I 
110TH CONGRESS 
1ST SESSION H. R. 2860 
To amend title XVIII of the Social Security Act to protect and preserve 
access of Medicare beneficiaries in rural areas to health care providers 
under the Medicare Program, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 26, 2007 
Mr. POMEROY (for himself, Mr. WALDEN of Oregon, Mr. STUPAK, Mrs. 
EMERSON, Mr. THOMPSON of California, Mr. MORAN of Kansas, Mr. 
KIND, Mr. PETERSON of Pennsylvania, Mr. ALLEN, Mr. BERRY, Mr. 
CAMP of Michigan, Ms. HERSETH SANDLIN, Mr. MCINTYRE, Mr. TAN-
NER, Mr. BISHOP of Georgia, Mr. BOSWELL, Mr. BOYD of Florida, Mr. 
BOUCHER, Mrs. BOYDA of Kansas, Mr. BRALEY of Iowa, Mr. CARNEY, 
Mr. DAVIS
of Alabama, Mr. EDWARDS, Mr. ETHERIDGE, Mr. 
GILCHREST, Mr. GRAVES, Mr. HARE, Mr. HASTINGS of Washington, Mr. 
HINCHEY, Ms. JACKSON-LEE of Texas, Mr. JONES of North Carolina, 
Mr. KANJORSKI, Mr. LAHOOD, Mr. LUCAS, Mr. MATHESON, Mr. 
MCHUGH, Mrs. MCMORRIS RODGERS, Mr. MCNULTY, Mr. MELANCON, 
Mr. OBERSTAR, Mr. PAUL, Mr. PICKERING, Mr. RAHALL, Mr. REHBERG, 
Mr. RENZI, Mr. SALAZAR, Mr. SIMPSON, Mr. TIAHRT, Mr. WELCH of 
Vermont, Mr. WILSON of Ohio, Mr. YOUNG of Alaska, Mr. THORNBERRY, 
and Mr. ROSS) introduced the following bill; which was referred to the 
Committee on Energy and Commerce, and in addition to the Committee 
on Ways and Means, for a period to be subsequently determined by the 
Speaker, in each case for consideration of such provisions as fall within 
the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to protect 
and preserve access of Medicare beneficiaries in rural 
areas to health care providers under the Medicare Pro-
gram, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Health Care Access and Rural Equity (H–CARE) Act 
of 2007’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—MEDICARE HOSPITAL SERVICES 
Sec. 101. Fairness in the Medicare disproportionate share hospital (DSH) ad-
justment for rural hospitals. 
Sec. 102. Treatment of Medicare hospital reclassifications. 
Sec. 103. Critical access hospital improvements. 
Sec. 104. Rebasing for sole community hospitals. 
Sec. 105. Establishment of rural community hospital (RCH) program. 
Sec. 106. Hold harmless through 2012 for small rural hospitals and sole com-
munity hospitals under the prospective payment system for 
hospital outpatient department services under the Medicare 
program. 
TITLE II—MEDICARE PRACTITIONER SERVICES 
Sec. 201. Coverage of marriage and family therapist services and mental health 
counselor services under part B of the Medicare program. 
Sec. 202. Permanent treatment of certain physician pathology services under 
Medicare. 
Sec. 203. Extension of Medicare incentive payment program for physician scar-
city areas. 
Sec. 204. Extension of Medicare increase payments for ground ambulance serv-
ices in rural areas. 
Sec. 205. Extension of floor on Medicare work geographic adjustment. 
TITLE III—OTHER MEDICARE PROVISIONS 
Sec. 301. Ensuring proportional representation of interests of rural areas on 
MedPAC. 
Sec. 302. Rural health clinic improvements. 
Sec. 303. Use of medical conditions for coding ambulance services. 
Sec. 304. Improvement in payments to retain emergency and other capacity for 
ambulances in rural areas. 
Sec. 305. Medicare remote monitoring pilot projects. 
Sec. 306. Minimum payment rate by Medicare Advantage organizations for 
services furnished by a critical access hospital and a rural 
health clinic. 
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Sec. 307. Prompt payment by Medicare prescription drug plans and MA–PD 
plans under part D. 
Sec. 308. Extension of Medicare reasonable costs payments for certain clinical 
diagnostic laboratory tests furnished to hospital patients in cer-
tain rural areas. 
Sec. 309. Extension of temporary Medicare payment increase for home health 
services furnished in a rural area. 
TITLE IV—OTHER PROVISIONS 
Sec. 401. Health information technology grants for rural health care providers. 
Sec. 402. Rural health quality advisory commission and demonstration projects. 
Sec. 403. Rural health care services. 
Sec. 404. Community health center collaborative access expansion. 
Sec. 405. Facilitating the provision of telehealth services across State lines. 
Sec. 406. Expanded application of the 340B program to drugs provided in 
rural hospitals. 
TITLE I—MEDICARE HOSPITAL 
SERVICES 
SEC. 
101. 
FAIRNESS 
IN 
THE 
MEDICARE 
DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) ADJUST-
MENT FOR RURAL HOSPITALS. 
Section 1886(d)(5)(F)(xiv)(II) of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended— 
(1) by striking ‘‘or, in the case’’ and all that 
follows through ‘‘subparagraph (G)(iv)’’; and 
(2) by inserting at the end the following new 
sentence: ‘‘The preceding sentence shall not apply to 
any hospital with respect to discharges occurring on 
or after October 1, 2007.’’. 
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SEC. 102. TREATMENT OF MEDICARE HOSPITAL RECLASSI-
FICATIONS. 
(a) EXTENDING
CERTAIN
MEDICARE
HOSPITAL 
WAGE INDEX RECLASSIFICATIONS THROUGH FISCAL 
YEAR 2010.— 
(1) IN GENERAL.—Section 106(a) of the Medi-
care Improvements and Extension Act of 2006 (divi-
sion B of public Law 109–432) is amended by strik-
ing ‘‘September 30, 2007’’ and inserting ‘‘September 
30, 2010’’. 
(2) SPECIAL EXCEPTION RECLASSIFICATIONS.— 
The Secretary of Health and Human Services shall 
extend for discharges occurring through September 
30, 2013, the special exception reclassification of a 
sole community hospital located in a State with less 
than 10 people per square mile, made under the au-
thority of section 1886(d)(5)(I)(i) of the Social Se-
curity Act (42 U.S.C. 1395ww(d)(5)(I)(i)) and con-
tained in the final rule promulgated by the Secretary 
in the Federal Register on August 11, 2004 (69 
Fed. Reg. 49107). 
(b) DISREGARDING SECTION 508 HOSPITAL RECLAS-
SIFICATIONS FOR PURPOSES OF GROUP RECLASSIFICA-
TIONS.—Section 508 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 
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108–173, 42 U.S.C. 1395ww note) is amended by adding 
at the end the following new subsection: 
‘‘(g) DISREGARDING HOSPITAL RECLASSIFICATIONS 
FOR PURPOSES
OF GROUP RECLASSIFICATIONS.—For 
purposes of the reclassification of a group of hospitals in 
a geographic area under section 1886(d), a hospital reclas-
sified under this section (including any such reclassifica-
tion which is extended under section 106(a) of the Medi-
care Improvements and Extension Act of 2006) shall not 
be taken into account and shall not prevent the other hos-
pitals in such area from establishing such a group for such 
purpose.’’. 
