1261 
‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER-
TAIN DEDUCTIBLE PAYMENTS.— 
‘‘(1) IN GENERAL.—In the case of any deduct-
ible related-party payment, any withholding tax im-
posed under chapter 3 (and any tax imposed under 
subpart A or B of this part) with respect to such 
payment may not be reduced under any treaty of the 
United States unless any such withholding tax would 
be reduced under a treaty of the United States if 
such payment were made directly to the foreign par-
ent corporation. 
‘‘(2) 
DEDUCTIBLE
RELATED-PARTY
PAY-
MENT.—For purposes of this subsection, the term 
‘deductible related-party payment’ means any pay-
ment made, directly or indirectly, by any person to 
any other person if the payment is allowable as a de-
duction under this chapter and both persons are 
members of the same foreign controlled group of en-
tities. 
‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI-
TIES.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘foreign 
controlled group of entities’ means a controlled 
group of entities the common parent of which 
is a foreign corporation. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01261
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1262 
‘‘(B) CONTROLLED GROUP OF ENTITIES.— 
The term ‘controlled group of entities’ means a 
controlled group of corporations as defined in 
section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be 
substituted for ‘at least 80 percent’ each 
place it appears therein, and 
‘‘(ii) the determination shall be made 
without regard to subsections (a)(4) and 
(b)(2) of section 1563. 
A partnership or any other entity (other than a 
corporation) shall be treated as a member of a 
controlled group of entities if such entity is con-
trolled 
(within 
the 
meaning 
of 
section 
954(d)(3)) by members of such group (includ-
ing any entity treated as a member of such 
group by reason of this sentence). 
‘‘(4) FOREIGN
PARENT
CORPORATION.—For 
purposes of this subsection, the term ‘foreign parent 
corporation’ means, with respect to any deductible 
related-party payment, the common parent of the 
foreign controlled group of entities referred to in 
paragraph (3)(A). 
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations or other guidance as are nec-
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01262
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1263 
essary or appropriate to carry out the purposes of 
this subsection, including regulations or other guid-
ance which provide for— 
‘‘(A) the treatment of two or more persons 
as members of a foreign controlled group of en-
tities if such persons would be the common par-
ent of such group if treated as one corporation, 
and 
‘‘(B) the treatment of any member of a 
foreign controlled group of entities as the com-
mon parent of such group if such treatment is 
appropriate taking into account the economic 
relationships among such entities.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to payments made after the date 
of the enactment of this Act. 
SEC. 452. CODIFICATION OF ECONOMIC SUBSTANCE DOC-
TRINE. 
(a) IN GENERAL.—Section 7701 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
(o) as subsection (p) and by inserting after subsection (n) 
the following new subsection: 
‘‘(o) CLARIFICATION
OF
ECONOMIC
SUBSTANCE 
DOCTRINE.— 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01263
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1264 
‘‘(1) APPLICATION OF DOCTRINE.—In the case 
of any transaction to which the economic substance 
doctrine is relevant, such transaction shall be treated 
as having economic substance only if— 
‘‘(A) the transaction changes in a mean-
ingful way (apart from Federal income tax ef-
fects) the taxpayer’s economic position, and 
‘‘(B) the taxpayer has a substantial pur-
pose (apart from Federal income tax effects) 
for entering into such transaction. 
‘‘(2) SPECIAL RULE WHERE TAXPAYER RELIES 
ON PROFIT POTENTIAL.— 
‘‘(A) IN
GENERAL.—The potential for 
profit of a transaction shall be taken into ac-
count in determining whether the requirements 
of subparagraphs (A) and (B) of paragraph (1) 
are met with respect to the transaction only if 
the present value of the reasonably expected 
pre-tax profit from the transaction is substan-
tial in relation to the present value of the ex-
pected net tax benefits that would be allowed if 
the transaction were respected. 
‘‘(B) TREATMENT OF FEES AND FOREIGN 
TAXES.—Fees and other transaction expenses 
and foreign taxes shall be taken into account as 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01264
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1265 
expenses in determining pre-tax profit under 
subparagraph (A). 
‘‘(3) STATE AND LOCAL TAX BENEFITS.—For 
purposes of paragraph (1), any State or local income 
tax effect which is related to a Federal income tax 
effect shall be treated in the same manner as a Fed-
eral income tax effect. 
‘‘(4) FINANCIAL ACCOUNTING BENEFITS.—For 
purposes of paragraph (1)(B), achieving a financial 
accounting benefit shall not be taken into account as 
a purpose for entering into a transaction if the ori-
gin of such financial accounting benefit is a reduc-
tion of Federal income tax. 
‘‘(5) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.— 
The term ‘economic substance doctrine’ means 
the common law doctrine under which tax bene-
fits under subtitle A with respect to a trans-
action are not allowable if the transaction does 
not have economic substance or lacks a business 
purpose. 
‘‘(B) EXCEPTION FOR PERSONAL TRANS-
ACTIONS OF INDIVIDUALS.—In the case of an 
individual, paragraph (1) shall apply only to 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01265
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1266 
transactions entered into in connection with a 
trade or business or an activity engaged in for 
the production of income. 
