H. R. 1—364
(1) in subparagraph (A), by striking ‘‘subparagraph (B)’’
and inserting ‘‘subparagraphs (B) and (C)’’; and
(2) by adding at the end the following new subparagraphs:
‘‘(C) SPECIAL, TEMPORARY INCREASE IN ALLOTMENTS ON
A ONE-TIME, NON-CUMULATIVE BASIS.—The DSH allotment
for any State (other than a State with a DSH allotment
determined under paragraph (5))—
‘‘(i) for fiscal year 2004 is equal to 116 percent
of the DSH allotment for the State for fiscal year
2003 under this paragraph, notwithstanding subpara-
graph (B); and
‘‘(ii) for each succeeding fiscal year is equal to
the DSH allotment for the State for fiscal year 2004
or, in the case of fiscal years beginning with the fiscal
year specified in subparagraph (D) for that State, the
DSH allotment for the State for the previous fiscal
year increased by the percentage change in the con-
sumer price index for all urban consumers (all items;
U.S. city average), for the previous fiscal year.
‘‘(D) FISCAL YEAR SPECIFIED.—For purposes of subpara-
graph (C)(ii), the fiscal year specified in this subparagraph
for a State is the first fiscal year for which the Secretary
estimates that the DSH allotment for that State will equal
(or no longer exceed) the DSH allotment for that State
under the law as in effect before the date of the enactment
of this subparagraph.’’.
(b) INCREASE IN FLOOR FOR TREATMENT AS A LOW DSH STATE.—
Section 1923(f)(5) (42 U.S.C. 1396r–4(f)(5)) is amended—
(1) in the paragraph heading, by striking ‘‘EXTREMELY’’;
(2) by striking ‘‘In the case of’’ and inserting the following:
‘‘(A) FOR
FISCAL
YEARS
2001
THROUGH
2003
FOR
EXTREMELY LOW DSH STATES.—In the case of’’;
(3) by inserting ‘‘before fiscal year 2004’’ after ‘‘In subse-
quent years’’; and
(4) by adding at the end the following:
‘‘(B) FOR FISCAL YEAR 2004 AND SUBSEQUENT FISCAL
YEARS.—In the case of a State in which the total expendi-
tures under the State plan (including Federal and State
shares) for disproportionate share hospital adjustments
under this section for fiscal year 2000, as reported to the
Administrator of the Centers for Medicare & Medicaid Serv-
ices as of August 31, 2003, is greater than 0 but less
than 3 percent of the State’s total amount of expenditures
under the State plan for medical assistance during the
fiscal year, the DSH allotment for the State with respect
to—
‘‘(i) fiscal year 2004 shall be the DSH allotment
for the State for fiscal year 2003 increased by 16 per-
cent;
‘‘(ii) each succeeding fiscal year before fiscal year
2009 shall be the DSH allotment for the State for
the previous fiscal year increased by 16 percent; and
‘‘(iii) fiscal year 2009 and any subsequent fiscal
year, shall be the DSH allotment for the State for
the previous year subject to an increase for inflation
as provided in paragraph (3)(A).’’.
H. R. 1—365
(c) ALLOTMENT ADJUSTMENT.—Section 1923(f) (42 U.S.C. 1396r–
4(f)) is amended—
(1) in paragraph (3)(A), by striking ‘‘The DSH’’ and
inserting ‘‘Except as provided in paragraph (6), the DSH’’;
(2) by redesignating paragraph (6) as paragraph (7); and
(3) by inserting after paragraph (5) the following:
‘‘(6) ALLOTMENT ADJUSTMENT.—Only with respect to fiscal
year 2004 or 2005, if a statewide waiver under section 1115
is revoked or terminated before the end of either such fiscal
year and there is no DSH allotment for the State, the Secretary
shall—
‘‘(A) permit the State whose waiver was revoked or
terminated to submit an amendment to its State plan
that would describe the methodology to be used by the
State (after the effective date of such revocation or termi-
nation) to identify and make payments to disproportionate
share hospitals, including children’s hospitals and institu-
tions for mental diseases or other mental health facilities
(other than State-owned institutions or facilities), on the
basis of the proportion of patients served by such hospitals
that are low-income patients with special needs; and
‘‘(B) provide for purposes of this subsection for com-
putation of an appropriate DSH allotment for the State
for fiscal year 2004 or 2005 (or both) that would not exceed
the amount allowed under paragraph (3)(B)(ii) and that
does not result in greater expenditures under this title
than would have been made if such waiver had not been
revoked or terminated.
