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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 141 TITLE V-UNEMPLOYMENT COMPENSATION PROVISIONS PART A—FEDERAL SUPPLEMENTAL COMPENSATION EXTENSION OF PROGRAM SEC. 501. (a) Paragraph (2) of section 602(f) of the Federal Supple- mental Compensation Act of 1982 is amended by striking out 96 Stat. 702. "March 31, 1983" and inserting in lieu thereof "September 30, 26 USC 3304 1Q8T' note. (b) Section 605(2) of such Act is amended by striking out "April 1, 96 Stat. 705. 1983" and inserting in lieu thereof "October 1, 1983". 26^sc 3304 NUMBER OF WEEKS FOR WHICH COMPENSATION PAYABLE SEC. 502. (a) Subsection (e) of section 602 of the Federal Supple- mental Compensation Act of 1982 is amended by redesignating 96 Stat. 702. paragraph (3) as paragraph (4) and by striking out paragraph (2) and 26 USC 3304 inserting in lieu thereof the following new paragraphs: "°*^ 'X2)(A) In the case of any account from which Federal supplemen- tal compensation was first payable to an individual for a week beginning after March 31, 1983, the amount established in such account shall be equal to the lesser of— "(i) 55 per centum of the total amount of regular compensa- tion (including dependents' allowances) payable to the individ- ual with respect to the benefit year (as determined under the State law) on the basis of which he most recently received regular compensation, or " (ii) the applicable limit determined under the following table times his average weekly benefit amount for his benefit year: "In the case of The applicable weeks during a: limit is: 6-percent period 14 5-percent period 12 4-percent period 10 Low-unemployment period 8 "(B) In the case of any State whose applicable limit, as determined under clause (ii) of subparagraph (A) for the first week beginning after March 27, 1983, and after the date of the enactment of part A of title V of the Social Security Amendments of 1983, would be more Supra. than 4 weeks lower than the number of weeks applicable to such State under this paragraph as in effect for the week beginning March 27, 1983, the applicable limit for such State for that week and any succeeding week shall not be lower than 4 less than the number so applicable to such State for the week beginning March 27, 1983. "(C) In the case of any account from which Federal supplemental compensation was payable to an individual for a week beginning before April 1, 1983, the amount established in such account shall be equal to the lesser of the subparagraph (A) entitlement or the sum of- "(i) the subparagraph (A) entitlement reduced (but not below zero) by the aggregate amount of Federal supplemental compen- sation paid to such individual for weeks beginning before April 1, 1983, plus "(ii) such individual's additional entitlement. "(D) For purposes of subparagraph (C) and this subparagraph—

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 97 STAT. 142 PUBLIC LAW 98-21—APR. 20, 1983 Definitions. Definitions. 26 USC 3304 note. 26 USC 3304 note. 96 Stat. 702. 26 USC 3304 note. "(i) The term 'subparagraph (A) entitlement' means the amount which would have been established in the account if subparagraph (A) had applied to such account. "(ii) The term 'additional entitlement' means the lesser of— "(I) three-fourths of the subparagraph (A) entitlement, or " (II) the applicable limit determined under the following table times the individual's average weekly benefit amount for his benefit year: "In the case of The applicable weeks during a: limit is: 6-percent period 10 5-percent period 8 4-percent period 8 Low-employment period 6 "(E) Except as provided in subparagraph (C)(i), for purposes of determining the amount of Federal supplemental compensation payable for weeks beginning after March 31, 1983, from an account described in subparagraph (C), no reduction in such account shall be made by reason of any Federal supplemental compensation paid to the individual for weeks beginning before April 1, 1983. "(3)(A) For purposes of this subsection, the terms '6-percent period', '5-percent period', '4 percent period', and 'low-unemploy- ment period' mean, with respect to any State, the period which— "(i) begins with the 3d week after the 1st week in which the rate of insured unemployment in the State for the period consisting of such week and the immediately preceding 12 weeks falls in the applicable range, and "(ii) ends with the 3d week after the 1st week in which the rate of insured unemployment for the period consisting of such week and the immediately preceding 12 weeks does not fall within the applicable range. "(B) For purposes of subparagraph (A), the applicable range is as follows: "In the case of a: The applicable range is: 6-percent period A rate equal to or exceeding 6 percent. 5-percent period A rate equal to or exceeding 5 percent but less than 6 percent. 4-percent period A rate equal to or exceeding 4 percent but less than 5 percent. Low-employment period A rate less than 4 percent. "(C) No 6-percent period, 5-percent period, or 4-percent period, as the case may be, shall last for a period of less than 4 weeks unless the State enters a period with a higher percentage designation. "(D) For purposes of this subsection— "(i) The rate of insured unemployment for any period shall be determined in the same manner as determined for purposes of section 203 of the Federal-State Extended Unemployment Com- pensation Act of 1970. "(ii) The amount of an individual's average weekly benefit amount shall be determined in the same manner as determined for purposes of section 202(b)(1)(C) of such Act. " (b)(1) Section 602(f)(2) of such Act is amended by inserting before the period at the end thereof the following: "; except that in the case of any individual who received such compensation for the week preceding the last week beginning after such date, such compensa- tion shall be payable to such individual for weeks beginning after

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 143 such date, but the total amount of such compensation payable for such weeks shall be limited to 50 percent of the total amount which would otherwise be payable for such weeks". (2) Section 605(2) of such Act is amended by inserting before the 96 Stat. 705. semicolon the following: "(except as otherwise provided in section 26 USC 3304 602(f)(2))". '^°^- (c) Paragraph (3) of section 602(d) of the Federal Supplemental 96 Stat. 702. Compensation Act of 1982 is amended to read as follows: note^^^ ^^^^ "(3) the maximum amount of Federal supplemental compen- sation payable to any individual for whom an account is estab- lished under subsection (e) shall not exceed the lesser of (A) the amount established in such account for such individual, or (B) in the case of an individual filing a claim under the interstate benefit payment plan for Federal supplemental compensation, the amount which would have been established in such account if the amount established in such account were determined by reference to the applicable limit under subparagraph (A)(ii) or (D)(ii) of subsection (e)(2) applicable in the State in which the individual is filing such interstate claim under the interstate benefit payment plan for the week in which he is filing such claim." EFFECTIVE DATE SEC. 503. (a) The amendments made by this part shall apply to 26 USC 3304 weeks beginning after March 31, 1983. ^°^- (b) In the case of any eligible individual— (1) to whom any Federal supplemental compensation was payable for any week beginning before April 1, 1983, and (2) who exhausted his rights to such compensation (by reason of the payment of all the amount in his Federal supplemental compensation account) before the first week beginning after March 31, 1983, such individual's eligibility for additional weeks of compensation by reason of the amendments made by this part shall not be limited or terminated by reason of any event, or failure to meet any require- ment of law relating to eligibility for unemployment compensation, occurring after the date of such exhaustion of rights and before April 1, 1983 (and the period after such exhaustion and before April 1, 1983, shall not be counted for purposes of determining the expiration of the two years following the end of his benefit year for purposes of section 602(b) of the Federal Supplemental Compensa- tion Act of 1982). 96 Stat. 702. (c) The Secretary of Labor shall, at the earliest practicable date 26 USC 3304 after the date of the enactment of this Act, propose to each State g°*^ with which he has in effect an agreement under section 602 of the modifications. Federal Supplemental Compensation Act of 1982 a modification of such agreement designed to provide for the payment of Federal supplemental compensation under such Act in accordance with the amendments made by this part. Notwithstanding any other provi- sion of law, if any State fails or refuses, within the 3-week period beginning on the date the Secretary of Labor proposed such a modification to such State, to enter into such a modification of such agreement, the Secretary of Labor shall terminate such agreement effective with the end of the last week which ends on or before such 3-week period.

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 97 STAT. 144 PUBLIC LAW 98-21 —APR. 20, 1983 TRAINING 96 Stat. 702. SEC. 504. Section 602 of the Federal Supplemental Compensation 26 USC 3304 Act of 1982 is amended by adding at the end thereof the following "° new subsection: "(g) The payment of Federal supplemental compensation shall not be denied to any recipient (who submits documentation prescribed by the Secretary) for any week because the recipient is in training or attending an accredited educational institution on a substantially full-time basis, or because of the application of State law to any such recipient relating to the availability for work, the active search for work, or the refusal to accept work on account of such training or attendance, unless the State agency determines that such training or attendance will not improve the opportunities for employment of the recipient.". COORDINATION WITH TRADE READJUSTMENT PROGRAM SEC. 505. Subsection (e) of section 602 of the Federal Supplemental 96 Stat. 702. Compensation Act of 1982 is amended by adding at the end thereof 26 USC 3304 the following new paragraph: "°*®- "(5)(A) Except as provided in subparagraph (B), the maximum amount of Federal supplemental compensation payable to an indi- vidual shall not be reduced by reason of any trade readjustment allowance to which the individual was entitled under the Trade Act 19 USC 2101. of 1974. "(B) If an individual received any trade readjustment allowance under the Trade Act of 1974 in respect of any benefit year, the maximum amount of Federal supplemental compensation payable under this subtitle in respect of such benefit year shall be reduced (but not below zero) so that (to the extent possible by making such a reduction) the aggregate amount of— "(i) regular compensation, "(ii) extended compensation, "(iii) trade readjustment allowances, and "(iv) Federal supplemental compensation, payable in respect of such benefit year does not exceed the aggregate amount which would have been so payable had the individual not been entitled to any trade readjustment allowance." PART B—PROVISIONS RELATING TO INTEREST AND CREDIT REDUCTIONS DEFERRAL OF INTEREST 42 USC 1322. SEC. 511. (a) Section 1202(b) of the Social Security Act is amended by adding at the end thereof the following new paragraphs: "(8)(A) With respect to interest due under this section on Septem- ber 30 of 1983, 1984, or 1985 (other than interest previously deferred under paragraph (3)(C)), a State may pay 80 percent of such interest in four annual installments of at least 20 percent beginning with the year after the year in which it is otherwise due, if such State meets the criteria of subparagraph (B). No interest shall accrue on such deferred interest. "(B) To meet the criteria of this subparagraph a State must— "(i) have taken no action since October 1, 1982, which would reduce its net unemployment tax effort or the net solvency of its