‘‘(C) OTHER
COMMON
LAW
DOCTRINES 
NOT
AFFECTED.—Except as specifically pro-
vided in this subsection, the provisions of this 
subsection shall not be construed as altering or 
supplanting any other rule of law, and the re-
quirements of this subsection shall be construed 
as being in addition to any such other rule of 
law. 
‘‘(D) DETERMINATION OF APPLICATION OF 
DOCTRINE NOT AFFECTED.—The determination 
of whether the economic substance doctrine is 
relevant to a transaction (or series of trans-
actions) shall be made in the same manner as 
if this subsection had never been enacted. 
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions entered into after 
the date of the enactment of this Act. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01266
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1267 
SEC. 453. PENALTIES FOR UNDERPAYMENTS. 
(a) PENALTY FOR UNDERPAYMENTS ATTRIBUTABLE 
TO TRANSACTIONS LACKING ECONOMIC SUBSTANCE.— 
(1) IN
GENERAL.—Subsection (b) of section 
6662 of the Internal Revenue Code of 1986 is 
amended by inserting after paragraph (5) the fol-
lowing new paragraph: 
‘‘(6) Any disallowance of claimed tax benefits 
by reason of a transaction lacking economic sub-
stance (within the meaning of section 7701(o)) or 
failing to meet the requirements of any similar rule 
of law.’’. 
(2) INCREASED PENALTY FOR NONDISCLOSED 
TRANSACTIONS.—Section 6662 of such Code is 
amended by adding at the end the following new 
subsection: 
‘‘(i) INCREASE IN PENALTY IN CASE OF NONDIS-
CLOSED NONECONOMIC SUBSTANCE TRANSACTIONS.— 
‘‘(1) IN GENERAL.—In the case of any portion 
of an underpayment which is attributable to one or 
more nondisclosed noneconomic substance trans-
actions, subsection (a) shall be applied with respect 
to such portion by substituting ‘40 percent’ for ‘20 
percent’. 
‘‘(2) 
NONDISCLOSED
NONECONOMIC
SUB-
STANCE TRANSACTIONS.—For purposes of this sub-
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01267
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1268 
section, the term ‘nondisclosed noneconomic sub-
stance transaction’ means any portion of a trans-
action described in subsection (b)(6) with respect to 
which the relevant facts affecting the tax treatment 
are not adequately disclosed in the return nor in a 
statement attached to the return. 
‘‘(3) 
SPECIAL
RULE
FOR
AMENDED
RE-
TURNS.—Except as provided in regulations, in no 
event shall any amendment or supplement to a re-
turn of tax be taken into account for purposes of 
this subsection if the amendment or supplement is 
filed after the earlier of the date the taxpayer is first 
contacted by the Secretary regarding the examina-
tion of the return or such other date as is specified 
by the Secretary.’’. 
(3) CONFORMING AMENDMENT.—Subparagraph 
(B) of section 6662A(e)(2) of such Code is amend-
ed— 
(A) by striking ‘‘section 6662(h)’’ and in-
serting ‘‘subsections (h) or (i) of section 6662’’, 
and 
(B) 
by 
striking 
‘‘GROSS
VALUATION 
MISSTATEMENT PENALTY’’ in the heading and 
inserting 
‘‘CERTAIN
INCREASED
UNDER-
PAYMENT PENALTIES’’. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01268
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1269 
(b) REASONABLE CAUSE EXCEPTION NOT APPLICA-
BLE TO NONECONOMIC SUBSTANCE TRANSACTIONS, TAX 
SHELTERS, AND CERTAIN LARGE OR PUBLICLY TRADED 
PERSONS.—Subsection (c) of section 6664 of such Code 
is amended— 
(1) by redesignating paragraphs (2) and (3) as 
paragraphs (3) and (4), respectively, 
(2) by striking ‘‘paragraph (2)’’ in paragraph 
(4), as so redesignated, and inserting ‘‘paragraph 
(3)’’, and 
(3) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply to— 
‘‘(A) to any portion of an underpayment 
which is attributable to one or more tax shelters 
(as defined in section 6662(d)(2)(C)) or trans-
actions described in section 6662(b)(6), and 
‘‘(B) to any taxpayer if such taxpayer is a 
specified 
person 
(as 
defined 
in 
section 
6662(d)(2)(D)(ii)).’’. 
(c) APPLICATION
OF PENALTY
FOR ERRONEOUS 
CLAIM FOR REFUND OR CREDIT TO NONECONOMIC SUB-
STANCE TRANSACTIONS.—Section 6676 of such Code is 
amended by redesignating subsection (c) as subsection (d) 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01269
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1270 
and inserting after subsection (b) the following new sub-
section: 
‘‘(c) NONECONOMIC
SUBSTANCE
TRANSACTIONS 
TREATED AS LACKING REASONABLE BASIS.—For pur-
poses of this section, any excessive amount which is attrib-
utable to any transaction described in section 6662(b)(6) 
shall not be treated as having a reasonable basis.’’. 
