Medicaid Voluntary Contribution and Provider-Specific Tax Amendments of 1991
PL 102-234 (H.R.3595), enacted 12/12/1991

PUBLIC LAW 102-234—DEC. 12, 1991 
105 STAT. 1793 
Public Law 102 
102d Congress 
-234 
An Act 
To delay until September 30,1992, the issuance of any regulations by the Secretary of 
Health and Human Services changing the treatment of voluntary contributions 
and provider-specific taxes by States as a source of a State's expenditures for which 
Federal financial participation is available under the medicaid program and to 
maintain the treatment of intergovernmental transfers as such a source. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Medicaid Voluntary Contribution 
and Provider-Specific Tax Amendments of 1991". 
SEC. 2. PROHIBITION ON USE OF VOLUNTARY CONTRIBUTIONS, AND 
LIMITATION ON THE USE OF PROVIDER-SPECIFIC TAXES TO 
OBTAIN FEDERAL FINANCIAL PARTICIPATION UNDER MEDIC-
AID. 
(a) IN GENERAL.—Section 1903 of the Social Security Act (42 U.S.C. 
1396b) is amended by adding at the end the following new subsec-
tion. 
"(w)(l)(A) Notwithstanding the previous provisions of this section, 
for purposes of determining the amount to be paid to a State (as 
defined in paragraph (7)(D)) under subsection (a)(1) for quarters in 
any fiscal year, the total amount expended during such fiscal year 
as medical gissistance under the State plan (as determined without 
regard to this subsection) shall be reduced by the sum of any 
revenues received by the State (or by a unit of local government in 
the State) during the fiscal year— 
"(i) from provider-related donations (as defined in paragraph 
(2)(A)), other than— 
"(I) bona fide provider-related donations (as defined in 
paragraph (2)(B)), and 
"(II) donations described in paragraph (2)(C); 
"(ii) from health care related taxes (as defined in paragraph 
(3)(A)), other than broad-based health care related taxes (as 
defined in paragraph (3)(B)); 
"(iii) from a broad-based health care related tax, if there is in 
effect a hold harmless provision (described in paragraph (4)) 
with respect to the tax; or 
"(iv) only with respect to State fiscal years (or portions 
thereof) occurring on or after January 1, 1992, and before 
October 1, 1995, from broad-based health care related taxes to 
the extent the amount of such taxes collected exceeds the limit 
established under paragraph (5). 
"(B) Notwithstanding the previous provisions of this section, for 
puroses of determining the amount to be paid to a State under 
subsection (a)(7) for all quarters in a Federal fiscal year (beginning 
with fiscal year 1993), the total amount expended during the fiscal 
year for administrative expenditures under the State plan (as deter-
Dec. 12. 1991 
[H.R. 3595] 
Medicaid 
Voluntary 
Contribution 
and 
Provider-
Specific Tax 
Amendments of 
1991. 
42 u s e 1305 
note. 
105 STAT. 1794 
PUBLIC LAW 102-234—DEC. 12, 1991 
mined without regard to this subsection) shall be reduced by the 
sum of any revenues received by the State (or by a unit of local 
government in the State) during such quarters from donations 
described in paragraph (2XC), to the extent the amount of such 
donations exceeds 10 percent of the amounts expended under the 
State plan under this title during the fiscal year for purposes 
described in paragraphs (2), (3), (4), (6), and (7) of subsection (a). 
"(CXi) Except as otherwise provided in clause (ii), subparagraph 
(AXi) shall apply to donations received on or after January 1, 1992. 
"(ii) Subject to the limits described in clause (iii) and subpara-
graph (E), subparagraph (AXi) shall not apply to donations received 
before the effective date specified in subparagraph (F) if such dona-
tions are received under programs in effect or as described in State 
plan amendments or related documents submitted to the Secretary 
by September 30, 1991, and applicable to State fiscal year 1992, as 
demonstrated by State plan amendments, written agreements. State 
budget documentation, or other documentary evidence in existence 
on that date. 
"(iii) In appljdng clause (ii) in the case of donations received in 
State fiscal year 1993, the maximum amount of such donations to 
which such clause may be applied may not exceed the total amount 
of such donations received in the corresponding period in State fiscal 
year 1992 (or not later than 5 days after the last day of the 
corresponding period). 
"(D)(i) Except as otherwise provided in clause (ii), subparagraphs 
(AXii) and (AXiii) shall apply to taxes received on or after January 1, 
1992. 
