I 
112TH CONGRESS 
2D SESSION 
H. R. 5624 
To amend title XVIII of the Social Security Act to protect and preserve 
access of Medicare beneficiaries in rural areas to health care providers 
under the Medicare program, to amend title III of the Public Health 
Service Act to extend discounts under the 340B program, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 8, 2012 
Mrs. MCMORRIS RODGERS introduced the following bill; which was referred 
to the Committee on Energy and Commerce, and in addition to the Com-
mittee on Ways and Means, for a period to be subsequently determined 
by the Speaker, in each case for consideration of such provisions as fall 
within the jurisdiction of the committee concerned 
A BILL 
To amend title XVIII of the Social Security Act to protect 
and preserve access of Medicare beneficiaries in rural 
areas to health care providers under the Medicare pro-
gram, to amend title III of the Public Health Service 
Act to extend discounts under the 340B program, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Rural Hospital and Provider Equity and 340B Improve-
ment Act of 2012’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—RURAL HOSPITAL AND PROVIDER EQUITY 
Sec. 101. Sense of the Congress. 
Sec. 102. Fairness in the Medicare disproportionate share hospital (DSH) ad-
justment for rural hospitals. 
Sec. 103. Extension and expansion of the Medicare hold harmless provision 
under the prospective payment system for hospital outpatient 
department (HOPD) services for certain hospitals. 
Sec. 104. Temporary improvements to the Medicare inpatient hospital payment 
adjustment for low-volume hospitals. 
Sec. 105. Extension of Medicare wage index reclassifications for certain hos-
pitals. 
Sec. 106. Extension of Medicare reasonable costs payments for certain clinical 
diagnostic laboratory tests furnished to hospital patients in cer-
tain rural areas. 
Sec. 107. Elimination of isolation test for cost-based ambulance reimbursement 
for critical access hospitals. 
Sec. 108. Extension of Medicare incentive payment program for physician scar-
city areas. 
Sec. 109. Extension of floor on Medicare work geographic adjustment. 
Sec. 110. Improving care planning for Medicare home health services. 
Sec. 111. Rural health clinic improvements. 
Sec. 112. Temporary Medicare payment increase for home health services fur-
nished in a rural area. 
Sec. 113. Extension of increased Medicare payments for rural ground ambu-
lance services. 
Sec. 114. Extension of payment for technical component of certain physician 
pathology services. 
Sec. 115. Facilitating the provision of telehealth services across State lines. 
Sec. 116. Medicare Part A payment for anesthesiologist services in certain 
rural hospitals based on CRNA pass-through rules. 
Sec. 117. Temporary floor on the practice expense geographic index for services 
furnished in rural areas outside of frontier States under the 
Medicare physician fee schedule. 
Sec. 118. Revisions to standard for designation of sole community hospitals. 
Sec. 119. State offices of rural health. 
Sec. 120. Ensuring proportional representation of interests of rural areas on 
MEDPAC. 
TITLE II—340B PROGRAM IMPROVEMENT 
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Sec. 201. Extension of discounts to inpatient drugs. 
Sec. 202. Prohibition against duplicate discounts for physician administered 
drugs. 
Sec. 203. Continued inclusion of orphan drugs in definition of covered out-
patient drugs; technical amendment. 
Sec. 204. Application of rules for determining provider-based status for certain 
entities. 
TITLE I—RURAL HOSPITAL AND 
PROVIDER EQUITY 
SEC. 101. SENSE OF THE CONGRESS. 
It is the sense of the Congress that— 
(1) residents of rural and frontier communities 
should have access to affordable, quality health care; 
(2) rural and frontier communities face unique 
challenges in health care delivery and financing; 
(3) Federal health policy must reflect the 
unique needs of residents of rural and frontier com-
munities and such communities in an equitable and 
sustainable manner; and 
(4) stakeholders should work collectively to 
identify innovative policies that address the avail-
ability, delivery, and affordability of health care 
services in rural and frontier communities. 
SEC. 
102. 
FAIRNESS 
IN 
THE 
MEDICARE 
DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) ADJUST-
MENT FOR RURAL HOSPITALS. 
Section 1886(d)(5)(F)(xiv)(II) of the Social Security 
Act (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended by 
adding at the end the following new sentence: ‘‘The pre-
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ceding sentence shall not apply to any hospital with re-
spect to discharges occurring on or after October 1, 2011, 
and before October 1, 2012.’’. 
