# Patient Protection and Affordable Care Act/Title III/Subtitle B/Part III
## PART III--IMPROVING PAYMENT ACCURACY
### SEC. 3131. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE.

    (a) Rebasing Home Health Prospective Payment Amount-
       (1) IN GENERAL- Section 1895(b)(3)(A) of the Social Security Act (42 U.S.C. 1395fff(b)(3)(A)) is amended--
          (A) in clause (i)(III), by striking `For periods' and inserting `Subject to clause (iii), for periods'; and
          (B) by adding at the end the following new clause:
                      `(iii) ADJUSTMENT FOR 2013 AND SUBSEQUENT YEARS-
                         `(I) IN GENERAL- Subject to subclause (II), for 2013 and subsequent years, the amount (or amounts) that would otherwise be applicable under clause (i)(III) shall be adjusted by a percentage determined appropriate by the Secretary to reflect such factors as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other factors that the Secretary considers to be relevant. In conducting the analysis under the preceding sentence, the Secretary may consider differences between hospital-based and freestanding agencies, between for-profit and nonprofit agencies, and between the resource costs of urban and rural agencies. Such adjustment shall be made before the update under subparagraph (B) is applied for the year.
                         `(II) TRANSITION- The Secretary shall provide for a 4-year phase-in (in equal increments) of the adjustment under subclause (I), with such adjustment being fully implemented for 2016. During each year of such phase-in, the amount of any adjustment under subclause (I) for the year may not exceed 3.5 percent of the amount (or amounts) applicable under clause (i)(III) as of the date of enactment of the Patient Protection and Affordable Care Act.'.
       (2) MEDPAC STUDY AND REPORT-
          (A) STUDY- The Medicare Payment Advisory Commission shall conduct a study on the implementation of the amendments made by paragraph (1). Such study shall include an analysis of the impact of such amendments on--
             (i) access to care;
             (ii) quality outcomes;
             (iii) the number of home health agencies; and
             (iv) rural agencies, urban agencies, for-profit agencies, and nonprofit agencies.
          (B) REPORT- Not later than January 1, 2015, the Medicare Payment Advisory Commission shall submit to Congress a report on the study conducted under subparagraph (A), together with recommendations for such legislation and administrative action as the Commission determines appropriate.
    (b) Program-specific Outlier Cap- Section 1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) is amended--
       (1) in paragraph (3)(C), by striking `the aggregate' and all that follows through the period at the end and inserting `5 percent of the total payments estimated to be made based on the prospective payment system under this subsection for the period.'; and
       (2) in paragraph (5)--
          (A) by striking `OUTLIERS- The Secretary' and inserting the following: `OUTLIERS-
                   `(A) IN GENERAL- Subject to subparagraph (B), the Secretary';
          (B) in subparagraph (A), as added by subparagraph (A), by striking `5 percent' and inserting `2.5 percent'; and
          (C) by adding at the end the following new subparagraph:
                   `(B) PROGRAM SPECIFIC OUTLIER CAP- The estimated total amount of additional payments or payment adjustments made under subparagraph (A) with respect to a home health agency for a year (beginning with 2011) may not exceed an amount equal to 10 percent of the estimated total amount of payments made under this section (without regard to this paragraph) with respect to the home health agency for the year.'.
    (c) Application of the Medicare Rural Home Health Add-on Policy- Section 421 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2283), as amended by section 5201(b) of the Deficit Reduction Act of 2005 (Public Law 109-171; 120 Stat. 46), is amended--
       (1) in the section heading, by striking `one-year' and inserting `temporary'; and
       (2) in subsection (a)--
          (A) by striking `, and episodes' and inserting `, episodes';
          (B) by inserting `and episodes and visits ending on or after April 1, 2010, and before January 1, 2016,' after `January 1, 2007,'; and
          (C) by inserting `(or, in the case of episodes and visits ending on or after April 1, 2010, and before January 1, 2016, 3 percent)' before the period at the end.
    (d) Study and Report on the Development of Home Health Payment Reforms in Order To Ensure Access to Care and Quality Services-
       (1) IN GENERAL- The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall conduct a study to evaluate the costs and quality of care among efficient home health agencies relative to other such agencies in providing ongoing access to care and in treating Medicare beneficiaries with varying severity levels of illness. Such study shall include an analysis of the following:
          (A) Methods to revise the home health prospective payment system under section 1895 of the Social Security Act (42 U.S.C. 1395fff) to more accurately account for the costs related to patient severity of illness or to improving beneficiary access to care, including--
             (i) payment adjustments for services that may be under- or over-valued;
             (ii) necessary changes to reflect the resource use relative to providing home health services to low-income Medicare beneficiaries or Medicare beneficiaries living in medically underserved areas;
             (iii) ways the outlier payment may be improved to more accurately reflect the cost of treating Medicare beneficiaries with high severity levels of illness;
             (iv) the role of quality of care incentives and penalties in driving provider and patient behavior;
             (v) improvements in the application of a wage index; and
             (vi) other areas determined appropriate by the Secretary.
          (B) The validity and reliability of responses on the OASIS instrument with particular emphasis on questions that relate to higher payment under the home health prospective payment system and higher outcome scores under Home Care Compare.
          (C) Additional research or payment revisions under the home health prospective payment system that may be necessary to set the payment rates for home health services based on costs of high-quality and efficient home health agencies or to improve Medicare beneficiary access to care.
          (D) A timetable for implementation of any appropriate changes based on the analysis of the matters described in subparagraphs (A), (B), and (C).
          (E) Other areas determined appropriate by the Secretary.
       (2) CONSIDERATIONS- In conducting the study under paragraph (1), the Secretary shall consider whether certain factors should be used to measure patient severity of illness and access to care, such as--
          (A) population density and relative patient access to care;
          (B) variations in service costs for providing care to individuals who are dually eligible under the Medicare and Medicaid programs;
          (C) the presence of severe or chronic diseases, as evidenced by multiple, discontinuous home health episodes;
          (D) poverty status, as evidenced by the receipt of Supplemental Security Income under title XVI of the Social Security Act;
          (E) the absence of caregivers;
          (F) language barriers;
          (G) atypical transportation costs;
          (H) security costs; and
          (I) other factors determined appropriate by the Secretary.
       (3) REPORT- Not later than March 1, 2011, the Secretary shall submit to Congress a report on the study conducted under paragraph (1), together with recommendations for such legislation and administrative action as the Secretary determines appropriate.
       (4) CONSULTATIONS- In conducting the study under paragraph (1) and preparing the report under paragraph (3), the Secretary shall consult with--
          (A) stakeholders representing home health agencies;
          (B) groups representing Medicare beneficiaries;
          (C) the Medicare Payment Advisory Commission;
          (D) the Inspector General of the Department of Health and Human Services; and
          (E) the Comptroller General of the United States.

