311 
in paragraph (3) and applied pursuant to 
paragraph (1). 
‘‘(D) FORM
OF
PAYMENT.—The Secretary 
may make the additional payments under this 
paragraph on a lump sum basis, a periodic 
basis, a claim by claim basis, or otherwise. 
‘‘(E) USE
OF
ADDITIONAL
PAYMENT.— 
Funding under this paragraph shall be used by 
targeted hospitals for transitional care activities 
designed to address the patient noncompliance 
issues that result in higher than normal read-
mission rates, such as one or more of the fol-
lowing: 
‘‘(i) Providing care coordination serv-
ices to assist in transitions from the tar-
geted hospital to other settings. 
‘‘(ii) Hiring translators and inter-
preters. 
‘‘(iii) Increasing services offered by 
discharge planners. 
‘‘(iv) Ensuring that individuals receive 
a summary of care and medication orders 
upon discharge. 
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312 
‘‘(v) Developing a quality improvement 
plan to assess and remedy preventable read-
mission rates. 
‘‘(vi) Assigning discharged individuals 
to a medical home. 
‘‘(vii) Doing other activities as deter-
mined appropriate by the Secretary. 
‘‘(F) GAO REPORT ON USE OF FUNDS.—Not 
later than 3 years after the date on which funds 
are first made available under this paragraph, 
the Comptroller General of the United States 
shall submit to Congress a report on the use of 
such funds. 
‘‘(G) DISPROPORTIONATE SHARE HOSPITAL 
PAYMENT.—In this paragraph, the term ‘dis-
proportionate share hospital payment’ means an 
additional payment amount under subsection 
(d)(5)(F).’’. 
(b) APPLICATION TO CRITICAL ACCESS HOSPITALS.— 
Section 1814(l) of the Social Security Act (42 U.S.C. 
1395f(l)) is amended— 
(1) in paragraph (5)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (C); 
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313 
(B) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; 
(C) by inserting at the end the following 
new subparagraph: 
‘‘(E) the methodology for determining the adjust-
ment factor under paragraph (5), including the deter-
mination of aggregate payments for actual and ex-
pected readmissions, applicable periods, applicable 
conditions and measures of readmissions.’’; and 
(D) by redesignating such paragraph as 
paragraph (6); and 
(2) by inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5) The adjustment factor described in section 
1886(p)(3) shall apply to payments with respect to a crit-
ical access hospital with respect to a cost reporting period 
beginning in fiscal year 2012 and each subsequent fiscal 
year (after application of paragraph (4) of this subsection) 
in a manner similar to the manner in which such section 
applies with respect to a fiscal year to an applicable hos-
pital as described in section 1886(p)(2).’’. 
(c) POST ACUTE CARE PROVIDERS.— 
(1) INTERIM POLICY.— 
(A) IN GENERAL.—With respect to a read-
mission to an applicable hospital or a critical 
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access hospital (as described in section 1814(l) of 
the Social Security Act) from a post acute care 
provider (as defined in paragraph (3)) and such 
a readmission is not governed by section 412.531 
of title 42, Code of Federal Regulations, if the 
claim submitted by such a post-acute care pro-
vider under title XVIII of the Social Security 
Act indicates that the individual was readmitted 
to a hospital from such a post-acute care pro-
vider or admitted from home and under the care 
of a home health agency within 30 days of an 
initial discharge from an applicable hospital or 
critical access hospital, the payment under such 
title on such claim shall be the applicable per-
cent specified in subparagraph (B) of the pay-
ment that would otherwise be made under the re-
spective payment system under such title for 
such post-acute care provider if this subsection 
did not apply. 
(B) APPLICABLE PERCENT DEFINED.—For 
purposes of subparagraph (A), the applicable 
percent is— 
(i) for fiscal or rate year 2012 is 
0.996; 
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(ii) for fiscal or rate year 2013 is 
0.993; and 
(iii) for fiscal or rate year 2014 is 
0.99. 
(C) EFFECTIVE DATE.—Subparagraph (1) 
shall apply to discharges or services furnished 
(as the case may be with respect to the applicable 
post acute care provider) on or after the first day 
of the fiscal year or rate year, beginning on or 
after October 1, 2011, with respect to the appli-
cable post acute care provider. 
(2) DEVELOPMENT AND APPLICATION OF PER-
FORMANCE MEASURES.— 
(A) IN GENERAL.—The Secretary of Health 
and Human Services shall develop appropriate 
measures of readmission rates for post acute care 
providers. The Secretary shall seek endorsement 
of such measures by the entity with a contract 
under section 1890(a) of the Social Security Act 
but may adopt and apply such measures under 
this paragraph without such an endorsement. 
The Secretary shall expand such measures in a 
manner similar to the manner in which applica-
ble conditions are expanded under paragraph 
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(5)(B) of section 1886(p) of the Social Security 
Act, as added by subsection (a). 
(B) IMPLEMENTATION.—The Secretary shall 
apply, on or after October 1, 2014, with respect 
to post acute care providers, policies similar to 
the policies applied with respect to applicable 
hospitals and critical access hospitals under the 
amendments made by subsection (a). The provi-
sions of paragraph (1) shall apply with respect 
to any period on or after October 1, 2014, and 
before such application date described in the pre-
vious sentence in the same manner as such pro-
visions apply with respect to fiscal or rate year 
2014. 
(C) MONITORING
AND
PENALTIES.—The 
provisions of paragraph (7) of such section 
1886(p) shall apply to providers under this 
paragraph in the same manner as they apply to 
hospitals under such section. 
(3) DEFINITIONS.—For purposes of this sub-
section: 
(A) POST
ACUTE
CARE
PROVIDER.—The 
term ‘‘post acute care provider’’ means— 
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(i) a skilled nursing facility (as de-
fined in section 1819(a) of the Social Secu-
rity Act); 
(ii) an inpatient rehabilitation facility 
(described in section 1886(h)(1)(A) of such 
Act); 
(iii) a home health agency (as defined 
in section 1861(o) of such Act); and 
(iv) a long term care hospital (as de-
fined in section 1861(ccc) of such Act). 
(B) OTHER TERMS .—The terms ‘‘applica-
ble condition’’, ‘‘applicable hospital’’, and ‘‘read-
mission’’ have the meanings given such terms in 
section 1886(p)(5) of the Social Security Act, as 
added by subsection (a)(1). 
(d) PHYSICIANS.— 
(1) STUDY.—The Secretary of Health and 
Human Services shall conduct a study to determine 
how the readmissions policy described in the previous 
subsections could be applied to physicians. 
(2) CONSIDERATIONS.—In conducting the study, 
the Secretary shall consider approaches such as— 
(A) creating a new code (or codes) and pay-
ment amount (or amounts) under the fee sched-
ule in section 1848 of the Social Security Act (in 
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318 
a budget neutral manner) for services furnished 
by an appropriate physician who sees an indi-
vidual within the first week after discharge from 
a hospital or critical access hospital; 
(B) developing measures of rates of readmis-
sion for individuals treated by physicians; 
(C) applying a payment reduction for phy-
sicians who treat the patient during the initial 
admission that results in a readmission; and 
(D) methods for attributing payments or 
payment reductions to the appropriate physician 
or physicians. 
(3) REPORT.—The Secretary shall issue a public 
report on such study not later than the date that is 
one year after the date of the enactment of this Act. 
(e) FUNDING.—For purposes of carrying out the provi-
sions of this section, in addition to funds otherwise avail-
able, out of any funds in the Treasury not otherwise appro-
priated, there are appropriated to the Secretary of Health 
and Human Services for the Center for Medicare & Med-
icaid Services Program Management Account $25,000,000 
for each fiscal year beginning with 2010. Amounts appro-
priated under this subsection for a fiscal year shall be avail-
able until expended. 
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319 
SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM 
PLAN AND BUNDLING PILOT PROGRAM. 
(a) PLAN.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall develop a detailed plan to reform 
payment for post acute care (PAC) services under the 
Medicare program under title XVIII of the Social Se-
curity Act (in this section referred to as the ‘‘Medi-
care program)’’. The goals of such payment reform 
are to— 
(A) improve the coordination, quality, and 
efficiency of such services; and 
(B) improve outcomes for individuals such 
as reducing the need for readmission to hospitals 
from providers of such services. 
(2) BUNDLING
POST
ACUTE
SERVICES.—The 
plan described in paragraph (1) shall include detailed 
specifications for a bundled payment for post acute 
services (in this section referred to as the ‘‘post acute 
care bundle’’), and may include other approaches de-
termined appropriate by the Secretary. 
(3) POST
ACUTE
SERVICES.—For purposes of 
this section, the term ‘‘post acute services’’ means 
services for which payment may be made under the 
Medicare program that are furnished by skilled nurs-
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320 
ing facilities, inpatient rehabilitation facilities, long 
term care hospitals, hospital based outpatient reha-
bilitation facilities and home health agencies to an 
individual after discharge of such individual from a 
hospital, and such other services determined appro-
priate by the Secretary. 
(b) DETAILS.—The plan described in subsection (a)(1) 
shall include consideration of the following issues: 
(1) The nature of payments under a post acute 
care bundle, including the type of provider or entity 
to whom payment should be made, the scope of activi-
ties and services included in the bundle, whether pay-
ment for physicians’ services should be included in the 
bundle, and the period covered by the bundle. 
(2) Whether the payment should be consolidated 
with the payment under the inpatient prospective sys-
tem under section 1886 of the Social Security Act (in 
this section referred to as MS-DRGs) or a separate 
payment should be established for such bundle, and if 
a separate payment is established, whether it should 
be made only upon use of post acute care services or 
for every discharge. 
(3) Whether the bundle should be applied across 
all categories of providers of inpatient services (in-
cluding critical access hospitals) and post acute care 
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321 
services or whether it should be limited to certain cat-
egories of providers, services, or discharges, such as 
high volume or high cost MS-DRGs. 
(4) The extent to which payment rates could be 
established to achieve offsets for efficiencies that could 
be expected to be achieved with a bundle payment, 
whether such rates should be established on a national 
basis or for different geographic areas, should vary 
according to discharge, case mix, outliers, and geo-
graphic differences in wages or other appropriate ad-
justments, and how to update such rates. 
(5) The nature of protections needed for individ-
uals under a system of bundled payments to ensure 
that individuals receive quality care, are furnished 
the level and amount of services needed as determined 
by an appropriate assessment instrument, are offered 
choice of provider, and the extent to which transi-
tional care services would improve quality of care for 
individuals and the functioning of a bundled post- 
acute system. 
(6) The nature of relationships that may be re-
quired between hospitals and providers of post acute 
care services to facilitate bundled payments, including 
the application of gainsharing, anti-referral, anti- 
kickback, and anti-trust laws. 
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(7) Quality measures that would be appropriate 
for reporting by hospitals and post acute providers 
(such as measures that assess changes in functional 
status and quality measures appropriate for each 
type of post acute services provider including how the 
reporting of such quality measures could be coordi-
nated with other reporting of such quality measures 
by such providers otherwise required). 
(8) How cost-sharing for a post acute care bun-
dle should be treated relative to current rules for cost- 
sharing for inpatient hospital, home health, skilled 
nursing facility, and other services. 
(9) How other programmatic issues should be 
treated in a post acute care bundle, including rules 
specific to various types of post-acute providers such 
as the post-acute transfer policy, three-day hospital 
stay to qualify for services furnished by skilled nurs-
ing facilities, and the coordination of payments and 
care under the Medicare program and the Medicaid 
program. 
(10) Such other issues as the Secretary deems 
appropriate. 
(c) CONSULTATIONS AND ANALYSIS.— 
(1) CONSULTATION
WITH
STAKEHOLDERS.—In 
developing the plan under subsection (a)(1), the Sec-
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retary shall consult with relevant stakeholders and 
shall consider experience with such research studies 
and demonstrations that the Secretary determines ap-
propriate. 
(2) ANALYSIS AND DATA COLLECTION.—In devel-
oping such plan, the Secretary shall— 
(A) analyze the issues described in sub-
section (b) and other issues that the Secretary 
determines appropriate; 
(B) analyze the impacts (including geo-
graphic impacts) of post acute service reform ap-
proaches, including bundling of such services on 
individuals, hospitals, post acute care providers, 
and physicians; 
(C) use existing data (such as data sub-
mitted on claims) and collect such data as the 
Secretary determines are appropriate to develop 
such plan required in this section; and 
(D) if patient functional status measures 
are appropriate for the analysis, to the extent 
practical, build upon the CARE tool being devel-
oped pursuant to section 5008 of the Deficit Re-
duction Act of 2005. 
(d) ADMINISTRATION.— 
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(1) FUNDING.—For purposes of carrying out the 
provisions of this section, in addition to funds other-
wise available, out of any funds in the Treasury not 
otherwise appropriated, there are appropriated to the 
Secretary for the Center for Medicare & Medicaid 
Services Program Management Account $15,000,000 
for each of the fiscal years 2010 through 2012. 
Amounts appropriated under this paragraph for a 
fiscal year shall be available until expended. 
(2) EXPEDITED DATA COLLECTION.—Chapter 35 
of title 44, United States Code shall not apply to this 
section. 
(e) PUBLIC REPORTS.— 
(1) INTERIM
REPORTS.—The Secretary shall 
issue interim public reports on a periodic basis on the 
plan described in subsection (a)(1), the issues de-
scribed in subsection (b), and impact analyses as the 
Secretary determines appropriate. 
(2) FINAL REPORT.—Not later than the date that 
is 3 years after the date of the enactment of this Act, 
the Secretary shall issue a final public report on such 
plan, including analysis of issues described in sub-
section (b) and impact analyses. 
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325 
(f) CONVERSION
OF ACUTE CARE EPISODE DEM-
ONSTRATION TO PILOT PROGRAM AND EXPANSION TO IN-
CLUDE POST ACUTE SERVICES.— 
(1) IN GENERAL.—Part E of title XVIII of the 
Social Security Act is amended by inserting after sec-
tion 1866C the following new section: 
‘‘CONVERSION OF ACUTE CARE EPISODE DEMONSTRATION 
TO
PILOT
PROGRAM
AND
EXPANSION
TO
INCLUDE 
POST ACUTE SERVICES 
‘‘SEC. 1866D. (a) IN GENERAL.—By not later than 
January 1, 2011, the Secretary shall, for the purpose of pro-
moting the use of bundled payments to promote efficient 
and high quality delivery of care— 
‘‘(1) convert the acute care episode demonstra-
tion program conducted under section 1866C to a 
pilot program; and 
‘‘(2) subject to subsection (c), expand such pro-
gram as so converted to include post acute services 
and such other services the Secretary determines to be 
appropriate, which may include transitional services. 
‘‘(b) SCOPE.—The Secretary shall set specific goals for 
the number of acute and post-acute bundling test sites under 
the pilot program to ensure that the pilot program is of 
sufficient size and scope to— 
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‘‘(1) test the approaches under the pilot program 
in a variety of settings, including urban, rural, and 
underserved areas; 
‘‘(2) include geographic areas and additional 
conditions that account for significant program 
spending, as defined by the Secretary; and 
‘‘(3) subject to subsection (d), disseminate the 
pilot program rapidly on a national basis. 
To the extent that the Secretary finds inpatient and post- 
acute care bundling to be successful in improving quality 
and reducing costs, the Secretary shall implement such 
mechanisms and reforms under the pilot program on as 
large a geographic scale as practical and economical, con-
sistent with subsection (e). 
‘‘(c) LIMITATION.—The Secretary shall only expand 
the pilot program under subsection (a)(2) if the Secretary 
finds that— 
‘‘(1) the demonstration program under section 
1866C and pilot program under this section maintain 
or increase the quality of care received by individuals 
enrolled under this title; and 
‘‘(2) such demonstration program and pilot pro-
gram reduce program expenditures and, based on the 
certification under subsection (d), that the expansion 
of such pilot program would result in estimated 
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spending that would be less than what spending 
would otherwise be in the absence of this section. 
‘‘(d) CERTIFICATION.—For purposes of subsection (c), 
the Chief Actuary of the Centers for Medicare & Medicaid 
Services shall certify whether expansion of the pilot pro-
gram under this section would result in estimated spending 
that would be less than what spending would otherwise be 
in the absence of this section. 
‘‘(e) VOLUNTARY PARTICIPATION.—Nothing in this 
paragraph shall be construed as requiring the participation 
of an entity in the pilot program under this section.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1866C(b) of the Social Security Act (42 U.S.C. 
1395cc–3(b)) is amended by striking ‘‘The Secretary’’ 
and inserting ‘‘Subject to section 1866D, the Sec-
retary’’. 
SEC. 1153. HOME HEALTH PAYMENT UPDATE FOR 2010. 
Section 1895(b)(3)(B)(ii) of the Social Security Act 
(42 U.S.C. 1395fff(b)(3)(B)(ii)) is amended— 
(1) in subclause (IV), by striking ‘‘and’’; 
(2) by redesignating subclause (V) as subclause 
(VII); and 
(3) by inserting after subclause (IV) the fol-
lowing new subclauses: 
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328 
‘‘(V) 2007, 2008, and 2009, sub-
ject to clause (v), the home health mar-
ket basket percentage increase; 
‘‘(VI) 2010, subject to clause (v), 0 
percent; and’’. 
SEC. 1154. PAYMENT ADJUSTMENTS FOR HOME HEALTH 
CARE. 
(a) ACCELERATION OF ADJUSTMENT FOR CASE MIX 
CHANGES.—Section 1895(b)(3)(B) of the Social Security 
Act (42 U.S.C. 1395fff(b)(3)(B)) is amended— 
(1) in clause (iv), by striking ‘‘Insofar as’’ and 
inserting ‘‘Subject to clause (vi), insofar as’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(vi) SPECIAL
RULE
FOR
CASE
MIX 
CHANGES FOR 2011.— 
‘‘(I) IN
GENERAL.—With respect 
to the case mix adjustments established 
in section 484.220(a) of title 42, Code 
of Federal Regulations, the Secretary 
shall apply, in 2010, the adjustment 
established in paragraph (3) of such 
section for 2011, in addition to apply-
ing the adjustment established in para-
graph (2) for 2010. 
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‘‘(II) 
CONSTRUCTION.—Nothing 
in this clause shall be construed as 
limiting the amount of adjustment for 
case mix for 2010 or 2011 if more re-
cent data indicate an appropriate ad-
justment that is greater than the 
amount established in the section de-
scribed in subclause (I).’’. 
(b) REBASING HOME HEALTH PROSPECTIVE PAYMENT 
AMOUNT.—Section 1895(b)(3)(A) of the Social Security Act 
(42 U.S.C. 1395fff(b)(3)(A)) is amended— 
(1) in clause (i)— 
(A) in subclause (III), by inserting ‘‘and be-
fore 2011’’ after ‘‘after the period described in 
subclause (II)’’; and 
(B) by inserting after subclause (III) the 
following new subclauses: 
‘‘(IV) Subject to clause (iii)(I), for 
2011, such amount (or amounts) shall 
be adjusted by a uniform percentage 
determined to be appropriate by the 
Secretary based on analysis of factors 
such as changes in the average number 
and types of visits in an episode, the 
change in intensity of visits in an epi-
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330 
sode, growth in cost per episode, and 
other factors that the Secretary con-
siders to be relevant. 
‘‘(V) Subject to clause (iii)(II), for 
a year after 2011, such a amount (or 
amounts) shall be equal to the amount 
(or amounts) determined under this 
clause for the previous year, updated 
under subparagraph (B).’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(iii) SPECIAL RULE IN CASE OF IN-
ABILITY TO EFFECT TIMELY REBASING.— 
‘‘(I) 
APPLICATION
OF
PROXY 
AMOUNT FOR 2011.—If the Secretary is 
not able to compute the amount (or 
amounts) under clause (i)(IV) so as to 
permit, on a timely basis, the applica-
tion of such clause for 2011, the Sec-
retary shall substitute for such amount 
(or amounts) 95 percent of the amount 
(or amounts) that would otherwise be 
specified under clause (i)(III) if it ap-
plied for 2011. 
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‘‘(II) ADJUSTMENT
FOR
SUBSE-
QUENT YEARS BASED ON DATA.—If the 
Secretary applies subclause (I), the 
Secretary before July 1, 2011, shall 
compare the amount (or amounts) ap-
plied under such subclause with the 
amount (or amounts) that should have 
been applied under clause (i)(IV). The 
Secretary shall decrease or increase the 
prospective 
payment 
amount 
(or 
amounts) under clause (i)(V) for 2012 
(or, at the Secretary’s discretion, over 
a period of several years beginning 
with 2012) by the amount (if any) by 
which the amount (or amounts) ap-
plied under subclause (I) is greater or 
less, respectively, than the amount (or 
amounts) that should have been ap-
plied under clause (i)(IV).’’. 
SEC. 
1155. 
INCORPORATING 
PRODUCTIVITY 
IMPROVE-
MENTS INTO MARKET BASKET UPDATE FOR 
HOME HEALTH SERVICES. 
(a) IN GENERAL.—Section 1895(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended— 
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(1) in clause (iii), by inserting ‘‘(including being 
subject to the productivity adjustment described in 
section 1886(b)(3)(B)(iii)(II))’’ after ‘‘in the same 
manner’’; and 
(2) in clause (v)(I), by inserting ‘‘(but not below 
0)’’ after ‘‘reduced’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to home health market basket per-
centage increases for years beginning with 2010. 
SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE 
PROHIBITION ON CERTAIN PHYSICIAN RE-
FERRALS MADE TO HOSPITALS. 
(a) IN GENERAL.—Section 1877 of the Social Security 
Act (42 U.S.C. 1395nn) is amended— 
(1) in subsection (d)(2)— 
(A) in subparagraph (A), by striking ‘‘and’’ 
at the end; 
(B) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(C) in the case where the entity is a hos-
pital, the hospital meets the requirements of 
paragraph (3)(D).’’; 
(2) in subsection (d)(3)— 
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(A) in subparagraph (B), by striking ‘‘and’’ 
at the end; 
(B) in subparagraph (C), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(D) the hospital meets the requirements de-
scribed in subsection (i)(1).’’; 
(3) by amending subsection (f) to read as follows: 
‘‘(f) REPORTING AND DISCLOSURE REQUIREMENTS.— 
‘‘(1) IN GENERAL.—Each entity providing cov-
ered items or services for which payment may be 
made under this title shall provide the Secretary with 
the information concerning the entity’s ownership, in-
vestment, and compensation arrangements, includ-
ing— 
‘‘(A) the covered items and services provided 
by the entity, and 
‘‘(B) the names and unique physician iden-
tification numbers of all physicians with an 
ownership or investment interest (as described in 
subsection (a)(2)(A)), or with a compensation 
arrangement 
(as 
described 
in 
subsection 
(a)(2)(B)), in the entity, or whose immediate rel-
atives have such an ownership or investment in-
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terest or who have such a compensation relation-
ship with the entity. 
Such information shall be provided in such form, 
manner, and at such times as the Secretary shall 
specify. The requirement of this subsection shall not 
apply to designated health services provided outside 
the United States or to entities which the Secretary 
determines provide services for which payment may 
be made under this title very infrequently. 
‘‘(2) REQUIREMENTS FOR HOSPITALS WITH PHY-
SICIAN OWNERSHIP OR INVESTMENT.—In the case of 
a hospital that meets the requirements described in 
subsection (i)(1), the hospital shall— 
‘‘(A) submit to the Secretary an initial re-
port, and periodic updates at a frequency deter-
mined by the Secretary, containing a detailed 
description of the identity of each physician 
owner and physician investor and any other 
owners or investors of the hospital; 
‘‘(B) require that any referring physician 
owner or investor discloses to the individual 
being referred, by a time that permits the indi-
vidual to make a meaningful decision regarding 
the receipt of services, as determined by the Sec-
retary, the ownership or investment interest, as 
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applicable, of such referring physician in the 
hospital; and 
‘‘(C) disclose the fact that the hospital is 
partially or wholly owned by one or more physi-
cians or has one or more physician investors— 
‘‘(i) on any public website for the hos-
pital; and 
‘‘(ii) in any public advertising for the 
hospital. 
The information to be reported or disclosed under this 
paragraph shall be provided in such form, manner, 
and at such times as the Secretary shall specify. The 
requirements of this paragraph shall not apply to des-
ignated health services furnished outside the United 
States or to entities which the Secretary determines 
provide services for which payment may be made 
under this title very infrequently. 
‘‘(3) PUBLICATION OF INFORMATION.—The Sec-
retary shall publish, and periodically update, the in-
formation submitted by hospitals under paragraph 
(2)(A) on the public Internet website of the Centers 
for Medicare & Medicaid Services.’’; 
(4) by amending subsection (g)(5) to read as fol-
lows: 
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‘‘(5) FAILURE TO REPORT OR DISCLOSE INFOR-
MATION.— 
‘‘(A) REPORTING.—Any person who is re-
quired, but fails, to meet a reporting requirement 
of paragraphs (1) and (2)(A) of subsection (f) is 
subject to a civil money penalty of not more than 
$10,000 for each day for which reporting is re-
quired to have been made. 
‘‘(B) DISCLOSURE.—Any physician who is 
required, but fails, to meet a disclosure require-
ment of subsection (f)(2)(B) or a hospital that is 
required, but fails, to meet a disclosure require-
ment of subsection (f)(2)(C) is subject to a civil 
money penalty of not more than $10,000 for each 
case in which disclosure is required to have been 
made. 
‘‘(C) APPLICATION.—The provisions of sec-
tion 1128A (other than the first sentence of sub-
section (a) and other than subsection (b)) shall 
apply to a civil money penalty under subpara-
graphs (A) and (B) in the same manner as such 
provisions apply to a penalty or proceeding 
under section 1128A(a).’’; and 
(5) by adding at the end the following new sub-
section: 
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‘‘(i) REQUIREMENTS TO QUALIFY FOR RURAL PRO-
VIDER AND HOSPITAL OWNERSHIP EXCEPTIONS TO SELF- 
REFERRAL PROHIBITION.— 
‘‘(1) REQUIREMENTS DESCRIBED.—For purposes 
of subsection (d)(3)(D), the requirements described in 
this paragraph are as follows: 
‘‘(A) PROVIDER AGREEMENT.—The hospital 
had— 
‘‘(i) physician ownership or investment 
on January 1, 2009; and 
‘‘(ii) a provider agreement under sec-
tion 1866 in effect on such date. 
‘‘(B) PROHIBITION ON PHYSICIAN OWNER-
SHIP
OR
INVESTMENT.—The percentage of the 
total value of the ownership or investment inter-
ests held in the hospital, or in an entity whose 
assets include the hospital, by physician owners 
or investors in the aggregate does not exceed such 
percentage as of the date of enactment of this 
subsection. 
‘‘(C) PROHIBITION ON EXPANSION OF FACIL-
ITY
CAPACITY.—Except as provided in para-
graph (2), the number of operating rooms, proce-
dure rooms, or beds of the hospital at any time 
on or after the date of the enactment of this sub-
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section are no greater than the number of oper-
ating rooms, procedure rooms, or beds, respec-
tively, as of such date. 
‘‘(D) ENSURING
BONA
FIDE
OWNERSHIP 
AND INVESTMENT.— 
‘‘(i) Any ownership or investment in-
terests that the hospital offers to a physician 
are not offered on more favorable terms 
than the terms offered to a person who is 
not in a position to refer patients or other-
wise generate business for the hospital. 
‘‘(ii) The hospital (or any investors in 
the hospital) does not directly or indirectly 
provide loans or financing for any physi-
cian owner or investor in the hospital. 
‘‘(iii) The hospital (or any investors in 
the hospital) does not directly or indirectly 
guarantee a loan, make a payment toward 
a loan, or otherwise subsidize a loan, for 
any physician owner or investor or group of 
physician owners or investors that is related 
to acquiring any ownership or investment 
interest in the hospital. 
‘‘(iv) Ownership or investment returns 
are distributed to each owner or investor in 
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the hospital in an amount that is directly 
proportional to the ownership or investment 
interest of such owner or investor in the 
hospital. 
‘‘(v) The investment interest of the 
owner or investor is directly proportional to 
the owner’s or investor’s capital contribu-
tions made at the time the ownership or in-
vestment interest is obtained. 
‘‘(vi) Physician owners and investors 
do not receive, directly or indirectly, any 
guaranteed receipt of or right to purchase 
other business interests related to the hos-
pital, including the purchase or lease of any 
property under the control of other owners 
or investors in the hospital or located near 
the premises of the hospital. 
‘‘(vii) The hospital does not offer a 
physician owner or investor the opportunity 
to purchase or lease any property under the 
control of the hospital or any other owner 
or investor in the hospital on more favor-
able terms than the terms offered to a per-
son that is not a physician owner or inves-
tor. 
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‘‘(viii) The hospital does not condition 
any physician ownership or investment in-
terests either directly or indirectly on the 
physician owner or investor making or in-
fluencing referrals to the hospital or other-
wise generating business for the hospital. 
‘‘(E) PATIENT SAFETY.—In the case of a 
hospital that does not offer emergency services, 
the hospital has the capacity to— 
‘‘(i) provide assessment and initial 
treatment for medical emergencies; and 
‘‘(ii) if the hospital lacks additional 
capabilities required to treat the emergency 
involved, refer and transfer the patient with 
the medical emergency to a hospital with 
the required capability. 
‘‘(F) LIMITATION ON APPLICATION TO CER-
TAIN CONVERTED FACILITIES.—The hospital was 
not converted from an ambulatory surgical cen-
ter to a hospital on or after the date of enact-
ment of this subsection. 
‘‘(2) EXCEPTION TO PROHIBITION ON EXPANSION 
OF FACILITY CAPACITY.— 
‘‘(A) PROCESS.— 
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341 
‘‘(i) ESTABLISHMENT.—The Secretary 
shall establish and implement a process 
under which a hospital may apply for an 
exception from the requirement under para-
graph (1)(C). 
‘‘(ii) OPPORTUNITY
FOR
COMMUNITY 
INPUT.—The process under clause (i) shall 
provide persons and entities in the commu-
nity in which the hospital applying for an 
exception is located with the opportunity to 
provide input with respect to the applica-
tion. 
‘‘(iii) TIMING FOR IMPLEMENTATION.— 
The Secretary shall implement the process 
under clause (i) on the date that is one 
month after the promulgation of regulations 
described in clause (iv). 
‘‘(iv) REGULATIONS.—Not later than 
the first day of the month beginning 18 
months after the date of the enactment of 
this subsection, the Secretary shall promul-
gate regulations to carry out the process 
under clause (i). The Secretary may issue 
such regulations as interim final regula-
tions. 
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342 
‘‘(B) FREQUENCY.—The process described 
in subparagraph (A) shall permit a hospital to 
apply for an exception up to once every 2 years. 
‘‘(C) PERMITTED INCREASE.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii) and subparagraph (D), a hospital 
granted an exception under the process de-
scribed in subparagraph (A) may increase 
the number of operating rooms, procedure 
rooms, or beds of the hospital above the 
baseline number of operating rooms, proce-
dure rooms, or beds, respectively, of the hos-
pital (or, if the hospital has been granted a 
previous exception under this paragraph, 
above the number of operating rooms, proce-
dure rooms, or beds, respectively, of the hos-
pital after the application of the most recent 
increase under such an exception). 
‘‘(ii) 100 PERCENT INCREASE LIMITA-
TION.—The Secretary shall not permit an 
increase in the number of operating rooms, 
procedure rooms, or beds of a hospital under 
clause (i) to the extent such increase would 
result in the number of operating rooms, 
procedure rooms, or beds of the hospital ex-
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ceeding 200 percent of the baseline number 
of operating rooms, procedure rooms, or 
beds of the hospital. 
‘‘(iii) BASELINE
NUMBER
OF
OPER-
ATING
ROOMS, 
PROCEDURE
ROOMS, 
OR 
BEDS.—In this paragraph, the term ‘base-
line number of operating rooms, procedure 
rooms, or beds’ means the number of oper-
ating rooms, procedure rooms, or beds of a 
hospital as of the date of enactment of this 
subsection. 
‘‘(D) INCREASE LIMITED TO FACILITIES ON 
THE MAIN CAMPUS OF THE HOSPITAL.—Any in-
crease in the number of operating rooms, proce-
dure rooms, or beds of a hospital pursuant to 
this paragraph may only occur in facilities on 
the main campus of the hospital. 
‘‘(E) CONDITIONS FOR APPROVAL OF AN IN-
CREASE IN FACILITY CAPACITY.—The Secretary 
may grant an exception under the process de-
scribed in subparagraph (A) only to a hospital— 
‘‘(i) that is located in a county in 
which the percentage increase in the popu-
lation during the most recent 5-year period 
for which data are available is estimated to 
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be at least 150 percent of the percentage in-
crease in the population growth of the State 
in which the hospital is located during that 
period, as estimated by Bureau of the Cen-
sus and available to the Secretary; 
‘‘(ii) whose annual percent of total in-
patient admissions that represent inpatient 
admissions under the program under title 
XIX is estimated to be equal to or greater 
than the average percent with respect to 
such admissions for all hospitals located in 
the county in which the hospital is located; 
‘‘(iii) 
that 
does 
not 
discriminate 
against beneficiaries of Federal health care 
programs and does not permit physicians 
practicing at the hospital to discriminate 
against such beneficiaries; 
‘‘(iv) that is located in a State in 
which the average bed capacity in the State 
is estimated to be less than the national av-
erage bed capacity; 
‘‘(v) that has an average bed occu-
pancy rate that is estimated to be greater 
than the average bed occupancy rate in the 
State in which the hospital is located; and 
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‘‘(vi) that meets other conditions as de-
termined by the Secretary. 
‘‘(F) PROCEDURE
ROOMS.—In this sub-
section, the term ‘procedure rooms’ includes 
rooms in which catheterizations, angiographies, 
angiograms, and endoscopies are furnished, but 
such term shall not include emergency rooms or 
departments (except for rooms in which catheter-
izations, 
angiographies, 
angiograms, 
and 
endoscopies are furnished). 
‘‘(G) PUBLICATION OF FINAL DECISIONS.— 
Not later than 120 days after receiving a com-
plete application under this paragraph, the Sec-
retary shall publish on the public Internet 
website of the Centers for Medicare & Medicaid 
Services the final decision with respect to such 
application. 
‘‘(H) LIMITATION ON REVIEW.—There shall 
be no administrative or judicial review under 
section 1869, section 1878, or otherwise of the ex-
ception process under this paragraph, including 
the establishment of such process, and any deter-
mination made under such process. 
‘‘(3) PHYSICIAN
OWNER
OR
INVESTOR
DE-
FINED.—For purposes of this subsection and sub-
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346 
section (f)(2), the term ‘physician owner or investor’ 
means a physician (or an immediate family member 
of such physician) with a direct or an indirect owner-
ship or investment interest in the hospital. 
‘‘(4) PATIENT
SAFETY
REQUIREMENT.—In the 
case of a hospital to which the requirements of para-
graph (1) apply, insofar as the hospital admits a pa-
tient and does not have any physician available on 
the premises 24 hours per day, 7 days per week, be-
fore admitting the patient— 
‘‘(A) the hospital shall disclose such fact to 
the patient; and 
‘‘(B) following such disclosure, the hospital 
shall receive from the patient a signed acknowl-
edgment that the patient understands such fact. 
‘‘(5) CLARIFICATION.—Nothing in this subsection 
shall be construed as preventing the Secretary from 
terminating a hospital’s provider agreement if the 
hospital is not in compliance with regulations pursu-
ant to section 1866.’’. 
(b) VERIFYING COMPLIANCE.—The Secretary of Health 
and Human Services shall establish policies and procedures 
to verify compliance with the requirements described in sub-
sections (i)(1) and (i)(4) of section 1877 of the Social Secu-
rity Act, as added by subsection (a)(5). The Secretary may 
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use unannounced site reviews of hospitals and audits to 
verify compliance with such requirements. 
(c) IMPLEMENTATION.— 
(1) FUNDING.—For purposes of carrying out the 
amendments made by subsection (a) and the provi-
sions of subsection (b), in addition to funds otherwise 
available, out of any funds in the Treasury not other-
wise appropriated there are appropriated to the Sec-
retary of Health and Human Services for the Centers 
for Medicare & Medicaid Services Program Manage-
ment Account $5,000,000 for each fiscal year begin-
ning with fiscal year 2010. Amounts appropriated 
under this paragraph for a fiscal year shall be avail-
able until expended. 
(2) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the amend-
ments made by subsection (a) and the provisions of 
subsection (b). 
SEC. 1157. INSTITUTE OF MEDICINE STUDY OF GEO-
GRAPHIC 
ADJUSTMENT 
FACTORS 
UNDER 
MEDICARE. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall enter into a contract with the Insti-
tute of Medicine of the National Academy of Science to con-
duct a comprehensive empirical study, and provide rec-
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ommendations as appropriate, on the accuracy of the geo-
graphic adjustment factors established under sections 
1848(e) and 1886(d)(3)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e), 11395ww(d)(3)). 
(b) MATTERS INCLUDED.—Such study shall include 
an evaluation and assessment of the following with respect 
to such adjustment factors: 
(1) Empirical validity of the adjustment factors. 
(2) Methodology used to determine the adjust-
ment factors. 
(3) Measures used for the adjustment factors, 
taking into account— 
(A) timeliness of data and frequency of revi-
sions to such data; 
(B) sources of data and the degree to which 
such data are representative of costs; and 
(C) operational costs of providers who par-
ticipate in Medicare. 
(c) EVALUATION.—Such study shall, within the context 
of the United States health care marketplace, evaluate and 
consider the following: 
(1) The effect of the adjustment factors on the 
level and distribution of the health care workforce and 
resources, including— 
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(A) recruitment and retention that takes 
into account workforce mobility between urban 
and rural areas; 
(B) ability of hospitals and other facilities 
to maintain an adequate and skilled workforce; 
and 
(C) patient access to providers and needed 
medical technologies. 
(2) The effect of the adjustment factors on popu-
lation health and quality of care. 
(3) The effect of the adjustment factors on the 
ability of providers to furnish efficient, high value 
care. 
(d) REPORT.—The contract under subsection (a) shall 
provide for the Institute of Medicine to submit, not later 
than one year after the date of the enactment of this Act, 
to the Secretary and the Congress a report containing re-
sults and recommendations of the study conducted under 
this section. 
(e) FUNDING.—There are authorized to be appro-
priated to carry out this section such sums as may be nec-
essary. 
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SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO 
ADDRESS GEOGRAPHIC INEQUITIES. . 
(a) IN GENERAL.—Taking into account the rec-
ommendations described in the report under section 
1157(d), and notwithstanding the geographic adjustments 
that would otherwise apply under sections 1848(e) and 
1886(d)(3)(E) of the Social Security Act (42 U.S.C. 1395w– 
4(e), 1395ww(d)(3)(E)), the Secretary of Health and 
Human Services shall include in proposed rules applicable 
to the rulemaking cycle for payment systems for physicians’ 
services and inpatient hospital services under sections 1848 
and 1886(d) of such Act, respectively, proposals (as the Sec-
retary determines to be appropriate) to revise the geo-
graphic adjustment factors used in such systems. Such pro-
posals shall be contained in the next rulemaking cycle fol-
lowing the submission to the Secretary of the report under 
section 1157(d). 
(b) PAYMENT ADJUSTMENTS.— 
(1) FUNDING
FOR
IMPROVEMENTS.—The Sec-
retary shall use funds as provided under subsection 
(c) in making changes to the geographic adjustment 
factors pursuant to subsection (a). In making such 
changes to such geographic adjustment factors, the 
Secretary shall ensure that the estimated increased ex-
penditures resulting from such changes does not ex-
ceed the amounts provided under subsection (c). 
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(2) ENSURING FAIRNESS.—In carrying out this 
subsection, the Secretary shall not reduce the geo-
graphic adjustment below the factor that applied for 
such payment system in the payment year before such 
changes. 
(c) FUNDING.—Amounts in the Medicare Improvement 
Fund under section 1898, as amended by section 1146, shall 
be available to the Secretary to make changes to the geo-
graphic adjustments factors as described in subsections (a) 
and (b) with respect to services furnished before January 
1, 2014. No more than one-half of such amounts shall be 
available with respect to services furnished in any one pay-
ment year. 
Subtitle D—Medicare Advantage 
Reforms 
PART 1—PAYMENT AND ADMINISTRATION 
SEC. 1161. PHASE-IN OF PAYMENT BASED ON FEE-FOR- 
SERVICE COSTS. 
Section 1853 of the Social Security Act (42 U.S.C. 
1395w–23) is amended— 
(1) in subsection (j)(1)(A)— 
(A) by striking ‘‘beginning with 2007’’ and 
inserting ‘‘for 2007, 2008, 2009, and 2010’’; and 
(B) by inserting after ‘‘(k)(1)’’ the fol-
lowing: ‘‘, or, beginning with 2011, 1⁄12 of the 
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blended benchmark amount determined under 
subsection (n)(1)’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(n) DETERMINATION
OF
BLENDED
BENCHMARK 
AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(j), subject to paragraphs (3) and (4), the term ‘blend-
ed benchmark amount’ means for an area— 
‘‘(A) for 2011 the sum of— 
‘‘(i) 2⁄3 of the applicable amount (as 
defined in subsection (k)) for the area and 
year; and 
‘‘(ii) 1⁄3 of the amount specified in 
paragraph (2) for the area and year; 
‘‘(B) for 2012 the sum of— 
‘‘(i) 1⁄3 of the applicable amount for 
the area and year; and 
‘‘(ii) 2⁄3 of the amount specified in 
paragraph (2) for the area and year; and 
‘‘(C) for a subsequent year the amount spec-
ified in paragraph (2) for the area and year. 
‘‘(2) SPECIFIED AMOUNT.—The amount specified 
in this paragraph for an area and year is the amount 
specified in subsection (c)(1)(D)(i) for the area and 
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year adjusted (in a manner specified by the Sec-
retary) to take into account the phase-out in the indi-
rect costs of medical education from capitation rates 
described in subsection (k)(4). 
‘‘(3) FEE-FOR-SERVICE PAYMENT FLOOR.—In no 
case shall the blended benchmark amount for an area 
and year be less than the amount specified in para-
graph (2). 
‘‘(4) EXCEPTION FOR PACE PLANS.—This sub-
section shall not apply to payments to a PACE pro-
gram under section 1894.’’. 
SEC. 1162. QUALITY BONUS PAYMENTS. 
