---
kind: "section"
citation: "42 U.S.C. § 256e"
title: "42"
title_heading: "The Public Health and Welfare"
number: "256e"
heading: "Program of payments to children’s hospitals that operate graduate medical education programs"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/256e"
units:
  - "Chapter 6A — Public Health Service"
  - "Subchapter II — General Powers and Duties"
  - "Part D — Primary Health Care"
  - "Subpart ix — support of graduate medical education programs in children’s hospitals"
---

# §256e. Program of payments to children’s hospitals that operate graduate medical education programs

- (a) **Payments—** The [Secretary](/usc/42/201.md?p=c) shall make two payments under this section to each children’s [hospital](/usc/42/300s–3.md?p=1) for each of fiscal years 2000 through 2005, each of fiscal years 2007 through 2011, each of fiscal years 2014 through 2018, and each of fiscal years 2019 through 2023, one for the direct expenses and the other for indirect expenses associated with operating approved graduate medical residency training [programs](/usc/42/274l–1.md?p=4). The [Secretary](/usc/42/201.md?p=c) shall promulgate [regulations](/usc/42/201.md?p=d) pursuant to the rulemaking requirements of [title 5](/usc/5.md) which shall govern payments made under this subpart.
- (b) **Amount of payments—**
  - (1) **In general—** Subject to paragraphs [(2)](#b-2) and [(3)](#b-3), the amounts payable under this section to a children’s [hospital](/usc/42/300s–3.md?p=1) for an approved graduate medical residency training [program](/usc/42/274l–1.md?p=4) for a fiscal year are each of the following amounts:
    - (A) **Direct expense amount—** The amount determined under [subsection (c)](#c) for direct expenses associated with operating approved graduate medical residency training [programs](/usc/42/274l–1.md?p=4).
    - (B) **Indirect expense amount—** The amount determined under [subsection (d)](#d) for indirect expenses associated with the [treatment](/usc/42/11851.md?p=11) of more severely ill patients and the additional costs relating to teaching residents in such [programs](/usc/42/274l–1.md?p=4).
  - (2) **Capped amount—**
    - (A) **In general—** The total of the payments made to children’s [hospitals](/usc/42/300s–3.md?p=1) under [paragraph (1)(A)](#b-1-A) or [paragraph (1)(B)](#b-1-B) in a fiscal year shall not exceed the funds appropriated under paragraph [(1)](#b-1) or [(2)](#b-2), respectively, of [subsection (f)](#f) for such payments for that fiscal year.
    - (B) **Pro rata reductions of payments for direct expenses—** If the [Secretary](/usc/42/201.md?p=c) determines that the amount of funds appropriated under [subsection (f)(1)](#f-1) for a fiscal year is insufficient to provide the total amount of payments otherwise due for such periods under [paragraph (1)(A)](#b-1-A), the [Secretary](/usc/42/201.md?p=c) shall reduce the amounts so payable on a pro rata basis to reflect such shortfall.
  - (3) **Annual reporting required—**
    - (A) **Reduction in payment for failure to report—**
      - (i) **In general—** The amount payable under this section to a children’s [hospital](/usc/42/300s–3.md?p=1) for a fiscal year (beginning with fiscal year 2008 and after taking into account [paragraph (2)](#b-2)) shall be reduced by 25 percent if the [Secretary](/usc/42/201.md?p=c) determines that—
        - (I) the [hospital](/usc/42/300s–3.md?p=1) has failed to provide the [Secretary](/usc/42/201.md?p=c), as an addendum to the [hospital](/usc/42/300s–3.md?p=1)’s application under this section for such fiscal year, the report required under [subparagraph (B)](#b-3-B) for the previous fiscal year; or
        - (II) such report fails to provide the information required under any clause of such subparagraph.
      - (ii) **Notice and opportunity to provide missing information—** Before imposing a reduction under [clause (i)](#b-3-A-i) on the basis of a [hospital](/usc/42/300s–3.md?p=1)’s failure to provide information described in [clause (i)(II)](#b-3-A-i-II), the [Secretary](/usc/42/201.md?p=c) shall provide notice to the [hospital](/usc/42/300s–3.md?p=1) of such failure and the [Secretary](/usc/42/201.md?p=c)’s intention to impose such reduction and shall provide the [hospital](/usc/42/300s–3.md?p=1) with the opportunity to provide the required information within a period of 30 days beginning on the date of such notice. If the [hospital](/usc/42/300s–3.md?p=1) provides such information within such period, no reduction shall be made under [clause (i)](#b-3-A-i) on the basis of the previous failure to provide such information.
