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(II) Actual construction, renova-
tion or demolition for the long-term 
care hospital has begun and the hos-
pital has expended, before the date of 
the enactment of this Act, at least 10 
percent of the estimated cost of the 
project (or, if less, $2,500,000). 
(III) A certificate of need has 
been approved in a State where one is 
required or other necessary approvals 
from appropriate State agencies have 
been received for the operation of the 
hospital. 
(IV) The hospital documents 
that, within 3 months after the date 
of the enactment of this Act, it is 
within a 6-month long-term care hos-
pital demonstration period required by 
section 412.23(e)(1)–(3) of title 42, 
Code of Federal Regulations, to dem-
onstrate that it has a greater than 25 
day average length of stay. 
(5) NO APPLICATION OF 25 PERCENT PATIENT 
THRESHOLD
PAYMENT
ADJUSTMENT
TO
FREE-
STANDING AND GRANDFATHERED LTCHS.—The Sec-
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retary shall not apply, during the 5-year period be-
ginning on the date of the enactment of this Act, 
section 412.536 of title 42, Code of Federal Regula-
tions, or any similar provision, to freestanding long- 
term care hospitals and the Secretary shall not apply 
such section or section 412.534 of title 42, Code of 
Federal Regulations, or any similar provisions, to a 
long-term care hospital identified by section 4417(a) 
of the Balanced Budget Act of 1997 (Public Law 
105–33). A long-term care hospital identified by 
such section 4417(a) shall be deemed to be a free-
standing long-term care hospital for the purpose of 
this section. Section 412.536 of title 42, Code of 
Federal Regulations, shall be void and of no effect. 
(6) PAYMENT
FOR
HOSPITALS-WITHIN-HOS-
PITALS.— 
(A) IN GENERAL.—Payments to an appli-
cable long-term care hospital or satellite facility 
which is located in a rural area or which is co- 
located with an urban single or MSA dominant 
hospital under paragraphs (d)(1), (e)(1), and 
(e)(4) of section 412.534 of title 42, Code of 
Federal Regulations, shall not be subject to any 
payment adjustment under such section if no 
more than 75 percent of the hospital’s Medicare 
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discharges (other than discharges described in 
paragraph (d)(2) or (e)(3) of such section) are 
admitted from a co-located hospital. 
(B) CO-LOCATED LONG-TERM CARE HOS-
PITALS AND SATELLITE FACILITIES.— 
(i) IN GENERAL.—Payment to an ap-
plicable long-term care hospital or satellite 
facility which is co-located with another 
hospital shall not be subject to any pay-
ment adjustment under section 412.534 of 
title 42, Code of Federal Regulations, if no 
more than 50 percent of the hospital’s 
Medicare discharges (other than discharges 
described in section 412.534(c)(3) of such 
title) are admitted from a co-located hos-
pital. 
(ii) APPLICABLE
LONG-TERM
CARE 
HOSPITAL
OR
SATELLITE
FACILITY
DE-
FINED.—In this paragraph, the term ‘‘ap-
plicable long-term care hospital or satellite 
facility’’ means a hospital or satellite facil-
ity that is subject to the transition rules 
under section 412.534(g) of title 42, Code 
of Federal Regulations. 
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(C) 
EFFECTIVE
DATE.—Subparagraphs 
(A) and (B) shall apply to discharges occurring 
on or after October 1, 2007, and before October 
1, 2012. 
(7) NO
APPLICATION
OF
VERY
SHORT-STAY 
OUTLIER POLICY.—The Secretary shall not apply, 
during the 5-year period beginning on the date of 
the enactment of this Act, the amendments finalized 
on May 11, 2007 (72 Federal Register 26904) made 
to the short-stay outlier payment provision for long- 
term 
care 
hospitals 
contained 
in 
section 
412.529(c)(3)(i) of title 42, Code of Federal Regula-
tions, or any similar provision. 