"(ii) Subparagraphs (AXii) and (AXiii) shall not apply to impermis-
sible taxes (as defined in clause (iii)) received before the effective 
date specified in subparagraph (F) to the extent the taxes (including 
the tax rate or base) were in effect, or the legislation or regulations 
imposing such taxes were enacted or adopted, as of November 22, 
1991. 
"(iii) In this subparagraph and subparagraph (E), the term 'im-
permissible tax' means a health care related tax for which a reduc-
tion may be made under clause (ii) or (iii) of subparagraph (A). 
"(EXi) In no case may the total amount of donations and taxes 
permitted under the exception provided in subparagraphs (C)(ii) and 
(D)(ii) for the portion of State fiscal year 1992 occurring during 
calendar year 1992 exceed the limit under paragraph (5) minus the 
total amount of broad-based health care related taxes received in 
the portion of that fiscal year. 
"(ii) In no case may the total amount of donations and taxes 
permitted under the exception provided in subparagraphs (C)(ii) and 
(D)(ii) for State fiscal year 1993 exceed the limit under paragraph (5) 
minus the total amount of broad-based health care related taxes 
received in that fiscal year. 
Effective dates. 
"(F) In this paragraph in the case of a State— 
"(i) except as provided in clause (iii), with a State fiscal year 
beginning on or before July 1, the effective date is October 1, 
1992, 
"(ii) except as provided in clause (iii), with a State fiscal year 
that begins after July 1, the effective date is January 1, 1993, or 
"(iii) with a State legislature which is not scheduled to have a 
regular legislative session in 1992, with a State legislature 
which is not scheduled to have a regular legislative session in 
PUBLIC LAW 102-234—DEC. 12, 1991 
105 STAT. 1795 
1993, or with a provider-specific tax enacted on November 4, 
1991, the effective date is July 1,1993. 
"(2)(A) In this subsection (except as provided in paragraph (6)), the 
term 'provider-related donation' means any donation or other vol-
untary payment (whether in cash or in kind) made (directly or 
indirectly) to a State or unit of local government by— 
"(i) a health care provider (as defined in paragraph (7)(B)), 
"(ii) an entity related to a health care provider (as defined in 
paragraph (7)(C)), or 
"(iii) an entity providing goods or services under the State 
plan for which payment is made to the State under paragraph 
(2), (3), (4), (6), or (7) of subsection (a). 
"(B) For purposes of paragraph (l)(A)(iXI), the term 'bona fide 
provider-related donation' means a provider-related donation that 
has no direct or indirect relationship (as determined by the Sec-
retary) to payments made under this title to that provider, to 
providers furnishing the same class of items and services as that 
provider, or to any related entity, as established by the State to the 
satisfaction of the Secretary. The Secretary may by regulation 
specify types of provider-related donations described in the previous 
sentence that will be considered to be bona fide provider-related 
donations. 
"(C) For purposes of paragraph (l)(A)(i)(II), donations described in 
this subparagraph are funds expended by a hospital, clinic, or 
similar entity for the direct cost (including costs of training and of 
preparing and distributing outreach materials) of State or local 
agency personnel who are stationed at the hospital, clinic, or entity 
to determine the eligibility of individuals for medical assistance 
under this title and to provide outreach services to eligible or 
potentially eligible individuals. 
"(3)(A) In this subsection (except as provided in paragraph (6)), the 
term 'health care related tax' means a tax (as defined in paragraph 
(7)(F)) that— 
"(i) is related to health care items or services, or to the 
provision of, the authority to provide, or payment for, such 
items or services, or 
"(ii) is not limited to such items or services but provides for 
treatment of individuals or entities that are providing or paying 
for such items or services that is different from the treatment 
provided to other individuals or entities. 
In applying clause (i), a tax is considered to relate to health care 
items or services if at least 85 percent of the burden of such tax falls 
on health care providers. 
"(B) In this subsection, the term 'broad-based health care related 
tax' means a health care related tax which is imposed with respect 
to a class of health care items or services (as described in paragraph 
(7XA)) or with respect to providers of such items or services and 
which, except as provided in subparagraphs (D) and (E)— 
"(i) is imposed at least with respect to all items or services in 
the CIEISS furnished by all non-Federal, nonpublic providers in 
the State (or, in the case of a tax imposed by a unit of local 
government, the area over which the unit has jurisdiction) or is 
imposed with respect to all non-Federal, nonpublic providers in 
the class; and 
"(ii) is imposed uniformly (in accordance with subparagraph 
(O). 
