REDUCTIONS IN PAYMENTS FOR PP8-EXEMPT HOSPITALS.

SEC. 13502. REDUCTIONS IN PAYMENTS FOR PP8-EXEMPT HOSPITALS. (a) In General.— Section 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)), as amended by section 13501(a)(2)(B)(i), is amended— (1) in clause (ii)— (A) by striking “and” at the end of subclause (III); (B) in subclause (IV)— (i) by striking “subsequent fiscal years” and inserting “a subsequent fiscal year ending on or before September 30, 1993,”, and (ii) by striking the period at the end and inserting a comma; and (C) by adding at the end the following new subclauses: “(V) fiscal years 1994 through 1997, is the market basket percentage increase minus the applicable reduction (as defined in clause (v)(II)), or in the case of a hospital for a fiscal year for which the hospital’s update adjustment percentage (as defined in clause (v)(I)) is at least 10 percent, the market basket percentage increase, and “(VI) subsequent fiscal years is the market basket percentage increase.”; and (2) by adding at the end the following new clause: “(v) For purposes of clause (ii)(V)— “(I) a hospital’s ‘update adjustment percentage’ for a fiscal year is the percentage by which the hospital’s allowable operating costs of inpatient hospital services recognized under this title for the cost reporting period beginning in fiscal year 1990 exceeds the hospital’s target amount (as determined under subparagraph (A)) for such cost reporting period, increased for each fiscal year (beginning with fiscal year 1994) by the 107 STAT. 578sum of any of the hospital’s applicable reductions under subclause (V) for previous fiscal years; and “(II) the ‘applicable reduction’ with respect to a hospital for a fiscal year is the lesser of 1 percentage point or the percentage point difference between 10 percent and the hospital’s update adjustment percentage for the fiscal year.”. (b) Effect of Payment Reduction on Exceptions and Adjustments.— Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A)) is amended— (1) by inserting “(i)” after “(A)”, and (2) by adding at the end the following: “(ii) The payment reductions under paragraph (3)(B)(ii)(V) shall not be considered by the Secretary in making adjustments pursuant to clause (i).”.