This Act may be cited as the “Rural Physician Workforce Production Act of 2018”.

(a) In general.—Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended by adding at the end the following new subsection:

“(u) Alternative national per resident payment amount for residents training in rural training locations.—

“(1) IN GENERAL.—

“(A) ESTABLISHMENT.—The Secretary shall establish a national per resident payment (NPRP) amount for time spent by residents training in rural training locations in accordance with paragraph (2).

“(B) ELECTION.—For cost reporting periods beginning on or after the date that is 1 year after the date of enactment of this subsection, an applicable hospital (as defined in paragraph (6)(A)), may elect to receive the payment amount under this subsection for each full-time-equivalent resident in an approved medical residency training program that receives training in a rural training location in accordance with paragraph (2). An applicable hospital may make an election under the preceding sentence regardless of whether the applicable hospital is otherwise eligible for a payment or adjustment for indirect and direct graduate medical education costs under subsections (d)(5)(B) and (h) or section 1814(l), as applicable, with respect to such residents. If the applicable hospital is otherwise eligible for such a payment or adjustment, the national per resident payment amount under this subsection shall be in lieu of such payment or adjustment.

“(C) APPLICATION.—The provisions of this subsection, or the application of such provisions to an applicable hospital, shall not result in or otherwise effect the following:

“(i) The establishment of a limitation on the number of residents in allopathic or osteopathic medicine for purposes of subsections (d)(5)(B) and (h) with respect to an approved medical residency training program of an applicable hospital (or be taken into account in determining such a limitation during the cap building period of an applicable hospital).

“(ii) The determination of—

“(I) the additional payment amount under subsection (d)(5)(B); or

“(II) hospital-specific approved FTE resident amounts under subsection (h).

“(iii) The counting of any resident with respect to which the applicable hospital receives a national per resident payment under this subsection towards the application of the limitation described in clause (i) for purposes of subsections (d)(5)(B) and (h).

“(2) PAYMENT AMOUNT.—

“(A) BASE AMOUNT.—The national per resident payment amount, with respect to full-time equivalent residents training in rural training locations, for cost reporting periods beginning during the first year beginning on or after the date of enactment of this subsection shall be, based on the most recently available data with respect to cost reporting periods beginning during a preceding year (referred to in this subparagraph as the ‘base cost reporting period’), equal to the sum of the following:

“(i) DIRECT GME.—The amount that, out of all of the payment amounts (determined on a per resident basis) received by hospitals under subsection (h) for such base cost reporting period, is equal to the national 85th percentile of such payment amounts.

“(ii) INDIRECT GME.—The amount that, out of all of the additional payment amounts (determined on a per resident basis) received by hospitals under subsection (d)(5)(B) for such base cost reporting period, is equal to the national 85th percentile of such payment amounts.

“(B) UPDATING FOR SUBSEQUENT COST REPORTING PERIODS.—For each subsequent cost reporting period, the national per resident payment amount is equal to such amount determined under this paragraph for the previous cost reporting period updated, through the midpoint of the period, by projecting the estimated percentage change in the consumer price index during the 12-month period ending at that midpoint, with appropriate adjustments to reflect previous under- or over-estimations under this subparagraph in the projected percentage change in the consumer price index.

“(C) CLARIFICATION.—The national per resident payment amount shall not be discounted or otherwise adjusted based on the Medicare patient load (as defined in subsection (h)(3)(C)) of an applicable hospital or discharges in a diagnosis-related group.

“(3) ALLOCATION OF PAYMENTS.—In providing for payments under this subsection, the Secretary shall provide for an allocation of such payments between parts A and part B (and the trust funds established under the respective parts) as reasonably reflects the proportion of such costs associated with the provision of services under each respective part.

“(4) ELIGIBILITY FOR PAYMENT.—

“(A) IN GENERAL.—An applicable hospital shall be eligible for payment of the national per resident payment amount under this subsection for time spent by a resident training in a rural training location if the following requirements are met:

“(i) The resident spends the equivalent of at least 8 weeks over the course of their training in a rural training location.

“(ii) The hospital pays the salary and benefits of the resident for the time spent training in a rural training location.

“(B) TREATMENT OF TIME SPENT IN RURAL TRACKS.—An applicable hospital shall be eligible for payment of the national per resident payment amount under this subsection for all time spent by residents in an approved medical residency program (or separately defined track within a program) that provides 50 percent or more of the total residency training time in rural training locations (as defined in paragraph (6)(C)), regardless of where the training occurs and regardless of specialty.

“(5) DETERMINATION OF FULL-TIME-EQUIVALENT RESIDENTS.—The determination of full-time-equivalent residents for purposes of this subsection shall be made in the same manner as the determination of full-time-equivalent residents under subsection (h)(4).

“(6) DEFINITIONS.—In this subsection:

“(A) APPLICABLE HOSPITAL.—The term ‘applicable hospital’ means a hospital or critical access hospital.

“(B) APPROVED MEDICAL RESIDENCY TRAINING PROGRAM; DIRECT GRADUATE MEDICAL EDUCATION COSTS; RESIDENT.—The terms ‘approved medical residency training program’, ‘direct graduate medical education costs’, and ‘resident’ have the meanings given those terms in subsection (h)(5).

