGARDING FISCAL YEARS 1995
AND 1996.—
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‘‘(1) IN GENERAL.—In the case of a teaching hos-
pital whose first payments under section 1886(h) were
for the cost reporting period beginning in fiscal year
1995 or in fiscal year 1996 (referred to in this sub-
section individually as a ‘first payment year’), the
percentage determined under paragraph (2) for the
hospital is deemed to be the percentage applicable
under section 2241(b)(2) to the hospital, subject to
paragraph (3).
‘‘(2) DETERMINATION OF FIXED PERCENTAGE.—
For purposes of paragraph (1), the percentage deter-
mined under this paragraph for a teaching hospital
is the percentage constituted by the ratio of the
amount determined under subparagraph (A) to the
amount determined under subparagraph (B), as fol-
lows:
‘‘(A)(i) If the first payment year for the
hospital is fiscal year 1995, the amount deter-
mined under this subparagraph is the total
amount of payments received by the hospital
under section 1886(h) for cost reporting periods
beginning in fiscal year 1995.
‘‘(ii) If the first payment year for the hos-
pital is fiscal year 1996, the amount determined
under this subparagraph is an amount equal to
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an estimate by the Secretary of the total amount
of payments that would have been paid to the
hospital under section 1886(h) for cost reporting
periods beginning in fiscal year 1995 if such sec-
tion, as in effect for fiscal year 1996, had ap-
plied to the hospital for fiscal year 1995.
‘‘(B)(i) If the first payment year for the
hospital is fiscal year 1995, the amount deter-
mined under this subparagraph is the aggregate
total of the payments received by teaching hos-
pitals under section 1886(h) for cost reporting
periods beginning in fiscal year 1995.
‘‘(ii) If the first payment year for the hos-
pital is fiscal year 1996—
‘‘(I) the Secretary shall make an esti-
mate in accordance with subparagraph
(A)(ii) for all teaching hospitals; and
‘‘(II) the amount determined under
this subparagraph is the sum of the esti-
mates 
made 
by 
the 
Secretary 
under
subclause (I).
‘‘(3) ADJUSTMENT OF PERCENTAGE.—The per-
centage determined under paragraph (2) shall be ad-
justed by the Secretary in accordance with section
2241(b)(2)(A) to the extent determined by the Sec-
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‘‘(c) PAYMENTS FROM ACCOUNTS.—The total amount
of payments to a qualifying consortium for a fiscal year
pursuant to subsection (a) shall be the sum of—
‘‘(1) the aggregate amount determined for the
teaching hospitals of the consortium pursuant to sec-
tion 2221(a) (relating to the General MedicarePlus
Incentive Account);
‘‘(2) the aggregate amount determined for the
teaching hospitals of the consortium pursuant to sec-
tion 2241(a)(1) (relating to the General Direct-Costs
Account); and
‘‘(3) an amount determined for the consortium
in accordance with the methodology in effect under
section 1886(j)(2)(C)(i) for the fiscal year (relating to
the Medicare Direct-Costs Account).
‘‘(d) DEFINITION.—For purposes of this title, the term
‘qualifying consortium’ means a consortium that meets the
requirements of subsection (b).’’.
CHAPTER 2—AMENDMENTS TO MEDICARE
PROGRAM
SEC. 12511. TRANSFER OF FUNDS.
Section 1886 (42 U.S.C. 1395ww) is amended—
(1) in subsection (d)(5)(B), in the matter preced-
ing clause (i), by striking ‘‘The Secretary shall pro-
vide’’ and inserting the following: ‘‘For discharges oc-
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curring on or before September 30, 1996, the Sec-
retary shall provide’’;
(2) in subsection (h)—
(A) in paragraph (1), in the first sentence,
by striking ‘‘the Secretary shall provide’’ and in-
serting ‘‘the Secretary shall, subject to paragraph
(6), provide’’; and
(B) by adding at the end the following
paragraph:
‘‘(6) LIMITATION.—
‘‘(A) IN GENERAL.—The authority to make
payments under this subsection applies only
with respect to cost reporting periods ending on
or before September 30, 1996, except as provided
in subparagraph (B).
‘‘(B) RULE REGARDING PORTION OF LAST
COST REPORTING PERIOD.—In the case of a cost
reporting period that extends beyond September
30, 1996, payments under this subsection shall
be made with respect to such portion of the pe-
riod as has lapsed as of such date.