### SEC. 3132. HOSPICE REFORM.

    (a) Hospice Care Payment Reforms-
       (1) IN GENERAL- Section 1814(i) of the Social Security Act (42 U.S.C. 1395f(i)), as amended by section 3004(c), is amended--
          (A) by redesignating paragraph (6) as paragraph (7); and
          (B) by inserting after paragraph (5) the following new paragraph:
                `(6)(A) The Secretary shall collect additional data and information as the Secretary determines appropriate to revise payments for hospice care under this subsection pursuant to subparagraph (D) and for other purposes as determined appropriate by the Secretary. The Secretary shall begin to collect such data by not later than January 1, 2011.
                   `(B) The additional data and information to be collected under subparagraph (A) may include data and information on--
                      `(i) charges and payments;
                      `(ii) the number of days of hospice care which are attributable to individuals who are entitled to, or enrolled for, benefits under part A; and
                      `(iii) with respect to each type of service included in hospice care--
                         `(I) the number of days of hospice care attributable to the type of service;
                         `(II) the cost of the type of service; and
                         `(III) the amount of payment for the type of service;
                      `(iv) charitable contributions and other revenue of the hospice program;
                      `(v) the number of hospice visits;
                      `(vi) the type of practitioner providing the visit; and
                      `(vii) the length of the visit and other basic information with respect to the visit.
                   `(C) The Secretary may collect the additional data and information under subparagraph (A) on cost reports, claims, or other mechanisms as the Secretary determines to be appropriate.
                   `(D)(i) Notwithstanding the preceding paragraphs of this subsection, not earlier than October 1, 2013, the Secretary shall, by regulation, implement revisions to the methodology for determining the payment rates for routine home care and other services included in hospice care under this part, as the Secretary determines to be appropriate. Such revisions may be based on an analysis of data and information collected under subparagraph (A). Such revisions may include adjustments to per diem payments that reflect changes in resource intensity in providing such care and services during the course of the entire episode of hospice care.
                      `(ii) Revisions in payment implemented pursuant to clause (i) shall result in the same estimated amount of aggregate expenditures under this title for hospice care furnished in the fiscal year in which such revisions in payment are implemented as would have been made under this title for such care in such fiscal year if such revisions had not been implemented.
                   `(E) The Secretary shall consult with hospice programs and the Medicare Payment Advisory Commission regarding the additional data and information to be collected under subparagraph (A) and the payment revisions under subparagraph (D).'.
       (2) CONFORMING AMENDMENTS- Section 1814(i)(1)(C) of the Social Security Act (42 U.S.C. 1395f(i)(1)(C)) is amended--
          (A) in clause (ii)--
             (i) in the matter preceding subclause (I), by inserting `(before the first fiscal year in which the payment revisions described in paragraph (6)(D) are implemented)' after `subsequent fiscal year'; and
             (ii) in subclause (VII), by inserting `(before the first fiscal year in which the payment revisions described in paragraph (6)(D) are implemented), subject to clause (iv),' after `subsequent fiscal year'; and
          (B) by adding at the end the following new clause:
                      `(iii) With respect to routine home care and other services included in hospice care furnished during fiscal years subsequent to the first fiscal year in which payment revisions described in paragraph (6)(D) are implemented, the payment rates for such care and services shall be the payment rates in effect under this clause during the preceding fiscal year increased by, subject to clause (iv), the market basket percentage increase (as defined in section 1886(b)(3)(B)(iii)) for the fiscal year.'.
    (b) Adoption of MedPAC Hospice Program Eligibility Recertification Recommendations- Section 1814(a)(7) of the Social Security Act (42 U.S.C. 1395f(a)(7)) is amended--
       (1) in subparagraph (B), by striking `and' at the end; and
       (2) by adding at the end the following new subparagraph:
