H. R. 3590—308 
(1) in subsection (d)(4)(B)(i)(3), by striking subclause (III); 
and 
(2) in subsection (j)— 
(A) in paragraph (8), by striking subparagraph (B) 
and inserting the following: 
‘‘(B) Physicians’ services (as defined in section 1861(q) 
of the Social Security Act (42 U.S.C. 1395x(q)).’’; 
(B) by striking paragraph (9); and 
(C) by redesignating paragraph (10) as paragraph (9). 
SEC. 3127. MEDPAC STUDY ON ADEQUACY OF MEDICARE PAYMENTS 
FOR HEALTH CARE PROVIDERS SERVING IN RURAL 
AREAS. 
(a) STUDY.—The Medicare Payment Advisory Commission shall 
conduct a study on the adequacy of payments for items and services 
furnished by providers of services and suppliers in rural areas 
under the Medicare program under title XVIII of the Social Security 
Act (42 U.S.C. 1395 et seq.). Such study shall include an analysis 
of— 
(1) any adjustments in payments to providers of services 
and suppliers that furnish items and services in rural areas; 
(2) access by Medicare beneficiaries to items and services 
in rural areas; 
(3) the adequacy of payments to providers of services and 
suppliers that furnish items and services in rural areas; and 
(4) the quality of care furnished in rural areas. 
(b) REPORT.—Not later than January 1, 2011, the Medicare 
Payment Advisory Commission shall submit to Congress a report 
containing the results of the study conducted under subsection 
(a). Such report shall include recommendations on appropriate modi-
fications to any adjustments in payments to providers of services 
and suppliers that furnish items and services in rural areas, 
together with recommendations for such legislation and administra-
tive action as the Medicare Payment Advisory Commission deter-
mines appropriate. 
SEC. 3128. TECHNICAL CORRECTION RELATED TO CRITICAL ACCESS 
HOSPITAL SERVICES. 
(a) IN GENERAL.—Subsections (g)(2)(A) and (l)(8) of section 1834 
of the Social Security Act (42 U.S.C. 1395m) are each amended 
by inserting ‘‘101 percent of’’ before ‘‘the reasonable costs’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall take effect as if included in the enactment of section 
405(a) of the Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173; 117 Stat. 2266). 
SEC. 3129. EXTENSION OF AND REVISIONS TO MEDICARE RURAL HOS-
PITAL FLEXIBILITY PROGRAM. 
(a) AUTHORIZATION.—Section 1820(j) of the Social Security Act 
(42 U.S.C. 1395i–4(j)) is amended— 
(1) by striking ‘‘2010, and for’’ and inserting ‘‘2010, for’’; 
and 
(2) by inserting ‘‘and for making grants to all States under 
subsection (g), such sums as may be necessary in each of 
fiscal years 2011 and 2012, to remain available until expended’’ 
before the period at the end. 
(b) USE OF FUNDS.—Section 1820(g)(3) of the Social Security 
Act (42 U.S.C. 1395i–4(g)(3)) is amended—
H. R. 3590—309 
(1) in subparagraph (A), by inserting ‘‘and to assist such 
hospitals in participating in delivery system reforms under 
the provisions of and amendments made by the Patient Protec-
tion and Affordable Care Act, such as value-based purchasing 
programs, accountable care organizations under section 1899, 
the National pilot program on payment bundling under section 
1866D, and other delivery system reform programs determined 
appropriate by the Secretary’’ before the period at the end; 
and 
(2) in subparagraph (E)— 
(A) by striking ‘‘, and to offset’’ and inserting ‘‘, to 
offset’’; and 
(B) by inserting ‘‘and to participate in delivery system 
reforms under the provisions of and amendments made 
by the Patient Protection and Affordable Care Act, such 
as value-based purchasing programs, accountable care 
organizations under section 1899, the National pilot pro-
gram on payment bundling under section 1866D, and other 
delivery system reform programs determined appropriate 
by the Secretary’’ before the period at the end. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to grants made on or after January 1, 2010. 
PART III—IMPROVING PAYMENT ACCURACY 
SEC. 3131. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE. 
(a) REBASING HOME HEALTH PROSPECTIVE PAYMENT AMOUNT.— 
(1) IN GENERAL.—Section 1895(b)(3)(A) of the Social Secu-
rity Act (42 U.S.C. 1395fff(b)(3)(A)) is amended— 
(A) in clause (i)(III), by striking ‘‘For periods’’ and 
inserting ‘‘Subject to clause (iii), for periods’’; and 
(B) by adding at the end the following new clause: 
‘‘(iii) ADJUSTMENT
FOR
2013
AND
SUBSEQUENT 
YEARS.— 
‘‘(I) IN
GENERAL.—Subject to subclause (II), 
for 2013 and subsequent years, the amount (or 
amounts) that would otherwise be applicable under 
clause (i)(III) shall be adjusted by a percentage 
determined appropriate by the Secretary to reflect 
such factors as changes in the number of visits 
in an episode, the mix of services in an episode, 
the level of intensity of services in an episode, 
the average cost of providing care per episode, 
and other factors that the Secretary considers to 
be relevant. In conducting the analysis under the 
preceding sentence, the Secretary may consider 
differences 
between 
hospital-based 
and 
free-
standing agencies, between for-profit and nonprofit 
agencies, and between the resource costs of urban 
and rural agencies. Such adjustment shall be made 
before the update under subparagraph (B) is 
applied for the year. 
