16 7 13 1 closing, modifying, or charging usage of underutilized hos2 pital facilities which is expected to benefit the programs au3 thorized under title XVIII and title XIX by (i) eliminating 4 excess bed capacity, (ii) discontinuing an underutilized 5 service for which there are adequate alternative sources, or 6 (iii) substituting for the underutilized service some other service which is needed in the area and which is consistent 8 with the findings of an appropriate health planning agency. 9 "(3) A hospital which has carried out a qualified con10 version and which continues in operation will be regarded 11 as having experienced a 'reimbursement detriment' (A) 12 to the extent that, solely because of the conversion there is a reduction in the aggregate reimbursement (but only to 14 the extent the capital was accepted as reasonable for pur15 poses of reimbursement) which is considered in determining 16 for payment purposes under title XVIII or title XIX to the 17 hospital the reasonable cost (as the term is used for purposes 18 of those titles) incurred by the hospital; (B) if the conver19 sion results, on an interim basis, in increased operating costs 20 to the extent that operating costs exceed amounts ordinarily 21 reimbursable under titles XVIII and XIX, or (C) in the 22 case of complete closure of a nonprofit, nongovernmental 23 (except local governmental) hospital, other than for re24 placement of the hospital to the extent of actual debt 25 obligations previously recognized as reasonable for reim 17 1 bursement, where the debt remains outstanding, less any 2 salvage value. 3 "(c) (1) Any hospital may file an application with the 4 Board (in a form and including data and information as 5 the Board, with the approval of the Secretary, may require) 6 for a transitional allowance with respect to any qualified 7 conversion which was formally initiated after December 31, 8 1977. The Board, with the approval of the Secretary, may 9 also establish procedures, consistent with this section, by 10 means of which a finding of a reimbursement detriment may 11 be made prior to the actual conversion. 12 "(2) The Board shall consider any application filed 13 by a hospital, and if the Board finds that— 14 15 16 17 18 "(A) the facility conversion is a qualified facility conversion, and "(B) the hospital is experiencing a reimbursement detriment because it carried out the qualified facility conversion, 19 the Board shall transmit to the Secretary its recommendation. 20 that the Secretary establish, a transitional allowance for the 21 hospital in amounts reasonably related to prior or prospec22 tive use of the facility under titles XVIII and XIX, and for a period, not to exceed twenty years, specified by the Board; 24 and, if the Board finds that the criteria in clauses (A) and 23 25 (B) are not met, it shall advise the Secretary not to estab 18 ilish a transitional allowance for that hospital. For an ap2 proved closure under subsection (b) (3) (C) the Board may 3 recommend or the Secretary may approve a lump-sum 4 payment in lieu of periodic allowances, where such payment 5 would constitute a more efficient and economic alternative. "(3) (A) The Board shall notify a hospital of its find 6 7 ings and recommendations. 8 "(B) A hospital dissatisfied with a recommendation 9 may obtain an informal or formal hearing at the discretion 10 of the Secretary, by filing (in the form and within a time 12 11 period established by the Secretary) a request for a hearing. "(4) (A) Within thirty days after receiving a recom13 mendation from the Board respecting a transitional allow14 ance or, if later, within thirty days after a hearing the Sec15 retary shall make a final determination whether, and if so 16 in what amount and for what period of time, a transitional 17 allowance will be granted to a hospital. A final determination 18 of the Secretary shall not be subject to judicial review. 19 "(B) The Secretary shall notify a hospital and any other 20 appropriate parties of the determination. 21 "(C) Any transitional allowance shall take effect on a 22 date prescribed by the Secretary, but not earlier than the 23 date of completion of the qualified facility conversion. A tran24 sitional allowance shall be included as an allowable cost item . 19 in determining the reasonable cost incurred by the hospital 2 in providing services for which payment is authorized under 3 this title": Provided, however, That the transitional allow 4 ance shall not be considered in applying limits to costs 5 recognized as reasonable pursuant to the third sentence of 6 section 1861 (v) (1) and section 1861 (aa) of this Act 7 or in determining the amount to be paid to a provider 8 pursuant to section 1814 (b), section 1833 (a) (2), section 9 1910 (i) (3), and section 506 (f) (3) of this Act.". 10 11 "(d) In determining the reasonable cost incurred by a hospital with respect to which payment is authorized 12 under a State plan approved under title V or title XIX, 13 any transitional allowance shall be included as an allowable 14 cost item. 15 "(e) (1) The Secretary shall not, prior to January 1, 16 1981, establish a transitional allowance for more than a total 17 of fifty hospitals. 18 "(2) On or before January 1, 1980, the Secretary shall 19 report to the Congress evaluating the effectiveness of the 20 program established under this section including appropriate 21 recommendations." 22 (b) The amendments made by subsection (a) shall 23 apply only to services furnished by a hospital or skilled 24 nursing facility for fiscal years beginning on and after the 22 1 Where the designated planning agencies do not unanimously 2 agree, the proposed expenditure shall be deemed disapproved; 3 where the designated planning agencies do not act to approve 4 or disapprove the proposed expenditure within one hundred 5 and eighty days of submission of request for approval the 6 proposed expenditure shall be deemed approved; any deemed 7 approval or disapproval shall be subject to review and 8 reversal by the Secretary following a request submitted to 9 him within sixty days of the deemed approval or disapproval, 10 for a review and reconsideration based upon the record. With 11 respect to any organization which is reimbursed on a per 12 capita, fixed fee, or negotiated rate basis, in determining the 13 Federal payments to be made under titles V, XVIII, and 14 XIX, the Secretary shall exclude an amount reasonably 15 equivalent to the amount which would otherwise be excluded 16 under this subsection if payment were made on other than a 17 per capita, fixed fee, or negotiated rate basis. 18 "(2) If the Secretary, after submitting the matters in19 volved to the advisory council, determines that an exclusion 20 of expenses related to any capital expenditure would dis21 courage the operation or expansion of any health care facility or health maintenance organization which has demonstrated 22 22 23 to his satisfaction proof of its capability to provide compre24 hensive health care services (including institutional services) 25 effectively and economically, or would be inconsistent with |