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 PUBLIC LAW 98-21—APR. 20, 1983 97 STAT, 145 unemployment system (as determined for purposes of section 3302(0 of the Internal Revenue Code of 1954); and 26 USC 3302. "(iiXD have taken an action (as certified by the Secretary of Labor) after March 31, 1982, which would have increased reve- nue liabilities and decreased benefits under the State's unem- ployment compensation system (hereinafter referred to as a 'solvency effort') by a combined total of the applicable percent- age (as compared to such revenues and benefits as would have been in effect without such State action) for the calendar year for which the deferral is requested; or "(II) have had, for taxable year 1982, an average unemploy- ment tax rate which was equal to or greater than 2.0 percent of the total of the wages (as determined without any limitation on amount) attributable to such State subject to contribution under the State unemployment compensation law with respect to such taxable year. In the case of the first year for which there is a deferral (over a 4- year period) of the interest otherwise payable for such year, the applicable percentage shall be 25 percent. In the case of the second such year, the applicable percentage shall be 35 percent. In the case of the third such year, the applicable percent^e shall be 50 percent. "(C)(i) The base year is the first year for which deferral under this provision is requested and subsequently granted. The Secretary of Labor shall estimate the unemployment rate for the base year. To determine whether a State meets the requirements of subparagraph (B)(ii)(I), the Secretary of Labor shall determine the percentage by which the benefits and taxes in the base year with the application of the action referred to in subparagraph (B)(iiXD are lower or greater, as the case may be, than such benefits* and taxes would have been without the application of such action. In making this determina- tion, the Secretary shall deem the application of the action referred to in subparagraph (B)(iiXD to have been effective for the base year to the same extent as such action is effective for the year following the year for which the deferral is sought. Once a deferral is ap- proved under clause (iiXD of subparagraph (B) a State must continue to maintain its solvency effort. Failure to do so shall result in the State being required to make immediate payment of all deferred interest. "(ii) Increases in the taxable wage base from $6,000 to $7,000 or increases after 1984 in the maximum tax rate to 5.4 percent shall not be counted for purposes of meeting the requirement of subpara- graph (B). "(D) In the case of a State which produces a solvency effort of 50 percent, 80 percent, and 90 percent rather than the 25 percent, 35 percent, and 50 percent required under subparagraph (B), the inter- est shall be computed at an interest rate which is 1 percentage point less than the otherwise applicable interest rate. "(9) Any interest otherwise due from a State on September 30 of a calendar year after 1982 may be deferred (and no interest shall accrue on such deferred interest) for a grace period of not to exceed 9 months if, for the most recent 12-month period for which data are available before the date such interest is otherwise due, the State had an average total unemployment rate of 13.5 percent or greater." (b) Section 1202(b)(7) of such Act is amended by striking out ", and 42 USC 1322. before January 1, 1988".

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 97 STAT. 146 PUBLIC LAW 98-21 —APR. 20, 1983 42 USC 1322. (c) Section 1202(b)(3)(C)(i) of the Social Security Act is amended by striking the matter that follows clause (II) and inserting "No inter- est shall accrue on such deferred interest." CAP ON CREDIT REDUCTION SEC. 512. (a)(1) Section 3302(f) of the Internal Revenue Code of 26 USC 3302. 1954 is amended by adding at the end thereof the following new paragraph: " (8) PARTIAL LIMITATION. — "(A) In the case of a State which would meet the require- ments of this subsection for a taxable year prior to 1987 but for its failure to meet one of the requirements contained in subparagraph (C) or (D) of paragraph (2), the reduction under subsection (c)(2) in credits otherwise applicable to taxpayers in such State for such taxable year and each subsequent year (in a period of consecutive years for each of which a credit reduction is in effect for taxpayers in such State) shall be reduced by 0.1 percentage point. "(B) In the case of a State which does not meet the requirements of paragraph (2) but meets the requirements of subparagraphs (A) and (B) of paragraph (2) and which also meets the requirements of section 1202(b)(8)(B) of the Ante, p. 144. Social Security Act with respect to such taxable year, the reduction under subsection (c)(2) in credits otherwise appli- cable to taxpayers in such State for such taxable year and each subsequent year (in a period of consecutive years for each of which a credit reduction is in effect for taxpayers in such State) shall be further reduced by an additional 0.1 percentage point. "(C) In no case shall the application of subparagraphs (A) and (B) reduce the credit reduction otherwise applicable under subsection (c)(2) below the limitation under para- graph (1)." Effective date. (2) The amendment made by paragraph (1) shall apply with nnfY respect to taxable year 1983 and taxable years thereafter. (b) Section 3302(f)(1) of such Code is amended by striking out "beginning before January 1, 1988,". note. AVERAGE EMPLOYER CONTRIBUTION RATE 26 USC 3302. SEC. 513. (a) Section 3302(d)(4)(B) of the Internal Revenue Code of 1954 is amended to read as follows: "(B)(i) for purposes of subparagraph (B) of subsection (c)(2), the total of the wages (as determined without any limitation on amount) attributable to such State subject to contributions under this chapter with respect to such calen- dar year, and "(ii) for purposes of subparagraph (C) of subsection (c)(2), the total of the remuneration subject to contributions under the State unemployment compensation law with respect to such calendar year." (b) Section 3302(c)(2)(B)(i) of such Code is amended by striking out "2.7" and inserting in lieu thereof "2.7 multiplied by a fraction, the numerator of which is the wage base under this chapter and the denominator of which is the estimated United States average

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 147 annual wage in covered employment for the Calendar year in which the determination is to be made". (c) Section 3302(c)(2)(B) of such Code is amended by inserting after "(if any)" the following: ", multiplied by a fraction, the numerator of which is the State's average annual wage in covered employment for the calendar year in which the determination is made and the determination of which is the we base under this chapter,". (d) The amendments made by this section shall be effective for taxable year 1983 and taxable years thereafter. DATE FOR PAYMENT OF INTEREST 26 USC 3302. Effective date. 26 USC 3302 note. SEC. 514. Section 1202(b)(3)(A) of the Social Security Act is 42 USC 1322. amended by striking out "not later than" and inserting in lieu thereof "prior to". PENALTY FOR FAILURE TO PAY INTEREST SEC. 515. (a) Section 303(c) of the Social Security Act is amended 42 USC 503. by striking out "or" at the end of paragraph (1), striking out the period at the end of paragraph (2) and inserting "; or", and adding at the end thereof the following new paragraph: "(3) that any interest required to be paid on advances under title XII of this Act has not been paid by the date on which such interest is required to be paid or has been paid directly or indirectly (by an equivalent reduction in State unemployment taxes or otherwise) by such State from amounts in such State's unemployment fund, until such interest is properly paid.", (b) Section 3304(a) of the Internal Revenue Code of 1954 (relating 26 USC 3304. to certification of State unemployment compensation laws) is amended by redesignating paragraph (17) as paragraph (18) and by inserting after paragraph (16) the following new paragraph: "(17) any interest required to be paid on advances under title XII of the Social Security Act shall be paid in a timely manner 42 USC i32i. and shall not be paid, directly or indirectly (by an equivalent reduction in State unemployment taxes or otherwise) by such State from amounts in such State's unemployment fund; and". PART C—MISCELLANEOUS PROVISIONS TREATMENT OF EMPLOYEES PROVIDING SERVICES TO EDUCATIONAL INSTITUTIONS SEC. 521. (a)(1) Section 3304(a)(6)(A) of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new clause: "(v) with respect to services to which section 3309(a)(1) applies, if such services are provided to or on behalf of an educational institution, compensation may be denied under the same circumstances as described in clauses (i) through (iv), and". (2) Clauses (iiXI), (iii), and (iv) of such section are each amended by striking out "may be denied" and inserting in lieu thereof "shall be denied'. (b)(l) Except as provided in paragraph (2), the amendments made by this section shall apply in the case of compensation paid for weeks beginning on or after April 1, 1984. 26 USC 3304. Effective date. 26 USC 8304 note.

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 97 STAT. 148 PUBLIC LAW 98-21 —APR. 20, 1983 'Session." (2) In the case of a State with respect to which the Secretary of Labor has determined that State legislation is required in order to comply with the amendment made by this section, the amendment made by this section shall apply in the case of compensation paid for weeks which begin on or after April 1, 1984, and after the end of the first session of the State legislature which begins after the date of the enactment of this Act, or which began prior to the date of the enactment of this Act and remained in session for at least twenty- five calendar days after such date of enactment. For purposes of the preceding sentence, the term "session" means a regular, special, budget, or other session of a State legislature. 26 USC 3304 note. Effective date. 26 USC 3304 note. 26 USC 3304. 42 USC 503. EXTENDED BENEFITS FOR INDIVDUALS WHO ARE HOSPITALIZED OR ON JURY DUTY SEC. 522. (a) Clause (ii) of paragraph (3)(A) of section 202(a) of the Federal-State Extended Unemployment Compensation Act of 1970 is amended to read as follows: "(ii) during which he fails to actively engeige in seeking work, unless such individual is not actively engaged in seeking work because such individual is, as determined in accordance with State law— "(I) before any court of the United States or any State pursuant to a lawfully issued summons to appear for jury duty {as such term may be defined by the Secretary of Labor), or "(II) hospitalized for treatment of an emergency or a life- threatening condition (as such term may be defined by such Secretary), if such exemptions in clauses (I) and (II) apply to recipients of regular benefits, and the State chooses to apply such exemp- tions for recipients of extended benefits.", (b) The amendment made by this section shall become effective on the date of the enactment of this Act. VOLUNTARY HEALTH INSURANCE PROGRAMS PERMITTED SEC. 523. (a) AMENDMENT OF INTERNAL REVENUE CODE OF 1954.— Paragraph (4) of section 3304(a) of the Internal Revenue Code of 1954 (relating to requirements for approval of State unemployment com- pensation laws) is amended by striking out "and" at the end of subparagraph (A), by adding "and" at the end of subparagraph (B), and by adding after subparagraph (B) the following new subparagraph: (C) nothing in this paragraph shall be construed to prohibit deducting an amount from unemplo5ment compen- sation otherwise payable to an individual and using the amount so deducted to pay for health insurance if the individual.elected to have such deduction made and such deduction was made under a program approved by the Secretary of Labor;". (b) AMENDMENT OF SOCIAL SECURITY ACT. —Paragraph (5) of section 303(a) of the Social Security Act is amended by striking out "; and" at the end thereof and inserting in lieu thereof "• Provided further, That nothing in this paragraph shall be construed to prohib- it deducting an amount from unemployment compensation other- wise payable to an individual and using the amount so deducted to