(a) IN GENERAL.—Section 1853 of the Social Security 
Act (42 U.S.C. 1395w-23), as amended by section 1161, is 
amended— 
(1) in subsection (j), by inserting ‘‘subject to sub-
section (o),’’ after ‘‘For purposes of this part,’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(o) QUALITY BASED PAYMENT ADJUSTMENT.— 
‘‘(1) HIGH
QUALITY
PLAN
ADJUSTMENT.—For 
years beginning with 2011, in the case of a Medicare 
Advantage plan that is identified (under paragraph 
(3)(E)(ii)) as a high quality MA plan with respect to 
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the year, the blended benchmark amount under sub-
section (n)(1) shall be increased— 
‘‘(A) for 2011, by 1.0 percent; 
‘‘(B) for 2012, by 2.0 percent; and 
‘‘(C) for a subsequent year, by 3.0 percent. 
‘‘(2) IMPROVED QUALITY PLAN ADJUSTMENT.— 
For years beginning with 2011, in the case of a Medi-
care Advantage plan that is identified (under para-
graph (3)(E)(iii)) as an improved quality MA plan 
with respect to the year, blended benchmark amount 
under subsection (n)(1) shall be increased— 
‘‘(A) for 2011, by 0.33 percent; 
‘‘(B) for 2012, by 0.66 percent; and 
‘‘(C) for a subsequent year, by 1.0 percent. 
‘‘(3) DETERMINATIONS OF QUALITY.— 
‘‘(A) QUALITY
PERFORMANCE.—The Sec-
retary shall provide for the computation of a 
quality performance score for each Medicare Ad-
vantage plan to be applied for each year begin-
ning with 2010. 
‘‘(B) COMPUTATION OF SCORE.— 
‘‘(i) FOR
YEARS
BEFORE
2014.—For 
years before 2014, the quality performance 
score for a Medicare Advantage plan shall 
be computed based on a blend (as des-
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ignated by the Secretary) of the plan’s per-
formance on— 
‘‘(I) HEDIS effectiveness of care 
quality measures; 
‘‘(II) CAHPS quality measures; 
and 
‘‘(III) such other measures of clin-
ical quality as the Secretary may 
specify. 
Such measures shall be risk-adjusted as the 
Secretary deems appropriate. 
‘‘(ii) ESTABLISHMENT
OF
OUTCOME- 
BASED MEASURES.—By not later than for 
2013 the Secretary shall implement report-
ing requirements for quality under this sec-
tion on measures selected under clause (iii) 
that reflect the outcomes of care experienced 
by individuals enrolled in Medicare Advan-
tage plans (in addition to measures de-
scribed in clause (i)). Such measures may 
include— 
‘‘(I) measures of rates of admis-
sion and readmission to a hospital; 
‘‘(II) measures of prevention qual-
ity, such as those established by the 
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Agency for Healthcare Research and 
Quality (that include hospital admis-
sion rates for specified conditions); 
‘‘(III) measures of patient mor-
tality and morbidity following surgery; 
‘‘(IV) measures of health func-
tioning (such as limitations on activi-
ties of daily living) and survival for 
patients with chronic diseases; 
‘‘(V) measures of patient safety; 
and 
‘‘(VI) other measure of outcomes 
and patient quality of life as deter-
mined by the Secretary. 
Such measures shall be risk-adjusted as the 
Secretary deems appropriate. In deter-
mining the quality measures to be used 
under this clause, the Secretary shall take 
into consideration the recommendations of 
the Medicare Payment Advisory Commis-
sion in its report to Congress under section 
168 of the Medicare Improvements for Pa-
tients and Providers Act of 2008 (Public 
Law 110–275) and shall provide preference 
to measures collected on and comparable to 
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measures used in measuring quality under 
parts A and B. 
‘‘(iii) RULES
FOR
SELECTION
OF 
MEASURES.—The 
Secretary 
shall 
select 
measures for purposes of clause (ii) con-
sistent with the following: 
‘‘(I) The Secretary shall provide 
preference to clinical quality measures 
that have been endorsed by the entity 
with a contract with the Secretary 
under section 1890(a). 
‘‘(II) Prior to any measure being 
selected under this clause, the Secretary 
shall publish in the Federal Register 
such measure and provide for a period 
of public comment on such measure. 
‘‘(iv) TRANSITIONAL USE OF BLEND.— 
For payments for 2014 and 2015, the Sec-
retary may compute the quality perform-
ance score for a Medicare Advantage plan 
based on a blend of the measures specified 
in clause (i) and the measures described in 
clause (ii) and selected under clause (iii). 
‘‘(v) USE
OF
QUALITY
OUTCOMES 
MEASURES.—For payments beginning with 
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2016, the preponderance of measures used 
under this paragraph shall be quality out-
comes measures described in clause (ii) and 
selected under clause (iii). 
‘‘(C) DATA USED IN COMPUTING SCORE.— 
Such score for application for— 
‘‘(i) payments in 2011 shall be based 
on quality performance data for plans for 
2009; and 
‘‘(ii) payments in 2012 and a subse-
quent year shall be based on quality per-
formance data for plans for the second pre-
ceding year. 
‘‘(D) REPORTING OF DATA.—Each Medicare 
Advantage organization shall provide for the re-
porting to the Secretary of quality performance 
data described in subparagraph (B) (in order to 
determine a quality performance score under this 
paragraph) in such time and manner as the Sec-
retary shall specify. 
‘‘(E) RANKING OF PLANS.— 
‘‘(i) INITIAL RANKING.—Based on the 
quality performance score described in sub-
paragraph (B) achieved with respect to a 
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year, the Secretary shall rank plan perform-
ance— 
‘‘(I) from highest to lowest based 
on absolute scores; and 
‘‘(II) from highest to lowest based 
on percentage improvement in the score 
for the plan from the previous year. 
A plan which does not report quality per-
formance data under subparagraph (D) 
shall be counted, for purposes of such rank-
ing, as having the lowest plan performance 
and lowest percentage improvement. 
‘‘(ii) IDENTIFICATION OF HIGH QUAL-
ITY PLANS IN TOP QUINTILE BASED ON PRO-
JECTED
ENROLLMENT.—The 
Secretary 
shall, based on the scores for each plan 
under clause (i)(I) and the Secretary’s pro-
jected enrollment for each plan and subject 
to clause (iv), identify those Medicare Ad-
vantage plans with the highest score that, 
based upon projected enrollment, are pro-
jected to include in the aggregate 20 percent 
of the total projected enrollment for the 
year. For purposes of this subsection, a plan 
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so identified shall be referred to in this sub-
section as a ‘high quality MA plan’. 
‘‘(iii) IDENTIFICATION
OF
IMPROVED 
QUALITY PLANS IN TOP QUINTILE BASED ON 
PROJECTED
ENROLLMENT.—The Secretary 
shall, based on the percentage improvement 
score for each plan under clause (i)(II) and 
the Secretary’s projected enrollment for each 
plan and subject to clause (iv), identify 
those Medicare Advantage plans with the 
greatest percentage improvement score that, 
based upon projected enrollment, are pro-
jected to include in the aggregate 20 percent 
of the total projected enrollment for the 
year. For purposes of this subsection, a plan 
so identified that is not a high quality plan 
for the year shall be referred to in this sub-
section as an ‘improved quality MA plan’. 
‘‘(iv) AUTHORITY TO DISQUALIFY CER-
TAIN PLANS.—In applying clauses (ii) and 
(iii), the Secretary may determine not to 
identify a Medicare Advantage plan if the 
Secretary has identified deficiencies in the 
plan’s compliance with rules for such plans 
under this part. 
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‘‘(F) NOTIFICATION.—The Secretary, in the 
annual announcement required under subsection 
(b)(1)(B) in 2011 and each succeeding year, 
shall notify the Medicare Advantage organization 
that is offering a high quality plan or an im-
proved quality plan of such identification for the 
year and the quality performance payment ad-
justment for such plan for the year. The Sec-
retary shall provide for publication on the 
website for the Medicare program of the informa-
tion described in the previous sentence.’’. 
SEC. 1163. EXTENSION OF SECRETARIAL CODING INTEN-
SITY ADJUSTMENT AUTHORITY. 
Section 1853(a)(1)(C)(ii) of the Social Security Act 
(42 U.S.C. 1395w–23(a)(1)(C)(ii) is amended— 
(1) in the matter before subclause (I), by striking 
‘‘through 2010’’ and inserting ‘‘and each subsequent 
year’’; and 
(2) in subclause (II)— 
(A) by inserting ‘‘periodically’’ before ‘‘con-
duct an analysis’’; 
(B) by inserting ‘‘on a timely basis’’ after 
‘‘are incorporated’’; and 
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(C) by striking ‘‘only for 2008, 2009, and 
2010’’ and inserting ‘‘for 2008 and subsequent 
years’’. 
SEC. 1164. SIMPLIFICATION OF ANNUAL BENEFICIARY 
ELECTION PERIODS. 
(a) 2 WEEK PROCESSING PERIOD FOR ANNUAL EN-
ROLLMENT PERIOD (AEP).—Paragraph (3)(B) of section 
1851(e) of the Social Security Act (42 U.S.C. 1395w–21(e)) 
is amended— 
(1) by striking ‘‘and’’ at the end of clause (iii); 
(2) in clause (iv)— 
(A) by striking ‘‘and succeeding years’’ and 
inserting ‘‘, 2008, 2009, and 2010’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(v) with respect to 2011 and suc-
ceeding years, the period beginning on No-
vember 1 and ending on December 15 of the 
year before such year.’’. 
(b) ELIMINATION OF 3-MONTH ADDITIONAL OPEN EN-
ROLLMENT PERIOD (OEP).—Effective for plan years begin-
ning with 2011, paragraph (2) of such section is amended 
by striking subparagraph (C). 
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SEC. 1165. EXTENSION OF REASONABLE COST CONTRACTS. 
Section 1876(h)(5)(C) of the Social Security Act (42 
U.S.C. 1395mm(h)(5)(C)) is amended— 
(1) in clause (ii), by striking ‘‘January 1, 2010’’ 
and inserting ‘‘January 1, 2012’’; and 
(2) in clause (iii), by striking ‘‘the service area 
for the year’’ and inserting ‘‘the portion of the plan’s 
service area for the year that is within the service 
area of a reasonable cost reimbursement contract’’. 
SEC. 1166. LIMITATION OF WAIVER AUTHORITY FOR EM-
PLOYER GROUP PLANS. 
(a) IN GENERAL.—The first sentence of paragraph (2) 
of section 1857(i) of the Social Security Act (42 U.S.C. 
1395w–27(i)) is amended by inserting before the period at 
the end the following: ‘‘, but only if 90 percent of the Medi-
care Advantage eligible individuals enrolled under such 
plan reside in a county in which the MA organization offers 
an MA local plan’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply for plan years beginning on or after 
January 1, 2011, and shall not apply to plans which were 
in effect as of December 31, 2010. 
SEC. 1167. IMPROVING RISK ADJUSTMENT FOR PAYMENTS. 
(a) REPORT TO CONGRESS.—Not later than 1 year 
after the date of the enactment of this Act, the Secretary 
of Health and Human Services shall submit to Congress 
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a report that evaluates the adequacy of the risk adjustment 
system under section 1853(a)(1)(C) of the Social Security 
Act (42 U.S.C. 1395-23(a)(1)(C)) in predicting costs for 
beneficiaries with chronic or co-morbid conditions, bene-
ficiaries dually-eligible for Medicare and Medicaid, and 
non-Medicaid eligible low-income beneficiaries; and the 
need and feasibility of including further gradations of dis-
eases or conditions and multiple years of beneficiary data. 
(b) IMPROVEMENTS TO RISK ADJUSTMENT.—Not later 
than January 1, 2012, the Secretary shall implement nec-
essary improvements to the risk adjustment system under 
section 1853(a)(1)(C) of the Social Security Act (42 U.S.C. 
1395–23(a)(1)(C)), taking into account the evaluation 
under subsection (a). 
SEC. 1168. ELIMINATION OF MA REGIONAL PLAN STABILIZA-
TION FUND. 
(a) IN GENERAL.—Section 1858 of the Social Security 
Act (42 U.S.C. 1395w–27a) is amended by striking sub-
section (e). 
(b) TRANSITION.—Any amount contained in the MA 
Regional Plan Stabilization Fund as of the date of the en-
actment of this Act shall be transferred to the Federal Sup-
plementary Medical Insurance Trust Fund. 
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SEC. 1169. STUDY REGARDING THE EFFECTS OF CALCU-
LATING 
MEDICARE 
ADVANTAGE 
PAYMENT 
RATES ON A REGIONAL AVERAGE OF MEDI-
CARE FEE FOR SERVICE RATES. 
(a) IN GENERAL.—The Administrator of the Centers 
for Medicare and Medicaid Services shall conduct a study 
to determine the potential effects of calculating Medicare 
Advantage payment rates on a more aggregated geographic 
basis (such as metropolitan statistical areas or other re-
gional delineations) rather than using county boundaries. 
In conducting such study, the Administrator shall consider 
whether such alternative geographic basis would result in 
the following: 
(1) Improvements in the quality of care. 
(2) Greater equity among providers. 
(3) More predictable benchmark amounts for 
Medicare advantage plans. 
(b) CONSULTATIONS.—In conducting the study, the 
Administrator shall consult with the following: 
(1) Experts in health care financing. 
(2) Representatives of foundations and other 
nonprofit entities that have conducted or supported 
research on Medicare financing issues. 
(3) Representatives from Medicare Advantage 
plans. 
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(4) Such other entities or people as determined 
by the Secretary. 
(c) REPORT.—Not later than one year after the date 
of the enactment of this Act, the Administrator shall trans-
mit a report to the Congress on the study conducted under 
this section. The report shall contain a detailed statement 
of findings and conclusions of the study, together with its 
recommendations for such legislation and administrative 
actions as the Administrator considers appropriate. 
PART 2—BENEFICIARY PROTECTIONS AND ANTI- 
FRAUD 
SEC. 1171. LIMITATION ON COST-SHARING FOR INDIVIDUAL 
HEALTH SERVICES. 
(a) IN GENERAL.—Section 1852(a)(1) of the Social Se-
curity Act (42 U.S.C. 1395w–22(a)(1)) is amended— 
(1) in subparagraph (A), by inserting before the 
period at the end the following: ‘‘with cost-sharing 
that is no greater (and may be less) than the cost- 
sharing that would otherwise be imposed under such 
program option’’; 
(2) in subparagraph (B)(i), by striking ‘‘or an 
actuarially equivalent level of cost-sharing as deter-
mined in this part’’; and 
(3) by amending clause (ii) of subparagraph (B) 
to read as follows: 
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‘‘(ii) PERMITTING USE OF FLAT COPAY-
MENT
OR
PER
DIEM
RATE.—Nothing in 
clause (i) shall be construed as prohibiting 
a Medicare Advantage plan from using a 
flat copayment or per diem rate, in lieu of 
the cost-sharing that would be imposed 
under part A or B, so long as the amount 
of the cost-sharing imposed does not exceed 
the amount of the cost-sharing that would 
be imposed under the respective part if the 
individual were not enrolled in a plan 
under this part.’’. 
(b) LIMITATION FOR DUAL ELIGIBLES AND QUALIFIED 
MEDICARE BENEFICIARIES.—Section 1852(a) of such Act 
is amended to read as follows: 
‘‘(7) LIMITATION ON COST-SHARING FOR DUAL 
ELIGIBLES
AND
QUALIFIED
MEDICARE
BENE-
FICIARIES.—In the case of a individual who is a full- 
benefit dual eligible individual (as defined in section 
1935(c)(6)) or a qualified medicare beneficiary (as 
defined in section 1905(p)(1)) who is enrolled in a 
Medicare Advantage plan, the plan may not impose 
cost-sharing that exceeds the amount of cost-sharing 
that would be permitted with respect to the individual 
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under this title and title XIX if the individual were 
not enrolled with such plan.’’. 
(c) EFFECTIVE DATES.— 
(1) The amendments made by subsection (a) 
shall apply to plan years beginning on or after Janu-
ary 1, 2011. 
(2) The amendments made by subsection (b) 
shall apply to plan years beginning on or after Janu-
ary 1, 2011. 
SEC. 1172. CONTINUOUS OPEN ENROLLMENT FOR ENROLL-
EES IN PLANS WITH ENROLLMENT SUSPEN-
SION. 
Section 1851(e)(4) of the Social Security Act (42 
U.S.C. 1395w(e)(4)) is amended— 
(1) in subparagraph (C), by striking at the end 
‘‘or’’; 
(2) in subparagraph (D)— 
(A) by inserting ‘‘, taking into account the 
health or well-being of the individual’’ before the 
period; and 
(B) by redesignating such subparagraph as 
subparagraph (E); and 
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
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‘‘(D) the individual is enrolled in an MA 
plan and enrollment in the plan is suspended 
under paragraph (2)(B) or (3)(C) of section 
1857(g) because of a failure of the plan to meet 
applicable requirements; or’’. 
SEC. 1173. INFORMATION FOR BENEFICIARIES ON MA PLAN 
ADMINISTRATIVE COSTS. 
(a) DISCLOSURE
OF MEDICAL LOSS RATIOS
AND 
OTHER EXPENSE DATA.—Section 1851 of the Social Secu-
rity Act (42 U.S.C. 1395w–21), as previously amended by 
this subtitle, is amended by adding at the end the following 
new subsection: 
‘‘(p) PUBLICATION OF MEDICAL LOSS RATIOS AND 
OTHER COST-RELATED INFORMATION.— 
‘‘(1) IN GENERAL.—The Secretary shall publish, 
not later than November 1 of each year (beginning 
with 2011), for each MA plan contract, the medical 
loss ratio of the plan in the previous year. 
‘‘(2) SUBMISSION OF DATA.— 
‘‘(A) IN GENERAL.—Each MA organization 
shall submit to the Secretary, in a form and 
manner specified by the Secretary, data nec-
essary for the Secretary to publish the medical 
loss ratio on a timely basis. 
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‘‘(B) DATA FOR 2010 AND 2011.—The data 
submitted under subparagraph (A) for 2010 and 
for 2011 shall be consistent in content with the 
data reported as part of the MA plan bid in 
June 2009 for 2010. 
‘‘(C) USE
OF
STANDARDIZED
ELEMENTS 
AND
DEFINITIONS.—The data to be submitted 
under subparagraph (A) relating to medical loss 
ratio for a year, beginning with 2012, shall be 
submitted based on the standardized elements 
and definitions developed under paragraph (3). 
‘‘(3) DEVELOPMENT OF DATA REPORTING STAND-
ARDS.— 
‘‘(A) IN GENERAL.—The Secretary shall de-
velop and implement standardized data elements 
and definitions for reporting under this sub-
section, for contract years beginning with 2012, 
of data necessary for the calculation of the med-
ical loss ratio for MA plans. Not later than De-
cember 31, 2010, the Secretary shall publish a 
report describing the elements and definitions so 
developed. 
‘‘(B) CONSULTATION.—The Secretary shall 
consult with the Health Choices Commissioner, 
representatives of MA organizations, experts on 
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health plan accounting systems, and representa-
tives of the National Association of Insurance 
Commissioners, in the development of such data 
elements and definitions. 
‘‘(4) MEDICAL LOSS RATIO TO BE DEFINED.— 
For purposes of this part, the term ‘medical loss ratio’ 
has the meaning given such term by the Secretary, 
taking into account the meaning given such term by 
the Health Choices Commissioner under section 116 of 
the America’s Affordable Health Choices Act of 
2009.’’. 
(b) MINIMUM MEDICAL LOSS RATIO.—Section 1857(e) 
of the Social Security Act (42 U.S.C. 1395w–27(e)) is 
amended by adding at the end the following new paragraph: 
‘‘(4) REQUIREMENT
FOR
MINIMUM
MEDICAL 
LOSS RATIO.—If the Secretary determines for a con-
tract year (beginning with 2014) that an MA plan 
has failed to have a medical loss ratio (as defined in 
section 1851(p)(4)) of at least .85— 
‘‘(A) the Secretary shall require the Medi-
care Advantage organization offering the plan to 
give enrollees a rebate (in the second succeeding 
contract year) of premiums under this part (or 
part B or part D, if applicable) by such amount 
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as would provide for a benefits ratio of at least 
.85; 
‘‘(B) for 3 consecutive contract years, the 
Secretary shall not permit the enrollment of new 
enrollees under the plan for coverage during the 
second succeeding contract year; and 
‘‘(C) the Secretary shall terminate the plan 
contract if the plan fails to have such a medical 
loss ratio for 5 consecutive contract years.’’. 
SEC. 1174. STRENGTHENING AUDIT AUTHORITY. 
(a) FOR PART C PAYMENTS RISK ADJUSTMENT.—Sec-
tion 1857(d)(1) of the Social Security Act (42 U.S.C. 
1395w–27(d)(1)) is amended by inserting after ‘‘section 
1858(c))’’ the following: ‘‘, and data submitted with respect 
to risk adjustment under section 1853(a)(3)’’. 
(b) ENFORCEMENT OF AUDITS AND DEFICIENCIES.— 
(1) IN GENERAL.—Section 1857(e) of such Act, 
as amended by section 1173, is amended by adding 
at the end the following new paragraph: 
‘‘(5) ENFORCEMENT
OF
AUDITS
AND
DEFI-
CIENCIES.— 
‘‘(A) INFORMATION IN CONTRACT.—The Sec-
retary shall require that each contract with an 
MA organization under this section shall include 
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terms that inform the organization of the provi-
sions in subsection (d). 