In determining the amount of an appropriate DSH allotment
under subparagraph (B) for a State, the Secretary shall take
into account the level of DSH expenditures for the State for
the fiscal year preceding the fiscal year in which the waiver
commenced.’’.
(d) INCREASED
REPORTING
AND
OTHER
REQUIREMENTS
TO
ENSURE THE APPROPRIATE USE OF MEDICAID DSH PAYMENT ADJUST-
MENTS.—Section 1923 (42 U.S.C. 1396r–4) is amended by adding
at the end the following new subsection:
‘‘(j) ANNUAL REPORTS AND OTHER REQUIREMENTS REGARDING
PAYMENT ADJUSTMENTS.—With respect to fiscal year 2004 and each
fiscal year thereafter, the Secretary shall require a State, as a
condition of receiving a payment under section 1903(a)(1) with
respect to a payment adjustment made under this section, to do
the following:
‘‘(1) REPORT.—The State shall submit an annual report
that includes the following:
‘‘(A) An identification of each disproportionate share
hospital that received a payment adjustment under this
section for the preceding fiscal year and the amount of
the payment adjustment made to such hospital for the
preceding fiscal year.
‘‘(B) Such other information as the Secretary deter-
mines necessary to ensure the appropriateness of the pay-
ment adjustments made under this section for the pre-
ceding fiscal year.
‘‘(2) INDEPENDENT
CERTIFIED
AUDIT.—The State shall
annually submit to the Secretary an independent certified audit
that verifies each of the following:
H. R. 1—366
‘‘(A) The extent to which hospitals in the State have
reduced their uncompensated care costs to reflect the total
amount of claimed expenditures made under this section.
‘‘(B) Payments under this section to hospitals that
comply with the requirements of subsection (g).
‘‘(C) Only the uncompensated care costs of providing
inpatient hospital and outpatient hospital services to
individuals described in paragraph (1)(A) of such subsection
are included in the calculation of the hospital-specific limits
under such subsection.
‘‘(D) The State included all payments under this title,
including supplemental payments, in the calculation of such
hospital-specific limits.
‘‘(E) The State has separately documented and retained
a record of all of its costs under this title, claimed expendi-
tures under this title, uninsured costs in determining pay-
ment adjustments under this section, and any payments
made on behalf of the uninsured from payment adjustments
under this section.’’.
(e) CLARIFICATION REGARDING NON-REGULATION
OF TRANS-
FERS.—
(1) IN GENERAL.—Nothing in section 1903(w) of the Social
Security Act (42 U.S.C. 1396b(w)) shall be construed by the
Secretary as prohibiting a State’s use of funds as the non-
Federal share of expenditures under title XIX of such Act
where such funds are transferred from or certified by a publicly-
owned regional medical center located in another State and
described in paragraph (2), so long as the Secretary determines
that such use of funds is proper and in the interest of the
program under title XIX.
(2) CENTER DESCRIBED.—A center described in this para-
graph is a publicly-owned regional medical center that—
(A) provides level 1 trauma and burn care services;
(B) provides level 3 neonatal care services;
(C) is obligated to serve all patients, regardless of
State of origin;
(D) is located within a Standard Metropolitan Statis-
tical Area (SMSA) that includes at least 3 States, including
the States described in paragraph (1);
(E) serves as a tertiary care provider for patients
residing within a 125 mile radius; and
(F) meets the criteria for a disproportionate share hos-
pital under section 1923 of such Act in at least one State
other than the one in which the center is located.
(3) EFFECTIVE PERIOD.—This subsection shall apply through
December 31, 2005.
SEC. 1002. CLARIFICATION OF INCLUSION OF INPATIENT DRUG PRICES
CHARGED TO CERTAIN PUBLIC HOSPITALS IN THE BEST
PRICE EXEMPTIONS FOR THE MEDICAID DRUG REBATE
PROGRAM.
