SEC. 1504. PRESERVATION OF RESIDENT CAP POSITIONS FROM CLOSED HOSPITALS.

[a] Direct GME- Section- 1886[h][4][H] of the Social Security Act [42 U.S.C. Section- 1395ww[h][4][H]] is amended by adding at the end the following new clause:

'[vi] REDISTRIBUTION OF RESIDENCY SLOTS AFTER A HOSPITAL CLOSES-

'[I] IN GENERAL- The Secretary shall, by regulation, establish a process consistent with subclauses [II] and [III] under which, in the case where a hospital [other than a hospital described in clause [v]] with an approved medical residency program in a State closes on or after the date that is 2 years before the date of the enactment of this clause, the Secretary shall increase the otherwise applicable resident limit under this paragraph for other hospitals in the State in accordance with this clause.

'[II] PROCESS FOR HOSPITALS IN CERTAIN AREAS- In determining for which hospitals the increase in the otherwise applicable resident limit described in subclause [I] is provided, the Secretary shall establish a process to provide for such increase to one or more hospitals located in the State. Such process shall take into consideration the recommendations submitted to the Secretary by the senior health official [as designated by the chief executive officer of such State] if such recommendations are submitted not later than 180 days after the date of the hospital closure involved [or, in the case of a hospital that closed after the date that is 2 years before the date of the enactment of this clause, 180 days after such date of enactment].

'[III] LIMITATION- The estimated aggregate number of increases in the otherwise applicable resident limits for hospitals under this clause shall be equal to the estimated number of resident positions in the approved medical residency programs that closed on or after the date described in subclause [I].'.

[b] No Effect on Temporary FTE Cap Adjustments- The amendments made by this section shall not effect any temporary adjustment to a hospital's FTE cap under section 413.79[h] of title 42, Code of Federal Regulations [as in effect on the date of enactment of this Act] and shall not affect the application of section 1886[h][4][H][v] of the Social Security Act.

[c] Conforming Amendments-

[1] Section- 422[b][2] of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 [Public Law 108-173], as amended by section 1501[c], is amended by striking '[7] and' and inserting '[4][H][vi], [7], and'.

[2] Section- 1886[h][7][E] of the Social Security Act [42 U.S.C. 1395ww[h][7][E]] is amended by inserting 'or under paragraph [4][H][vi]' after 'under this paragraph'.