SEC. 103. CRITICAL ACCESS HOSPITAL IMPROVEMENTS. 
(a) CLARIFICATION
OF PAYMENT
FOR CLINICAL 
LABORATORY TESTS FURNISHED BY CRITICAL ACCESS 
HOSPITALS.— 
(1) IN GENERAL.—Section 1834(g)(4) of the 
Social Security Act (42 U.S.C. 1395m(g)(4)) is 
amended— 
(A) in the heading, by striking ‘‘NO BENE-
FICIARY COST-SHARING’’ and inserting ‘‘TREAT-
MENT OF’’; and 
(B) by adding at the end the following new 
sentence: ‘‘For purposes of the preceding sen-
tence and section 1861(mm)(3), clinical diag-
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nostic laboratory services furnished by a critical 
access hospital shall be treated as being fur-
nished as part of outpatient critical access serv-
ices without regard to whether— 
‘‘(A) the individual with respect to whom 
such services are furnished is physically present 
in the critical access hospital at the time the 
specimen is collected; 
‘‘(B) such individual is registered as an 
outpatient on the records of, and receives such 
services directly from, the critical access hos-
pital; or 
‘‘(C) payment is (or, but for this sub-
section, would be) available for such services 
under the fee schedule established under section 
1833(h).’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to cost reporting peri-
ods beginning on or after October 1, 2003. 
(b) ELIMINATION OF ISOLATION TEST FOR COST- 
BASED AMBULANCE REIMBURSEMENT.— 
(1) IN
GENERAL.—Section 1834(l)(8) of the 
Social Security Act (42 U.S.C. 1395m(l)(8)) is 
amended— 
(A) in subparagraph (B)— 
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(i) by striking ‘‘owned and’’; and 
(ii) by inserting ‘‘(including when 
such services are provided by the entity 
under an arrangement with the hospital)’’ 
after ‘‘hospital’’; and 
(B) by striking the comma at the end of 
subparagraph (B) and all that follows and in-
serting a period. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to services furnished 
on or after January 1, 2008. 
(c) PROVISION OF A MORE FLEXIBLE ALTERNATIVE 
TO THE CAH DESIGNATION 25 INPATIENT BED LIMIT 
REQUIREMENT.— 
(1) IN
GENERAL.—Section 1820(c)(2) of the 
Social Security Act (42 U.S.C. 1395i–4(c)(2)) is 
amended— 
(A) in subparagraph (B)(iii), by striking 
‘‘provides not more than’’ and inserting ‘‘sub-
ject to subparagraph (F), provides not more 
than’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(F) ALTERNATIVE TO 25 INPATIENT BED 
LIMIT REQUIREMENT.— 
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‘‘(i) IN GENERAL.—A State may elect 
to treat a facility, with respect to the des-
ignation of the facility for a cost reporting 
period, as satisfying the requirement of 
subparagraph (B)(iii) relating to a max-
imum number of acute care inpatient beds 
if the facility elects, in accordance with a 
method specified by the Secretary and be-
fore the beginning of the cost reporting pe-
riod, to meet the requirement under clause 
(ii). 
‘‘(ii) ALTERNATE
REQUIREMENT.— 
The requirement under this clause, with 
respect to a facility and a cost reporting 
period, is that the total number of inpa-
tient bed days described in subparagraph 
(B)(iii) during such period will not exceed 
7,300. For purposes of this subparagraph, 
an individual who is an inpatient in a bed 
in the facility for a single day shall be 
counted as one inpatient bed day. 
‘‘(iii) WITHDRAWAL OF ELECTION.— 
The option described in clause (i) shall not 
apply to a facility for a cost reporting pe-
riod if the facility (for any two consecutive 
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cost reporting periods during the previous 
5 cost reporting periods) was treated under 
such option and had a total number of in-
patient bed days for each of such two cost 
reporting periods that exceeded the num-
ber specified in such clause.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to cost reporting peri-
ods beginning on or after the date of the enactment 
of this Act. 
SEC. 104. REBASING FOR SOLE COMMUNITY HOSPITALS. 
(a) REBASING PERMITTED.—Section 1886(b)(3) of 
the Social Security Act (42 U.S.C. 1395ww(b)(3)) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(K)(i) For cost reporting periods beginning on or 
after October 1, 2007, in the case of a sole community 
hospital there shall be substituted for the amount other-
wise determined under subsection (d)(5)(D)(i) of this sec-
tion, if such substitution results in a greater amount of 
payment under this section for the hospital— 
‘‘(I) with respect to discharges occurring in fis-
cal year 2008, 75 percent of the subsection 
(d)(5)(D)(i) amount (as described in subparagraph 
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(I)(i)(I)) and 25 percent of the subparagraph (K) 
rebased target amount (as defined in clause (ii)); 
‘‘(II) with respect to discharges occurring in fis-
cal year 2009, 50 percent of the subsection 
(d)(5)(D)(i) amount and 50 percent of the subpara-
graph (K) rebased target amount; 
‘‘(III) with respect to discharges occurring in 
fiscal year 2010, 25 percent of the subsection 
(d)(5)(D)(i) amount and 75 percent of the subpara-
graph (K) rebased target amount; and 
‘‘(IV) with respect to discharges occurring after 
fiscal year 2010, 100 percent of the subparagraph 
(K) rebased target amount. 
‘‘(ii) For purposes of this subparagraph, the ‘sub-
paragraph (K) rebased target amount’ has the meaning 
given the term ‘target amount’ in subparagraph (C), ex-
cept that— 
‘‘(I) there shall be substituted for the base cost 
reporting period the 12-month cost reporting period 
beginning during fiscal year 2002; 
‘‘(II) any reference in subparagraph (C)(i) to 
the ‘first cost reporting period’ described in such 
subparagraph is deemed a reference to the first cost 
reporting period beginning on or after October 1, 
2007; and 
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‘‘(III) the applicable percentage increase shall 
only be applied under subparagraph (C)(iv) for dis-
charges occurring in fiscal years beginning with fis-
cal year 2009.’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
1886(b)(3) of such Act (42 U.S.C. 1395ww(b)(3)) is 
amended— 
(1) in subparagraph (C), by inserting ‘‘and sub-
paragraph (K)’’ after ‘‘subject to subparagraph (I)’’ 
in the matter preceding clause (i); and 
(2) in subparagraph (I)(i)— 
(A) by striking ‘‘For’’ in the matter pre-
ceding subclause (I) and inserting ‘‘Subject to 
subparagraph (K), for’’; and 
(B) in subclause (I), by inserting ‘‘and 
subparagraph (K)’’ after ‘‘referred to in this 
clause’’. 
SEC. 105. ESTABLISHMENT OF RURAL COMMUNITY HOS-
PITAL (RCH) PROGRAM. 
(a) IN GENERAL.—Section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x), as amended by section 201, 
is amended by adding at the end of the following new sub-
section: 
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‘‘Rural Community Hospital; Rural Community Hospital 
Services 
‘‘(ddd)(1) The term ‘rural community hospital’ 
means a hospital (as defined in subsection (e)) that— 
‘‘(A) is located in a rural area (as defined in 
section 1886(d)(2)(D)) or treated as being so lo-
cated pursuant to section 1886(d)(8)(E); 
‘‘(B) subject to paragraph (2), has less than 51 
acute care inpatient beds, as reported in its most re-
cent cost report; 
‘‘(C) makes available 24-hour emergency care 
services; 
‘‘(D) subject to paragraph (3), has a provider 
agreement in effect with the Secretary and is open 
to the public as of January 1, 2008; and 
‘‘(E) applies to the Secretary for such designa-
tion. 
