(1)

in paragraph (4)(F)(i), by striking paragraphs (7), (8), (9), and (10) and inserting paragraphs (7), (8), (9), (10), and (11);

(2)

in paragraph (4)(H)(i), by striking paragraphs (7), (8), (9), and (10) and inserting paragraphs (7), (8), (9), (10), and (11);

(3)

in paragraph (7)(E), by inserting paragraph (10), after paragraph (8),; and

(4)

by adding at the end the following new paragraph:

(11) Distribution of additional residency positions

(A) Additional residency positions

(i) In general

For each of fiscal years 2026 through 2032 (and succeeding fiscal years if the Secretary determines that there are additional residency positions available to distribute under clause (iv)(II)), the Secretary shall, subject to clause (ii) and subparagraph (D), increase the otherwise applicable resident limit for each qualifying hospital (as defined in subparagraph (H)) that submits a timely application under this subparagraph by such number as the Secretary may approve for portions of cost reporting periods occurring on or after July 1 of the fiscal year of the increase.

(ii) Number available for distribution

For each such fiscal year, the Secretary shall determine the total number of additional residency positions available for distribution under clause (i) in accordance with the following:

(I) Allocation to hospitals already operating over resident limit

One-third of such number shall be available for distribution only to hospitals described in subparagraph (B).

(II) Aggregate limitation

Except as provided in clause (iv)(I), the aggregate number of increases in the otherwise applicable resident limit under this subparagraph shall be equal to 2,000 in each such year.

(iii) Process for distributing positions

(I) Rounds of applications

The Secretary shall initiate 7 separate rounds of applications for an increase under clause (i), 1 round with respect to each of fiscal years 2026 through 2032.

(II) Number available

In each of such rounds, the aggregate number of positions available for distribution in the fiscal year under clause (ii) shall be distributed, plus any additional positions available under clause (iv).

(III) Timing

The Secretary shall notify hospitals of the number of positions distributed to the hospital under this paragraph as a result of an increase in the otherwise applicable resident limit by January 1 of the fiscal year of the increase. Such increase shall be effective for portions of cost reporting periods beginning on or after July 1 of that fiscal year.

(iv) Positions not distributed during the fiscal year

(I) In general

If the number of resident full-time equivalent positions distributed under this paragraph in a fiscal year is less than the aggregate number of positions available for distribution in the fiscal year (as described in clause (ii), including after application of this subclause), the difference between such number distributed and such number available for distribution shall be added to the aggregate number of positions available for distribution in the following fiscal year.

(II) Exception if positions not distributed by end of fiscal year 2032

If the aggregate number of positions distributed under this paragraph during the 7-year period of fiscal years 2026 through 2032 is less than 14,000, the Secretary shall, in accordance with the provisions of clause (ii) and subparagraph (E) and the considerations and priority described in subparagraph (C), conduct an application and distribution process in each subsequent fiscal year until such time as the aggregate amount of positions distributed under this paragraph is equal to 14,000.

(B) Allocation of distribution for positions to hospitals already operating over resident limit

(i) In general

Subject to clauses (ii) and (iii), in the case of a hospital in which the reference resident level of the hospital (as specified in subparagraph (H)(ii)) is greater than the otherwise applicable resident limit, the increase in the otherwise applicable resident limit under subparagraph (A) for a fiscal year described in such subparagraph shall be an amount equal to the product of the total number of additional residency positions available for distribution under subparagraph (A)(ii)(I) for such fiscal year and the quotient of—

(I)

the number of resident positions by which the reference resident level of the hospital exceeds the otherwise applicable resident limit for the hospital; and

(II)

the number of resident positions by which the reference resident level of all such hospitals with respect to which an application is approved under this paragraph exceeds the otherwise applicable resident limit for such hospitals.

(ii) Requirements

A hospital described in clause (i)—

(I)

is not eligible for an increase in the otherwise applicable resident limit under this subparagraph unless the amount by which the reference resident level of the hospital exceeds the otherwise applicable resident limit is not less than 10 and the hospital trains at least 25 percent of the full-time equivalent residents of the hospital in primary care and general surgery (as of the date of enactment of this paragraph); and

(II)

shall continue to train at least 25 percent of the full-time equivalent residents of the hospital in primary care and general surgery for the 5-year period beginning on such date.

In the case where the Secretary determines that a hospital described in clause (i) no longer meets the requirement of subclause (II), the Secretary may reduce the otherwise applicable resident limit of the hospital by the amount by which such limit was increased under this subparagraph.

(iii) Clarification regarding eligibility for other additional residency positions

Nothing in this subparagraph shall be construed as preventing a hospital described in clause (i) from applying for and receiving additional residency positions under this paragraph that are not reserved for distribution under this subparagraph.

(C) Distribution of other positions

For purposes of determining an increase in the otherwise applicable resident limit under subparagraph (A) (other than such an increase described in subparagraph (B)), the following shall apply:

(i) Considerations in distribution

In determining for which hospitals such an increase is provided under subparagraph (A), the Secretary shall take into account the demonstrated likelihood of the hospital filling the positions made available under this paragraph within the first 5 cost reporting periods beginning after the date the increase would be effective, as determined by the Secretary.

