
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC1395uu]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
        SUBCHAPTER XVIII--HEALTH INSURANCE FOR AGED AND DISABLED
 
                    Part D--Miscellaneous Provisions
 
Sec. 1395uu. Payments to promote closing or conversion of 
        underutilized hospital facilities
        

(a) Transitional allowances; procedures applicable

    Any hospital may file an application with the Secretary (in such 
form and including such data and information as the Secretary may 
require) for establishment of a transitional allowance under this 
subchapter with respect to the closing or conversion of an underutilized 
hospital facility. The Secretary also may establish procedures, 
consistent with this section, by which a hospital, before undergoing an 
actual closure or conversion of a hospital facility, can have a 
determination made as to whether or not it will be eligible for a 
transitional allowance under this section with respect to such closure 
or conversion.

(b) Allowable costs as transitional allowances; findings and 
        determinations

    If the Secretary finds, after consideration of an application under 
subsection (a) of this section, that--
        (1) the hospital's closure or conversion--
            (A) is formally initiated after September 30, 1981,
            (B) is expected to benefit the program under this subchapter 
        by (i) eliminating excess bed capacity, (ii) discontinuing an 
        underutilized service for which there are adequate alternative 
        sources, or (iii) substituting for the underutilized service 
        some other service which is needed in the area, and
            (C) is consistent with the findings of an appropriate health 
        planning agency and with any applicable State program for 
        reduction in the number of hospital beds in the State, and

        (2) in the case of a complete closure of a hospital--
            (A) the hospital is a private nonprofit hospital or a local 
        governmental hospital, and
            (B) the closure is not for replacement of the hospital,

the Secretary may include as an allowable cost in the hospital's 
reasonable cost (for the purpose of making payments to the hospital 
under this subchapter) an amount (in this section referred to as a 
``transitional allowance''), as provided in subsection (c) of this 
section.

(c) Factors determinative of transitional allowance

    (1) Each transitional allowance established shall be reasonably 
related to the prior or prospective use of the facility involved under 
this subchapter and shall recognize--
        (A) in the case of a facility conversion or closure (other than 
    a complete closure of a hospital)--
            (i) in the case of a private nonprofit or local governmental 
        hospital, that portion of the hospital's costs attributable to 
        capital assets of the facility which have been taken into 
        account in determining reasonable cost for purposes of 
        determining the amount of payment to the hospital under this 
        subchapter, and
            (ii) in the case of any hospital, transitional operating 
        cost increases related to the conversion or closure to the 
        extent that such operating costs exceed amounts ordinarily 
        reimbursable under this subchapter; and

        (B) in the case of complete closure of a hospital, the 
    outstanding portion of actual debt obligations previously recognized 
    as reasonable for purposes of reimbursement under this subchapter, 
    less any salvage value of the hospital.

    (2) A transitional allowance shall be for a period (not to exceed 20 
years) specified by the Secretary, except that, in the case of a 
complete closure described in paragraph (1)(B), the Secretary may 
provide for a lump-sum allowance where the Secretary determines that 
such a one-time allowance is more efficient and economical.
    (3) A transitional allowance shall take effect on a date established 
by the Secretary, but not earlier than the date of completion of the 
closure or conversion concerned.
    (4) A transitional allowance shall not be considered in applying the 
limits to costs recognized as reasonable pursuant to the third sentence 
of subparagraph (A) and subparagraph (L)(i) of section 1395x(v)(1) of 
this title, or in determining whether the reasonable cost exceeds the 
customary charges for a service for purposes of determining the amount 
to be paid to a provider pursuant to sections 1395f(b) and 1395l(a)(2) 
of this title.

(d) Hearing to review determination

    A hospital dissatisfied with a determination of the Secretary on its 
application under this section may obtain an informal or formal hearing, 
at the discretion of the Secretary, by filing (in such form and within 
such time period as the Secretary establishes) a request for such a 
hearing. The Secretary shall make a final determination on such 
application within 30 days after the last day of such hearing.

(Aug. 14, 1935, ch. 531, title XVIII, Sec. 1884, as added Pub. L. 97-35, 
title XXI, Sec. 2101(a)[(1)], Aug. 13, 1981, 95 Stat. 785; amended Pub. 
L. 97-248, title I, Sec. 128(a)(6), Sept. 3, 1982, 96 Stat. 366.)


                               Amendments

    1982--Subsec. (d). Pub. L. 97-248 redesignated second subsec. (c), 
relating to hearing to review determination, as subsec. (d).


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-248 effective as if originally included as 
part of this section as this section was enacted by the Omnibus Budget 
Reconciliation Act of 1981, Pub. L. 97-35, see section 128(e)(2) of Pub. 
L. 97-248, set out as a note under section 1395x of this title.


                             Effective Date

    Section 2101(c) of Pub. L. 97-35 provided that: ``The amendment made 
by subsection (a) [enacting this section and amending section 1396b of 
this title] shall apply only to services furnished by a hospital during 
any accounting year beginning on or after October 1, 1981.''


  Payments To Promote Closure and Conversion of Underutilized Hospital 
                               Facilities

    Pub. L. 98-369, div. B, title III, Sec. 2353, July 18, 1984, 98 
Stat. 1099, directed Secretary of Health and Human Services to carry out 
a study and report to Congress prior to Mar. 31, 1985, on modifications 
required in this section in order to conform the closure and conversion 
program authorized in that section to the prospective payment system 
under section 1395ww(d) of this title, so as to provide assistance to 
hospitals which may have particular problems in converting facilities 
(or parts thereof) from acute care to less intensive care or in closing 
facilities (or parts thereof), such report to include recommendations as 
to how, and whether, implementation of this section as modified may 
result in reductions in total hospital inpatient costs and total 
expenditures under this subchapter, and prohibited from implementing 
this section prior to Mar. 31, 1985.


  Establishment and Evaluation of Transitional Allowances; Report and 
                       Recommendations to Congress

    Section 2101(b) of Pub. L. 97-35 prohibited Secretary of Health and 
Human Services from establishing under this section transitional 
allowances with respect to more than 50 hospitals prior to Jan. 1, 1984, 
and directed Secretary to evaluate effectiveness of program of 
transitional allowances established under this section and, not later 
than Jan. 1, 1983, report to Congress on such evaluation and include in 
such report such recommendations for such legislative changes as deemed 
appropriate.

                  Section Referred to in Other Sections

    This section is referred to in section 1396b of this title.