‘‘(2) For purposes of paragraph (1)(B), beds in a 
psychiatric or rehabilitation unit of the hospital which is 
a distinct part of the hospital shall not be counted. 
‘‘(3) Subparagraph (1)(D) shall not be construed to 
prohibit any of the following from qualifying as a rural 
community hospital: 
‘‘(A) A replacement facility (as defined by the 
Secretary in regulations in effect on January 1, 
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2008) with the same service area (as defined by the 
Secretary in regulations in effect on such date). 
‘‘(B) A facility obtaining a new provider num-
ber pursuant to a change of ownership. 
‘‘(C) A facility which has a binding written 
agreement with an outside, unrelated party for the 
construction, reconstruction, lease, rental, or financ-
ing of a building as of January 1, 2008. 
‘‘(4) Nothing in this subsection shall be construed as 
prohibiting a critical access hospital from qualifying as a 
rural community hospital if the critical access hospital 
meets the conditions otherwise applicable to hospitals 
under subsection (e) and section 1866. 
‘‘(5) Nothing in this subsection shall be construed as 
prohibiting a rural community hospital participating in 
the demonstration program under Section 410A of the 
Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173; 117 Stat. 
2313) from qualifying as a rural community hospital if 
the rural community hospital meets the conditions other-
wise applicable to hospitals under subsection (e) and sec-
tion 1866.’’. 
(b) PAYMENT.— 
(1) INPATIENT
HOSPITAL
SERVICES.—Section 
1814 of the Social Security Act (42 U.S.C. 1395f) 
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is amended by adding at the end the following new 
subsection: 
‘‘Payment for Inpatient Services Furnished in Rural 
Community Hospitals 
‘‘(m) The amount of payment under this part for in-
patient hospital services furnished in a rural community 
hospital, other than such services furnished in a psy-
chiatric or rehabilitation unit of the hospital which is a 
distinct part, is, at the election of the hospital in the appli-
cation referred to in section 1861(ddd)(1)(E)— 
‘‘(1) 101 percent of the reasonable costs of pro-
viding such services, without regard to the amount 
of the customary or other charge, or 
‘‘(2) the amount of payment provided for under 
the prospective payment system for inpatient hos-
pital services under section 1886(d).’’. 
(2) OUTPATIENT SERVICES.—Section 1834 of 
such Act (42 U.S.C. 1395m) is amended by adding 
at the end the following new subsection: 
‘‘(n) PAYMENT FOR OUTPATIENT SERVICES FUR-
NISHED
IN
RURAL
COMMUNITY
HOSPITALS.—The 
amount of payment under this part for outpatient services 
furnished in a rural community hospital is, at the election 
of the hospital in the application referred to in section 
1861(ddd)(1)(E)— 
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‘‘(1) 101 percent of the reasonable costs of pro-
viding such services, without regard to the amount 
of the customary or other charge and any limitation 
under section 1861(v)(1)(U), or 
‘‘(2) the amount of payment provided for under 
the prospective payment system for covered OPD 
services under section 1833(t).’’. 
(3) EXEMPTION FROM 30-PERCENT REDUCTION 
IN
REIMBURSEMENT
FOR
BAD
DEBT.—Section 
1861(v)(1)(T) 
of 
such 
Act 
(42 
U.S.C. 
1395x(v)(1)(T)) is amended by inserting ‘‘(other 
than for a rural community hospital)’’ after ‘‘In de-
termining such reasonable costs for hospitals’’. 
(c) BENEFICIARY COST-SHARING FOR OUTPATIENT 
SERVICES.—Section 1834(n) of such Act (as added by 
subsection (b)(2)) is amended— 
(1) by redesignating paragraphs (1) and (2) as 
subparagraphs (A) and (B), respectively; 
(2) by inserting ‘‘(1)’’ after ‘‘(n)’’; and 
(3) by adding at the end the following: 
‘‘(2) The amounts of beneficiary cost-sharing for out-
patient services furnished in a rural community hospital 
under this part shall be as follows: 
‘‘(A) For items and services that would have 
been paid under section 1833(t) if provided by a 
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hospital, the amount of cost-sharing determined 
under paragraph (8) of such section. 
‘‘(B) For items and services that would have 
been paid under section 1833(h) if furnished by a 
provider or supplier, no cost-sharing shall apply. 
‘‘(C) For all other items and services, the 
amount of cost-sharing that would apply to the item 
or service under the methodology that would be used 
to determine payment for such item or service if pro-
vided by a physician, provider, or supplier, as the 
case may be.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) PART
A
PAYMENT.—Section 1814(b) of 
such Act (42 U.S.C. 1395f(b)) is amended in the 
matter preceding paragraph (1) by inserting ‘‘other 
than inpatient hospital services furnished by a rural 
community hospital,’’ after ‘‘critical access hospital 
services,’’. 
(2) PART
B
PAYMENT.—Section 1833(a) of 
such Act (42 U.S.C. 1395l(a)) is amended— 
(A) in paragraph (2), in the matter before 
subparagraph (A), by striking ‘‘and (I)’’ and in-
serting ‘‘(I), and (K)’’; 
(B) by striking ‘‘and’’ at the end of para-
graph (8); 
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(C) by striking the period at the end of 
paragraph (9) and inserting ‘‘; and’’; and 
(D) by adding at the end the following: 
‘‘(10) in the case of outpatient services fur-
nished by a rural community hospital, the amounts 
described in section 1834(n).’’. 
(3) TECHNICAL AMENDMENTS.— 
(A) CONSULTATION
WITH
STATE
AGEN-
CIES.—Section 1863 of such Act (42 U.S.C. 
1395z) is amended by striking ‘‘and (dd)(2)’’ 
and 
inserting 
‘‘(dd)(2), 
(mm)(1), 
and 
(ddd)(1)’’. 
(B) 
PROVIDER
AGREEMENTS.—Section 
1866(a)(2)(A) 
of 
such 
Act 
(42 
U.S.C. 
1395cc(a)(2)(A)) is amended by inserting ‘‘sec-
tion 1834(n)(2),’’ after ‘‘section 1833(b),’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after October 1, 2007. 
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SEC. 106. HOLD HARMLESS THROUGH 2012 FOR SMALL 
RURAL HOSPITALS AND SOLE COMMUNITY 
HOSPITALS UNDER THE PROSPECTIVE PAY-
MENT SYSTEM FOR HOSPITAL OUTPATIENT 
DEPARTMENT SERVICES UNDER THE MEDI-
CARE PROGRAM. 
Section 1833(t)(7)(D)(i) of the Social Security Act 
(42 U.S.C. 1395l(t)(7)(D)) is amended— 
(1) in subclause (II)— 
(A) by striking ‘‘January 1, 2009’’ and in-
serting ‘‘January 1, 2008’’; 
(B) by striking ‘‘2006, 2007, or 2008’’ and 
inserting ‘‘2006 or 2007’’; and 
(C) by striking ‘‘95 percent, 90 percent, 
and 85 percent’’ and inserting ‘‘95 percent and 
90 percent’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(III) In the case of a hospital located 
in a rural area and that has not more than 
100 beds or a sole community hospital (as 
defined in section 1886(d)(5)(D)(iii)), for 
covered OPD services furnished after De-
cember 31, 2007, and before January 1, 
2013, for which the PPS amount is less 
than the pre-BBA amount, the amount of 
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payment under this subsection shall be in-
creased by the amount of such dif-
ference.’’. 
