123 
technology in the clinical education of health professionals. 
Such awards shall be made on a competitive basis and 
pursuant to peer review. 
‘‘(b) ELIGIBILITY.—To be eligible to receive a grant 
under subsection (a), an entity shall— 
‘‘(1) submit to the Secretary an application at 
such time, in such manner, and containing such in-
formation as the Secretary may require; 
‘‘(2) submit to the Secretary a strategic plan 
for integrating certified EHR technology in the clin-
ical education of health professionals to reduce med-
ical errors and enhance health care quality; 
‘‘(3) be— 
‘‘(A) a school of medicine, osteopathic 
medicine, dentistry, or pharmacy, a graduate 
program in behavioral or mental health, or any 
other graduate health professions school; 
‘‘(B) a graduate school of nursing or phy-
sician assistant studies; 
‘‘(C) a consortium of two or more schools 
described in subparagraph (A) or (B); or 
‘‘(D) an institution with a graduate med-
ical education program in medicine, osteopathic 
medicine, dentistry, pharmacy, nursing, or phy-
sician assistance studies; 
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‘‘(4) provide for the collection of data regarding 
the effectiveness of the demonstration project to be 
funded under the grant in improving the safety of 
patients, the efficiency of health care delivery, and 
in increasing the likelihood that graduates of the 
grantee will adopt and incorporate certified EHR 
technology, in the delivery of health care services; 
and 
‘‘(5) provide matching funds in accordance with 
subsection (d). 
‘‘(c) USE OF FUNDS.— 
‘‘(1) IN GENERAL.—With respect to a grant 
under subsection (a), an eligible entity shall— 
‘‘(A) use grant funds in collaboration with 
2 or more disciplines; and 
‘‘(B) use grant funds to integrate certified 
EHR technology into community-based clinical 
education. 
‘‘(2) LIMITATION.—An eligible entity shall not 
use amounts received under a grant under sub-
section (a) to purchase hardware, software, or serv-
ices. 
‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 
provide more than 50 percent of the costs of any activity 
for which assistance is provided under subsection (a), ex-
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cept in an instance of national economic conditions which 
would render the cost-share requirement under this sub-
section detrimental to the program and upon notification 
to Congress as to the justification to waive the cost-share 
requirement. 
‘‘(e) EVALUATION.—The Secretary shall take such 
action as may be necessary to evaluate the projects funded 
under this section and publish, make available, and dis-
seminate the results of such evaluations on as wide a basis 
as is practicable. 
‘‘(f) REPORTS.—Not later than 1 year after the date 
of enactment of this title, and annually thereafter, the Sec-
retary shall submit to the Committee on Health, Edu-
cation, Labor, and Pensions and the Committee on Fi-
nance of the Senate, and the Committee on Energy and 
Commerce of the House of Representatives a report 
that— 
‘‘(1) describes the specific projects established 
under this section; and 
‘‘(2) contains recommendations for Congress 
based on the evaluation conducted under subsection 
(e). 
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126 
‘‘SEC. 3016. INFORMATION TECHNOLOGY PROFESSIONALS 
ON HEALTH CARE. 
‘‘(a) IN GENERAL.—The Secretary, in consultation 
with the Director of the National Science Foundation, 
shall provide assistance to institutions of higher education 
(or consortia thereof) to establish or expand medical 
health informatics education programs, including certifi-
cation, undergraduate, and masters degree programs, for 
both health care and information technology students to 
ensure the rapid and effective utilization and development 
of health information technologies (in the United States 
health care infrastructure). 
‘‘(b) ACTIVITIES.—Activities for which assistance 
may be provided under subsection (a) may include the fol-
lowing: 
‘‘(1) Developing and revising curricula in med-
ical health informatics and related disciplines. 
‘‘(2) Recruiting and retaining students to the 
program involved. 
‘‘(3) Acquiring equipment necessary for student 
instruction in these programs, including the installa-
tion of testbed networks for student use. 
‘‘(4) Establishing or enhancing bridge programs 
in the health informatics fields between community 
colleges and universities. 
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‘‘(c) PRIORITY.—In providing assistance under sub-
section (a), the Secretary shall give preference to the fol-
lowing: 
‘‘(1) Existing education and training programs. 
‘‘(2) Programs designed to be completed in less 
than six months. 
‘‘(d) FINANCIAL SUPPORT.—The Secretary may not 
provide more than 50 percent of the costs of any activity 
for which assistance is provided under subsection (a), ex-
cept in an instance of national economic conditions which 
would render the cost-share requirement under this sub-
section detrimental to the program and upon notification 
to Congress as to the justification to waive the cost-share 
requirement. 
‘‘SEC. 3017. GENERAL GRANT AND LOAN PROVISIONS. 
‘‘(a) REPORTS.—The Secretary may require that an 
entity receiving assistance under this subtitle shall submit 
to the Secretary, not later than the date that is 1 year 
after the date of receipt of such assistance, a report that 
includes— 
‘‘(1) an analysis of the effectiveness of the ac-
tivities for which the entity receives such assistance, 
as compared to the goals for such activities; and 
‘‘(2) an analysis of the impact of the project on 
health care quality and safety. 
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128 
‘‘(b) REQUIREMENT TO IMPROVE QUALITY OF CARE 
AND DECREASE IN COSTS.—The National Coordinator 
shall annually evaluate the activities conducted under this 
subtitle and shall, in awarding grants, implement the les-
sons learned from such evaluation in a manner so that 
awards made subsequent to each such evaluation are made 
in a manner that, in the determination of the National 
Coordinator, will result in the greatest improvement in the 
quality and efficiency of health care. 
‘‘SEC. 3018. AUTHORIZATION FOR APPROPRIATIONS. 
‘‘For the purposes of carrying out this subtitle, there 
is authorized to be appropriated such sums as may be nec-
essary for each of the fiscal years 2009 through 2013. 
Amounts so appropriated shall remain available until ex-
pended.’’. 
PART II—MEDICARE PROGRAM 
SEC. 4311. INCENTIVES FOR ELIGIBLE PROFESSIONALS. 
(a) INCENTIVE PAYMENTS.—Section 1848 of the So-
cial Security Act (42 U.S.C. 1395w–4) is amended by add-
ing at the end the following new subsection: 
‘‘(o) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY.— 
‘‘(1) INCENTIVE PAYMENTS.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding subparagraphs of this paragraph, with 
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respect to covered professional services fur-
nished by an eligible professional during a pay-
ment year (as defined in subparagraph (E)), if 
the eligible professional is a meaningful EHR 
user (as determined under paragraph (2)) for 
the reporting period with respect to such year, 
in addition to the amount otherwise paid under 
this part, there also shall be paid to the eligible 
professional (or to an employer or facility in the 
cases described in clause (A) of section 
1842(b)(6)), from the Federal Supplementary 
Medical Insurance Trust Fund established 
under section 1841 an amount equal to 75 per-
cent of the Secretary’s estimate (based on 
claims submitted not later than 2 months after 
the end of the payment year) of the allowed 
charges under this part for all such covered 
professional services furnished by the eligible 
professional during such year. 
‘‘(B) LIMITATIONS
ON
AMOUNTS
OF
IN-
CENTIVE PAYMENTS.— 
‘‘(i) IN GENERAL.—In no case shall 
the amount of the incentive payment pro-
vided under this paragraph for an eligible 
professional for a payment year exceed the 
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applicable amount specified under this sub-
paragraph with respect to such eligible 
professional and such year. 
