A bill to amend title XVIII of the Social Security Act to improve disproportionate share medicare payments to hospitals serving vulnerable populations.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Safety Net Hospital 
Improvement Act of 2002''.

SEC. 2. COLLECTION OF DATA AND MODIFICATION OF DISPROPORTIONATE SHARE 
              MEDICARE PAYMENTS TO HOSPITALS SERVING VULNERABLE 
              POPULATIONS.

    (a) Collection of Data.--Section 1886(d)(5)(F) of the Social 
Security Act (42 U.S.C. 1395ww(d)(5)(F)) is amended by adding at the 
end the following new clause:
    ``(xiv) The Secretary shall collect from each subsection (d) 
hospital annual data on inpatient and outpatient charges, including all 
such charges for each of the following categories:
            ``(I) All patients.
            ``(II) Patients who are entitled to benefits under part A 
        and are entitled to benefits (excluding any State 
        supplementation) under the supplemental security income program 
        under title XVI.
            ``(III) Patients who are entitled to (or, if they applied, 
        would be eligible for) medical assistance under title XIX or 
        child health assistance under title XXI.
            ``(IV) Patients who are beneficiaries of indigent care 
        programs sponsored by State or local governments (including 
        general assistance programs) which are funded solely by local 
        or State funds or by a combination of local, State, or Federal 
        funding.
            ``(V) The amount of charity care charges and bad debt.''.
    (b) Modification.--Section 1886(d)(5)(F) of the Social Security Act 
(42 U.S.C. 1395ww(d)(5)(F)), as amended by subsection (a), is amended--
            (1) by striking all the matter preceding clause (xiv) and 
        inserting the following:
    ``(F)(i) The Secretary shall provide, in accordance with this 
subparagraph, for an additional payment amount for each subsection (d) 
hospital which serves a significantly disproportionate number of low-
income patients (as defined in clause (iv)).
    ``(ii) The amount of the payment described in clause (i) for each 
discharge shall be determined by multiplying--
            ``(I) the sum of the amount determined under paragraph 
        (1)(A)(ii)(II) (or, if applicable, the amount determined under 
        paragraph (1)(A)(iii)) and, for cases qualifying for additional 
        payment under subparagraph (A)(i), the amount paid to the 
        hospital under subparagraph (A) for that discharge, by
            ``(II) the disproportionate share adjustment percentage 
        established under clause (iii) for the cost reporting period in 
        which the discharge occurs.
    ``(iii) The disproportionate share adjustment percentage for a cost 
reporting period for a hospital is equal to (P-T)(C), where--
            ``(I) `P' is equal to the hospital's disproportionate 
        patient percentage (as defined in clause (v)) for the period;
            ``(II) `T' is equal to the threshold percentage established 
        by the Secretary under clause (iv); and
            ``(III) `C' is equal to a conversion factor established by 
        the Secretary in a manner so that, in applying such conversion 
        factor for cost reporting periods beginning in fiscal year 
        2002--
                    ``(aa) the total of the additional payments that 
                would have been made under this subparagraph for cost 
                reporting periods beginning in fiscal year 2002 if the 
                amendment made by section 2(b) of the Medicare Safety 
                Net Hospital Improvement Act of 2002 had been in 
                effect; are equal to
                    ``(bb) the total of the additional payments that 
                would have been made under this subparagraph for cost 
                reporting periods beginning in fiscal year 2002 if such 
                amendment was not in effect but if the disproportionate 
                share adjustment percentage (as defined in clause (iv) 
                (as in effect during such cost reporting periods)) for 
                all hospitals was equal to the percent determined in 
                accordance with the applicable formulae described in 
                clause (vii) (as so in effect).
The Secretary shall establish the conversion factor under subclause 
(III) based upon the data described in clause (iv) that is collected by 
the Secretary.
    ``(iv) For purposes of this subparagraph, a hospital `serves a 
significantly disproportionate number of low-income patients' for a 
cost reporting period if the hospital has a disproportionate patient 
percentage (as defined in clause (v)) for that period which equals or 
exceeds a threshold percentage, as established by the Secretary in a 
manner so that, if the amendment made by section 2(b) of the Medicare 
Safety Net Hospital Improvement Act of 2002 had been in effect for cost 
reporting periods beginning in fiscal year 2002 and if the 
disproportionate share adjustment percentage (as defined in clause (iv) 
(as in effect during such periods)) for all hospitals was equal to the 
percent determined in accordance with the applicable formulae described 
in clause (vii) (as so in effect), 60 percent of subsection (d) 
hospitals would have been eligible for an additional payment under this 
subparagraph for such periods. The Secretary shall establish such 