TITLE II—MEDICARE 
PRACTITIONER SERVICES 
SEC. 201. COVERAGE OF MARRIAGE AND FAMILY THERA-
PIST SERVICES AND MENTAL HEALTH COUN-
SELOR SERVICES UNDER PART B OF THE 
MEDICARE PROGRAM. 
(a) COVERAGE OF SERVICES.— 
(1) IN
GENERAL.—Section 1861(s)(2) of the 
Social Security Act (42 U.S.C. 1395x(s)(2)) is 
amended— 
(A) in subparagraph (Z), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (AA), by inserting 
‘‘and’’ at the end; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(BB) marriage and family therapist services 
(as defined in subsection (ccc)(1)) and mental health 
counselor 
services 
(as 
defined 
in 
subsection 
(ccc)(3));’’. 
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(2) DEFINITIONS.—Section 1861 of such Act 
(42 U.S.C. 1395x) is amended by adding at the end 
the following new subsection: 
‘‘Marriage and Family Therapist Services; Marriage and 
Family Therapist; Mental Health Counselor Serv-
ices; Mental Health Counselor 
‘‘(ccc)(1) The term ‘marriage and family therapist 
services’ means services performed by a marriage and 
family therapist (as defined in paragraph (2)) for the diag-
nosis and treatment of mental illnesses, which the mar-
riage and family therapist is legally authorized to perform 
under State law (or the State regulatory mechanism pro-
vided by State law) of the State in which such services 
are performed, as would otherwise be covered if furnished 
by a physician or as an incident to a physician’s profes-
sional service, but only if no facility or other provider 
charges or is paid any amounts with respect to the fur-
nishing of such services. 
‘‘(2) The term ‘marriage and family therapist’ means 
an individual who— 
‘‘(A) possesses a master’s or doctoral degree 
which qualifies for licensure or certification as a 
marriage and family therapist pursuant to State 
law; 
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‘‘(B) after obtaining such degree has performed 
at least 2 years of clinical supervised experience in 
marriage and family therapy; and 
‘‘(C) in the case of an individual performing 
services in a State that provides for licensure or cer-
tification of marriage and family therapists, is li-
censed or certified as a marriage and family thera-
pist in such State. 
‘‘(3) The term ‘mental health counselor services’ 
means services performed by a mental health counselor (as 
defined in paragraph (4)) for the diagnosis and treatment 
of mental illnesses which the mental health counselor is 
legally authorized to perform under State law (or the 
State regulatory mechanism provided by the State law) of 
the State in which such services are performed, as would 
otherwise be covered if furnished by a physician or as inci-
dent to a physician’s professional service, but only if no 
facility or other provider charges or is paid any amounts 
with respect to the furnishing of such services. 
‘‘(4) The term ‘mental health counselor’ means an 
individual who— 
‘‘(A) possesses a master’s or doctor’s degree in 
mental health counseling or a related field; 
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‘‘(B) after obtaining such a degree has per-
formed at least 2 years of supervised mental health 
counselor practice; and 
‘‘(C) in the case of an individual performing 
services in a State that provides for licensure or cer-
tification of mental health counselors or professional 
counselors, is licensed or certified as a mental health 
counselor or professional counselor in such State.’’. 
(3) PROVISION
FOR
PAYMENT
UNDER
PART 
B.—Section 1832(a)(2)(B) of such Act (42 U.S.C. 
1395k(a)(2)(B)) is amended by adding at the end 
the following new clause: 
‘‘(v) marriage and family therapist 
services and mental health counselor serv-
ices;’’. 
(4) AMOUNT OF PAYMENT.—Section 1833(a)(1) 
of such Act (42 U.S.C. 1395l(a)(1)) is amended— 
(A) by striking ‘‘and (V)’’ and inserting 
‘‘(V)’’; and 
(B) by inserting before the semicolon at 
the end the following: ‘‘, and (W) with respect 
to marriage and family therapist services and 
mental health counselor services under section 
1861(s)(2)(BB), the amounts paid shall be 80 
percent of the lesser of the actual charge for 
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the services or 75 percent of the amount deter-
mined for payment of a psychologist under sub-
paragraph (L)’’. 
(5) EXCLUSION
OF
MARRIAGE
AND
FAMILY 
THERAPIST SERVICES AND MENTAL HEALTH COUN-
SELOR SERVICES FROM SKILLED NURSING FACILITY 
PROSPECTIVE
PAYMENT
SYSTEM.—Section 
1888(e)(2)(A)(ii) 
of 
such 
Act 
(42 
U.S.C. 
1395yy(e)(2)(A)(ii)) is amended by inserting ‘‘mar-
riage and family therapist services (as defined in 
section 1861(ccc)(1)), mental health counselor serv-
ices (as defined in section 1861(ccc)(3)),’’ after 
‘‘qualified psychologist services,’’. 
(6) INCLUSION
OF
MARRIAGE
AND
FAMILY 
THERAPISTS AND MENTAL HEALTH COUNSELORS AS 
PRACTITIONERS FOR ASSIGNMENT OF CLAIMS.—Sec-
tion 1842(b)(18)(C) of such Act (42 U.S.C. 
1395u(b)(18)(C)) is amended by adding at the end 
the following new clauses: 
‘‘(vii) A marriage and family therapist (as de-
fined in section 1861(ccc)(2)). 
‘‘(viii) A mental health counselor (as defined in 
section 1861(ccc)(4)).’’. 
(b) COVERAGE OF CERTAIN MENTAL HEALTH SERV-
ICES PROVIDED IN CERTAIN SETTINGS.— 
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(1) RURAL HEALTH CLINICS AND FEDERALLY 
QUALIFIED
HEALTH
CENTERS.—Section 
1861(aa)(1)(B) of the Social Security Act (42 
U.S.C. 1395x(aa)(1)(B)) is amended by striking ‘‘or 
by a clinical social worker (as defined in subsection 
(hh)(1)),’’ and inserting ‘‘, by a clinical social worker 
(as defined in subsection (hh)(1)), by a marriage 
and family therapist (as defined in subsection 
(ccc)(2)), or by a mental health counselor (as de-
fined in subsection (ccc)(4)),’’. 
(2) 
HOSPICE
PROGRAMS.—Section 
1861(dd)(2)(B)(i)(III) of such Act (42 U.S.C. 
1395x(dd)(2)(B)(i)(III)) is amended by inserting ‘‘or 
one marriage and family therapist (as defined in 
subsection (ccc)(2))’’ after ‘‘social worker’’. 
(c) AUTHORIZATION
OF MARRIAGE
AND FAMILY 
THERAPISTS TO DEVELOP DISCHARGE PLANS FOR POST- 
HOSPITAL SERVICES.—Section 1861(ee)(2)(G) of the So-
cial Security Act (42 U.S.C. 1395x(ee)(2)(G)) is amended 
by inserting ‘‘marriage and family therapist (as defined 
in subsection (ccc)(2)),’’ after ‘‘social worker,’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to services furnished 
on or after January 1, 2008. 
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SEC. 202. PERMANENT TREATMENT OF CERTAIN PHYSI-
CIAN PATHOLOGY SERVICES UNDER MEDI-
CARE. 