(d) SPECIAL UNDERSTATEMENT REDUCTION RULE 
FOR CERTAIN LARGE OR PUBLICLY TRADED PERSONS.— 
(1) IN
GENERAL.—Paragraph (2) of section 
6662(d) of such Code is amended by adding at the 
end the following new subparagraph: 
‘‘(D) SPECIAL REDUCTION RULE FOR CER-
TAIN LARGE OR PUBLICLY TRADED PERSONS.— 
‘‘(i) IN GENERAL.—In the case of any 
specified person— 
‘‘(I) subparagraph (B) shall not 
apply, and 
‘‘(II) the amount of the under-
statement under subparagraph (A) 
shall be reduced by that portion of the 
understatement which is attributable 
to any item with respect to which the 
taxpayer has a reasonable belief that 
the tax treatment of such item by the 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01270
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1271 
taxpayer is more likely than not the 
proper tax treatment of such item. 
‘‘(ii) SPECIFIED
PERSON.—For pur-
poses of this subparagraph, the term ‘spec-
ified person’ means— 
‘‘(I) any person required to file 
periodic or other reports under section 
13 of the Securities Exchange Act of 
1934, and 
‘‘(II) any corporation with gross 
receipts in excess of $100,000,000 for 
the taxable year involved. 
All persons treated as a single employer 
under section 52(a) shall be treated as one 
person for purposes of subclause (II).’’. 
(2) CONFORMING AMENDMENT.—Subparagraph 
(C) of section 6662(d)(2) of such Code is amended 
by striking ‘‘Subparagraph (B)’’ and inserting ‘‘Sub-
paragraphs (B) and (D)(i)(II)’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transactions entered into after 
the date of the enactment of this Act. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01271
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1272 
SUBDIVISION B—MEDICARE AND 
MEDICAID IMPROVEMENTS 
SEC. 1001. TABLE OF CONTENTS OF SUBDIVISION. 
The table of contents for this subdivision is as fol-
lows: 
Sec. 1001. Table of contents of subdivision. 
TITLE I—IMPROVING HEALTH CARE VALUE 
Subtitle A—Provisions Related to Medicare Part A 
PART 1—MARKET BASKET UPDATES 
Sec. 1101. Skilled nursing facility payment update. 
Sec. 1102. Inpatient rehabilitation facility payment update. 
Sec. 1103. Incorporating productivity improvements into market basket updates 
that do not already incorporate such improvements. 
PART 2—OTHER MEDICARE PART A PROVISIONS 
Sec. 1111. Payments to skilled nursing facilities. 
Sec. 1112. Medicare DSH report and payment adjustments in response to cov-
erage expansion. 
Subtitle B—Provisions Related to Part B 
PART 1—PHYSICIANS’ SERVICES 
Sec. 1121. Sustainable growth rate reform. 
Sec. 1122. Misvalued codes under the physician fee schedule. 
Sec. 1123. Payments for efficient areas. 
Sec. 1124. Modifications to the Physician Quality Reporting Initiative (PQRI). 
Sec. 1125. Adjustment to Medicare payment localities. 
PART 2—MARKET BASKET UPDATES 
Sec. 1131. Incorporating productivity improvements into market basket updates 
that do not already incorporate such improvements. 
PART 3—OTHER PROVISIONS 
Sec. 1141. Rental and purchase of power-driven wheelchairs. 
Sec. 1142. Extension of payment rule for brachytherapy. 
Sec. 1143. Home infusion therapy report to congress. 
Sec. 1144. Require ambulatory surgical centers (ASCs) to submit cost data and 
other data. 
Sec. 1145. Treatment of certain cancer hospitals. 
Sec. 1146. Medicare Improvement Fund. 
Sec. 1147. Payment for imaging services. 
Sec. 1148. Durable medical equipment program improvements. 
Sec. 1149. MedPAC study and report on bone mass measurement. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01272
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1273 
Subtitle C—Provisions Related to Medicare Parts A and B 
Sec. 1151. Reducing potentially preventable hospital readmissions. 
Sec. 1152. Post acute care services payment reform plan and bundling pilot 
program. 
Sec. 1153. Home health payment update for 2010. 
Sec. 1154. Payment adjustments for home health care. 
Sec. 1155. Incorporating productivity improvements into market basket update 
for home health services. 
Sec. 1156. Limitation on Medicare exceptions to the prohibition on certain phy-
sician referrals made to hospitals. 
Sec. 1157. Institute of Medicine study of geographic adjustment factors under 
Medicare. 
Sec. 1158. Revision of Medicare payment systems to address geographic inequi-
ties. 
Subtitle D—Medicare Advantage Reforms 
PART 1—PAYMENT AND ADMINISTRATION 
Sec. 1161. Phase-in of payment based on fee-for-service costs. 
Sec. 1162. Quality bonus payments. 
Sec. 1163. Extension of Secretarial coding intensity adjustment authority. 
Sec. 1164. Simplification of annual beneficiary election periods. 
Sec. 1165. Extension of reasonable cost contracts. 
Sec. 1166. Limitation of waiver authority for employer group plans. 
Sec. 1167. Improving risk adjustment for payments. 
Sec. 1168. Elimination of MA Regional Plan Stabilization Fund. 