‘‘(ii) AMOUNT.—Subject to clause 
(iii), the applicable amount specified in this 
subparagraph for an eligible professional is 
as follows: 
‘‘(I) For the first payment year 
for such professional, $15,000. 
‘‘(II) For the second payment 
year for such professional, $12,000. 
‘‘(III) For the third payment 
year for such professional, $8,000. 
‘‘(IV) For the fourth payment 
year for such professional, $4,000. 
‘‘(V) For the fifth payment year 
for such professional, $2,000. 
‘‘(VI) For any succeeding pay-
ment year for such professional, $0. 
‘‘(iii) PHASE
DOWN
FOR
ELIGIBLE 
PROFESSIONALS
FIRST
ADOPTING
EHR 
AFTER 2013.—If the first payment year for 
an eligible professional is after 2013, then 
the amount specified in this subparagraph 
for a payment year for such professional is 
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131 
the same as the amount specified in clause 
(ii) for such payment year for an eligible 
professional whose first payment year is 
2013. If the first payment year for an eli-
gible professional is after 2015 then the 
applicable amount specified in this sub-
paragraph for such professional for such 
year and any subsequent year shall be $0. 
‘‘(C) NON-APPLICATION
TO
HOSPITAL- 
BASED ELIGIBLE PROFESSIONALS.— 
‘‘(i) IN GENERAL.—No incentive pay-
ment may be made under this paragraph 
in the case of a hospital-based eligible pro-
fessional. 
‘‘(ii) HOSPITAL-BASED ELIGIBLE PRO-
FESSIONAL.—For purposes of clause (i), 
the term ‘hospital-based eligible profes-
sional’ means, with respect to covered pro-
fessional services furnished by an eligible 
professional during the reporting period for 
a payment year, an eligible professional, 
such as a pathologist, anesthesiologist, or 
emergency physician, who furnishes sub-
stantially all of such services in a hospital 
setting (whether inpatient or outpatient) 
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132 
and through the use of the facilities and 
equipment, including computer equipment, 
of the hospital. 
‘‘(D) PAYMENT.— 
‘‘(i) FORM OF PAYMENT.—The pay-
ment under this paragraph may be in the 
form of a single consolidated payment or 
in the form of such periodic installments 
as the Secretary may specify. 
‘‘(ii) COORDINATION OF APPLICATION 
OF
LIMITATION
FOR
PROFESSIONALS
IN 
DIFFERENT PRACTICES.—In the case of an 
eligible professional furnishing covered pro-
fessional services in more than one practice 
(as specified by the Secretary), the Sec-
retary shall establish rules to coordinate 
the incentive payments, including the ap-
plication of the limitation on amounts of 
such incentive payments under this para-
graph, among such practices. 
‘‘(iii) 
COORDINATION
WITH
MED-
ICAID.—The Secretary shall seek, to the 
maximum extent practicable, to avoid du-
plicative requirements from Federal and 
State Governments to demonstrate mean-
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133 
ingful use of certified EHR technology 
under this title and title XIX. In doing so, 
the Secretary may deem satisfaction of 
State requirements for such meaningful 
use for a payment year under title XIX to 
be sufficient to qualify as meaningful use 
under this subsection and subsection (a)(7) 
and vice versa. The Secretary may also ad-
just the reporting periods under such title 
and such subsections in order to carry out 
this clause. 
‘‘(E) PAYMENT YEAR DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘payment year’ 
means a year beginning with 2011. 
‘‘(ii) FIRST, SECOND, ETC. PAYMENT 
YEAR.—The term ‘first payment year’ 
means, with respect to covered professional 
services furnished by an eligible profes-
sional, the first year for which an incentive 
payment is made for such services under 
this subsection. The terms ‘second pay-
ment year’, ‘third payment year’, ‘fourth 
payment year’, and ‘fifth payment year’ 
mean, with respect to covered professional 
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134 
services furnished by such eligible profes-
sional, each successive year immediately 
following the first payment year for such 
professional. 
‘‘(2) MEANINGFUL EHR USER.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible professional shall be 
treated as a meaningful EHR user for a report-
ing period for a payment year (or, for purposes 
of subsection (a)(7), for a reporting period 
under such subsection for a year) if each of the 
following requirements is met: 
‘‘(i) MEANINGFUL USE OF CERTIFIED 
EHR
TECHNOLOGY.—The eligible profes-
sional demonstrates to the satisfaction of 
the Secretary, in accordance with subpara-
graph (C)(i), that during such period the 
professional is using certified EHR tech-
nology in a meaningful manner, which 
shall include the use of electronic pre-
scribing as determined to be appropriate 
by the Secretary. 
‘‘(ii) INFORMATION EXCHANGE.—The 
eligible professional demonstrates to the 
satisfaction of the Secretary, in accordance 
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135 
with subparagraph (C)(i), that during such 
period such certified EHR technology is 
connected in a manner that provides, in 
accordance with law and standards appli-
cable to the exchange of information, for 
the electronic exchange of health informa-
tion to improve the quality of health care, 
such as promoting care coordination. 
‘‘(iii) 
REPORTING
ON
MEASURES 
USING
EHR.—Subject to subparagraph 
(B)(ii) and using such certified EHR tech-
nology, the eligible professional submits in-
formation for such period, in a form and 
manner specified by the Secretary, on such 
clinical quality measures and such other 
measures as selected by the Secretary 
under subparagraph (B)(i). 
The Secretary may provide for the use of alter-
native means for meeting the requirements of 
clauses (i), (ii), and (iii) in the case of an eligi-
ble professional furnishing covered professional 
services in a group practice (as defined by the 
Secretary). The Secretary shall seek to improve 
the use of electronic health records and health 
care quality over time by requiring more strin-
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gent measures of meaningful use selected under 
this paragraph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary shall 
select measures for purposes of subpara-
graph (A)(iii) but only consistent 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 subparagraph, the 
Secretary shall publish in the Federal 
Register such measure and provide for 
a period of public comment on such 
measure. 
‘‘(ii) 
LIMITATION.—The 
Secretary 
may not require the electronic reporting of 
information on clinical quality measures 
under subparagraph (A)(iii) unless the 
Secretary has the capacity to accept the in-
formation electronically, which may be on 
a pilot basis. 
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137 
‘‘(iii) COORDINATION OF REPORTING 
OF
INFORMATION.—In 
selecting 
such 
measures, and in establishing the form and 
manner for reporting measures under sub-
paragraph (A)(iii), the Secretary shall seek 
to avoid redundant or duplicative reporting 
otherwise required, including reporting 
under subsection (k)(2)(C). 
‘‘(C) DEMONSTRATION
OF
MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY AND IN-
FORMATION EXCHANGE.— 
‘‘(i) IN
GENERAL.—A professional 
may satisfy the demonstration requirement 
of clauses (i) and (ii) of subparagraph (A) 
through means specified by the Secretary, 
which may include— 
‘‘(I) an attestation; 
‘‘(II) the submission of claims 
with appropriate coding (such as a 
code indicating that a patient encoun-
ter was documented using certified 
EHR technology); 
‘‘(III) a survey response; 
‘‘(IV) reporting under subpara-
graph (A)(iii); and 
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138 
‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE
OF
PART
D
DATA.—Not-
withstanding sections 1860D–15(d)(2)(B) 
and 1860D–15(f)(2), the Secretary may 
use data regarding drug claims submitted 
for purposes of section 1860D–15 that are 
necessary for purposes of subparagraph 
(A). 
‘‘(3) APPLICATION.— 
‘‘(A) 
PHYSICIAN
REPORTING
SYSTEM 
RULES.—Paragraphs (5), (6), and (8) of sub-
section (k) shall apply for purposes of this sub-
section in the same manner as they apply for 
purposes of such subsection. 