105 STAT. 1796 
PUBLIC LAW 102-234—DEC. 12, 1991 
"(CXi) Subject to clause (ii), for purposes of subparagraph (BXii), a 
tax is considered to be imposed uniformly if— 
"(I) in the case of a tax consisting of a licensing fee or similar 
tax oh a class of health care items or services (or providers of 
such items or services), the amount of the tax imposed is the 
same for every provider providing items or services within the 
"(II) in the case of a tax consisting of a licensing fee or similar 
tax imposed on a class of health care items or services (or 
providers of such services) on the basis of the number of beds 
(licensed or otherwise) of the provider, the amount of the tax is 
the same for each bed of each provider of such items or services 
in the class; 
"(III) in the case of a tax based on revenues or receipts with 
respect to a class of items or services (or providers of items or 
services) the tax is imposed at a uniform rate for all items and 
services (or providers of such items or services) in the class on 
all the gross revenues or receipts, or net operating revenues, 
relating to the provision of all such items or services (or all such 
providers) in the State (or, in the case of a tax imposed by a unit 
of local government within the State, in the area over which the 
unit has jurisdiction); or 
"(IV) in the case of any other tax, the State establishes to the 
satisfaction of the Secretary that the tax is imposed uniformly, 
"(ii) Subject to subparagraphs (D) and (E), a tax imposed with 
respect to a class of health care items and services is not considered 
to be imposed uniformly if the tax provides for any credits, exclu-
sions, or deductions which have as their purpose or effect the return 
to providers of all or a portion of the tax paid in a manner that is 
inconsistent with subclauses (I) and (II) of subparagraph (EXii) or 
provides for a hold harmless provision described in paragraph (4). 
"(D) A tax imposed with respect to a class of health care items and 
services is considered to be imposed uniformly— 
"(i) notwithstanding that the tax is not imposed with respect 
to items or services (or the providers thereof) for which pa3mient 
is made under a State plan under this title or title XVIII, or 
"(ii) in the case of a tax described in subparagraph (CXiXIII), 
notwithstanding that the tax provides for exclusion (in whole or 
in part) of revenues or receipts from a State plan under this 
title or title XVIII. 
"(EXi) A State may submit an application to the Secretary 
requesting that the Secretary treat a t«ix as a broad-based health 
care related tax, notwithstanding that the tax does not apply to all 
health care items or services in class (or all providers of such items 
and services), provides for a credit, deduction, or exclusion, is not 
applied uniformly, or otherwise does not meet the requirements of 
subparagraph (B) or (C). Permissible waivers may include exemp-
tions for rural or sole-community providers. 
"(ii) The Secretary shall approve such an application if the State 
establishes to the satisfaction of the Secretary that— 
"(I) the net impact of the tax and associated expenditures 
under this title as proposed by the State is generally redistribu-
tive in nature, and 
"(II) the amount of the tax is not directly correlated to 
pajnnents under this title for items or services with respect to 
which the tax is imposed. 
PUBLIC LAW 102-234—DEC. 12,1991 
105 STAT. 1797 
The Secretary shall by regulation specify tjrpes of credits, exclusions, R^fulations. 
and deductions that will be considered to meet the requirements of 
this subparagraph. 
"(4) For purposes of paragraph (IXAXiii), there is in effect a hold 
harmless provision with respect to a broad-based health care related 
tax imposed with respect to a class of items or services if the 
Secretary determines that any of the following applies: 
"(A) The State or other unit of government imposing the tax 
provides (directly or indirectly) for a pajmaent (other than under 
this title) to taxpayers and the Eimount of such pajnnent is 
positively correlated either to the amount of such tax or to the 
difference between the amount of the tax and the amount of 
payment under the State plan. 
(B) All or any portion of the pajnnent made under this title 
to the taxpayer varies based only upon the amount of the total 
tax paid. 
"(C) The State or other unit of government imposing the tax 
provides (directly or indirectly) for any payment, offset, or 
waiver that guarantees to hold teixpayers harmless for any 
portion of the costs of the tax. 
The provisions of this paragraph shall not prevent use of the tax to 
reimburse health care providers in a class for expenditures under 
this title nor preclude States from relying on such reimbursement to 
justify or explain the tax in the legislative process. 
