PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2145 (2) PAYMENT. — Section 1886(b)(3) of such Act (42 U.S.C. j 1395ww(b)(3)), as amended by subsection (e)(l)(B), is further amended— (i) in subparagraph (A), by striking "subparagraph (C)" and inserting "subparagraphs (C) and (D)", and (ii) by adding at the end the following new subparagraph: "(D) For cost reporting periods ending on or before March 31, 1993, in the case of a hospital that is a medicare-dependent, small rural hospital (as defined in subsection (d)(5)(G)), 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 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, in- creased by the applicable percentage increase under subpara- graph (B)(i) for discharges occurring in the fiscal year in which that later cost reporting period begins. There shall be substituted for the base cost reporting period de- scribed in clause (i) a hospital's cost reporting period (if any) begin- ning during fiscal year 1987 if such substitution results in an increase in the target amount for the hospital.", (g) ESSENTIAL ACCESS COMMUNITY HOSPITAL PROGRAM. — (1) ESTABLISHMENT OF PROGRAM.— (A) IN GENERAL.—Part A of title XVIII of the Social Security Act (42 U.S.C. 1395c et seq.) is amended by adding at the end the following new section: "ESSENTIAL ACCESS COMMUNITY HOSPITAL PROGRAM 42 USC 1395i-4. "SEC. 1820. (a) IN GENERAL.—There is hereby established a pro- Grants. gram under which the Secretary— S*®*® ^<* ^?^^ "(1) shall make grants to not more than 7 States to carry out ^°\Si the activities described in subsection (d)(D; "(2) shall make grants to eligible hospitals and facilities (or consortia of hospitals and facilities) to carry out the activities described in subsection (d)(2); and "(3) shall designate (under subsection (i)) hospitals and facili- ties located in States receiving grants under paragraph (1) as essential access community hospitals or rural primary care hospitals. "(b) ELIGIBILITY OP STATES FOR GRANTS. — A State is eligible to receive a grant under subsection (a)(1) only if the State submits to the Secretary, at such time and in such form as the Secretary may require, an application containing— "(1) assurances that the State—
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