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 149 pay for health insurance if the individual elected to have such deduction made and such deduction was made under a program approved by the Secretary of Labor; and". (c) EFFECTIVE DATE. — The amendments made by this section shall 26 USC 3304 take effect on the date of the enactment of this Act. note. TREATMENT OF CERTAIN ORGANIZATIONS RETROACTIVELY DETERMINED TO BE DESCRIBED IN SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1954 26 USC 3303 note. 26 USC 3309. 26 USC 501. SEC 524. If— (1) an organization did not make an election to make pay- ments (in lieu of contributions) as provided in section 3309(a)(2) of the Internal Revenue C!ode of 1954 before April 1, 1972, because such organization, as of such date, was treated as an organization described in section 501(c)(4) of such Code, (2) the Internal Revenue Service subsequently determined that such organization was described in section 501(c)(3) of such Code, and (3) such organization made such an election before the earlier of— (A) the date 18 months after such election was first available to it under the State law, or (B) January 1, 1984, then section 3303(f) of such Code shall be applied with respect to 26 USC 3303 such organization as if it did not contain the requirement that the election be made before April 1, 1972, and by substituting "Jan- uary 1, 1982" for "January 1, 1969". TITLE VI—PROSPECTIVE PAYMENTS FOR MEDICARE INPATIENT HOSPITAL SERVICES MEDICARE PAYMENTS FOR INPATIENT HOSPITAL SERVICES ON THE BASIS OF PROSPECTIVE RATES 96 Stat. 331. 42 USC 1395WW. SEC 601. (a)(1) Subsection (a)(1) of section 1886 of the Social Security Act is amended by adding at the end the following new subparagraph: "(D) Subparagraph (A) shall not apply to cost reporting periods beginning on or after October 1, 1983.. (2) Sul^ection (a)(4) of such section is amended by adding at the end the following new sentence: "Such term does not include costs of approved educational activities, or, with respect to costs incurred in cost reporting periods beginning prior to October 1, 1986, capital- related costs, as defined by the Secretary.". (3) It is the intent of Congress that, in considering the implemen- tation of a system for including capital-related costs under a pro- spectively determined payment rate for inpatient hospital services, costs related to capital projects for which expenditures are obligated on or after the effective date of the implementation of such a system, may or may not be distinguished and treated differently from costs of projects for which expenditures were obligated before such date. (b) Section 1886(b) of such Act is amended— (1) by striking out "Notwithstanding sections 1814(b), but 42usei395f. subject to the provisions of sections" in paragraph (1) and 42 USC 1395WW note.

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 97 STAT. 150 PUBLIC LAW 98-21 —APR. 20, 1983 26 USC 3111. 42 USC 1395mm. 42 USC 1395CC. 42 USC 1395y. inserting in lieu thereof "Notwithstanding section 1814(b) but subject to the provisions of section"; (2) by inserting "(other than a subsection (d) hospital, as defined in subsection (d)(1)(B))" in the matter before subpara- graph (A) of paragraph (1) after "of a hospital"; (3) by inserting, in the matter in paragraph (1) following subparagraph (B), "(other than on the basis of a DRG prospec- tive payment rate determined under subsection (d))" after "pay- able under this title"; (4) by repealing paragraph (2); (5) by inserting "and subsection (d) and except as provided in subsection (e)" in paragraph (3)(B) after "subparagraph (A)"; (6) by inserting "or fiscal year" after "cost reporting period" each place it appears in paragraph (3)(B); (7) by inserting "before the beginning of the period or year" in paragraph (3)(B) after "estimated by the Secretary"; (8) by striking out "exceeds" in paragraph (3)(B) and inserting in lieu thereof "will exceed"; and (9) by repealing paragraph (6), effective with respect to cost reporting periods beginning on or after October 1, 1982, and by inserting after paragraph (5), effective with respect to cost reporting periods beginning on or after October 1, 1983, the following new paragraph (6): "(6) In the case of any hospital which becomes subject to the taxes under section 3111 of the Internal Revenue Code of 1954, with respect to any or all of its employees, for part or all of a cost reporting period, and was not subject to such taxes with respect to any or all of its employees for all or part of the 12-month base cost reporting period referred to in subsection (b)(3)(A)(i), the Secretary shall provide for an adjustment by increasing the base period amount described in such subsection for such hospital by an amount equal to the amount of such taxes which would have been paid or accrued by such hospital for such base period if such hospital had been subject to such taxes for all of such base period with respect to all its employees, minus the amount of any such taxes actually paid or accrued for such base period.". (c)(1) Subsection (c)(1) of such section is amended— (A) by striking out "and" at the end of subparagraph (B), (B) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof a semicolon, and (C) by adding at the end the following: "(D) the Secretary determines that the system will not pre- clude an eligible organization (as defined in section 1876(b)) from negotiating directly with hospitals with respect to the organization's rate of payment for inpatient hospital services; and "(E) the Secretary determines that the system requires hospi- tals to meet the requirement of section 1866(a)(1)(G) and the system provides for the exclusion of certain costs in accordance with section 1862(a)(14) (except for such waivers thereof as the Secretary provides by regulation). The Secretary cannot deny the application of a State under this subsection on the ground that the State's hospital reimbursement control system is based on a payment methodology other than on the bsisis of a diagnosis-related group or on the ground that the amount of payments made under this title under such system must be less than the amount of payments which would otherwise have

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 151 been made under this title not using such system. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining payment amounts at no more than a specified percentage increase above the payment amounts in a base period, the State has the option of applying such test (for inpatient hospital services under part A) on an aggregate payment basis or on the basis of the amount of payment per inpatient discharge or admis- sion. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining aggregate payment amounts below a national average percentage increase in total payments under part A for inpatient hospital services, the Secretary cannot deny the application of a State under this subsection on the ground that the State's rate of increase in such payments for such services must be less than such national average rate of increase." (2) Subsection (c)(3) of such section is amended— (A) by striking out "requirement of paragraph (1)(A)" and inserting in lieu thereof "requirements of subparagraphs (A), (D), and (E) of paragraph (1) and, if applicable, the requirements of paragraph (5),", and (B) by inserting "(or, if applicable, in paragraph (5))" in subparagraph (B) after "paragraph (1)". (3) Subsection (c) of such section is further amended by adding at the end the following new paragraphs: "(4) The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if— "(A) the requirements of subparagraphs (A), (B), (C), and (D) of paragraph (1) have been met with respect to the system, and "(B) with respect to that system a waiver of certain require- ments of title XVIII of the Social Security Act has been approved on or before (and which is in effect as of) the date of the enactment of the Social Security Amendments of 1983, pursuant to section 402(a) of the Social Security Amendments of 42 USC I395b-i. 1967 or section 222(a) of the Social Security Amendments of 1972. With respect to a State system described in this paragraph, the Secretary shall judge the effectiveness of such system on the basis of its rate of increase or inflation in inpatient hospital payments for individuals under this title, as compared to the national rate of increase or inflation for such payments, with the State retaining the option to have the test applied on the basis of the aggregate pay- ment or payments per inpatient admission or discharge during the three cost reporting periods beginning on or after October 1, 1983, after which such test, at the option of the Secretary, shall no longer apply, and such State systems shall be treated in the same manner as under other waivers. "(5) The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if— "(A) the requirements of subparagraphs (A), (B), (C), (D), and (E) of paragraph (1) have been met with respect to the system; "(B) the Secretary determines that the system— "(i) is operated directly by the State or by an entity designated pursuant to State law, "(ii) provides for payment of hospitals covered under the system under a methodology (which sets forth exceptions and adjustments, as well as any method for changes in the 42 USC 1395. 42 USC 1395b-l note.