‘‘(B) COORDINATION
WITH
OTHER
PAY-
MENTS.—The provisions of this subsection shall 
not be taken into account in applying the provi-
sions of subsection (m) of this section and of 
section 1833(m) and any payment under such 
provisions shall not be taken into account in 
computing allowable charges under this sub-
section. 
‘‘(C) LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
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139 
under section 1869, section 1878, or otherwise 
of the determination of any incentive payment 
under this subsection and the payment adjust-
ment under subsection (a)(7), including the de-
termination of a meaningful EHR user under 
paragraph (2), a limitation under paragraph 
(1)(B), and the exception under subsection 
(a)(7)(B). 
‘‘(D) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names, business addresses, and business phone 
numbers of the eligible professionals who are 
meaningful EHR users and, as determined ap-
propriate by the Secretary, of group practices 
receiving incentive payments under paragraph 
(1). 
‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 
For purposes of this section, the term ‘certified 
EHR technology’ means a qualified electronic health 
record (as defined in 3000(13) of the Public Health 
Service Act) that is certified pursuant to section 
3001(c)(5) of such Act as meeting standards adopt-
ed under section 3004 of such Act that are applica-
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140 
ble to the type of record involved (as determined by 
the Secretary, such as an ambulatory electronic 
health record for office-based physicians or an inpa-
tient hospital electronic health record for hospitals). 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) 
COVERED
PROFESSIONAL
SERV-
ICES.—The term ‘covered professional services’ 
has the meaning given such term in subsection 
(k)(3). 
‘‘(B) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ means a physician, as de-
fined in section 1861(r). 
‘‘(C) REPORTING PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
with respect to a payment year, as specified by 
the Secretary.’’. 
(b) INCENTIVE PAYMENT ADJUSTMENT.—Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w– 
4(a)) is amended by adding at the end the following new 
paragraph: 
‘‘(7) INCENTIVES
FOR
MEANINGFUL
USE
OF 
CERTIFIED EHR TECHNOLOGY.— 
‘‘(A) ADJUSTMENT.— 
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141 
‘‘(i) IN
GENERAL.—Subject to sub-
paragraphs (B) and (D), with respect to 
covered professional services furnished by 
an eligible professional during 2016 or any 
subsequent payment year, if the eligible 
professional is not a meaningful EHR user 
(as determined under subsection (o)(2)) for 
a reporting period for the year, the fee 
schedule amount for such services fur-
nished by such professional during the year 
(including the fee schedule amount for pur-
poses of determining a payment based on 
such amount) shall be equal to the applica-
ble percent of the fee schedule amount that 
would otherwise apply to such services 
under this subsection (determined after ap-
plication of paragraph (3) but without re-
gard to this paragraph). 
‘‘(ii) APPLICABLE PERCENT.—Subject 
to clause (iii), for purposes of clause (i), 
the term ‘applicable percent’ means— 
‘‘(I) for 2016, 99 percent; 
‘‘(II) for 2017, 98 percent; and 
‘‘(III) for 2018 and each subse-
quent year, 97 percent. 
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142 
‘‘(iii) AUTHORITY TO DECREASE AP-
PLICABLE
PERCENTAGE
FOR
2019
AND 
SUBSEQUENT YEARS.—For 2019 and each 
subsequent year, if the Secretary finds that 
the proportion of eligible professionals who 
are meaningful EHR users (as determined 
under subsection (o)(2)) is less than 75 
percent, the applicable percent shall be de-
creased by 1 percentage point from the ap-
plicable percent in the preceding year, but 
in no case shall the applicable percent be 
less than 95 percent. 
‘‘(B) 
SIGNIFICANT
HARDSHIP
EXCEP-
TION.—The Secretary may, on a case-by-case 
basis, exempt an eligible professional from the 
application of the payment adjustment under 
subparagraph (A) if the Secretary determines, 
subject to annual renewal, that compliance with 
the requirement for being a meaningful EHR 
user would result in a significant hardship, such 
as in the case of an eligible professional who 
practices in a rural area without sufficient 
Internet access. In no case may an eligible pro-
fessional be granted an exemption under this 
subparagraph for more than 5 years. 
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143 
‘‘(C) APPLICATION OF PHYSICIAN REPORT-
ING SYSTEM RULES.—Paragraphs (5), (6), and 
(8) of subsection (k) shall apply for purposes of 
this paragraph in the same manner as they 
apply for purposes of such subsection. 
‘‘(D) NON-APPLICATION
TO
HOSPITAL- 
BASED
ELIGIBLE
PROFESSIONALS.—No pay-
ment adjustment may be made under subpara-
graph (A) in the case of hospital-based eligible 
professionals 
(as 
defined 
in 
subsection 
(o)(1)(C)(ii)). 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) COVERED
PROFESSIONAL
SERV-
ICES.—The 
term 
‘covered 
professional 
services’ has the meaning given such term 
in subsection (k)(3). 
‘‘(ii) ELIGIBLE PROFESSIONAL.—The 
term ‘eligible professional’ means a physi-
cian, as defined in section 1861(r). 
‘‘(iii) REPORTING PERIOD.—The term 
‘reporting period’ means, with respect to a 
year, a period specified by the Secretary.’’. 
(c) APPLICATION
TO CERTAIN HMO-AFFILIATED 
ELIGIBLE PROFESSIONALS.—Section 1853 of the Social 
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144 
Security Act (42 U.S.C. 1395w–23) is amended by adding 
at the end the following new subsection: 
‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL IN-
CENTIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOP-
TION AND MEANINGFUL USE OF CERTIFIED EHR TECH-
NOLOGY.— 
‘‘(1) IN GENERAL.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the provisions of sections 1848(o) and 1848(a)(7) 
shall apply with respect to eligible professionals de-
scribed in paragraph (2) of the organization who the 
organization attests under paragraph (6) to be 
meaningful EHR users in a similar manner as they 
apply to eligible professionals under such sections. 
Incentive payments under paragraph (3) shall be 
made to and payment adjustments under paragraph 
(4) shall apply to such qualifying organizations. 
‘‘(2) ELIGIBLE
PROFESSIONAL
DESCRIBED.— 
With respect to a qualifying MA organization, an eli-
gible professional described in this paragraph is an 
eligible professional (as defined for purposes of sec-
tion 1848(o)) who— 
‘‘(A)(i) is employed by the organization; or 
‘‘(ii)(I) is employed by, or is a partner of, 
an entity that through contract with the organi-
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zation furnishes at least 80 percent of the enti-
ty’s patient care services to enrollees of such or-
ganization; and 
‘‘(II) furnishes at least 75 percent of the 
professional services of the eligible professional 
to enrollees of the organization; and 
‘‘(B) furnishes, on average, at least 20 
hours per week of patient care services. 
‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(o) under paragraph (1), instead of the ad-
ditional 
payment 
amount 
under 
section 
1848(o)(1)(A) and subject to subparagraph 
(B), the Secretary may substitute an amount 
determined by the Secretary to the extent fea-
sible and practical to be similar to the esti-
mated amount in the aggregate that would be 
payable if payment for services furnished by 
such professionals was payable under part B in-
stead of this part. 
‘‘(B) AVOIDING
DUPLICATION
OF
PAY-
MENTS.— 
‘‘(i) IN GENERAL.—If an eligible pro-
fessional described in paragraph (2) is eli-
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146 
gible for the maximum incentive payment 
under section 1848(o)(1)(A) for the same 
payment period, the payment incentive 
shall be made only under such section and 
not under this subsection. 