(a) IN GENERAL.—Section 1927(c)(1)(C)(i)(I) (42 U.S.C. 1396r–
8(c)(1)(C)(i)(I)) is amended by inserting before the semicolon the
following: ‘‘(including inpatient prices charged to hospitals described
in section 340B(a)(4)(L) of the Public Health Service Act)’’.
H. R. 1—367
(b) ANTI-DIVERSION
PROTECTION.—Section 1927(c)(1)(C) (42
U.S.C. 1396r–8(c)(1)(C)) is amended by adding at the end the fol-
lowing:
‘‘(iii) APPLICATION
OF
AUDITING
AND
RECORD-
KEEPING REQUIREMENTS.—With respect to a covered
entity described in section 340B(a)(4)(L) of the Public
Health Service Act, any drug purchased for inpatient
use shall be subject to the auditing and recordkeeping
requirements described in section 340B(a)(5)(C) of the
Public Health Service Act.’’.
SEC. 1003. EXTENSION OF MORATORIUM.
(a) IN GENERAL.—Section 6408(a)(3) of the Omnibus Budget
Reconciliation Act of 1989, as amended by section 13642 of the
Omnibus Budget Reconciliation Act of 1993 and section 4758 of
the Balanced Budget Act of 1997, is amended—
(1) by striking ‘‘until December 31, 2002’’, and
(2) by striking ‘‘Kent Community Hospital Complex in
Michigan or.’’
(b) EFFECTIVE DATES.—
(1) PERMANENT EXTENSION.—The amendment made by sub-
section (a)(1) shall take effect as if included in the amendment
made by section 4758 of the Balanced Budget Act of 1997.
(2) MODIFICATION.—The amendment made by subsection
(a)(2) shall take effect on the date of enactment of this Act.
Subtitle B—Miscellaneous Provisions
SEC. 1011. FEDERAL REIMBURSEMENT OF EMERGENCY HEALTH SERV-
ICES FURNISHED TO UNDOCUMENTED ALIENS.
(a) TOTAL AMOUNT AVAILABLE FOR ALLOTMENT.—
(1) IN GENERAL.—Out of any funds in the Treasury not
otherwise appropriated, there are appropriated to the Secretary
$250,000,000 for each of fiscal years 2005 through 2008 for
the purpose of making allotments under this section for pay-
ments to eligible providers in States described in paragraph
(1) or (2) of subsection (b).
(2) AVAILABILITY.—Funds appropriated under paragraph
(1) shall remain available until expended.
(b) STATE ALLOTMENTS.—
(1) BASED ON PERCENTAGE OF UNDOCUMENTED ALIENS.—
(A) IN
GENERAL.—Out of the amount appropriated
under subsection (a) for a fiscal year, the Secretary shall
use $167,000,000 of such amount to make allotments for
such fiscal year in accordance with subparagraph (B).
(B) FORMULA.—The amount of the allotment for pay-
ments to eligible providers in each State for a fiscal year
shall be equal to the product of—
(i) the total amount available for allotments under
this paragraph for the fiscal year; and
(ii) the percentage of undocumented aliens residing
in the State as compared to the total number of such
aliens residing in all States, as determined by the
Statistics Division of the Immigration and Naturaliza-
tion Service, as of January 2003, based on the 2000
decennial census.
H. R. 1—368
(2) BASED ON NUMBER OF UNDOCUMENTED ALIEN APPREHEN-
SION STATES.—
(A) IN
GENERAL.—Out of the amount appropriated
under subsection (a) for a fiscal year, the Secretary shall
use $83,000,000 of such amount to make allotments, in
addition to amounts allotted under paragraph (1), for such
fiscal year for each of the 6 States with the highest number
of undocumented alien apprehensions for such fiscal year.
(B) DETERMINATION OF ALLOTMENTS.—The amount of
the allotment for each State described in subparagraph
(A) for a fiscal year shall be equal to the product of—
(i) the total amount available for allotments under
this paragraph for the fiscal year; and
(ii) 
the 
percentage 
of 
undocumented 
alien
apprehensions in the State in that fiscal year as com-
pared to the total of such apprehensions for all such
States for the preceding fiscal year.
