SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Urban Medicare-Dependent Hospitals 
Preservation Act of 2011''.

SEC. 2. CRITERIA AND PAYMENT FOR CERTAIN URBAN MEDICARE-DEPENDENT 
              HOSPITALS.

    (a) In General.--Section 1886(d)(5) of the Social Security Act (42 
U.S.C. 1395ww(d)(5)) is amended by adding at the end the following new 
subparagraph:
                    ``(M)(i) For cost reporting periods beginning on or 
                after October 1, 2011, and before October 1, 2014, in 
                the case of a subsection (d) hospital which is an urban 
                Medicare-dependent hospital, payment under paragraph 
                (1)(A) shall be equal to the sum of the amount 
                determined under clause (ii) and the amount determined 
                under paragraph (1)(A)(iii).
                    ``(ii) The amount determined under this clause is, 
                for discharges occurring during a cost reporting period 
                that begins on or after October 1, 2011, and before 
                October 1, 2014, 50 percent of the amount by which the 
                hospital's target amount for the cost reporting period 
                (as defined in subsection (b)(3)(L)) exceeds the amount 
                determined under paragraph (1)(A)(iii).
                    ``(iii) For purposes of this subparagraph, the term 
                `urban Medicare-dependent hospital' means, with respect 
                to any cost reporting period to which clause (i) 
                applies, any hospital--
                            ``(I) located in an urban area or 
                        reclassified to an urban area for wage index 
                        purposes;
                            ``(II) that does not receive payment--
                                    ``(aa) under subparagraph (C) as a 
                                rural referral center;
                                    ``(bb) under subparagraph (D) as a 
                                sole community hospital;
                                    ``(cc) under subparagraph (B) or 
                                under subsection (h); or
                                    ``(dd) under subparagraph (F);
                            ``(III) that is not a physician-owned 
                        hospital, as defined in section 489.3 of title 
                        42, Code of Federal Regulations (as in effect 
                        as of the date of the enactment of this 
                        subparagraph); and
                            ``(IV) for which not less than 60 percent 
                        of its inpatient days or discharges during the 
                        cost reporting period beginning in fiscal year 
                        2006, or two of the three most recently audited 
                        cost reporting periods for which the Secretary 
                        has a settled cost report, were attributable to 
                        inpatients entitled to benefits under part A 
                        and not enrolled in a Medicare Advantage plan 
                        under part C.''.
    (b) Target Payment Amount.--Section 1886(b)(3) of the Social 
Security Act (42 U.S.C. 1395ww(b)(3)) is amended--
            (1) in subparagraph (B)(iv), by striking ``and (D)'' and 
        inserting ``, (D), and (M)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(M) For cost reporting periods occurring on or 
                after October 1, 2011, and before October 1, 2014, in 
                the case of a hospital that is an urban Medicare-
                dependent hospital (as defined in subsection 
                (d)(5)(M)), the term `target amount' means--
                            ``(i) with respect to the first 12-month 
                        cost reporting period in which this 
                        subparagraph is applied to the hospital, the 
                        allowable operating costs of inpatient hospital 
                        services (as defined in subsection (a)(4)) 
                        recognized under this title for the hospital 
                        for the 12-month cost reporting period 
                        beginning during fiscal year 2002 or 2006 
                        (whichever results in a higher target amount), 
                        increased by the applicable percentage increase 
                        under subparagraph (B)(iv) for each of fiscal 
                        years 2003 through 2011 or 2007 through 2011, 
                        respectively; and
                            ``(ii) with respect to discharges occurring 
                        after the first 12-month cost reporting period 
                        in which this subparagraph is applied to the 
                        hospital, the target amount for the preceding 
                        year increased by the applicable percentage 
                        increase under subparagraph (B)(iv).''.
Output: Urban Medicare-Dependent Hospitals Preservation Act of 2011 - Amends title XVIII (Medicare) of the Social Security Act, with respect to cost reporting periods beginning on or after October 1, 2011, and before October 1, 2014, to revise the criteria and payment formula for "subsection (d) hospitals" which are urban Medicare-dependent hospitals.

(Generally a subsection (d) hospital is an acute care hospital particularly one that receives payments under Medicare's inpatient prospective payment system when providing covered inpatient services to eligible beneficiaries.)