470 
‘‘(ii) hospitals and post-acute care 
providers; 
‘‘(iii) hospitals, physicians, and post- 
acute care providers; or 
‘‘(iv) combinations of post-acute pro-
viders. 
‘‘(B) FURTHER APPLICATION.— 
‘‘(i) IN
GENERAL.—In carrying out 
paragraph (1), the Secretary shall apply 
bundled payments in a manner so as to in-
clude collaborative care networks and con-
tinuing care hospitals. 
‘‘(ii) COLLABORATIVE CARE NETWORK 
DEFINED.—For purposes of this subpara-
graph, the term ‘collaborative care net-
work’ means a consortium of health care 
providers that provides a comprehensive 
range of coordinated and integrated health 
care services to low-income patient popu-
lations (including the uninsured) which 
may include coordinated and comprehen-
sive care by safety net providers to reduce 
any unnecessary use of items and services 
furnished in emergency departments, man-
age chronic conditions, improve quality and 
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efficiency of care, increase preventive serv-
ices, and promote adherence to post-acute 
and follow-up care plans. 
‘‘(iii) CONTINUING
CARE
HOSPITAL 
DEFINED.—For purposes of this subpara-
graph, the term ‘continuing care hospital’ 
means an entity that has demonstrated the 
ability to meet patient care and patient 
safety standards and that provides under 
common management the medical and re-
habilitation services provided in inpatient 
rehabilitation hospitals and units (as de-
fined in section 1886(d)(1)(B)(ii)), long- 
term care hospitals (as defined in section 
1886(d)(1)(B)(iv)(I)), and skilled nursing 
facilities (as defined in section 1819(a)) 
that are located in a hospital described in 
section 1886(d). 
‘‘(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 over time the pilot 
program is of sufficient size and scope to— 
‘‘(1) test the approaches under the pilot pro-
gram in a variety of settings, including urban, rural, 
and underserved areas; 
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‘‘(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). Nothing in this subsection 
shall be construed as limiting the number of hospital and 
physician groups or the number of hospital and post-acute 
provider groups that may participate in the pilot program. 
‘‘(c) LIMITATION.—The Secretary shall only expand 
the pilot program under subsection (a) if the Secretary 
finds that— 
‘‘(1) the demonstration program under section 
1866C and pilot program under this section main-
tain or increase the quality of care received by indi-
viduals 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 ex-
pansion of such pilot program would result in esti-
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mated spending that would be less than what spend-
ing would otherwise be in the absence of this section. 
‘‘(d) CERTIFICATION.—For purposes of subsection 
(c), the Chief Actuary of the Centers for Medicare & Med-
icaid Services shall certify whether expansion of the pilot 
program 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 participa-
tion of an entity in the pilot program under this section. 
‘‘(f) EVALUATION
ON
COST
AND
QUALITY
OF 
CARE.—The Secretary shall conduct an evaluation of the 
pilot program under subsection (a) to study the effect of 
such program on costs and quality of care. The findings 
of such evaluation shall be included in the final report re-
quired under section 1152(e)(2) of the Affordable Health 
Care for America Act. 
‘‘(g) STUDY OF ADDITIONAL BUNDLING AND EPI-
SODE-BASED PAYMENT FOR PHYSICIANS’ SERVICES.— 
‘‘(1) IN GENERAL.—The Secretary shall provide 
for a study of and development of a plan for testing 
additional ways to increase bundling of payments for 
physicians in connection with an episode of care, 
such as in connection with outpatient hospital serv-
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ices or services rendered in physicians’ offices, other 
than those provided under the pilot program. 
‘‘(2) APPLICATION.—The Secretary may imple-
ment such a plan through a demonstration pro-
gram.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1866C(b) of the Social Security Act (42 U.S.C. 
1395cc–3(b)) is amended by striking ‘‘The Sec-
retary’’ and inserting ‘‘Subject to section 1866D, the 
Secretary’’. 
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: 
‘‘(V) 2007, 2008, and 2009, sub-
ject to clause (v), the home health 
market basket percentage increase; 
‘‘(VI) 2010, subject to clause (v), 
0 percent; and’’. 
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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 estab-
lished in section 484.220(a) of title 
42, Code of Federal Regulations, the 
Secretary shall apply, in 2010, the ad-
justment established in paragraph (3) 
of such section for 2011, in addition 
to applying the adjustment established 
in paragraph (2) for 2010. 
‘‘(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 
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amount established in the section de-
scribed in subclause (I).’’. 
