Title III, SEC. 3051. TRANSITIONAL PAYMENTS TO INSTITUTIONS. (a) Payments Regarding Effects of Subpart B Allocations. (1) In general. For each of the calendar years 1998 through 2001, in the case of any eligible institution that submits to the Secretary an application for the year involved in accordance with subsection (d), the Secretary shall make payments for such year to the institution for the purpose specified in subsection (c). The Secretary shall make the payments in an amount determined in accordance with subsection (e), and may administer the payments as a contract, grant, or cooperative agreement. (2) Applicable years. Payments under paragraph (1) may not be made before calendar year 1998, except that the Secretary may make such payments before such year to eligible institutions in any State that has become a participating State under title I. (b) Eligible Institution. For purposes of this section, the term ``eligible institution'', with respect to a calendar year, means an institution (1) in which there are one or more programs that (A) are approved physician training programs; and (B) are receiving payments under section 3031 for such year; and (2) whose number of speciality positions (in the medical specialities with respect to which such payments are made) is below the number of such positions at the institution for academic year 1993-94 as a result of allocations under subpart B. (c) Purpose of Payments. The purpose of payments under subsection (a) is to assist an eligible institution with the costs of operation. A funding agreement for such payments is that the institution will expend the payments only for such purpose. (d) Application for Payments. For purposes of subsection (a), an application for payments under such subsection is in accordance with this subsection if the institution involved submits the application not later than the date specified by the Secretary; the institution has cooperated with the approved physician training programs of the institution in meeting the condition described in section 3032(b); the application contains each funding agreement described in this section and provides assurances of compliance with such agreements satisfactory to the Secretary; and the application is in such form, is made in such manner, and contains such agreements, assurances, and information as the Secretary determines to be necessary to carry out this section. (e) Amount of Payments. (1) In general. Subject to the annual health professions workforce account determined by the Secretary under section 3033(a) for the calendar year involved, the amount of payments required in subsection (a) to be made to an eligible institution for the calendar year is the product of the amount determined under paragraph (2) and the applicable percentage specified in paragraph (3). (2) Number of specialty positions lost; national average salary. For purposes of paragraph (1), the amount determined under this paragraph for an eligible institution for the calendar year involved is the product of (A) an amount equal to the number of full-time equivalent specialty positions lost; and (B) the national average salary of training participants. (3) Applicable percentage. For purposes of paragraph (1), the applicable percentage for a calendar year is the following, as applicable to such year: (A) For calendar year 1998, 100 percent. (B) For calendar year 1999, 75 percent. (C) For calendar year 2000, 50 percent. (D) For calendar year 2001, 25 percent. (4) Determination of specialty positions lost. (A) For purposes of this section, the number of specialty positions lost, with respect to a calendar year, is the difference between (i) the number of specialty positions described in subparagraph (B) that are estimated for the institution involved for the academic year beginning in such calendar year; and (ii) the number of such specialty positions at the institution for academic year 1993-94. (B) For purposes of subparagraph (A), the specialty positions described in this subparagraph are specialty positions in the medical specialities with respect to which payments under section 3031 are made to programs of the institution involved. (5) Additional provision regarding national average salary. (A) The Secretary shall determine, for academic year 1992-93, an amount equal to the national average described in paragraph (2)(B). The national average applicable under such paragraph for a calendar year is, subject to subparagraph (B), the amount determined under the preceding sentence increased by an amount necessary to offset the effects of health care inflation occurring since academic year 1992-93, as determined through use of the general health care inflation factors for such years (or if there is no such factor for a year, the consumer price index for the year). (B) The national average determined under subparagraph (A) and applicable to a calendar year shall, in the case of the eligible institution involved, be adjusted by a factor to reflect regional differences in the applicable wage and wage-related costs.