‘‘(C) RULE OF CONSTRUCTION.—This para-
graph may not be construed as authorizing any
payment under section 1861(v) with respect to
graduate medical education.’’; and
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(3) by adding at the end the following subsection:
‘‘(j) TRANSFERS TO TEACHING HOSPITAL AND GRAD-
UATE MEDICAL EDUCATION TRUST FUND.—
‘‘(1) 
INDIRECT
COSTS
OF
MEDICAL
EDU-
CATION.—
‘‘(A) IN GENERAL.—From the Federal Hos-
pital Insurance Trust Fund, the Secretary shall,
for fiscal year 1997 and each subsequent fiscal
year, transfer to the Medicare Indirect-Costs
Medical Education Account under section 2201
an amount determined by the Secretary in ac-
cordance with subparagraph (B).
‘‘(B) DETERMINATION
OF
AMOUNTS.—The
Secretary shall make an estimate for the fiscal
year involved of the nationwide total of the
amounts that would have been paid under sub-
section (d)(5)(B) to hospitals during the fiscal
year if such payments had not been terminated
for discharges occurring after September 30,
1996. For purposes of subparagraph (A), the
amount determined under this subparagraph for
the fiscal year is the estimate made by the Sec-
retary under the preceding sentence.
‘‘(C) SUPPLEMENTAL
TRANSFERS.—If the
Secretary determines that the amount of a trans-
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fer under subparagraph (A) for a fiscal year is
insufficient for making payments in the amounts
required pursuant to section 2231(a)(2) for the
year, the Secretary shall make such additional
transfers for the year between the funds and ac-
counts involved as the Secretary determines to be
necessary for making the payments.
‘‘(2) DIRECT COSTS OF MEDICAL EDUCATION.—
‘‘(A) IN GENERAL.—From the Federal Hos-
pital Insurance Trust Fund and the Federal
Supplementary Medical Insurance Trust Fund,
the Secretary shall, for fiscal year 1997 and each
subsequent fiscal year, transfer to the Medicare
Direct-Costs Medical Education Account (under
section 2201) the sum of—
‘‘(i) an amount determined by the Sec-
retary in accordance with subparagraph
(B); and
‘‘(ii) as applicable, an amount deter-
mined by the Secretary in accordance with
subparagraph (C)(ii).
‘‘(B) DETERMINATION
OF
AMOUNTS.—For
each hospital (other than a hospital that is a
member of a qualifying consortium referred to in
subparagraph (C)), the Secretary shall make an
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estimate for the fiscal year involved of the
amount that would have been paid under sub-
section (h) to the hospital during the fiscal year
if such payments had not been terminated for
cost reporting periods ending on or before Sep-
tember 30, 1996. For purposes of subparagraph
(A)(i), the amount determined under this sub-
paragraph for the fiscal year is the sum of all
estimates made by the Secretary under the pre-
ceding sentence.
‘‘(C) ESTIMATES
REGARDING
QUALIFYING
CONSORTIA.—If the Secretary authorizes pay-
ments under section 2243(a) to one or more
qualifying consortia, the Secretary shall carry
out the following:
‘‘(i) The Secretary shall establish a
methodology for making payments to quali-
fying consortia with respect to the reason-
able direct costs of such consortia in carry-
ing out programs of graduate medical edu-
cation. The methodology shall be the meth-
odology established in subsection (h), modi-
fied to the extent necessary to take into ac-
count the participation in such programs of
entities other than hospitals.
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‘‘(ii) For each qualifying consortium,
the Secretary shall make an estimate for the
fiscal year involved of the amount that
would have been paid to the consortium
during the fiscal year if, using the meth-
odology under clause (i), payments had been
made to the consortium for the fiscal year
as reimbursements with respect to cost re-
porting periods. For purposes of subpara-
graph (A)(ii), the amount determined under
this clause for the fiscal year is the sum of
all estimates made by the Secretary under
the preceding sentence.
‘‘(D) ALLOCATION
BETWEEN
FUNDS.—In
providing for a transfer under subparagraph (A)
for a fiscal year, the Secretary shall provide for
an allocation of the amounts involved between
part A and part B (and the trust funds estab-
lished under the respective parts) as reasonably
reflects the proportion of direct graduate medical
education costs of hospitals associated with the
provision of services under each respective part.
‘‘(E) SUPPLEMENTAL
TRANSFERS.—If the
Secretary determines that the amount of a trans-
fer under subparagraph (A) for a fiscal year is