PUBLIC LAW 106-113—APPENDIX F 113 STAT. 1501A-331 SEC. 122. ENHANCED PAYMENTS FOR LONG-TERM CARE AND PSY- CHIATRIC HOSPITALS UNTIL DEVELOPMENT OF PROSPECTIVE PAYMENT SYSTEMS FOR THOSE HOS- PITALS. Section 1886(b)(2) (42 U.S.C. 1395ww(b)(2)) is amended— (1) in subparagraph (A), by striking "In addition to" and inserting "Except as provided in subparagraph (E), in addition to"; and (2) by adding at the end the following new subparagraph: "(E)(i) In the case of an eligible hospital that is a hospital or unit that is within a class of hospital described in clause (ii) with a 12-month cost reporting period beginning before the enactment of this subparagraph, in determining the amount of the increase under subparagraph (A), the Secretary shall substitute for the percentage of the target amount applicable under subparagraph (A)(ii)— "(I) for a cost reporting period beginning on or after October 1, 2000, and before September 30, 2001, 1.5 percent; and "(II) for a cost reporting period beginning on or after October 1, 2001, and before September 30, 2002, 2 percent. "(ii) For purposes of clause (i), each of the following shall be treated as a separate class of hospital: "(I) Hospitals described in clause (i) of subsection (d)(1)(B) and psychiatric units described in the matter following clause (v) of such subsection. "(II) Hospitals described in clause (iv) of such subsection.". SEC. 123. PER DISCHARGE PROSPECTIVE PAYMENT SYSTEM FOR LONG-TERM CARE HOSPITALS. (a) DEVELOPMENT OF SYSTEM.— (1) IN GENERAL. —The Secretary of Health and Human Services shall develop a per discharge prospective payment system for payment for inpatient hospital services of longterm care hospitals described in section 1886(d)(l)(B)(iv) of the Social Security Act (42 U.S.C. 1395ww(d)(l)(B)(iv)) under the medicare program. Such system shall include an adequate patient classification system that is based on diagnosis-related groups (DRGs) and that reflects the differences in patient resource use and costs, and shall maintain budget neutrality. (2) COLLECTION OF DATA AND EVALUATION. — In developing the system described in paragraph (1), the Secretary may require such long-term care hospitals to submit such information to the Secretary as the Secretary may require to develop the system. (b) REPORT.— Not later than October 1, 2001, the Secretary shall submit to the appropriate committees of Congress a report that includes a description of the system developed under subsection (a)(1). (c) IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.— Notwithstanding section 1886(b)(3) of the Social Security Act (42 U.S.C. 1395ww(b)(3)), the Secretary shall provide, for cost reporting periods beginning on or after October 1, 2002, for pa3Tnents for inpatient hospital services furnished by long-term care hospitals under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) in accordance with the system described in subsection (a).