‘‘(B) ENFORCEMENT AUTHORITY.—The Sec-
retary is authorized, in connection with con-
ducting audits and other activities under sub-
section (d), to take such actions, including pur-
suit of financial recoveries, necessary to address 
deficiencies identified in such audits or other ac-
tivities.’’. 
(2) APPLICATION UNDER PART D.—For provision 
applying the amendment made by paragraph (1) to 
prescription drug plans under part D, see section 
1860D–12(b)(3)(D) of the Social Security Act. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall take effect on the date of the enactment of this 
Act and shall apply to audits and activities conducted for 
contract years beginning on or after January 1, 2011. 
SEC. 1175. AUTHORITY TO DENY PLAN BIDS. 
(a) IN GENERAL.—Section 1854(a)(5) of the Social Se-
curity Act (42 U.S.C. 1395w–24(a)(5)) is amended by add-
ing at the end the following new subparagraph: 
‘‘(C) REJECTION OF BIDS.—Nothing in this 
section shall be construed as requiring the Sec-
retary to accept any or every bid by an MA or-
ganization under this subsection.’’. 
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(b) APPLICATION UNDER PART D.—Section 1860D– 
11(d) of such Act (42 U.S.C. 1395w–111(d)) is amended 
by adding at the end the following new paragraph: 
‘‘(3) REJECTION OF BIDS.—Paragraph (5)(C) of 
section 1854(a) shall apply with respect to bids under 
this section in the same manner as it applies to bids 
by an MA organization under such section.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to bids for contract years beginning on 
or after January 1, 2011. 
PART 3—TREATMENT OF SPECIAL NEEDS PLANS 
SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN 
ENROLLMENT PERIOD OF INDIVIDUALS INTO 
CHRONIC CARE SPECIALIZED MA PLANS FOR 
SPECIAL NEEDS INDIVIDUALS. 
Section 1859(f)(4) of the Social Security Act (42 
U.S.C. 1395w–28(f)(4)) is amended by adding at the end 
the following new subparagraph: 
‘‘(C) The plan does not enroll an individual 
on or after January 1, 2011, other than during 
an annual, coordinated open enrollment period 
or when at the time of the diagnosis of the dis-
ease or condition that qualifies the individual as 
an 
individual 
described 
in 
subsection 
(b)(6)(B)(iii).’’. 
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SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS 
PLANS TO RESTRICT ENROLLMENT. 
(a) IN GENERAL.—Section 1859(f)(1) of the Social Se-
curity Act (42 U.S.C. 1395w–28(f)(1)) is amended by strik-
ing ‘‘January 1, 2011’’ and inserting ‘‘January 1, 2013 
(or January 1, 2016, in the case of a plan described in 
section 1177(b)(1) of the America’s Affordable Health 
Choices Act of 2009)’’. 
(b) GRANDFATHERING OF CERTAIN PLANS.— 
(1) PLANS DESCRIBED.—For purposes of section 
1859(f)(1) of the Social Security Act (42 U.S.C. 
1395w–28(f)(1)), a plan described in this paragraph 
is a plan that had a contract with a State that had 
a State program to operate an integrated Medicaid- 
Medicare program that had been approved by the 
Centers for Medicare & Medicaid Services as of Janu-
ary 1, 2004. 
(2) 
ANALYSIS; 
REPORT.—The 
Secretary 
of 
Health and Human Services shall provide, through a 
contract with an independent health services evalua-
tion organization, for an analysis of the plans de-
scribed in paragraph (1) with regard to the impact 
of such plans on cost, quality of care, patient satisfac-
tion, and other subjects as specified by the Secretary. 
Not later than December 31, 2011, the Secretary shall 
submit to Congress a report on such analysis and 
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shall include in such report such recommendations 
with regard to the treatment of such plans as the Sec-
retary deems appropriate. 
Subtitle E—Improvements to 
Medicare Part D 
SEC. 1181. ELIMINATION OF COVERAGE GAP. 
(a) IN GENERAL.—Section 1860D–2(b) of such Act (42 
U.S.C. 1395w–102(b)) is amended— 
(1) in paragraph (3)(A), by striking ‘‘paragraph 
(4)’’ and inserting ‘‘paragraphs (4) and (7)’’; 
(2) in paragraph (4)(B)(i), by inserting ‘‘subject 
to paragraph (7),’’ after ‘‘purposes of this part,’’; and 
(3) by adding at the end the following new para-
graph: 
‘‘(7) PHASED-IN
ELIMINATION
OF
COVERAGE 
GAP.— 
‘‘(A) IN GENERAL.—For each year begin-
ning with 2011, the Secretary shall consistent 
with this paragraph progressively increase the 
initial coverage limit (described in subsection 
(b)(3)) and decrease the annual out-of-pocket 
threshold from the amounts otherwise computed 
until there is a continuation of coverage from the 
initial coverage limit for expenditures incurred 
through the total amount of expenditures at 
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which benefits are available under paragraph 
(4). 
‘‘(B) INCREASE
IN
INITIAL
COVERAGE 
LIMIT.—For a year beginning with 2011, the 
initial coverage limit otherwise computed with-
out regard to this paragraph shall be increased 
by 1⁄2 of the cumulative phase-in percentage (as 
defined in subparagraph (D)(ii) for the year) 
times the out-of-pocket gap amount (as defined 
in subparagraph (E)) for the year. 
‘‘(C) DECREASE IN ANNUAL OUT-OF-POCKET 
THRESHOLD.—For a year beginning with 2011, 
the annual out-of-pocket threshold otherwise com-
puted without regard to this paragraph shall be 
decreased by 1⁄2 of the cumulative phase-in per-
centage of the out-of-pocket gap amount for the 
year multiplied by 1.75. 
‘‘(D) PHASE–IN.—For purposes of this 
paragraph: 
‘‘(i) 
ANNUAL
PHASE-IN
PERCENT-
AGE.—The term ‘annual phase-in percent-
age’ means— 
‘‘(I) for 2011, 13 percent; 
‘‘(II) for 2012, 2013, 2014, and 
2015, 5 percent; 
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‘‘(III) for 2016 through 2018, 7.5 
percent; and 
‘‘(IV) for 2019 and each subse-
quent year, 10 percent. 
‘‘(ii) CUMULATIVE PHASE-IN PERCENT-
AGE.—The term ‘cumulative phase-in per-
centage’ means for a year the sum of the 
annual phase-in percentage for the year and 
the annual phase-in percentages for each 
previous year beginning with 2011, but in 
no case more than 100 percent. 
‘‘(E) OUT-OF-POCKET
GAP
AMOUNT.—For 
purposes of this paragraph, the term ‘out-of- 
pocket gap amount’ means for a year the amount 
by which— 
‘‘(i) the annual out-of-pocket threshold 
specified in paragraph (4)(B) for the year 
(as determined as if this paragraph did not 
apply), exceeds 
‘‘(ii) the sum of— 
‘‘(I) the annual deductible under 
paragraph (1) for the year; and 
‘‘(II) 1⁄4 of the amount by which 
the initial coverage limit under para-
graph (3) for the year (as determined 
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as if this paragraph did not apply) ex-
ceeds such annual deductible.’’. 
(b) REQUIRING DRUG MANUFACTURERS TO PROVIDE 
DRUG REBATES FOR FULL-BENEFIT DUAL ELIGIBLES.— 
(1) IN GENERAL.—Section 1860D–2 of the Social 
Security Act (42 U.S.C. 1396r–8) is amended— 
(A) in subsection (e)(1), in the matter before 
subparagraph (A), by inserting ‘‘and subsection 
(f)’’ after ‘‘this subsection’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR 
FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS.— 
‘‘(1) IN GENERAL.—In this part, the term ‘cov-
ered part D drug’ does not include any drug or bio-
logic that is manufactured by a manufacturer that 
has not entered into and have in effect a rebate agree-
ment described in paragraph (2). 
‘‘(2) REBATE AGREEMENT.—A rebate agreement 
under this subsection shall require the manufacturer 
to provide to the Secretary a rebate for each rebate 
period (as defined in paragraph (6)(B)) ending after 
December 31, 2010, in the amount specified in para-
graph (3) for any covered part D drug of the manu-
facturer dispensed after December 31, 2010, to any 
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paragraph (3)(A)(i) of such section for such 
form, strength, and period. 
‘‘(C) AVERAGE MEDICARE DRUG PROGRAM 
FULL-BENEFIT
DUAL
ELIGIBLE
REBATE 
AMOUNT.—For purposes of this subsection, the 
term ‘average Medicare drug program full-benefit 
dual eligible rebate amount’ means, with respect 
to each dosage form and strength of a covered 
part D drug provided by a manufacturer for a 
rebate period, the sum, for all PDP sponsors 
under part D and MA organizations admin-
istering a MA–PD plan under part C, of— 
‘‘(i) the product, for each such sponsor 
or organization, of— 
‘‘(I) the sum of all rebates, dis-
counts, or other price concessions (not 
taking into account any rebate pro-
vided under paragraph (2) for such 
dosage form and strength of the drug 
dispensed, calculated on a per-unit 
basis, but only to the extent that any 
such rebate, discount, or other price 
concession applies equally to drugs dis-
pensed to full-benefit dual eligible 
Medicare drug plan enrollees and 
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drugs dispensed to PDP and MA–PD 
enrollees who are not full-benefit dual 
eligible individuals; and 
‘‘(II) the number of the units of 
such dosage and strength of the drug 
dispensed during the rebate period to 
full-benefit dual eligible individuals en-
rolled in the prescription drug plans 
administered by the PDP sponsor or 
the MA–PD plans administered by the 
MA–PD organization; divided by 
‘‘(ii) the total number of units of such 
dosage and strength of the drug dispensed 
during the rebate period to full-benefit dual 
eligible individuals enrolled in all prescrip-
tion drug plans administered by PDP spon-
sors and all MA–PD plans administered by 
MA–PD organizations. 
‘‘(4) LENGTH OF AGREEMENT.—The provisions 
of paragraph (4) of section 1927(b) (other than 
clauses (iv) and (v) of subparagraph (B)) shall apply 
to rebate agreements under this subsection in the same 
manner as such paragraph applies to a rebate agree-
ment under such section. 
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384 
‘‘(5) OTHER TERMS AND CONDITIONS.—The Sec-
retary shall establish other terms and conditions of 
the rebate agreement under this subsection, including 
terms and conditions related to compliance, that are 
consistent with this subsection. 
‘‘(6) DEFINITIONS.—In this subsection and sec-
tion 1860D–12(b)(7): 
‘‘(A) FULL-BENEFIT DUAL ELIGIBLE INDI-
VIDUAL.—The term ‘full-benefit dual eligible in-
dividual’ has the meaning given such term in 
section 1935(c)(6). 
‘‘(B) REBATE
PERIOD.—The term ‘rebate 
period’ has the meaning given such term in sec-
tion 1927(k)(8).’’. 
(2) REPORTING REQUIREMENT FOR THE DETER-
MINATION AND PAYMENT OF REBATES BY MANUFAC-
TURES
RELATED
TO
REBATE
FOR
FULL-BENEFIT 
DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.— 
(A) REQUIREMENTS FOR PDP SPONSORS.— 
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: 
‘‘(7) REPORTING
REQUIREMENT
FOR
THE
DE-
TERMINATION AND PAYMENT OF REBATES BY MANU-
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385 
FACTURERS RELATED TO REBATE FOR FULL-BENEFIT 
DUAL ELIGIBLE MEDICARE DRUG PLAN ENROLLEES.— 
‘‘(A) IN GENERAL.—For purposes of the re-
bate under section 1860D–2(f) for contract years 
beginning on or after January 1, 2011, each con-
tract entered into with a PDP sponsor under 
this part with respect to a prescription drug 
plan shall require that the sponsor comply with 
subparagraphs (B) and (C). 
‘‘(B) REPORT FORM AND CONTENTS.—Not 
later than 60 days after the end of each rebate 
period (as defined in section 1860D–2(f)(6)(B)) 
within such a contract year to which such sec-
tion applies, a PDP sponsor of a prescription 
drug plan under this part shall report to each 
manufacturer— 
‘‘(i) information (by National Drug 
Code number) on the total number of units 
of each dosage, form, and strength of each 
drug of such manufacturer dispensed to full- 
benefit dual eligible Medicare drug plan en-
rollees under any prescription drug plan 
operated by the PDP sponsor during the re-
bate period; 
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‘‘(ii) information on the price dis-
counts, price concessions, and rebates for 
such drugs for such form, strength, and pe-
riod; 
‘‘(iii) information on the extent to 
which such price discounts, price conces-
sions, and rebates apply equally to full-ben-
efit dual eligible Medicare drug plan enroll-
ees and PDP enrollees who are not full-ben-
efit dual eligible Medicare drug plan enroll-
ees; and 
‘‘(iv) any additional information that 
the Secretary determines is necessary to en-
able the Secretary to calculate the average 
Medicare drug program full-benefit dual eli-
gible rebate amount (as defined in para-
graph (3)(C) of such section), and to deter-
mine the amount of the rebate required 
under this section, for such form, strength, 
and period. 
Such report shall be in a form consistent with a 
standard reporting format established by the Sec-
retary. 
‘‘(C) SUBMISSION
TO
SECRETARY.—Each 
PDP sponsor shall promptly transmit a copy of 
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the information reported under subparagraph 
(B) to the Secretary for the purpose of audit 
oversight and evaluation. 
‘‘(D) CONFIDENTIALITY OF INFORMATION.— 
The provisions of subparagraph (D) of section 
1927(b)(3), relating to confidentiality of infor-
mation, shall apply to information reported by 
PDP sponsors under this paragraph in the same 
manner that such provisions apply to informa-
tion disclosed by manufacturers or wholesalers 
under such section, except— 
‘‘(i) that any reference to ‘this section’ 
in clause (i) of such subparagraph shall be 
treated as being a reference to this section; 
‘‘(ii) the reference to the Director of the 
Congressional Budget Office in clause (iii) 
of such subparagraph shall be treated as in-
cluding a reference to the Medicare Pay-
ment Advisory Commission; and 
‘‘(iii) clause (iv) of such subparagraph 
shall not apply. 
‘‘(E) OVERSIGHT.—Information reported 
under this paragraph may be used by the Inspec-
tor General of the Department of Health and 
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Human Services for the statutorily authorized 
purposes of audit, investigation, and evaluations. 
‘‘(F) PENALTIES FOR FAILURE TO PROVIDE 
TIMELY INFORMATION AND PROVISION OF FALSE 
INFORMATION.—In the case of a PDP sponsor— 
‘‘(i) that fails to provide information 
required under subparagraph (B) on a 
timely basis, the sponsor is subject to a civil 
money penalty in the amount of $10,000 for 
each day in which such information has not 
been provided; or 
‘‘(ii) that knowingly (as defined in sec-
tion 1128A(i)) provides false information 
under such subparagraph, the sponsor is 
subject to a civil money penalty in an 
amount not to exceed $100,000 for each 
item of false information. 
Such civil money penalties are in addition to 
other penalties as may be prescribed by law. The 
provisions of section 1128A (other than sub-
sections (a) and (b)) shall apply to a civil money 
penalty under this subparagraph in the same 
manner as such provisions apply to a penalty or 
proceeding under section 1128A(a).’’. 
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389 
(B) APPLICATION TO MA ORGANIZATIONS.— 
Section 1857(f)(3) of the Social Security Act (42 
U.S.C. 1395w–27(f)(3)) is amended by adding at 
the end the following: 
‘‘(D) REPORTING
REQUIREMENT
RELATED 
TO REBATE FOR FULL-BENEFIT DUAL ELIGIBLE 
MEDICARE
DRUG
PLAN
ENROLLEES.—Section 
1860D–12(b)(7).’’. 
(3) DEPOSIT OF REBATES INTO MEDICARE PRE-
SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) of 
such Act (42 U.S.C. 1395w–116(c)) is amended by 
adding at the end the following new paragraph: 
‘‘(6) REBATE FOR FULL-BENEFIT DUAL ELIGIBLE 
MEDICARE DRUG PLAN ENROLLEES.—Amounts paid 
under a rebate agreement under section 1860D–2(f) 
shall be deposited into the Account and shall be used 
to pay for all or part of the gradual elimination of 
the coverage gap under section 1860D–2(b)(7).’’. 
SEC. 1182. DISCOUNTS FOR CERTAIN PART D DRUGS IN 
ORIGINAL COVERAGE GAP. 
Section 1860D–2 of the Social Security Act (42 U.S.C. 
1395w–102), as amended by section 1181, is amended— 
(1) in subsection (b)(4)(C)(ii), by inserting ‘‘sub-
ject to subsection (g)(2)(C),’’ after ‘‘(ii)’’; 
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(2) in subsection (e)(1), in the matter before sub-
paragraph (A), by striking ‘‘subsection (f)’’ and in-
serting ‘‘subsections (f) and (g)’’; and 
(3) by adding at the end the following new sub-
section: 
‘‘(g) REQUIREMENT FOR MANUFACTURER DISCOUNT 
AGREEMENT FOR CERTAIN QUALIFYING DRUGS.— 
‘‘(1) IN GENERAL.—In this part, the term ‘cov-
ered part D drug’ does not include any drug or bio-
logic that is manufactured by a manufacturer that 
has not entered into and have in effect for all quali-
fying drugs (as defined in paragraph (5)(A)) a dis-
count agreement described in paragraph (2). 
‘‘(2) DISCOUNT AGREEMENT.— 
‘‘(A) PERIODIC
DISCOUNTS.—A discount 
agreement under this paragraph shall require the 
manufacturer involved to provide, to each PDP 
sponsor with respect to a prescription drug plan 
or each MA organization with respect to each 
MA-PD plan, a discount in an amount specified 
in paragraph (3) for qualifying drugs (as de-
fined in paragraph (5)(A)) of the manufacturer 
dispensed to a qualifying enrollee after December 
31, 2010, insofar as the individual is in the 
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original gap in coverage (as defined in para-
graph (5)(E)). 
‘‘(B) DISCOUNT
AGREEMENT.—Insofar as 
not inconsistent with this subsection, the Sec-
retary shall establish terms and conditions of 
such agreement, including terms and conditions 
relating to compliance, similar to the terms and 
conditions for rebate agreements under para-
graphs (2), (3), and (4) of section 1927(b), except 
that— 
‘‘(i) discounts shall be applied under 
this subsection to prescription drug plans 
and MA-PD plans instead of State plans 
under title XIX; 
‘‘(ii) PDP sponsors and MA organiza-
tions shall be responsible, instead of States, 
for provision of necessary utilization infor-
mation to drug manufacturers; and 
‘‘(iii) sponsors and MA organizations 
shall be responsible for reporting informa-
tion on drug-component negotiated price, 
instead of other manufacturer prices. 
‘‘(C) COUNTING
DISCOUNT
TOWARD
TRUE 
OUT-OF-POCKET
COSTS.—Under the discount 
agreement, in applying subsection (b)(4), with 
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regard to subparagraph (C)(i) of such subsection, 
if a qualified enrollee purchases the qualified 
drug insofar as the enrollee is in an actual gap 
of coverage (as defined in paragraph (5)(D)), the 
amount of the discount under the agreement 
shall be treated and counted as costs incurred by 
the plan enrollee. 
‘‘(3) DISCOUNT
AMOUNT.—The amount of the 
discount specified in this paragraph for a discount 
period for a plan is equal to 50 percent of the amount 
of the drug-component negotiated price (as defined in 
paragraph (5)(C)) for qualifying drugs for the period 
involved. 
‘‘(4) ADDITIONAL TERMS.—In the case of a dis-
count provided under this subsection with respect to 
a prescription drug plan offered by a PDP sponsor or 
an MA-PD plan offered by an MA organization, if a 
qualified enrollee purchases the qualified drug— 
‘‘(A) insofar as the enrollee is in an actual 
gap of coverage (as defined in paragraph 
(5)(D)), the sponsor or plan shall provide the 
discount to the enrollee at the time the enrollee 
pays for the drug; and 
‘‘(B) insofar as the enrollee is in the portion 
of the original gap in coverage (as defined in 
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paragraph (5)(E)) that is not in the actual gap 
in coverage, the discount shall not be applied 
against the negotiated price (as defined in sub-
section (d)(1)(B)) for the purpose of calculating 
the beneficiary payment. 
‘‘(5) DEFINITIONS.—In this subsection: 
‘‘(A) QUALIFYING DRUG.—The term ‘quali-
fying drug’ means, with respect to a prescription 
drug plan or MA-PD plan, a drug or biological 
product that— 
‘‘(i)(I) is a drug produced or distrib-
uted under an original new drug applica-
tion approved by the Food and Drug Ad-
ministration, including a drug product 
marketed by any cross-licensed producers or 
distributors operating under the new drug 
application; 
‘‘(II) is a drug that was originally 
marketed under an original new drug ap-
plication approved by the Food and Drug 
Administration; or 
‘‘(III) is a biological product as ap-
proved under section 351(a) of the Public 
Health Services Act; 
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‘‘(ii) is covered under the formulary of 
the plan; and 
‘‘(iii) is dispensed to an individual 
who is in the original gap in coverage. 
‘‘(B) QUALIFYING
ENROLLEE.—The term 
‘qualifying enrollee’ means an individual en-
rolled in a prescription drug plan or MA-PD 
plan other than such an individual who is a sub-
sidy-eligible individual (as defined in section 
1860D–14(a)(3)). 
