# Medicare Improvements for Patients and Providers Act of 2008/Title I/Subtitle D
## SUBTITLE D — PROVISIONS RELATING TO PART C
### Sec. 161. Phase-Out of Indirect Medical Education (IME).

    (a) In General.—
       Section 1853(k) of the Social Security Act (42 U.S.C. 1395w–23(k)) is amended—
          (1) in paragraph (1), in the matter preceding subparagraph (A), by striking ``paragraph (2)´´ and inserting ``paragraphs (2) and (4)´´; and
          (2) by adding at the end the following new paragraph:
             ``(4) Phase-out of the indirect costs of medical education from capitation rates.—
                ``(A) In general.—After determining the applicable amount for an area for a year under paragraph (1) (beginning with 2010), the Secretary shall adjust such applicable amount to exclude from such applicable amount the phase-in percentage (as defined in subparagraph (B)(i)) for the year of the Secretary's estimate of the standardized costs for payments under section 1886(d)(5)(B) in the area for the year. Any adjustment under the preceding sentence shall be made prior to the application of paragraph (2).
                ``(B) Percentages defined.—For purposes of this paragraph:
                   ``(i) Phase-in percentage.—The term ‘phase-in percentage’ means, for an area for a year, the ratio (expressed as a percentage, but in no case greater than 100 percent) of—
                      ``(I) the maximum cumulative adjustment percentage for the year (as defined in clause (ii)); to
                      ``(II) the standardized IME cost percentage (as defined in clause (iii)) for the area and year.
                   ``(ii) Maximum cumulative adjustment percentage.—The term ‘maximum cumulative adjustment percentage’ means, for—
                      ``(I) 2010, 0.60 percent; and
                      ``(II) a subsequent year, the maximum cumulative adjustment percentage for the previous year increased by 0.60 percentage points.
                   ``(iii) Standardized IME cost percentage.—The term ‘standardized IME cost percentage’ means, for an area for a year, the per capita costs for payments under section 1886(d)(5)(B) (expressed as a percentage of the fee-for-service amount specified in subparagraph (C)) for the area and the year.
                ``(C) Fee-for-service amount.—The fee-for-service amount specified in this subparagraph for an area for a year is the amount specified under subsection (c)(1)(D) for the area and the year.´´.
    (b) Excluding Adjustment from the Update.—
       Section 1853(k)(1)(B)(i) of the Social Security Act (42 U.S.C. 1395w–23(k)(1)(B)(i)) is amended by striking ``paragraph (2)´´ and inserting ``paragraphs (2) and (4)´´.
    (c) Hold Harmless for PACE Program Payments.—
       Section 1894(d) of the Social Security Act (42 U.S.C. 1395eee(d)) is amended by adding at the end the following new paragraph:
             ``(3) Capitation rates determined without regard to the phase-out of the indirect costs of medical education from the annual Medicare Advantage capitation rate.—Capitation amounts under this subsection shall be determined without regard to the application of section 1853(k)(4).´´.

