This Act may be cited as the “Improving Oversight and Accountability in Medicaid Non-DSH Supplemental Payments Act”.

(a) Guidance for states on non-DSH supplemental payments; state reporting and auditing requirements.—Section 1903 of the Social Security Act (42 U.S.C. 1396b) is amended by adding at the end the following new subsection:

“(aa) (1) Not later than 180 days after the date of the enactment of this subsection, the Secretary shall—

“(A) issue guidance to States that identifies permissible methods for calculation of non-DSH supplemental payments to providers to ensure such payments are consistent with section 1902(a)(30)(A) (including any regulations issued under such section such as the regulations specifying upper payment limits under the State plan in part 447 of title 42, Code of Federal Regulations (or any successor regulations));

“(B) establish annual reporting requirements for States making non-DSH supplemental payments that include—

“(i) with respect to a provider that is a hospital, nursing facility, intermediate care facility for the mentally retarded, or an institution for mental diseases, or any other institution, an identification of each provider that received a non-DSH supplemental payment for the preceding fiscal year, the type of ownership or operating authority of each such provider, and the aggregate amount of such payments received by each provider for the preceding fiscal year broken out by category of service;

“(ii) with respect a provider that is not described in clause (i), any information specified in the preceding paragraph, as determined appropriate by the Secretary; and

“(iii) such other information as the Secretary determines to be necessary to ensure that non-DSH supplemental payments made to providers under this section are consistent with section 1902(a)(30)(A); and

“(C) establish requirements for States making non-DSH supplemental payments to conduct and submit to the Secretary an annual independent certified audit that verifies—

“(i) the extent to which non-DSH supplemental payments made in the preceding fiscal year are consistent with the guidance issued under subparagraph (A);

“(ii) that payments made under the State plan (or under a waiver of the plan) are only for the provision of covered services to eligible individuals under the State plan (or under a waiver of the plan); and

“(iii) any other information the Secretary determines is necessary to ensure non-DSH supplemental payments are consistent with applicable Federal laws and regulations.

“(2) For purposes of this subsection, the term ‘non-DSH supplemental payment’ means a payment, other than a payment under section 1923, that—

“(A) is identified by the Secretary through guidance described in paragraph (1)(A);

“(B) is made by a State to a provider under the State plan (or under a waiver of the plan) for an item or service furnished to an individual eligible for medical assistance under the State plan (or under a waiver of the plan); and

“(C) is in addition to any base or standard payments made to a provider under the State plan (or under a waiver of the plan) for such an item or service, including any additional payments made to such provider that are not more than any limits imposed pursuant to section 1902(a)(30)(A) (including the regulations specifying upper payment limits under the State plan in part 447 of title 42, Code of Federal Regulations (or any successor regulations)).”.

(b) State reporting and auditing of non-DSH supplemental payments.—Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i)) is amended—

(1) in paragraph (26), by striking “or” at the end;

(2) by redesignating paragraph (27) as paragraph (28); and

(3) by inserting after paragraph (26) the following new paragraph:

“(27) with respect to amounts expended to make any non-DSH supplemental payment (as defined in subsection (aa)(2)), unless the State complies with the reporting and auditing requirements under subparagraphs (B) and (C) of subsection (aa)(1); or”.