                   `(D) on and after January 1, 2011--
                      `(i) a hospice physician or nurse practitioner has a face-to-face encounter with the individual to determine continued eligibility of the individual for hospice care prior to the 180th-day recertification and each subsequent recertification under subparagraph (A)(ii) and attests that such visit took place (in accordance with procedures established by the Secretary); and
                      `(ii) in the case of hospice care provided an individual for more than 180 days by a hospice program for which the number of such cases for such program comprises more than a percent (specified by the Secretary) of the total number of such cases for all programs under this title, the hospice care provided to such individual is medically reviewed (in accordance with procedures established by the Secretary); and'.

### SEC. 3133. IMPROVEMENT TO MEDICARE DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.

Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as amended by sections 3001, 3008, and 3025, is amended--
       (1) in subsection (d)(5)(F)(i), by striking `For' and inserting `Subject to subsection (r), for'; and
       (2) by adding at the end the following new subsection:
             `(r) Adjustments to Medicare DSH Payments-
                `(1) EMPIRICALLY JUSTIFIED DSH PAYMENTS- For fiscal year 2015 and each subsequent fiscal year, instead of the amount of disproportionate share hospital payment that would otherwise be made under subsection (d)(5)(F) to a subsection (d) hospital for the fiscal year, the Secretary shall pay to the subsection (d) hospital 25 percent of such amount (which represents the empirically justified amount for such payment, as determined by the Medicare Payment Advisory Commission in its March 2007 Report to the Congress).
                `(2) ADDITIONAL PAYMENT- In addition to the payment made to a subsection (d) hospital under paragraph (1), for fiscal year 2015 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospitals an additional amount equal to the product of the following factors:
                   `(A) FACTOR ONE- A factor equal to the difference between--
                      `(i) the aggregate amount of payments that would be made to subsection (d) hospitals under subsection (d)(5)(F) if this subsection did not apply for such fiscal year (as estimated by the Secretary); and
                      `(ii) the aggregate amount of payments that are made to subsection (d) hospitals under paragraph (1) for such fiscal year (as so estimated).
                   `(B) FACTOR TWO-
                      `(i) FISCAL YEARS 2015, 2016, AND 2017- For each of fiscal years 2015, 2016, and 2017, a factor equal to 1 minus the percent change (divided by 100) in the percent of individuals under the age of 65 who are uninsured, as determined by comparing the percent of such individuals--
                         `(I) who are uninsured in 2012, the last year before coverage expansion under the Patient Protection and Affordable Care Act (as calculated by the Secretary based on the most recent estimates available from the Director of the Congressional Budget Office before a vote in either House on such Act that, if determined in the affirmative, would clear such Act for enrollment); and
                         `(II) who are uninsured in the most recent period for which data is available (as so calculated).
                      `(ii) 2018 AND SUBSEQUENT YEARS- For fiscal year 2018 and each subsequent fiscal year, a factor equal to 1 minus the percent change (divided by 100) in the percent of individuals who are uninsured, as determined by comparing the percent of individuals--
                         `(I) who are uninsured in 2012 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of the Centers for Medicare & Medicaid Services); and
                         `(II) who are uninsured in the most recent period for which data is available (as so estimated and certified).
                   `(C) FACTOR THREE- A factor equal to the percent, for each subsection (d) hospital, that represents the quotient of--
                      `(i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and
                      `(ii) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under this subsection for such period (as so estimated, based on such data).
                `(3) LIMITATIONS ON REVIEW- There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following:
                   `(A) Any estimate of the Secretary for purposes of determining the factors described in paragraph (2).
                   `(B) Any period selected by the Secretary for such purposes.'.