    - (B) **Annual report—** The report required under this subparagraph for a children’s [hospital](/usc/42/300s–3.md?p=1) for a fiscal year is a report that includes (in a form and manner specified by the [Secretary](/usc/42/201.md?p=c)) the following information for the residency academic year completed immediately prior to such fiscal year:
      - (i) The types of resident training [programs](/usc/42/274l–1.md?p=4) that the [hospital](/usc/42/300s–3.md?p=1) provided for residents described in [subparagraph (C)](#b-3-C), such as general pediatrics, internal medicine/pediatrics, and pediatric subspecialties, including both medical subspecialties certified by the American Board of Pediatrics (such as pediatric gastroenterology) and non-medical subspecialties approved by other medical certification boards (such as pediatric surgery).
      - (ii) The number of training positions for residents described in [subparagraph (C)](#b-3-C), the number of such positions recruited to fill, and the number of such positions filled.
      - (iii) The types of training that the [hospital](/usc/42/300s–3.md?p=1) provided for residents described in [subparagraph (C)](#b-3-C) related to the health care needs of different populations, such as children who are underserved for reasons of family income or geographic location, including rural and urban areas.
      - (iv) The changes in residency training for residents described in [subparagraph (C)](#b-3-C) which the [hospital](/usc/42/300s–3.md?p=1) has made during such residency academic year (except that the first report submitted by the [hospital](/usc/42/300s–3.md?p=1) under this subparagraph shall be for such changes since the first year in which the [hospital](/usc/42/300s–3.md?p=1) received payment under this section), including—
        - (I) changes in curricula, training experiences, and types of training [programs](/usc/42/274l–1.md?p=4), and benefits that have resulted from such changes; and
        - (II) changes for purposes of training the residents in the measurement and improvement of the quality and safety of patient care.
      - (v) The numbers of residents described in [subparagraph (C)](#b-3-C) who completed their residency training at the end of such residency academic year and care for children within the borders of the [service](/usc/42/201.md?p=a) area of the [hospital](/usc/42/300s–3.md?p=1) or within the borders of the [State](/usc/42/201.md?p=f) in which the [hospital](/usc/42/300s–3.md?p=1) is located. Such numbers shall be disaggregated with respect to residents who completed residencies in general pediatrics or internal medicine/pediatrics, subspecialty residencies, and dental residencies.
    - (C) **Residents—** The residents described in this subparagraph are those who—
      - (i) are in full-time equivalent resident training positions in any training [program](/usc/42/274l–1.md?p=4) sponsored by the [hospital](/usc/42/300s–3.md?p=1); or
      - (ii) are in a training [program](/usc/42/274l–1.md?p=4) sponsored by an entity other than the [hospital](/usc/42/300s–3.md?p=1), but who spend more than 75 percent of their training time at the [hospital](/usc/42/300s–3.md?p=1).
    - (D) **Report to Congress—** Not later than the end of fiscal year 2018, and the end of fiscal year 2022, the [Secretary](/usc/42/201.md?p=c), acting through the [Administrator](/usc/42/4005.md?p=1) of the Health Resources and [Services](/usc/42/201.md?p=a) Administration, shall submit a report to the Congress—
      - (i) summarizing the information submitted in reports to the [Secretary](/usc/42/201.md?p=c) under [subparagraph (B)](#b-3-B);
      - (ii) describing the results of the [program](/usc/42/274l–1.md?p=4) carried out under this section; and
      - (iii) making recommendations for improvements to the [program](/usc/42/274l–1.md?p=4).
- (c) **Amount of payment for direct graduate medical education—**
  - (1) **In general—** The amount determined under this subsection for payments to a children’s [hospital](/usc/42/300s–3.md?p=1) for direct graduate expenses relating to approved graduate medical residency training [programs](/usc/42/274l–1.md?p=4) for a fiscal year is equal to the product of—
    - (A) the updated per resident amount for direct graduate medical education, as determined under [paragraph (2)](#c-2); and
    - (B) the average number of full-time equivalent residents in the [hospital](/usc/42/300s–3.md?p=1)’s graduate approved medical residency training [programs](/usc/42/274l–1.md?p=4) (as determined under [section 1395ww(h)(4) of this title](/usc/42/1395ww.md?p=h-4) during the fiscal year.
  - (2) **Updated per resident amount for direct graduate medical education—** The updated per resident amount for direct graduate medical education for a [hospital](/usc/42/300s–3.md?p=1) for a fiscal year is an amount determined as follows:
    - (A) **Determination of hospital single per resident amount—** The [Secretary](/usc/42/201.md?p=c) shall compute for each [hospital](/usc/42/300s–3.md?p=1) operating an approved graduate medical education [program](/usc/42/274l–1.md?p=4) (regardless of whether or not it is a children’s [hospital](/usc/42/300s–3.md?p=1)) a single per resident amount equal to the average (weighted by number of full-time equivalent residents) of the primary care per resident amount and the non-primary care per resident amount computed under [section 1395ww(h)(2) of this title](/usc/42/1395ww.md?p=h-2) for cost reporting periods ending during fiscal year 1997.
    - (B) **Determination of wage and non-wage-related proportion of the single per resident amount—** The [Secretary](/usc/42/201.md?p=c) shall estimate the average proportion of the single per resident amounts computed under [subparagraph (A)](#c-2-A) that is attributable to wages and wage-related costs.
    - (C) **Standardizing per resident amounts—** The [Secretary](/usc/42/201.md?p=c) shall establish a standardized per resident amount for each such [hospital](/usc/42/300s–3.md?p=1)—
      - (i) by dividing the single per resident amount computed under [subparagraph (A)](#c-2-A) into a wage-related portion and a non-wage-related portion by applying the proportion determined under [subparagraph (B)](#c-2-B);
      - (ii) by dividing the wage-related portion by the factor applied under [section 1395ww(d)(3)(E) of this title](/usc/42/1395ww.md?p=d-3-E) for discharges occurring during fiscal year 1999 for the [hospital](/usc/42/300s–3.md?p=1)’s area; and
      - (iii) by adding the non-wage-related portion to the amount computed under [clause (ii)](#c-2-C-ii).
    - (D) **Determination of national average—** The [Secretary](/usc/42/201.md?p=c) shall compute a national average per resident amount equal to the average of the standardized per resident amounts computed under [subparagraph (C)](#c-2-C) for such [hospitals](/usc/42/300s–3.md?p=1), with the amount for each [hospital](/usc/42/300s–3.md?p=1) weighted by the average number of full-time equivalent residents at such [hospital](/usc/42/300s–3.md?p=1).
    - (E) **Application to individual hospitals—** The [Secretary](/usc/42/201.md?p=c) shall compute for each such [hospital](/usc/42/300s–3.md?p=1) that is a children’s [hospital](/usc/42/300s–3.md?p=1) a per resident amount—
      - (i) by dividing the national average per resident amount computed under [subparagraph (D)](#c-2-D) into a wage-related portion and a non-wage-related portion by applying the proportion determined under [subparagraph (B)](#c-2-B);
      - (ii) by multiplying the wage-related portion by the factor applied under [section 1395ww(d)(3)(E) of this title](/usc/42/1395ww.md?p=d-3-E) for discharges occurring during the preceding fiscal year for the [hospital](/usc/42/300s–3.md?p=1)’s area; and
      - (iii) by adding the non-wage-related portion to the amount computed under [clause (ii)](#c-2-E-ii).
    - (F) **Updating rate—** The [Secretary](/usc/42/201.md?p=c) shall update such per resident amount for each such children’s [hospital](/usc/42/300s–3.md?p=1) by the estimated percentage increase in the consumer price index for all urban consumers during the period beginning October 1997 and ending with the midpoint of the Federal fiscal year for which payments are made.
- (d) **Amount of payment for indirect medical education—**
  - (1) **In general—** The amount determined under this subsection for payments to a children’s [hospital](/usc/42/300s–3.md?p=1) for indirect expenses associated with the [treatment](/usc/42/11851.md?p=11) of more severely ill patients and the additional costs associated with the teaching of residents for a fiscal year is equal to an amount determined appropriate by the [Secretary](/usc/42/201.md?p=c).
  - (2) **Factors—** In determining the amount under [paragraph (1)](#d-1), the [Secretary](/usc/42/201.md?p=c) shall—
    - (A) take into account variations in case mix among children’s [hospitals](/usc/42/300s–3.md?p=1) and the ratio of the number of full-time equivalent residents in the [hospitals](/usc/42/300s–3.md?p=1)’ approved graduate medical residency training [programs](/usc/42/274l–1.md?p=4) to beds (but excluding beds or bassinets assigned to healthy newborn infants); and
    - (B) assure that the aggregate of the payments for indirect expenses associated with the [treatment](/usc/42/11851.md?p=11) of more severely ill patients and the additional costs related to the teaching of residents under this section in a fiscal year are equal to the amount appropriated for such expenses for the fiscal year involved under [subsection (f)(2)](#f-2).