threshold percentage based upon the data described in clause (iv) that 
is collected by the Secretary.
    ``(v) In this subparagraph, the term `disproportionate patient 
percentage' means, with respect to a cost reporting period of a 
hospital (expressed as a percentage)--
            ``(I) the charges described in subclauses (II) through (V) 
        of clause (vi) for such period; divided by
            ``(II) the charges described in subclause (I) of such 
        clause for such period.''; and
            (2) by redesignating clause (xiv) as clause (vi).
    (c) Conforming Amendments.--
            (1) Medicare.--
                    (A) Qualified long-term care hospital.--Section 
                1886(b)(3)(G)(ii)(II) of the Social Security Act (42 
                U.S.C. 1395ww(b)(3)(G)(ii)(II)) is amended by striking 
                ``of at least 70 percent (as determined by the 
                Secretary under subsection (d)(5)(F)(vi))'' and 
                inserting ``under subsection (d)(5)(F)(v) equal to or 
                greater than an appropriate percentage (as determined 
                by the Secretary)''.
                    (B) Provider-based status.--Section 404(b)(2)(B) of 
                the Medicare, Medicaid, and SCHIP Benefits Improvement 
                and Protection Act of 2000 (114 Stat. 2763A-507), as 
                enacted into law by section 1(a)(6) of Public Law 106-
                554, is amended by striking ``greater than 11.75 
                percent or is described in clause (i)(II) of such 
                section'' and inserting ``greater than an appropriate 
                percent (as determined by the Secretary)''.
            (2) Medicaid.--Section 1923(c) of the Social Security Act 
        (42 U.S.C. 1396r-4(c)) is amended--
                    (A) in paragraph (1), by striking ``section 
                1886(d)(5)(F)(iv)'' and inserting ``section 
                1886(d)(5)(F)(iii)''; and
                    (B) by striking the second sentence.
            (3) Public health service act.--Section 340B(a)(4)(L)(ii) 
        of the Public Health Service Act (42 U.S.C. 256b(a)(4)(L)(ii)) 
        is amended to read as follows:
                            ``(ii) for the most recent cost reporting 
                        period that ended before the calendar quarter 
                        involved--
                                    ``(I) in the case of a calendar 
                                quarter involved that begins prior to 
                                April 1, 2004, had a disproportionate 
                                share adjustment percentage (as 
                                determined under section 1886(d)(5)(F) 
                                of the Social Security Act) greater 
                                than 11.75 percent or was described in 
                                section 1886(d)(5)(F)(i)(II) of such 
                                Act; and
                                    ``(II) in the case of a calendar 
                                quarter involved that begins on or 
                                after April 1, 2004, had a 
                                disproportionate share adjustment 
                                percentage (as so determined) that is 
                                greater than an appropriate percent, as 
                                established by the Secretary in a 
                                manner so that, with respect to the 12-
                                month period beginning on such date, 
                                the number of hospitals that are 
                                described in this subparagraph is the 
                                same as, or greater than, the number of 
                                hospitals that would have been 
                                described in this subparagraph if the 
                                Medicare Safety Net Hospital 
                                Improvement Act of 2002 had not been 
                                enacted; and''.
    (d) Technical Amendments.--Section 1815(e)(1)(B) of the Social 
Security Act (42 U.S.C. 1395g(e)(1)(B)) is amended--
            (1) in the matter preceding clause (i), by inserting ``a'' 
        before ``hospital''; and
            (2) in clause (i), by striking ``(as established in clause 
        (iv) of such section)'' and inserting ``(as established in 
        section 1886(d)(5)(F)(iv), as in effect during fiscal year 
        1987)''.
    (e) Effective Dates.--
            (1) Collection.--The amendment made by subsection (a) shall 
        take effect on the date of enactment of this Act.
            (2) Modification and conforming amendments.--The amendments 
        made by subsections (b) and (c) shall apply to payments for 
        discharges occurring on or after April 1, 2004.
            (3) Technical amendments.--The amendments made by 
        subsection (d) shall take effect as if included in the 
        enactment of section 9311(a) of the Omnibus Budget 
        Reconciliation Act of 1986 (Public Law 99-509; 100 Stat. 1996).

Summary: Medicare Safety Net Hospital Improvement Act of 2002 - Amends title XVIII (Medicare) of the Social Security Act (SSA) to provide for the annual collection of data on inpatient and outpatient charges and modification of disproportionate share Medicare payments with respect to each hospital serving vulnerable populations.