### Sec. 162. Revisions to Requirements for Medicare Advantage Private Fee-for-Service Plans.

    (a) Requirements to Assure Access to Network Coverage.—
          (1) Individual Market.—
             Section 1852(d) of the Social Security Act (42 U.S.C. 1395w–22(d)) is amended—
                (A) in paragraph (4), in the second sentence, by striking ``The Secretary´´ and inserting ``Subject to paragraph (5), the Secretary´´; and
                (B) by adding at the end the following new paragraph:
                   ``(5) Requirement of certain nonemployer Medicare Advantage private fee-for-service plans to use contracts with providers.—
                      ``(A) In general.—For plan year 2011 and subsequent plan years, in the case of a Medicare Advantage private fee-for-service plan not described in paragraph (1) or (2) of section 1857(i) operating in a network area (as defined in subparagraph (B)), the plan shall meet the access standards under paragraph (4) in that area only through entering into written contracts as provided for under subparagraph (B) of such paragraph and not, in whole or in part, through the establishment of payment rates meeting the requirements under subparagraph (A) of such paragraph.
                      ``(B) Network area defined.—For purposes of subparagraph (A), the term ‘network area’ means, for a plan year, an area which the Secretary identifies (in the Secretary's announcement of the proposed payment rates for the previous plan year under section 1853(b)(1)(B)) as having at least 2 network-based plans (as defined in subparagraph (C)) with enrollment under this part as of the first day of the year in which such announcement is made.
                      ``(C) Network-based plan defined.—
                         ``(i) In general.—For purposes of subparagraph (B), the term ‘network-based plan’ means—
                            ``(I) except as provided in clause (ii), a Medicare Advantage plan that is a coordinated care plan described in section 1851(a)(2)(A)(i);
                            ``(II) a network-based MSA plan; and
                            ``(III) a reasonable cost reimbursement plan under section 1876.
                         ``(ii) Exclusion of non-network regional PPOs.—The term ‘network-based plan’ shall not include an MA regional plan that, with respect to the area, meets access adequacy standards under this part substantially through the authority of section 422.112(a)(1)(ii) of title 42, Code of Federal Regulations, rather than through written contracts.´´.
          (2) Employer Plans.—
             Section 1852(d) of the Social Security Act (42 U.S.C. 1395w–22(d)), as amended by paragraph (1), is amended—
                (A) in paragraph (4), in the second sentence, by striking ``paragraph (5)´´ and inserting ``paragraphs (5) and (6)´´; and
                (B) by adding at the end the following new paragraph:
                   ``(6) Requirement of all employer Medicare Advantage private fee-for-service plans to use contracts with providers.—For plan year 2011 and subsequent plan years, in the case of a Medicare Advantage private fee-for-service plan that is described in paragraph (1) or (2) of section 1857(i), the plan shall meet the access standards under paragraph (4) only through entering into written contracts as provided for under subparagraph (B) of such paragraph and not, in whole or in part, through the establishment of payment rates meeting the requirements under subparagraph (A) of such paragraph.´´.
          (3) Access Requirements.—
                (A) In General.—
                   Section 1852(d)(4)(B) of the Social Security Act (42 U.S.C. 1395w–22(d)(4)(B)) is amended by striking ``a sufficient number´´ through ``terms of the plan´´ and inserting ``a sufficient number and range of providers within such category to meet the access standards in subparagraphs (A) through (E) of paragraph (1)´´.
                (B) Effective Date.—
                   The amendment made by subparagraph (A) shall apply to plan year 2010 and subsequent plan years.
    (b) Clarification Regarding Utilization.—
       Section 1859(b)(2) of the Social Security Act (42 U.S.C. 1395w–28(b)(2)) is amended by adding at the end the following flush sentence:
             ``Nothing in subparagraph (B) shall be construed to preclude a plan from varying rates for such a provider based on the specialty of the provider, the location of the provider, or other factors related to such provider that are not related to utilization, or to preclude a plan from increasing rates for such a provider based on increased utilization of specified preventive or screening services.´´.

### Sec. 163. Revisions to Quality Improvement Programs.

    (a) Requirement for MA private fee-for-service and MSA plans to have a quality improvement program.—
       Section 1852(e)(1) of the Social Security Act (42 U.S.C. 1395w–22(e)(1)) is amended by striking ``(other than an MA private fee-for-service plan or an MSA plan)´´.
    (b) Data collection requirements for MA regional plans, MA private fee-for-service plans, and MSA plans.—
       Section 1852(e)(3)(A) of the Social Security Act (42 U.S.C. 1395w–22(e)(3)(A)) is amended—
          (1) in clause (i), by adding at the end the following new sentence: ``With respect to MA private fee-for-service plans and MSA plans, the requirements under the preceding sentence may not exceed the requirements under this subparagraph with respect to MA local plans that are preferred provider organization plans, except that, for plan year 2010, the limitation under clause (iii) shall not apply and such requirements shall apply only with respect to administrative claims data.´´
          (2) by striking clause (ii); and
          (3) in clause (iii)—
                (A) in the heading—
                      (i) by inserting ``local´´ after ``to´´; and
                      (ii) by inserting ``and MA regional plans´´ after ``organizations´´; and
                (B) by inserting ``and to MA regional plans´´ after ``organization plans´´.
    (c) Effective Date.—
       The amendments made by this section shall apply to plan years beginning on or after January 1, 2010.