### SEC. 3134. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE.

    (a) In General- Section 1848(c)(2) of the Social Security Act (42 U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new subparagraphs:
                   `(K) POTENTIALLY MISVALUED CODES-
                      `(i) IN GENERAL- The Secretary shall--
                         `(I) periodically identify services as being potentially misvalued using criteria specified in clause (ii); and
                         `(II) review and make appropriate adjustments to the relative values established under this paragraph for services identified as being potentially misvalued under subclause (I).
                      `(ii) IDENTIFICATION OF POTENTIALLY MISVALUED CODES- For purposes of identifying potentially misvalued services pursuant to clause (i)(I), the Secretary shall examine (as the Secretary determines to be appropriate) codes (and families of codes as appropriate) for which there has been the fastest growth; codes (and families of codes as appropriate) that have experienced substantial changes in practice expenses; codes for new technologies or services within an appropriate period (such as 3 years) after the relative values are initially established for such codes; multiple codes that are frequently billed in conjunction with furnishing a single service; codes with low relative values, particularly those that are often billed multiple times for a single treatment; codes which have not been subject to review since the implementation of the RBRVS (the so-called `Harvard-valued codes'); and such other codes determined to be appropriate by the Secretary.
                      `(iii) REVIEW AND ADJUSTMENTS-
                         `(I) The Secretary may use existing processes to receive recommendations on the review and appropriate adjustment of potentially misvalued services described in clause (i)(II).
                         `(II) The Secretary may conduct surveys, other data collection activities, studies, or other analyses as the Secretary determines to be appropriate to facilitate the review and appropriate adjustment described in clause (i)(II).
                         `(III) The Secretary may use analytic contractors to identify and analyze services identified under clause (i)(I), conduct surveys or collect data, and make recommendations on the review and appropriate adjustment of services described in clause (i)(II).
                         `(IV) The Secretary may coordinate the review and appropriate adjustment described in clause (i)(II) with the periodic review described in subparagraph (B).
                         `(V) As part of the review and adjustment described in clause (i)(II), including with respect to codes with low relative values described in clause (ii), the Secretary may make appropriate coding revisions (including using existing processes for consideration of coding changes) which may include consolidation of individual services into bundled codes for payment under the fee schedule under subsection (b).
                         `(VI) The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(II).
                   `(L) VALIDATING RELATIVE VALUE UNITS-
                      `(i) IN GENERAL- The Secretary shall establish a process to validate relative value units under the fee schedule under subsection (b).
                      `(ii) COMPONENTS AND ELEMENTS OF WORK- The process described in clause (i) may include validation of work elements (such as time, mental effort and professional judgment, technical skill and physical effort, and stress due to risk) involved with furnishing a service and may include validation of the pre-, post-, and intra-service components of work.
                      `(iii) SCOPE OF CODES- The validation of work relative value units shall include a sampling of codes for services that is the same as the codes listed under subparagraph (K)(ii).
                      `(iv) METHODS- The Secretary may conduct the validation under this subparagraph using methods described in subclauses (I) through (V) of subparagraph (K)(iii) as the Secretary determines to be appropriate.
                      `(v) ADJUSTMENTS- The Secretary shall make appropriate adjustments to the work relative value units under the fee schedule under subsection (b). The provisions of subparagraph (B)(ii)(II) shall apply to adjustments to relative value units made pursuant to this subparagraph in the same manner as such provisions apply to adjustments under subparagraph (B)(ii)(II).'.
    (b) Implementation-
       (1) ADMINISTRATION-
          (A) Chapter 35 of title 44, United States Code and the provisions of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to this section or the amendment made by this section.
          (B) Notwithstanding any other provision of law, the Secretary may implement subparagraphs (K) and (L) of 1848(c)(2) of the Social Security Act, as added by subsection (a), by program instruction or otherwise.
          (C) Section 4505(d) of the Balanced Budget Act of 1997 is repealed.
          (D) Except for provisions related to confidentiality of information, the provisions of the Federal Acquisition Regulation shall not apply to this section or the amendment made by this section.
       (2) FOCUSING CMS RESOURCES ON POTENTIALLY OVERVALUED CODES- Section 1868(a) of the Social Security Act (42 U.S.C. 1395ee(a)) is repealed.

