PAYMENTS FOR HOSPITAL CAPITAL.

SEC. 4006. PAYMENTS FOR HOSPITAL CAPITAL. (a) Reductions in Payments for Capital.— Section 1886(g)(3)(A) of the Social Security Act (42 U.S.C. 1395ww(g)(3)(A)) is amended— (A) in clause (ii), by striking “, and” and inserting “on or after October 1, 1987, and before January 1, 1988,”, (B) by striking clause (iii) and inserting the following: “(iii) 12 percent for payments attributable to portions of cost reporting periods or discharges (as the case may be) in fiscal year 1988, occurring on or after January 1, 1988, and “(iv) 15 percent to portions of cost reporting periods or discharges (as the case may) be occurring during fiscal year 1989.”. (b) Prospective Payment for Capital-Related Costs.— (1) In general.— Paragraph (1) of section 1886(g) of such Act (42 U.S.C. 1395ww(g)) is amended to read as follows: “(g) (1) (A) Notwithstanding section 1861(v), instead of any amounts that are otherwise payable under this title with respect to the reasonable costs of subsection (d) hospitals and subsection (d) Puerto Rico hospitals for capital-related costs of inpatient hospital services, the Secretary shall, for hospital cost reporting periods beginning on or after October 1, 1991, provide for payments for such costs in accordance with a prospective pa3mient system established by the Secretary. “(B) Such system— “(i) shall provide for (I) a payment on a per discharge basis, and (II) an appropriate weighting of such payment amount as relates to the classification of the discharge; 101 STAT. 1330–53 “(ii) may provide for an adjustment to take into account variations in the relative costs of capital and construction for the different types of facilities or areas in which they are located; “(iii) may provide for such exceptions (including appropriate exceptions to reflect capital obligations) as the Secretary determines to be appropriate, and “(iv) may provide for suitable adjustment to reflect hospital occupancy rate. “(C) In this paragraph, the term ‘capital-related costs’ has the meaning given such term by the Secretary under subsection (a)(4) as of September 30, 1987, and does not include a return on equity capital.”. (2) Conforming amendment.— Section 1886 of such Act is amended— (A) in subsection (a)(4), by striking “with respect to costs incurred in cost reporting periods beginning prior to October 1 of 1987 (or of such later year as the Secretary may, in his discretion, select), other capital-related costs, as defined by the Secretary” and inserting “other capital-related costs (as defined by the Secretary for periods before October 1, 1987)”, and (B) by striking subparagraph (C) of subsection (g)(3). (3) Effective dates.— The amendment made by paragraph (1) shall take effect on October 1, 1987. The amendments made by paragraph (2) shall apply to cost reporting periods beginning on or after October 1, 1987. (c) Propac Report on Adjustment for Hospital Occupancy.— The Prospective Payment Assessment Commission shall study and report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate, by not later than May 1, 1988, on the suitability and feasibility of linking payment for capital-related costs under part A of title XVIII of the Social Security Act to hospital occupancy rates.