PART 2—BENEFICIARY PROTECTIONS AND ANTI-FRAUD 
Sec. 1171. Limitation on cost-sharing for individual health services. 
Sec. 1172. Continuous open enrollment for enrollees in plans with enrollment 
suspension. 
Sec. 1173. Information for beneficiaries on MA plan administrative costs. 
Sec. 1174. Strengthening audit authority. 
Sec. 1175. Authority to deny plan bids. 
PART 3—TREATMENT OF SPECIAL NEEDS PLANS 
Sec. 1176. Limitation on enrollment outside open enrollment period of individ-
uals into chronic care specialized MA plans for special needs 
individuals. 
Sec. 1177. Extension of authority of special needs plans to restrict enrollment. 
Subtitle E—Improvements to Medicare Part D 
Sec. 1181. Elimination of coverage gap. 
Sec. 1182. Discounts for certain part D drugs in original coverage gap. 
Sec. 1183. Repeal of provision relating to submission of claims by pharmacies 
located in or contracting with long-term care facilities. 
Sec. 1184. Including costs incurred by AIDS drug assistance programs and In-
dian Health Service in providing prescription drugs toward the 
annual out-of-pocket threshold under part D. 
Sec. 1185. Permitting mid-year changes in enrollment for formulary changes 
that adversely impact an enrollee. 
Subtitle F—Medicare Rural Access Protections 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01273
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1274 
Sec. 1191. Telehealth expansion and enhancements. 
Sec. 1192. Extension of outpatient hold harmless provision. 
Sec. 1193. Extension of section 508 hospital reclassifications. 
Sec. 1194. Extension of geographic floor for work. 
Sec. 1195. Extension of payment for technical component of certain physician 
pathology services. 
Sec. 1196. Extension of ambulance add-ons. 
TITLE J—MEDICARE BENEFICIARY IMPROVEMENTS 
Subtitle A—Improving and Simplifying Financial Assistance for Low Income 
Medicare Beneficiaries 
Sec. 1201. Improving assets tests for Medicare Savings Program and low-in-
come subsidy program. 
Sec. 1202. Elimination of part D cost-sharing for certain non-institutionalized 
full-benefit dual eligible individuals. 
Sec. 1203. Eliminating barriers to enrollment. 
Sec. 1204. Enhanced oversight relating to reimbursements for retroactive low 
income subsidy enrollment. 
Sec. 1205. Intelligent assignment in enrollment. 
Sec. 1206. Special enrollment period and automatic enrollment process for cer-
tain subsidy eligible individuals. 
Sec. 1207. Application of MA premiums prior to rebate in calculation of low 
income subsidy benchmark. 
Subtitle B—Reducing Health Disparities 
Sec. 1221. Ensuring effective communication in Medicare. 
Sec. 1222. Demonstration to promote access for Medicare beneficiaries with 
limited English proficiency by providing reimbursement for cul-
turally and linguistically appropriate services. 
Sec. 1223. IOM report on impact of language access services. 
Sec. 1224. Definitions. 
Subtitle C—Miscellaneous Improvements 
Sec. 1231. Extension of therapy caps exceptions process. 
Sec. 1232. Extended months of coverage of immunosuppressive drugs for kid-
ney transplant patients and other renal dialysis provisions. 
Sec. 1233. Advance care planning consultation. 
Sec. 1234. Part B special enrollment period and waiver of limited enrollment 
penalty for TRICARE beneficiaries. 
Sec. 1235. Exception for use of more recent tax year in case of gains from sale 
of primary residence in computing part B income-related pre-
mium. 
Sec. 1236. Demonstration program on use of patient decisions aids. 
TITLE K—PROMOTING PRIMARY CARE, MENTAL HEALTH 
SERVICES, AND COORDINATED CARE 
Sec. 1301. Accountable Care Organization pilot program. 
Sec. 1302. Medical home pilot program. 
Sec. 1303. Payment incentive for selected primary care services. 
Sec. 1304. Increased reimbursement rate for certified nurse-midwives. 
Sec. 1305. Coverage and waiver of cost-sharing for preventive services. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01274
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1275 
Sec. 1306. Waiver of deductible for colorectal cancer screening tests regardless 
of coding, subsequent diagnosis, or ancillary tissue removal. 
Sec. 1307. Excluding clinical social worker services from coverage under the 
medicare skilled nursing facility prospective payment system 
and consolidated payment. 
Sec. 1308. Coverage of marriage and family therapist services and mental 
health counselor services. 
Sec. 1309. Extension of physician fee schedule mental health add-on. 
Sec. 1310. Expanding access to vaccines. 
TITLE L—QUALITY 
Subtitle A—Comparative Effectiveness Research 
Sec. 1401. Comparative effectiveness research. 
Subtitle B—Nursing Home Transparency 
PART 1—IMPROVING TRANSPARENCY OF INFORMATION ON SKILLED 
NURSING FACILITIES AND NURSING FACILITIES 
Sec. 1411. Required disclosure of ownership and additional disclosable parties 
information. 
Sec. 1412. Accountability requirements. 
Sec. 1413. Nursing home compare Medicare website. 
Sec. 1414. Reporting of expenditures. 
