PUBLIC LAW 97-35—AUG. 13, 1981 (iv) by striking out "each skilled nursing or intermediate care facility" and inserting in lieu thereof "each hospital, skilled nursing facility, and intermediate care facility"; and (C) by redesignating subparagraphs (E) and (F) as subparagraphs (A) and (B), respectively. (2) Section 1902(a)(20) of such Act is amended— (A) by inserting "and" at the end of subparagraph (B); (B) by striking out "and" at the end of subparagraph (C); and (C) by striking out subparagraph (D). (b)(1) Subsection (h) of section 1902 of such Act is repealed. (2) The amendment made by paragraph (1) shall not apply with respect to services furnished before the date the Secretary of Health and Human Services first promulgates and has in effect final regulations (on an interim or other basis) to carry out section 1902(a)(13)(A) of the Social Security Act (as amended by this subtitle). (c) Part A of title XI of such Act is amended by adding after section 1134 the following new section:
95 STAT. 809
42 USC 1396a.
42 USC 1396a note.
DEVELOPMENT OF MODEL PROSPECTIVE RATE METHODOLOGY
"SEC. 1135. (a) The Secretary shall develop a model svstem or 42 USC i320b-5. systems for the payment of hospitals for inpatient hospital services on a prospective basis which may be applied for reimbursement of hospitals under title XVIII or under a State plan approved under title 42 USC 1395, XIX. "(b) The Secretary shall report to the Congress on the development 1396. of such system or systems not later than July 31, 1982.". REMOVAL OF MEDICAID REASONABLE CHARGE LIMITATION
SEC. 2174. (a) Section 1902(a)(30) of the Social Security Act is amended by striking out "(including payments" and all that follows through "reasonable charges" and inserting in lieu thereof "are". (b) Section 1903(i) of such Act is amended by striking out paragraph (1). (c) The amendments made by this section shall apply to services furnished on or after October 1, 1981.
42 USC I396a. 42 USC 1396b. Effective date. 42 USC 1396a note.
INAPPLICABILITY AND WAIVER OF FREEDOM-OF-CHOICE AND OTHER STATE PLAN REQUIREMENTS
SEC. 2175. (a) Paragraph (23) of section 1902(a) of the Social Security Act is amended— (1) by inserting "except as provided in section 1915 and" after "(23)", and (2) by striking out all that follows the first semicolon. (b) Title XIX of the Social Security Act is amended by adding at the end the following new section: PROVISIONS RESPECTING INAPPLICABILITY AND WAIVER OF CERTAIN REQUIREMENTS OF THIS TITLE
" S E C 1915. (a) A State shall not be deemed to be out of compliance 42 USC I396n. with the requirements of paragraphs (1), (10), or (23) of section 1902(a) solely by reason of the fact that the State (or any political subdivision thereof)— "(1) has entered into— "(A) a contract with an organization which has agreed to provide care and services in addition to those offered under
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