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 97 STAT. 152 PUBLIC LAW 98-21 —APR. 20, 1983 96 Stat. 339. 42 USC 1395WW. 42 USC 1395f. methodology) by which rates or amounts to be paid for hospital services during a specified period are established under the system prior to the defined rate period, and "(iii) hospitals covered under the system will make such reports (in lieu of cost and other reports, identified by the Secretary, otherwise required under this title) as the Secre- tary may require in order to properly monitor assurances provided under this subsection; "(C) the State has provided the Secretary with satisfactory assurances that operation of the system will not result in any change in hospital admission practices which result in— "(i) a significant reduction in the proportion of patients (receiving hospital services covered under the system) who have no third-party coverage and who are unable to pay for hospital services, "(ii) a significant reduction in the proportion of individ- uals admitted to hospitals for inpatient hospital services for which payment is (or is likely to be) less than the antici- pated charges for or costs of such services, "(iii) the refusal to admit patients who would be expected to require unusually costly or prolonged treatment for rea- sons other than those related to the appropriateness of the care available at the hospital, or 'Xiv) the refusal to provide emergency services to any person who is in need of emergency services if the hospital provides such services; "(D) any change by the State in the system which has the effect of materially reducing payments to hospitals can only take effect upon 60 days notice to the Secretary and to the hospitals the payment to which is likely to be materially affected by the change; and "(E) the State has provided the Secretary with satisfactory assurances that in the development of the system the State has consulted with local governmental officials concerning the impact of the system on public hospitals. The Secretary shall respond to requests of States under this para- graph within 60 days of the date the request is submitted to the Secretary. "(6) If the Secretary determines that the assurances described in paragraph (1)(C) have not been met with respect to any 36-month period, the Secretary may reduce payments under this title to hospitals under the system in an amount equal to the amount by which the payment under this title under such system for such period exceeded the amount of payments which would otherwise have been made under this title not using such system.". (d) Subsection (d) of such section, as added by section 110 of the Tax Equity and Fiscal Responsibility Act of 1982, is amended— (1) by striking out "section 1814(b)" in paragraph (2)(A) and inserting in lieu thereof "subsection (b)", and (2) by redesignating the subsection as subsection 0) and trans- ferring and inserting such subsection at the end of section 1814 of the Social Security Act under the following heading: 96 Stat. 331. 42 USC 1395WW. "Elimination of Lesser-of-Cost-or-Charges Provision". (e) Such section 1886 is further amended by adding at the end the following new subsections:

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 153 "(d)(l)(A) Notwithstanding section 1814(b) but subject to the provi- sions of section 1813, the amount of the payment with respect to the operating costs of inpatient hospital services (as defined in subsec- tion (a)(4)) of a subsection (d) hospital (as defined in subparagraph (B)) for inpatient hospital discharges in a cost reporting period or in a fiscal year— " (i) beginning on or after October 1, 1983, and before October 1, 1984, is equal to the sum of— "(I) the target percentage (as defined in subparagraph (O) of the hospital's target amount for the cost reporting period (as defined in subsection (b)(3)(A), but determined without the application of subsection (a)), and "(II) the DRG percentage (as defined in subparagraph (O) of the regional adjusted DRG prospective payment rate determined under paragraph (2) for such dischai^es; "(ii) beginning on or after October 1, 1984, and before October 1, 1986, is equal to the sum of—- "(I) the target percentage (as defined in subparagraph (C)) of the hospital's target amount for the cost reporting period (as defined in subsection (b)(3)(A), but determined without the application of subsection (a)), and "(II) the DRG percentage (as defined in subparagraph (O) of the applicable combined adjusted DRG prospective pay- ment rate determined under subparagraph (U) for such discharges; or "(iii) beginning on or after October 1, 1986, is equal to the national adjusted DRG prospective payment rate determined under paragraph (3) for such discharges. "(B) As used in this section, the term 'subsection (d) hospital' means a hospital located in one of the fifty States or the District of Columbia other than— "(i) a psychiatric hospital (as defined in section 1861(f)), "(ii) a rehabilitation hospital (as defined by the Secretary), "(iii) a hospital whose inpatients are predominantly individ- uals under 18 years of age, or "(iv) a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days; and, in accordance with regulations of the Secretary, does not include a psychiatric or rehabilitation unit of the hospital which is a distinct part of the hospital (as defined by the Secretary). "(C) For purposes of this subsection, for cost reporting periods beginning, or discharges occurring- "(i) on or after October 1, 1983, and before October 1, 1984, the 'target percentage' is 75 percent and the *DRG percentage' is 25 percent; "(ii) on or after October 1, 1984, and before October 1, 1985, the 'target percentage' is 50 percent and the 'DRG percentage' is 50 percent; and "(iii) on or after October 1, 1985, and before October 1, 1986, the 'target percentage' is 25 percent and the 'DRG percentage' is 75 percent. "(D) For purposes of subparagraph (A)(iiXII), the 'applicable com- bined adjusted DRG prospective payment rate' for cost reporting periods beginning, or discharges occurring— "(i) on or after October 1, 1984, and before October 1, 1985, is a combined rate consisting of 25 percent of the national adjusted DRG prospective payment rate, and 75 percent of the regional 42 USC 1395f, 1395e. 42 USC 1395x.

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Page:Second Geological Survey of Pennsylvania Report of Progress PPP.djvu/16

 them to the genus. Only the separated portions of the trifid rail were then known, and this reference was not unnatural.

1850.—These fragments were ascribed to and constituted as a sub-genus  by Professor McCoy. In the same publication he proposes the genus, and describes two species.

1851.—The following year these species are again described by Prof. McCoy and properly classed with the Phyllopoda, which has since been the receptacle for all fossil forms of a similar nature.

1852.—In 1852, Professor Hall made the first announcement in America of the discovery of fossils similar to those described by Prof. Agassiz as Onchus murchisoni, and described the species Onchus deweyi, from the Niagara group of New York. (Pal. N. Y. Vol. ii, p. 320.)

1853.—M. J. Barrande pointed out the essential identity of the fossils described under the names of and, with the telson and movable spines of , and suggests that these names are superfluous.

Since this time a number of new genera have been established both in America and abroad, of which only those will here be noticed which lead directly to the species of the present paper.

1863.—In the 16th Report of the New York State Cabinet of Natural History, Professor Hall described four species of this order and referred three of them to the genus. Two of these have since been recognized as having been described from different portions of individuals of the same species, and are now united under one species.

1876.—In 1876 the same author again illustrated these species and refered to one as Ceratiocaris (Aristozoe) punctatus, and suggested that the specimens designated as Ceratiocaris armatus were probably identical with it. (Illustrations of Devonian Fossils, pl. 23.)

1879.—Dr. A. S. Packard recognizes the importance of Nebalia and its fossil allies and their relations to the decapods, and proposes the order Phyllocarida for their reception. (Zoölogy American Science Series, p. 703.)


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Page:United States Statutes at Large Volume 97.djvu/186

 97 STAT. 154 PUBLIC LAW 98-21 —APR. 20, 1983 adjusted DRG prospective payment rate, determined under paragraph (3) for such discharges; and "(ii) on or after October 1, 1985, and before October 1, 1986, is a combined rate consisting of 50 percent of the national adjusted DRG prospective payment rate, and 50 percent of the regional adjusted DRG prospective payment rate, determined under paragraph (3) for such discharges. "(2) The Secretary shall determine a national adjusted DRG pros- pective payment rate, for each inpatient hospital discharge in fiscal year 1984 involving inpatient hospital services of a subsection (d) hospital in the United States, and shall determine a regional adjusted DRG prospective payment rate for such discharges in each region, for which payment may be made under part A of this title. Each such rate shall be determined for hospitals located in urban or rural areas within the United States or within each such region, respectively, as follows: " (A) DETERMINING ALLOWABLE INDIVIDUAL HOSPITAL COSTS FOR BASE PERIOD. —The Secretary shall determine the allowable operating costs per discharge of inpatient hospital services for the hospital for the most recent cost reporting period for which data are available. "(B) UPDATING FOR FISCAL YEAR 1984.— The Secretary shall update each amount determined under subparagraph (A) for fiscal year 1984 by— "(i) updating for fiscal year 1983 by the estimated average rate of change of hospital costs industry-wide between the cost reporting period used under such subparagraph and fiscal year 1983 and the most recent case-mix data availa- ble, and " (ii) projecting for fiscal year 1984 by the applicable percentage increase (as defined in subsection (b)(3)(B)) for fiscal year 1984. "(C) STANDARDIZING AMOUNTS. —The Secretary shall standard- ize the amount updated under subparagraph (B) for each hospi- tal by— "(i) excluding an estimate of indirect medical education costs, "(ii) adjusting for variations among hospitals by area in the average hospital wage level, and "(iii) adjusting for variations in case mix among hospitals. " (D) COMPUTING URBAN AND RURAL AVERAGES. — The Secretary shall compute an average of the standardized amounts deter- mined under subparagraph (C) for the United States and for each region— "(i) for all subsection (d) hospitals located in an urban area within the United States or that region, respectively, and "(ii) for all subsection (d) hospitals located in a rural area within the United States or that region, respectively. ' Region. " For purposes of this subsection, the term 'region' means one of the nine census divisions, comprising the fifty States and the District of Columbia, established by the Bureau of the Census 'Urban area." for statistical and reporting purposes; the term 'urban area' means an area within a Standard Metropolitan Statistical Area (as defined by the Office of Management and Budget) or within such similar area as the Secretary has recognized under subsec-

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 155 tion (a) by regulation; and the term 'rural area* means any area outside such an area or similar area. "(E) REDUCING FOR VALUE OF OUTUER PAYMENTS.— The Secre- tary shall reduce each of the average standardized amounts determined under subparagraph (D) by a proportion equal to the proportion (estimated by the Secretary) of the amount of payments under this subsection based on DRG prospective pay- ment rates which are additional payments described in para- graph (5)(A) (relating to outlier payments). "(F) MAINTAINING BUDGET NEUTRAUTY. — The Secretary shall adjust each of such average standardized amounts as may be required under subsection (e)(l)(B) for that fiscal year. (G) COMPUTING DRG-SPECIFIC RATES FOR URBAN AND RURAL HOSPITALS IN THE UNITED STATES AND IN EACH REGION.— For each discharge classified within a diagnosis-related group, the Secre- tary shall establish a national DRG prospective payment rate and shall establish a regional DRG prospective payment rate for each re^on, each of which is equal— States or that region (respectively), to the product of— "(I) the average standardized amount (computed under subparagraph (D), reduced under subparagraph (E), and adjusted under subparagraph (F)) for hospitals located in an urban area in the United States or that region, and (II) the weighting factor (determined under para- graph (4)(B)) for that diagnosis-related group; and "(ii) for hospitals located in a rural area in the United States or that region (respectively), to the product of— "(I) the average standardized amount (computed under subparagraph (D), reduced under subparagraph (E), and adjusted under subparagraph (F)) for hospitals located in a rural area in the United States or that region, and (II) the weighting factor (determined under para- graph (4)(B)) for that diagnosis-related group. "(H) ADJUSTING FOR DIFFERENT AREA WAGE LEVELS.— The Sec- retary shall adjust the proportion, (as estimated by the Secre- tary from time to time) of hospitals' costs which are attributable to wages and wage-related costs, of the national and regional DRG prospective payment rates computed under subparagraph (G) for area differences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level. "(3) The Secretary shall determine a national adjusted DRG pros- pective payment rate, for each inpatient hospital discharge in a fiscal year after fiscal year 1984 involving inpatient hospital services of a subsection (d) hospital in the United States, and shall determine a regional adjusted DRG prospective payment rate for such dis- charges in each region for which payment may be made under part A of this title. Each such rate shall be determined for hospitals located in urban or rural areas within the United States and within each such region, respectively, as follows: "(A) UPDATING PREVIOUS STANDARDIZED AMOUNTS.— The Secre- tary shall compute an average standardized amount for hospi- tals located in an urban area and for hospitals located in a rural "Rural area."
 * Xi) for hospitals located in an urban area in the United