- (e) **Making of payments—**
  - (1) **Interim payments—** The [Secretary](/usc/42/201.md?p=c) shall determine, before the beginning of each fiscal year involved for which payments may be made for a [hospital](/usc/42/300s–3.md?p=1) under this section, the amounts of the payments for direct graduate medical education and indirect medical education for such fiscal year and shall (subject to [paragraph (2)](#e-2)) make the payments of such amounts in 12 equal interim installments during such period. Such interim payments to each individual [hospital](/usc/42/300s–3.md?p=1) shall be based on the number of residents reported in the [hospital](/usc/42/300s–3.md?p=1)’s most recently filed Medicare cost report prior to the application date for the Federal fiscal year for which the interim payment amounts are established. In the case of a [hospital](/usc/42/300s–3.md?p=1) that does not report residents on a Medicare cost report, such interim payments shall be based on the number of residents trained during the [hospital](/usc/42/300s–3.md?p=1)’s most recently completed Medicare cost report filing period.
  - (2) **Withholding—** The [Secretary](/usc/42/201.md?p=c) shall withhold up to 25 percent from each interim installment for direct and indirect graduate medical education paid under [paragraph (1)](#e-1) as necessary to ensure a [hospital](/usc/42/300s–3.md?p=1) will not be overpaid on an interim basis.
  - (3) **Reconciliation—** Prior to the end of each fiscal year, the [Secretary](/usc/42/201.md?p=c) shall determine any changes to the number of residents reported by a [hospital](/usc/42/300s–3.md?p=1) in the application of the [hospital](/usc/42/300s–3.md?p=1) for the current fiscal year to determine the final amount payable to the [hospital](/usc/42/300s–3.md?p=1) for the current fiscal year for both direct expense and indirect expense amounts. Based on such determination, the [Secretary](/usc/42/201.md?p=c) shall recoup any overpayments made and pay any balance due to the extent possible. The final amount so determined shall be considered a final intermediary determination for the purposes of [section 1395oo](/usc/42/1395oo.md) of this title and shall be subject to administrative and judicial review under that section in the same manner as the amount of payment under [section 1395ww(d)](/usc/42/1395ww.md?p=d)[^1] of this title is subject to review under such section.
- (f) **Authorization of appropriations—**
  - (1) **Direct graduate medical education—**
    - (A) **In general—** There are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, for payments under [subsection (b)(1)(A)](#b-1-A)—
      - (i) for fiscal year 2000, $90,000,000;
      - (ii) for fiscal year 2001, $95,000,000;
      - (iii) for each of the fiscal years 2002 through 2005, such sums as may be necessary;
      - (iv) for each of fiscal years 2007 through 2011, $110,000,000;
      - (v) for each of fiscal years 2014 through 2018, $100,000,000; and
      - (vi) for each of fiscal years 2019 through 2023, $105,000,000.
    - (B) **Carryover of excess—** The amounts appropriated under [subparagraph (A)](#f-1-A) for fiscal year 2000 shall remain available for obligation through the end of fiscal year 2001.
  - (2) **Indirect medical education—** There are hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, for payments under [subsection (b)(1)(B)](#b-1-B)—
    - (A) for fiscal year 2000, $190,000,000;
    - (B) for fiscal year 2001, $190,000,000;
    - (C) for each of the fiscal years 2002 through 2005, such sums as may be necessary;
    - (D) for each of fiscal years 2007 through 2011, $220,000,000;
    - (E) for each of fiscal years 2014 through 2018, $200,000,000; and
    - (F) for each of fiscal years 2019 through 2023, $220,000,000.
- (g) **Definitions—** In this section:
  - (1) **Approved graduate medical residency training program—** The term “approved graduate medical residency training [program](/usc/42/274l–1.md?p=4)” has the meaning given the term “approved medical residency training [program](/usc/42/274l–1.md?p=4)” in [section 1395ww(h)(5)(A) of this title](/usc/42/1395ww.md?p=h-5-A).
  - (2) **Children’s hospital—** The term “children’s [hospital](/usc/42/300s–3.md?p=1)” means a [hospital](/usc/42/300s–3.md?p=1) with a Medicare payment agreement and which is excluded from the Medicare inpatient prospective payment system pursuant to [section 1395ww(d)(1)(B)(iii) of this title](/usc/42/1395ww.md?p=d-1-B-iii) and its accompanying [regulations](/usc/42/201.md?p=d).
  - (3) **Direct graduate medical education costs—** The term “direct graduate medical education costs” has the meaning given such term in [section 1395ww(h)(5)(C) of this title](/usc/42/1395ww.md?p=h-5-C).