‘‘(C) 
DRUG-COMPONENT
NEGOTIATED 
PRICE.—The term ‘drug-component negotiated 
price’ means, with respect to a qualifying drug, 
the negotiated price (as defined in subsection 
(d)(1)(B)), as determined without regard to any 
dispensing fee, of the drug under the prescription 
drug plan or MA-PD plan involved. 
‘‘(D) ACTUAL GAP IN COVERAGE.—The term 
‘actual gap in coverage’ means the gap in pre-
scription drug coverage that occurs between the 
initial coverage limit (as modified under sub-
paragraph (B) of subsection (b)(7)) and the an-
nual out-of-pocket threshold (as modified under 
subparagraph (C) of such subsection). 
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‘‘(E) ORIGINAL
GAP
IN
COVERAGE.—The 
term ‘original in gap coverage’ means the gap in 
prescription drug coverage that would occur be-
tween the initial coverage limit (described in 
subsection (b)(3)) and the annual out-of-pocket 
threshold (as defined in subsection (b)(4)(B)) if 
subsection (b)(7) did not apply.’’. 
SEC. 1183. REPEAL OF PROVISION RELATING TO SUBMIS-
SION OF CLAIMS BY PHARMACIES LOCATED 
IN OR CONTRACTING WITH LONG-TERM CARE 
FACILITIES. 
(a) PART D SUBMISSION.—Section 1860D–12(b) of the 
Social Security Act (42 U.S.C. 1395w–112(b)), as amended 
by section 172(a)(1) of Public Law 110-275, is amended 
by striking paragraph (5) and redesignating paragraph (6) 
and paragraph (7), as added by section 1181(b)(2), as 
paragraph (5) and paragraph (6), respectively. 
(b) 
SUBMISSION
TO
MA-PD 
PLANS.—Section 
1857(f)(3) of the Social Security Act (42 U.S.C. 1395w- 
27(f)(3)), as added by section 171(b) of Public Law 110- 
275 and amended by section 172(a)(2) of such Public Law 
and section 1181 of this Act, is amended by striking sub-
paragraph (B) and redesignating subparagraphs (C) and 
(D) as subparagraphs (B) and (C), respectively. 
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(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply for contract years beginning with 2010. 
SEC. 1184. INCLUDING COSTS INCURRED BY AIDS DRUG AS-
SISTANCE PROGRAMS AND INDIAN HEALTH 
SERVICE 
IN 
PROVIDING 
PRESCRIPTION 
DRUGS TOWARD THE ANNUAL OUT-OF-POCK-
ET THRESHOLD UNDER PART D. 
(a) IN GENERAL.—Section 1860D–2(b)(4)(C) of the 
Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)) is 
amended— 
(1) in clause (i), by striking ‘‘and’’ at the end; 
(2) in clause (ii)— 
(A) by striking ‘‘such costs shall be treated 
as incurred only if’’ and inserting ‘‘subject to 
clause (iii), such costs shall be treated as in-
curred only if’’; 
(B) by striking ‘‘, under section 1860D–14, 
or under a State Pharmaceutical Assistance Pro-
gram’’; and 
(C) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by inserting after clause (ii) the following 
new clause: 
‘‘(iii) such costs shall be treated as in-
curred and shall not be considered to be re-
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397 
imbursed under clause (ii) if such costs are 
borne or paid— 
‘‘(I) under section 1860D–14; 
‘‘(II) under a State Pharma-
ceutical Assistance Program; 
‘‘(III) by the Indian Health Serv-
ice, an Indian tribe or tribal organiza-
tion, or an urban Indian organization 
(as defined in section 4 of the Indian 
Health Care Improvement Act); or 
‘‘(IV) under an AIDS Drug As-
sistance Program under part B of title 
XXVI of the Public Health Service 
Act.’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to costs incurred on or after January 
1, 2011. 
SEC. 1185. PERMITTING MID-YEAR CHANGES IN ENROLL-
MENT FOR FORMULARY CHANGES THAT AD-
VERSELY IMPACT AN ENROLLEE. 
(a) IN GENERAL.—Section 1860D–1(b)(3) of the So-
cial Security Act (42 U.S.C. 1395w–101(b)(3)) is amended 
by adding at the end the following new subparagraph: 
‘‘(F) CHANGE IN FORMULARY RESULTING IN 
INCREASE IN COST-SHARING.— 
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398 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), in the case of an individual 
enrolled in a prescription drug plan (or 
MA–PD plan) who has been prescribed and 
is using a covered part D drug while so en-
rolled, if the formulary of the plan is mate-
rially changed (other than at the end of a 
contract year) so to reduce the coverage (or 
increase the cost-sharing) of the drug under 
the plan. 
‘‘(ii) EXCEPTION.—Clause (i) shall not 
apply in the case that a drug is removed 
from the formulary of a plan because of a 
recall or withdrawal of the drug issued by 
the Food and Drug Administration, because 
the drug is replaced with a generic drug 
that is a therapeutic equivalent, or because 
of utilization management applied to— 
‘‘(I) a drug whose labeling in-
cludes a boxed warning required by the 
Food and Drug Administration under 
section 210.57(c)(1) of title 21, Code of 
Federal Regulations (or a successor 
regulation); or 
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399 
‘‘(II) a drug required under sub-
section (c)(2) of section 505–1 of the 
Federal Food, Drug, and Cosmetic Act 
to have a Risk Evaluation and Man-
agement Strategy that includes ele-
ments under subsection (f) of such sec-
tion.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to contract years beginning on or 
after January 1, 2011. 
SEC. 1186. NEGOTIATION OF LOWER COVERED PART D 
DRUG PRICES ON BEHALF OF MEDICARE 
BENEFICIARIES. 
(a) NEGOTIATION BY SECRETARY.—Section 1860D–11 
of the Social Security Act (42 U.S.C. 1395w–111) is 
amended by striking subsection (i) (relating to noninter-
ference) and inserting the following: 
‘‘(i) NEGOTIATION OF LOWER DRUG PRICES.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of law, the Secretary shall negotiate with 
pharmaceutical manufacturers the prices (including 
discounts, rebates, and other price concessions) that 
may be charged to PDP sponsors and MA organiza-
tions for covered part D drugs for part D eligible in-
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400 
dividuals who are enrolled under a prescription drug 
plan or under an MA-PD plan. 
‘‘(2) 
NO
CHANGE
IN
RULES
FOR 
FORMULARIES.— 
‘‘(A) IN GENERAL.—Nothing in paragraph 
(1) shall be construed to authorize the Secretary 
to establish or require a particular formulary. 
‘‘(B) CONSTRUCTION.—Subparagraph (A) 
shall not be construed as affecting the Secretary’s 
authority to ensure appropriate and adequate 
access to covered part D drugs under prescrip-
tion drug plans and under MA-PD plans, in-
cluding compliance of such plans with formulary 
requirements under section 1860D–4(b)(3). 
‘‘(3) CONSTRUCTION.—Nothing in this subsection 
shall be construed as preventing the sponsor of a pre-
scription drug plan, or an organization offering an 
MA-PD plan, from obtaining a discount or reduction 
of the price for a covered part D drug below the price 
negotiated under paragraph (1). 
‘‘(4) SEMI-ANNUAL REPORTS TO CONGRESS.—Not 
later than June 1, 2011, and every six months there-
after, the Secretary shall submit to the Committees on 
Ways and Means, Energy and Commerce, and Over-
sight and Government Reform of the House of Rep-
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401 
resentatives and the Committee on Finance of the 
Senate a report on negotiations conducted by the Sec-
retary to achieve lower prices for Medicare bene-
ficiaries, and the prices and price discounts achieved 
by the Secretary as a result of such negotiations.’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on the date of the enactment 
of this Act and shall first apply to negotiations and prices 
for plan years beginning on January 1, 2011. 
SEC. 1187. STATE CERTIFICATION PRIOR TO WAIVER OF LI-
CENSURE REQUIREMENTS UNDER MEDICARE 
PRESCRIPTION DRUG PROGRAM. 
(a) IN GENERAL.—Section 1860D–12(c) of the Social 
Security Act (42 U.S.C. 1395w–112(c)) is amended— 
(1) in paragraph (1)(A), by striking ‘‘In the 
case’’ and inserting ‘‘Subject to paragraph (5), in the 
case’’; and 
(2) by adding at the end the following new para-
graph: 
‘‘(5) STATE CERTIFICATION REQUIRED.— 
‘‘(A) IN
GENERAL.—The Secretary may 
only grant a waiver under paragraph (1)(A) if 
the Secretary has received a certification from 
the State insurance commissioner that the pre-
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402 
scription drug plan has a substantially complete 
application pending in the State. 
‘‘(B) REVOCATION OF WAIVER UPON FIND-
ING OF FRAUD AND ABUSE.—The Secretary shall 
revoke a waiver granted under paragraph (1)(A) 
if the State insurance commissioner submits a 
certification to the Secretary that the recipient of 
such a waiver— 
‘‘(i) has committed fraud or abuse with 
respect to such waiver; 
‘‘(ii) has failed to make a good faith ef-
fort to satisfy State licensing requirements; 
or 
‘‘(iii) was determined ineligible for li-
censure by the State.’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply with respect to plan years beginning 
on or after January 1, 2010. 
Subtitle F—Medicare Rural Access 
Protections 
SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS. 
. 
(a) ADDITIONAL TELEHEALTH SITE.— 
(1) IN GENERAL.—Paragraph (4)(C)(ii) of sec-
tion 1834(m) of the Social Security Act (42 U.S.C. 
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403 
1395m(m)) is amended by adding at the end the fol-
lowing new subclause: 
‘‘(IX) A renal dialysis facility.’’ 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to services furnished on or 
after January 1, 2011. 
(b) TELEHEALTH ADVISORY COMMITTEE.— 
(1) ESTABLISHMENT.—Section 1868 of the So-
cial Security Act (42 U.S.C. 1395ee) is amended— 
(A) in the heading, by adding at the end the 
following: 
‘‘TELEHEALTH
ADVISORY
COM-
MITTEE’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(c) TELEHEALTH ADVISORY COMMITTEE.— 
‘‘(1) IN GENERAL.—The Secretary shall appoint 
a Telehealth Advisory Committee (in this subsection 
referred to as the ‘Advisory Committee’) to make rec-
ommendations to the Secretary on policies of the Cen-
ters for Medicare & Medicaid Services regarding tele-
health services as established under section 1834(m), 
including the appropriate addition or deletion of 
services (and HCPCS codes) to those specified in 
paragraphs (4)(F)(i) and (4)(F)(ii) of such section 
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404 
and for authorized payment under paragraph (1) of 
such section. 
‘‘(2) MEMBERSHIP; TERMS.— 
‘‘(A) MEMBERSHIP.— 
‘‘(i) IN GENERAL.—The Advisory Com-
mittee shall be composed of 9 members, to be 
appointed by the Secretary, of whom— 
‘‘(I) 5 shall be practicing physi-
cians; 
‘‘(II) 2 shall be practicing non- 
physician health care practitioners; 
and 
‘‘(III) 2 shall be administrators of 
telehealth programs. 
‘‘(ii) REQUIREMENTS FOR APPOINTING 
MEMBERS.—In appointing members of the 
Advisory Committee, the Secretary shall— 
‘‘(I) ensure that each member has 
prior experience with the practice of 
telemedicine or telehealth; 
‘‘(II) give preference to individ-
uals who are currently providing tele-
medicine or telehealth services or who 
are involved in telemedicine or tele-
health programs; 
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405 
‘‘(III) ensure that the membership 
of the Advisory Committee represents a 
balance of specialties and geographic 
regions; and 
‘‘(IV) take into account the rec-
ommendations of stakeholders. 
‘‘(B) TERMS.—The members of the Advisory 
Committee shall serve for such term as the Sec-
retary may specify. 
‘‘(C) CONFLICTS OF INTEREST.—An advi-
sory committee member may not participate 
with respect to a particular matter considered in 
an advisory committee meeting if such member 
(or an immediate family member of such mem-
ber) has a financial interest that could be af-
fected by the advice given to the Secretary with 
respect to such matter. 
‘‘(3) MEETINGS.—The Advisory Committee shall 
meet twice each calendar year and at such other times 
as the Secretary may provide. 
‘‘(4) PERMANENT COMMITTEE.—Section 14 of the 
Federal Advisory Committee Act (5 U.S.C. App.) 
shall not apply to the Advisory Committee.’’ 
(2) FOLLOWING
RECOMMENDATIONS.—Section 
1834(m)(4)(F) 
of 
such 
Act 
(42 
U.S.C. 
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406 
1395m(m)(4)(F)) is amended by adding at the end 
the following new clause: 
‘‘(iii) 
RECOMMENDATIONS
OF
THE 
TELEHEALTH
ADVISORY
COMMITTEE.—In 
making determinations under clauses (i) 
and (ii), the Secretary shall take into ac-
count the recommendations of the Telehealth 
Advisory Committee (established under sec-
tion 1868(c)) when adding or deleting serv-
ices (and HCPCS codes) and in establishing 
policies of the Centers for Medicare & Med-
icaid Services regarding the delivery of tele-
health services. If the Secretary does not im-
plement such a recommendation, the Sec-
retary shall publish in the Federal Register 
a statement regarding the reason such rec-
ommendation was not implemented.’’ 
(3) WAIVER OF ADMINISTRATIVE LIMITATION.— 
The Secretary of Health and Human Services shall 
establish the Telehealth Advisory Committee under the 
amendment made by paragraph (1) notwithstanding 
any limitation that may apply to the number of ad-
visory committees that may be established (within the 
Department of Health and Human Services or other-
wise). 
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407 
SEC. 1192. EXTENSION OF OUTPATIENT HOLD HARMLESS 
PROVISION. 
Section 1833(t)(7)(D)(i) of the Social Security Act (42 
U.S.C. 1395l(t)(7)(D)(i)) is amended— 
(1) in subclause (II)— 
(A) in the first sentence, by striking 
‘‘‘2010’’ and inserting ‘‘2012’’; and 
(B) in the second sentence, by striking ‘‘or 
2009’’ and inserting ‘‘, 2009, 2010, or 2011’’; 
and 
(2) in subclause (III), by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2012’’. 
SEC. 1193. EXTENSION OF SECTION 508 HOSPITAL RECLAS-
SIFICATIONS. 
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, 2011’’. 
SEC. 1194. EXTENSION OF GEOGRAPHIC FLOOR FOR WORK. 
Section 1848(e)(1)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)(E)) is amended by striking ‘‘before 
January 1, 2010’’ and inserting ‘‘before January 1, 2012’’. 
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408 
SEC. 1195. EXTENSION OF PAYMENT FOR TECHNICAL COM-
PONENT OF CERTAIN PHYSICIAN PATHOLOGY 
SERVICES. 
Section 542(c) of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000 (as en-
acted into law by section 1(a)(6) of Public Law 106–554), 
as amended by section 732 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (42 
U.S.C. 1395w–4 note), section 104 of division B of the Tax 
Relief and Health Care Act of 2006 (42 U.S.C. 1395w–4 
note), section 104 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (Public Law 110–173), and section 
136 of the Medicare Improvements for Patients and Pro-
viders Act of 1008 (Public Law 110–275), is amended by 
striking ‘‘and 2009’’ and inserting ‘‘2009, 2010, and 2011’’. 
SEC. 1196. EXTENSION OF AMBULANCE ADD-ONS. 
(a) IN GENERAL.—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 preceding clause (i), by 
striking ‘‘before January 1, 2010’’ and inserting 
‘‘before January 1, 2012’’; and 
(B) in each of clauses (i) and (ii), by strik-
ing ‘‘before January 1, 2010’’ and inserting ‘‘be-
fore January 1, 2012’’. 
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409 
(b) 
AIR
AMBULANCE
IMPROVEMENTS.—Section 
146(b)(1) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110–275) is amended 
by striking ‘‘ending on December 31, 2009’’ and inserting 
‘‘ending on December 31, 2011’’. 
SEC. 1197. ENSURING PROPORTIONAL REPRESENTATION 
OF INTERESTS OF RURAL AREAS ON MEDPAC. 
(a) IN GENERAL.—Section 1805(c)(2) of the Social Se-
curity 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-
vide a balance between urban and rural rep-
resentatives under subparagraph (A), the propor-
tion of members of the Commission who rep-
resent the interests of health care providers and 
Medicare beneficiaries located in rural areas 
shall be no less than the proportion of the total 
number of Medicare beneficiaries who reside in 
rural areas.’’. 
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410 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to appointments to the Medicare 
Payment Advisory Commission made after the date of the 
enactment of this Act. 
TITLE II—MEDICARE 
BENEFICIARY IMPROVEMENTS 
Subtitle A—Improving and Simpli-
fying Financial Assistance for 
Low 
Income 
Medicare 
Bene-
ficiaries 
SEC. 1201. IMPROVING ASSETS TESTS FOR MEDICARE SAV-
INGS PROGRAM AND LOW-INCOME SUBSIDY 
PROGRAM. 
(a) APPLICATION
OF HIGHEST LEVEL PERMITTED 
UNDER LIS TO ALL SUBSIDY ELIGIBLE INDIVIDUALS.— 
(1) IN GENERAL.—Section 1860D–14(a)(1) of the 
Social Security Act (42 U.S.C. 1395w–114(a)(1)) is 
amended in the matter before subparagraph (A), by 
inserting ‘‘(or, beginning with 2012, paragraph 
(3)(E))’’ after ‘‘paragraph (3)(D)’’. 
(2) 
ANNUAL
INCREASE
IN
LIS
RESOURCE 
TEST.—Section 1860D–14(a)(3)(E)(i) of such Act (42 
U.S.C. 1395w–114(a)(3)(E)(i)) is amended— 
(A) by striking ‘‘and’’ at the end of sub-
clause (I); 
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411 
(B) in subclause (II), by inserting ‘‘(before 
2012)’’ after ‘‘subsequent year’’; 
(C) by striking the period at the end of sub-
clause (II) and inserting a semicolon; 
(D) by inserting after subclause (II) the fol-
lowing new subclauses: 
‘‘(III) for 2012, $17,000 (or 
$34,000 in the case of the combined 
value of the individual’s assets or re-
sources and the assets or resources of 
the individual’s spouse); and 
‘‘(IV) for a subsequent year, the 
dollar amounts specified in this sub-
clause (or subclause (III)) for the pre-
vious year increased by the annual 
percentage increase in the consumer 
price index (all items; U.S. city aver-
age) as of September of such previous 
year.’’; and 
(E) in the last sentence, by inserting ‘‘or 
(IV)’’ after ‘‘subclause (II)’’. 
(3) APPLICATION OF LIS TEST UNDER MEDICARE 
SAVINGS
PROGRAM.—Section 1905(p)(1)(C) of such 
Act (42 U.S.C. 1396d(p)(1)(C)) is amended— 
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412 
(A) by striking ‘‘effective beginning with 
January 1, 2010’’ and inserting ‘‘effective for the 
period beginning with January 1, 2010, and 
ending with December 31, 2011’’; and 
(B) by inserting before the period at the end 
the following: ‘‘or, effective beginning with Janu-
ary 1, 2012, whose resources (as so determined) 
do not exceed the maximum resource level ap-
plied for the year under subparagraph (E) of 
section 1860D–14(a)(3) (determined without re-
gard to the life insurance policy exclusion pro-
vided under subparagraph (G) of such section) 
applicable to an individual or to the individual 
and the individual’s spouse (as the case may 
be)’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to eligibility determinations for in-
come-related subsidies and medicare cost-sharing furnished 
for periods beginning on or after January 1, 2012. 
SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR 
CERTAIN NONINSTITUTIONALIZED FULL-BEN-
EFIT DUAL ELIGIBLE INDIVIDUALS. 
(a) IN GENERAL.—Section 1860D–14(a)(1)(D)(i) of 
the Social Security Act (42 U.S.C. 1395w–114(a)(1)(D)(i)) 
is amended— 
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413 
(1) by striking ‘‘INSTITUTIONALIZED
INDIVID-
UALS.—In’’ and inserting ‘‘ELIMINATION OF COST- 
SHARING FOR CERTAIN FULL-BENEFIT DUAL ELIGIBLE 
INDIVIDUALS.— 
‘‘(I) INSTITUTIONALIZED INDIVID-
UALS.—In’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(II) CERTAIN
OTHER
INDIVID-
UALS.—In the case of an individual 
who is a full-benefit dual eligible indi-
vidual and with respect to whom there 
has been a determination that but for 
the provision of home and community 
based care (whether under section 
1915, 1932, or under a waiver under 
section 1115) the individual would re-
quire the level of care provided in a 
hospital or a nursing facility or inter-
mediate care facility for the mentally 
retarded the cost of which could be re-
imbursed under the State plan under 
title XIX, the elimination of any bene-
ficiary coinsurance described in section 
1860D–2(b)(2) 
(for 
all 
amounts 
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414 
through the total amount of expendi-
tures at which benefits are available 
under section 1860D–2(b)(4)).’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to drugs dispensed on or after Janu-
ary 1, 2011. 
SEC. 1203. ELIMINATING BARRIERS TO ENROLLMENT. 
(a) ADMINISTRATIVE VERIFICATION OF INCOME AND 
RESOURCES UNDER
THE LOW-INCOME SUBSIDY PRO-
GRAM.— 
(1) IN GENERAL.—Clause (iii) of section 1860D– 
14(a)(3)(E) of the Social Security Act (42 U.S.C. 
