SEC. 1704. REDUCTION IN MEDICAID DSH.

[a] Report-

[1] IN GENERAL- Not later than January 1, 2016, the Secretary of Health and Human Services [in this title referred to as the 'Secretary'] shall submit to Congress a report concerning the extent to which, based upon the impact of the health care reforms carried out under division A in reducing the number of uninsured individuals, there is a continued role for Medicaid DSH. In preparing the report, the Secretary shall consult with community-based health care networks serving low-income beneficiaries.

[2] MATTERS TO BE INCLUDED- The report shall include the following:

[A] RECOMMENDATIONS- Recommendations regarding--

[i] the appropriate targeting of Medicaid DSH within States; and

[ii] the distribution of Medicaid DSH among the States.

[B] SPECIFICATION OF DSH HEALTH REFORM METHODOLOGY- The DSH Health Reform methodology described in paragraph [2] of subsection [b] for purposes of implementing the requirements of such subsection.

[3] COORDINATION WITH MEDICARE DSH REPORT- The Secretary shall coordinate the report under this subsection with the report on Medicare DSH under section 1112.

[4] MEDICAID DSH- In this section, the term 'Medicaid DSH' means adjustments in payments under section 1923 of the Social Security Act for inpatient hospital services furnished by disproportionate share hospitals.

[b] Medicaid DSH Reductions-

[1] IN GENERAL- The Secretary shall reduce Medicaid DSH so as to reduce total Federal payments to all States for such purpose by $1,500,000,000 in fiscal year 2017, $2,500,000,000 in fiscal year 2018, and $6,000,000,000 in fiscal year 2019.

[2] DSH HEALTH REFORM METHODOLOGY- The Secretary shall carry out paragraph [1] through use of a DSH Health Reform methodology issued by the Secretary that imposes the largest percentage reductions on the States that--

[A] have the lowest percentages of uninsured individuals [determined on the basis of audited hospital cost reports] during the most recent year for which such data are available; or

[B] do not target their DSH payments on--

[i] hospitals with high volumes of Medicaid inpatients [as defined in section 1923[b][1][A] of the Social Security Act [42 U.S.C. 1396r-4[b][1][A]]; and

[ii] hospitals that have high levels of uncompensated care [excluding bad debt].

[3] DSH ALLOTMENT PUBLICATIONS-

[A] IN GENERAL- Not later than the publication deadline specified in subparagraph [B], the Secretary shall publish in the Federal Register a notice specifying the DSH allotment to each State under 1923[f] of the Social Security Act for the respective fiscal year specified in such subparagraph, consistent with the application of the DSH Health Reform methodology described in paragraph [2].

[B] PUBLICATAION DEADLINE- The publication deadline specified in this subparagraph is--

[i] January 1, 2016, with respect to DSH allotments described in subparagraph [A] for fiscal year 2017;

[ii] January 1, 2017, with respect to DSH allotments described in subparagraph [A] for fiscal year 2018; and

[iii] January 1, 2018, with respect to DSH allotments described in subparagraph [A] for fiscal year 2019.

[c] Conforming Amendments-

[1] Section- 1923[f] of the Social Security Act [42 U.S.C. 1396r-4[f]] is amended--

[A] by redesignating paragraph [7] as paragraph [8]; and

[B] by inserting after paragraph [6] the following new paragraph:

'[7] SPECIAL RULE FOR FISCAL YEARS 2017, 2018, AND 2019-

'[A] FISCAL YEAR 2017- Notwithstanding paragraph [2], the total DSH allotments for all States for--

'[i] fiscal year 2017, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $1,500,000,000;

'[ii] fiscal year 2018, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $2,500,000,000; and

'[iii] fiscal year 2019, shall be the total DSH allotments that would otherwise be determined under this subsection for such fiscal year decreased by $6,000,000,000.'.

[2] Section- 1923[b][4] of such Act [42 U.S.C. 1396r-4[b][4]] is amended by adding before the period the following: 'or to affect the authority of the Secretary to issue and implement the DSH Health Reform methodology under section 1704[b][2] of the America's Health Choices Act of 2009'.

[d] Disproportionate Share Hospitals [DSH] and Essential Access Hospital [EAH] Non-Discrimination-

[1] IN GENERAL- Section- 1923[d] of the Social Security Act [42 U.S.C. 1396r-4] is amended by adding at the end the following new paragraph:

'[4] No hospital may be defined or deemed as a disproportionate share hospital, or as an essential access hospital [for purposes of subsection [f][6][A][iv], under a State plan under this title or subsection [b] of this section [including any waiver under section 1115] unless the hospital--

'[A] provides services to beneficiaries under this title without discrimination on the ground of race, color, national origin, creed, source of payment, status as a beneficiary under this title, or any other ground unrelated to such beneficiary's need for the services or the availability of the needed services in the hospital; and

'[B] makes arrangements for, and accepts, reimbursement under this title for services provided to eligible beneficiaries under this title.'.

[2] EFFECTIVE DATE- The amendment made by subsection [a] shall be apply to expenditures made on or after July 1, 2010.