Section 1848(i) of the Social Security Act (42 U.S.C. 
1395w–4(i)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) TREATMENT OF CERTAIN PHYSICIAN PA-
THOLOGY SERVICES.— 
‘‘(A) IN GENERAL.—With respect to serv-
ices furnished on or after January 1, 2008, if 
an independent laboratory furnishes the tech-
nical component of a physician pathology serv-
ice to a fee-for-service Medicare beneficiary who 
is an inpatient or outpatient of a covered hos-
pital, the Secretary shall treat such component 
as a service for which payment shall be made 
to the laboratory under this section and not as 
an inpatient hospital service for which payment 
is made to the hospital under section 1886(d) 
or as a hospital outpatient service for which 
payment is made to the hospital under section 
1833(t). 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) COVERED HOSPITAL.— 
‘‘(I) IN
GENERAL.—The term 
‘covered hospital’ means, with respect 
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to an inpatient or outpatient, a hos-
pital that had an arrangement with 
an independent laboratory that was in 
effect as of July 22, 1999, under 
which a laboratory furnished the tech-
nical component of physician pathol-
ogy services to fee-for-service Medi-
care beneficiaries who were hospital 
inpatients or outpatients, respectively, 
and submitted claims for payment for 
such component to a carrier with a 
contract under section 1842 and not 
to the hospital. 
‘‘(II) CHANGE
IN
OWNERSHIP 
DOES
NOT
AFFECT
DETERMINA-
TION.—A change in ownership with 
respect to a hospital on or after the 
date referred to in subclause (I) shall 
not affect the determination of wheth-
er such hospital is a covered hospital 
for purposes of such subclause. 
‘‘(ii) 
FEE-FOR-SERVICE
MEDICARE 
BENEFICIARY.—The term ‘fee-for-service 
Medicare beneficiary’ means an individual 
who is entitled to (or enrolled for) benefits 
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under part A, or enrolled under this part, 
or both, but who is not enrolled in any of 
the following: 
‘‘(I) A Medicare Advantage plan 
under part C. 
‘‘(II) A plan offered by an eligi-
ble organization under section 1876. 
‘‘(III) A program of all-inclusive 
care for the elderly (PACE) under 
section 1894. 
‘‘(IV) A social health mainte-
nance organization (SHMO) dem-
onstration project established under 
section 4018(b) of the Omnibus 
Budget Reconciliation Act of 1987 
(Public Law 100–203). 
‘‘(C) REFERENCE.—For the provision re-
lated to the treatment of certain services fur-
nished prior to January 1, 2008, see section 
542 of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 
2000, as amended by section 732 of the Medi-
care Prescription Drug, Improvement, and 
Modernization Act of 2003 and section 104 of 
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the Medicare Improvements and Extension Act 
of 2006 (division B of Public Law 109–432).’’. 
SEC. 203. EXTENSION OF MEDICARE INCENTIVE PAYMENT 
PROGRAM FOR PHYSICIAN SCARCITY AREAS. 
Section 1833(u)(1) of the Social Security Act (42 
U.S.C. 1395l(u)(1)) is amended by striking ‘‘2008’’ and 
inserting ‘‘2013’’. 
SEC. 204. EXTENSION OF MEDICARE INCREASE PAYMENTS 
FOR 
GROUND 
AMBULANCE 
SERVICES 
IN 
RURAL AREAS. 
Section 1834(l)(13) of the Social Security Act (42 
U.S.C. 1395m(l)(13)) is amended— 
(1) in subparagraph (A)— 
(A) in the matter before clause (i), by 
striking ‘‘furnished on or after July 1, 2004, 
and before January 1, 2007,’’; 
(B) in clause (i), by inserting ‘‘for services 
furnished on or after July 1, 2004, and before 
January 1, 2012,’’ after ‘‘in such paragraph,’’; 
and 
(C) in clause (ii), by inserting ‘‘for services 
furnished on or after July 1, 2004, and before 
January 1, 2007,’’ after ‘‘in clause (i),’’; and 
(2) in subparagraph (B)— 
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(A) in the heading, by striking ‘‘AFTER 
2006’’ and inserting ‘‘FOR SUBSEQUENT PERI-
ODS’’; 
(B) by inserting ‘‘clauses (i) and (ii) of’’ 
before ‘‘subparagraph (A)’’; and 
(C) by striking ‘‘in such subparagraph’’ 
and inserting ‘‘in the respective clause’’. 
SEC. 205. EXTENSION OF FLOOR ON MEDICARE WORK GEO-
GRAPHIC ADJUSTMENT. 
Section 1848(e)(1)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)(E)) is amended by striking ‘‘2008’’ 
and inserting ‘‘2012’’. 
TITLE III—OTHER MEDICARE 
PROVISIONS 
SEC. 301. ENSURING PROPORTIONAL REPRESENTATION OF 
INTERESTS OF RURAL AREAS ON MEDPAC. 
(a) IN GENERAL.—Section 1805(c)(2) of the Social 
Security Act (42 U.S.C. 1395b–6(c)(2)) is amended— 
(1) in subparagraph (A), by inserting ‘‘con-
sistent with subparagraph (E)’’ after ‘‘rural rep-
resentatives’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) PROPORTIONAL REPRESENTATION OF 
INTERESTS OF RURAL AREAS.—In order to pro-
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vide a balance between urban and rural rep-
resentatives under subparagraph (A), the pro-
portion of members who represent the interests 
of health care providers and Medicare bene-
ficiaries located in rural areas shall be no less 
than the proportion, of the total number of 
Medicare beneficiaries, who reside in rural 
areas.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply with respect to appointments 
made to the Medicare Payment Advisory Commission after 
the date of the enactment of this Act. 
SEC. 302. RURAL HEALTH CLINIC IMPROVEMENTS. 
Section 1833(f) of the Social Security Act (42 U.S.C. 
1395l(f)) is amended— 
(1) in paragraph (1), by striking ‘‘, and’’ at the 
end and inserting a semicolon; 
(2) in paragraph (2)— 
(A) by inserting ‘‘(before 2008)’’ after ‘‘in 
a subsequent year’’; and 
(B) by striking the period at the end and 
inserting a semicolon; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(3) in 2008, at $92 per visit; and 
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‘‘(4) in a subsequent year, at the limit estab-
lished under this subsection for the previous year in-
creased by the percentage increase in the MEI (as 
so defined) applicable to primary care services (as so 
defined) furnished as of the first day of that year.’’. 
SEC. 303. USE OF MEDICAL CONDITIONS FOR CODING AM-
BULANCE SERVICES. 
Section 1834(l)(7) of the Social Security Act (42 
U.S.C. 1395m(l)(7)) is amended to read as follows: 
‘‘(7) CODING SYSTEM.— 
‘‘(A) IN GENERAL.—The Secretary shall, 
in accordance with section 1173(c)(1)(B) and 
not later than January 1, 2008, establish a 
mandatory system or systems for the coding of 
claims for ambulance services for which pay-
ment is made under this subsection, including a 
code set specifying the medical condition of the 
individual who is transported and the level of 
service that is appropriate for the transpor-
tation of an individual with that medical condi-
tion. 
‘‘(B) MEDICAL CONDITIONS.—The code set 
established under subparagraph (A) shall take 
into account the list of medical conditions devel-
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oped in the course of the negotiated rulemaking 
process conducted under paragraph (1).’’. 