1395w–114(a)(3)(E)) is amended to read as follows: 
‘‘(iii) CERTIFICATION OF INCOME AND 
RESOURCES.—For purposes of applying this 
section— 
‘‘(I) an individual shall be per-
mitted to apply on the basis of self-cer-
tification of income and resources; and 
‘‘(II) matters attested to in the 
application shall be subject to appro-
priate methods of verification without 
the need of the individual to provide 
additional documentation, except in 
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extraordinary situations as determined 
by the Commissioner.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply beginning January 1, 
2010. 
(b) DISCLOSURES TO FACILITATE IDENTIFICATION OF 
INDIVIDUALS LIKELY TO BE INELIGIBLE FOR THE LOW- 
INCOME ASSISTANCE UNDER THE MEDICARE PRESCRIP-
TION DRUG PROGRAM TO ASSIST SOCIAL SECURITY ADMIN-
ISTRATION’S OUTREACH TO ELIGIBLE INDIVIDUALS.—For 
provision authorizing disclosure of return information to 
facilitate identification of individuals likely to be ineligible 
for low-income subsidies under Medicare prescription drug 
program, see section 1801. 
SEC. 1204. ENHANCED OVERSIGHT RELATING TO REIM-
BURSEMENTS FOR RETROACTIVE LOW IN-
COME SUBSIDY ENROLLMENT. 
(a) IN GENERAL.—In the case of a retroactive LIS en-
rollment beneficiary who is enrolled under a prescription 
drug plan under part D of title XVIII of the Social Security 
Act (or an MA-PD plan under part C of such title), the 
beneficiary (or any eligible third party) is entitled to reim-
bursement by the plan for covered drug costs incurred by 
the beneficiary during the retroactive coverage period of the 
beneficiary in accordance with subsection (b) and in the 
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case of such a beneficiary described in subsection 
(c)(4)(A)(i), such reimbursement shall be made automati-
cally by the plan upon receipt of appropriate notice the 
beneficiary is eligible for assistance described in such sub-
section (c)(4)(A)(i) without further information required to 
be filed with the plan by the beneficiary. 
(b) ADMINISTRATIVE REQUIREMENTS RELATING TO 
REIMBURSEMENTS.— 
(1) LINE-ITEM DESCRIPTION.—Each reimburse-
ment made by a prescription drug plan or MA-PD 
plan under subsection (a) shall include a line-item 
description of the items for which the reimbursement 
is made. 
(2) TIMING OF REIMBURSEMENTS.—A prescrip-
tion drug plan or MA-PD plan must make a reim-
bursement under subsection (a) to a retroactive LIS 
enrollment beneficiary, with respect to a claim, not 
later than 45 days after— 
(A) in the case of a beneficiary described in 
subsection (c)(4)(A)(i), the date on which the 
plan receives notice from the Secretary that the 
beneficiary is eligible for assistance described in 
such subsection; or 
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(B) in the case of a beneficiary described in 
subsection (c)(4)(A)(ii), the date on which the 
beneficiary files the claim with the plan. 
(3) REPORTING REQUIREMENT.—For each month 
beginning with January 2011, each prescription drug 
plan and each MA-PD plan shall report to the Sec-
retary the following: 
(A) The number of claims the plan has re-
adjudicated during the month due to a bene-
ficiary becoming retroactively eligible for sub-
sidies available under section 1860D-14 of the 
Social Security Act. 
(B) The total value of the readjudicated 
claim amount for the month. 
(C) The Medicare Health Insurance Claims 
Number of beneficiaries for whom claims were 
readjudicated. 
(D) For the claims described in subpara-
graphs (A) and (B), an attestation to the Ad-
ministrator of the Centers for Medicare & Med-
icaid Services of the total amount of reimburse-
ment the plan has provided to beneficiaries for 
premiums and cost-sharing that the beneficiary 
overpaid for which the plan received payment 
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from the Centers for Medicare & Medicaid Serv-
ices. 
(c) DEFINITIONS.—For purposes of this section: 
(1) COVERED DRUG COSTS.—The term ‘‘covered 
drug costs’’ means, with respect to a retroactive LIS 
enrollment beneficiary enrolled under a prescription 
drug plan under part D of title XVIII of the Social 
Security Act (or an MA-PD plan under part C of 
such title), the amount by which— 
(A) the costs incurred by such beneficiary 
during the retroactive coverage period of the ben-
eficiary for covered part D drugs, premiums, 
and cost-sharing under such title; exceeds 
(B) such costs that would have been in-
curred by such beneficiary during such period if 
the beneficiary had been both enrolled in the 
plan and recognized by such plan as qualified 
during such period for the low income subsidy 
under section 1860D-14 of the Social Security 
Act to which the individual is entitled. 
(2) ELIGIBLE THIRD PARTY.—The term ‘‘eligible 
third party’’ means, with respect to a retroactive LIS 
enrollment beneficiary, an organization or other third 
party that is owed payment on behalf of such bene-
ficiary for covered drug costs incurred by such bene-
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ficiary during the retroactive coverage period of such 
beneficiary. 
(3) RETROACTIVE COVERAGE PERIOD.—The term 
‘‘retroactive coverage period’’ means— 
(A) with respect to a retroactive LIS enroll-
ment 
beneficiary 
described 
in 
paragraph 
(4)(A)(i), the period— 
(i) beginning on the effective date of 
the assistance described in such paragraph 
for which the individual is eligible; and 
(ii) ending on the date the plan effec-
tuates the status of such individual as so el-
igible; and 
(B) with respect to a retroactive LIS enroll-
ment 
beneficiary 
described 
in 
paragraph 
(4)(A)(ii), the period— 
(i) beginning on the date the indi-
vidual is both entitled to benefits under part 
A, or enrolled under part B, of title XVIII 
of the Social Security Act and eligible for 
medical assistance under a State plan 
under title XIX of such Act; and 
(ii) ending on the date the plan effec-
tuates the status of such individual as a 
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full-benefit dual eligible individual (as de-
fined in section 1935(c)(6) of such Act). 
(4) RETROACTIVE
LIS
ENROLLMENT
BENE-
FICIARY.— 
(A) IN
GENERAL.—The term ‘‘retroactive 
LIS enrollment beneficiary’’ means an indi-
vidual who— 
(i) is enrolled in a prescription drug 
plan under part D of title XVIII of the So-
cial Security Act (or an MA-PD plan under 
part C of such title) and subsequently be-
comes eligible as a full-benefit dual eligible 
individual (as defined in section 1935(c)(6) 
of such Act), an individual receiving a low- 
income subsidy under section 1860D-14 of 
such Act, an individual receiving assistance 
under the Medicare Savings Program im-
plemented under clauses (i), (iii), and (iv) 
of section 1902(a)(10)(E) of such Act, or an 
individual receiving assistance under the 
supplemental 
security 
income 
program 
under section 1611 of such Act; or 
(ii) subject to subparagraph (B)(i), is 
a full-benefit dual eligible individual (as de-
fined in section 1935(c)(6) of such Act) who 
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is automatically enrolled in such a plan 
under section 1860D-1(b)(1)(C) of such Act. 
(B) EXCEPTION
FOR
BENEFICIARIES
EN-
ROLLED IN RFP PLAN.— 
(i) IN GENERAL.—In no case shall an 
individual 
described 
in 
subparagraph 
(A)(ii) include an individual who is en-
rolled, pursuant to a RFP contract de-
scribed in clause (ii), in a prescription drug 
plan offered by the sponsor of such plan 
awarded such contract. 
(ii) RFP CONTRACT DESCRIBED.—The 
RFP contract described in this section is a 
contract entered into between the Secretary 
and a sponsor of a prescription drug plan 
pursuant to the Centers for Medicare & 
Medicaid Services’ request for proposals 
issued on February 17, 2009, relating to 
Medicare part D retroactive coverage for 
certain low income beneficiaries, or a simi-
lar subsequent request for proposals. 
SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT. 
(a) IN GENERAL.—Section 1860D–1(b)(1)(C) of the 
Social Security Act (42 U.S.C. 1395w–101(b)(1)(C)) is 
amended by adding after ‘‘PDP region’’ the following: ‘‘or 
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through use of an intelligent assignment process that is de-
signed to maximize the access of such individual to nec-
essary prescription drugs while minimizing costs to such 
individual and to the program under this part to the great-
est extent possible. In the case the Secretary enrolls such 
individuals through use of an intelligent assignment proc-
ess, such process shall take into account the extent to which 
prescription drugs necessary for the individual are covered 
in the case of a PDP sponsor of a prescription drug plan 
that uses a formulary, the use of prior authorization or 
other restrictions on access to coverage of such prescription 
drugs by such a sponsor, and the overall quality of a pre-
scription drug plan as measured by quality ratings estab-
lished by the Secretary’’ 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect for contract years beginning 
with 2012. 
SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC 
ENROLLMENT PROCESS FOR CERTAIN SUB-
SIDY ELIGIBLE INDIVIDUALS. 
(a) SPECIAL ENROLLMENT PERIOD.—Section 1860D– 
1(b)(3)(D) of the Social Security Act (42 U.S.C. 1395w– 
101(b)(3)(D)) is amended to read as follows: 
‘‘(D) SUBSIDY ELIGIBLE INDIVIDUALS.—In 
the case of an individual (as determined by the 
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Secretary) who is determined under subpara-
graph (B) of section 1860D–14(a)(3) to be a sub-
sidy eligible individual.’’. 
(b) 
AUTOMATIC
ENROLLMENT.—Section 
1860D– 
1(b)(1) of the Social Security Act (42 U.S.C. 1395w– 
101(b)(1)) is amended by adding at the end the following 
new subparagraph: 
‘‘(D) SPECIAL RULE FOR SUBSIDY ELIGIBLE 
INDIVIDUALS.—The process established under 
subparagraph (A) shall include, in the case of an 
individual described in paragraph (3)(D) who 
fails to enroll in a prescription drug plan or an 
MA–PD plan during the special enrollment es-
tablished under such section applicable to such 
individual, the application of the assignment 
process described in subparagraph (C) to such 
individual in the same manner as such assign-
ment process applies to a part D eligible indi-
vidual described in such subparagraph (C). 
Nothing in the previous sentence shall prevent an 
individual described in such sentence from de-
clining enrollment in a plan determined appro-
priate by the Secretary (or in the program under 
this part) or from changing such enrollment.’’. 
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(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to subsidy determinations made for 
months beginning with January 2011. 
SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO RE-
BATE IN CALCULATION OF LOW INCOME SUB-
SIDY BENCHMARK. 
(a) IN GENERAL.—Section 1860D–14(b)(2)(B)(iii) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
114(b)(2)(B)(iii)) is amended by inserting before the period 
the following: ‘‘before the application of the monthly rebate 
computed under section 1854(b)(1)(C)(i) for that plan and 
year involved’’. 
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to subsidy determinations made for 
months beginning with January 2011. 
Subtitle B—Reducing Health 
Disparities 
SEC. 1221. ENSURING EFFECTIVE COMMUNICATION IN 
MEDICARE. 
(a) ENSURING EFFECTIVE COMMUNICATION BY THE 
CENTERS FOR MEDICARE & MEDICAID SERVICES.— 
(1) STUDY ON MEDICARE PAYMENTS FOR LAN-
GUAGE
SERVICES.—The Secretary of Health and 
Human Services shall conduct a study that examines 
the extent to which Medicare service providers utilize, 
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offer, or make available language services for bene-
ficiaries who are limited English proficient and ways 
that Medicare should develop payment systems for 
language services. 
(2) ANALYSES.—The study shall include an 
analysis of each of the following: 
(A) How to develop and structure appro-
priate payment systems for language services for 
all Medicare service providers. 
(B) The feasibility of adopting a payment 
methodology for on-site interpreters, including 
interpreters who work as independent contractors 
and interpreters who work for agencies that pro-
vide on-site interpretation, pursuant to which 
such interpreters could directly bill Medicare for 
services provided in support of physician office 
services for an LEP Medicare patient. 
(C) The feasibility of Medicare contracting 
directly with agencies that provide off-site inter-
pretation including telephonic and video inter-
pretation pursuant to which such contractors 
could directly bill Medicare for the services pro-
vided in support of physician office services for 
an LEP Medicare patient. 
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(D) The feasibility of modifying the existing 
Medicare resource-based relative value scale 
(RBRVS) by using adjustments (such as multi-
pliers or add-ons) when a patient is LEP. 
(E) How each of options described in a pre-
vious paragraph would be funded and how such 
funding would affect physician payments, a phy-
sician’s practice, and beneficiary cost-sharing. 
(F) The extent to which providers under 
parts A and B of title XVIII of the Social Secu-
rity Act, MA organizations offering Medicare 
Advantage plans under part C of such title and 
PDP sponsors of a prescription drug plan under 
part D of such title utilize, offer, or make avail-
able language services for beneficiaries with lim-
ited English proficiency. 
(G) The nature and type of language serv-
ices provided by States under title XIX of the 
Social Security Act and the extent to which such 
services could be utilized by beneficiaries and 
providers under title XVIII of such Act. 
(3) 
VARIATION
IN
PAYMENT
SYSTEM
DE-
SCRIBED.—The payment systems described in para-
graph (2)(A) may allow variations based upon types 
of service providers, available delivery methods, and 
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costs for providing language services including such 
factors as— 
(A) the type of language services provided 
(such as provision of health care or health care 
related services directly in a non-English lan-
guage by a bilingual provider or use of an inter-
preter); 
(B) type of interpretation services provided 
(such as in-person, telephonic, video interpreta-
tion); 
(C) the methods and costs of providing lan-
guage services (including the costs of providing 
language services with internal staff or through 
contract with external independent contractors 
or agencies, or both); 
(D) providing services for languages not fre-
quently encountered in the United States; and 
(E) providing services in rural areas. 
(4) REPORT.—The Secretary shall submit a re-
port on the study conducted under subsection (a) to 
appropriate committees of Congress not later than 12 
months after the date of the enactment of this Act. 
(5) EXEMPTION FROM PAPERWORK REDUCTION 
ACT.—Chapter 35 of title 44, United States Code 
(commonly known as the ‘‘Paperwork Reduction Act’’ 
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), shall not apply for purposes of carrying out this 
subsection. 
(6) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection such sums as are necessary. 
(b) HEALTH PLANS.—Section 1857(g)(1) of the Social 
Security Act (42 U.S.C. 1395w–27(g)(1)) is amended— 
(1) by striking ‘‘or’’ at the end of subparagraph 
(F); 
(2) by adding ‘‘or’’ at the end of subparagraph 
(G); and 
(3) by inserting after subparagraph (G) the fol-
lowing new subparagraph: 
‘‘(H) fails substantially to provide language 
services to limited English proficient bene-
ficiaries enrolled in the plan that are required 
under law;’’. 
SEC. 1222. DEMONSTRATION TO PROMOTE ACCESS FOR 
MEDICARE BENEFICIARIES WITH LIMITED- 
ENGLISH PROFICIENCY BY PROVIDING REIM-
BURSEMENT FOR CULTURALLY AND LINGUIS-
TICALLY APPROPRIATE SERVICES. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the completion of the study described in section 
1221(a), the Secretary, acting through the Centers for Medi-
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care & Medicaid Services and the Center for Medicare and 
Medicaid Payment Innovation established under section 
1115A of the Social Security Act (as added by section 1910) 
and consistent with the applicable provisions of such sec-
tion, shall carry out a demonstration program under which 
the Secretary shall award not fewer than 24 3-year grants 
to eligible Medicare service providers (as described in sub-
section (b)(1)) to improve effective communication between 
such providers and Medicare beneficiaries who are living 
in communities where racial and ethnic minorities, includ-
ing populations that face language barriers, are under-
served with respect to such services. In designing and car-
rying out the demonstration the Secretary shall take into 
consideration the results of the study conducted under sec-
tion 1221(a) and adjust, as appropriate, the distribution 
of grants so as to better target Medicare beneficiaries who 
are in the greatest need of language services. The Secretary 
shall not authorize a grant larger than $500,000 over three 
years for any grantee. 
(b) ELIGIBILITY; PRIORITY.— 
(1) ELIGIBILITY.—To be eligible to receive a 
grant under subsection (a) an entity shall— 
(A) be— 
(i) a provider of services under part A 
of title XVIII of the Social Security Act; 
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(ii) a service provider under part B of 
such title; 
(iii) a part C organization offering a 
Medicare part C plan under part C of such 
title; or 
(iv) a PDP sponsor of a prescription 
drug plan under part D of such title; and 
(B) prepare and submit to the Secretary an 
application, at such time, in such manner, and 
accompanied by such additional information as 
the Secretary may require. 
(2) PRIORITY.— 
(A) DISTRIBUTION.—To the extent feasible, 
in awarding grants under this section, the Sec-
retary shall award— 
(i) at least 6 grants to providers of 
services described in paragraph (1)(A)(i); 
(ii) at least 6 grants to service pro-
viders described in paragraph (1)(A)(ii); 
(iii) at least 6 grants to organizations 
described in paragraph (1)(A)(iii); and 
(iv) at least 6 grants to sponsors de-
scribed in paragraph (1)(A)(iv). 
(B) FOR COMMUNITY ORGANIZATIONS.—The 
Secretary shall give priority to applicants that 
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have developed partnerships with community or-
ganizations or with agencies with experience in 
language access. 
(C) VARIATION
IN
GRANTEES.—The Sec-
retary shall also ensure that the grantees under 
this section represent, among other factors, vari-
ations in— 
(i) different types of language services 
provided and of service providers and orga-
nizations under parts A through D of title 
XVIII of the Social Security Act; 
(ii) languages needed and their fre-
quency of use; 
(iii) urban and rural settings; 
(iv) at least two geographic regions, as 
defined by the Secretary; and 
(v) at least two large metropolitan sta-
tistical areas with diverse populations. 
(c) USE OF FUNDS.— 
(1) IN
GENERAL.—A grantee shall use grant 
funds received under this section to pay for the provi-
sion of competent language services to Medicare bene-
ficiaries who are limited-English proficient. Com-
petent interpreter services may be provided through 
on-site interpretation, telephonic interpretation, or 
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video interpretation or direct provision of health care 
or health care related services by a bilingual health 
care provider. A grantee may use bilingual providers, 
staff, or contract interpreters. A grantee may use 
grant funds to pay for competent translation services. 
A grantee may use up to 10 percent of the grant 
funds to pay for administrative costs associated with 
the provision of competent language services and for 
reporting required under subsection (e). 
(2) ORGANIZATIONS.—Grantees that are part C 
organizations or PDP sponsors must ensure that their 
network providers receive at least 50 percent of the 
grant funds to pay for the provision of competent lan-
guage services to Medicare beneficiaries who are lim-
ited-English proficient, including physicians and 
pharmacies. 
(3) DETERMINATION
OF
PAYMENTS
FOR
LAN-
GUAGE SERVICES.—Payments to grantees shall be cal-
culated based on the estimated numbers of limited- 
English proficient Medicare beneficiaries in a grant-
ee’s service area utilizing— 
(A) data on the numbers of limited-English 
proficient individuals who speak English less 
than ‘‘very well’’ from the most recently avail-
able data from the Bureau of the Census or other 
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State-based study the Secretary determines likely 
to yield accurate data regarding the number of 
such individuals served by the grantee; or 
(B) the grantee’s own data if the grantee 
routinely collects data on Medicare beneficiaries’ 
primary language in a manner determined by 
the Secretary to yield accurate data and such 
data shows greater numbers of limited-English 
proficient individuals than the data listed in 
subparagraph (A). 
(4) LIMITATIONS.— 
(A) REPORTING.—Payments shall only be 
provided under this section to grantees that re-
port their costs of providing language services as 
required under subsection (e) and may be modi-
fied annually at the discretion of the Secretary. 
If a grantee fails to provide the reports under 
such section for the first year of a grant, the Sec-
retary may terminate the grant and solicit ap-
plications from new grantees to participate in 
the subsequent two years of the demonstration 
program. 
(B) TYPE OF SERVICES.— 
(i) IN
GENERAL.—Subject to clause 
(ii), payments shall be provided under this 
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section only to grantees that utilize com-
petent bilingual staff or competent inter-
preter or translation services which— 
(I) if the grantee operates in a 
State that has statewide health care in-
terpreter standards, meet the State 
standards currently in effect; or 
(II) if the grantee operates in a 
State that does not have statewide 
health care interpreter standards, uti-
lizes competent interpreters who follow 
the National Council on Interpreting 
in Health Care’s Code of Ethics and 
Standards of Practice. 
(ii) EXEMPTIONS.—The requirements 
of clause (i) shall not apply— 
(I) in the case of a Medicare bene-
ficiary who is limited-English pro-
ficient (who has been informed in the 
beneficiary’s primary language of the 
availability of free interpreter and 
translation services) and who requests 
the use of family, friends, or other per-
sons untrained in interpretation or 
translation and the grantee documents 
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the request in the beneficiary’s record; 
and 
(II) in the case of a medical emer-
gency where the delay directly associ-
ated with obtaining a competent inter-
preter or translation services would 
jeopardize the health of the patient. 
Nothing in clause (ii)(II) shall be construed 
to exempt emergency rooms or similar enti-
ties that regularly provide health care serv-
ices in medical emergencies from having in 
place systems to provide competent inter-
preter and translation services without 
undue delay. 