Sec. 1415. Standardized complaint form. 
Sec. 1416. Ensuring staffing accountability. 
PART 2—TARGETING ENFORCEMENT 
Sec. 1421. Civil money penalties. 
Sec. 1422. National independent monitor pilot program. 
Sec. 1423. Notification of facility closure. 
PART 3—IMPROVING STAFF TRAINING 
Sec. 1431. Dementia and abuse prevention training. 
Sec. 1432. Study and report on training required for certified nurse aides and 
supervisory staff. 
Subtitle C—Quality Measurements 
Sec. 1441. Establishment of national priorities for quality improvement. 
Sec. 1442. Development of new quality measures; GAO evaluation of data col-
lection process for quality measurement. 
Sec. 1443. Multi-stakeholder pre-rulemaking input into selection of quality 
measures. 
Sec. 1444. Application of quality measures. 
Sec. 1445. Consensus-based entity funding. 
Subtitle D—Physician Payments Sunshine Provision 
Sec. 1451. Reports on financial relationships between manufacturers and dis-
tributors of covered drugs, devices, biologicals, or medical sup-
plies under Medicare, Medicaid, or CHIP and physicians and 
other health care entities and between physicians and other 
health care entities. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01275
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1276 
Subtitle E—Public Reporting on Health Care-Associated Infections 
Sec. 1461. Requirement for public reporting by hospitals and ambulatory sur-
gical centers on health care-associated infections. 
TITLE M—MEDICARE GRADUATE MEDICAL EDUCATION 
Sec. 1501. Distribution of unused residency positions. 
Sec. 1502. Increasing training in nonprovider settings. 
Sec. 1503. Rules for counting resident time for didactic and scholarly activities 
and other activities. 
Sec. 1504. Preservation of resident cap positions from closed hospitals. 
Sec. 1505. Improving accountability for approved medical residency training. 
TITLE N—PROGRAM INTEGRITY 
Subtitle A—Increased Funding To Fight Waste, Fraud, and Abuse 
Sec. 1601. Increased funding and flexibility to fight fraud and abuse. 
Subtitle B—Enhanced Penalties for Fraud and Abuse 
Sec. 1611. Enhanced penalties for false statements on provider or supplier en-
rollment applications. 
Sec. 1612. Enhanced penalties for submission of false statements material to 
a false claim. 
Sec. 1613. Enhanced penalties for delaying inspections. 
Sec. 1614. Enhanced hospice program safeguards. 
Sec. 1615. Enhanced penalties for individuals excluded from program participa-
tion. 
Sec. 1616. Enhanced penalties for provision of false information by Medicare 
Advantage and part D plans. 
Sec. 1617. Enhanced penalties for Medicare Advantage and part D marketing 
violations. 
Sec. 1618. Enhanced penalties for obstruction of program audits. 
Sec. 1619. Exclusion of certain individuals and entities from participation in 
Medicare and State health care programs. 
Subtitle C—Enhanced Program and Provider Protections 
Sec. 1631. Enhanced CMS program protection authority. 
Sec. 1632. Enhanced Medicare, Medicaid, and CHIP program disclosure re-
quirements relating to previous affiliations. 
Sec. 1633. Required inclusion of payment modifier for certain evaluation and 
management services. 
Sec. 1634. Evaluations and reports required under Medicare Integrity Pro-
gram. 
Sec. 1635. Require providers and suppliers to adopt programs to reduce waste, 
fraud, and abuse. 
Sec. 1636. Maximum period for submission of Medicare claims reduced to not 
more than 12 months. 
Sec. 1637. Physicians who order durable medical equipment or home health 
services required to be Medicare enrolled physicians or eligible 
professionals. 
Sec. 1638. Requirement for physicians to provide documentation on referrals to 
programs at high risk of waste and abuse. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01276
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1277 
Sec. 1639. Face to face encounter with patient required before physicians may 
certify eligibility for home health services or durable medical 
equipment under Medicare. 
Sec. 1640. Extension of testimonial subpoena authority to program exclusion 
investigations. 
Sec. 1641. Required repayments of Medicare and Medicaid overpayments. 
Sec. 1642. Expanded application of hardship waivers for OIG exclusions to 
beneficiaries of any Federal health care program. 
Sec. 1643. Access to certain information on renal dialysis facilities. 
Sec. 1644. Billing agents, clearinghouses, or other alternate payees required to 
register under Medicare. 
Sec. 1645. Conforming civil monetary penalties to False Claims Act amend-
ments. 
Subtitle D—Access to Information Needed To Prevent Fraud, Waste, and 
Abuse 
Sec. 1651. Access to Information Necessary to Identify Fraud, Waste, and 
Abuse. 
Sec. 1652. Elimination of duplication between the Healthcare Integrity and 
Protection Data Bank and the National Practitioner Data 
Bank. 
Sec. 1653. Compliance with HIPAA privacy and security standards. 
TITLE O—MEDICAID AND CHIP 
Subtitle A—Medicaid and Health Reform 
Sec. 1701. Eligibility for individuals with income below 1331⁄3 percent of the 
Federal poverty level. 