SEC. 304. IMPROVEMENT IN PAYMENTS TO RETAIN EMER-
GENCY AND OTHER CAPACITY FOR AMBU-
LANCES IN RURAL AREAS. 
(a) IN GENERAL.—Section 1834(l) of the Social Se-
curity Act (42 U.S.C. 1395m(l)) is amended by adding 
at the end the following new paragraph: 
‘‘(15) ADDITIONAL PAYMENTS FOR PROVIDERS 
FURNISHING
AMBULANCE
SERVICES
IN
RURAL 
AREAS.— 
‘‘(A) IN GENERAL.—In the case of ground 
ambulance services furnished on or after Janu-
ary 1, 2008, for which the transportation origi-
nates in a rural area (as determined under sub-
paragraph (B)), the Secretary shall provide for 
a percent increase in the base rate of the fee 
schedule for a trip identified under this sub-
section. 
‘‘(B) IDENTIFICATION OF RURAL AREAS.— 
The Secretary, in consultation with the Office 
of Rural Health Policy, shall use the Rural- 
Urban Commuting Areas (RUCA) coding sys-
tem, adopted by that Office, to designate rural 
areas for the purposes of this paragraph. A 
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rural area is any area in RUCA levels 2 
through 10 and any unclassified area. 
‘‘(C) TIERING
OF
RURAL
AREAS.—The 
Secretary shall designate 4 tiers of rural areas, 
using a ZIP Code population-based method-
ology generated by the RUCA coding system, as 
follows: 
‘‘(i) TIER 1.—A rural area that is a 
high metropolitan commuting area, in 
which 30 percent or more of the com-
muting flow is to an urban area, as des-
ignated by the Bureau of the Census 
(RUCA level 2). 
‘‘(ii) TIER 2.—A rural area that is a 
low metropolitan commuting area, in which 
less than 30 percent of the commuting flow 
is to an urban area or to a large town, as 
designated by the Bureau of the Census 
(RUCA levels 3–6). 
‘‘(iii) TIER 3.—A rural area that is a 
small town core, as designated by the Bu-
reau of the Census, in which no significant 
portion of the commuting flow is to an 
area of population greater than 10,000 
people (RUCA levels 7–9). 
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‘‘(iv) TIER 4.—A rural area in which 
there is no dominant commuting flow 
(RUCA level 10) and any unclassified area. 
The Secretary shall consult with the Office of 
Rural Health Policy not less often than every 2 
years to update the designation of rural areas 
in accordance with any changes that are made 
to the RUCA system. 
‘‘(D) PAYMENT ADJUSTMENTS FOR TRIPS 
IN RURAL AREAS.—The Secretary shall adjust 
the payment rate under this section for ambu-
lance trips that originate in each of the tiers es-
tablished in subparagraph (C) according to the 
national average cost of full-cost providers for 
providing ambulance services in each such 
tier.’’. 
(b) REVIEW OF PAYMENTS FOR RURAL AMBULANCE 
SERVICES AND REPORT TO CONGRESS.— 
(1) REVIEW.—Not later than July 1, 2009, the 
Secretary of Health and Human Services shall re-
view the system for adjusting payments for rural 
ambulance services under section 1834(l)(15) of the 
Social Security Act, as added by subsection (a), to 
determine the adequacy and appropriateness of such 
adjustments. In conducting such review, the Sec-
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retary shall consult with providers and suppliers af-
fected by such adjustments and with representatives 
of the ambulance industry generally to determine— 
(A) whether such adjustments adequately 
cover the additional costs incurred in serving 
areas of low population density; and 
(B) whether the tiered structure for mak-
ing such adjustments appropriately reflects the 
difference in costs of providing services in dif-
ferent types of rural areas. 
(2) REPORT.—Not later than January 1, 2011, 
the Secretary shall submit to Congress a report on 
the review conducted under paragraph (1) together 
with any recommendations for revision to the sys-
tems for adjusting payments for ambulance services 
in rural areas that the Secretary of Health and 
Human Services determines appropriate. 
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section 
1834(l) of the Social Security Act (42 U.S.C. 1395m(l)), 
as amended by subsection (a), is amended by adding at 
the end the following new paragraph: 
‘‘(16) DESIGNATION
OF
RURAL
AREAS
FOR 
MILEAGE PAYMENT PURPOSES.—In establishing any 
differential in the amount of payment for mileage 
between rural and urban areas in the fee schedule 
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established under paragraph (1), the Secretary shall, 
in the case of ambulance services furnished on or 
after January 1, 2008, identify rural areas in the 
same manner as provided in paragraph (15)(B).’’. 
(2) Section 1834(l)(12)(A) of such Act (42 U.S.C. 
1395m(l)(12)(A)) is amended by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2008’’. 
(3) Section 1834(l)(13)(A)(i) of such Act (42 U.S.C. 
1395m(l)(13)(A)(i)) is amended— 
(A) by inserting ‘‘(or in the case of such serv-
ices furnished in 2008, in a rural area identified by 
the Secretary under paragraph (15)(B))’’ after 
‘‘such paragraph’’; and 
(B) by striking ‘‘paragraphs (11) and (12)’’ 
and inserting ‘‘paragraphs (11), (12), and (15)’’. 
SEC. 
305. 
MEDICARE 
REMOTE 
MONITORING 
PILOT 
PROJECTS. 
(a) PILOT PROJECTS.— 
(1) IN
GENERAL.—Not later than 9 months 
after the date of enactment of this Act, the Sec-
retary of Health and Human Services (in this sec-
tion referred to as the ‘‘Secretary’’) shall conduct 
pilot projects under title XVIII of the Social Secu-
rity Act for the purpose of providing incentives to 
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home health agencies to utilize home monitoring and 
communications technologies that— 
(A) enhance health outcomes for Medicare 
beneficiaries; and 
(B) reduce expenditures under such title. 
(2) SITE REQUIREMENTS.— 
(A) URBAN AND RURAL.—The Secretary 
shall conduct the pilot projects under this sec-
tion in both urban and rural areas. 
(B) SITE IN A SMALL STATE.—The Sec-
retary shall conduct at least 3 of the pilot 
projects in a State with a population of less 
than 1,000,000. 
(3) DEFINITION OF HOME HEALTH AGENCY.— 
In this section, the term ‘‘home health agency’’ has 
the meaning given that term in section 1861(o) of 
the Social Security Act (42 U.S.C. 1395x(o)). 
(b) MEDICARE BENEFICIARIES WITHIN THE SCOPE 
OF PROJECTS.—The Secretary shall specify the criteria 
for identifying those Medicare beneficiaries who shall be 
considered within the scope of the pilot projects under this 
section for purposes of the application of subsection (c) 
and for the assessment of the effectiveness of the home 
health agency in achieving the objectives of this section. 
Such criteria may provide for the inclusion in the projects 
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of Medicare beneficiaries who begin receiving home health 
services under title XVIII of the Social Security Act after 
the date of the implementation of the projects. 
(c) INCENTIVES.— 
(1) PERFORMANCE
TARGETS.—The Secretary 
shall establish for each home health agency partici-
pating in a pilot project under this section a per-
formance target using one of the following meth-
odologies, as determined appropriate by the Sec-
retary: 
(A) ADJUSTED HISTORICAL PERFORMANCE 
TARGET.—The Secretary shall establish for the 
agency— 
(i) a base expenditure amount equal 
to the average total payments made to the 
agency under parts A and B of title XVIII 
of the Social Security Act for Medicare 
beneficiaries determined to be within the 
scope of the pilot project in a base period 
determined by the Secretary; and 
(ii) an annual per capita expenditure 
target for such beneficiaries, reflecting the 
base expenditure amount adjusted for risk 
and adjusted growth rates. 
