H. R. 3590—340 
for a limited period of time for individuals enrolled under 
a specialized MA plan for special needs individuals 
described in subsection (b)(6)(B)(ii) who are no longer 
eligible for medical assistance under title XIX. 
‘‘(D) TIMELINE FOR INITIAL TRANSITION.—The Secretary 
shall ensure that applicable individuals enrolled in a 
specialized MA plan for special needs individuals (as 
defined in subsection (b)(6)) prior to January 1, 2010, are 
transitioned to a plan or the program described in subpara-
graph (A) by not later than January 1, 2013.’’. 
(d) TEMPORARY EXTENSION
OF AUTHORITY TO OPERATE
BUT 
NO SERVICE AREA EXPANSION FOR DUAL SPECIAL NEEDS PLANS 
THAT DO NOT MEET CERTAIN REQUIREMENTS.—Section 164(c)(2) 
of the Medicare Improvements for Patients and Providers Act of 
2008 (Public Law 110–275) is amended by striking ‘‘December 31, 
2010’’ and inserting ‘‘December 31, 2012’’. 
(e) AUTHORITY TO REQUIRE SPECIAL NEEDS PLANS BE NCQA 
APPROVED.—Section 1859(f) of the Social Security Act (42 U.S.C. 
1395w–28(f)), as amended by subsections (a) and (c), is amended— 
(1) in paragraph (2), by adding at the end the following 
new subparagraph: 
‘‘(C) If applicable, the plan meets the requirement 
described in paragraph (7).’’; 
(2) in paragraph (3), by adding at the end the following 
new subparagraph: 
‘‘(E) If applicable, the plan meets the requirement 
described in paragraph (7).’’; 
(3) in paragraph (4), by adding at the end the following 
new subparagraph: 
‘‘(C) If applicable, the plan meets the requirement 
described in paragraph (7).’’; and 
(4) by adding at the end the following new paragraph: 
‘‘(7) AUTHORITY TO REQUIRE SPECIAL NEEDS PLANS BE NCQA 
APPROVED.—For 2012 and subsequent years, the Secretary shall 
require that a Medicare Advantage organization offering a 
specialized MA plan for special needs individuals be approved 
by the National Committee for Quality Assurance (based on 
standards established by the Secretary).’’. 
(f) RISK ADJUSTMENT.—Section 1853(a)(1)(C) of the Social Secu-
rity Act (42 U.S.C. 1395i–23(a)(1)(C)) is amended by adding at 
the end the following new clause: 
‘‘(iii) IMPROVEMENTS TO RISK ADJUSTMENT FOR SPE-
CIAL NEEDS INDIVIDUALS WITH CHRONIC HEALTH CONDI-
TIONS.— 
‘‘(I) IN GENERAL.—For 2011 and subsequent 
years, for purposes of the adjustment under clause 
(i) with respect to individuals described in sub-
clause (II), the Secretary shall use a risk score 
that reflects the known underlying risk profile and 
chronic health status of similar individuals. Such 
risk score shall be used instead of the default 
risk score for new enrollees in Medicare Advantage 
plans that are not specialized MA plans for special 
needs individuals (as defined in section 1859(b)(6)). 
‘‘(II) INDIVIDUALS DESCRIBED.—An individual 
described in this subclause is a special needs indi-
vidual described in subsection (b)(6)(B)(iii) who
H. R. 3590—341 
enrolls in a specialized MA plan for special needs 
individuals on or after January 1, 2011. 
‘‘(III) EVALUATION.—For 2011 and periodically 
thereafter, the Secretary shall evaluate and revise 
the risk adjustment system under this subpara-
graph in order to, as accurately as possible, 
account for higher medical and care coordination 
costs associated with frailty, individuals with mul-
tiple, comorbid chronic conditions, and individuals 
with a diagnosis of mental illness, and also to 
account for costs that may be associated with 
higher concentrations of beneficiaries with those 
conditions. 