"(5XA) For purposes of this subsection, the limit under this 
subparagraph with respect to a State is an amount equal to 25 
percent (or, if greater, the State base percentage, as defined in 
subparagraph (B)) of the non-Federal share of the total amount 
expended under the State plan during a State fiscEil year (or portion 
thereof), as it would be determined pursuant to paragraph (1)(A) 
without regard to paragraph (IXAXiv). 
"(BXi) In subparsigraph (A), the term 'State base percentage' 
means, with respect to a State, an amount (expressed £is a percent-
age) equal to— 
"(I) the total of the amount of health care related taxes 
(whether or not broad-based) and the amount of provider-related 
donations (whether or not bona fide) projected to be collected (in 
accordance with clause (ii)) during State fiscal year 1992, di-
vided by 
"(II) the non-Federal share of the total amount estimated to 
be expended under the State plan during such State fiscal year, 
"(ii) For purposes of clause (i)(I), in the case of a tax that is not in 
effect throughout State fiscal year 1992 or the rate (or base) of which 
is increased during such fiscal year, the Secretary shall project the 
amount to be collected during such fiscal year as if the tax (or 
increase) were in effect during the entire State fiscal year. 
"(CXi) The total amount of health care related taxes under 
subparagraph (B)(i)(I) shall be determined by the Secretary based on 
only those taxes (including the tax rate or base) which were in 
effect, or for which legislation or regulations imposing such taxes 
were enacted or adopted, as of November 22,1991. 
"(ii) The amount of provider-related donations under subpara-
graph (B)(i)(I) shall be determined by the Secretary based on pro-
grams in effect on September 30, 1991, and applicable to State fiscal 
year 1992, as demonstrated by State plan amendments, written 
agreements. State budget documentation, or other documentary 
evidence in existence on that date. 
105 STAT. 1798 
PUBLIC LAW 102-234—DEC. 12, 1991 
"(iii) The amount of expenditures described in subparagraph 
(BXiXII) shall be determined by the Secretary based on the best data 
available as of the date of the enactment of this subsection. 
"(6)(A) Notwithstanding the provisions of this subsection, the 
Secretary may not restrict States' use of funds where such funds are 
derived from State or local taxes (or funds appropriated to State 
university teaching hospitals) transferred from or certified by units 
of government within a State as the non-Federal share of expendi-
tures under this title, regardless of whether the unit of government 
is also a health care provider, except as provided in section 
1902(aX2), unless the transferred funds are derived by the unit of 
government from donations or taxes that would not otherwise be 
recognized as the non-Federal share under this section. 
"(B) For purposes of this subsection, funds the use of which the 
Secretary may not restrict under subparagraph (A) shall not be 
considered to be a provider-related donation or a health care related 
tax. 
"(7) For purposes of this subsection: 
"(A) Each of the following shall be considered a separate class 
of health care items and services: 
"(i) Inpatient hospital services, 
"(ii) Outpatient hospital services. 
"(iii) Nursing facility services (other than services of 
intermediate care facilities for the mentally retarded). 
"(iv) Services of intermediate care facilities for the men-
tally retarded. 
"(v) Physicians' services. 
"(vi) Home health care services. 
"(vii) Outpatient prescription drugs, 
"(viii) Services of health maintenance organizations (and 
other organizations with contracts under section 1903(m)). 
"(ix) Such other classification of health care items and 
services consistent with this subparagraph as the Secretary 
may establish by regulation. 
"(B) The term 'health care provider' means an individual or 
person that receives payments for the provision of health care 
items or services. 
"(C) An entity is considered to be 'related' to a health care 
provider if the entity— 
"(i) is an organization, association, corporation or part-
nership formed by or on behalf of health care providers; 
"(ii) is a person with an ownership or control interest (as 
defined in section 1124(a)(3)) in the provider; 
"(iii) is the employee, spouse, parent, child, or sibling of 
the provider (or of a person described in clause (ii)); or 
"(iv) has a similar, close relationship (as defined in regu-
lations) to the provider. 
"(D) The term 'State' means only the 50 States and the 
District of Columbia but does not include any State whose 
entire program under this title is operated under a waiver 
granted under section 1115. 
"(E) The 'State fiscal year' means, with respect to a specified 
year, a State fiscal year ending in that specified year. 
