(a) Pursuant to section 368-e of the Social Services Law, the department shall review claims for expenditures made by counties and the City of New York for medical care, services and supplies furnished to pre-school children with handicapping conditions or pre-school children suspected of having handicapping conditions, as defined in section 4401(1) of the Education Law.

1. (1) Payment to counties and cities. Payment for such medical care, services and supplies furnished to pre-school children described in subdivision (a) of this section, which would otherwise qualify for reimbursement under title 11 of article 5 of the Social Services Law and the regulations of the department, shall be made in accordance with fees established by the department and approved by the Director of the Budget, to the county or city which furnished the care, services or supplies, either directly or by contract.
2. (2) Payment to clinics or diagnostic and treatment centers. Any clinic or diagnostic and treatment center licensed under article 28 of the Public Health Law, or article 16 or 31 of the Mental Hygiene Law, which submitted a claim for such reimbursement payments on or before June 30, 1995, is authorized to directly submit such claims for medical care, services or supplies furnished on or before June 30, 1997.

(b) Payment.