‘‘(IV) PUBLICATION OF EVALUATION AND REVI-
SIONS.—The Secretary shall publish, as part of 
an announcement under subsection (b), a descrip-
tion of any evaluation conducted under subclause 
(III) during the preceding year and any revisions 
made under such subclause as a result of such 
evaluation.’’. 
(g) TECHNICAL CORRECTION.—Section 1859(f)(5) of the Social 
Security Act (42 U.S.C. 1395w–28(f)(5)) is amended, in the matter 
preceding subparagraph (A), by striking ‘‘described in subsection 
(b)(6)(B)(i)’’. 
SEC. 3206. EXTENSION OF REASONABLE COST CONTRACTS. 
Section 1876(h)(5)(C)(ii) of the Social Security Act (42 U.S.C. 
1395mm(h)(5)(C)(ii)) is amended, in the matter preceding subclause 
(I), by striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 2013’’. 
SEC. 3207. TECHNICAL CORRECTION TO MA PRIVATE FEE-FOR- 
SERVICE PLANS. 
For plan year 2011 and subsequent plan years, to the extent 
that the Secretary of Health and Human Services is applying the 
2008 service area extension waiver policy (as modified in the April 
11, 2008, Centers for Medicare & Medicaid Services’ memorandum 
with the subject ‘‘2009 Employer Group Waiver-Modification of the 
2008 Service Area Extension Waiver Granted to Certain MA Local 
Coordinated Care Plans’’) to Medicare Advantage coordinated care 
plans, the Secretary shall extend the application of such waiver 
policy to employers who contract directly with the Secretary as 
a Medicare Advantage private fee-for-service plan under section 
1857(i)(2) of the Social Security Act (42 U.S.C. 1395w–27(i)(2)) 
and that had enrollment as of October 1, 2009. 
SEC. 3208. MAKING SENIOR HOUSING FACILITY DEMONSTRATION 
PERMANENT. 
(a) IN GENERAL.—Section 1859 of the Social Security Act (42 
U.S.C. 1395w–28) is amended by adding at the end the following 
new subsection: 
‘‘(g) SPECIAL RULES FOR SENIOR HOUSING FACILITY PLANS.— 
‘‘(1) IN GENERAL.—In the case of a Medicare Advantage 
senior housing facility plan described in paragraph (2), notwith-
standing any other provision of this part to the contrary and 
in accordance with regulations of the Secretary, the service 
area of such plan may be limited to a senior housing facility 
in a geographic area.
H. R. 3590—342 
‘‘(2) MEDICARE ADVANTAGE SENIOR HOUSING FACILITY PLAN 
DESCRIBED.—For purposes of this subsection, a Medicare 
Advantage senior housing facility plan is a Medicare Advantage 
plan that— 
‘‘(A) restricts enrollment of individuals under this part 
to individuals who reside in a continuing care retirement 
community (as defined in section 1852(l)(4)(B)); 
‘‘(B) provides primary care services onsite and has 
a ratio of accessible physicians to beneficiaries that the 
Secretary determines is adequate; 
‘‘(C) provides transportation services for beneficiaries 
to specialty providers outside of the facility; and 
‘‘(D) has participated (as of December 31, 2009) in 
a demonstration project established by the Secretary under 
which such a plan was offered for not less than 1 year.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall take effect on January 1, 2010, and shall apply to plan 
years beginning on or after such date. 
SEC. 3209. AUTHORITY TO DENY PLAN BIDS. 
(a) IN GENERAL.—Section 1854(a)(5) of the Social Security Act 
(42 U.S.C. 1395w–24(a)(5)) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) REJECTION OF BIDS.— 
‘‘(i) IN GENERAL.—Nothing in this section shall be 
construed as requiring the Secretary to accept any 
or every bid submitted by an MA organization under 
this subsection. 
‘‘(ii) AUTHORITY
TO
DENY
BIDS
THAT
PROPOSE 
SIGNIFICANT INCREASES IN COST SHARING OR DECREASES 
IN BENEFITS.—The Secretary may deny a bid submitted 
by an MA organization for an MA plan if it proposes 
significant increases in cost sharing or decreases in 
benefits offered under the plan.’’. 