"(F) The term 'tax' includes any licensing fee, assessment, or 
other mandatory payment, but does not include pa5anent of a 
criminal or civil fine or penalty (other than a fine or penalty 
PUBLIC LAW 102-234—DEC. 12, 1991 
105 STAT. 1799 
imposed in lieu of or instead of a fee, assessment, or other 
mandatory payment). 
"(G) The term 'unit of local government' means, with respect 
to a State, a city, county, special purpose district, or other 
governmental unit in the State.". 
(b) CONFORMING AMENDMENTS.—(1) Section 1902(t) of such Act (42 
U.S.C. 1396a(t)) is amended— 
(A) by striking "Except as provided in section 1903(i), noth-
ing" and inserting "Nothing", and 
(B) by striking "taxes (whether or not of general applicabil-
ity)" and inserting "taxes of general applicability". 
(2) Section 1903(i) of such Act (42 U.S.C. 1396b(i)) is amended by 
striking paragraph (10) inserted by section 4701(b)(2XB) of the Omni-
bus Budget Reconciliation Act of 1990. 
(c) EFFECTIVE DATE.—(1) The amendments made by this section 
shall take effect January 1, 1992, without regard to whether or not 
regulations have been promulgated to carry out such amendments 
by such date. 
(2) Except as specifically provided in section 1903(w) of the Social 
Security Act and notwithstanding any other provision of such Act, 
the Secretary of Health and Human Services shall not, with respect 
to expenditures prior to the effective date specified in section 
1903(w)(l)(F) of such Act, disallow any claim submitted by a State 
for, or otherwise withhold Federal financial participation with re-
spect to, amounts expended for medical assistance under title XIX of 
the Social Security Act by reason of the fact that the source of the 
funds used to constitute the non-Federal share of such expenditures 
is a tax imposed on, or a donation received from, a health care 
provider, or on the ground that the amount of any donation or tax 
proceeds must be credited against the amount of the expenditure. 
(3) The interim final rule promulgated by the Secretary of Health 
and Human Services on October 31, 1991 (56 Federal Register 
56132), relating to the State share of financial participation under 
the medicaid program, is hereby nullified and is of no effect. No part 
of such rule shall be effective except pursuant to a rule promulgated 
after the date of the enactment of this Act and consistent with this 
section (and the amendments made by this section). 
SEC. 3. RESTRICTIONS ON AGGREGATE PAYMENTS FOR DISPROPORTION-
ATE SHARE HOSPITALS. 
(a) REPEAL OF PROHIBITION OF UPPER PAYMENT LIMIT FOR DIS-
PROPORTIONATE SHARE HOSPITALS.—Section 1902(h) of the Social 
Security Act (42 U.S.C. 1396a(h)) is amended by striking "to limit" 
the first place it appears and all that follows through "special needs 
or". 
03) LIMITATION ON AGGREGATE PAYMENT ADJUSTMENTS.— 
(1) IN GENERAL.—Section 1923 of such Act (42 U.S.C. 1396r-4) 
is amended by adding at the end the following new subsection: 
"(f) DENIAL OF FEDERAL FINANCIAL PARTICIPATION FOR PAYMENTS 
IN EXCESS OF CERTAIN LIMITS.— 
"(1) IN GENERAL.— 
"(A) APPUCATION OF STATE-SPECIFIC LIMITS.—Except as 
provided in subparagraph (D), payment under section 
1903(a) shall not be made with respect to any payment 
adjustment made under this section for hospitals in a State 
(as defined in paragraph (4XB)) for quarters— 
42 u s e 1396a 
note. 
42 u s e 1396b 
note. 
105 STAT. 1800 
PUBLIC LAW 102-234—DEC. 12, 1991 
"(i) in fiscal year 1992 (beginning on or after Janu-
ary 1,1992), unless— 
"(I) the payment adjustments are made— 
"(a) in accordance with the State plan in 
effect or amendments submitted to the Sec-
retary by September 30,1991, 
"(b) in accordance with the State plan in 
effect or amendments submitted to the Sec-
retary by November 26, 1991, or modification 
thereof, if the amendment designates only dis-
proportionate share hospitals with a medicaid 
or low-income utilization percentage at or 
above the Statewide arithmetic mean, or 
"(c) in accordance with a payment methodol-
ogy which was established and in effect as of 
September 30, 1991, or in accordance with 
legislation or regulations enacted or adopted 
as of such date; or 
"(II) the payment adjustments are the minimum 
adjustments required in order to meet the require-
ments of subsection (c)(1); or 
"(ii) in a subsequent fiscal year, to the extent that the 
total of such payment adjustments exceeds the State 
disproportionate share hospital (in this subsection re-
ferred to as 'DSH') allotment for the year (as specified 
in paragraph (2)). 