Sec. 1702.
Requirements and special rules for certain Medicaid eligible individ-
uals. 
Sec. 1703. CHIP and Medicaid maintenance of effort. 
Sec. 1704. Reduction in Medicaid DSH. 
Sec. 1705. Expanded outstationing. 
Subtitle B—Prevention 
Sec. 1711. Required coverage of preventive services. 
Sec. 1712. Tobacco cessation. 
Sec. 1713. Optional coverage of nurse home visitation services. 
Sec. 1714. State eligibility option for family planning services. 
Subtitle C—Access 
Sec. 1721. Payments to primary care practitioners. 
Sec. 1722. Medical home pilot program. 
Sec. 1723. Translation or interpretation services. 
Sec. 1724. Optional coverage for freestanding birth center services. 
Sec. 1725. Inclusion of public health clinics under the vaccines for children pro-
gram. 
Subtitle D—Coverage 
Sec. 1731. Optional medicaid coverage of low-income HIV-infected individuals. 
Sec. 1732. Extending transitional Medicaid Assistance (TMA). 
Sec. 1733. Requirement of 12-month continuous coverage under certain CHIP 
programs. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01277
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1278 
Subtitle E—Financing 
Sec. 1741. Payments to pharmacists. 
Sec. 1742. Prescription drug rebates. 
Sec. 1743. Extension of prescription drug discounts to enrollees of medicaid 
managed care organizations. 
Sec. 1744. Payments for graduate medical education. 
Subtitle F—Waste, Fraud, and Abuse 
Sec. 1751. Health-care acquired conditions. 
Sec. 1752. Evaluations and reports required under Medicaid Integrity Program. 
Sec. 1753. Require providers and suppliers to adopt programs to reduce waste, 
fraud, and abuse. 
Sec. 1754. Overpayments. 
Sec. 1755. Managed Care Organizations. 
Sec. 1756. Termination of provider participation under Medicaid and CHIP if 
terminated under Medicare or other State plan or child health 
plan. 
Sec. 1757.
Medicaid and CHIP exclusion from participation relating to certain 
ownership, control, and management affiliations. 
Sec. 1758.
Requirement to report expanded set of data elements under MMIS 
to detect fraud and abuse. 
Sec. 1759. Billing agents, clearinghouses, or other alternate payees required to 
register under Medicaid. 
Sec. 1760. Denial of payments for litigation-related misconduct. 
Subtitle G—Puerto Rico and the Territories 
Sec. 1771. Puerto Rico and territories. 
Subtitle H—Miscellaneous 
Sec. 1781. Technical corrections. 
Sec. 1782. Extension of QI program. 
TITLE P—REVENUE-RELATED PROVISIONS 
Sec. 1801. Disclosures to facilitate identification of individuals likely to be ineli-
gible for the low-income assistance under the Medicare pre-
scription drug program to assist Social Security Administra-
tion’s outreach to eligible individuals. 
Sec. 1802. Comparative Effectiveness Research Trust Fund; financing for 
Trust Fund. 
TITLE Q—MISCELLANEOUS PROVISIONS 
Sec. 1901. Repeal of trigger provision. 
Sec. 1902. Repeal of comparative cost adjustment (CCA) program. 
Sec. 1903. Extension of gainsharing demonstration. 
Sec. 1904. Grants to States for quality home visitation programs for families 
with young children and families expecting children. 
Sec. 1905. Improved coordination and protection for dual eligibles. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01278
Fmt 6652
Sfmt 6211
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1279 
TITLE I—IMPROVING HEALTH 
CARE VALUE 
Subtitle A—Provisions Related to 
Medicare Part A 
PART 1—MARKET BASKET UPDATES 
SEC. 1101. SKILLED NURSING FACILITY PAYMENT UPDATE. 
(a) IN GENERAL.—Section 1888(e)(4)(E)(ii) of the 
Social Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is 
amended— 
(1) in subclause (III), by striking ‘‘and’’ at the 
end; 
(2) by redesignating subclause (IV) as sub-
clause (VI); and 
(3) by inserting after subclause (III) the fol-
lowing new subclauses: 
‘‘(IV) for each of fiscal years 
2004 through 2009, the rate com-
puted for the previous fiscal year in-
creased by the skilled nursing facility 
market basket percentage change for 
the fiscal year involved; 
‘‘(V) for fiscal year 2010, the 
rate computed for the previous fiscal 
year; and’’. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01279
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1280 
(b) 
DELAYED
EFFECTIVE
DATE.—Section 
1888(e)(4)(E)(ii)(V) of the Social Security Act, as in-
serted by subsection (a)(3), shall not apply to payment 
for days before January 1, 2010. 
SEC. 1102. INPATIENT REHABILITATION FACILITY PAY-
MENT UPDATE. 
(a) IN GENERAL.—Section 1886(j)(3)(C) of the So-
cial Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended 
by striking ‘‘and 2009’’ and inserting ‘‘through 2010’’. 
(b) DELAYED EFFECTIVE DATE.—The amendment 
made by subsection (a) shall not apply to payment units 
occurring before January 1, 2010. 
SEC. 
1103. 