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 97 STAT. 156 PUBLIC LAW 98-21 —APR. 20, 1983 area within the United States and for hospitals located in an urban area and for hospitals located in a rural area within each region, equal to the respective average standardized amount computed for the previous fiscal year under paragraph (2KD) or under this subparagraph, increased for fiscal year 1985 by the applicable percentage increase under subsection (b)(3)(B), and adjusted for subsequent fiscal years in accordance with the final determination of the Secretary under subsection (e)(4), and adjusted to reflect the most recent case-mix data available. (B) REDUCING FOR VALUE OF OUTLIER PAYMENTS. —The Secre- tary shall reduce each of the average standardized amounts determined under subparagraph (A) by a proportion equal to the proportion (estimated by the Secretary) of the amount of payments under this subsection based on DRG prospective pay- ment amounts which are additional payments described in paragraph (5)(A) (relating to outlier payments). "(C) MAINTAINING BUDGET NEUTRALITY.— The Secretary shall adjust each of such average standardized amounts as may be required under subsection (e)(l)(B) for that fiscal year. "(D) COMPUTING DRG-SPECIFIC RATES FOR URBAN AND RURAL HOSPITALS.— For each discharge classified within a diagnosis- related group, the Secretary shall establish for the fiscal year a national DRG prospective payment rate and shall establish a regional DRG prospective payment rate for each region, each of which is equal— "(i) for hospitals located in an urban area in the United States or that region (respectively), to the product of— "(I) the average standardized amount (computed under subparagraph (A), reduced under subparagraph (B), and adjusted under subparagraph (C), for the fiscal year for hospitals located in an urban area in the United States or that region, and "(II) the weighting factor (determined under para- graph (4)(B)) for that diagnosis-related group; and "(ii) for hospitals located in a rural area in the United States or that region (respectively), to the product of— "(I) the average standardized amount (computed under subparagraph (A), reduced under subparagraph (B), and adjusted under subparagraph (O) for the fiscal year for hospitals located in a rural area in the United States or that region, and "(II) the weighting factor (determined under para- graph (4)(B)) for that diagnosis-related group. "(E) ADJUSTING FOR DIFFERENT AREA WAGE LEVELS. — The Sec- retary shall adjust the proportion, (as estimated by the Secre- tary from time to time) of hospitals' costs which are attributable to wages and wage-related costs, of the DRG prospective pay- ment rates computed under subparagraph (D) for area differ- ences in hospital wage levels by a factor (established by the Secretary) reflecting the relative hospital wage level in the geographic area of the hospital compared to the national aver- age hospital wage level. "(4)(A) The Secretary shall establish a classification of inpatient hospital discharges by diagnosis-related groups and a methodology for classifying specific hospital discharges within these groups. "(B) For each such diagnosis-related group the Secretary shall assign an appropriate weighting factor which reflects the relative

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 157 hospital resources used with respect to discharges classified within that group compared to discharges classified within other groups. "(C) The Secretary shall adjust the classifications and weighting factors established under subparagraphs (A) and (B), for discharges in fiscal year 1986 and at least every four fiscal years thereafter, to reflect changes in treatment patterns, technology, and other factors which may change the relative use of hospital resources. "(D) The Commission (established under subsection (e)(2)) shall consult with and make recommendations to the Secretary with respect to the need for adjustments under subparagraph (C), based upon its evaluation of scientific evidence with respect to new prac- tices, including the use of new technologies and treatment modali- ties. The Commission shall report to the Congress with respect to its Report to evaluation of any adjustments made by the Secretary under subpar- Congress. agraph (C). "(5)(A)(i) The Secretary shall provide for an additional payment for a subsection (d) hospital for any discharge in a diagnosis-related group, the length of stay of which exceeds the mean length of stay for discharges within that group by a fixed number of days, or exceeds such mean length of stay by some fixed number of standard deviations, whichever is the fewer number of days. "(ii) For cases which are not included in clause (i), a subsection (d) hospital may request additional payments in any case where charges, adjusted to cost, exceed a fixed multiple of the applicable DRG prospective payment rate, or exceed such other fixed dollar amount, whichever is greater. "(iii) The amount of such additional payment under clauses (i) and (ii) shall be determined by the Secretary and shall approximate the marginal cost of care beyond the cutoff point applicable under clause (i) or (ii). "(iv) The total amount of the additional payments made under this subparagraph for discharges in a fiscal year may not be less than 5 percent nor more than 6 percent of the total payments projected or estimated to be made based on DRG prospective pay- ment rates for discharges in that year. "(B) The Secretary shall provide for an additional payment amount for subsection (d) hospitals with indirect costs of medical education, in an amount computed in the same manner as the adjustment for such costs under regulations (in effect as of Janu- ary 1, 1983) under subsection (a)(2), except that in the computation under this subparagraph the Secretary shall use an educational adjustment factor equal to twice the factor provided under such regulations. "(C)(i) The Secretary shall provide for such exceptions and adjust- ments to the payment amounts established under this subsection as the Secretary deems appropriate to take into account the special needs of regional and national referral centers (including those hospitals of 500 or more beds located in rural areas), and of public or other hospitals that serve a significantly disproportionate number of patients who have low income or are entitled to benefits under part A of this title. "(ii) With respect to a subsection (d) hospital which is a 'sole community hospital', payment under paragraph (1)(A) for any cost reporting period or fiscel year beginning on or after October 1, 1984, shall be determined under the formula provided in clause (i) of that paragraph with the target and DRG percentages determined under paragraph (l)(C)(i) (except that any reference to paragraph (2) shall

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 97 STAT. 158 PUBLIC LAW 98-21 —APR. 20, 1983 "Sole community hospital. " 42 USC 1395y. Publication in Federal Register. 42 USC 139500. be deemed, for this purpose, a reference to paragraph (3)). In the case of a sole community hospital that experiences, in a cost report- ing period (beginning on or after October 1, 1983, and before October 1, 1986) compared to the previous cost reporting period, a decrease of more than 5 percent in its total number of inpatient cases due to circumstances beyond its control, the Secretary shall provide for such adjustment to the payment amounts under this subsection as may be necessary to fully compensate the hospital for the fixed costs it incurs in the period in providing inpatient hospital services, including the reasonable cost of maintaining necessary core staff and services. For purposes of this subparagraph, the term 'sole community hospital' means a hospital that, by reason of factors such as isolated location, weather conditions, travel conditions, or ab- sence of other hospitals (as determined by the Secretary), is the sole source of inpatient hospital services reasonably available to individ- uals in a geographical area who are entitled to benefits under part A. "(iii) The Secretary shall provide by regulation for such other exceptions and adjustments to such payment amounts under this subsection as the Secretary deems appropriate (including exceptions and adjustments that may be appropriate with respect to hospitals involved extensively in treatment for and research on cancer). "(iv) The Secretary may provide for such adjustments to the payment amounts under this subsection as the Secretary deems appropriate to take into account the unique circumstances of hospi- tals located in Alaska and Hawaii. "(D)(i) The Secretary shall estimate the amount of reimbursement made for services described in section 1862(a)(14) with respect to which payment was made under part B in the base reporting periods referred to in paragraph (2)(A) and with respect to which payment is no longer being made. "(ii) The Secretary shall provide for an adjustment to the payment for subsection (d) hospitals in each fiscal year so as appropriately to reflect the net amount described in clause (i). "(6) The Secretary shall provide for publication in the Federal Register, on or before the September 1 before each fiscal year (beginning with fiscal year 1984), of a description of the methodology and data used in computing the adjusted DRG prospective payment rates under this subsection, including any adjustments required under subsection (e)(1)(B). "(7) There shall be no administrative or judicial review under section 1878 or otherwise of— "(A) the determination of the requirement, or the propor- tional amount, of any adjustment effected pursuant to subsec- tion (e)(1), and "(B) the establishment of diagnosis-related groups, of the methodology for the classification of discharges within such groups, and of the appropriate weighting factors thereof under paragraph (4). " (e)(1)(A) For cost reporting periods of hospitals beginning in fiscal year 1984 or fiscal year 1985, the Secretary shall provide for such proportional adjustment in the applicable percentage increase (oth- erwise applicable to the periods under subsection (b)(3)(B)) as may be necessary to assure that— "(i) the aggregate payment amounts otherwise provided under subsection (d)(l)(A)(i)(I) for that fiscal year for operating costs of