"(B) NATIONAL DSH PAYMENT LIMIT.—The national DSH 
payment limit for a fiscal year is equal to 12 percent of the 
total amount of expenditures under State plans under this 
title for medical assistance during the fiscal year. 
"(C) 
PUBLICATION OF STATE DSH ALLOTMENTS AND NA-
TIONAL DSH PAYMENT LIMIT.—Before the beginning of each 
fiscal year (beginning with fiscal year 1993), the Secretary 
shall, consistent with section 1903(d), estimate and pub-
lish— 
"(i) the national DSH payment limit for the fiscal 
year, and 
"(ii) the State DSH allotment for each State for the 
year. 
"(D) CONDITIONAL EXCEPTION FOR CERTAIN STATES.—Sub-
ject to subparagraph (E), beginning with payments for quar-
ters beginning on or after January 1, 1996, and at the 
option of a State, subparagraph (A) shall not apply in the 
case of a State which defines a hospital as a disproportion-
ate share hospital under subsection (a)(1) only if the hos-
pital meets any of the following requirements: 
"(i) The hospital's medicaid inpatient utilization rate 
(as defined in subsection (b)(2)) is at or above the mean 
medicaid inpatient utilization rate for all hospitals in 
the State. 
"(ii) The hospital's low-income utilization rate (as 
defined in subsection (b)(3)) is at or above the mean low-
income utilization rate for all hospitals in the State, 
"(iii) The number of inpatient days of the hospital 
attributable to patients who (for such days) were eli-
gible for medical assistance under the State plan is 
PUBLIC LAW 102-234—DEC. 12, 1991 
105 STAT. 1801 
equal to at leeist 1 percent of the total number of such 
days for all hospitals in the State. 
"(iv) The hospital meets such alternative require-
ments as the Secretary may establish by regulation, 
taking into account the special circumstances of chil-
dren's hospitals, hospitals located in rural areas, and 
sole community hospitals. 
"(E) CONDITION FOR OPTION.—The option specified in 
subparagraph (D) shall not apply for payments for a quar-
ter beginning before the date of enactment of legislation 
establishing a limit on payment adjustments under this 
section which would apply in the case of a state exercising 
such option. 
"(2) DETERMINATION OF STATE DSH ALLOTMENTS.— 
"(A) IN GENERAL.—Subject to subparagraph (B), the State 
DSH allotment for a fiscal year is equal to the State DSH 
allotment for the previous fiscal year (or, for fiscal year 
1993, the State base allotment as defined in paragraph 
(4XC)), increased by— 
"(i) the State growth factor (as defined in paragraph 
(4)(E)) for the fiscal year, and 
"(ii) the State supplemental amount for the fiscal 
year (as determined under paragraph (3)). 
"(B) EXCEPTIONS.— 
"(i) LIMIT TO 12 PERCENT OR BASE ALLOTMENT.—A 
State DSH allotment under subparagraph (A) for a 
fiscal year shall not exceed 12 percent of the total 
amount of expenditures under the State plan for medi-
cal assistance during the fiscal year, except that, in the 
case of a high DSH State (as defined in paragraph 
(4)(A)), the State DSH allotment shall equal the State 
based allotment. 
"(ii) 
EXCEPTION FOR MINIMUM REQUIRED ADJUST-
MENT.—No State DSH allotment shall be less than the 
minimum amount of payment adjustments the State is 
required to make in the fiscal year to meet the require-
ments of subsection (c)(1). 
"(3) STATE SUPPLEMENTAL AMOUNTS.—The Secretary shall 
determine a supplemental amount for each State that is not a 
high DSH State ior a fiscal year as follows: 
"(A) DETERMINATION OF REDISTRIBUTION POOL.—The Sec-
retary shall subtract from the national DSH payment limit 
(specified in paragraph (1)(B)) for the fiscal year the fol-
lowing: 
"(i) the total of the State base allotments for high 
DSH States; 
"(ii) the total of State DSH allotments for the pre-
vious fiscal year (or, in the case of fiscal year 1993, the 
total of State base allotments) for all States other than 
high DSH States; 
"(iii) the total of the State growth amounts for all 
States other than high DSH States for the fiscal year; 
and 
"(iv) the total additions to State DSH allotments the 
Secretary estimates will be attributable to paragraph 
(2)(B)(ii). 
