SEC. 2. REDISTRIBUTING UNUSED RESIDENCY POSITIONS 
TO PROMOTE THE ESTABLISHMENT OF RESI-
DENCY PROGRAMS FOR NEWLY RECOGNIZED 
PRIMARY MEDICAL SPECIALTIES. 
(a) IN GENERAL.—Section 1886(h) of the Social Se-
curity 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 ‘‘para-
graph (8)’’ and inserting ‘‘paragraphs (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 UN-
USED POSITIONS.— 
‘‘(i) IN GENERAL.—If a hospital’s ref-
erence resident level (as defined in sub-
paragraph (G)(i)) is less than the other-
wise applicable resident limit (as defined in 
subparagraph (G)(iii)), effective for por-
tions of cost reporting periods occurring on 
or after July 1, 2017, the otherwise appli-
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cable resident limit shall be reduced by 65 
percent of the difference between such oth-
erwise applicable resident limit and such 
reference resident level. 
‘‘(ii) 
EXCEPTION.—This 
subpara-
graph 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. 
‘‘(B) DISTRIBUTION.— 
‘‘(i) IN
GENERAL.—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 appli-
cation under this subparagraph by such 
number as the Secretary may approve for 
portions of cost reporting periods occurring 
on or after July 1, 2017. The aggregate 
number of increases in the otherwise appli-
cable resident limit under this subpara-
graph shall be equal to the aggregate re-
duction in such limits attributable to sub-
paragraph (A) (as estimated by the Sec-
retary). 
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‘‘(ii) 
REQUIREMENTS.—Subject 
to 
clause (iii), a hospital that receives an in-
crease in the otherwise applicable resident 
limit under this subparagraph shall ensure, 
during the 3-year period beginning on the 
date of such increase, that the positions re-
sulting from the increase under this para-
graph will be filled. The Secretary may de-
termine whether a hospital has met the re-
quirements under this clause during such 
3-year period in such manner and at such 
time as the Secretary determines appro-
priate, including at the end of such 3-year 
period. 
‘‘(iii) REDISTRIBUTION OF POSITIONS 
IF HOSPITAL NO LONGER MEETS CERTAIN 
REQUIREMENTS.—In the case where the 
Secretary determines that a hospital de-
scribed in clause (ii) does not meet the re-
quirements of such clause, the Secretary 
shall— 
‘‘(I) reduce the otherwise applica-
ble resident limit of the hospital by 
the amount by which such limit was 
increased under this paragraph; and 
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‘‘(II) provide for the distribution 
of positions attributable to such re-
duction in accordance with the re-
quirements of this paragraph. 
‘‘(C) CAPACITY
CONSIDERATIONS
IN
RE-
DISTRIBUTION.—In determining for which hos-
pitals the increase in the otherwise applicable 
resident limit is provided under subparagraph 
(B), the Secretary shall take into account the 
demonstration likelihood of the hospital filling 
the positions made available under this para-
graph within the first 3 cost reporting periods 
beginning on or after July 1, 2017, as deter-
mined by the Secretary. 
‘‘(D) PRIORITY
IN
REDISTRIBUTION.— 
Subject to subparagraphs (C) and (E), the Sec-
retary shall determine which qualifying hos-
pitals receive increases under subparagraph (B) 
in the otherwise applicable resident limits for 
such hospitals in a manner that distributes the 
positions made available to hospitals under this 
paragraph in accordance with the following: 
‘‘(i) The Secretary shall make such 
positions available to hospitals with appli-
cable residency training programs. 
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‘‘(ii) In the case that the application 
of clause (i) does not result in the distribu-
tion of all positions made available under 
this paragraph, the Secretary shall make 
any positions that remain undistributed 
after the application of such clause avail-
able to hospitals that are located in— 
‘‘(I) a State with a resident-to- 
population ratio in the lowest quartile 
(as determined by the Secretary); 
‘‘(II) a State, a territory of the 
United States, or the District of Co-
lumbia that is among the top 10 
States, territories, or Districts in 
terms of the ratio of the total popu-
lation of the State, territory, or Dis-
trict living in an area designated 
(under such section 332(a)(1)(A)) as 
a health professional shortage area 
(as of the date of enactment of this 
paragraph), to the total population of 
the State, territory, or District (as de-
termined by the Secretary based on 
the most recent available population 
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data published by the Bureau of the 
Census); or 
‘‘(III) a rural area (as defined in 
subsection (d)(2)(D)(ii)). 
‘‘(iii) In the case that the application 
of clauses (i) and (ii) does not result in the 
distribution of all positions made available 
under this paragraph, the Secretary shall 
make any positions that remain undistrib-
uted after the application of such clauses 
available to hospitals that establish a med-
ical residency program that is sponsored 
by, or affiliated with, a medical school that 
was first accredited during the cost report-
ing period prior to the cost reporting pe-
riod with respect to which such application 
applies. 
‘‘(E) LIMITATION.—A hospital may not re-
ceive more than 75 full-time equivalent addi-
tional residency positions under this paragraph. 
‘‘(F) APPLICATION
OF
PER
RESIDENT 
AMOUNTS
FOR
PRIMARY
CARE
AND
NONPRI-
MARY CARE.—With respect to additional resi-
dency positions in a hospital attributable to the 
increase provided under this paragraph, the ap-
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proved FTE per resident amounts are deemed 
to be equal to the hospital per resident amounts 
for primary care and nonprimary care com-
puted under paragraph (2)(D) for that hospital. 
‘‘(G) DEFINITIONS.—In this paragraph: 
‘‘(i) REFERENCE RESIDENT LEVEL.— 
The term ‘reference resident level’ means, 
with respect to a hospital, the highest resi-
dent level for any of the 3 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. 
‘‘(ii) RESIDENT
LEVEL.—The term 
‘resident level’ has the meaning given such 
term in paragraph (7)(C)(i). 
‘‘(iii) OTHERWISE APPLICABLE RESI-
DENT LIMIT.—The term ‘otherwise appli-
cable resident limit’ means, with respect to 
a hospital, the limit otherwise applicable 
under subparagraphs (F)(i) and (H) of 
paragraph (4) on the resident level for the 
hospital determined without regard to this 
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‘‘(H) 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 shall be the reference resi-
dent level with respect to the cost reporting pe-
riod that results in the smallest difference be-
tween the reference resident level and the other-
wise applicable resident limit.’’. 
(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 July 1, 2017, insofar as an additional 
payment amount under this subparagraph 
is attributable to resident positions distrib-
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uted to a hospital under subsection 
(h)(9)(B), the indirect teaching adjustment 
factor shall be computed in the same man-
ner as provided under clause (ii) with re-
spect 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 ‘‘para-
graphs (7), (8), and (9).’’. 
Æ 
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