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PUBLIC LAW 98-21—APR. 20, 1983 97 STAT. 151 been made under this title not using such system. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining payment amounts at no more than a specified percentage increase above the payment amounts in a base period, the State has the option of applying such test (for inpatient hospital services under part A) on an aggregate payment basis or on the basis of the amount of payment per inpatient discharge or admis- sion. If the Secretary determines that the conditions described in subparagraph (C) are based on maintaining aggregate payment amounts below a national average percentage increase in total payments under part A for inpatient hospital services, the Secretary cannot deny the application of a State under this subsection on the ground that the State's rate of increase in such payments for such services must be less than such national average rate of increase." (2) Subsection (c)(3) of such section is amended— (A) by striking out "requirement of paragraph (1)(A)" and inserting in lieu thereof "requirements of subparagraphs (A), (D), and (E) of paragraph (1) and, if applicable, the requirements of paragraph (5),", and (B) by inserting "(or, if applicable, in paragraph (5))" in subparagraph (B) after "paragraph (1)". (3) Subsection (c) of such section is further amended by adding at the end the following new paragraphs: "(4) The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if— "(A) the requirements of subparagraphs (A), (B), (C), and (D) of paragraph (1) have been met with respect to the system, and "(B) with respect to that system a waiver of certain require- ments of title XVIII of the Social Security Act has been approved on or before (and which is in effect as of) the date of the enactment of the Social Security Amendments of 1983, pursuant to section 402(a) of the Social Security Amendments of 42 use I395b-i. 1967 or section 222(a) of the Social Security Amendments of 1972. With respect to a State system described in this paragraph, the Secretary shall judge the effectiveness of such system on the basis of its rate of increase or inflation in inpatient hospital payments for individuals under this title, as compared to the national rate of increase or inflation for such payments, with the State retaining the option to have the test applied on the basis of the aggregate pay- ment or payments per inpatient admission or discharge during the three cost reporting periods beginning on or after October 1, 1983, after which such test, at the option of the Secretary, shall no longer apply, and such State systems shall be treated in the same manner as under other waivers. "(5) The Secretary shall approve the request of a State under paragraph (1) with respect to a hospital reimbursement control system if— "(A) the requirements of subparagraphs (A), (B), (C), (D), and (E) of paragraph (1) have been met with respect to the system; "(B) the Secretary determines that the system— "(i) is operated directly by the State or by an entity designated pursuant to State law, "(ii) provides for payment of hospitals covered under the system under a methodology (which sets forth exceptions and adjustments, as well as any method for changes in the 42 use 1395. 42 use 1395b-l note.