(b) APPLICATION UNDER PART D.—Section 1860D–11(d) of such 
Act (42 U.S.C. 1395w–111(d)) is amended by adding at the end 
the following new paragraph: 
‘‘(3) REJECTION
OF
BIDS.—Paragraph (5)(C) of section 
1854(a) shall apply with respect to bids submitted by a PDP 
sponsor under subsection (b) in the same manner as such 
paragraph applies to bids submitted by an MA organization 
under such section 1854(a).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to bids submitted for contract years beginning on or 
after January 1, 2011. 
SEC. 3210. DEVELOPMENT OF NEW STANDARDS FOR CERTAIN 
MEDIGAP PLANS. 
(a) IN GENERAL.—Section 1882 of the Social Security Act (42 
U.S.C. 1395ss) is amended by adding at the end the following 
new subsection: 
‘‘(y) DEVELOPMENT OF NEW STANDARDS FOR CERTAIN MEDICARE 
SUPPLEMENTAL POLICIES.— 
‘‘(1) IN GENERAL.—The Secretary shall request the National 
Association of Insurance Commissioners to review and revise 
the standards for benefit packages described in paragraph (2) 
under subsection (p)(1), to otherwise update standards to 
include requirements for nominal cost sharing to encourage
H. R. 3590—343 
the use of appropriate physicians’ services under part B. Such 
revisions shall be based on evidence published in peer-reviewed 
journals or current examples used by integrated delivery sys-
tems and made consistent with the rules applicable under 
subsection (p)(1)(E) with the reference to the ‘1991 NAIC Model 
Regulation’ deemed a reference to the NAIC Model Regulation 
as published in the Federal Register on December 4, 1998, 
and as subsequently updated by the National Association of 
Insurance Commissioners to reflect previous changes in law 
and the reference to ‘date of enactment of this subsection’ 
deemed a reference to the date of enactment of the Patient 
Protection and Affordable Care Act. To the extent practicable, 
such revision shall provide for the implementation of revised 
standards for benefit packages as of January 1, 2015. 
‘‘(2) BENEFIT PACKAGES DESCRIBED.—The benefit packages 
described in this paragraph are benefit packages classified as 
‘C’ and ‘F’.’’. 
(b) CONFORMING AMENDMENT.—Section 1882(o)(1) of the Social 
Security Act (42 U.S.C. 1395ss(o)(1)) is amended by striking ‘‘, 
and (w)’’ and inserting ‘‘(w), and (y)’’. 
Subtitle D—Medicare Part D Improve-
ments for Prescription Drug Plans and 
MA–PD Plans 
SEC. 3301. MEDICARE COVERAGE GAP DISCOUNT PROGRAM. 
(a) CONDITION FOR COVERAGE OF DRUGS UNDER PART D.— 
Part D of Title XVIII of the Social Security Act (42 U.S.C. 1395w– 
101 et seq.), is amended by adding at the end the following new 
section: 
‘‘CONDITION FOR COVERAGE OF DRUGS UNDER THIS PART 
‘‘SEC. 1860D–43. (a) IN GENERAL.—In order for coverage to 
be available under this part for covered part D drugs (as defined 
in section 1860D–2(e)) of a manufacturer, the manufacturer must— 
‘‘(1) participate in the Medicare coverage gap discount pro-
gram under section 1860D–14A; 
‘‘(2) have entered into and have in effect an agreement 
described in subsection (b) of such section with the Secretary; 
and 
‘‘(3) have entered into and have in effect, under terms 
and conditions specified by the Secretary, a contract with a 
third party that the Secretary has entered into a contract 
with under subsection (d)(3) of such section. 
‘‘(b) EFFECTIVE DATE.—Subsection (a) shall apply to covered 
part D drugs dispensed under this part on or after July 1, 2010. 
‘‘(c) AUTHORIZING COVERAGE FOR DRUGS NOT COVERED UNDER 
AGREEMENTS.—Subsection (a) shall not apply to the dispensing 
of a covered part D drug if— 
‘‘(1) the Secretary has made a determination that the avail-
ability of the drug is essential to the health of beneficiaries 
under this part; or