(d) ASSURANCES.—Grantees under this section shall— 
(1) ensure that appropriate clinical and support 
staff receive ongoing education and training in lin-
guistically appropriate service delivery; 
(2) ensure the linguistic competence of bilingual 
providers; 
(3) offer and provide appropriate language serv-
ices at no additional charge to each patient with lim-
ited-English proficiency at all points of contact, in a 
timely manner during all hours of operation; 
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(4) notify Medicare beneficiaries of their right to 
receive language services in their primary language; 
(5) post signage in the languages of the com-
monly encountered group or groups present in the 
service area of the organization; and 
(6) ensure that— 
(A) primary language data are collected for 
recipients of language services; and 
(B) consistent with the privacy protections 
provided under the regulations promulgated pur-
suant to section 264(c) of the Health Insurance 
Portability and Accountability Act of 1996 (42 
U.S.C. 1320d–2 note), if the recipient of lan-
guage services is a minor or is incapacitated, the 
primary language of the parent or legal guard-
ian is collected and utilized. 
(e) REPORTING REQUIREMENTS.—Grantees under this 
section shall provide the Secretary with reports at the con-
clusion of the each year of a grant under this section. Each 
report shall include at least the following information: 
(1) The number of Medicare beneficiaries to 
whom language services are provided. 
(2) The languages of those Medicare beneficiaries. 
(3) The types of language services provided (such 
as provision of services directly in non-English lan-
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guage by a bilingual health care provider or use of an 
interpreter). 
(4) Type of interpretation (such as in-person, 
telephonic, or video interpretation). 
(5) The methods of providing language services 
(such as staff or contract with external independent 
contractors or agencies). 
(6) The length of time for each interpretation en-
counter. 
(7) The costs of providing language services 
(which may be actual or estimated, as determined by 
the Secretary). 
(f) NO COST SHARING.—Limited-English proficient 
Medicare beneficiaries shall not have to pay cost-sharing 
or co-pays for language services provided through this dem-
onstration program. 
(g) EVALUATION AND REPORT.—The Secretary shall 
conduct an evaluation of the demonstration program under 
this section and shall submit to the appropriate committees 
of Congress a report not later than 1 year after the comple-
tion of the program. The report shall include the following: 
(1) An analysis of the patient outcomes and costs 
of furnishing care to the limited-English proficient 
Medicare beneficiaries participating in the project as 
compared to such outcomes and costs for limited- 
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English proficient Medicare beneficiaries not partici-
pating. 
(2) The effect of delivering culturally and lin-
guistically appropriate services on beneficiary access 
to care, utilization of services, efficiency and cost-ef-
fectiveness of health care delivery, patient satisfaction, 
and select health outcomes. 
(3) Recommendations, if any, regarding the ex-
tension of such project to the entire Medicare pro-
gram. 
(h) GENERAL PROVISIONS.—Nothing in this section 
shall be construed to limit otherwise existing obligations of 
recipients of Federal financial assistance under title VI of 
the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et seq.) 
or any other statute. 
(i) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated to carry out this section 
$16,000,000 for each fiscal year of the demonstration pro-
gram. 
SEC. 1223. IOM REPORT ON IMPACT OF LANGUAGE ACCESS 
SERVICES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall enter into an arrangement with the 
Institute of Medicine under which the Institute will prepare 
and publish, not later than 3 years after the date of the 
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enactment of this Act, a report on the impact of language 
access services on the health and health care of limited- 
English proficient populations. 
(b) CONTENTS.—Such report shall include— 
(1) recommendations on the development and 
implementation of policies and practices by health 
care organizations and providers for limited-English 
proficient patient populations; 
(2) a description of the effect of providing lan-
guage access services on quality of health care and ac-
cess to care and reduced medical error; and 
(3) a description of the costs associated with or 
savings related to provision of language access serv-
ices. 
SEC. 1224. DEFINITIONS. 
In this subtitle: 
(1) BILINGUAL.—The term ‘‘bilingual’’ with re-
spect to an individual means a person who has suffi-
cient degree of proficiency in two languages and can 
ensure effective communication can occur in both lan-
guages. 
(2) COMPETENT INTERPRETER SERVICES.—The 
term ‘‘competent interpreter services’’ means a trans- 
language rendition of a spoken message in which the 
interpreter comprehends the source language and can 
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speak comprehensively in the target language to con-
vey the meaning intended in the source language. The 
interpreter knows health and health-related termi-
nology and provides accurate interpretations by 
choosing equivalent expressions that convey the best 
matching and meaning to the source language and 
captures, to the greatest possible extent, all nuances 
intended in the source message. 
(3) COMPETENT
TRANSLATION
SERVICES.—The 
term ‘‘competent translation services’’ means a trans- 
language rendition of a written document in which 
the translator comprehends the source language and 
can write comprehensively in the target language to 
convey the meaning intended in the source language. 
The translator knows health and health-related termi-
nology and provides accurate translations by choosing 
equivalent expressions that convey the best matching 
and meaning to the source language and captures, to 
the greatest possible extent, all nuances intended in 
the source document. 
(4) EFFECTIVE COMMUNICATION.—The term ‘‘ef-
fective communication’’ means an exchange of infor-
mation between the provider of health care or health 
care-related services and the limited-English pro-
ficient recipient of such services that enables limited- 
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English proficient individuals to access, understand, 
and benefit from health care or health care-related 
services. 
(5) INTERPRETING/INTERPRETATION.—The terms 
‘‘interpreting’’ and ‘‘interpretation’’ mean the trans-
mission of a spoken message from one language into 
another, faithfully, accurately, and objectively. 
(6) HEALTH CARE SERVICES.—The term ‘‘health 
care services’’ means services that address physical as 
well as mental health conditions in all care settings. 
(7) HEALTH
CARE-RELATED
SERVICES.—The 
term ‘‘health care-related services’’ means human or 
social services programs or activities that provide ac-
cess, referrals or links to health care. 
(8) LANGUAGE ACCESS.—The term ‘‘language ac-
cess’’ means the provision of language services to an 
LEP individual designed to enhance that individual’s 
access to, understanding of or benefit from health care 
or health care-related services. 
(9) LANGUAGE SERVICES.—The term ‘‘language 
services’’ means provision of health care services di-
rectly in a non-English language, interpretation, 
translation, and non-English signage. 
(10) LIMITED-ENGLISH PROFICIENT.—The term 
‘‘limited-English proficient’’ or ‘‘LEP’’ with respect 
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to an individual means an individual who speaks a 
primary language other than English and who cannot 
speak, read, write or understand the English language 
at a level that permits the individual to effectively 
communicate with clinical or nonclinical staff at an 
entity providing health care or health care related 
services. 
(11) MEDICARE BENEFICIARY.—The term ‘‘Medi-
care beneficiary’’ means an individual entitled to 
benefits under part A of title XVIII of the Social Se-
curity Act or enrolled under part B of such title. 
(12) MEDICARE PROGRAM.—The term ‘‘Medicare 
program’’ means the programs under parts A through 
D of title XVIII of the Social Security Act. 
(13) SERVICE
PROVIDER.—The term ‘‘service 
provider’’ includes all suppliers, providers of services, 
or entities under contract to provide coverage, items 
or services under any part of title XVIII of the Social 
Security Act. 
Subtitle C—Miscellaneous 
Improvements 
SEC. 1231. EXTENSION OF THERAPY CAPS EXCEPTIONS 
PROCESS. 
Section 1833(g)(5) of the Social Security Act (42 
U.S.C. 1395l(g)(5)), as amended by section 141 of the Medi-
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care Improvements for Patients and Providers Act of 2008 
(Public Law 110–275), is amended by striking ‘‘December 
31, 2009’’ and inserting ‘‘December 31, 2011’’. 
SEC. 1232. EXTENDED MONTHS OF COVERAGE OF IMMUNO-
SUPPRESSIVE DRUGS FOR KIDNEY TRANS-
PLANT PATIENTS AND OTHER RENAL DIALY-
SIS PROVISIONS. 
(a) PROVISION OF APPROPRIATE COVERAGE OF IM-
MUNOSUPPRESSIVE DRUGS UNDER THE MEDICARE PRO-
GRAM FOR KIDNEY TRANSPLANT RECIPIENTS.— 
(1) CONTINUED
ENTITLEMENT
TO
IMMUNO-
SUPPRESSIVE DRUGS.— 
(A) KIDNEY
TRANSPLANT
RECIPIENTS.— 
Section 226A(b)(2) of the Social Security Act 
(42 U.S.C. 426–1(b)(2)) is amended by inserting 
‘‘(except for coverage of immunosuppressive 
drugs under section 1861(s)(2)(J))’’ before ‘‘, 
with the thirty-sixth month’’. 
(B) APPLICATION.—Section 1836 of such 
Act (42 U.S.C. 1395o) is amended— 
(i) by striking ‘‘Every individual who’’ 
and inserting ‘‘(a) IN GENERAL.—Every 
individual who’’; and 
(ii) by adding at the end the following 
new subsection: 
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‘‘(b) SPECIAL RULES APPLICABLE TO INDIVIDUALS 
ONLY ELIGIBLE FOR COVERAGE OF IMMUNOSUPPRESSIVE 
DRUGS.— 
‘‘(1) IN GENERAL.—In the case of an individual 
whose eligibility for benefits under this title has ended 
on or after January 1, 2012, except for the coverage 
of immunosuppressive drugs by reason of section 
226A(b)(2), the following rules shall apply: 
‘‘(A) The individual shall be deemed to be 
enrolled under this part for purposes of receiving 
coverage of such drugs. 
‘‘(B) The individual shall be responsible for 
providing for payment of the portion of the pre-
mium under section 1839 which is not covered 
under the Medicare savings program (as defined 
in section 1144(c)(7)) in order to receive such 
coverage. 
‘‘(C) The provision of such drugs shall be 
subject to the application of— 
‘‘(i) 
the 
deductible 
under 
section 
1833(b); and 
‘‘(ii) the coinsurance amount applica-
ble for such drugs (as determined under this 
part). 
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‘‘(D) If the individual is an inpatient of a 
hospital or other entity, the individual is entitled 
to receive coverage of such drugs under this part. 
‘‘(2) 
ESTABLISHMENT
OF
PROCEDURES
IN 
ORDER
TO
IMPLEMENT
COVERAGE.—The Secretary 
shall establish procedures for— 
‘‘(A) identifying individuals that are enti-
tled to coverage of immunosuppressive drugs by 
reason of section 226A(b)(2); and 
‘‘(B) distinguishing such individuals from 
individuals that are enrolled under this part for 
the complete package of benefits under this 
part.’’. 
(C) TECHNICAL AMENDMENT TO CORRECT 
DUPLICATE
SUBSECTION
DESIGNATION.—Sub-
section (c) of section 226A of such Act (42 U.S.C. 
426–1), as added by section 201(a)(3)(D)(ii) of 
the Social Security Independence and Program 
Improvements Act of 1994 (Public Law 103–296; 
108 Stat. 1497), is redesignated as subsection 
(d). 
(2) EXTENSION OF SECONDARY PAYER REQUIRE-
MENTS
FOR
ESRD
BENEFICIARIES.—Section 
1862(b)(1)(C) of such Act (42 U.S.C. 1395y(b)(1)(C)) 
is amended by adding at the end the following new 
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sentence: ‘‘With regard to immunosuppressive drugs 
furnished on or after the date of the enactment of the 
America’s Affordable Health Choices Act of 2009, this 
subparagraph shall be applied without regard to any 
time limitation.’’. 
(b) MEDICARE COVERAGE FOR ESRD PATIENTS.— 
Section 1881 of such Act is further amended— 
(1) in subsection (b)(14)(B)(iii), by inserting ‘‘, 
including oral drugs that are not the oral equivalent 
of an intravenous drug (such as oral phosphate bind-
ers and calcimimetics),’’ after ‘‘other drugs and 
biologicals’’; 
(2) in subsection (b)(14)(E)(ii)— 
(A) in the first sentence— 
(i) by striking ‘‘a one-time election to 
be excluded from the phase-in’’ and insert-
ing ‘‘an election, with respect to 2011, 2012, 
or 2013, to be excluded from the phase-in 
(or the remainder of the phase-in)’’; and 
(ii) by adding before the period at the 
end the following: ‘‘for such year and for 
each subsequent year during the phase-in 
described in clause (i)’’; and 
(B) in the second sentence— 
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(i) by striking ‘‘January 1, 2011’’ and 
inserting ‘‘the first date of such year’’; and 
(ii) by inserting ‘‘and at a time’’ after 
‘‘form and manner’’; and 
(3) in subsection (h)(4)(E), by striking ‘‘lesser’’ 
and inserting ‘‘greater’’. 
SEC. 1233. ADVANCE CARE PLANNING CONSULTATION. 
(a) MEDICARE.— 
(1) IN GENERAL.—Section 1861 of the Social Se-
curity Act (42 U.S.C. 1395x) is amended— 
(A) in subsection (s)(2)— 
(i) by striking ‘‘and’’ at the end of sub-
paragraph (DD); 
(ii) by adding ‘‘and’’ at the end of sub-
paragraph (EE); and 
(iii) by adding at the end the following 
new subparagraph: 
‘‘(FF) advance care planning consultation (as 
defined in subsection (hhh)(1));’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘Advance Care Planning Consultation 
‘‘(hhh)(1) Subject to paragraphs (3) and (4), the term 
‘advance care planning consultation’ means a consultation 
between the individual and a practitioner described in 
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paragraph (2) regarding advance care planning, if, subject 
to paragraph (3), the individual involved has not had such 
a consultation within the last 5 years. Such consultation 
shall include the following: 
‘‘(A) An explanation by the practitioner of ad-
vance care planning, including key questions and 
considerations, important steps, and suggested people 
to talk to. 
‘‘(B) An explanation by the practitioner of ad-
vance directives, including living wills and durable 
powers of attorney, and their uses. 
‘‘(C) An explanation by the practitioner of the 
role and responsibilities of a health care proxy. 
‘‘(D) The provision by the practitioner of a list 
of national and State-specific resources to assist con-
sumers and their families with advance care plan-
ning, including the national toll-free hotline, the ad-
vance care planning clearinghouses, and State legal 
service organizations (including those funded through 
the Older Americans Act of 1965). 
‘‘(E) An explanation by the practitioner of the 
continuum of end-of-life services and supports avail-
able, including palliative care and hospice, and bene-
fits for such services and supports that are available 
under this title. 
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‘‘(F)(i) Subject to clause (ii), an explanation of 
orders regarding life sustaining treatment or similar 
orders, which shall include— 
‘‘(I) the reasons why the development of 
such an order is beneficial to the individual and 
the individual’s family and the reasons why such 
an order should be updated periodically as the 
health of the individual changes; 
‘‘(II) the information needed for an indi-
vidual or legal surrogate to make informed deci-
sions regarding the completion of such an order; 
and 
‘‘(III) the identification of resources that an 
individual may use to determine the require-
ments of the State in which such individual re-
sides so that the treatment wishes of that indi-
vidual will be carried out if the individual is 
unable to communicate those wishes, including 
requirements regarding the designation of a sur-
rogate decisionmaker (also known as a health 
care proxy). 
‘‘(ii) The Secretary shall limit the requirement 
for explanations under clause (i) to consultations fur-
nished in a State— 
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‘‘(I) in which all legal barriers have been 
addressed for enabling orders for life sustaining 
treatment to constitute a set of medical orders re-
spected across all care settings; and 
‘‘(II) that has in effect a program for orders 
for life sustaining treatment described in clause 
(iii). 
‘‘(iii) A program for orders for life sustaining 
treatment for a States described in this clause is a 
program that— 
‘‘(I) ensures such orders are standardized 
and uniquely identifiable throughout the State; 
‘‘(II) distributes or makes accessible such or-
ders to physicians and other health professionals 
that (acting within the scope of the professional’s 
authority under State law) may sign orders for 
life sustaining treatment; 
‘‘(III) provides training for health care pro-
fessionals across the continuum of care about the 
goals and use of orders for life sustaining treat-
ment; and 
‘‘(IV) is guided by a coalition of stake-
holders includes representatives from emergency 
medical services, emergency department physi-
cians or nurses, state long-term care association, 
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state medical association, state surveyors, agency 
responsible for senior services, state department 
of health, state hospital association, home health 
association, state bar association, and state hos-
pice association. 
‘‘(2) A practitioner described in this paragraph is— 
‘‘(A) a physician (as defined in subsection 
(r)(1)); and 
‘‘(B) a nurse practitioner or physician assistant 
who has the authority under State law to sign orders 
for life sustaining treatments. 
‘‘(3)(A) An initial preventive physical examination 
under subsection (WW), including any related discussion 
during such examination, shall not be considered an ad-
vance care planning consultation for purposes of applying 
the 5-year limitation under paragraph (1). 
‘‘(B) An advance care planning consultation with re-
spect to an individual may be conducted more frequently 
than provided under paragraph (1) if there is a significant 
change in the health condition of the individual, including 
diagnosis of a chronic, progressive, life-limiting disease, a 
life-threatening or terminal diagnosis or life-threatening in-
jury, or upon admission to a skilled nursing facility, a 
long-term care facility (as defined by the Secretary), or a 
hospice program. 
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452 
‘‘(4) A consultation under this subsection may include 
the formulation of an order regarding life sustaining treat-
ment or a similar order. 
‘‘(5)(A) For purposes of this section, the term ‘order 
regarding life sustaining treatment’ means, with respect to 
an individual, an actionable medical order relating to the 
treatment of that individual that— 
‘‘(i) is signed and dated by a physician (as de-
fined in subsection (r)(1)) or another health care pro-
fessional (as specified by the Secretary and who is 
acting within the scope of the professional’s authority 
under State law in signing such an order, including 
a nurse practitioner or physician assistant) and is in 
a form that permits it to stay with the individual 
and be followed by health care professionals and pro-
viders across the continuum of care; 
‘‘(ii) effectively communicates the individual’s 
preferences regarding life sustaining treatment, in-
cluding an indication of the treatment and care de-
sired by the individual; 
‘‘(iii) is uniquely identifiable and standardized 
within a given locality, region, or State (as identified 
by the Secretary); and 
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453 
‘‘(iv) may incorporate any advance directive (as 
defined in section 1866(f)(3)) if executed by the indi-
vidual. 
‘‘(B) The level of treatment indicated under subpara-
graph (A)(ii) may range from an indication for full treat-
ment to an indication to limit some or all or specified inter-
ventions. Such indicated levels of treatment may include 
indications respecting, among other items— 
‘‘(i) the intensity of medical intervention if the 
patient is pulse less, apneic, or has serious cardiac or 
pulmonary problems; 
‘‘(ii) the individual’s desire regarding transfer to 
a hospital or remaining at the current care setting; 
‘‘(iii) the use of antibiotics; and 
‘‘(iv) the use of artificially administered nutri-
tion and hydration.’’. 
(2) PAYMENT.—Section 1848(j)(3) of such Act 
(42 U.S.C. 1395w-4(j)(3)) is amended by inserting 
‘‘(2)(FF),’’ after ‘‘(2)(EE),’’. 
(3) FREQUENCY LIMITATION.—Section 1862(a) of 
such Act (42 U.S.C. 1395y(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (N), by striking 
‘‘and’’ at the end; 
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(ii) in subparagraph (O) by striking 
the semicolon at the end and inserting ‘‘, 
and’’; and 
(iii) by adding at the end the following 
new subparagraph: 
‘‘(P) in the case of advance care planning 
consultations 
(as 
defined 
in 
section 
1861(hhh)(1)), which are performed more fre-
quently than is covered under such section;’’; and 
(B) in paragraph (7), by striking ‘‘or (K)’’ 
and inserting ‘‘(K), or (P)’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to consultations fur-
nished on or after January 1, 2011. 
(b) EXPANSION OF PHYSICIAN QUALITY REPORTING 
INITIATIVE FOR END OF LIFE CARE.— 
(1) PHYSICIAN’S
QUALITY
REPORTING
INITIA-
TIVE.—Section 1848(k)(2) of the Social Security Act 
(42 U.S.C. 1395w–4(k)(2)) is amended by adding at 
the end the following new subparagraph: 
‘‘(E) PHYSICIAN’S QUALITY REPORTING INI-
TIATIVE.— 
‘‘(i) IN GENERAL.—For purposes of re-
porting data on quality measures for cov-
ered professional services furnished during 
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2011 and any subsequent year, to the extent 
that measures are available, the Secretary 
shall include quality measures on end of life 
care and advanced care planning that have 
been adopted or endorsed by a consensus- 
based organization, if appropriate. Such 
measures shall measure both the creation of 
and adherence to orders for life-sustaining 
treatment. 
‘‘(ii) PROPOSED SET OF MEASURES.— 
The Secretary shall publish in the Federal 
Register proposed quality measures on end 
of life care and advanced care planning 
that the Secretary determines are described 
in subparagraph (A) and would be appro-
priate for eligible professionals to use to 
submit data to the Secretary. The Secretary 
shall provide for a period of public com-
ment on such set of measures before final-
izing such proposed measures.’’. 
(c) INCLUSION OF INFORMATION IN MEDICARE & YOU 
HANDBOOK.— 
(1) MEDICARE & YOU HANDBOOK.— 
(A) IN GENERAL.—Not later than 1 year 
after the date of the enactment of this Act, the 
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Secretary of Health and Human Services shall 
update the online version of the Medicare & You 
Handbook to include the following: 
(i) An explanation of advance care 
planning and advance directives, includ-
ing— 
(I) living wills; 
(II) durable power of attorney; 
(III) 
orders 
of 
life-sustaining 
treatment; and 
(IV) health care proxies. 