‘‘(ii) METHODS.—In the case of an el-
igible professional described in paragraph 
(2) who is eligible for an incentive payment 
under section 1848(o)(1)(A) but is not de-
scribed in clause (i) for the same payment 
period, the Secretary shall develop a proc-
ess— 
‘‘(I) to ensure that duplicate pay-
ments are not made with respect to 
an eligible professional both under 
this subsection and under section 
1848(o)(1)(A); and 
‘‘(II) to collect data from Medi-
care Advantage organizations to en-
sure against such duplicate payments. 
‘‘(C) FIXED SCHEDULE FOR APPLICATION 
OF LIMITATION ON INCENTIVE PAYMENTS FOR 
ALL
ELIGIBLE
PROFESSIONALS.—In applying 
section 1848(o)(1)(B)(ii) under subparagraph 
(A), in accordance with rules specified by the 
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Secretary, a qualifying MA organization shall 
specify a year (not earlier than 2011) that shall 
be treated as the first payment year for all eli-
gible professionals with respect to such organi-
zation. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(a)(7) under paragraph (1), instead of the 
payment adjustment being an applicable per-
cent of the fee schedule amount for a year 
under such section, subject to subparagraph 
(D), the payment adjustment under paragraph 
(1) shall be equal to the percent specified in 
subparagraph (B) for such year of the payment 
amount otherwise provided under this section 
for such year. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
100 percent minus a number of percentage 
points equal to the product of— 
‘‘(i) the number of percentage points 
by which the applicable percent (under sec-
tion 1848(a)(7)(A)(ii)) for the year is less 
than 100 percent; and 
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148 
‘‘(ii) the Medicare physician expendi-
ture proportion specified in subparagraph 
(C) for the year. 
‘‘(C) MEDICARE PHYSICIAN EXPENDITURE 
PROPORTION.—The Medicare physician expend-
iture proportion under this subparagraph for a 
year is the Secretary’s estimate of the propor-
tion, of the expenditures under parts A and B 
that are not attributable to this part, that are 
attributable to expenditures for physicians’ 
services. 
‘‘(D) APPLICATION OF PAYMENT ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible profes-
sionals are meaningful EHR users with respect 
to a year, the Secretary shall apply the payment 
adjustment under this paragraph based on the 
proportion of such eligible professionals that are 
not meaningful EHR users for such year. 
‘‘(5) 
QUALIFYING
MA
ORGANIZATION
DE-
FINED.—In this subsection and subsection (m), the 
term ‘qualifying MA organization’ means a Medicare 
Advantage organization that is organized as a health 
maintenance organization (as defined in section 
2791(b)(3) of the Public Health Service Act). 
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149 
‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 
For purposes of this subsection and subsection (m), 
a qualifying MA organization shall submit an attes-
tation, in a form and manner specified by the Sec-
retary which may include the submission of such at-
testation as part of submission of the initial bid 
under section 1854(a)(1)(A)(iv), identifying— 
‘‘(A) whether each eligible professional de-
scribed in paragraph (2), with respect to such 
organization is a meaningful EHR user (as de-
fined in section 1848(o)(2)) for a year specified 
by the Secretary; and 
‘‘(B) whether each eligible hospital de-
scribed in subsection (m)(1), with respect to 
such organization, is a meaningful EHR user 
(as defined in section 1886(n)(3)) for an appli-
cable period specified by the Secretary.’’. 
(d) CONFORMING AMENDMENTS.—Section 1853 of 
the Social Security Act (42 U.S.C. 1395w–23) is amend-
ed— 
(1) in subsection (a)(1)(A), by striking ‘‘and 
(i)’’ and inserting ‘‘(i), and (l)’’; 
(2) in subsection (c)— 
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(A) in paragraph (1)(D)(i), by striking 
‘‘section 1886(h)’’ and inserting ‘‘sections 
1848(o) and 1886(h)’’; and 
(B) in paragraph (6)(A), by inserting after 
‘‘under part B,’’ the following: ‘‘excluding ex-
penditures attributable to subsections (a)(7) 
and (o) of section 1848,’’; and 
(3) in subsection (f), by inserting ‘‘and for pay-
ments under subsection (l)’’ after ‘‘with the organi-
zation’’. 
(e) 
CONFORMING
AMENDMENTS
TO
E-PRE-
SCRIBING.— 
(1) Section 1848(a)(5)(A) of the Social Security 
Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 
(A) in clause (i), by striking ‘‘or any sub-
sequent year’’ and inserting ‘‘, 2013, 2014, or 
2015’’; and 
(B) in clause (ii), by striking ‘‘and each 
subsequent year’’ and inserting ‘‘and 2015’’. 
(2) Section 1848(m)(2) of such Act (42 U.S.C. 
1395w–4(m)(2)) is amended— 
(A) in subparagraph (A), by striking ‘‘For 
2009’’ and inserting ‘‘Subject to subparagraph 
(D), for 2009’’; and 
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151 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) LIMITATION WITH RESPECT TO EHR 
INCENTIVE PAYMENTS.—The provisions of this 
paragraph shall not apply to an eligible profes-
sional (or, in the case of a group practice under 
paragraph (3)(C), to the group practice) if, for 
the reporting period the eligible professional (or 
group practice) receives an incentive payment 
under subsection (o)(1)(A) with respect to a 
certified EHR technology (as defined in sub-
section (o)(4)) that has the capability of elec-
tronic prescribing.’’. 
SEC. 4312. INCENTIVES FOR HOSPITALS. 
(a) INCENTIVE PAYMENT.—Section 1886 of the So-
cial Security Act (42 U.S.C. 1395ww) is amended by add-
ing at the end the following new subsection: 
‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY.— 
‘‘(1) IN GENERAL.—Subject to the succeeding 
provisions of this subsection, with respect to inpa-
tient hospital services furnished by an eligible hos-
pital during a payment year (as defined in para-
graph (2)(G)), if the eligible hospital is a meaningful 
EHR user (as determined under paragraph (3)) for 
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152 
the reporting period with respect to such year, in ad-
dition to the amount otherwise paid under this sec-
tion, there also shall be paid to the eligible hospital, 
from the Federal Hospital Insurance Trust Fund es-
tablished under section 1817, an amount equal to 
the applicable amount specified in paragraph (2)(A) 
for the hospital for such payment year. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding subparagraphs of this paragraph, the 
applicable amount specified in this subpara-
graph for an eligible hospital for a payment 
year is equal to the product of the following: 
‘‘(i) INITIAL AMOUNT.—The sum of— 
‘‘(I) the base amount specified in 
subparagraph (B); plus 
‘‘(II) 
the 
discharge 
related 
amount specified in subparagraph (C) 
for a 12-month period selected by the 
Secretary with respect to such pay-
ment year. 
‘‘(ii) MEDICARE
SHARE.—The Medi-
care share as specified in subparagraph 
(D) for the hospital for a period selected 
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153 
by the Secretary with respect to such pay-
ment year. 
‘‘(iii) 
TRANSITION
FACTOR.—The 
transition factor specified in subparagraph 
(E) for the hospital for the payment year. 
‘‘(B) BASE
AMOUNT.—The base amount 
specified in this subparagraph is $2,000,000. 
‘‘(C) DISCHARGE RELATED AMOUNT.—The 
discharge related amount specified in this sub-
paragraph for a 12-month period selected by 
the Secretary shall be determined as the sum of 
the amount, based upon total discharges (re-
gardless of any source of payment) for the pe-
riod, for each discharge up to the 23,000th dis-
charge as follows: 
‘‘(i) For the 1,150th through the 
9,200th discharge, $200. 