### SEC. 3135. MODIFICATION OF EQUIPMENT UTILIZATION FACTOR FOR ADVANCED IMAGING SERVICES.

    (a) Adjustment in Practice Expense To Reflect Higher Presumed Utilization- Section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is amended--
       (1) in subsection (b)(4)--
          (A) in subparagraph (B), by striking `subparagraph (A)' and inserting `this paragraph'; and
          (B) by adding at the end the following new subparagraph:
                   `(C) ADJUSTMENT IN PRACTICE EXPENSE TO REFLECT HIGHER PRESUMED UTILIZATION- Consistent with the methodology for computing the number of practice expense relative value units under subsection (c)(2)(C)(ii) with respect to advanced diagnostic imaging services (as defined in section 1834(e)(1)(B)) furnished on or after January 1, 2010, the Secretary shall adjust such number of units so it reflects--
                      `(i) in the case of services furnished on or after January 1, 2010, and before January 1, 2013, a 65 percent (rather than 50 percent) presumed rate of utilization of imaging equipment;
                      `(ii) in the case of services furnished on or after January 1, 2013, and before January 1, 2014, a 70 percent (rather than 50 percent) presumed rate of utilization of imaging equipment; and
                      `(iii) in the case of services furnished on or after January 1, 2014, a 75 percent (rather than 50 percent) presumed rate of utilization of imaging equipment.'; and
       (2) in subsection (c)(2)(B)(v), by adding at the end the following new subclauses:
                         `(III) CHANGE IN PRESUMED UTILIZATION LEVEL OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERVICES FOR 2010 THROUGH 2012- Effective for fee schedules established beginning with 2010 and ending with 2012, reduced expenditures attributable to the presumed rate of utilization of imaging equipment of 65 percent under subsection (b)(4)(C)(i) instead of a presumed rate of utilization of such equipment of 50 percent.
                         `(IV) CHANGE IN PRESUMED UTILIZATION LEVEL OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERVICES FOR 2013- Effective for fee schedules established for 2013, reduced expenditures attributable to the presumed rate of utilization of imaging equipment of 70 percent under subsection (b)(4)(C)(ii) instead of a presumed rate of utilization of such equipment of 50 percent.
                         `(V) CHANGE IN PRESUMED UTILIZATION LEVEL OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERVICES FOR 2014 AND SUBSEQUENT YEARS- Effective for fee schedules established beginning with 2014, reduced expenditures attributable to the presumed rate of utilization of imaging equipment of 75 percent under subsection (b)(4)(C)(iii) instead of a presumed rate of utilization of such equipment of 50 percent.'.
    (b) Adjustment in Technical Component `discount' on Single-session Imaging to Consecutive Body Parts- Section 1848 of the Social Security Act (42 U.S.C. 1395w-4), as amended by subsection (a), is amended--
       (1) in subsection (b)(4), by adding at the end the following new subparagraph:
                   `(D) ADJUSTMENT IN TECHNICAL COMPONENT DISCOUNT ON SINGLE-SESSION IMAGING INVOLVING CONSECUTIVE BODY PARTS- For services furnished on or after July 1, 2010, the Secretary shall increase the reduction in payments attributable to the multiple procedure payment reduction applicable to the technical component for imaging under the final rule published by the Secretary in the Federal Register on November 21, 2005 (part 405 of title 42, Code of Federal Regulations) from 25 percent to 50 percent.'; and
       (2) in subsection (c)(2)(B)(v), by adding at the end the following new subclause:
                         `(VI) ADDITIONAL REDUCED PAYMENT FOR MULTIPLE IMAGING PROCEDURES- Effective for fee schedules established beginning with 2010 (but not applied for services furnished prior to July 1, 2010), reduced expenditures attributable to the increase in the multiple procedure payment reduction from 25 to 50 percent (as described in subsection (b)(4)(D)).'.
    (c) Analysis by the Chief Actuary of the Centers for Medicare & Medicaid Services- Not later than January 1, 2013, the Chief Actuary of the Centers for Medicare & Medicaid Services shall make publicly available an analysis of whether, for the period of 2010 through 2019, the cumulative expenditure reductions under title XVIII of the Social Security Act that are attributable to the adjustments under the amendments made by this section are projected to exceed $3,000,000,000.

