42 U.S.C. § 1395uu — Payments to promote closing or conversion of underutilized hospital facilities

(a) Transitional allowances and procedures Any hospital may apply to the Secretary for a transitional allowance under this subchapter for closing or converting an underutilized hospital facility. The application must use the form and include the data and information the Secretary requires. Before a facility actually closes or converts, the Secretary may also create procedures that let a hospital find out whether it will qualify for a transitional allowance for that closure or conversion. This section does not define the terms “hospital,” “underutilized hospital facility,” or “transitional allowance.” (b) Costs that may be treated as transitional allowances; required findings After considering an application under subsection (a), the Secretary may include an amount in the hospital’s reasonable cost for purposes of payments under this subchapter. This amount is called a “transitional allowance” in this section, but only if the Secretary finds all the required facts below. (1) The hospital’s closure or conversion must meet all three conditions: (A) The closure or conversion was formally started after September 30, 1981. (B) It is expected to benefit the program under this subchapter in at least one of these ways: (i) It eliminates excess bed capacity. (ii) It stops an underutilized service for which enough alternative sources exist. (iii) It replaces the underutilized service with another service that is needed in the area. (C) It is consistent with the findings of an appropriate health-planning agency and with any applicable State program for reducing the number of hospital beds in the State. (2) If the hospital is closing completely, both of these additional conditions must be met: (A) The hospital is a private nonprofit hospital or a local governmental hospital. (B) The closure is not being done to replace the hospital. (c) Factors that determine the transitional allowance (1) Each transitional allowance must have a reasonable connection to the facility’s prior or expected use under this subchapter. It must take into account the following: (A) For a facility conversion or closure other than a hospital’s complete closure: (i) If the hospital is private nonprofit or local governmental, the allowance must recognize the part of the hospital’s costs tied to the facility’s capital assets. Those assets must already have been counted in determining reasonable cost for the payment amount under this subchapter. (ii) For any hospital, the allowance must recognize increases in operating costs related to the conversion or closure, but only to the extent those costs are higher than the amounts ordinarily reimbursable under this subchapter. (B) For a hospital’s complete closure, the allowance must recognize the unpaid part of actual debt obligations that were previously recognized as reasonable for reimbursement under this subchapter. The hospital’s salvage value must be subtracted. (2) The Secretary must specify the period for the transitional allowance. The period may not be longer than 20 years. However, for a complete closure described in paragraph (1)(B), the Secretary may provide one lump-sum allowance if the Secretary decides that a one-time payment would be more efficient and economical. (3) The allowance begins on the date the Secretary sets. That date cannot be earlier than the date when the relevant closure or conversion is completed. (4) The allowance is not counted when applying the limits on costs recognized as reasonable under the third sentence of section 1395x(v)(1)(A) and section 1395x(v)(1)(L)(i) of this title. It also is not counted when deciding whether reasonable cost is greater than customary charges for a service, for purposes of deciding the amount paid to a provider under sections 1395f(b) and 1395l(a)(2) of this title. This section does not define the terms “reasonable cost,” “capital assets,” “operating costs,” “salvage value,” “actual debt obligations,” “customary charges,” or “provider.” (d) Hearing to review a determination If a hospital is dissatisfied with the Secretary’s decision on its application under this section, it may request an informal or formal hearing. The Secretary decides which type of hearing will be held. The hospital must file the request in the form and within the time period set by the Secretary. The Secretary must make a final decision on the application within 30 days after the hearing’s last day. This section does not define the terms “informal hearing” or “formal hearing.”