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 159 inpatient hospital services of hospitals (excluding payments made under section 1866(a)(1)(F)), 42 USC i395cc. are not greater or less than— "(ii) the target percentage (as defined in subsection (d)(l)(C)) of the payment amounts which would have been payable for such services for those same hospitals for that fiscal year under this section under the law as in effect before the date of the enact- ment of the Social Security Amendments of 1983 (excluding payments made under section 1866(a)(1)(F)); except that the adjustment made under this subparagraph shall apply only to subsection (d) hospitals and shall not apply for pur- poses of making computations under subsection (d)(2)(B)(ii) or sub- section (d)(3)(A). "(B) For discharges occurring in fiscal year 1984 or fiscal year 1985, the Secretary shall provide under subsections (d)(2)(F) and (d)(3)(C) for such equal proportional adjustment in each of the average standardized amounts otherwise computed for that fiscal year as may be necessary to assure that— "(i) the aggregate payment amounts otherwise provided under subsection (d)(l)(A)(i)(II) and (d)(5) for that fiscal year for operat- ing costs of inpatient hospital services of hospitals (excluding payments made under section 1866(a)(1)(F)), are not greater or less than— "(ii) the DRG percentage (as defined in subsection (d)(1)(C)) of the payment amounts which would have been payable for such services for those same hospitals for that fiscal year under this section under the law as in effect before the date of the enact- ment of the Social Security Amendments of 1983 (excluding payments made under section 1866(a)(1)(F)). "(2) The Director of the Congressional Office of Technology Assess- ment (hereinafter in this subsection referred to as the 'Director' and the 'Office', respectively) shall provide for appointment of a Prospec- tive Payment Assessment Commission (hereinafter in this subsec- tion referred to as the 'Commission'), to be composed of independent experts appointed by the Director. In addition to carrying out its functions under subsection (d)(4)(D), the Commission shall review the applicable percentage increase factor described in subsection (b)(3)(B) and make recommendations to the Secretary on the appro- priate percentage change which should be effected for hospital inpatient discharges under subsections (b) and (d) for fiscal years beginning with fiscal year 1986. In making its recommendations, the Commission shall take into account changes in the hospital market- basket described in subsection (b)(3)(B), hospital productivity, tech- nological and scientific advances, the quality of health care provided in hospitals (including the quality and skill level of professional nursing required to maintain quality care), and long-term cost- effectiveness in the provision of inpatient hospital services. "(3) The Commission, not later than the April 1 before the begin- Recommendations. ning of each fiscal year (beginning with fiscal year 1986), shall report its recommendations to the Secretary on an appropriate change factor which should be used (instead of the applicable per- centage increase described in subsection (b)(3)(B)) for inpatient hos- pitsl services for discharges in that fiscal year. "(4) Taking into consideration the recommendations of the Com- mission, the Secretary shall determine for each fiscal year (begin- ning with fiscal year 1986) the percentage change which will apply for purposes of this section as the applicable percentage increase

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 97 STAT. 160 PUBLIC LAW 98-21 —APR. 20, 1983 (otherwise described in subsection (b)(3)(B)) for discharges in that fiscal year, and which will take into account amounts necessary for the efficient and effective delivery of medically appropriate and necessary care of high quality. Publication in "(5) The Secretary shall cause to have published for public com- Federal ment in the Federal Register, not later than— Kegister. «^^^ ^^IQ June 1 before each fiscal year (beginning with fiscal year 1986), the Secretary's proposed determination under para- graph (4) for that fiscal year, and "(B) the September 1 before such fiscal year after such consid- eration of public comment on the proposal as is feasible in the time available, the Secretary's final determination under such paragraph for that year. The Secretary shall include in the publication referred to in subpar- agraph (A) for a fiscal year the report of the Commission's recom- mendations submitted under paragraph (3) for that fiscal year. "(6)(A) The Commission shall consist of 15 individuals. Members of the Commission shall first be appointed no later than April 1, 1984, for a term of three years, except that the Director may provide initially for such shorter terms as will insure that (on a continuing basis) the terms of no more than seven members expire in any one year. "(B) The membership of the Commission shall provide expertise and experience in the provision and financing of health care, includ- ing physicians and registered professional nurses, employers, third party payors, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research, and individuals having expertise in the research and development of technological and scientific advances in health care. The Director shall seek nominations from a wide range of groups, including— "(i) national organizations representing physicians, including medical specialty organizations and registered professional nurses and other skilled health professionals; "(ii) national organizations representing hospitals, including teaching hospitals; "(iii) national organizations representing manufacturers of health care products; and "(iv) national organizations representing the business commu- nity, health benefit programs, labor, and the elderly. "(C) Subject to such review as the Office deems necessary to assure the efficient administration of the Commission, the Commis- sion may— "(i) employ and fix the compensation of such personnel (not to exceed 25) as may be necessary to carry out its duties; "(ii) seek such assistance and support as may be required in the performance of its duties from appropriate Federal depart- ments and agencies; "(iii) enter into contracts or make other arrangements, as may be necessary for the conduct of the work of the Commission; "(iv) make advance, progress, and other payments which relate to the work of the Commission; "(v) provide transportation and subsistence for persons serv- ing without compensation; and "(vi) prescribe such rules and regulations as it deems neces- sary with respect to the internal organization and operation of the Commission.

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 161 "(D) While serving on the business of the Commission (including traveltime), a member of the Commission shall be entitled to com- pensation at the per diem equivalent of the rate provided for level IV of the Executive Schedule under section 5315 of title 5, United States Code; and while so serving away from home and his regular place of business, a member may be allowed travel expenses, as authorized by the Chairman of the Commission. "(E) In order to identify medically appropriate patterns of health resources use in accordance with paragraph (2), the Commission shall collect and assess information on medical and surgical proce- dures and services, including information on regional variations of medical practice and lengths of hospitalization and on other patient- care data, giving special attention to treatment patterns for condi- tions which appear to involve excessively costly or inappropriate services not adding to the quality of care provided. In order to assess the safety, efficacy, and cost-effectiveness of new and existing medi- cal and surgical procedures, the Commission shall, in coordination to the extent possible with the Secretary, collect and assess factual information, giving special attention to the needs of updating exist- ing diagnosis-related groups, establishing new diagnosis-related groups, and making recommendations on relative weighting factors for such groups to reflect appropriate differences in resource con- sumption in delivering safe, efficacious, and cost-effective care. In collecting and assessing information, the Commission shall— "(i) utilize existing information, both published and unpub- lished, where possible, collected and assessed either by its own staff or under other arrangements made in accordance with this paragraph; "(ii) carry out, or award grants or contracts for, original research and experimentation, including clinical research, where existing information is inadequate for the development of useful and valid guidelines by the Commission; and "(iii) adopt procedures allowing any interested party to submit information with respect to medical and surgical proce- dures and services (including new practices, such as the use of new technologies and treatment modalities), which information the Commission shall consider in making reports and recom- mendations to the Secretary and Congress. "(F) The Commission shall have access to such relevant informa- tion and data as may be available from appropriate Federal agencies and shall assure that its activities, especially the conduct of original research and medical studies, are coordinated with the activities of Federal agencies. "(G)(i) The Office shall report annually to the Congress on the functioning and progress of the Commission and on the status of the assessment of medical procedures and services by the Commission, "(ii) The Office shall nave unrestricted access to all deliberations, records, and data of the Commission, immediately upon its request, "(iii) In order to carry out its duties under this paragraph, the Office is authorized to expend reasonable and neccessary funds as mutually agreed upon by the Office and the Commission. The Office shall be reimbursed for such funds by the Commission from the appropriations made with respect to the Commission. (H) The Commission shall be subject to periodic audit by the Audit General Accounting Office. "(I)(i) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this paragraph. Report to Congress. Appropriation authorization. 11-194O 85—7 QL3

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 97 STAT. 162 PUBLIC LAW 98-21 —APR. 20, 1983 42 USC 1320c. 42 USC 1301. 42 USC 1395y. 42 USC 1320a-l. 42 USC 1395y. "(ii) Eighty-five percent of such appropriation shall be payable from the Federal Hospital Insurance Trust Fund, and 15 percent of such appropriation shall be payable from the Federal Supplemen- tal^ Medical Insurance Trust Fund. (fKD The Secretary shall maintain, for a period ending not earlier than September 30, 1988, a system for the reporting of costs of hospitals receiving pa3mients computed under subsection (d). "(2) If the Secretary determines, based upon information supplied by a utilization and quality control peer review organization under part B of title XI, that a hospital, in order to circumvent the payment method established under subsection (b) or (d) of this section, has taken an action that results in the admission of individ- uals entitled to benefits under part A unnecessarily, unnecessary multiple admissions of the same such individuals, or other inappro- priate medical or other practices with respect to such individuals, the Secretary may— "(A) deny payment (in whole or in part) under part A with respect to inpatient hospital services provided with respect to such an unnecessary admission (or subsequent admission of the same individual), or "(B) require the hospital to take other corrective action neces- sary to prevent or correct the inappropriate practice. "(3) The provisions of paragraphs (2), (3), and (4) of section 1862(d) shall apply to determinations under paragraph (2) of this subsection in the same manner as they apply to determinations made under section 1862(d)(l). "(g)(1) If the Congress does not enact legislation, after the date of the enactment of this subsection and before October 1, 1986, respect- ing the payment under this title for capital-related costs for inpa- tient hospital services, no payment may be made under this title for capital-related costs of capital expenditures (as defined in section 1122(g) and except as provided in section 1122(j)) for inpatient hospital services in a State, which expenditures are obligated after September 30, 1986, unless the State has an agreement with the Secretary under section 1122(b) and under the ^eement the State has recommended approval of the capital expenditures. "(2) The Secretary shall provide that the amount which is allow- able, with respect to reasonable costs of inpatient hospital services for which payment may be made under this title, for a return on equity capital for hospitals shall, for cost reporting periods begin- ning on or after the date of the enactment of this subsection, be equal to amounts otherwise allowable under regulations in effect on March 1, 1983, except that the rate of return to be recognized shall be equal to the average of the rates of interest, for each of the months any part of which is included in the reporting period, on obligations issued for purchase by the Federal Hospitm Insurance Trust Fund. ". (f) Section 1862(a)(l) of the Social Security Act is amended— (1) by striking out "(B) or (C)" and inserting in lieu thereof "(B),(C),or(D)"; (2) by striking out "and" at the end of subparagraph (B); (3) by striking out the semicolon at the end of subparagraph (C) and inserting in lieu thereof a comma and "and"; and (4) by adding at the end thereof the following new subparagraph: "(D) in the case of clinical care items and services provided with the concurrence of the Secretary and with respect to