### Sec. 164. Revisions Relating to Specialized Medicare Advantage Plans for Special Needs Individuals.

    (a) Extension of Authority to Restrict Enrollment.—
       Section 1859(f) of the Social Security Act (42 U.S.C. 1395w–28(f)), as amended by section 108(a) of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173) is amended by striking ``2010´´ and inserting ``2011´´.
    (b) Moratorium on Authority to Designate Other Plans as Specialized MA Plans.—
       During the period beginning on January 1, 2010, and ending on December 31, 2010, the Secretary of Health and Human Services may not exercise the authority provided under section 231(d) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (42 U.S.C. 1395w–21 note) to designate other plans as specialized MA plans for special needs individuals.
    (c) Requirements for Enrollment.—
          (1) In General.—
             Section 1859 of the Social Security Act (42 U.S.C. 1395w–28) is amended—
                (A) in subsection (b)(6)(A), by inserting ``and that, as of January 1, 2010, meets the applicable requirements of paragraph (2), (3), or (4) of subsection (f), as the case may be´´ before the period at the end; and
                (B) in subsection (f)—
                      (i) by amending the heading to read as follows: ``Requirements regarding enrollment in specialized MA plans for special needs individuals´´;
                      (ii) by designating the sentence beginning ``In the case of´´ as paragraph (1) with the heading ``Requirements for enrollment.—´´ and with appropriate indentation; and
                      (iii) by adding at the end the following new paragraphs:
                         ``(2) Additional requirements for institutional SNPs.—In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(i), the applicable requirements described in this paragraph are as follows:
                            ``(A) Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individuals described in subsection (b)(6)(B)(i). In the case of an individual who is living in the community but requires an institutional level of care, such individual shall not be considered a special needs individual described in subsection (b)(6)(B)(i) unless the determination that the individual requires an institutional level of care was made—
                               ``(i) using a State assessment tool of the State in which the individual resides; and
                               ``(ii) by an entity other than the organization offering the plan.
                            ``(B) The plan meets the requirements described in paragraph (5).
                         ``(3) Additional requirements for dual SNPs.—In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(ii), the applicable requirements described in this paragraph are as follows:
                            ``(A) Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individuals described in subsection (b)(6)(B)(ii).
                            ``(B) The plan meets the requirements described in paragraph (5).
                            ``(C) The plan provides each prospective enrollee, prior to enrollment, with a comprehensive written statement (using standardized content and format established by the Secretary) that describes—
                               ``(i) the benefits and cost-sharing protections that the individual is entitled to under the State Medicaid program under title XIX; and
                               ``(ii) which of such benefits and cost-sharing protections are covered under the plan.
                            ``Such statement shall be included with any description of benefits offered by the plan.
                            ``(D) The plan has a contract with the State Medicaid agency to provide benefits, or arrange for benefits to be provided, for which such individual is entitled to receive as medical assistance under title XIX. Such benefits may include long-term care services consistent with State policy.
                         ``(4) Additional requirements for severe or disabling chronic condition SNPs.—In the case of a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(iii), the applicable requirements described in this paragraph are as follows:
                            ``(A) Each individual that enrolls in the plan on or after January 1, 2010, is a special needs individual described in subsection (b)(6)(B)(iii).
                            ``(B) The plan meets the requirements described in paragraph (5).´´.
          (2) Authority to operate but no service area expansion for dual SNPs that do not meet certain requirements.—
             Notwithstanding subsection (f) of section 1859 of the Social Security Act (42 U.S.C. 1395w–28), during the period beginning on January 1, 2010, and ending on December 31, 2010, in the case of a specialized Medicare Advantage plan for special needs individuals described in subsection (b)(6)(B)(ii) of such section, as amended by this section, that does not meet the requirement described in subsection (f)(3)(D) of such section, the Secretary of Health and Human Services—
                (A) shall permit such plan to be offered under part C of title XVIII of such Act; and
                (B) shall not permit an expansion of the service area of the plan under such part C.
          (3) Resources for State Medicaid Agencies.—
             The Secretary of Health and Human Services shall provide for the designation of appropriate staff and resources that can address State inquiries with respect to the coordination of State and Federal policies for specialized MA plans for special needs individuals described in section 1859(b)(6)(B)(ii) of the Social Security Act (42 U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this section.