(b) REBASING HOME HEALTH PROSPECTIVE PAY-
MENT AMOUNT.—Section 1895(b)(3)(A) of the Social Se-
curity Act (42 U.S.C. 1395fff(b)(3)(A)) is amended— 
(1) in clause (i)— 
(A) in subclause (III), by inserting ‘‘and 
before 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 per-
centage 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 epi-
sode, the change in intensity of visits 
in an episode, growth in cost per epi-
sode, and other factors that the Sec-
retary considers to be relevant. 
‘‘(V) Subject to clause (iii)(II), 
for a year after 2011, such a amount 
(or amounts) shall be equal to the 
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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 applied for 2011. 
‘‘(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) applied under such sub-
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clause with the amount (or amounts) 
that should have been applied under 
clause (i)(IV). The Secretary shall de-
crease or increase the prospective pay-
ment amount (or amounts) under 
clause (i)(V) for 2012 (or, at the Sec-
retary’s discretion, over a period of 
several years beginning with 2012) by 
the amount (if any) by which the 
amount (or amounts) applied under 
subclause (I) is greater or less, re-
spectively, 
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 So-
cial Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amend-
ed— 
(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 
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(2) in clause (v)(I), by inserting ‘‘(but not 
below 0)’’ after ‘‘reduced’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to home health market basket 
percentage increases for years beginning with 2011. 
SEC. 1155A. MEDPAC STUDY ON VARIATION IN HOME 
HEALTH MARGINS. 
(a) IN GENERAL.—The Medicare Payment Advisory 
Commission shall conduct a study regarding variation in 
performance of home health agencies in an effort to ex-
plain variation in Medicare margins for such agencies. 
Such study shall include an examination of at least the 
following issues: 
(1) The demographic characteristics of individ-
uals served and the geographic distribution associ-
ated with transportation costs. 
(2) The characteristics of such agencies, such 
as whether such agencies operate 24 hours each day, 
provide charity care, or are part of an integrated 
health system. 
(3) The socio-economic status of individuals 
served, such as the proportion of such individuals 
who are dually eligible for Medicare and Medicaid 
benefits. 
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(4) The presence of severe and or chronic dis-
ease or disability in individuals served, as evidenced 
by multiple discontinuous home health episodes with 
a high number of visits per episode. 
(5) The differences in services provided, such as 
therapy and non-therapy services. 
(b) REPORT.—Not later than June 1, 2011, the Com-
mission shall submit a report to the Congress on the re-
sults of the study conducted under subsection (a) and shall 
include in the report the Commission’s conclusions and 
recommendations, if appropriate, regarding each of the 
issues described in paragraphs (1), (2) and (3) of such 
subsection. 
SEC. 1155B. PERMITTING HOME HEALTH AGENCIES TO AS-
SIGN 
THE 
MOST 
APPROPRIATE 
SKILLED 
SERVICE TO MAKE THE INITIAL ASSESSMENT 
VISIT UNDER A MEDICARE HOME HEALTH 
PLAN OF CARE FOR REHABILITATION CASES. 
(a) 
IN
GENERAL.—Notwithstanding 
section 
484.55(a)(2) of title 42 of the Code of Federal Regula-
tions or any other provision of law, a home health agency 
may determine the most appropriate skilled therapist to 
make the initial assessment visit for an individual who is 
referred (and may be eligible) for home health services 
under title XVIII of the Social Security Act but who does 
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481 
not require skilled nursing care as long as the skilled serv-
ice (for which that therapist is qualified to provide the 
service) is included as part of the plan of care for home 
health services for such individual. 
(b) RULE
OF CONSTRUCTION.—Nothing in sub-
section (a) shall be construed to provide for initial eligi-
bility for coverage of home health services under title 
XVIII of the Social Security Act on the basis of a need 
for occupational therapy. 
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 Secu-
rity 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 
described in subsection (i)(1).’’; 
(3) by amending subsection (f) to read as fol-
lows: 
‘‘(f) 
REPORTING
AND
DISCLOSURE
REQUIRE-
MENTS.— 
‘‘(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 owner-
ship, investment, and compensation arrangements, 
including— 
‘‘(A) the covered items and services pro-
vided 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 compensa-
tion arrangement (as described in subsection 
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(a)(2)(B)), in the entity, or whose immediate 
relatives have such an ownership or investment 
interest or who have such a compensation rela-
tionship 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 
PHYSICIAN
OWNERSHIP
OR
INVESTMENT.—In the 
case of a hospital that meets the requirements de-
scribed 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 
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484 
the receipt of services, as determined by the 
Secretary, the ownership or investment interest, 
as 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, man-
ner, and at such times as the Secretary shall specify. 