(ii) A description of Federal and State 
resources available to assist individuals and 
their families with advance care planning 
and advance directives, including— 
(I) available State legal service 
organizations to assist individuals 
with advance care planning, including 
those organizations that receive fund-
ing pursuant to the Older Americans 
Act of 1965 (42 U.S.C. 93001 et seq.); 
(II) website links or addresses for 
State-specific advance directive forms; 
and 
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(III) any additional information, 
as determined by the Secretary. 
(B) UPDATE OF PAPER AND SUBSEQUENT 
VERSIONS.—The Secretary shall include the in-
formation described in subparagraph (A) in all 
paper and electronic versions of the Medicare & 
You Handbook that are published on or after the 
date that is 1 year after the date of the enact-
ment of this Act. 
SEC. 1234. PART B SPECIAL ENROLLMENT PERIOD AND 
WAIVER OF LIMITED ENROLLMENT PENALTY 
FOR TRICARE BENEFICIARIES. 
(a) PART B SPECIAL ENROLLMENT PERIOD.— 
(1) IN GENERAL.—Section 1837 of the Social Se-
curity Act (42 U.S.C. 1395p) is amended by adding 
at the end the following new subsection: 
‘‘(l)(1) In the case of any individual who is a covered 
beneficiary (as defined in section 1072(5) of title 10, United 
States Code) at the time the individual is entitled to hos-
pital insurance benefits under part A under section 226(b) 
or section 226A and who is eligible to enroll but who has 
elected not to enroll (or to be deemed enrolled) during the 
individual’s initial enrollment period, there shall be a spe-
cial enrollment period described in paragraph (2). 
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‘‘(2) The special enrollment period described in this 
paragraph, with respect to an individual, is the 12-month 
period beginning on the day after the last day of the initial 
enrollment period of the individual or, if later, the 12- 
month period beginning with the month the individual is 
notified of enrollment under this section. 
‘‘(3) In the case of an individual who enrolls during 
the special enrollment period provided under paragraph 
(1), the coverage period under this part shall begin on the 
first day of the month in which the individual enrolls or, 
at the option of the individual, on the first day of the second 
month following the last month of the individual’s initial 
enrollment period. 
‘‘(4) The Secretary of Defense shall establish a method 
for identifying individuals described in paragraph (1) and 
providing notice to them of their eligibility for enrollment 
during the special enrollment period described in para-
graph (2).’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to elections made on or 
after the date of the enactment of this Act. 
(b) WAIVER OF INCREASE OF PREMIUM.— 
(1) IN GENERAL.—Section 1839(b) of the Social 
Security Act (42 U.S.C. 1395r(b)) is amended by 
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striking ‘‘section 1837(i)(4)’’ and inserting ‘‘sub-
section (i)(4) or (l) of section 1837’’. 
(2) EFFECTIVE DATE.— 
(A) IN
GENERAL.—The amendment made 
by paragraph (1) shall apply with respect to 
elections made on or after the date of the enact-
ment of this Act. 
(B) REBATES FOR CERTAIN DISABLED AND 
ESRD BENEFICIARIES.— 
(i) IN GENERAL.—With respect to pre-
miums for months on or after January 
2005 and before the month of the enactment 
of this Act, no increase in the premium 
shall be effected for a month in the case of 
any individual who is a covered beneficiary 
(as defined in section 1072(5) of title 10, 
United States Code) at the time the indi-
vidual is entitled to hospital insurance ben-
efits under part A of title XVIII of the So-
cial Security Act under section 226(b) or 
226A of such Act, and who is eligible to en-
roll, but who has elected not to enroll (or to 
be deemed enrolled), during the individual’s 
initial enrollment period, and who enrolls 
under this part within the 12-month period 
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that begins on the first day of the month 
after the month of notification of entitle-
ment under this part. 
(ii) CONSULTATION WITH DEPARTMENT 
OF DEFENSE.—The Secretary of Health and 
Human Services shall consult with the Sec-
retary of Defense in identifying individuals 
described in this paragraph. 
(iii) 
REBATES.—The 
Secretary 
of 
Health and Human Services shall establish 
a method for providing rebates of premium 
increases paid for months on or after Janu-
ary 1, 2005, and before the month of the en-
actment of this Act for which a penalty was 
applied and collected. 
SEC. 1235. EXCEPTION FOR USE OF MORE RECENT TAX 
YEAR IN CASE OF GAINS FROM SALE OF PRI-
MARY RESIDENCE IN COMPUTING PART B IN-
COME-RELATED PREMIUM. 
(a) IN GENERAL.—Section 1839(i)(4)(C)(ii)(II) of the 
Social Security Act (42 U.S.C. 1395r(i)(4)(C)(ii)(II)) is 
amended by inserting ‘‘sale of primary residence,’’ after 
‘‘divorce of such individual,’’. 
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(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to premiums and payments for years 
beginning with 2011. 
SEC. 1236. DEMONSTRATION PROGRAM ON USE OF PATIENT 
DECISIONS AIDS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services, acting through the Center for Medicare 
and Medicaid Payment Innovation established under sec-
tion 1115A of the Social Security Act (as added by section 
1910) and consistent with the applicable provisions of such 
section, shall establish a shared decision making demonstra-
tion program (in this subsection referred to as the ‘‘pro-
gram’’) under the Medicare program using patient decision 
aids to meet the objective of improving the understanding 
by Medicare beneficiaries of their medical treatment op-
tions, as compared to comparable Medicare beneficiaries 
who do not participate in a shared decision making process 
using patient decision aids. 
(b) SITES.— 
(1) ENROLLMENT.—The Secretary shall enroll in 
the program not more than 30 eligible providers who 
have experience in implementing, and have invested 
in the necessary infrastructure to implement, shared 
decision making using patient decision aids. 
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(2) APPLICATION.—An eligible provider seeking 
to participate in the program shall submit to the Sec-
retary an application at such time and containing 
such information as the Secretary may require. 
(3) PREFERENCE.—In enrolling eligible pro-
viders in the program, the Secretary shall give pref-
erence to eligible providers that— 
(A) have documented experience in using 
patient decision aids for the conditions identified 
by the Secretary and in using shared decision 
making; 
(B) have the necessary information tech-
nology infrastructure to collect the information 
required by the Secretary for reporting purposes; 
and 
(C) are trained in how to use patient deci-
sion aids and shared decision making. 
(c) FOLLOW-UP COUNSELING VISIT.— 
(1) IN GENERAL.—An eligible provider partici-
pating in the program shall routinely schedule Medi-
care beneficiaries for a counseling visit after the view-
ing of such a patient decision aid to answer any 
questions the beneficiary may have with respect to the 
medical care of the condition involved and to assist 
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the beneficiary in thinking through how their pref-
erences and concerns relate to their medical care. 
(2) PAYMENT
FOR
FOLLOW-UP
COUNSELING 
VISIT.—The Secretary shall establish procedures for 
making payments for such counseling visits provided 
to Medicare beneficiaries under the program. Such 
procedures shall provide for the establishment— 
(A) of a code (or codes) to represent such 
services; and 
(B) of a single payment amount for such 
service that includes the professional time of the 
health care provider and a portion of the reason-
able costs of the infrastructure of the eligible pro-
vider such as would be made under the applica-
ble payment systems to that provider for similar 
covered services. 
(d) COSTS OF AIDS.—An eligible provider partici-
pating in the program shall be responsible for the costs of 
selecting, purchasing, and incorporating such patient deci-
sion aids into the provider’s practice, and reporting data 
on quality and outcome measures under the program. 
(e) FUNDING.—The Secretary shall provide for the 
transfer from the Federal Supplementary Medical Insur-
ance Trust Fund established under section 1841 of the So-
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cial Security Act (42 U.S.C. 1395t) of such funds as are 
necessary for the costs of carrying out the program. 
(f) WAIVER AUTHORITY.—The Secretary may waive 
such requirements of titles XI and XVIII of the Social Secu-
rity Act (42 U.S.C. 1301 et seq. and 1395 et seq.) as may 
be necessary for the purpose of carrying out the program. 
(g) REPORT.—Not later than 12 months after the date 
of completion of the program, the Secretary shall submit 
to Congress a report on such program, together with rec-
ommendations for such legislation and administrative ac-
tion as the Secretary determines to be appropriate. The 
final report shall include an evaluation of the impact of 
the use of the program on health quality, utilization of 
health care services, and on improving the quality of life 
of such beneficiaries. 
(h) DEFINITIONS.—In this section: 
(1) ELIGIBLE
PROVIDER.—The term ‘‘eligible 
provider’’ means the following: 
(A) A primary care practice. 
(B) A specialty practice. 
(C) A multispecialty group practice. 
(D) A hospital. 
(E) A rural health clinic. 
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(F) A Federally qualified health center (as 
defined in section 1861(aa)(4) of the Social Se-
curity Act (42 U.S.C. 1395x(aa)(4)). 
(G) An integrated delivery system. 
(H) A State cooperative entity that includes 
the State government and at least one other 
health care provider which is set up for the pur-
pose of testing shared decision making and pa-
tient decision aids. 
(2) PATIENT DECISION AID.—The term ‘‘patient 
decision aid’’ means an educational tool (such as the 
Internet, a video, or a pamphlet) that helps patients 
(or, if appropriate, the family caregiver of the pa-
tient) understand and communicate their beliefs and 
preferences related to their treatment options, and to 
decide with their health care provider what treat-
ments are best for them based on their treatment op-
tions, scientific evidence, circumstances, beliefs, and 
preferences. 
(3) SHARED
DECISION
MAKING.—The term 
‘‘shared decision making’’ means a collaborative proc-
ess between patient and clinician that engages the pa-
tient in decision making, provides patients with in-
formation about trade-offs among treatment options, 
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and facilitates the incorporation of patient pref-
erences and values into the medical plan. 
TITLE III—PROMOTING PRIMARY 
CARE, MENTAL HEALTH SERV-
ICES, 
AND 
COORDINATED 
CARE 
SEC. 1301. ACCOUNTABLE CARE ORGANIZATION PILOT PRO-
GRAM. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1866D, as added by section 1152(f) 
of this Act, the following new section: 
‘‘ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM 
‘‘SEC. 1866E. (a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall conduct 
a pilot program (in this section referred to as the 
‘pilot program’) to test different payment incentive 
models, including (to the extent practicable) the spe-
cific payment incentive models described in subsection 
(c), designed to reduce the growth of expenditures and 
improve health outcomes in the provision of items and 
services under this title to applicable beneficiaries (as 
defined in subsection (d)) by qualifying accountable 
care organizations (as defined in subsection (b)(1)) in 
order to— 
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‘‘(A) promote accountability for a patient 
population and coordinate items and services 
under parts A and B; 
‘‘(B) encourage investment in infrastructure 
and redesigned care processes for high quality 
and efficient service delivery; and 
‘‘(C) reward physician practices and other 
physician organizational models for the provi-
sion of high quality and efficient health care 
services. 
‘‘(2) SCOPE.—The Secretary shall set specific 
goals for the number of accountable care organiza-
tions, participating practitioners, and patients served 
in the initial tests under the pilot program to ensure 
that the pilot program is of sufficient size and scope 
to— 
‘‘(A) test the approach involved in a variety 
of settings, including urban, rural, and under-
served areas; and 
‘‘(B) subject to subsection (f)(1), disseminate 
such approach rapidly on a national basis. 
To the extent that the Secretary finds a qualifying ac-
countable care organization model to be successful in 
improving quality and reducing costs, the Secretary 
shall attempt to attract at least 10 percent of all eligi-
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ble providers to act as accountable care organizations 
and implement such mechanisms and reforms within 
5 years after the date of the enactment of this section. 
If the Secretary further finds such accountable care 
organization models to be successful, the Secretary 
shall seek to implement such mechanisms and reforms 
on as large a geographic scale as practical and eco-
nomical. 
‘‘(b) QUALIFYING ACCOUNTABLE CARE ORGANIZA-
TIONS (ACOS).— 
‘‘(1) QUALIFYING ACO DEFINED.—In this section: 
‘‘(A) IN GENERAL.—The terms ‘qualifying 
accountable care organization’ and ‘qualifying 
ACO’ mean a group of physicians or other phy-
sician organizational model (as defined in sub-
paragraph (D)) that— 
‘‘(i) is organized at least in part for 
the purpose of providing physicians’ serv-
ices; and 
‘‘(ii) meets such criteria as the Sec-
retary determines to be appropriate to par-
ticipate in the pilot program, including the 
criteria specified in paragraph (2). 
‘‘(B) INCLUSION OF OTHER PROVIDERS.— 
Nothing in this subsection shall be construed as 
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preventing a qualifying ACO from including a 
hospital or any other provider of services or sup-
plier furnishing items or services for which pay-
ment may be made under this title that is affili-
ated with the ACO under an arrangement struc-
tured so that such provider or supplier partici-
pates in the pilot program and shares in any in-
centive payments under the pilot program. 
‘‘(C) PHYSICIAN.—The term ‘physician’ in-
cludes, except as the Secretary may otherwise 
provide, any individual who furnishes services 
for which payment may be made as physicians’ 
services. 
‘‘(D) OTHER
PHYSICIAN
ORGANIZATIONAL 
MODEL.—The term ‘other physician organization 
model’ means, with respect to a qualifying ACO 
any model of organization under which physi-
cians enter into agreements with other providers 
for the purposes of participation in the pilot 
program in order to provide high quality and ef-
ficient health care services and share in any in-
centive payments under such program 
‘‘(E) OTHER
SERVICES.—Nothing in this 
paragraph shall be construed as preventing a 
qualifying ACO from furnishing items or serv-
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ices, for which payment may not be made under 
this title, for purposes of achieving performance 
goals under the pilot program. 
‘‘(2) QUALIFYING CRITERIA.—The following are 
criteria described in this paragraph for an organized 
group of physicians to be a qualifying ACO: 
‘‘(A) The group has a legal structure that 
would allow the group to receive and distribute 
incentive payments under this section. 
‘‘(B) The group includes a sufficient num-
ber of primary care physicians (regardless of 
specialty) for the applicable beneficiaries for 
whose care the group is accountable (as deter-
mined by the Secretary). 
‘‘(C) The group reports on quality measures 
in such form, manner, and frequency as specified 
by the Secretary (which may be for the group, 
for providers of services and suppliers, or both). 
‘‘(D) The group reports to the Secretary (in 
a form, manner and frequency as specified by 
the Secretary) such data as the Secretary deter-
mines appropriate to monitor and evaluate the 
pilot program. 
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‘‘(E) The group provides notice to applica-
ble beneficiaries regarding the pilot program (as 
determined appropriate by the Secretary). 
‘‘(F) The group contributes to a best prac-
tices network or website, that shall be main-
tained by the Secretary for the purpose of shar-
ing strategies on quality improvement, care co-
ordination, and efficiency that the groups believe 
are effective. 
‘‘(G) The group utilizes patient-centered 
processes of care, including those that emphasize 
patient and caregiver involvement in planning 
and monitoring of ongoing care management 
plan. 
‘‘(H) The group meets other criteria deter-
mined to be appropriate by the Secretary. 
‘‘(c) SPECIFIC PAYMENT INCENTIVE MODELS.—The 
specific payment incentive models described in this sub-
section are the following: 
‘‘(1) PERFORMANCE TARGET MODEL.—Under the 
performance target model under this paragraph (in 
this paragraph referred to as the ‘performance target 
model’): 
‘‘(A) IN
GENERAL.—A qualifying ACO 
qualifies to receive an incentive payment if ex-
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penditures for applicable beneficiaries are less 
than a target spending level or a target rate of 
growth. The incentive payment shall be made 
only if savings are greater than would result 
from normal variation in expenditures for items 
and services covered under parts A and B. 
‘‘(B) COMPUTATION OF PERFORMANCE TAR-
GET.— 
‘‘(i) IN GENERAL.—The Secretary shall 
establish a performance target for each 
qualifying ACO comprised of a base amount 
(described in clause (ii)) increased to the 
current year by an adjustment factor (de-
scribed in clause (iii)). Such a target may 
be established on a per capita basis, as the 
Secretary determines to be appropriate. 
‘‘(ii) BASE AMOUNT.—For purposes of 
clause (i), the base amount in this subpara-
graph is equal to the average total pay-
ments (or allowed charges) under parts A 
and B (and may include part D, if the Sec-
retary determines appropriate) for applica-
ble beneficiaries for whom the qualifying 
ACO furnishes items and services in a base 
period determined by the Secretary. Such 
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base amount may be determined on a per 
capita basis. 
‘‘(iii) 
ADJUSTMENT
FACTOR.—For 
purposes of clause (i), the adjustment factor 
in this clause may equal an annual per 
capita amount that reflects changes in ex-
penditures from the period of the base 
amount to the current year that would rep-
resent an appropriate performance target 
for applicable beneficiaries (as determined 
by the Secretary). Such adjustment factor 
may be determined as an amount or rate, 
may be determined on a national, regional, 
local, or organization-specific basis, and 
may be determined on a per capita basis. 
Such adjustment factor also may be ad-
justed for risk as determined appropriate by 
the Secretary. 
‘‘(iv) REBASING.—Under this model 
the Secretary shall periodically rebase the 
base expenditure amount described in clause 
(ii). 
‘‘(C) MEETING TARGET.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), a qualifying ACO that meet or exceeds 
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annual quality and performance targets for 
a year shall receive an incentive payment 
for such year equal to a portion (as deter-
mined appropriate by the Secretary) of the 
amount by which payments under this title 
for such year relative are estimated to be 
below the performance target for such year, 
as determined by the Secretary. The Sec-
retary may establish a cap on incentive 
payments for a year for a qualifying ACO. 
‘‘(ii) LIMITATION.—The Secretary shall 
limit incentive payments to each qualifying 
ACO under this paragraph as necessary to 
ensure that the aggregate expenditures with 
respect to applicable beneficiaries for such 
ACOs under this title (inclusive of incentive 
payments described in this subparagraph) 
do not exceed the amount that the Secretary 
estimates would be expended for such ACO 
for such beneficiaries if the pilot program 
under this section were not implemented. 
‘‘(D) REPORTING
AND
OTHER
REQUIRE-
MENTS.—In carrying out such model, the Sec-
retary may (as the Secretary determines to be 
appropriate) incorporate reporting requirements, 
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incentive payments, and penalties related to the 
physician quality reporting initiative (PQRI), 
electronic prescribing, electronic health records, 
and other similar initiatives under section 1848, 
and may use alternative criteria than would oth-
erwise apply under such section for determining 
whether to make such payments. The incentive 
payments described in this subparagraph shall 
not be included in the limit described in sub-
paragraph (C)(ii) or in the performance target 
model described in this paragraph. 
‘‘(2) PARTIAL CAPITATION MODEL.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a partial capitation model described 
in this paragraph (in this paragraph referred to 
as a ‘partial capitation model’) is a model in 
which a qualifying ACO would be at financial 
risk for some, but not all, of the items and serv-
ices covered under parts A and B, such as at risk 
for some or all physicians’ services or all items 
and services under part B. The Secretary may 
limit a partial capitation model to ACOs that 
are highly integrated systems of care and to 
ACOs capable of bearing risk, as determined to 
be appropriate by the Secretary. 
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‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Payments to a qualifying ACO for ap-
plicable beneficiaries for a year under the partial 
capitation model shall be established in a man-
ner that does not result in spending more for 
such ACO for such beneficiaries than would oth-
erwise be expended for such ACO for such bene-
ficiaries for such year if the pilot program were 
not implemented, as estimated by the Secretary. 
‘‘(3) OTHER PAYMENT MODELS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary may develop other pay-
ment models that meet the goals of this pilot pro-
gram to improve quality and efficiency. 
‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Subparagraph (B) of paragraph (2) 
shall apply to a payment model under subpara-
graph (A) in a similar manner as such subpara-
graph (B) applies to the payment model under 
paragraph (2). 
‘‘(d) APPLICABLE BENEFICIARIES.— 
‘‘(1) IN GENERAL.—In this section, the term ‘ap-
plicable beneficiary’ means, with respect to a quali-
fying ACO, an individual who— 
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‘‘(A) is enrolled under part B and entitled 
to benefits under part A; 
‘‘(B) is not enrolled in a Medicare Advan-
tage plan under part C or a PACE program 
under section 1894; and 
‘‘(C) meets such other criteria as the Sec-
retary determines appropriate, which may in-
clude criteria relating to frequency of contact 
with physicians in the ACO 
‘‘(2) FOLLOWING APPLICABLE BENEFICIARIES.— 
The Secretary may monitor data on expenditures and 
quality of services under this title after an applicable 
beneficiary discontinues receiving services under this 
title through a qualifying ACO. 
‘‘(e) IMPLEMENTATION.— 
‘‘(1) STARTING DATE.—The pilot program shall 
begin no later than January 1, 2012. An agreement 
with a qualifying ACO under the pilot program may 
cover a multi-year period of between 3 and 5 years. 
‘‘(2) WAIVER.—The Secretary may waive such 
provisions of this title (including section 1877) and 
title XI in the manner the Secretary determines nec-
essary in order implement the pilot program. 
‘‘(3) PERFORMANCE
RESULTS
REPORTS.—The 
Secretary shall report performance results to quali-
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