INCORPORATING 
PRODUCTIVITY 
IMPROVE-
MENTS 
INTO 
MARKET 
BASKET 
UPDATES 
THAT DO NOT ALREADY INCORPORATE SUCH 
IMPROVEMENTS. 
(a) 
INPATIENT
ACUTE
HOSPITALS.—Section 
1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)) is amended— 
(1) in clause (iii)— 
(A) by striking ‘‘(iii) For purposes of this 
subparagraph,’’ and inserting ‘‘(iii)(I) For pur-
poses of this subparagraph, subject to the pro-
ductivity adjustment described in subclause 
(II),’’; and 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01280
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1281 
(B) by adding at the end the following new 
subclause: 
‘‘(II) The productivity adjustment described in this 
subclause, with respect to an increase or change for a fis-
cal year or year or cost reporting period, or other annual 
period, is a productivity offset equal to the percentage 
change in the 10-year moving average of annual economy- 
wide private nonfarm business multi-factor productivity 
(as recently published before the promulgation of such in-
crease for the year or period involved). Except as other-
wise provided, any reference to the increase described in 
this clause shall be a reference to the percentage increase 
described in subclause (I) minus the percentage change 
under this subclause.’’; 
(2) in the first sentence of clause (viii)(I), by 
inserting ‘‘(but not below zero)’’ after ‘‘shall be re-
duced’’; and 
(3) in the first sentence of clause (ix)(I)— 
(A) by inserting ‘‘(determined without re-
gard to clause (iii)(II)’’ after ‘‘clause (i)’’ the 
second time it appears; and 
(B) by inserting ‘‘(but not below zero)’’ 
after ‘‘reduced’’. 
(b) 
SKILLED
NURSING
FACILITIES.—Section 
1888(e)(5)(B) of such Act (42 U.S.C. 1395yy(e)(5)(B)) 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01281
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1282 
is amended by inserting ‘‘subject to the productivity ad-
justment described in section 1886(b)(3)(B)(iii)(II)’’ after 
‘‘as calculated by the Secretary’’. 
(c) 
LONG-TERM
CARE
HOSPITALS.—Section 
1886(m) of the Social Security Act (42 U.S.C. 
1395ww(m)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) PRODUCTIVITY
ADJUSTMENT.—In imple-
menting the system described in paragraph (1) for 
discharges occurring during the rate year ending in 
2010 or any subsequent rate year for a hospital, to 
the extent that an annual percentage increase factor 
applies to a base rate for such discharges for the 
hospital, such factor shall be subject to the produc-
tivity 
adjustment 
described 
in 
section 
1886(b)(3)(B)(iii)(II).’’. 
(d) INPATIENT REHABILITATION FACILITIES.—The 
second sentence of section 1886(j)(3)(C) of the Social Se-
curity Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by in-
serting ‘‘(subject to the productivity adjustment described 
in section 1886(b)(3)(B)(iii)(II))’’ after ‘‘appropriate per-
centage increase’’. 
(e) PSYCHIATRIC HOSPITALS.—Section 1886 of the 
Social Security Act (42 U.S.C. 1395ww) is amended by 
adding at the end the following new subsection: 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01282
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1283 
‘‘(o) PROSPECTIVE
PAYMENT
FOR
PSYCHIATRIC 
HOSPITALS.— 
‘‘(1) REFERENCE TO ESTABLISHMENT AND IM-
PLEMENTATION OF SYSTEM.—For provisions related 
to the establishment and implementation of a pro-
spective payment system for payments under this 
title for inpatient hospital services furnished by psy-
chiatric hospitals (as described in clause (i) of sub-
section (d)(1)(B)) and psychiatric units (as de-
scribed in the matter following clause (v) of such 
subsection), see section 124 of the Medicare, Med-
icaid, and SCHIP Balanced Budget Refinement Act 
of 1999. 
‘‘(2) PRODUCTIVITY
ADJUSTMENT.—In imple-
menting the system described in paragraph (1) for 
discharges occurring during the rate year ending in 
2011 or any subsequent rate year for a psychiatric 
hospital or unit described in such paragraph, to the 
extent that an annual percentage increase factor ap-
plies to a base rate for such discharges for the hos-
pital or unit, respectively, such factor shall be sub-
ject to the productivity adjustment described in sec-
tion 1886(b)(3)(B)(iii)(II).’’. 
(f) HOSPICE CARE.—Subclause (VII) of section 
1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01283
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1284 
1395f(i)(1)(C)(ii)) is amended by inserting after ‘‘the 
market basket percentage increase’’ the following: ‘‘(which 
is subject to the productivity adjustment described in sec-
tion 1886(b)(3)(B)(iii)(II))’’. 
(g) EFFECTIVE DATE.—The amendments made by 
subsections (a), (b), (d), and (f) shall apply to annual in-
creases effected for fiscal years beginning with fiscal year 
2010. 
PART 2—OTHER MEDICARE PART A PROVISIONS 
SEC. 1111. PAYMENTS TO SKILLED NURSING FACILITIES. 
