Directs the Secretary of Health and Human Services to establish demonstration programs in each of 20 hospitals under which each hospital receives Medicare (title XVIII of the Social Security Act) reimbursement of its reasonable costs incurred pursuant to a written agreement with an educational institution to provide training to undergraduates as part of an approved education program that leads to a bachelor's degree in nursing. Requires the Secretary to report to the Congress by January 1, 1993, on the demonstration programs and the supply and characteristics of nurses trained under such programs.

Amends the Medicare program to state that nursing education programs operated by corporations controlled by, or under common control with, the hospital may be treated as approved educational activities of such hospital.