‘‘(ii) For the 9,201st through the 
13,800th discharge, 50 percent of the 
amount specified in clause (i). 
‘‘(iii) For the 13,801st through the 
23,000th discharge, 30 percent of the 
amount specified in clause (i). 
‘‘(D) MEDICARE
SHARE.—The Medicare 
share specified under this subparagraph for a 
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155 
porting under this title), divided by 
the total amount of the hospital’s 
charges during such period. 
Insofar as the Secretary determines that data 
are not available on charity care necessary to 
calculate the portion of the formula specified in 
clause (ii)(II), the Secretary shall use data on 
uncompensated care and may adjust such data 
so as to be an appropriate proxy for charity 
care including a downward adjustment to elimi-
nate bad debt data from uncompensated care 
data. In the absence of the data necessary, with 
respect to a hospital, for the Secretary to com-
pute the amount described in clause (ii)(II), the 
amount under such clause shall be deemed to 
be 1. In the absence of data, with respect to a 
hospital, necessary to compute the amount de-
scribed in clause (i)(II), the amount under such 
clause shall be deemed to be 0. 
‘‘(E) TRANSITION FACTOR SPECIFIED.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the transition factor specified in this 
subparagraph for an eligible hospital for a 
payment year is as follows: 
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‘‘(I) For the first payment year 
for such hospital, 1. 
‘‘(II) For the second payment 
year for such hospital, 3⁄4. 
‘‘(III) For the third payment 
year for such hospital, 1⁄2. 
‘‘(IV) For the fourth payment 
year for such hospital, 1⁄4. 
‘‘(V) For any succeeding pay-
ment year for such hospital, 0. 
‘‘(ii) PHASE
DOWN
FOR
ELIGIBLE 
HOSPITALS FIRST ADOPTING EHR AFTER 
2013.—If the first payment year for an eli-
gible hospital is after 2013, then the tran-
sition factor specified in this subparagraph 
for a payment year for such hospital is the 
same as the amount specified in clause (i) 
for such payment year for an eligible hos-
pital for which the first payment year is 
2013. If the first payment year for an eli-
gible hospital is after 2015 then the transi-
tion factor specified in this subparagraph 
for such hospital and for such year and 
any subsequent year shall be 0. 
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157 
‘‘(F) FORM OF PAYMENT.—The payment 
under this subsection for a payment year may 
be in the form of a single consolidated payment 
or in the form of such periodic installments as 
the Secretary may specify. 
‘‘(G) PAYMENT YEAR DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘payment year’ 
means a fiscal year beginning with fiscal 
year 2011. 
‘‘(ii) FIRST, SECOND, ETC. PAYMENT 
YEAR.—The term ‘first payment year’ 
means, with respect to inpatient hospital 
services furnished by an eligible hospital, 
the first fiscal year for which an incentive 
payment is made for such services under 
this subsection. The terms ‘second pay-
ment year’, ‘third payment year’, and 
‘fourth payment year’ mean, with respect 
to an eligible hospital, each successive year 
immediately following the first payment 
year for that hospital. 
‘‘(3) MEANINGFUL EHR USER.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible hospital shall be treated 
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158 
as a meaningful EHR user for a reporting pe-
riod for a payment year (or, for purposes of 
subsection (b)(3)(B)(ix), for a reporting period 
under such subsection for a fiscal year) if each 
of the following requirements are met: 
‘‘(i) MEANINGFUL USE OF CERTIFIED 
EHR TECHNOLOGY.—The eligible hospital 
demonstrates to the satisfaction of the Sec-
retary, in accordance with subparagraph 
(C)(i), that during such period the hospital 
is using certified EHR technology in a 
meaningful manner. 
‘‘(ii) INFORMATION EXCHANGE.—The 
eligible hospital demonstrates to the satis-
faction of the Secretary, in accordance 
with subparagraph (C)(i), that during such 
period such certified EHR technology is 
connected in a manner that provides, in 
accordance with law and standards appli-
cable to the exchange of information, for 
the electronic exchange of health informa-
tion to improve the quality of health care, 
such as promoting care coordination. 
‘‘(iii) 
REPORTING
ON
MEASURES 
USING
EHR.—Subject to subparagraph 
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159 
(B)(ii) and using such certified EHR tech-
nology, the eligible hospital submits infor-
mation for such period, in a form and 
manner specified by the Secretary, on such 
clinical quality measures and such other 
measures as selected by the Secretary 
under subparagraph (B)(i). 
The Secretary shall seek to improve the use of 
electronic health records and health care quality 
over time by requiring more stringent measures 
of meaningful use selected under this para-
graph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary shall 
select measures for purposes of subpara-
graph (A)(iii) but only consistent with the 
following: 
‘‘(I) The Secretary shall provide 
preference to clinical quality measures 
that have been selected for purposes 
of applying subsection (b)(3)(B)(viii) 
or that have been endorsed by the en-
tity with a contract with the Secretary 
under section 1890(a). 
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160 
‘‘(II) Prior to any measure (other 
than a clinical quality measure that 
has been selected for purposes of ap-
plying 
subsection 
(b)(3)(B)(viii)) 
being selected under this subpara-
graph, the Secretary shall publish in 
the Federal Register such measure 
and provide for a period of public 
comment on such measure. 
‘‘(ii) LIMITATIONS.—The Secretary 
may not require the electronic reporting of 
information on clinical quality measures 
under subparagraph (A)(iii) unless the 
Secretary has the capacity to accept the in-
formation electronically, which may be on 
a pilot basis. 
‘‘(iii) COORDINATION OF REPORTING 
OF
INFORMATION.—In 
selecting 
such 
measures, and in establishing the form and 
manner for reporting measures under sub-
paragraph (A)(iii), the Secretary shall seek 
to avoid redundant or duplicative reporting 
with reporting otherwise required, includ-
ing 
reporting 
under 
subsection 
(b)(3)(B)(viii). 
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161 
‘‘(C) DEMONSTRATION
OF
MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY AND IN-
FORMATION EXCHANGE.— 
‘‘(i) IN
GENERAL.—A hospital may 
satisfy the demonstration requirement of 
clauses (i) and (ii) of subparagraph (A) 
through means specified by the Secretary, 
which may include— 
‘‘(I) an attestation; 
‘‘(II) the submission of claims 
with appropriate coding (such as a 
code indicating that inpatient care 
was documented using certified EHR 
technology); 
‘‘(III) a survey response; 
‘‘(IV) reporting under subpara-
graph (A)(iii); and 
‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE
OF
PART
D
DATA.—Not-
withstanding sections 1860D–15(d)(2)(B) 
and 1860D–15(f)(2), the Secretary may 
use data regarding drug claims submitted 
for purposes of section 1860D–15 that are 
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162 
necessary for purposes of subparagraph 
(A). 
‘‘(4) APPLICATION.— 
‘‘(A) LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise 
of the determination of any incentive payment 
under this subsection and the payment adjust-
ment under subsection (b)(3)(B)(ix), including 
the determination of a meaningful EHR user 
under paragraph (3), determination of meas-
ures applicable to services furnished by eligible 
hospitals under this subsection, and the excep-
tion under subsection (b)(3)(B)(ix)(II). 
‘‘(B) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names of the eligible hospitals that are mean-
ingful EHR users under this subsection or sub-
section (b)(3)(B)(ix) and other relevant data as 
determined appropriate by the Secretary. The 
Secretary shall ensure that a hospital has the 
opportunity to review the other relevant data 
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163 
that are to be made public with respect to the 
hospital prior to such data being made public. 
‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 
The term ‘certified EHR technology’ has the mean-
ing given such term in section 1848(o)(4). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli-
gible hospital’ means a subsection (d) hospital. 
‘‘(B) REPORTING PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
with respect to a payment year, as specified by 
the Secretary.’’. 
(b) INCENTIVE MARKET BASKET ADJUSTMENT.— 
Section 1886(b)(3)(B) of the Social Security Act (42 
U.S.C. 1395ww(b)(3)(B)) is amended— 
(1) in clause (viii)(I), by inserting ‘‘(or, begin-
ning with fiscal year 2016, by one-quarter)’’ after 
‘‘2.0 percentage points’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ix)(I) For purposes of clause (i) for fiscal year 
2016 and each subsequent fiscal year, in the case of an 
eligible hospital (as defined in subsection (n)(6)(A)) that 
is not a meaningful EHR user (as defined in subsection 
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164 
(n)(3)) for the reporting period for such fiscal year, three- 
quarters of the applicable percentage increase otherwise 
applicable under clause (i) for such fiscal year shall be 
reduced by 331⁄3 percent for fiscal year 2016, 662⁄3 per-
cent for fiscal year 2017, and 100 percent for fiscal year 
2018 and each subsequent fiscal year. Such reduction 
shall apply only with respect to the fiscal year involved 
and the Secretary shall not take into account such reduc-
tion in computing the applicable percentage increase under 
clause (i) for a subsequent fiscal year. 
‘‘(II) The Secretary may, on a case-by-case basis, ex-
empt a subsection (d) hospital from the application of sub-
clause (I) with respect to a fiscal year if the Secretary 
determines, subject to annual renewal, that requiring such 
hospital to be a meaningful EHR user during such fiscal 
year would result in a significant hardship, such as in the 
case of a hospital in a rural area without sufficient Inter-
net access. In no case may a hospital be granted an ex-
emption under this subclause for more than 5 years. 
‘‘(III) For fiscal year 2016 and each subsequent fis-
cal year, a State in which hospitals are paid for services 
under section 1814(b)(3) shall adjust the payments to 
each subsection (d) hospital in the State that is not a 
meaningful EHR user (as defined in subsection (n)(3)) 
in a manner that is designed to result in an aggregate 
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165 
reduction in payments to hospitals in the State that is 
equivalent to the aggregate reduction that would have oc-
curred if payments had been reduced to each subsection 
(d) hospital in the State in a manner comparable to the 
reduction under the previous provisions of this clause. The 
State shall report to the Secretary the methodology it will 
use to make the payment adjustment under the previous 
sentence. 
‘‘(IV) For purposes of this clause, the term ‘reporting 
period’ means, with respect to a fiscal year, any period 
(or periods), with respect to the fiscal year, as specified 
by the Secretary.’’. 
(c) APPLICATION
TO CERTAIN HMO-AFFILIATED 
ELIGIBLE HOSPITALS.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23), as amended by section 
4311(c), is further amended by adding at the end the fol-
lowing new subsection: 
‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
AND MEANINGFUL USE
OF CERTIFIED EHR TECH-
NOLOGY.— 
‘‘(1) APPLICATION.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the 
provisions 
of 
sections 
1886(n) 
and 
1886(b)(3)(B)(ix) shall apply with respect to eligible 
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166 
hospitals described in paragraph (2) of the organiza-
tion which the organization attests under subsection 
(l)(6) to be meaningful EHR users in a similar man-
ner as they apply to eligible hospitals under such 
sections. Incentive payments under paragraph (3) 
shall be made to and payment adjustments under 
paragraph (4) shall apply to such qualifying organi-
zations. 
‘‘(2) ELIGIBLE
HOSPITAL
DESCRIBED.—With 
respect to a qualifying MA organization, an eligible 
hospital described in this paragraph is an eligible 
hospital that is under common corporate governance 
with such organization and serves individuals en-
rolled under an MA plan offered by such organiza-
tion. 
‘‘(3) ELIGIBLE
HOSPITAL
INCENTIVE
PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1886(n)(2) under paragraph (1), instead of the 
additional payment amount under section 
1886(n)(2), there shall be substituted an 
amount determined by the Secretary to be simi-
lar to the estimated amount in the aggregate 
that would be payable if payment for services 
furnished by such hospitals was payable under 
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subsection and under section 1886(n); 
and 
‘‘(II) to collect data from Medi-
care Advantage organizations to en-
sure against such duplicate payments. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) Subject to paragraph (3), in the case 
of a qualifying MA organization (as defined in 
section 1853(l)(5)), if, according to the attesta-
tion of the organization submitted under sub-
section (l)(6) for an applicable period, one or 
more eligible hospitals (as defined in section 
1886(n)(6)(A)) that are under common cor-
porate governance with such organization and 
that serve individuals enrolled under a plan of-
fered by such organization are not meaningful 
EHR users (as defined in section 1886(n)(3)) 
with respect to a period, the payment amount 
payable under this section for such organization 
for such period shall be the percent specified in 
subparagraph (B) for such period of the pay-
ment amount otherwise provided under this sec-
tion for such period. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
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100 percent minus a number of percentage 
points equal to the product of— 
‘‘(i) the number of the percentage 
point reduction effected under section 
1886(b)(3)(B)(ix)(I) for the period; and 
‘‘(ii) the Medicare hospital expendi-
ture proportion specified in subparagraph 
(C) for the year. 
‘‘(C) MEDICARE HOSPITAL EXPENDITURE 
PROPORTION.—The Medicare hospital expendi-
ture proportion under this subparagraph for a 
year is the Secretary’s estimate of the propor-
tion, of the expenditures under parts A and B 
that are not attributable to this part, that are 
attributable to expenditures for inpatient hos-
pital services. 
‘‘(D) APPLICATION OF PAYMENT ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible hospitals 
are meaningful EHR users with respect to an 
applicable period, the Secretary shall apply the 
payment adjustment under this paragraph 
based on a methodology specified by the Sec-
retary, taking into account the proportion of 
such eligible hospitals, or discharges from such 
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171 
hospitals, that are not meaningful EHR users 
for such period.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1814(b) of the Social Security Act 
(42 U.S.C. 1395f(b)) is amended— 
(A) in paragraph (3), in the matter pre-
ceding subparagraph (A), by inserting ‘‘, sub-
ject to section 1886(d)(3)(B)(ix)(III),’’ after 
‘‘then’’; and 
(B) by adding at the end the following: 
‘‘For purposes of applying paragraph (3), there 
shall be taken into account incentive payments, 
and payment adjustments under subsection 
(b)(3)(B)(ix) or (n) of section 1886.’’. 
(2) Section 1851(i)(1) of the Social Security 
Act (42 U.S.C. 1395w–21(i)(1)) is amended by 
striking 
‘‘and 
1886(h)(3)(D)’’ 
and 
inserting 
‘‘1886(h)(3)(D), and 1853(m)’’. 
(3) Section 1853 of the Social Security Act (42 
U.S.C. 
1395w–23), 
as 
amended 
by 
section 
4311(d)(1), is amended— 
(A) in subsection (c)— 
(i) in paragraph (1)(D)(i), by striking 
‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 
1886(n)’’; and 
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(ii) in paragraph (6)(A), by inserting 
‘‘and subsections (b)(3)(B)(ix) and (n) of 
section 1886’’ after ‘‘section 1848’’; and 
(B) in subsection (f), by inserting ‘‘and 
subsection (m)’’ after ‘‘under subsection (l)’’. 