### SEC. 3136. REVISION OF PAYMENT FOR POWER-DRIVEN WHEELCHAIRS.

    (a) In General- Section 1834(a)(7)(A) of the Social Security Act (42 U.S.C. 1395m(a)(7)(A)) is amended--
       (1) in clause (i)--
          (A) in subclause (II), by inserting `subclause (III) and' after `Subject to'; and
          (B) by adding at the end the following new subclause:
                         `(III) SPECIAL RULE FOR POWER-DRIVEN WHEELCHAIRS- For purposes of payment for power-driven wheelchairs, subclause (II) shall be applied by substituting `15 percent' and `6 percent' for `10 percent' and `7.5 percent', respectively.'; and
       (2) in clause (iii)--
          (A) in the heading, by inserting `COMPLEX, REHABILITATIVE' before `POWER-DRIVEN'; and
          (B) by inserting `complex, rehabilitative' before `power-driven'.
    (b) Technical Amendment- Section 1834(a)(7)(C)(ii)(II) of the Social Security Act (42 U.S.C. 1395m(a)(7)(C)(ii)(II)) is amended by striking `(A)(ii) or'.
    (c) Effective Date-
       (1) IN GENERAL- Subject to paragraph (2), the amendments made by subsection (a) shall take effect on January 1, 2011, and shall apply to power-driven wheelchairs furnished on or after such date.
       (2) APPLICATION TO COMPETITIVE BIDDING- The amendments made by subsection (a) shall not apply to payment made for items and services furnished pursuant to contracts entered into under section 1847 of the Social Security Act (42 U.S.C. 1395w-3) prior to January 1, 2011, pursuant to the implementation of subsection (a)(1)(B)(i)(I) of such section 1847.

