Sec. 7.3. (a) This section applies to disproportionate share payments for any state fiscal year during which the state directed payment program under IC 16-21-10-8.5 is in effect. (b) The office may develop and implement a Medicaid state plan amendment that provides Medicaid disproportionate share payments for state mental health institutions under IC 12-24-1-3 that qualify as a disproportionate share provider under section 1(a) of this chapter. (c) The office shall develop and implement a Medicaid state plan amendment that provides Medicaid disproportionate share payments for hospitals pursuant to the following STEPS: STEP ONE: Each acute care hospital licensed under IC 16-21 that qualifies as a disproportionate share provider under section 1(a) of this chapter, including acute care hospitals licensed under IC 16-21 and established and operated under IC 16-22-2 , IC 16-22-8 , or IC 16-23 that qualify as a disproportionate share provider under section 1(a) of this chapter, shall be paid a disproportionate share payment for the state fiscal year in the amount of one thousand dollars ($1,000). STEP TWO: Of the state's disproportionate share payment allotment under 42 CFR 447.297 that remains for the state fiscal year following STEP ONE, and any applicable payments under subsection (b), disproportionate share payments shall be paid to municipal disproportionate share providers described in section 1(b) of this chapter, and to acute care hospitals licensed under IC 16-21 and established and operated under IC 16-22-8 that qualify as a disproportionate share provider under section 1(a) of this chapter, that fund the state's share of their disproportionate share payment for the state fiscal year through an intergovernmental transfer. Subject to subsection (d), each hospital's payment shall be an amount equal to its hospital specific limit for the state fiscal year calculated pursuant to 42 U.S.C. 1396r-4(g). (d) If the total disproportionate share payments under STEP TWO of subsection (c) for a state fiscal year would be greater than the state's disproportionate share payment allotment under 42 CFR 447.297 that remains following STEP ONE of subsection (c), and any applicable payments under subsection (b), the disproportionate share payments to each hospital eligible under STEP TWO shall be made on a pro rata basis, based on each hospital's hospital specific limit in relation to the remaining disproportionate share payment allotment.
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