‘‘(II) TRANSITION.—The Secretary shall provide 
for a 4-year phase-in (in equal increments) of the 
adjustment under subclause (I), with such adjust-
ment being fully implemented for 2016. During 
each year of such phase-in, the amount of any
H. R. 3590—310 
adjustment under subclause (I) for the year may 
not exceed 3.5 percent of the amount (or amounts) 
applicable under clause (i)(III) as of the date of 
enactment of the Patient Protection and Affordable 
Care Act.’’. 
(2) MEDPAC STUDY AND REPORT.— 
(A) STUDY.—The Medicare Payment Advisory Commis-
sion shall conduct a study on the implementation of the 
amendments made by paragraph (1). Such study shall 
include an analysis of the impact of such amendments 
on— 
(i) access to care; 
(ii) quality outcomes; 
(iii) the number of home health agencies; and 
(iv) rural agencies, urban agencies, for-profit agen-
cies, and nonprofit agencies. 
(B) REPORT.—Not later than January 1, 2015, the 
Medicare Payment Advisory Commission shall submit to 
Congress a report on the study conducted under subpara-
graph (A), together with recommendations for such legisla-
tion and administrative action as the Commission deter-
mines appropriate. 
(b) PROGRAM-SPECIFIC OUTLIER CAP.—Section 1895(b) of the 
Social Security Act (42 U.S.C. 1395fff(b)) is amended— 
(1) in paragraph (3)(C), by striking ‘‘the aggregate’’ and 
all that follows through the period at the end and inserting 
‘‘5 percent of the total payments estimated to be made based 
on the prospective payment system under this subsection for 
the period.’’; and 
(2) in paragraph (5)— 
(A) by striking ‘‘OUTLIERS.—The Secretary’’ and 
inserting the following: ‘‘OUTLIERS.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (B), the 
Secretary’’; 
(B) in subparagraph (A), as added by subparagraph 
(A), by striking ‘‘5 percent’’ and inserting ‘‘2.5 percent’’; 
and 
(C) by adding at the end the following new subpara-
graph: 
‘‘(B) PROGRAM SPECIFIC OUTLIER CAP.—The estimated 
total amount of additional payments or payment adjust-
ments made under subparagraph (A) with respect to a 
home health agency for a year (beginning with 2011) may 
not exceed an amount equal to 10 percent of the estimated 
total amount of payments made under this section (without 
regard to this paragraph) with respect to the home health 
agency for the year.’’. 
(c) APPLICATION OF THE MEDICARE RURAL HOME HEALTH ADD- 
ON
POLICY.—Section 421 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 108– 
173; 117 Stat. 2283), as amended by section 5201(b) of the Deficit 
Reduction Act of 2005 (Public Law 109–171; 120 Stat. 46), is 
amended— 
(1) in the section heading, by striking ‘‘ONE-YEAR’’ and 
inserting ‘‘TEMPORARY’’; and 
(2) in subsection (a)—
H. R. 3590—311 
(A) by striking ‘‘, and episodes’’ and inserting ‘‘, epi-
sodes’’; 
(B) by inserting ‘‘and episodes and visits ending on 
or after April 1, 2010, and before January 1, 2016,’’ after 
‘‘January 1, 2007,’’; and 
(C) by inserting ‘‘(or, in the case of episodes and visits 
ending on or after April 1, 2010, and before January 1, 
2016, 3 percent)’’ before the period at the end. 
(d) STUDY AND REPORT ON THE DEVELOPMENT OF HOME HEALTH 
PAYMENT REFORMS IN ORDER TO ENSURE ACCESS TO CARE AND 
QUALITY SERVICES.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services (in this section referred to as the ‘‘Secretary’’) shall 
conduct a study to evaluate the costs and quality of care among 
efficient home health agencies relative to other such agencies 
in providing ongoing access to care and in treating Medicare 
beneficiaries with varying severity levels of illness. Such study 
shall include an analysis of the following: 
(A) Methods to revise the home health prospective 
payment system under section 1895 of the Social Security 
Act (42 U.S.C. 1395fff) to more accurately account for the 
costs related to patient severity of illness or to improving 
beneficiary access to care, including— 
(i) payment adjustments for services that may be 
under- or over-valued; 
(ii) necessary changes to reflect the resource use 
relative to providing home health services to low- 
income Medicare beneficiaries or Medicare bene-
ficiaries living in medically underserved areas; 
(iii) ways the outlier payment may be improved 
to more accurately reflect the cost of treating Medicare 
beneficiaries with high severity levels of illness; 
(iv) the role of quality of care incentives and pen-
alties in driving provider and patient behavior; 
(v) improvements in the application of a wage 
index; and 
(vi) other areas determined appropriate by the Sec-
retary. 
(B) The validity and reliability of responses on the 
OASIS instrument with particular emphasis on questions 
that relate to higher payment under the home health 
prospective payment system and higher outcome scores 
under Home Care Compare. 
(C) Additional research or payment revisions under 
the home health prospective payment system that may 
be necessary to set the payment rates for home health 
services based on costs of high-quality and efficient home 
health agencies or to improve Medicare beneficiary access 
to care. 
(D) A timetable for implementation of any appropriate 
changes based on the analysis of the matters described 
in subparagraphs (A), (B), and (C). 
(E) Other areas determined appropriate by the Sec-
retary. 
(2) CONSIDERATIONS.—In conducting the study under para-
graph (1), the Secretary shall consider whether certain factors