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IM-
PLEMENTATION FUNDING. 
(a) PREMIUM HOLD HARMLESS.— 
(1) IN GENERAL.—Section 1839(a)(1) of the 
Social Security Act (42 U.S.C. 1395r(a)(1)) is 
amended by adding at the end the following: ‘‘In ap-
plying this paragraph there shall not be taken into 
account additional payments under section 1848(o) 
and section 1853(l)(3) and the Government con-
tribution under section 1844(a)(3).’’. 
(2) PAYMENT.—Section 1844(a) of such Act 
(42 U.S.C. 1395w(a)) is amended— 
(A) in paragraph (2), by striking the pe-
riod at the end and inserting ‘‘; plus’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) a Government contribution equal to the 
amount of payment incentives payable under sec-
tions 1848(o) and 1853(l)(3).’’. 
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(b) MEDICARE IMPROVEMENT FUND.—Section 1898 
of the Social Security Act (42 U.S.C. 1395iii), as added 
by section 7002(a) of the Supplemental Appropriations 
Act, 2008 (Public Law 110–252) and as amended by sec-
tion 188(a)(2) of the Medicare Improvements for Patients 
and Providers Act of 2008 (Public Law 110–275; 122 
Stat. 2589) and by section 6 of the QI Program Supple-
mental Funding Act of 2008, is amended— 
(1) in subsection (a)— 
(A) by inserting ‘‘medicare’’ before ‘‘fee- 
for-service’’; and 
(B) by inserting before the period at the 
end the following: ‘‘including, but not limited 
to, an increase in the conversion factor under 
section 1848(d) to address, in whole or in part, 
any projected shortfall in the conversion factor 
for 2014 relative to the conversion factor for 
2008 and adjustments to payments for items 
and services furnished by providers of services 
and suppliers under such original medicare fee- 
for-service program’’; and 
(2) in subsection (b)— 
(A) in paragraph (1), by striking ‘‘during 
fiscal year 2014,’’ and all that follows and in-
serting the following: ‘‘during— 
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‘‘(A) fiscal year 2014, $22,290,000,000; 
and 
‘‘(B) fiscal year 2020 and each subsequent 
fiscal year, the Secretary’s estimate, as of July 
1 of the fiscal year, of the aggregate reduction 
in expenditures under this title during the pre-
ceding fiscal year directly resulting from the re-
duction in payment amounts under sections 
1848(a)(7), 
1853(l)(4), 
1853(m)(4), 
and 
1886(b)(3)(B)(ix).’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) NO
EFFECT
ON
PAYMENTS
IN
SUBSE-
QUENT YEARS.—In the case that expenditures from 
the Fund are applied to, or otherwise affect, a pay-
ment rate for an item or service under this title for 
a year, the payment rate for such item or service 
shall be computed for a subsequent year as if such 
application or effect had never occurred.’’. 
(c) IMPLEMENTATION FUNDING.—In addition to 
funds otherwise available, out of any funds in the Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
ment Account, $60,000,000 for each of fiscal years 2009 
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175 
through 2015 and $30,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
SEC. 4314. STUDY ON APPLICATION OF EHR PAYMENT IN-
CENTIVES FOR PROVIDERS NOT RECEIVING 
OTHER INCENTIVE PAYMENTS. 
(a) STUDY.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall conduct a study to determine 
the extent to which and manner in which payment 
incentives (such as under title XVIII or XIX of the 
Social Security Act) and other funding for purposes 
of implementing and using certified EHR technology 
(as defined in section 3000 of the Public Health 
Service Act) should be made available to health care 
providers who are receiving minimal or no payment 
incentives or other funding under this Act, under 
title XVIII or XIX of the Social Security Act, or 
otherwise, for such purposes. 
(2) DETAILS OF STUDY.—Such study shall in-
clude an examination of— 
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(A) the adoption rates of certified EHR 
technology by such health care providers; 
(B) the clinical utility of such technology 
by such health care providers; 
(C) whether the services furnished by such 
health care providers are appropriate for or 
would benefit from the use of such technology; 
(D) the extent to which such health care 
providers work in settings that might otherwise 
receive an incentive payment or other funding 
under this Act, title XVIII or XIX of the Social 
Security Act, or otherwise; 
(E) the potential costs and the potential 
benefits of making payment incentives and 
other funding available to such health care pro-
viders; and 
(F) any other issues the Secretary deems 
to be appropriate. 
(b) REPORT.—Not later than June 30, 2010, the 
Secretary shall submit to Congress a report on the find-
ings and conclusions of the study conducted under sub-
section (a). 
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177 
PART III—MEDICAID FUNDING 
SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER-
ATION PAYMENTS; IMPLEMENTATION FUND-
ING. 
(a) IN GENERAL.—Section 1903 of the Social Secu-
rity Act (42 U.S.C. 1396b) is amended— 
(1) in subsection (a)(3)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D); 
(B) by striking ‘‘plus’’ at the end of sub-
paragraph (E) and inserting ‘‘and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F)(i) 100 percent of so much of the 
sums expended during such quarter as are at-
tributable to payments for certified EHR tech-
nology (and support services including mainte-
nance and training that is for, or is necessary 
for the adoption and operation of, such tech-
nology) by Medicaid providers described in sub-
section (t)(1); and 
‘‘(ii) 90 percent of so much of the sums ex-
pended during such quarter as are attributable 
to payments for reasonable administrative ex-
penses related to the administration of pay-
ments described in clause (i) if the State meets 
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178 
the condition described in subsection (t)(9); 
plus’’; and 
(2) by inserting after subsection (s) the fol-
lowing new subsection: 
‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay-
ments for certified EHR technology (and support services 
including maintenance that is for, or is necessary for the 
operation of, such technology) by Medicaid providers de-
scribed in this paragraph are payments made by the State 
in accordance with this subsection of 85 percent of the 
net allowable costs of Medicaid providers (as defined in 
paragraph (2)) for such technology (and support services). 
‘‘(2) In this subsection and subsection (a)(3)(F), the 
term ‘Medicaid provider’ means— 
‘‘(A) an eligible professional (as defined in 
paragraph (3)(B)) who is not hospital-based and has 
at least 30 percent of the professional’s patient vol-
ume (as estimated in accordance with standards es-
tablished by the Secretary) attributable to individ-
uals who are receiving medical assistance under this 
title; and 
‘‘(B) (i) a children’s hospital, (ii) an acute-care 
hospital that is not described in clause (i) and that 
has at least 10 percent of the hospital’s patient vol-
ume (as estimated in accordance with standards es-
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tablished by the Secretary) attributable to individ-
uals who are receiving medical assistance under this 
title, or (iii) a Federally-qualified health center or 
rural health clinic that has at least 30 percent of the 
center’s or clinic’s patient volume (as estimated in 
accordance with standards established by the Sec-
retary) attributable to individuals who are receiving 
medical assistance under this title. 
An eligible professional shall not qualify as a Medicaid 
provider under this subsection unless the eligible profes-
sional has waived, in a manner specified by the Secretary, 
any right to payment under section 1848(o) with respect 
to the adoption or support of certified EHR technology 
by the professional. In applying clauses (ii) and (iii) of 
subparagraph (B), the standards established by the Sec-
retary for patient volume shall include individuals enrolled 
in a Medicaid managed care plan (under section 1903(m) 
or section 1932). 