(C) DATA.—For purposes of this paragraph, the highest
number of undocumented alien apprehensions for a fiscal
year shall be based on the apprehension rates for the
4-consecutive-quarter period ending before the beginning
of the fiscal year for which information is available for
undocumented aliens in such States, as reported by the
Department of Homeland Security.
(c) USE OF FUNDS.—
(1) AUTHORITY TO MAKE PAYMENTS.—From the allotments
made for a State under subsection (b) for a fiscal year, the
Secretary shall pay the amount (subject to the total amount
available from such allotments) determined under paragraph
(2) directly to eligible providers located in the State for the
provision of eligible services to aliens described in paragraph
(5) to the extent that the eligible provider was not otherwise
reimbursed (through insurance or otherwise) for such services
during that fiscal year.
(2) DETERMINATION OF PAYMENT AMOUNTS.—
(A) IN GENERAL.—Subject to subparagraph (B), the pay-
ment amount determined under this paragraph shall be
an amount determined by the Secretary that is equal to
the lesser of—
(i) the amount that the provider demonstrates was
incurred for the provision of such services; or
(ii) amounts determined under a methodology
established by the Secretary for purposes of this sub-
section.
(B) PRO-RATA
REDUCTION.—If the amount of funds
allotted to a State under subsection (b) for a fiscal year
is insufficient to ensure that each eligible provider in that
State receives the amount of payment calculated under
subparagraph (A), the Secretary shall reduce that amount
of payment with respect to each eligible provider to ensure
that the entire amount allotted to the State for that fiscal
year is paid to such eligible providers.
(3) METHODOLOGY.—In establishing a methodology under
paragraph (2)(A)(ii), the Secretary—
(A) may establish different methodologies for types
of eligible providers;
H. R. 1—369
(B) may base payments for hospital services on esti-
mated hospital charges, adjusted to estimated cost, through
the application of hospital-specific cost-to-charge ratios;
(C) shall provide for the election by a hospital to receive
either payments to the hospital for—
(i) hospital and physician services; or
(ii) hospital services and for a portion of the on-
call payments made by the hospital to physicians; and
(D) shall make quarterly payments under this section
to eligible providers.
If a hospital makes the election under subparagraph (C)(i),
the hospital shall pass on payments for services of a physician
to the physician and may not charge any administrative or
other fee with respect to such payments.
(4) LIMITATION
ON
USE
OF
FUNDS.—Payments made to
eligible providers in a State from allotments made under sub-
section (b) for a fiscal year may only be used for costs incurred
in providing eligible services to aliens described in paragraph
(5).
(5) ALIENS
DESCRIBED.—For purposes of paragraphs (1)
and (2), aliens described in this paragraph are any of the
following:
(A) Undocumented aliens.
(B) Aliens who have been paroled into the United
States at a United States port of entry for the purpose
of receiving eligible services.
(C) Mexican citizens permitted to enter the United
States for not more than 72 hours under the authority
of a biometric machine readable border crossing identifica-
tion card (also referred to as a ‘‘laser visa’’) issued in
accordance with the requirements of regulations prescribed
under section 101(a)(6) of the Immigration and Nationality
Act (8 U.S.C. 1101(a)(6)).
(d) APPLICATIONS; ADVANCE PAYMENTS.—
(1) 
DEADLINE
FOR
ESTABLISHMENT
OF
APPLICATION
PROCESS.—
(A) IN GENERAL.—Not later than September 1, 2004,
the Secretary shall establish a process under which eligible
providers located in a State may request payments under
subsection (c).
(B) INCLUSION OF MEASURES TO COMBAT FRAUD AND
ABUSE.—The Secretary shall include in the process estab-
lished under subparagraph (A) measures to ensure that
inappropriate, excessive, or fraudulent payments are not
made from the allotments determined under subsection
(b), including certification by the eligible provider of the
veracity of the payment request.
(2) ADVANCE PAYMENT; RETROSPECTIVE ADJUSTMENT.—The
process established under paragraph (1) may provide for
making payments under this section for each quarter of a
fiscal year on the basis of advance estimates of expenditures
submitted by applicants for such payments and such other
investigation as the Secretary may find necessary, and for
making reductions or increases in the payments as necessary
to adjust for any overpayment or underpayment for prior quar-
ters of such fiscal year.