- (h) **Additional provisions—**
  - (1) **In general—** The [Secretary](/usc/42/201.md?p=c) is authorized to make available up to 25 percent of the total amounts in excess of $245,000,000 appropriated under paragraphs [(1)](#f-1) and [(2)](#f-2) of subsection (f), but not to exceed $7,000,000, for payments to [hospitals](/usc/42/300s–3.md?p=1) qualified as described in [paragraph (2)](#h-2), for the direct and indirect expenses associated with operating approved graduate medical residency training [programs](/usc/42/274l–1.md?p=4), as described in [subsection (a)](#a).
  - (2) **Qualified hospitals—**
    - (A) **In general—** To qualify to receive payments under [paragraph (1)](#h-1), a [hospital](/usc/42/300s–3.md?p=1) shall be a free-standing [hospital](/usc/42/300s–3.md?p=1)—
      - (i) with a Medicare payment agreement and that is excluded from the Medicare inpatient [hospital](/usc/42/300s–3.md?p=1) prospective payment system pursuant to [section 1395ww(d)(1)(B) of this title](/usc/42/1395ww.md?p=d-1-B) and its accompanying [regulations](/usc/42/201.md?p=d);
      - (ii) whose inpatients are predominantly individuals under 18 years of age;
      - (iii) that has an approved medical residency training [program](/usc/42/274l–1.md?p=4) as defined in [section 1395ww(h)(5)(A) of this title](/usc/42/1395ww.md?p=h-5-A); and
      - (iv) that is not otherwise qualified to receive payments under this section or [section 1395ww(h) of this title](/usc/42/1395ww.md?p=h).
    - (B) **Establishment of residency cap—** In the case of a freestanding children’s [hospital](/usc/42/300s–3.md?p=1) that, on April 7, 2014, meets the requirements of [subparagraph (A)](#h-2-A) but for which the [Secretary](/usc/42/201.md?p=c) has not determined an average number of full-time equivalent residents under [section 1395ww(h)(4) of this title](/usc/42/1395ww.md?p=h-4), the [Secretary](/usc/42/201.md?p=c) may establish such number of full-time equivalent residents for the purposes of calculating payments under this subsection.
  - (3) **Payments—** Payments to [hospitals](/usc/42/300s–3.md?p=1) made under this subsection shall be made in the same manner as payments are made to children’s [hospitals](/usc/42/300s–3.md?p=1), as described in subsections [(b)](#b) through [(e)](#e).
  - (4) **Payment amounts—** The direct and indirect payment amounts under this subsection shall be determined using per resident amounts that are no greater than the per resident amounts used for determining direct and indirect payment amounts under [subsection (a)](#a).
  - (5) **Reporting—** A [hospital](/usc/42/300s–3.md?p=1) receiving payments under this subsection shall be subject to the reporting requirements under [subsection (b)(3)](#b-3).
  - (6) **Remaining funds—**
    - (A) **In general—** If the payments to qualified [hospitals](/usc/42/300s–3.md?p=1) under [paragraph (1)](#h-1) for a fiscal year are less than the total amount made available under such paragraph for that fiscal year, any remaining amounts for such fiscal year may be made available to all [hospitals](/usc/42/300s–3.md?p=1) participating in the [program](/usc/42/274l–1.md?p=4) under this subsection or [subsection (a)](#a).
    - (B) **Quality bonus system—** For purposes of distributing the remaining amounts described in [subparagraph (A)](#h-6-A), the [Secretary](/usc/42/201.md?p=c) may establish a quality bonus system, whereby the [Secretary](/usc/42/201.md?p=c) distributes bonus payments to [hospitals](/usc/42/300s–3.md?p=1) participating in the [program](/usc/42/274l–1.md?p=4) under this subsection or [subsection (a)](#a) that meet standards specified by the [Secretary](/usc/42/201.md?p=c), which may include a focus on quality measurement and improvement, interpersonal and communications skills, delivering patient-centered care, and practicing in integrated health systems, including training in community-based settings. In developing such standards, the [Secretary](/usc/42/201.md?p=c) shall collaborate with relevant stakeholders, including [program](/usc/42/274l–1.md?p=4) accrediting bodies, certifying boards, training [programs](/usc/42/274l–1.md?p=4), health care organizations, health care purchasers, and patient and consumer groups.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(July 1, 1944, ch. 373, title III, § 340E, as added Pub. L. 106–129, § 4, Dec. 6, 1999, 113 Stat. 1671; amended Pub. L. 106–310, div. A, title XX, § 2001, Oct. 17, 2000, 114 Stat. 1155; Pub. L. 108–490, § 1(a), Dec. 23, 2004, 118 Stat. 3972; Pub. L. 109–307, § 2, Oct. 6, 2006, 120 Stat. 1721; Pub. L. 113–98, §§ 2, 3, Apr. 7, 2014, 128 Stat. 1140; Pub. L. 115–241, § 2, Sept. 18, 2018, 132 Stat. 2892.)