105 STAT. 1802 
PUBLIC LAW 102-234—DEC. 12, 1991 
"(B) 
DISTRIBUTION OF POOL BASED ON TOTAL MEDICAID 
EXPENDITURES FOR MEDICAL ASSISTANCE.—The Supplemental 
amount for a State for a fiscal year is equal to the lesser 
of— 
"(i) the product of the amount determined under 
subparagraph (A) and the ratio of— 
"(I) the total amount of expenditures made 
under the State plan under this title for medical 
• 
assistance during the fiscal year, to 
"(II) the total amount of expenditures made 
under the State plans under this title for medical 
assistance during the fiscal year for all States 
which are not high DSH States in the fiscal year, 
or 
"(ii) the amount that would raise the State DSH 
allotment to the maximum permitted under paragraph 
(2)(B). 
"(4) DEFINITIONS.—In this subsection: 
"(A) HIGH DSH STATE.—The term 'high DSH State' means, 
for a fiscal year, a State for which the State base allotment 
exceeds 12 percent of the total amount of expenditures 
made under the State plan under this title for medical 
assistance during the fiscal year. 
"(B) STATE.—The term 'State' means only the 50 States 
and the District of Columbia but does not include any State 
whose entire program under this title is operated under a 
waiver granted under section 1115. 
"(C) STATE BASE ALLOTMENT.—The term 'State base allot-
ment' means, with respect to a State, the greater o
f
— 
"(i) the total amount of payment adjustments made 
under subsection (c) under the State plan during fiscal 
year 1992 (excluding any such payment adjustments for 
which a reduction may be made under paragraph 
(l)(A)(i)), or 
"(ii) $1,000,000. 
The amount under clause (i) shall be determined by the 
Secretary and shall include only payment adjustments de-
scribed in paragraph (l)(A)(i)(I). 
"(D) STATE GROWTH AMOUNT.—The term 'State growth 
amount' means, with respect to a State for a fiscal year, the 
lesser of— 
"(i) the product of the State growth factor and the 
State DSH payment limit for the previous fiscal year, 
or 
"(ii) the amount by which 12 percent of the total 
amount of expenditures made under the State plan 
under this title for medical assistance during the fiscal 
year exceeds the State DSH allotment for the previous 
fiscal year. 
"(E) STATE GROWTH FACTOR.—The term 'State growth 
factor' means, for a State for a fiscal year, the percentage 
by which the expenditures described in section 1903(a) in 
the State in the fiscal year exceed such expenditures in the 
previous fiscal year.". 
(2) CONFORMING AMENDMENTS.—(A) Such section 1923 is fur-
ther amended— 
PUBLIC LAW 102-234—DEC. 12, 1991 
105 STAT. 1803 
(i) in subsection (aX2XB), by striking "subsection (c)," and 
inserting "subsections (c) and (f),"; and 
(ii) in subsection (c), by striking "In order" and inserting 
"Subject to subsection (f), in order". 
(B) Section 1903(a)(1) of such Act (42 U.S.C. 1396b(a)(l)) is 
amended by inserting "and section 1923(f)" after "of this sec-
tion". 
(c) LIMITS ON AuTHORitY To RESTRICT D S H DESIGNATIONS.— 42 USC l396r-4. 
Subsection (b) of such section is amended by adding at the end the 
following new paragraph: 
"(4) The Secretary may not restrict a State's authority to 
designate hospitals as disproportionate share hospitals under 
this section. The previous sentence shall not be construed to 
affect the authority of the Secretary to reduce payments pursu-
ant to section 1903(w)(l)(A)(iii) if the Secretary determines that, 
as a result of such designations, there is in effect a hold 
harmless provision described in section 1903(w)(4).". 
(d) STUDY OF DSH PAYMENT ADJUSTMENTS.— 
42 use i396r-4 
(1) IN GENERAL.—The Prospective Pajnnent Assessment "°*®-
Commission shall conduct a study concerning— 
(A) the feasibility and desirability of establishing maxi-
mum and minimum payment adjustments under section 
1923(c) of the Social Security Act for hospitals deemed 
disproportionate share hospitals under State medicaid 
plans, and 
(B) criteria (other than criteria described in clause (i) or 
(ii) of section 1923(fXlXD) of such Act) that are appropriate 
for the designation of disproportionate share hospitals 
under section 1923 of such Act. 
