(b) Notwithstanding the provisions of subsection (h), section five of this article, and, further, notwithstanding the provisions of subsection (b), subdivision (4), section three of this article, the state agency shall adopt rules pursuant to section eight of this article, to exempt from review the conversion of acute care beds to skilled nursing care beds by a licensed hospital by the state department of health and human resources if the hospital meets the following conditions:
(1) It is located in a nonmetropolitan statistical area as defined by the bureau of census of the federal government;
(2) It has experienced an average occupancy rate of less than fifty percent for the twelve months preceding the date of request for this exemption; and
(3) The nursing home service area within which the hospital is located is under the bed ceiling as calculated by the thirty beds per thousand population formula as set forth in the long-term care chapter of the state health plan, except for the purposes of this article existing nursing home beds shall be used in the calculation.
(c) The state agency shall include in its rules requirements that:
(1) In converting beds, the hospital must change one acute care bed into one skilled nursing care bed;
(2) All acute care beds converted shall be permanently deleted from the hospital's acute-care bed complement and the hospital may not thereafter add, by conversion or otherwise, acute-care beds to its bed complement without satisfying the requirements of subsection (b), subdivision (4), section three of this article, for which purposes such an addition, whether by conversion or otherwise, shall be considered a substantial change to the bed capacity of the hospital notwithstanding the definition of that term found in subsection (ff), section two of this article;
(3) The hospital shall meet all applicable federal and state licensing requirements for the provisions of skilled nursing services including a requirement that all skilled care beds created under this exemption shall be located in distinct-part, long-term care units;
(4) No hospital is permitted to convert more than twenty-five percent of its licensed bed capacity in any twenty-four month period pursuant to this exemption; however, in the event that subsection (g), section five of this article, is repealed and to the extent that other methods of converting acute care beds are available under this article, the hospital may request certificate of need approval of such conversions; and
(5) The hospital shall undergo substantial compliance review of a conversion under this exemption under such terms and at such a time as set by the state agency in its rules.
(d) Nothing in this section negatively affects the rights of inspection and certification which are elsewhere required by federal law or regulations or by this code or duly adopted rule of an authorized state entity.