## Notes

### Editorial Notes

### References in Text

Section 1395ww(d) of this title, referred to in subsec. (e)(3), was in the original “section 1186(d) of such Act” and was translated as reading “section 1886(d) of such Act”, meaning section 1886(d) of the Social Security Act, to reflect the probable intent of Congress, because the Social Security Act does not contain a section 1186 and section 1395ww(d) of this title relates to review of inpatient hospital service payments.

### Amendments

2018—Subsec. (a). Pub. L. 115–241, § 2(1), substituted “each of fiscal years 2014 through 2018, and each of fiscal years 2019 through 2023,” for “and each of fiscal years 2014 through 2018,”.

Subsec. (b)(3)(D). Pub. L. 115–241, § 2(2), inserted “and the end of fiscal year 2022,” after “fiscal year 2018,” in introductory provisions.

Subsec. (f)(1)(A)(vi). Pub. L. 115–241, § 2(3)(A), added cl. (vi).

Subsec. (f)(2)(F). Pub. L. 115–241, § 2(3)(B), added subpar. (F).

2014—Subsec. (a). Pub. L. 113–98, § 2(a)(1), substituted “through 2005, each of fiscal years 2007 through 2011, and each of fiscal years 2014 through 2018” for “through 2005 and each of fiscal years 2007 through 2011”.

Subsec. (b)(3)(D). Pub. L. 113–98, § 2(b), substituted “Not later than the end of fiscal year 2018” for “Not later than the end of fiscal year 2011” in introductory provisions.

Subsec. (f)(1)(A)(v). Pub. L. 113–98, § 2(a)(2)(A), added cl. (v).

Subsec. (f)(2)(E). Pub. L. 113–98, § 2(a)(2)(B), added subpar. (E).

Subsec. (h). Pub. L. 113–98, § 3, added subsec. (h).

2006—Subsec. (a). Pub. L. 109–307, § 2(a)(1), inserted “and each of fiscal years 2007 through 2011” after “for each of fiscal years 2000 through 2005”.

Subsec. (b)(1). Pub. L. 109–307, § 2(b)(1), substituted “paragraphs (2) and (3)” for “paragraph (2)” in introductory provisions.