(2) ITEMS INCLUDED IN STUDY.—The Commission shall include 
in the study— 
(A) a comparison of the payment adjustments for hos-
pitals made under such section and the additional pay-
ments made under title XVIII of such Act for hospitals 
serving a significantly disproportionate number of low 
income patients under the medicare program; and 
(B) an analysis of the effect the establishment of limits on 
such payment adjustments will have on the ability of the 
hospitals to be reimbursed for the resource costs incurred 
by the hospitals in treating individuals entitled to medical 
assistance under State medicaid plans and other low-
income patients. 
(3) REPORT.—Not later than January 1, 1994, the Commission 
shall submit a report on the study conducted under paragraph 
(1) to the Committee on Finance of the Senate and the Commit-
tee on Energy and Commerce of the House of Representatives. 
Such report shall include such recommendations respecting the 
designation of disproportionate share hospitals and the 
establishment of maximum and minimum payment adjust-
ments for such hospitals under section 1923 of the Social Secu-
rity Act as may be appropriate. 
(e) EFFECTIVE DATE.—(1) The amendments made by this section 
42 USC 1396a 
shall take effect January 1,1992. 
^°^-
(2) The proposed rule promulgated by the Secretary of Health and 
Human Services on October 31, 1991 (56 Federal Register 56141), 
relating to the standards for defining disproportionate share hos-
pitals under the medicaid program, shall be withdrawn and can-
105 STAT. 1804 
PUBLIC LAW 102-234—DEC. 12, 1991 
celed. No part of such proposed rule shall be effective except pursu-
ant to a rule promulgated after the date of the enactment of this Act 
and consistent with this section (and the amendments made by this 
section). 
SEC. 4. REPORTING REQUIREMENT. 
(a) IN GENERAL.—Section 1903(d) of the Social Security Act (42 
U.S.C. 1396b(d)) is amended by adding at the end the following: 
"(6)(A) Each State (as defined in subsection (w)(7XD)) shall include, 
in the first report submitted under paragraph (1) after the end of 
each fiscal year, information related to— 
"(i) provider-related donations made to the State or units of 
local government during such fiscal year, and 
"(ii) health care related taxes collected by the State or such 
units during such fiscal year. 
"(B) Each State shall include, in the first report submitted under 
»t V 
paragraph (1) after the end of each fiscal year, information related 
to the total amount of payment adjustments made, and the smiount 
of payment adjustments made to individual providers (by provider), 
under section 1923(c) during such fiscal year.". 
l-xV®^^^^^** 
^^ EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to fiscal years ending after the date of the enactment of 
this Act, 
note. 
42 use 1396b 
SEC. 5. INTERIM FINAL REGULATIONS. 
"° • 
(a) IN GENERAL.—Subject to subsection (b), the Secretary of Health 
and Human Services shall issue such regulations (on an interim 
final or other basis) as may be necessary to implement this Act and 
the amendments made by this Act. 
(b) REGULATIONS CHANGING TREATMENT OF INTERGOVERNMENTAL 
TRANSFERS.—The Secretary may not issue any interim final regula-
tion that changes the treatment (specified in section 433.45(a) of title 
42, Code of Federal Regulations) of public funds as a source of State 
share of financial participation under title XIX of the Social Secu-
rity Act, except as may be necessary to permit the Secretary to deny 
Federal financial participation for public funds described in section 
1903(w)(6)(A) of such Act (as added by section 2(a) of this Act) that 
PUBLIC LAW 102-234—DEC. 12,1991 
105 STAT. 1805 
are derived from donations or taxes that would not otherwise be 
recognized as the non-Federal share under section 1903(w) of such 
Act. 
(c) CONSULTATION WITH STATES.—The Secretary shall consult with 
the States before issuing any regulations under this Act. 
Approved December 12,1991. 
< 
LEGISLATIVE HISTORY—H.R. 3595: 
HOUSE REPORTS: Nos. 102-310 (C!omm. on Energy and Ck)mmerce) and 102-409 
(Comm. of Conference). 
CONGRESSIONAL RECORD, Vol. 137 (1991): 
Nov. 19, considered and passed House. 
Nov. 26, considered and passed Senate, amended. House agreed to conference 
report. 
Nov. 27, Senate agreed to conference report.