(8) NO APPLICATION OF ONE TIME ADJUST-
MENT TO STANDARD AMOUNT.—The Secretary shall 
not, during the 5-year period beginning on the date 
of the enactment of this Act, make the one-time pro-
spective adjustment to long-term care hospital pro-
spective payment rates provided for in section 
412.523(d)(3) of title 42, Code of Federal Regula-
tions, or any similar provision. 
(c) SEPARATE CLASSIFICATION FOR CERTAIN LONG- 
STAY CANCER HOSPITALS.— 
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(1) IN GENERAL.—Subsection (d)(1)(B) of sec-
tion 1886 of the Social Security Act (42 U.S.C. 
1395ww) is amended— 
(A) in clause (iv)— 
(i) in subclause (I), by striking 
‘‘(iv)(I)’’ and inserting ‘‘(iv)’’ and by strik-
ing ‘‘or’’ at the end; and 
(ii) in subclause (II)— 
(I) by striking ‘‘, or’’ at the end 
and inserting a semicolon; and 
(II) by redesignating such sub-
clause as clause (vi) and by moving it 
to immediately follow clause (v); and 
(B) in clause (v), by striking the semicolon 
at the end and inserting ‘‘, or’’. 
(2) CONFORMING
PAYMENT
REFERENCES.— 
Subsection (b) of such section is amended— 
(A) in paragraph (2)(E)(ii), by adding at 
the end the following new subclause: 
‘‘(III) Hospitals described in clause (vi) of such 
subsection.’’; 
(B) in paragraph (3)(F)(iii), by adding at 
the end the following new subclause: 
‘‘(VI) Hospitals described in clause (vi) of such 
subsection.’’; 
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(C) in paragraphs (3)(G)(ii), (3)(H)(i), 
and (3)(H)(ii)(I), by inserting ‘‘or (vi)’’ after 
‘‘clause (iv)’’ each place it appears; 
(D) in paragraph (3)(H)(iv), by adding at 
the end the following new subclause: 
‘‘(IV) Hospitals described in clause (vi) of such 
subsection.’’; 
(E) in paragraph (3)(J), by striking ‘‘sub-
section (d)(1)(B)(iv)’’ and inserting ‘‘clause (iv) 
or (vi) of subsection (d)(1)(B)’’; and 
(F) in paragraph (7)(B), by adding at the 
end the following new clause: 
‘‘(iv) Hospitals described in clause (vi) of such 
subsection.’’. 
(3) ADDITIONAL CONFORMING AMENDMENTS.— 
The second sentence of subsection (d)(1)(B) of such 
section is amended— 
(A) by inserting ‘‘(as in effect as of such 
date)’’ after ‘‘clause (iv)’’; and 
(B) by inserting ‘‘(or, in the case of a hos-
pital classified under clause (iv)(II), as so in ef-
fect, shall be classified under clause (vi) on and 
after the effective date of such clause)’’ after 
‘‘so classified’’. 
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(4) IN GENERAL.—In the case of a hospital 
that is classified under clause (iv)(II) of section 
1886(d)(1)(B) of the Social Security Act imme-
diately before the date of the enactment of this Act 
and which is classified under clause (vi) of such sec-
tion after such date of enactment, payments under 
section 1886 of such Act for cost reporting periods 
beginning after the date of the enactment of this Act 
shall be based upon payment rates in effect for the 
cost reporting period for such hospital beginning 
during fiscal year 2001, increased for each suc-
ceeding cost reporting period (beginning before the 
date of the enactment of this Act) by the applicable 
percentage increase under section 1886(b)(3)(B)(ii) 
of such Act. 
(5) CLARIFICATION
OF
TREATMENT
OF
SAT-
ELLITE
FACILITIES
AND
REMOTE
LOCATIONS.—A 
long-stay cancer hospital described in section 
1886(d)(1)(B)(vi) of the Social Security Act, as des-
ignated under paragraph (1), shall include satellites 
or remote site locations for such hospital established 
before or after the date of the enactment of this Act 
without regard to section 412.22(h)(2)(i) of title 42, 
Code of Federal Regulations, if the provider-based 
requirements under section 413.65 of such title, ap-
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