“(C) RURAL TRAINING LOCATION.—The term ‘rural training location’ means a location in which training occurs that, based on the 2010 census or any subsequent census adjustment, meets one or more of the following criteria:

“(i) The training occurs in a location that is a rural area (as defined in section 1886(d)(2)(D)).

“(ii) The training occurs in a location that has a rural-urban commuting area code equal to or greater than 4.0.

“(iii) The training occurs in a location that is within 10 miles of a sole community hospital (as defined in subsection (d)(5)(D)(iii))).

“(7) BUDGET NEUTRALITY REQUIREMENT.—The Secretary shall ensure that aggregate payments for direct medical education costs and indirect medical education costs under this title, including any payments under this subsection, for each year (effective beginning on or after the date that is 1 year after the date of enactment of this subsection) are not greater than the aggregate payments for such costs that would have been made under this title for the year without the application of this subsection. For purposes of carrying out the budget neutrality requirement under the preceding sentence, the Secretary may make appropriate adjustments to the amount of such payments for direct graduate medical education costs and indirect medical education costs under subsections (h) and (d)(5)(B), respectively.”.

(b) Treatment of critical access hospitals and sole community hospitals.—

(1) CRITICAL ACCESS HOSPITALS.—Section 1814(l) of the Social Security Act (42 U.S.C. 1395f(l)) is amended by adding at the end the following new paragraph:

“(6) For cost reporting periods beginning on or after the date that is 1 year after the date of enactment of this paragraph, the following shall apply:

“(A) A critical access hospital may elect to be treated as a hospital or as a non-provider setting for purposes of counting resident time for indirect medical education costs and direct graduate medical education costs for the time spent by the resident in that setting under subsections (d)(5)(B) and (h), respectively, of section 1886.

“(B) Medical education costs shall not be considered reasonable costs of a critical access hospital for purposes of payment under paragraph (1), to the extent that the critical access hospital or another hospital receives payment for such costs for the time spent by the resident in that setting pursuant to subsection (d)(5)(B), subsection (h), or subsection (u) of section 1886.”.

(2) SOLE COMMUNITY HOSPITALS.—Section 1886(d)(5)(D) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(D)) is amended by adding at the end the following new clause:

“(vi) For cost reporting periods beginning on or after the date that is 1 year after the date of enactment of this paragraph, the hospital-specific payment amount determined under clause (i)(I) with respect to a sole community hospital shall not include medical education costs, to the extent that the sole community hospital receives payment for such costs for the time spent by the resident in that setting pursuant to subsection (u).”.

(c) Conforming amendments.—

(1) Section 1886 of the Social Security Act (42 U.S.C. 1395ww) is amended—

(A) in subsection (d)(5)(B), in the matter preceding clause (i), by striking “The Secretary” and inserting “Subject to subsection (u), the Secretary”; and

(B) in subsection (h)—

(i) in paragraph (1), by inserting “subject to subsection (u)” after “1861(v),”; and

(ii) in paragraph (3), in the flush matter at the end, by striking “subsection (k)” and inserting “subsection (k) or subsection (u)”.

(a) Direct graduate medical education.—Section 1886(h) of the Social Security Act (42 U.S.C. 1395ww(h)) is amended—

(1) in paragraph (4)—

(A) in subparagraph (F)(i)—

(i) by striking “130 percent” and inserting “for cost reporting periods beginning on or after October 1, 1997, and before the date that is 1 year after the date of enactment of the Rural Physician Workforce Production Act of 2018, 130 percent”; and

(ii) by adding at the end the following: “For cost reporting periods beginning on or after the date that is 1 year after the date of enactment of the Rural Physician Workforce Production Act of 2018, such rules shall provide that any full-time-equivalent resident in an approved medical residency program (or separately defined track within a program) that provides 50 percent or more of the total residency training time in rural training locations (as defined in subsection (u)(6)(C)), regardless of where the training occurs and regardless of specialty, shall not be taken into account for purposes of applying the limitation under this subparagraph.”. ; and

(B) in subparagraph (H)—

(i) in clause (i), in the second sentence, by inserting the following before the period: “, in accordance with the second sentence of clause (i) of such subparagraph”; and

(ii) in clause (iv), by inserting the following before the period: “, in accordance with the second sentence of clause (i) of such subparagraph”; and

(2) in paragraph (5), by adding at the end the following new subparagraph:

“(L) SPECIAL RULES REGARDING APPLICATION OF NATIONAL PER RESIDENT PAYMENT AMOUNT.—For special rules regarding application of the national per resident payment amount under subsection (u), see paragraph (1)(C) of such subsection.”.

(b) Indirect medical education.—Section 1886(d)(5)(B)(v) is amended—

(1) by striking “130 percent” and inserting “for cost reporting periods beginning on or after October 1, 1997, and before the date that is 1 year after the date of enactment of the Rural Physician Workforce Production Act of 2018, 130 percent”; and

(2) by adding at the end the following: “For cost reporting periods beginning on or after the date that is 1 year after the date of enactment of the Rural Physician Workforce Production Act of 2018, such rules shall provide that any full-time-equivalent resident in an approved medical residency program (or separately defined track within a program) that provides 50 percent or more of the total residency training time in rural training locations (as defined in subsection (u)(6)(C)), regardless of where the training occurs and regardless of specialty, shall not be taken into account for purposes of applying the limitation under this subparagraph. For special rules regarding application of the national per resident payment amount under subsection (u), see paragraph (1)(C) of such subsection.”.