          (4) No Requirement for Contract.—
             Nothing in the provisions of, or amendments made by, this subsection shall require a State to enter into a contract with a Medicare Advantage organization with respect to a specialized MA plan for special needs individuals described in section 1859(b)(6)(B)(ii) of the Social Security Act (42 U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this section.
    (d) Care Management Requirements for All SNPs.—
          (1) Requirements.—
             Section 1859(f) of the Social Security Act (42 U.S.C. 1395w–28(f)), as amended by subsection (c)(1), is amended by adding at the end the following new paragraph:
                ``(5) Care management requirements for all SNPs.—The requirements described in this paragraph are that the organization offering a specialized MA plan for special needs individuals described in subsection (b)(6)(B)(i)—
                   ``(A) have in place an evidenced-based model of care with appropriate networks of providers and specialists; and
                   ``(B) with respect to each individual enrolled in the plan—
                      ``(i) conduct an initial assessment and an annual reassessment of the individual’s physical, psychosocial, and functional needs;
                      ``(ii) develop a plan, in consultation with the individual as feasible, that identifies goals and objectives, including measurable outcomes as well as specific services and benefits to be provided; and
                      ``(iii) use an interdisciplinary team in the management of care.´´.
          (2) Review to Ensure Compliance with Care Management Requirements.—
             Section 1857(d) of the Social Security Act (42 U.S.C. 1395w–27(d)) is amended by adding at the end the following new paragraph:
                ``(6) Review to ensure compliance with care management requirements for specialized Medicare Advantage plans for special needs individuals.—In conjunction with the periodic audit of a specialized Medicare Advantage plan for special needs individuals under paragraph (1), the Secretary shall conduct a review to ensure that such organization offering the plan meets the requirements described in section 1859(f)(5).´´.
    (e) Clarification of the definition of a severe or disabling chronic conditions specialized needs individual.—
          (1) In General.—
             Section 1859(b)(6)(B)(iii) of the Social Security Act (42 U.S.C. 1395w–28(b)(6)(B)(iii)) is amended by inserting ``who have one or more comorbid and medically complex chronic conditions that are substantially disabling or life threatening, have a high risk of hospitalization or other significant adverse health outcomes, and require specialized delivery systems across domains of care´´ before the period at the end.
          (2) Panel.—
             The Secretary of Health and Human Services shall convene a panel of clinical advisors to determine the conditions that meet the definition of severe and disabling chronic conditions under section 1859(b)(6)(B)(iii) of the Social Security Act (42 U.S.C. 1395w–28(b)(6)(B)(iii)), as amended by paragraph (1). The panel shall include the Director of the Agency for Healthcare Research and Quality (or the Director’s designee).
    (f) Special requirements regarding quality reporting for specialized MA plans for special needs individuals.—
          (1) In General.—
             Section 1852(e)(3)(A) of the Social Security Act (42 U.S.C. 1395w–22(e)(3)(A)), as amended by section 163, is amended by inserting after clause (i) the following new clause:
                ``(ii) Special requirements for specialized MA plans for special needs individuals.—In addition to the data required to be collected, analyzed, and reported under clause (i) and notwithstanding the limitations under subparagraph (B), as part of the quality improvement program under paragraph (1), each MA organization offering a specialized Medicare Advantage plan for special needs individuals shall provide for the collection, analysis, and reporting of data that permits the measurement of health outcomes and other indices of quality with respect to the requirements described in paragraphs (2) through (5) of subsection (f). Such data may be based on claims data and shall be at the plan level.´´.
          (2) Effective Date.—
             The amendment made by paragraph (1) shall take effect on a date specified by the Secretary of Health and Human Services (but in no case later than January 1, 2010), and shall apply to all specialized Medicare Advantage plans for special needs individuals regardless of when the plan first entered the Medicare Advantage program under part C of title XVIII of the Social Security Act.
    (g) Effective Date and Application.—
       The amendments made by subsections (c)(1), (d), and (e)(1) shall apply to plan years beginning on or after January 1, 2010, and shall apply to all specialized Medicare Advantage plans for special needs individuals regardless of when the plan first entered the Medicare Advantage program under part C of title XVIII of the Social Security Act.
    (h) No Affect on Medicaid Benefits for Duals.—
       Nothing in the provisions of, or amendments made by, this section shall affect the benefits available under the Medicaid program under title XIX of the Social Security Act for special needs individuals described in section 1859(b)(6)(B)(ii) of such Act (42 U.S.C. 1395w–28(b)(6)(B)(ii)).