‘‘(3) In this subsection and subsection (a)(3)(F): 
‘‘(A) The term ‘certified EHR technology’ 
means a qualified electronic health record (as de-
fined in 3000(13) of the Public Health Service Act) 
that is certified pursuant to section 3001(c)(5) of 
such Act as meeting standards adopted under sec-
tion 3004 of such Act that are applicable to the type 
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180 
of record involved (as determined by the Secretary, 
such as an ambulatory electronic health record for 
office-based physicians or an inpatient hospital elec-
tronic health record for hospitals). 
‘‘(B) The term ‘eligible professional’ means a 
physician as defined in paragraphs (1) and (2) of 
section 1861(r), and includes a nurse mid-wife and 
a nurse practitioner. 
‘‘(C) The term ‘hospital-based’ means, with re-
spect to an eligible professional, a professional (such 
as a pathologist, anesthesiologist, or emergency phy-
sician) who furnishes substantially all of the individ-
ual’s professional services in a hospital setting 
(whether inpatient or outpatient) and through the 
use of the facilities and equipment, including com-
puter equipment, of the hospital. 
‘‘(4)(A) The term ‘allowable costs’ means, with re-
spect to certified EHR technology of a Medicaid provider, 
costs of such technology (and support services including 
maintenance and training that is for, or is necessary for 
the adoption and operation of, such technology) as deter-
mined by the Secretary to be reasonable. 
‘‘(B) The term ‘net allowable costs’ means allowable 
costs reduced by any payment that is made to the Med-
icaid provider involved from any other source that is di-
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182 
wise, for a Medicaid provider described in paragraph 
(2)(B) exceed such aggregate or annual limitation as 
the Secretary shall establish, based on an amount 
determined by the Secretary as being adequate to 
adopt and maintain certified EHR technology, con-
sistent with paragraph (6). 
‘‘(5) Payments described in paragraph (1) are not in 
accordance with this subsection unless the following re-
quirements are met: 
‘‘(A) The State provides assurances satisfactory 
to the Secretary that amounts received under sub-
section (a)(3)(F) with respect to costs of a Medicaid 
provider are paid directly to such provider without 
any deduction or rebate. 
‘‘(B) Such Medicaid provider is responsible for 
payment of the costs described in such paragraph 
that are not provided under this title. 
‘‘(C) With respect to payments to such Med-
icaid provider for costs other than costs related to 
the initial adoption of certified EHR technology, the 
Medicaid provider demonstrates meaningful use of 
certified EHR technology through a means that is 
approved by the State and acceptable to the Sec-
retary, and that may be based upon the methodolo-
gies applied under section 1848(o) or 1886(n). 
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‘‘(D) To the extent specified by the Secretary, 
the certified EHR technology is compatible with 
State or Federal administrative management sys-
tems. 
‘‘(6)(A) In no case shall the payments described in 
paragraph (1), with respect to a hospital, exceed in the 
aggregate the product of— 
‘‘(i) the overall hospital EHR amount for the 
hospital computed under subparagraph (B); and 
‘‘(ii) the Medicaid share for such hospital com-
puted under subparagraph (C). 
‘‘(B) For purposes of this paragraph, the overall hos-
pital EHR amount, with respect to a hospital, is the sum 
of 
the 
applicable 
amounts 
specified 
in 
section 
1886(n)(2)(A) for such hospital for the first 4 payment 
years (as estimated by the Secretary) determined as if the 
Medicare share specified in clause (ii) of such section were 
1. The Secretary shall publish in the Federal Register the 
overall hospital EHR amount for each hospital eligible for 
payments under this subsection. In computing amounts 
under clause (ii) for payment years after the first payment 
year, the Secretary shall assume that in subsequent pay-
ment years discharges increase at the average annual rate 
of growth of the most recent 3 years for which discharge 
data are available per year. 
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‘‘(C) The Medicaid share computed under this sub-
paragraph, for a hospital for a period specified by the Sec-
retary, shall be calculated in the same manner as the 
Medicare share under section 1886(n)(2)(D) for such a 
hospital and period, except that there shall be substituted 
for the numerator under clause (i) of such section the 
amount that is equal to the number of inpatient-bed-days 
(as established by the Secretary) which are attributable 
to individuals who are receiving medical assistance under 
this title and who are not described in section 
1886(n)(2)(D)(i). In computing inpatient-bed-days under 
the previous sentence, the Secretary shall take into ac-
count inpatient-bed-days attributable to inpatient-bed- 
days that are paid for individuals enrolled in a Medicaid 
managed care plan (under section 1903(m) or section 
1932). 
‘‘(7) With respect to health care providers other than 
hospitals, the Secretary shall ensure coordination of the 
different programs for payment of such health care pro-
viders for adoption or use of health information technology 
(including certified EHR technology), as well as payments 
for such health care providers provided under this title or 
title XVIII, to assure no duplication of funding. 
‘‘(8) In carrying out paragraph (5)(C), the State and 
Secretary shall seek, to the maximum extent practicable, 
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185 
to avoid duplicative requirements from Federal and State 
Governments to demonstrate meaningful use of certified 
EHR technology under this title and title XVIII. In doing 
so, the Secretary may deem satisfaction of requirements 
for such meaningful use for a payment year under title 
XVIII to be sufficient to qualify as meaningful use under 
this subsection. The Secretary may also specify the report-
ing periods under this subsection in order to carry out this 
paragraph. 
‘‘(9) In order to be provided Federal financial partici-
pation under subsection (a)(3)(F)(ii), a State must dem-
onstrate to the satisfaction of the Secretary, that the 
State— 
‘‘(A) is using the funds provided for the pur-
poses of administering payments under this sub-
section, including tracking of meaningful use by 
Medicaid providers; 
‘‘(B) is conducting adequate oversight of the 
program under this subsection, including routine 
tracking of meaningful use attestations and report-
ing mechanisms; and 
‘‘(C) is pursuing initiatives to encourage the 
adoption of certified EHR technology to promote 
health care quality and the exchange of health care 
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information under this title, subject to applicable 
laws and regulations governing such exchange. 
‘‘(10) The Secretary shall periodically submit reports 
to the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Finance of the 
Senate on status, progress, and oversight of payments 
under paragraph (1).’’. 
(b) IMPLEMENTATION FUNDING.—In addition to 
funds otherwise available, out of any funds in the Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
ment Account, $40,000,000 for each of fiscal years 2009 
through 2015 and $20,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and the amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
Subtitle D—Privacy 
SEC. 4400. DEFINITIONS. 
In this subtitle, except as specified otherwise: 
(1) BREACH.—The term ‘‘breach’’ means the 
unauthorized acquisition, access, use, or disclosure 
of protected health information which compromises 
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the security, privacy, or integrity of protected health 
information maintained by or on behalf of a person. 
Such term does not include any unintentional acqui-
sition, access, use, or disclosure of such information 
by an employee or agent of the covered entity or 
business associate involved if such acquisition, ac-
cess, use, or disclosure, respectively, was made in 
good faith and within the course and scope of the 
employment or other contractual relationship of such 
employee or agent, respectively, with the covered en-
tity or business associate and if such information is 
not further acquired, accessed, used, or disclosed by 
such employee or agent. 
(2) BUSINESS ASSOCIATE.—The term ‘‘business 
associate’’ has the meaning given such term in sec-
tion 160.103 of title 45, Code of Federal Regula-
tions. 
(3) COVERED ENTITY.—The term ‘‘covered en-
tity’’ has the meaning given such term in section 
160.103 of title 45, Code of Federal Regulations. 
(4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis-
closure’’ have the meaning given the term ‘‘disclo-
sure’’ in section 160.103 of title 45, Code of Federal 
Regulations. 
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