(ii) Minimum distribution for certain categories of hospitals

With respect to the aggregate number of such positions available for distribution under this paragraph, the Secretary shall distribute not less than 10 percent of such aggregate number to each of the following categories of hospitals:

(I)

Hospitals that—

(aa)

are located in a rural area (as defined in subsection (d)(2)(D)), excluding hospitals that are treated as being located in a rural area pursuant to subsection (d)(8)(E);

(bb)

are located in an area that has a rural-urban commuting code equal to or greater than 4.0;

(cc)

are sole community hospitals (as defined in subsection (d)(5)(D)(iii));

(dd)

are located within 10 miles of a sole community hospital; or

(ee)

for fiscal years after fiscal year 2031, have an accredited rural training track (as described in paragraph (4)(H)(iv)).

(II)

Hospitals in which the reference resident level of the hospital (as specified in subparagraph (H)(ii)) is greater than the otherwise applicable resident limit.

(III)

Hospitals in States with—

(aa)

new medical schools that received Candidate School status from the Liaison Committee on Medical Education or that received Pre-Accreditation status from the American Osteopathic Association Commission on Osteopathic College Accreditation on or after January 1, 2000, and that have achieved or continue to progress toward Full Accreditation status (as such term is defined by the Liaison Committee on Medical Education) or toward Accreditation status (as such term is defined by the American Osteopathic Association Commission on Osteopathic College Accreditation); or

(bb)

additional locations and branch campuses established on or after January 1, 2000, by medical schools with Full Accreditation status (as such term is defined by the Liaison Committee on Medical Education) or Accreditation status (as such term is defined by the American Osteopathic Association Commission on Osteopathic College Accreditation).

(IV)

Hospitals that serve areas designated as health professional shortage areas under section 332(a)(1)(A) of the Public Health Service Act, as determined by the Secretary.

(iii) Prioritization in distribution to HPSA hospitals

In distributing positions to a hospital described in clause (ii)(IV), the Secretary shall give priority to hospitals that are affiliated with—

(I)

a historically Black medical school (as defined in subparagraph (H)); or

(II)

any other school listed in section 326(e)(1) of the Higher Education Act of 1965 that establishes a medical college.

(D) Prohibition on distribution to hospitals without an increase agreement

No increase in the otherwise applicable resident limit of a hospital may be made under subparagraph (C) unless such hospital agrees to increase the total number of full-time equivalent residency positions under the approved medical residency training program of such hospital by the number of such positions made available by such increase under the subparagraph.

(E) Limitation

(i) In general

Except as provided in clause (ii), a hospital may not receive more than 75 full-time equivalent additional residency positions in the aggregate under this paragraph, paragraph (9), and paragraph (10) over the period of fiscal years 2026 through 2032.

(ii) Increase in number of additional positions a hospital may receive

The Secretary shall increase the aggregate number of full-time equivalent additional residency positions a hospital may receive under this paragraph over such period if the Secretary estimates that the number of positions available for distribution under subparagraph (A) exceeds the number of applications approved under such subparagraph over such period.

(F) Application of per resident amounts for primary care and nonprimary care

With respect to additional residency positions in a hospital attributable to the increase provided under this paragraph, the approved FTE per resident amounts are deemed to be equal to the hospital per resident amounts for primary care and nonprimary care computed under paragraph (2)(D) for that hospital.

(G) Permitting facilities to apply aggregation rules

The Secretary shall permit hospitals receiving additional residency positions attributable to the increase provided under this paragraph to, beginning in the fifth year after the effective date of such increase, apply such positions to the limitation amount under paragraph (4)(F) that may be aggregated pursuant to paragraph (4)(H) among members of the same affiliated group.

(H) Definitions

In this paragraph:

(i) Otherwise applicable resident limit

The term otherwise applicable resident limit means, with respect to a hospital, the limit otherwise applicable under subparagraphs (F)(i) and (H) of paragraph (4) on the resident level for the hospital determined without regard to this paragraph but taking into account paragraphs (7)(A), (7)(B), (8)(A), (8)(B), (9), (10)(A), and (10)(B).

(ii) Reference resident level

Except as otherwise provided in subclause (II), the term reference resident level means, with respect to a hospital, the resident level for the most recent cost reporting period of the hospital ending on or before the date of enactment of this paragraph, for which a cost report has been settled (or, if not, submitted (subject to audit)), as determined by the Secretary.

(iii) Resident level

The term resident level has the meaning given such term in paragraph (7)(C)(i).

(iv) Qualifying hospital

The term qualifying hospital means a hospital described in subparagraph (B)(i) or any of subclauses (I) through (IV) of subparagraph (C)(ii).

(v) Historically Black medical school

The term historically Black medical school means Howard University College of Medicine, Charles R. Drew University of Medicine and Science, Meharry Medical College, Morehouse School of Medicine, Xavier University Graduate School of Health Sciences and Medical School, and Maryland College of Osteopathic Medicine at Morgan State University.

(1)

in clause (v), in the third sentence, by striking subsections (h)(7), (h)(8), (h)(9), and (h)(10) and inserting subsections (h)(7), (h)(8), (h)(9), (h)(10), and (h)(11); and

(2)

by adding after clause (xiii) the following new clause:

(xiv)

For discharges occurring on or after July 1, 2027, insofar as an additional payment amount under this subparagraph is attributable to resident positions distributed to a hospital under subsection (h)(11), the indirect teaching adjustment factor shall be computed in the same manner as provided under clause (ii) with respect to such resident positions.