104 STAT. 1388-72 PUBLIC LAW 101-508 —NOV. 5, 1990 (2) EXEMPTION FOR RURAL PRIMARY CARE HOSPITALS. —Section 1861(v)(l)(S)(ii)(II) (42 U.S.C. 1395x(v)(l)(S)(ii)(II)) is amended by striking "1886(d)(5)(D)(iii)). " and inserting "1886(d)(5)(D)(iii) or a rural primary care hospital (as defined in section 1861(mm)(l))." (b) REDUCTION IN REASONABLE COSTS OF HOSPITAL OUTPATIENT SERVICES (1)" IN GENERAL.— Section 1861(v)(l)(S)(ii) (42 U.S.C. 1395x(v)(l)(S)(ii)) is amended— (A) in subclause (II)— (i) by striking "Subclause (I)" and inserting "Subclauses (I) and (II)", and (ii) by striking "capital-related costs of any hospital" and inserting "costs of hospital outpatient services provided by any hospital"; (B) in subclause (III)— (i) by striking "subclause (I)" and inserting "subclauses (I) and (II)", and (ii) by striking "capital-related" and inserting "the"; (C) by redesignating subclauses (II) and (III) as subclauses (III) and (IV); and (D) by inserting after subclause (I) the following new subclause: "(II) The Secretary shall reduce the reasonable cost of outpatient hospital services (other than the capital-related costs of such services) otherwise determined pursuant to section 1833(a)(2)(B)(i)(I) by 5.8 percent for payments attributable to portions of cost reporting periods occurring during fiscal years 1991, 1992, 1993, 1994, or 1995. ". 42 USC 1320b-5 (2) PROSPECTIVE PAYMENT SYSTEM FOR HOSPITAL OUTPATIENT note. SERVICES. — (A) DEVELOPMENT OF PROPOSAL. — The Secretary of Health and Human Services shall develop a proposal to replace the current system under which payment is made for hospital outpatient services under title XVIII of the Social Security Act with a system under which such payments would be made on the basis of prospectively determined rates. In developing any proposal under this paragraph, the Secretary shall consider— (i) the need to provide for appropriate limits on increases in expenditures under the medicare program; (ii) the need to adjust prospectively determined rates to account for changes in a hospital's outpatient case mix, severity of illness of patients, volume of cases, and the development of new technologies and standards of medical practice; (iii) providing hospitals with incentives to control the costs of providing outpatient services; (iv) the feasibility and appropriateness of including payment for outpatient services not currently paid on a cost-related basis under the medicare program (including clinical diagnostic laboratory tests and dialysis services) in the system; (v) the need to increase payments under the system to hospitals that treat a disproportionate share of lowincome patients, teaching hospitals, and hospitals located in geographic areas with high wages and wagerelated costs;
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