; and (6) by redesignating paragraph (9) as paragraph (8). 3. Prioritizing disproportionate share hospital payments based on Medicaid inpatient utilization and low-income utilization rates (a) In general Section 1923 of the Social Security Act ( 42 U.S.C. 1396r–4 ) is amended— (1) in subsection (a)(2)(D), by inserting (which, as of October 1, 2021, shall meet the requirements of subsection (k)) after methodology ; (2) in subsection (c), by striking and (g) and inserting , (g), and, beginning on October 1, 2021, (k) ; (3) in subsection (d)(2)(A)— (A) in clause (i), by striking ; or and inserting a semicolon; (B) in clause (ii), by striking the period at the end and inserting ; or ; and (C) by adding at the end the following new clause: (iii) that is an institution for mental diseases. ; and (4) by adding at the end the following new subsection: (k) State methodology requirements (1) In general Subject to paragraph (4), a State methodology for identifying and making payments to disproportionate share hospitals meets the requirements of this subsection if— (A) the methodology is uniformly applied statewide; (B) the methodology identifies each hospital in the State that is described in a disproportionate share hospital tier (as defined in paragraph (2)); and (C) in making payments to disproportionate share hospitals, the methodology meets the requirements of paragraph (3). (2) Disproportionate share hospital tiers The term disproportionate share hospital tier means each of the following: (A) Tier 1 hospitals A category of hospitals (referred to in this section as tier 1 hospitals ) in which each hospital satisfies— (i) each of the criteria described in clause (ii) of subparagraph (B)