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state; and

(B) whether during the term of the rate agreement, appropriations to the department are expected to be available in amounts adequate to pay the Medicaid rates proposed in the small facility rate agreement. (e) A prospective payment rate established under this section is not subject to 7 AAC 150.220, except as provided by (k) of this section and is not subject to 7 AAC 150.150. (f) Except as otherwise specified under ( l) of this section, the department will base the small facility prospective payment rate for a rate agreement made under (d) of this section on the rate calculated under 7 AAC 150.160 after the election of the small facility is exercised under (c) of this section. For the eligible small facilities’ fiscal year beginning in calendar year 2003, each small facility may

(1) terminate its current small facility rate agreement and enter into a new rate agreement in which the prospective payment rate is based on the rate calculated under 7 AAC 150.160, using fiscal year 2000 as the base year for facilities whose fiscal year ends on December 31, and using fiscal year 2001 as the base year for all other facilities; or

(2) enter into a rate agreement in which the prospective payment rate based on the rate calculated under 7 AAC 150.160, using fiscal year 2000 as the base year for facilities whose fiscal year ends on December 31, and using fiscal year 2001 as the base year for all other facilities. (g) The first year payment rate established under a rate agreement made under (g) of this section will be calculated as follows, except that the adjustment factors identified in 7 AAC 150.150 will not be applied:

(1) the first year payment rate for inpatient acute care services will be expressed as a per-day rate calculated under 7 AAC 150.160(b); for each complete fiscal year of the small facility that begins during the period after the first payment year of the rate agreement made under (d) of this section and that ends at the expiration of the rate agreement, the first year payment rate will be increased by updating the noncapital portion of the payment rate annually at the rate of three percent per year and by updating the capital portion of the payment rate annually at the rate of 1.1 percent per year; for state fiscal year 2018, the department will not apply the rate increases described in this paragraph;

(2) a prospective payment rate for all outpatient acute care services will be expressed as the percentage of charges component calculated under 7 AAC 150.160(c);

(3) a first year payment rate for long-term care will be expressed as a per-day rate as calculated in 7 AAC 150.160(g); for each complete fiscal year of the small facility that begins during the period after the first payment year of the rate agreement made under (d) of this section and that ends at the expiration of the rate agreement, the first year payment rate will be increased by updating the noncapital portion of the payment rate annually at the rate of three percent per year and by updating the capital portion of the payment rate annually at the rate of 1.1 percent per year;