To amend section 4038 of the Omnibus Budget Reconciliation Act of 1987 to permit rural health medical education demonstration projects to be conducted by a consortium including a rural hospital and to authorize appropriations for expenses of such projects not reimbursed under the medicare program.

Amends the Omnibus Budget Reconciliation Act of 1987 to allow a consortium including one or more rural hospitals (including at least a small rural hospital and/or one or more rural health clinics) to participate in the rural health medical education demonstration project of the Department of Health and Human Services. Authorizes appropriations as necessary to pay costs of such project which are attributable to travel and living expenses of medical residents and travel expenses of supervising physicians, to the extent such costs are not reimbursed under the Medicare program.