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(B) COMPARATIVE
PERFORMANCE
TAR-
GET.—The Secretary shall establish for the 
agency a comparative performance target equal 
to the average total payments under such parts 
A and B during the pilot project for comparable 
individuals in the same geographic area that 
are not determined to be within the scope of the 
pilot project. 
(2) INCENTIVE.—Subject to paragraph (3), the 
Secretary shall pay to each participating home care 
agency an incentive payment for each year under the 
pilot project equal to a portion of the Medicare sav-
ings realized for such year relative to the perform-
ance target under paragraph (1). 
(3) LIMITATION ON EXPENDITURES.—The Sec-
retary shall limit incentive payments under this sec-
tion in order to ensure that the aggregate expendi-
tures under title XVIII of the Social Security Act 
(including incentive payments under this subsection) 
do not exceed the amount that the Secretary esti-
mates would have been expended if the pilot projects 
under this section had not been implemented. 
(d) WAIVER AUTHORITY.—The Secretary may waive 
such provisions of titles XI and XVIII of the Social Secu-
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rity Act as the Secretary determines to be appropriate for 
the conduct of the pilot projects under this section. 
(e) REPORT TO CONGRESS.—Not later than 5 years 
after the date that the first pilot project under this section 
is implemented, the Secretary shall submit to Congress a 
report on the pilot projects. Such report shall contain a 
detailed description of issues related to the expansion of 
the projects under subsection (f) and recommendations for 
such legislation and administrative actions as the Sec-
retary considers appropriate. 
(f) EXPANSION.—If the Secretary determines that 
any of the pilot projects under this section enhance health 
outcomes for Medicare beneficiaries and reduce expendi-
tures under title XVIII of the Social Security Act, the Sec-
retary may initiate comparable projects in additional 
areas. 
(g) INCENTIVE PAYMENTS HAVE NO EFFECT ON 
OTHER MEDICARE PAYMENTS TO AGENCIES.—An incen-
tive payment under this section— 
(1) shall be in addition to the payments that a 
home health agency would otherwise receive under 
title XVIII of the Social Security Act for the provi-
sion of home health services; and 
(2) shall have no effect on the amount of such 
payments. 
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SEC. 306. MINIMUM PAYMENT RATE BY MEDICARE ADVAN-
TAGE ORGANIZATIONS FOR SERVICES FUR-
NISHED BY A CRITICAL ACCESS HOSPITAL 
AND A RURAL HEALTH CLINIC. 
(a) IN GENERAL.—Section 1857(e) of the Social Se-
curity Act (42 U.S.C. 1395w–27(e)) is amended by adding 
at the end the following: 
‘‘(4) MINIMUM PAYMENT RATE FOR SERVICES 
FURNISHED BY A CRITICAL ACCESS HOSPITAL AND 
A RURAL HEALTH CLINIC.—A contract under this 
section between an MA organization and the Sec-
retary for the offering of an MA plan shall require 
the organization to provide for a payment rate under 
the plan for inpatient and outpatient critical access 
hospital services and rural health clinic services fur-
nished to enrollees of the plan and for extended care 
services furnished by a critical access hospital under 
an agreement entered into under section 1883 to 
such enrollees (whether or not the services are fur-
nished pursuant to an agreement between such orga-
nization and a critical access hospital or a rural 
health clinic) that is not less than— 
‘‘(A) the applicable payment rate estab-
lished under part A or part B (which includes 
the payment of an interim rate and a subse-
quent cost reconciliation) with respect to the 
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critical access hospital for such inpatient, out-
patient, and extended care services or the rural 
health clinic for such rural health clinic serv-
ices; or 
‘‘(B) if the critical access hospital or the 
rural health clinic determines appropriate, 103 
percent of the applicable interim payment rate 
established under part A or part B with respect 
to the critical access hospital for such inpatient, 
outpatient, and extended care services or the 
rural health clinic for such rural health clinic 
services.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to Medicare Advantage contract 
years beginning on or after January 1, 2008. 
SEC. 307. PROMPT PAYMENT BY MEDICARE PRESCRIPTION 
DRUG PLANS AND MA–PD PLANS UNDER 
PART D. 
(a) APPLICATION TO PRESCRIPTION DRUG PLANS.— 
Section 1860D–12(b) of the Social Security Act (42 
U.S.C. 1395w–112(b)) is amended by adding at the end 
the following new paragraph: 
‘‘(4) PROMPT PAYMENT OF CLEAN CLAIMS.— 
‘‘(A) PROMPT
PAYMENT.—Each contract 
entered into with a PDP sponsor under this 
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subsection with respect to a prescription drug 
plan offered by such sponsor shall provide that 
payment shall be issued, mailed, or otherwise 
transmitted with respect to all clean claims sub-
mitted under this part within the applicable 
number of calendar days after the date on 
which the claim is received. 
‘‘(B) DEFINITIONS.—In this paragraph: 
‘‘(i) CLEAN CLAIM.—The term ‘clean 
claim’ means a claim, with respect to a 
covered part D drug, that has no apparent 
defect or impropriety (including any lack 
of any required substantiating documenta-
tion) or particular circumstance requiring 
special treatment that prevents timely pay-
ment from being made on the claim under 
this part. 
‘‘(ii) APPLICABLE
NUMBER
OF
CAL-
ENDAR DAYS.—The term ‘applicable num-
ber of calendar days’ means— 
‘‘(I) with respect to claims sub-
mitted 
electronically, 
calendar 
days; and 
‘‘(II) with respect to claims sub-
mitted otherwise, 30 calendar days. 
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‘‘(C) INTEREST PAYMENT.—If payment is 
not issued, mailed, or otherwise transmitted 
within the applicable number of calendar days 
(as defined in subparagraph (B)) after a clean 
claim is received, interest shall be paid at a rate 
used for purposes of section 3902(a) of title 31, 
United States Code (relating to interest pen-
alties for failure to make prompt payments), for 
the period beginning on the day after the re-
quired payment date and ending on the date on 
which payment is made. 
‘‘(D) PROCEDURES INVOLVING CLAIMS.— 
‘‘(i) CLAIMS DEEMED TO BE CLEAN 
CLAIMS.— 
‘‘(I) IN GENERAL.—A claim for a 
covered part D drug shall be deemed 
to be a clean claim for purposes of 
this paragraph if the PDP sponsor in-
volved does not provide a notification 
of deficiency to the claimant by the 
10th day that begins after the date on 
which the claim is submitted. 
‘‘(II) NOTIFICATION
OF
DEFI-
CIENCY.—For purposes of subclause 
(II), the term ‘notification of defi-
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ciency’ means a notification that 
specifies all defects or improprieties in 
the claim involved and that lists all 
additional information or documents 
necessary for the proper processing 
and payment of the claim. 
‘‘(ii) PAYMENT OF CLEAN PORTIONS 
OF CLAIMS.—A PDP sponsor shall, as ap-
propriate, pay any portion of a claim for a 
covered part D drug that would be a clean 
claim but for a defect or impropriety in a 
separate portion of the claim in accordance 
with subparagraph (A). 