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 163 96 Stat. 331. 42 USC 1395WW. 42 USC 1395WW note. 42 USC 1395f, 1395n. 42 USC 1395x. research and experimentation conducted by, or under contract with, the Prospective Payment Assessment Commission or the Secretary, which are not reasonable and necessary to carry out the purposes of section 1886(e)(6);". (g) In determining whether a hospital is in an urban or rural area for purposes of section 1886(d) of the Social Security Act, the Secre- tary of Health and Human Services shall classify any hospital located in New England as being located in an urban area if such hospital was classified as being located in an urban area under the Standard Metropolitan Statistical Area system of classification in effect in 1979. CONFORMING AMENDMENTS SEC. 602. (a) Section 1153(b)(2) of the Social Security Act is 42 USC i320c-2. amended by adding at the end the following new subparagraph: "(C) The twelve-month period referred to in subparagraph (A) shall be deemed to begin not later than October 1983.". (b) Sections 1814(g) and 1835(e) of the Social Security Act are each amended by inserting "(or would be if section 1886 did not apply)" after "section 1861(v)(l)(D)". (c) Section 1814(h)(2) of such Act is amended by striking out "the reasonable costs for such services" and inserting in lieu thereof "the amount that would be payable for such services under subsection (b) and section 1886". (d)(1) The matter in section 1861(v)(l)(G)(i) of such Act following subclause (III) is amended by striking out "on the basis of the reasonable cost of and inserting in lieu thereof "the amount other- wise payable under part A with respect to". (2) Section 1861(v)(2)(A) of such Act is amended by striking out "an amount equal to the reasonable cost of and inserting in lieu thereof "the amount that would be taken into account with respect to". (3) Section 1861(v)(2)(B) of such Act is amended by striking out "the equivalent of the reasonable cost of. (4) Section 1861(v)(3) of such Act is amended by striking out "the reasonable cost of such bed and board furnished in semiprivate accommodations (determined pursuant to paragraph (1))" and inserting in lieu thereof "the amount otherwise payable under this title for such bed and board furnished in semiprivate accommodations". (e) Section 1862(a) of such Act is amended— (1) by striking out "or" at the end of paragraph (12), (2) by striking out the period at the end of paragraph (13) and inserting in lieu thereof "; or", and (3) by adding at the end the following new paragraph: "(14) which are other than physicians' services (as defined in regulations promulgated specifically for purposes of this para- graph) and which are furnished to an individual who is an inpatient of a hospital by an entity other than the hospital, unless the services are furnished under arrangements (as de- fined in section 1861(w)(l)) with the entity made by the hospi- tal.". (fKD Section 1866(a)(l) of such Act is amended— (A) by striking out "and" at the end of subparagraph (D), (B) by striking out the period at the end of subparagraph (E), and (C) by adding at the end the following new subparagraphs: 42 USC 1395y. 42 USC 1395CC.

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 97 STAT. 164 PUBLIC LAW 98-21 —APR. 20, 1983 96 Stat. 331. 42 USC 1395WW. 42 USC 1320c. 42 USC 1301. 42 USC 1395CC. 42 USC 1395mm. "(F) in the case of hospitals which provide inpatient hospital services for which payment may be made under subsection (c) or (d) of section 1886, to maintain an agreement with a utilization and quality control peer review organization (if there is such an organization which has a contract with the Secretary under part B of title XI for the area in which the hospital is located) under which the organization will perform functions under that part with respect to the review of the validity of diagnostic information provided by such hospital, the completeness, ade- quacy, and quality of care provided, the appropriateness of admissions and discharges, and the appropriateness of care provided for which additional payments are sought under sec- tion 1886(d)(5), with respect to inpatient hospital services for which payment may be made under part A of this title (and for purposes of payment under this title, the cost of such agreement to the hospital shall be considered a cost incurred by such hospital in providing inpatient services under part A, and (i) shall be paid directly by the Secretary to such organization on behalf of such hospital in accordance with a rate per review established by the Secretary, (ii) shall be transferred from the Federal Hospital Insurance Trust Fund, without regard to amounts appropriated in advance in appropriation Acts, in the same manner as transfers are made for payment for services provided directly to beneficiaries, (iii) shall be not less than an amount which reflects the rates per review established in fiscal year 1982 for both direct and administrative costs (adjusted for inflation), and (iv) shall not be less in the aggregate for a fiscal year than the aggregate amount expended in fiscal year 1982 for direct and administrative costs (adjusted for inflation)) of such reviews, "(G) in the case of hospitals which provide inpatient hospital services for which payment may be made under subsection (b) or (d) of section 1886, not to charge any individual or any other person for inpatient hospital services for which such individual would be entitled to have payment made under part A but for a denial or reduction of payments under section 1886(f)(2), and " (H) in the case of hospitals which provide inpatient hospital services for which payment may be made under this title, to have all items and services (other than physicians' services as defined in regulations for purposes of section 1862(a)(14)) (i) that are furnished to an individual who is an inpatient of the hospital, and (ii) for which the individual is entitled to have payment made under this title, furnished by the hospital or otherwise under arrangements (as defined in section 1861(w)(l)) made by the hospital. ". (2) The matter in section 1866(a)(2)(B)(ii) of such Act preceding subclause (I) is amended by inserting "and except with respect to inpatient hospital costs with respect to which amounts are payable under section 1886(d)" after "(except with respect to emergency services". (g) Section 1876(g) of such Act is-amended by adding at the end the following: "(4) A risk-sharing contract under this subsection may, at the option of an eligible organization, provide that, the Secretary— "(A) will reimburse hospitals either for payment amounts determined in accordance with section 1886, or, if applicable, for the reasonable cost (as determined under section 1861(v)), of

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 165 42 USC 139500. inpatient hospital services furnished to individuals enrolled with such organization pursuant to subsection (d), and "(B) will deduct the amount of such reimbursement for pay- ment which would otherwise be made to such organization.'. (h)(1) Section 1878(a) of such Act is amended— (A) by inserting "and (except as provided in subsection (g)(2)) any hospital which receives payments in amounts computed under subsection (b) or (d) of section 1886 and which has submit- ted such reports within such time as the Secretary may require in order to make payment under such section may obtain a hearing with respect to such payment by the Board" after "subsection (h)" in the matter before paragraph (1), (B) by inserting "(i)" after "(A)" in paragraph (1)(A), (C) by inserting "or" at the end of paragraph (1)(A) and by adding after such paragraph the following new clause: "(ii) is dissatisfied with a final determination of the Secre- tary as to the amount of the payment under subsection (b) or (d) of section 1886,", and (D) by striking out "(I)(A)" in paragraph (3) and inserting in lieu thereof "(l)(A)(i), or with respect to appeals under para- graph (l)(A)(ii), 180 days after notice of the Secretary's final determination,". (2)(A) The last sentence of section 1878(0(1) of the Social Security Act is amended by inserting "(or, in an action brought jointly by several providers, the judicial district in which the greatest number of such providers are located)" after "the judicial district in which the provider is located". (B) Section 1878(f)(1) of such Act is further amended by adding at the end thereof the following new sentence: "Any appeal to the Board or action for judicial review by providers which are under common ownership or control must be brought by such providers as a group with respect to any matter involving an issue common to such providers.". (3) Section 1878(g) of such Act is amended by inserting "(1)" after "(g)" and by adding at the end the following new paragraph: "(2) The determinations and other decisions described in section 1886(d)(7) shall not be reviewed by the Board or by any court pursuant to an action brought under subsection (0 or otherwise." (4) The third sentence of section 1878(h) of such Act is amended by striking out "cost reimbursement" and inserting in lieu thereof "payment of providers of services". (i) The first sentence of section 18810t))(2)(A) of such Act is amended by inserting "or section 1886 (if applicable)" after "section 1861(v)". 0') Section 1887(a)(lKB) of such Act is amended by inserting "or on the bases described in section 1886" after "on a reasonable cost basis". (k) The Secretary of Health and Human Services may, for any cost reporting period beginning prior to October 1, 1986, waive the requirements of sections 1862(a)(14) and 1866(a)(l)(H) of the Social Security Act in the case of a hospital which has followed a practice, since prior to October 1, 1982, of allowing direct billing under part B of title XVIII of such Act for services (other than physicians serv- ices) so extensively, that immediate compliance with those require- ments would threaten the stability of patient care. Any such waiver shall provide that such billing may continue to be made under part B of such title but that the payments to such hospital under part A 42 USC I395j 42 USC 1395rr. 96 Stat. 337. 42 USC 1395XX. 42 USC 1395y note. 42 USC 1395y, 1395CC. 42 USC 1395.