### SEC. 3137. HOSPITAL WAGE INDEX IMPROVEMENT.

    (a) Extension of Section 508 Hospital Reclassifications-
       (1) IN GENERAL- Subsection (a) of section 106 of division B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395 note), as amended by section 117 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-173) and section 124 of the Medicare Improvements for Patients and Providers Act of 2008 (Public Law 110-275), is amended by striking `September 30, 2009' and inserting `September 30, 2010'.
       (2) USE OF PARTICULAR WAGE INDEX IN FISCAL YEAR 2010- For purposes of implementation of the amendment made by this subsection during fiscal year 2010, the Secretary shall use the hospital wage index that was promulgated by the Secretary in the Federal Register on August 27, 2009 (74 Fed. Reg. 43754), and any subsequent corrections.
    (b) Plan for Reforming the Medicare Hospital Wage Index System-
       (1) IN GENERAL- Not later than December 31, 2011, the Secretary of Health and Human Services (in this section referred to as the `Secretary') shall submit to Congress a report that includes a plan to reform the hospital wage index system under section 1886 of the Social Security Act.
       (2) DETAILS- In developing the plan under paragraph (1), the Secretary shall take into account the goals for reforming such system set forth in the Medicare Payment Advisory Commission June 2007 report entitled `Report to Congress: Promoting Greater Efficiency in Medicare', including establishing a new hospital compensation index system that--
          (A) uses Bureau of Labor Statistics data, or other data or methodologies, to calculate relative wages for each geographic area involved;
          (B) minimizes wage index adjustments between and within metropolitan statistical areas and statewide rural areas;
          (C) includes methods to minimize the volatility of wage index adjustments that result from implementation of policy, while maintaining budget neutrality in applying such adjustments;
          (D) takes into account the effect that implementation of the system would have on health care providers and on each region of the country;
          (E) addresses issues related to occupational mix, such as staffing practices and ratios, and any evidence on the effect on quality of care or patient safety as a result of the implementation of the system; and
          (F) provides for a transition.
       (3) CONSULTATION- In developing the plan under paragraph (1), the Secretary shall consult with relevant affected parties.
    (c) Use of Particular Criteria for Determining Reclassifications- Notwithstanding any other provision of law, in making decisions on applications for reclassification of a subsection (d) hospital (as defined in paragraph (1)(B) of section 1886(d) of the Social Security Act (42 U.S.C. 1395ww(d)) for the purposes described in paragraph (10)(D)(v) of such section for fiscal year 2011 and each subsequent fiscal year (until the first fiscal year beginning on or after the date that is 1 year after the Secretary of Health and Human Services submits the report to Congress under subsection (b)), the Geographic Classification Review Board established under paragraph (10) of such section shall use the average hourly wage comparison criteria used in making such decisions as of September 30, 2008. The preceding sentence shall be effected in a budget neutral manner.

### SEC. 3138. TREATMENT OF CERTAIN CANCER HOSPITALS.

Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) is amended by adding at the end the following new paragraph:
                `(18) AUTHORIZATION OF ADJUSTMENT FOR CANCER HOSPITALS-
                   `(A) STUDY- The Secretary shall conduct a study to determine if, under the system under this subsection, costs incurred by hospitals described in section 1886(d)(1)(B)(v) with respect to ambulatory payment classification groups exceed those costs incurred by other hospitals furnishing services under this subsection (as determined appropriate by the Secretary). In conducting the study under this subparagraph, the Secretary shall take into consideration the cost of drugs and biologicals incurred by such hospitals.
                   `(B) AUTHORIZATION OF ADJUSTMENT- Insofar as the Secretary determines under subparagraph (A) that costs incurred by hospitals described in section 1886(d)(1)(B)(v) exceed those costs incurred by other hospitals furnishing services under this subsection, the Secretary shall provide for an appropriate adjustment under paragraph (2)(E) to reflect those higher costs effective for services furnished on or after January 1, 2011.'.

### SEC. 3139. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

    (a) In General- Section 1847A of the Social Security Act (42 U.S.C. 1395w-3a) is amended--
       (1) in subsection (b)--
          (A) in paragraph (1)--
             (i) in subparagraph (A), by striking `or' at the end;
             (ii) in subparagraph (B), by striking the period at the end and inserting `; or'; and
             (iii) by adding at the end the following new subparagraph:
                   `(C) in the case of a biosimilar biological product (as defined in subsection (c)(6)(H)), the amount determined under paragraph (8).'; and
          (B) by adding at the end the following new paragraph:
                `(8) BIOSIMILAR BIOLOGICAL PRODUCT- The amount specified in this paragraph for a biosimilar biological product described in paragraph (1)(C) is the sum of--
                   `(A) the average sales price as determined using the methodology described under paragraph (6) applied to a biosimilar biological product for all National Drug Codes assigned to such product in the same manner as such paragraph is applied to drugs described in such paragraph; and
                   `(B) 6 percent of the amount determined under paragraph (4) for the reference biological product (as defined in subsection (c)(6)(I)).'; and
       (2) in subsection (c)(6), by adding at the end the following new subparagraph:
                   `(H) BIOSIMILAR BIOLOGICAL PRODUCT- The term `biosimilar biological product' means a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act.
                   `(I) REFERENCE BIOLOGICAL PRODUCT- The term `reference biological product' means the biological product licensed under such section 351 that is referred to in the application described in subparagraph (H) of the biosimilar biological product.'.
    (b) Effective Date- The amendments made by subsection (a) shall apply to payments for biosimilar biological products beginning with the first day of the second calendar quarter after enactment of legislation providing for a biosimilar pathway (as determined by the Secretary).