The requirements of this paragraph shall not apply 
to designated health services furnished outside the 
United States or to entities which the Secretary de-
termines provide services for which payment may be 
made under this title very infrequently. 
‘‘(3) PUBLICATION
OF
INFORMATION.—The 
Secretary shall publish, and periodically update, the 
information submitted by hospitals under paragraph 
(2)(A) on the public Internet website of the Centers 
for Medicare & Medicaid Services.’’; 
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(4) by amending subsection (g)(5) to read as 
follows: 
‘‘(5) FAILURE TO REPORT OR DISCLOSE INFOR-
MATION.— 
‘‘(A) REPORTING.—Any person who is re-
quired, but fails, to meet a reporting require-
ment of paragraphs (1) and (2)(A) of sub-
section (f) is subject to a civil money penalty of 
not more than $10,000 for each day for which 
reporting is required 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 re-
quirement 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 
section 1128A (other than the first sentence of 
subsection (a) and other than subsection (b)) 
shall apply to a civil money penalty under sub-
paragraphs (A) and (B) in the same manner as 
such provisions apply to a penalty or proceeding 
under section 1128A(a).’’; and 
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486 
(5) by adding at the end the following new sub-
section: 
‘‘(i) REQUIREMENTS TO QUALIFY FOR RURAL PRO-
VIDER
AND
HOSPITAL
OWNERSHIP
EXCEPTIONS
TO 
SELF-REFERRAL PROHIBITION.— 
‘‘(1) REQUIREMENTS
DESCRIBED.—For pur-
poses of subsection (d)(3)(D), the requirements de-
scribed in this paragraph are as follows: 
‘‘(A) PROVIDER
AGREEMENT.—The hos-
pital had— 
‘‘(i) physician ownership or invest-
ment 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 in-
terests 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 enact-
ment of this subsection. 
‘‘(C) PROHIBITION ON EXPANSION OF FA-
CILITY CAPACITY.—Except as provided in para-
graph (2), the number of operating rooms, pro-
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cedure rooms, or beds of the hospital at any 
time on or after the date of the enactment of 
this subsection are no greater than the number 
of operating rooms, procedure rooms, or beds, 
respectively, as of such date. 
‘‘(D) ENSURING
BONA
FIDE
OWNERSHIP 
AND INVESTMENT.— 
‘‘(i) Any ownership or investment in-
terests that the hospital offers to a physi-
cian are not offered on more favorable 
terms than the terms offered to a person 
who is not in a position to refer patients 
or otherwise generate business for the hos-
pital. 
‘‘(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 re-
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489 
other owner or investor in the hospital on 
more favorable terms than the terms of-
fered to a person that is not a physician 
owner or investor. 
‘‘(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 
CERTAIN
CONVERTED
FACILITIES.—The hos-
pital was not converted from an ambulatory 
surgical center to a hospital on or after the date 
of enactment of this subsection. 
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‘‘(2) EXCEPTION TO PROHIBITION ON EXPAN-
SION OF FACILITY CAPACITY.— 
‘‘(A) PROCESS.— 
‘‘(i) ESTABLISHMENT.—The Secretary 
shall establish and implement a process 
under which a hospital may apply for an 
exception from the requirement under 
paragraph (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
IMPLEMENTA-
TION.—The Secretary shall implement the 
process under clause (i) on the date that is 
one month after the promulgation of regu-
lations 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 
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under clause (i). The Secretary may issue 
such regulations as interim final regula-
tions. 
‘‘(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 
hospital (or, if the hospital has been grant-
ed a previous exception under this para-
graph, above the number of operating 
rooms, procedure rooms, or beds, respec-
tively, of the hospital 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, 
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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 exceeding 200 percent of the base-
line 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 increase in the number of operating rooms, 
procedure 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 
INCREASE
IN
FACILITY
CAPACITY.—The Sec-
retary may grant an exception under the proc-
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493 
ess described 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 
be at least 150 percent of the percentage 
increase in the population growth of the 
State in which the hospital is located dur-
ing that period, as estimated by Bureau of 
the Census 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 
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State is estimated to be less than the na-
tional average 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 
‘‘(vi) that meets other conditions as 
determined 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 cath-
eterizations, angiographies, angiograms, and 
endoscopies are furnished). 