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 97 STAT. 166 PUBLIC LAW 98-21 —APR. 20, 1983 42 USC 1395c. 42 USC 1395J. 42 USC 1395CC. of such title shall be reduced by the amount of the billings for such services under part B of such title. If such a waiver is granted, at the end of the waiver period the Secretary may provide for such meth- ods of payments under part A as is appropriate, given the organiza- tional structure of the institution. (1) Effective October 1, 1984, section 1866(a)(1) of the Social Secu- rity Act, as amended by subsection (f)(1) of this section, is further amended— (1) by striking out "(if there is such an organization" in subparagraph (F) and insert in lieu thereof "(with an organiza- tion", and (2) by adding at the end the following new sentence: "In the case of a hospital which has an agreement in effect with an organization described in subparagraph (F), which organization's contract with the Secretary under part B of title XI is terminated on or after October 1, 1984, the hospital shall not be determined to be out of compliance with the requirement of such subparagraph during the six month period beginning on the date of the termina- tion of that contract.". 42 USC 1395WW note. 96 Stat. 331. 42 USC 1395WW. REPORTS, EXPERIMENTS, AND DEMONSTRATION PROJECTS SEC. 603. (a)(1) The Secretary of Health and Human Services (hereinafter in this title referred to as the "Secretary") shall study, develop, and report to the Congress within 18 months after the date of the enactment of this Act on the method and proposals for legislation by which capital-related costs, such as return on net equity, associated with inpatient hospital services can be included within the prospective payment amounts computed under section 1886(d) of the Social Security Act. (2)(A) The Secretary shall study and report annually to the Con- gress at the end of each year O^eginning with 1984 and ending with 1987) on the impact, of the payment methodology under section 1886(d) of the Social Security Act during the previous year, on classes of hospitals, beneficiaries, and other payors for inpatient hospital services, and other providers, and, in particular, on the impact of computing DRG prospective payment rates by census division, rather than exclusively on a national basis. Each such report shall include such recommendations for such changes in legislation as the Secretary deems appropriate. (B) During fiscal year 1984, the Secretary shall begin the collec- tion of data necessary to compute the amount of physician charges attributable, by diagnosis-related groups, to physicians' services fur- nished to inpatients of hospitals whose discharges are classified within those groups. The Secretary shall include, in a report to Congress in 1985, recommendations on the advisability and feasibil- ity of providing for determining the amount of the payments for physicians' services furnished to hospital inpatients based on the DRG type classification of the discharges of those inpatients, and legislative recommendations thereon. (C) In the annual report to Congress under subparagraph (A) for 1985, the Secretary shall include the results of studies on— (i) the feasibility and impact of eliminating or phasing out separate urban and rural DRG prospective payment rates under paragraph (3) of section 1886(d) of the Social Security Act; (ii) whether and the method under which hospitals, not paid based on amounts determined under such section, can be paid

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 PUBLIC LAW 98-21—APR. 20, 1983 97 STAT. 167 for inpatient hospital services on a prospective basis as under such section; (iii) the appropriateness of the factors used under paragraph (5)(A) of such section to compensate hospitals for the additional expenses of outlier cases, and the application of severity of illness, intensity of care, or other modifications to the diagnosis- related groups, and the advisability and feasibility of providing for such modifications; (iv) the feasibility and desirability of applying the payment methodology under such section to payment by all payors for inpatient hospital services; and (v) the impact of such section on hospital admissions and the feasibility of making a volume adjustment in the DRG prospec- tive payment rates or requiring preadmission certification in order to minimize the incentive to increase admissions. Such report shall specifically include, with respect to the item described in clause (iv), consideration of the extent of cost-shifting to non-Federal payors and the impact of such cost-shifting on health insurance costs and premiums borne by employers and employees. (D) In the annual report to Congress under subparagraph (A) for 1986, the Secretary shall include the results of a study examining the overall impact of State systems of hospital payment (either approved under section 1886(c) of the Social Security Act or under a waiver approved under section 402(a) of the Social Security Amend- ments of 1967 or section 222(a) of the Social Security Amendments of 1972), particularly assessing such systems' impact not only on the medicare program but also on the medicaid program, on payments and premiums under private health insurance plans, and on tax expenditures. (3)(A) The Secretary shall complete a study and make legislative recommendations to the Congress with respect to an equitable method of reimbursing sole community hospitals which takes into account their unique vulnerability to substantial variations in occupancy. (B) In addition, the Secretary shall examine ways to coordinate an information transfer between parts A and B of title XVIII of the Social Security Act, particularly with respect to those cases where a denial of coverage is made under part A of such title and no adjustment is made in the reimbursement to the admitting physi- cian or physicians. (C) The Secretary shall also report on the appropriate treatment of uncompensated care costs, and adjustments that might be appro- priate for large teaching hospitals located in rural areas. (D) The Secretary shall also report on the advisability of having hospitals make available information on the cost of care to patients financed by both public programs and private payors. (E) The studies and reports described in this paragraph shall be completed and submitted not later than April 1, 1985. (4) The Secretary shall complete a study and make recommenda- tions to the Congress, before April 1, 1984, with respect to a method for including hospitals located outside of the fifty States and the District of Columbia under a prospective payment system. (b)(1) Except as provided in paragraph (2), the amendments made by this title shall not affect the authority of the Secretary to develop, carry out, or continue experiments and demonstration projects. 96 Stat. 331. 42 USC 1395WW. 42 USC 1395b-l. 42 USC 1395b-l note. Study and recommendations. 42 USC 1395c, 1395J. Study and recommendations. Effective date. 42 USC 1395b-l note.

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 97 STAT. 168 PUBLIC LAW 98-21—APR. 20, 1983 42 USC 1395. 42 USC 1395b-l. 42 USC 1395b-l note. 42 USC 1315. 42 USC 1396. 42 USC 1395b-l note. 42 USC 1395WW note. Ante, p. 163. Ante, p. 152. Publication in Federal Register. (2) The Secretary shall provide that, upon the request of a State which has a demonstration project, for payment of hospitals under title XVIII of the Social Security Act approved under section 402(a) of the Social Security Amendments of 1967 or section 222(a) of the Social Security Amendments of 1972, which (A) is in effect as of March 1, 1983, and (B) was entered into after August 1982 (or upon the request of another party to demonstration project agreement), the terms of the demonstration agreement shall be modified so that the demonstration project is not required to maintain the rate of increase in medicare hospital costs in that State below the national rate of increase in medicare hospital costs. (c) The Secretary shall approve, with appropriate terms and condi- tions as defined by the Secretary, within 30 days after the date of enactment of this Act— (1) the risk-sharing application of On Lok Senior Health Services (according to terms and conditions as specified by the Secretary), dated July 2, 1982, for waivers, pursuant to section 222 of the Social Security Amendments of 1972 and section 402(a) of the Social Security Amendments of 1967, of certain requirements of title XVIII of the Social Security Act over a period of 36 months in order to carry out a long-term care demonstration project, and (2) the application of the Department of Health Services, State of California, dated November 1, 1982, pursuant to section 1115 of the Social Security Act, for the waiver of certain requirements of title XIX of such Act over a period of 36 months in order to carry out a demonstration project for capitated reimbursement for comprehensive long-term care services involving On Lok Senior Health Services. (d) The Secretary shall conduct demonstrations with hospitals in areas with critical shortages of skilled nursing facilities to study the feasibility of providing alternative systems of care or methods of payment. EFFECTIVE DATES SEC. 604. (a)(1) Except as provided in section 602(1) and in para- graph (2), the amendments made by the preceding provisions of this title apply to items and services furnished by or under arrange- ments with a hospital beginning with its first cost reporting period that begins on or after October 1, 1983. A change in a hospital s cost reporting period that has been made after November 1982 shall be recognized for purposes of this section only if the Secretary finds good cause for that change. (2) Section 1866(a)(1)(F) of the Social Security Act (as added by section 602(f)(1)(C) of this title), section 1862(a)(14) (as added by section 602(e)(3) of this title) and sections 1886(a)(1)(G) and (H) of such Act (as added by section 602(f)(l)(C) of this title) take effect on October 1, 1983. (b) The Secretary shall make an appropriate reduction in the payment amount under section 1886(d) of the Social Security Act {as amended by this title) for any discharge, if the admission has occurred before a hospital's first cost reporting period that begins after September 1983, to take into account amounts payable under title XVIII of that Act (as in effect before the date of the enactment of this Act) for items and services furnished before that period. (c)(1) The Secretary shall cause to be published in the Federal Register a notice of the interim final DRG prospective payment

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 PUBLIC LAW 98-21 —APR. 20, 1983 97 STAT. 169 rates established under subsection (d) of section 1886 of the Social Security Act (as amended by this title) no later than September 1, 1983, and allow for a period of public comment thereon. Payment on the basis of prospective rates shall become effective on October 1, 1983, without the necessity for consideration of comments received, but the Secretary shall, by notice published in the Federal Register, affirm or modify the amounts by December 31, 1983, after consider- ing those comments. (2) A modification under paragraph (1) that reduces a prospective payment rate shall apply only to discharges occurring after 30 days after the date the notice of the modification is published in the Federal Register. (3) Rules to implement subsection (d) of section 1886 of the Social Security Act (as so amended) shall be established in accordance with the procedure described in this subsection. Ante, p. 152. DELAY IN PROVISION RELATING TO HOSPITAL-BASED SKILLED NURSING FACILITIES SEC. 605. bility Act inserting in (b) The Secretary of Health and Human Services shall, prior to December 31, 1983, complete a study and report to the Congress with respect to (1) the effect which the implementation of section 102 of the Tax Equity and Fiscal Responsibility Act of 1982 would have on hospital-based skilled nursing facilities, given the differ- ences (if any) in the patient populations served by such facilities and by community-based skilled nursing facilities and (2) the impact on skilled nursing facilities of hospital prospective payment systems, and recommendations concerning payment of skilled nursing facilities. 96 Stat. 336. 42 USC 1395x note. 42 USC 1395x note. SHIFT IN MEDICARE PREMIUMS TO COINCIDE WITH COST-OF-LIVING INCREASE SEC. 606. (a)(1) Section 1839 of the Social Security Act is amended 42 USC I395r. by striking out subsections (a), (b), and (c) and inserting in lieu thereof the following: "(a)(1) The Secretary shall, during September of 1983 and of each year thereafter, determine the monthly actuarial rate for enrollees age 65 and over which shall be applicable for the succeeding calen- dar year. Such actuarial rate shall be the amount the Secretary estimates to be necessary so that the aggregate amount for such calendar year with respect to those enrollees age 65 and older will equal one-half of the total of the benefits and administrative costs which he estimates will be payable from the Federal Supplementary Medical Insurance Trust Fund for services performed and related administrative costs incurred in such calendar year with respect to such enrollees. In calculating the monthly actuarial rate, the Secre- tary shall include an appropriate amount for a contingency margin. (2) The monthly premium of each individual enrolled under this part for each month after December 1983 shall, except as provided in subsections (b) and (e), be the amount determined under para- graph (3). "(3) The Secretary shall, during September of 1983 and of each year thereafter, determine and promulgate the monthly premium

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