‘‘(iii) OBLIGATION TO PAY.—A claim 
for a covered part D drug submitted to a 
PDP sponsor that is not paid or contested 
by the provider within the applicable num-
ber of calendar days (as defined in sub-
paragraph (B)) shall be deemed to be a 
clean claim and shall be paid by the PDP 
sponsor in accordance with subparagraph 
(A). 
‘‘(iv) DATE OF PAYMENT OF CLAIM.— 
Payment of a clean claim under subpara-
graph (A) is considered to have been made 
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on the date on which full payment is re-
ceived by the provider. 
‘‘(E) 
ELECTRONIC
TRANSFER
OF 
FUNDS.—A PDP sponsor shall pay all clean 
claims submitted electronically by an electronic 
funds transfer mechanism.’’. 
(b) APPLICATION
TO
MA–PD PLANS.—Section 
1857(f) of such Act (42 U.S.C. 1395w–27) is amended 
by adding at the end the following new paragraph: 
‘‘(3) INCORPORATION
OF
CERTAIN
PRESCRIP-
TION DRUG PLAN CONTRACT REQUIREMENTS.—The 
provisions of section 1860D–12(b)(4) shall apply to 
contracts with a Medicare Advantage organization in 
the same manner as they apply to contracts with a 
PDP sponsor offering a prescription drug plan 
under part D.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contracts entered into or re-
newed on or after the date of the enactment of this Act. 
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SEC. 308. EXTENSION OF MEDICARE REASONABLE COSTS 
PAYMENTS FOR CERTAIN CLINICAL DIAG-
NOSTIC LABORATORY TESTS FURNISHED TO 
HOSPITAL PATIENTS IN CERTAIN RURAL 
AREAS. 
Section 416(b) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 
108–173; 117 Stat. 2282; 42 U.S.C. 1395l–4(b)) is 
amended by striking ‘‘2-year’’ and inserting ‘‘8-year’’. 
SEC. 309. EXTENSION OF TEMPORARY MEDICARE PAYMENT 
INCREASE FOR HOME HEALTH SERVICES 
FURNISHED IN A RURAL AREA. 
(a) IN GENERAL.—Section 421 of the Medicare Pre-
scription Drug, Improvement, and Modernization Act of 
2003 (Public Law 108–173; 117 Stat. 2283; 42 U.S.C. 
1395fff note), as amended by section 5201(b) of the Def-
icit Reduction Act of 2005, is amended— 
(1) in the heading, by striking ‘‘ONE-YEAR’’ 
and inserting ‘‘TEMPORARY’’; and 
(2) in subsection (a) by striking ‘‘before April 
1, 2005, and episodes and visits beginning on or 
after January 1, 2006, and before January 1, 2007’’ 
and inserting ‘‘before December 31, 2012’’. 
(b) APPLICATION TO CERTAIN HOME HEALTH SERV-
ICES FURNISHED PRIOR TO DATE OF ENACTMENT.—For 
episodes and visits for home health services furnished on 
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or after January 1, 2007, and before the date of the enact-
ment of this Act, the Secretary of Health and Human 
Services shall provide for a lump sum payment, not later 
than 60 days after such enactment, of amounts due under 
the amendment made by subsection (a)(2). 
(c) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to episodes and visits on or after 
April 1, 2005. 
TITLE IV—OTHER PROVISIONS 
SEC. 401. HEALTH INFORMATION TECHNOLOGY GRANTS 
FOR RURAL HEALTH CARE PROVIDERS. 
Title II of the Public Health Service Act is amended 
by adding at the end the following new part: 
‘‘PART D—HEALTH INFORMATION TECHNOLOGY 
GRANTS 
‘‘SEC. 271. GRANTS TO FACILITATE THE WIDESPREAD 
ADOPTION OF INTEROPERABLE HEALTH IN-
FORMATION TECHNOLOGY IN RURAL AREAS. 
‘‘(a) COMPETITIVE GRANTS TO ELIGIBLE ENTITIES 
IN RURAL AREAS.— 
‘‘(1) IN GENERAL.—The Secretary may award 
competitive grants to eligible entities in rural areas 
to facilitate the purchase and enhance the utilization 
of qualified health information technology systems to 
improve the quality and efficiency of health care. 
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‘‘(2) ELIGIBILITY.—To be eligible to receive a 
grant under paragraph (1) an entity shall— 
‘‘(A) submit to the Secretary an applica-
tion at such time, in such manner, and con-
taining such information as the Secretary may 
require; 
‘‘(B) submit to the Secretary a strategic 
plan for the implementation of data sharing 
and interoperability measures; 
‘‘(C) be a rural health care provider; 
‘‘(D) adopt any applicable core interoper-
ability guidelines (endorsed under other provi-
sions of law); 
‘‘(E) agree to notify patients if their indi-
vidually 
identifiable 
health 
information 
is 
wrongfully disclosed; 
‘‘(F) 
demonstrate 
significant 
financial 
need; and 
‘‘(G) provide matching funds in accordance 
with paragraph (4). 
‘‘(3) USE OF FUNDS.—Amounts received under 
a grant under this subsection shall be used to facili-
tate the purchase and enhance the utilization of 
qualified health information technology systems and 
training personnel in the use of such technology. 
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‘‘(4) MATCHING REQUIREMENT.—To be eligible 
for a grant under this subsection an entity shall con-
tribute non-Federal contributions to the costs of car-
rying out the activities for which the grant is award-
ed in an amount equal to $1 for each $3 of Federal 
funds provided under the grant. 
‘‘(5) LIMIT ON GRANT AMOUNT.—In no case 
shall the payment amount under this subsection with 
respect to the purchase or enhanced utilization of 
qualified health information technology for a rural 
health care provider, in addition to the amount of 
any loan made to the provider from a grant to a 
State under subsection (b) for such purpose, exceed 
100 percent of the provider’s costs for such purchase 
or enhanced utilization (taking into account costs for 
training, implementation, and maintenance). 
‘‘(6) PREFERENCE IN AWARDING GRANTS.—In 
awarding grants to eligible entities under this sub-
section, the Secretary shall give preference to each 
of the following types of applicants: 
‘‘(A) An entity that is located in a frontier 
or other rural underserved area as determined 
by the Secretary. 
‘‘(B) An entity that will link, to the extent 
practicable, the qualified health information 
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system to a local or regional health information 
plan or plans. 
‘‘(C) A rural health care provider that is a 
nonprofit hospital or a Federally qualified 
health center. 
‘‘(D) A rural health care provider that is 
an individual practice or group practice. 
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) IN
GENERAL.—For the purpose of car-
rying out this section, there is authorized to be ap-
propriated $20,000,000 for fiscal year 2008, 
$30,000,000 for fiscal year 2009, and such sums as 
may be necessary, but not to exceed $30,000,000 for 
each of fiscal years 2010 through 2012. 
‘‘(2) 
AVAILABILITY.—Amounts 
appropriated 
under paragraph (1) shall remain available through 
fiscal year 2011. 
‘‘(c) DEFINITIONS.—In this section: 
‘‘(1) FEDERALLY
QUALIFIED
HEALTH
CEN-
TER.—The term ‘Federally qualified health center’ 
has the meaning given that term in section 
1861(aa)(4) of the Social Security Act (42 U.S.C. 
1395x(aa)(4)). 
‘‘(2) GROUP PRACTICE.—The term ‘group prac-
tice’ has the meaning given that term in section 
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