Subsec. (b)(3). Pub. L. 109–307, § 2(b)(2), added par. (3).

Subsec. (c)(2)(E)(ii). Pub. L. 109–307, § 2(c)(1), substituted “applied under section 1395ww(d)(3)(E) of this title for discharges occurring during the preceding fiscal year” for “described in subparagraph (C)(ii)”.

Subsec. (e)(1). Pub. L. 109–307, § 2(a)(2), substituted “12” for “26”.

Subsec. (e)(2). Pub. L. 109–307, § 2(c)(2), struck out first sentence which read as follows: “The Secretary shall withhold up to 25 percent from each interim installment for direct and indirect graduate medical education paid under paragraph (1).”

Subsec. (e)(3). Pub. L. 109–307, § 2(c)(3), substituted “made and pay” for “made to pay”.

Subsec. (f)(1)(A)(iv). Pub. L. 109–307, § 2(a)(3), added cl. (iv).

Subsec. (f)(2). Pub. L. 109–307, § 2(a)(4)(A), substituted “subsection (b)(1)(B)” for “subsection (b)(1)(A)” in introductory provisions.

Subsec. (f)(2)(D). Pub. L. 109–307, § 2(a)(4)(B)–(D), added subpar. (D).

2004—Subsec. (d)(1). Pub. L. 108–490, § 1(a)(1), substituted “costs associated with” for “costs related to”.

Subsec. (d)(2)(A). Pub. L. 108–490, § 1(a)(2), inserted “ratio of the” after “hospitals and the” and “to beds (but excluding beds or bassinets assigned to healthy newborn infants)” before semicolon.

2000—Subsec. (a). Pub. L. 106–310, § 2001(a), substituted “2000 through 2005” for “2000 and 2001” and inserted at end “The Secretary shall promulgate regulations pursuant to the rulemaking requirements of title 5 which shall govern payments made under this subpart.”

Subsec. (c)(2)(F). Pub. L. 106–310, § 2001(b), substituted “Federal fiscal year for which payments are made” for “hospital’s cost reporting period that begins during fiscal year 2000”.

Subsec. (e)(1). Pub. L. 106–310, § 2001(c), inserted at end “Such interim payments to each individual hospital shall be based on the number of residents reported in the hospital’s most recently filed Medicare cost report prior to the application date for the Federal fiscal year for which the interim payment amounts are established. In the case of a hospital that does not report residents on a Medicare cost report, such interim payments shall be based on the number of residents trained during the hospital’s most recently completed Medicare cost report filing period.”

Subsec. (e)(2). Pub. L. 106–310, § 2001(d), inserted “and indirect” after “interim installment for direct” and inserted at end “The Secretary shall withhold up to 25 percent from each interim installment for direct and indirect graduate medical education paid under paragraph (1) as necessary to ensure a hospital will not be overpaid on an interim basis.”

Subsec. (e)(3). Pub. L. 106–310, § 2001(e), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “At the end of each fiscal year for which payments may be made under this section, the hospital shall submit to the Secretary such information as the Secretary determines to be necessary to determine the percent (if any) of the total amount withheld under paragraph (2) that is due under this section for the hospital for the fiscal year. Based on such determination, the Secretary shall recoup any overpayments made, or pay any balance due. The amount so determined shall be considered a final intermediary determination for purposes of applying section 1395oo of this title and shall be subject to review under that section in the same manner as the amount of payment under section 1395ww(d) of this title is subject to review under such section.”

Subsec. (f)(1)(A)(iii). Pub. L. 106–310, § 2001(f)(1), added cl. (iii).

Subsec. (f)(2)(C). Pub. L. 106–310, § 2001(f)(2), added subpar. (C).

Subsec. (g)(2). Pub. L. 106–310, § 2001(g), substituted “with a Medicare payment agreement and which is excluded from the Medicare inpatient prospective payment system pursuant to section 1395ww(d)(1)(B)(iii) of this title and its accompanying regulations” for “described in section 1395ww(d)(1)(B)(iii) of this title”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2004 Amendment

Pub. L. 108–490, § 1(b), Dec. 23, 2004, 118 Stat. 3972, provided that: “The amendments made by subsection (a) [amending this section] shall apply to payments for periods beginning with fiscal year 2005.”