114 STAT. 2763A-576 PUBLIC LAW 106-554—APPENDIX F 447.272, 447.304, and 447.321 of title 42, Code of Federal Regulations (and any other section of part 447 of title 42, Code of Federal Regulations that the Secretary determines is appropriate), a final regulation based on the proposed rule announced on October 5, 2000, that— (1) modifies the upper payment limit test applied to State medicaid spending for inpatient hospital services, outpatient hospital services, nursing facility services, intermediate care facility services for the mentally retarded, and clinic services by applying an aggregate upper payment limit to payments made to government facilities that are not State-owned or operated facilities; and (2) provides for a transition period in accordance with subsection (b). (b) TRANSITION PERIOD.— (1) IN GENERAL. —The final regulation required under subsection (a) shall provide that, with respect to a State described in paragraph (3), the State shall be considered to be in compliance with the final regulation required under subsection (a) so long as, for each State fiscal year during the period described in paragraph (4), the State reduces payments under a State medicaid plan pa5mfient provision or methodology described in paragraph (3) (including a payment provision or methodology described in that paragraph that was approved under a waiver of such plan), or reduces the actual dollar payment levels described in paragraph (3)(B), so that the amount of the pay- ments that would otherwise have been made under such provision, methodology, or payment levels by the State for any State fiscal year during such period is reduced by 15 percent in the first such State fiscal year, and by an additional 15 percent in each of the next 5 State fiscal years. (2) REQUIREMENT. —Notwithstanding paragraph (1), the final regulation required under subsection (a) shall provide that, for any period (or portion of a period) that occurs on or after October 1, 2008, medicaid payments made by a State described in paragraph (3) shall comply with such final regulation. (3) STATE DESCRIBED. —^A State described in this paragraph is a State with a State medicaid plan payment provision or methodology (including a payment provision or methodology approved under a waiver of such plan) which— (A) was approved, deemed to have been approved, or was in effect on or before October 1, 1992 (including any subsequent amendments or successor provisions or methodologies and whether or not a State plan amendment was made to carry out such provision or methodology after such date) or under which claims for Federal financial participation were filed and paid on or before such date; and (B) provides for payments that are in excess of the upper pa5anent limit test established under the final regulation required under subsection (a) (or which would be noncompliant with such final regulation if the actual dollar payment levels made under the payment provision or methodology in the State fiscal year which begins during 1999 were continued).
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