### Sec. 165. Limitation on Out-of-Pocket Costs for Dual Eligibles and Qualified Medicare Beneficiaries Enrolled in a Specialized Medicare Advantage Plan for Special Needs Individuals.

    (a) In General.—
       Section 1852(a) of the Social Security Act (42 U.S.C. 1395w–22(a)) is amended by adding at the end the following new paragraph:
             ``(7) Limitation on cost-sharing for dual eligibles and qualified medicare beneficiaries.—In the case of an individual who is a full-benefit dual eligible individual (as defined in section 1935(c)(6)) or a qualified medicare beneficiary (as defined in section 1905(p)(1)) and who is enrolled in a specialized Medicare Advantage plan for special needs individuals described in section 1859(b)(6)(B)(ii), the plan may not impose cost-sharing that exceeds the amount of cost-sharing that would be permitted with respect to the individual under title XIX if the individual were not enrolled in such plan.´´.
    (b) Effective Date.—
       The amendment made by subsection (a) shall apply to plan years beginning on or after January 1, 2010.

### Sec. 166. Adjustment to the Medicare Advantage Stabilization Fund.

    Section 1858(e)(2)(A)(i) of the Social Security Act (42 U.S.C. 1395w–27a(e)(2)(A)(i)), as amended by section 110 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173), is amended—
          (1) by striking ``2013´´ and inserting ``2014´´; and
          (2) by striking ``$1,790,000,000´´ and inserting ``$1´´.