‘‘(G) 
PUBLICATION
OF
FINAL
DECI-
SIONS.—Not later than 120 days after receiving 
a complete application under this paragraph, 
the Secretary shall publish on the public Inter-
net website of the Centers for Medicare & Med-
icaid Services the final decision with respect to 
such application. 
‘‘(H) LIMITATION
ON
REVIEW.—There 
shall be no administrative or judicial review 
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under section 1869, section 1878, or otherwise 
of the exception process under this paragraph, 
including the establishment of such process, 
and any determination made under such proc-
ess. 
‘‘(3) PHYSICIAN
OWNER
OR
INVESTOR
DE-
FINED.—For purposes of this subsection and sub-
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 own-
ership 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 sub-
section shall be construed as preventing the Sec-
retary from terminating a hospital’s provider agree-
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496 
ment if the hospital is not in compliance with regu-
lations pursuant to section 1866.’’. 
(b) VERIFYING
COMPLIANCE.—The Secretary of 
Health and Human Services shall establish policies and 
procedures to verify compliance with the requirements de-
scribed in subsections (i)(1) and (i)(4) of section 1877 of 
the Social Security Act, as added by subsection (a)(5). 
The Secretary may use unannounced site reviews of hos-
pitals and audits to verify compliance with such require-
ments. 
(c) IMPLEMENTATION.— 
(1) FUNDING.—For purposes of carrying out 
the amendments made by subsection (a) and the 
provisions of subsection (b), in addition to funds 
otherwise available, out of any funds in the Treasury 
not otherwise appropriated there are appropriated to 
the Secretary of Health and Human Services for the 
Centers for Medicare & Medicaid Services Program 
Management Account $5,000,000 for each fiscal 
year beginning with fiscal year 2010. Amounts ap-
propriated under this paragraph for a fiscal year 
shall be available until expended. 
(2) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the amend-
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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 
conduct a comprehensive empirical study, and provide rec-
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), 1395ww(d)(3)(E)). 
(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 re-
visions to such data; 
(B) sources of data and the degree to 
which such data are representative of costs; and 
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(C) operational costs of providers who par-
ticipate in Medicare. 
(c) EVALUATION.—Such study shall, within the con-
text of the United States health care marketplace, evalu-
ate and consider the following: 
(1) The effect of the adjustment factors on the 
level and distribution of the health care workforce 
and resources, including— 
(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 pop-
ulation 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 1 year after the date of the enactment of this 
Act, to the Secretary and the Congress a report containing 
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results 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. 
SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO 
ADDRESS GEOGRAPHIC INEQUITIES. 
(a) REVISION OF MEDICARE PAYMENT SYSTEMS.— 
Taking into account the recommendations described in the 
report under section 1157, and notwithstanding the geo-
graphic adjustments that would otherwise apply under sec-
tion 1848(e) and section 1886(d)(3)(E) of the Social Se-
curity 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 pay-
ment systems for physicians’ services and inpatient hos-
pital services under sections 1848 and section 1886(d) of 
such Act, respectively, proposals (as the Secretary deter-
mines to be appropriate) to revise the geographic adjust-
ment factors used in such systems. Such proposals’ rules 
shall be contained in the next rulemaking cycle following 
the submission to the Secretary of the report described 
in section 1157. 
(b) PAYMENT ADJUSTMENTS.— 
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(1) FUNDING FOR IMPROVEMENTS.—For years 
before 2014, the Secretary shall ensure that the ad-
ditional expenditures resulting from the implementa-
tion of the provisions of this section, as estimated by 
the Secretary, do not exceed $8,000,000,000, and do 
not exceed half of such amount in any payment year. 
(2) HOLD
HARMLESS.—In carrying out this 
subsection— 
(A) for payment years before 2014, the 
Secretary shall not reduce the geographic ad-
justment below the factor that applied for such 
payment system in the payment year before 
such changes; and 
(B) for payment years beginning with 
2014, the Secretary shall implement the geo-
graphic adjustment in a manner that does not 
result in any net change in aggregate expendi-
tures under title XVIII of the Social Security 
Act from the amount of such expenditures that 
the Secretary estimates would have occurred if 
no geographic adjustment had occurred under 
this section. 
(c) MEDICARE IMPROVEMENT FUND.— 
(1) Amounts in the Medicare Improvement 
Fund under section 1898 of the Social Security Act, 
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