(a) CHANGE IN RECALIBRATION FACTOR.— 
(1) ANALYSIS.—The Secretary of Health and 
Human Services shall conduct, using calendar year 
2006 claims data, an initial analysis comparing total 
payments under title XVIII of the Social Security 
Act for skilled nursing facility services under the 
RUG–53 and under the RUG–44 classification sys-
tems. 
(2) ADJUSTMENT
IN
RECALIBRATION
FAC-
TOR.—Based on the initial analysis under paragraph 
(1), the Secretary shall adjust the case mix indexes 
under section 1888(e)(4)(G)(i) of the Social Security 
Act (42 U.S.C. 1395yy(e)(4)(G)(i)) for fiscal year 
2010 by the appropriate recalibration factor as pro-
posed in the proposed rule for Medicare skilled nurs-
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01284
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1285 
ing facilities issued by such Secretary on May 12, 
2009 (74 Federal Register 22214 et seq.). 
(b) CHANGE IN PAYMENT FOR NONTHERAPY ANCIL-
LARY (NTA) SERVICES AND THERAPY SERVICES.— 
(1) CHANGES
UNDER
CURRENT
SNF
CLASSI-
FICATION SYSTEM.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary of Health and Human 
Services shall, under the system for payment of 
skilled nursing facility services under section 
1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)), increase payment by 10 percent for 
non-therapy ancillary services (as specified by 
the Secretary in the notice issued on November 
27, 1998 (63 Federal Register 65561 et seq.)) 
and shall decrease payment for the therapy case 
mix component of such rates by 5.5 percent. 
(B) EFFECTIVE
DATE.—The changes in 
payment described in subparagraph (A) shall 
apply for days on or after January 1, 2010, 
and until the Secretary implements an alter-
native case mix classification system for pay-
ment of skilled nursing facility services under 
section 1888(e) of the Social Security Act (42 
U.S.C. 1395yy(e)). 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01285
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1286 
(C) IMPLEMENTATION.—Notwithstanding 
any other provision of law, the Secretary may 
implement by program instruction or otherwise 
the provisions of this paragraph. 
(2) CHANGES UNDER A FUTURE SNF CASE MIX 
CLASSIFICATION SYSTEM.— 
(A) ANALYSIS.— 
(i) IN
GENERAL.—The Secretary of 
Health and Human Services shall analyze 
payments for non-therapy ancillary services 
under a future skilled nursing facility clas-
sification system to ensure the accuracy of 
payment for non-therapy ancillary services. 
Such analysis shall consider use of appro-
priate indicators which may include age, 
physical and mental status, ability to per-
form activities of daily living, prior nursing 
home stay, broad RUG category, and a 
proxy for length of stay. 
(ii) 
APPLICATION.—Such 
analysis 
shall be conducted in a manner such that 
the future skilled nursing facility classifica-
tion system is implemented to apply to 
services furnished during a fiscal year be-
ginning with fiscal year 2011. 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01286
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1287 
(B) CONSULTATION.—In conducting the 
analysis under subparagraph (A), the Secretary 
shall consult with interested parties, including 
the Medicare Payment Advisory Commission 
and other interested stakeholders, to identify 
appropriate predictors of nontherapy ancillary 
costs. 
(C) RULEMAKING.—The Secretary shall 
include the result of the analysis under sub-
paragraph (A) in the fiscal year 2011 rule-
making cycle for purposes of implementation 
beginning for such fiscal year. 
(D) IMPLEMENTATION.—Subject to sub-
paragraph (E) and consistent with subpara-
graph (A)(ii), the Secretary shall implement 
changes to payments for non-therapy ancillary 
services (which may include a separate rate 
component for non-therapy ancillary services 
and may include use of a model that predicts 
payment amounts applicable for non-therapy 
ancillary services) under such future skilled 
nursing facility services classification system as 
the Secretary determines appropriate based on 
the analysis conducted pursuant to subpara-
graph (A). 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01287
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS
1300 
‘‘(i) APPLICATION OF SEPARATE UP-
DATE ADJUSTMENTS FOR EACH SERVICE 
CATEGORY.—Pursuant 
to 
paragraph 
(1)(A)(ii)(I), the update shall be made to 
the conversion factor for each service cat-
egory (as defined in subsection (j)(5)) 
based upon an update adjustment factor 
for the respective category and year and 
the update adjustment factor shall be com-
puted, for a year, separately for each serv-
ice category. 
‘‘(ii) COMPUTATION OF ALLOWED AND 
ACTUAL EXPENDITURES BASED ON SERV-
ICE CATEGORIES.—In computing the prior 
year adjustment component and the cumu-
lative adjustment component under clauses 
(i) and (ii) of paragraph (4)(B), the fol-
lowing rules apply: 
‘‘(I) APPLICATION
BASED
ON 
SERVICE
CATEGORIES.—The allowed 
expenditures and actual expenditures 
shall be the allowed and actual ex-
penditures for the service category, as 
determined under subparagraph (B). 
VerDate Nov 24 2008 
23:53 Mar 17, 2010
Jkt 089200
PO 00000
Frm 01300
Fmt 6652
Sfmt 6201
E:\BILLS\H4872.RH
H4872
dcolon on DSK2BSOYB1PROD with BILLS