### Sec. 167. Access to Medicare Reasonable Cost Contract Plans.

    (a) Extension of Reasonable Cost Contracts.—
       Section 1876(h)(5)(C)(ii) of the Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(ii)), as amended by section 109 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173), is amended by striking ``January 1, 2009´´ and inserting ``January 1, 2010´´ in the matter preceding subclause (I).
    (b) Requirement for at Least Two Medicare Advantage Organizations to be Offering a Plan in an Area for the Prohibition to be Applicable.—
       Subclauses (I) and (II) of section 1876(h)(5)(C)(ii) of the Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(ii)) are each amended by inserting ``, provided that all such plans are not offered by the same Medicare Advantage organization´´ after ``clause (iii)´´.
    (c) Revision of Requirements for a Plan that are Used to Determine if Prohibition is Applicable.—
          (1) In General.—
             Section 1876(h)(5)(C)(iii)(I) of the Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(iii)(I)) is amended by inserting ``that are not in another Metropolitan Statistical Area with a population of more than 250,000´´ after ``such Metropolitan Statistical Area´´.
          (2) Clarification.—
             Section 1876(h)(5)(C)(iii)(I) of the Social Security Act (42 U.S.C. 1395mm(h)(5)(C)(iii)(I)) is amended by adding at the end the following new sentence: ``If the service area includes a portion in more than 1 Metropolitan Statistical Area with a population of more than 250,000, the minimum enrollment determination under the preceding sentence shall be made with respect to each such Metropolitan Statistical Area (and such applicable contiguous counties to such Metropolitan Statistical Area).´´.
    (d) GAO study and report.—
          (1) Study.—
             The Comptroller General of the United States shall conduct a study of the reasons (if any) why reasonable cost contracts under section 1876(h) of the Social Security Act (42 U.S.C. 1395mm(h)) are unable to become Medicare Advantage plans under part C of title XVIII of such Act.
          (2) Report.—
             Not later than December 31, 2009, the Comptroller General of the United States shall submit to Congress a report containing the results of the study conducted under paragraph (1), together with recommendations for such legislation and administrative action as the Comptroller General determines appropriate.

### Sec. 168. MedPAC Study and Report on Quality Measures.

    (a) Study.—
       The Medicare Payment Advisory Commission shall conduct a study on how comparable measures of performance and patient experience can be collected and reported by 2011 for the Medicare Advantage program under part C of title XVIII of the Social Security Act and the original Medicare fee-for-service program under parts A and B of such title. Such study shall address technical issues, such as data requirements, in addition to issues relating to appropriate quality benchmarks that—
          (1) compare the quality of care Medicare beneficiaries receive across Medicare Advantage plans; and
          (2) compare the quality of care Medicare beneficiaries receive under Medicare Advantage plans and under the original Medicare fee-for-service program.
    (b) Report.—
       Not later than March 31, 2010, the Medicare Payment Advisory Commission shall submit to Congress a report containing the results of the study conducted under subsection (a), together with recommendations for such legislation and administrative action as the Medicare Payment Advisory Commission determines appropriate.

### Sec. 169. MedPAC Study and Report Medicare Advantage Payments.

    (a) Study.—
       The Medicare Payment Advisory Commission (in this section referred to as the ``Commission´´) shall conduct a study of the following:
          (1) The correlation between—
                (A) the costs that Medicare Advantage organizations with respect to Medicare Advantage plans incur in providing coverage under the plan for items and services covered under the original Medicare fee-for-service program under parts A and B of title XVIII of the Social Security Act, as reflected in plan bids; and
                (B) county-level spending under such original Medicare fee-for-service program on a per capita basis, as calculated by the Chief Actuary of the Centers for Medicare & Medicaid Services.
             The study with respect to the issue described in the preceding sentence shall include differences in correlation statistics by plan type and geographic area.
          (2) Based on these results of the study with respect to the issue described in paragraph (1), and other data the Commission determines appropriate—
                (A) alternate approaches to payment with respect to a Medicare beneficiary enrolled in a Medicare Advantage plan other than through county-level payment area equivalents.
                (B) the accuracy and completeness of county-level estimates of per capita spending under such original Medicare fee-for-service program (including counties in Puerto Rico), as used to determine the annual Medicare Advantage capitation rate under section 1853 of the Social Security Act (42 U.S.C. 1395w–23), and whether such estimates include—
                      (i) expenditures with respect to Medicare beneficiaries at facilities of the Department of Veterans Affairs; and
                      (ii) all appropriate administrative expenses, including claims processing.
          (3) Ways to improve the accuracy and completeness of county-level estimates of per capita spending described in paragraph (2)(B).
    (b) Report.—
       Not later than March 31, 2010, the Commission shall submit to Congress a report containing the results of the study conducted under subsection (a), together with recommendations for such legislation and administrative action as the Commission determines appropriate.