(e) DEFINITIONS.—In this section:
H. R. 1—370
(1) ELIGIBLE
PROVIDER.—The term ‘‘eligible provider’’
means a hospital, physician, or provider of ambulance services
(including an Indian Health Service facility whether operated
by the Indian Health Service or by an Indian tribe or tribal
organization).
(2) ELIGIBLE SERVICES.—The term ‘‘eligible services’’ means
health care services required by the application of section 1867
of the Social Security Act (42 U.S.C. 1395dd), and related
hospital inpatient and outpatient services and ambulance serv-
ices (as defined by the Secretary).
(3) HOSPITAL.—The term ‘‘hospital’’ has the meaning given
such term in section 1861(e) of the Social Security Act (42
U.S.C. 1395x(e)), except that such term shall include a critical
access hospital (as defined in section 1861(mm)(1) of such Act
(42 U.S.C. 1395x(mm)(1)).
(4) PHYSICIAN.—The term ‘‘physician’’ has the meaning
given that term in section 1861(r) of the Social Security Act
(42 U.S.C. 1395x(r)).
(5) INDIAN
TRIBE; 
TRIBAL
ORGANIZATION.—The terms
‘‘Indian tribe’’ and ‘‘tribal organization’’ have the meanings
given such terms in section 4 of the Indian Health Care
Improvement Act (25 U.S.C. 1603).
(6) STATE.—The term ‘‘State’’ means the 50 States and
the District of Columbia.
SEC. 1012. COMMISSION ON SYSTEMIC INTEROPERABILITY.
(a) ESTABLISHMENT.—The Secretary shall establish a commis-
sion to be known as the ‘‘Commission on Systemic Interoperability’’
(in this section referred to as the ‘‘Commission’’).
(b) DUTIES.—
(1) IN GENERAL.—The Commission shall develop a com-
prehensive strategy for the adoption and implementation of
health care information technology standards, that includes
a timeline and prioritization for such adoption and implementa-
tion.
(2) CONSIDERATIONS.—In developing the comprehensive
health care information technology strategy under paragraph
(1), the Commission shall consider—
(A) the costs and benefits of the standards, both finan-
cial impact and quality improvement;
(B) the current demand on industry resources to imple-
ment this Act and other electronic standards, including
HIPAA standards; and
(C) the most cost-effective and efficient means for
industry to implement the standards.
(3) NONINTERFERENCE.—In carrying out this section, the
Commission shall not interfere with any standards development
of adoption processes underway in the private or public sector
and shall not replicate activities related to such standards
or the national health information infrastructure underway
within the Department of Health and Human Services.
(4) REPORT.—Not later than October 31, 2005, the Commis-
sion shall submit to the Secretary and to Congress a report
describing the strategy developed under paragraph (1),
including an analysis of the matters considered under para-
graph (2).
(c) MEMBERSHIP.—
H. R. 1—371
(1) NUMBER AND APPOINTMENT.—The Commission shall be
composed of 11 members appointed as follows:
(A) The President shall appoint three members, one
of whom the President shall designate as Chairperson.
(B) The Majority Leader of the Senate shall appoint
two members.
(C) The Minority Leader of the Senate shall appoint
two members.
(D) The Speaker of the House of Representatives shall
appoint two members.
(E) The Minority Leader of the House of Representa-
tives shall appoint two members.
(2) QUALIFICATIONS.—The membership of the Commission
shall include individuals with national recognition for their
expertise in health finance and economics, health plans and
integrated delivery systems, reimbursement of health facilities,
practicing physicians, practicing pharmacists, and other pro-
viders of health services, health care technology and informa-
tion systems, and other related fields, who provide a mix of
different professionals, broad geographic representation, and
a balance between urban and rural representatives.
(d) TERMS.—Each member shall be appointed for the life of
the Commission.
(e) COMPENSATION.—
(1) RATES OF PAY.—Members shall each be paid at a rate
not to exceed the daily equivalent of the rate of basic pay
for level IV of the Executive Schedule for each day (including
travel time) during which they are engaged in the actual
performance of duties vested in the Commission.
