payment year
(2) Payment amount (A) In general Subject to the succeeding subparagraphs of this paragraph, the applicable amount specified in this subparagraph for an eligible hospital for a payment year is equal to the product of the following: (i) Initial amount The sum of— (I) the base amount specified in subparagraph (B); plus (II) the discharge related amount specified in subparagraph (C) for a 12-month period selected by the Secretary with respect to such payment year. (ii) Medicare share The Medicare share as specified in subparagraph (D) for the eligible hospital for a period selected by the Secretary with respect to such payment year. (iii) Transition factor The transition factor specified in subparagraph (E) for the eligible hospital for the payment year. (B) Base amount The base amount specified in this subparagraph is $2,000,000. (C) Discharge related amount The discharge related amount specified in this subparagraph for a 12-month period selected by the Secretary shall be determined as the sum of the amount, estimated based upon total discharges for the eligible hospital (regardless of any source of payment) for the period, for each discharge up to the 23,000th discharge as follows: (i) For the first through 1,149th discharge, $0. (ii) For the 1,150th through the 23,000th discharge, $200. (iii) For any discharge greater than the 23,000th, $0. (D) Medicare share The Medicare share specified under this subparagraph for an eligible hospital for a period selected by the Secretary for a payment year is equal to the fraction— (i) the numerator of which is the sum (for such period and with respect to the eligible hospital) of— (I) the estimated number of inpatient-bed-days (as established by the Secretary) which are attributable to individuals with respect to whom payment may be made under part A; and (II) the estimated number of inpatient-bed-days (as so established) which are attributable to individuals who are enrolled with a Medicare Advantage organization under part C; and (ii) the denominator of which is the product of— (I) the estimated total number of inpatient-bed-days with respect to the eligible hospital during such period; and (II) the estimated total amount of the eligible hospital’s charges during such period, not including any charges that are attributable to charity care (as such term is used for purposes of hospital cost reporting under this subchapter), divided by the estimated total amount of the hospital’s charges during such period. Insofar as the Secretary determines that data are not available on charity care necessary to calculate the portion of the formula specified in clause (ii)(II), the Secretary shall use data on uncompensated care and may adjust such data so as to be an appropriate proxy for charity care including a downward adjustment to eliminate bad debt data from uncompensated care data. In the absence of the data necessary, with respect to a hospital, for the Secretary to compute the amount described in clause (ii)(II), the amount under such clause shall be deemed to be 1. In the absence of data, with respect to a hospital, necessary to compute the amount described in clause (i)(II), the amount under such clause shall be deemed to be 0. (E) Transition factor specified (i) In general Subject to clause (ii), the transition factor specified in this subparagraph for an eligible hospital for a payment year is as follows: (I) For the first payment year for such hospital, 1. (II) For the second payment year for such hospital, ¾. (III) For the third payment year for such hospital, ½. (IV) For the fourth payment year for such hospital, ¼. (V) For any succeeding payment year for such hospital, 0. (ii) Phase down for eligible hospitals first adopting EHR after 2013 If the first payment year for an eligible hospital is after 2013, then the transition factor specified in this subparagraph for a payment year for such hospital is the same as the amount specified in clause (i) for such payment year for an eligible hospital for which the first payment year is 2013. If the first payment year for an eligible hospital is after 2015 then the transition factor specified in this subparagraph for such hospital and for such year and any subsequent year shall be 0. (F) Form of payment The payment under this subsection for a payment year may be in the form of a single consolidated payment or in the form of such periodic installments as the Secretary may specify. (G) Payment year defined (i) In general For purposes of this subsection, the term “payment year” means a fiscal year beginning with fiscal year 2011. (ii) First, second, etc. payment year The term “first payment year” means, with respect to inpatient hospital services furnished by an eligible hospital, the first fiscal year for which an incentive payment is made for such services under this subsection. The terms “second payment year”, “third payment year”, and “fourth payment year” mean, with respect to an eligible hospital, each successive year immediately following the first payment year for that hospital.