(b) Notwithstanding any provision of law to the contrary, and any rule issued by the state agency, any rural hospital that was formerly owned and operated by the county but now is owned by a nonprofit multi-hospital chain owning two or more rural hospitals, that is eligible in the rural health plan for, but not currently designated as, a critical access hospital and currently have one to twenty-five nursing beds, may apply for a certificate of need to convert up to sixteen beds of existing licensed acute care beds to nursing beds for certification by both medicare and medicaid for reimbursement purposes, provided that the following conditions are met:
(1) There is no overall increase in the bed capacity of the hospital; one acute care bed is converted to one dually certified medicare and medicaid nursing bed.
(2) All converted acute care beds shall be permanently deleted from the acute care bed compliment of the hospital, which may not thereafter add, by conversion or otherwise, acute care beds to its bed compliment without satisfying the requirements of subdivision (4), subsection (b), section three of this article, for which purposes the 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 as found in subsection (e), section two of this article.
(3) After the conversion, the hospital shall have no more than fifty licensed acute care beds.
(4) The hospital shall meet all federal and state licensing requirements for the provisions of skilled nursing services. Additionally, all skilled nursing beds created under this exemption shall be located in distinct long-term care units in a previously constructed part of the hospital that can be used for that purpose.
(5) Nothing in this section negatively affects the rights of inspection and certification which are elsewhere required by federal law or regulations.