PPS-EXEMPT HOSPITALS.

SEC. 6004. PPS-EXEMPT HOSPITALS. (a) Exemption of Cancer Hospitals From Prospective Payment System.— (1) In general.— Section 1886(d)(1)(B) of the Social Security Act (42 U.S.C. 1395ww(d)(1)(B)) is amended— (A) in clause (iii), by striking “or”; (B) in clause (iv), by striking the semicolon at the end and inserting “, or”; and (C) by inserting after clause (iv) the following new clause: “(v) a hospital that the Secretary has classified, at any time on or before December 31, 1990, (or, in the case of a hospital that, as of the date of the enactment of this clause, is located in a State operating a demonstration project under section 1814(b), on or before December 31, 1991) for purposes of applying exceptions and adjustments to payment amounts under this subsection, as a hospital involved extensively in treatment for or research on cancer;”. (2) Conforming amendment.—Section 1886(d)(5)(1) of such Act (as redesignated by section 6003(e)(1)(A)) is amended by striking “(including” and all that follows through “cancer)”. (3) Effective date.— The amendments made by this subsection shall apply with respect to cost reporting periods beginning on or after October 1, 1989, except that— (A) in the case of a hospital classified by the Secretary of Health and Human Services as a hospital involved extensively in treatment for or research on cancer under section 1886(d)(5)(I) of the Social Security Act (as redesignated by section 6003(e)(1)(A)) after the date of the enactment of this Act, such amendments shall apply with respect to cost reporting periods beginning on or after the date of such classification, (B) in the case of a hospital that is not described in subparagraph (A), such amendments shall apply with respect to portions of cost reporting periods or discharges 103 STAT. 2160occurring during and after fiscal year 1987 for purposes of section 1886(g) of the Social Security Act, and (C) such amendments shall take effect 30 days after the date of the enactment of this Act for purposes of determining the eligibility of a hospital to receive periodic interim payments under section 1815(e)(2) of the Social Security Act. (b) Rebasing for Cancer Hospitals.— (1) In general.— Section 1886(b)(3) of such Act (42 U.S.C. 1395ww(b)(3)), as amended by subsections (e)(1)(B) and (f)(2) of section 6003, is further amended— (A) in subparagraph (A), by striking “(C) and (D)” and inserting “(C), (D), and (E)”, (B) in subparagraph (B)(ii), by striking “For purposes of subparagraph (A)” and inserting “For purposes of subparagraphs (A) and (E)”, and (C) by adding at the end the following new subparagraph: “(E) In the case of a hospital described in clause (v) of subsection (d)(1)(B), the term ‘target amount’ means— “(i) with respect to the first 12-month cost reporting period in which this subparagraph is applied to the hospital— “(I) the allowable operating costs of inpatient hospital services (as defined in subsection (a)(4)) recognized under this title for the hospital for the 12-month cost reporting period (in this subparagraph referred to as the ‘base cost reporting period’) preceding the first cost reporting period for which this subsection was in effect with respect to such hospital, increased (in a compounded manner) by— “(II) the sum of the applicable percentage increases applied to such hospital under this paragraph for cost reporting periods after the base cost reporting period and up to and including such first 12-month cost reporting period, or “(ii) with respect to a later cost reporting period, the target amount for the preceding 12-month cost reporting period, increased by the applicable percentage increase under subparagraph (B)(ii) for that later cost reporting period. There shall be substituted for the base cost reporting period described in clause (i) a hospital’s cost reporting period (if any) beginning during fiscal year 1987 if such substitution results in an increase in the target amount for the hospital.”. (2) Effective date.—The amendments made by paragraph (1) shall apply with respect to cost reporting periods beginning on or after April 1, 1989.