A bill to provide for the modification of the medicare reimbursement formula to allow small hospitals in rural areas with low occupancy to provide long-term care but only in those areas where there are no appropriate nursing home beds available.

Amends title XVIII (Medicare) of the Social Security Act to provide for the creation of an alternative reimbursement formula which will allow participating hospitals with less than 100 beds and less than 60 percent average occupancy located in areas where there is a demonstrated shortage of nursing home beds, to provide long-term care without applying proportional allocation of overhead costs to all patients in such facilities.