(2) 
PROHIBITION
OF
COMPENSATION
OF
FEDERAL
EMPLOYEES.—Members of the Commission who are full-time
officers or employees of the United States or Members of Con-
gress may not receive additional pay, allowances, or benefits
by reason of their service on the Commission.
(3) TRAVEL EXPENSES.—Each member shall receive travel
expenses, including per diem in lieu of subsistence, in accord-
ance with applicable provisions under subchapter I of chapter
57 of title 5, United States Code.
(f) QUORUM.—A majority of the members of the Commission
shall constitute a quorum but a lesser number may hold hearings.
(g) DIRECTOR
AND
STAFF
OF
COMMISSION; EXPERTS
AND
CONSULTANTS.—
(1) DIRECTOR.—The Commission shall have a Director who
shall be appointed by the Chairperson. The Director shall be
paid at a rate not to exceed the rate of basic pay for level
IV of the Executive Schedule.
(2) STAFF.—With the approval of the Commission, the
Director may appoint and fix the pay of such additional per-
sonnel as the Director considers appropriate.
(3) APPLICABILITY OF CERTAIN CIVIL SERVICE LAWS.—The
Director and staff of the Commission may be appointed without
regard to the provisions of title 5, United States Code, governing
appointments in the competitive service, and may be paid with-
out regard to the provisions of chapter 51 and subchapter
III of chapter 53 of that title relating to classification and
General Schedule pay rates, except that an individual so
H. R. 1—372
appointed may not receive pay in excess of level IV of the
Executive Schedule.
(4) EXPERTS AND CONSULTANTS.—With the approval of the
Commission, the Director may procure temporary and intermit-
tent services under section 3109(b) of title 5, United States
Code.
(5) STAFF
OF
FEDERAL
AGENCIES.—Upon request of the
Chairperson, the head of any Federal department or agency
may detail, on a reimbursable basis, any of the personnel
of that department or agency to the Commission to assist
it in carrying out its duties under this Act.
(h) POWERS OF COMMISSION.—
(1) HEARINGS AND SESSIONS.—The Commission may, for
the purpose of carrying out this Act, hold hearings, sit and
act at times and places, take testimony, and receive evidence
as the Commission considers appropriate.
(2) POWERS OF MEMBERS AND AGENTS.—Any member or
agent of the Commission may, if authorized by the Commission,
take any action which the Commission is authorized to take
by this section.
(3) OBTAINING
OFFICIAL
DATA.—The Commission may
secure directly from any department or agency of the United
States information necessary to enable it to carry out this
Act. Upon request of the Chairperson of the Commission, the
head of that department or agency shall furnish that informa-
tion to the Commission.
(4) GIFTS, BEQUESTS, AND DEVISES.—The Commission may
accept, use, and dispose of gifts, bequests, or devises of services
or property, both real and personal, for the purpose of aiding
or facilitating the work of the Commission. Gifts, bequests,
or devises of money and proceeds from sales of other property
received as gifts, bequests, or devises shall be deposited in
the Treasury and shall be available for disbursement upon
order of the Commission. For purposes of Federal income,
estate, and gift taxes, property accepted under this subsection
shall be considered as a gift, bequest, or devise to the United
States.
(5) MAILS.—The Commission may use the United States
mails in the same manner and under the same conditions
as other departments and agencies of the United States.
(6) ADMINISTRATIVE SUPPORT SERVICES.—Upon the request
of the Commission, the Administrator of General Services shall
provide to the Commission, on a reimbursable basis, the
administrative support services necessary for the Commission
to carry out its responsibilities under this Act.
(7) CONTRACT AUTHORITY.—The Commission may enter into
contracts or make other arrangements, as may be necessary
for the conduct of the work of the Commission (without regard
to section 3709 of the Revised Statutes (41 U.S.C. 5)).
(i) TERMINATION.—The Commission shall terminate on 30 days
after submitting its report pursuant to subsection (b)(3).
(j) AUTHORIZATION OF APPROPRIATIONS.—There is authorized
to be appropriated such sums as may be necessary to carry out
this section.