### SEC. 3140. MEDICARE HOSPICE CONCURRENT CARE DEMONSTRATION PROGRAM.

    (a) Establishment-
       (1) IN GENERAL- The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall establish a Medicare Hospice Concurrent Care demonstration program at participating hospice programs under which Medicare beneficiaries are furnished, during the same period, hospice care and any other items or services covered under title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) from funds otherwise paid under such title to such hospice programs.
       (2) DURATION- The demonstration program under this section shall be conducted for a 3-year period.
       (3) SITES- The Secretary shall select not more than 15 hospice programs at which the demonstration program under this section shall be conducted. Such hospice programs shall be located in urban and rural areas.
    (b) Independent Evaluation and Reports-
       (1) INDEPENDENT EVALUATION- The Secretary shall provide for the conduct of an independent evaluation of the demonstration program under this section. Such independent evaluation shall determine whether the demonstration program has improved patient care, quality of life, and cost-effectiveness for Medicare beneficiaries participating in the demonstration program.
       (2) REPORTS- The Secretary shall submit to Congress a report containing the results of the evaluation conducted under paragraph (1), together with such recommendations as the Secretary determines appropriate.
    (c) Budget Neutrality- With respect to the 3-year period of the demonstration program under this section, the Secretary shall ensure that the aggregate expenditures under title XVIII for such period shall not exceed the aggregate expenditures that would have been expended under such title if the demonstration program under this section had not been implemented.

### SEC. 3141. APPLICATION OF BUDGET NEUTRALITY ON A NATIONAL BASIS IN THE CALCULATION OF THE MEDICARE HOSPITAL WAGE INDEX FLOOR.

In the case of discharges occurring on or after October 1, 2010, for purposes of applying section 4410 of the Balanced Budget Act of 1997 (42 U.S.C. 1395ww note) and paragraph (h)(4) of section 412.64 of title 42, Code of Federal Regulations, the Secretary of Health and Human Services shall administer subsection (b) of such section 4410 and paragraph (e) of such section 412.64 in the same manner as the Secretary administered such subsection (b) and paragraph (e) for discharges occurring during fiscal year 2008 (through a uniform, national adjustment to the area wage index).

### SEC. 3142. HHS STUDY ON URBAN MEDICARE-DEPENDENT HOSPITALS.

    (a) Study-
       (1) IN GENERAL- The Secretary of Health and Human Services (in this section referred to as the `Secretary') shall conduct a study on the need for an additional payment for urban Medicare-dependent hospitals for inpatient hospital services under section 1886 of the Social Security Act (42 U.S.C. 1395ww). Such study shall include an analysis of--
          (A) the Medicare inpatient margins of urban Medicare-dependent hospitals, as compared to other hospitals which receive 1 or more additional payments or adjustments under such section (including those payments or adjustments described in paragraph (2)(A)); and
          (B) whether payments to medicare-dependent, small rural hospitals under subsection (d)(5)(G) of such section should be applied to urban Medicare-dependent hospitals.
       (2) URBAN MEDICARE-DEPENDENT HOSPITAL DEFINED- For purposes of this section, the term `urban Medicare-dependent hospital' means a subsection (d) hospital (as defined in subsection (d)(1)(B) of such section) that--
          (A) does not receive any additional payment or adjustment under such section, such as payments for indirect medical education costs under subsection (d)(5)(B) of such section, disproportionate share payments under subsection (d)(5)(A) of such section, payments to a rural referral center under subsection (d)(5)(C) of such section, payments to a critical access hospital under section 1814(l) of such Act (42 U.S.C. 1395f(l)), payments to a sole community hospital under subsection (d)(5)(D) of such section 1886, or payments to a medicare-dependent, small rural hospital under subsection (d)(5)(G) of such section 1886; and
          (B) for which more than 60 percent of its inpatient days or discharges during 2 of the 3 most recently audited cost reporting periods for which the Secretary has a settled cost report were attributable to inpatients entitled to benefits under part A of title XVIII of such Act.
    (b) Report- Not later than 9 months after the date of enactment of this Act, the Secretary 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 Secretary determines appropriate.

### SEC. 3143. PROTECTING HOME HEALTH BENEFITS.

Nothing in the provisions of, or amendments made by, this Act shall result in the reduction of guaranteed home health benefits under title XVIII of the Social Security Act.