SEC. 103. EXTENSION AND EXPANSION OF THE MEDICARE 
HOLD HARMLESS PROVISION UNDER THE 
PROSPECTIVE PAYMENT SYSTEM FOR HOS-
PITAL OUTPATIENT DEPARTMENT (HOPD) 
SERVICES FOR CERTAIN HOSPITALS. 
Section 1833(t)(7)(D)(i) of the Social Security Act 
(42 U.S.C. 1395l(t)(7)(D)(i)) is amended— 
(1) in subclause (II)— 
(A) in the first sentence, by striking 
‘‘March 1, 2012’’ and inserting ‘‘January 1, 
2013’’; and 
(B) in the second sentence— 
(i) by striking ‘‘and 85’’ and inserting 
‘‘85’’; and 
(ii) by inserting the following before 
the period at the end: ‘‘, and 100 percent 
with respect to such services furnished in 
the last 10 months of 2012’’; and 
(2) in subclause (III)— 
(A) in the first sentence— 
(i) by striking ‘‘2009, and before 
March 1, 2012, for which’’ and inserting 
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‘‘2009, and before January 1, 2013, for 
which’’; and 
(ii) by striking ‘‘85 percent’’ and in-
serting ‘‘the applicable percentage (as de-
termined under the second sentence of sub-
clause (II) for the year)’’; and 
(B) in the second sentence, by striking 
‘‘2010, and before March 1, 2012, the pre-
ceding’’ and inserting ‘‘2010, and before Janu-
ary 1, 2013, the preceding’’. 
SEC. 104. TEMPORARY IMPROVEMENTS TO THE MEDICARE 
INPATIENT 
HOSPITAL 
PAYMENT 
ADJUST-
MENT FOR LOW-VOLUME HOSPITALS. 
Section 1886(d)(12) of the Social Security Act (42 
U.S.C. 1395ww(d)(12)) is amended— 
(1) in subparagraph (C)(i), by inserting ‘‘and 
2,000 discharges, respectively,’’ after ‘‘1,600 dis-
charges’’; and 
(2) in subparagraph (D)— 
(A) by striking ‘‘1,600’’ and inserting ‘‘the 
applicable number of’’; and 
(B) by adding at the end the following new 
sentence: ‘‘For purposes of the preceding sen-
tence, the term ‘applicable number of dis-
charges’ means 1,600 discharges with respect to 
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discharges occurring in fiscal year 2011 and 
2,000 discharges with respect to discharges oc-
curring in fiscal year 2012’’. 
SEC. 105. EXTENSION OF MEDICARE WAGE INDEX RECLAS-
SIFICATIONS FOR CERTAIN HOSPITALS. 
(a) EXTENSION OF CORRECTION OF MID-YEAR RE-
CLASSIFICATION
EXPIRATION
FOR
CERTAIN
HOS-
PITALS.— 
(1) IN GENERAL.—In the case of a hospital de-
scribed in paragraph (2), the Secretary of Health 
and Human Services shall apply subsection (a) of 
section 106 of division B of the Tax Relief and 
Health Care Act of 2006 (42 U.S.C. 1395ww note), 
as amended by section 117 of the Medicare, Med-
icaid, and SCHIP Extension Act of 2007 (Public 
Law 110–173), section 124 of the Medicare Im-
provements for Patients and Providers Act of 2008 
(Public Law 110–275), sections 3137(a) and 10317 
of the Patient Protection and Affordable Care Act 
(Public Law 111–148), and section 102 of the Medi-
care and Medicaid Extenders Act of 2010 (Public 
Law 111–309), by substituting ‘‘September 30, 
2012’’ for ‘‘November 30, 2011’’. 
(2) HOSPITAL
DESCRIBED.—A hospital de-
scribed in this paragraph is— 
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(A) a hospital— 
(i) that is described in subsection (a) 
of such section 106; and 
(ii)(I) that is located in a rural area; 
and 
(II) for which the Secretary of Health 
and Human Services has determined the 
extension under this subsection to be ap-
propriate; or 
(B) a sole community hospital located in a 
State with less than 10 people per square mile 
that was provided with a special exception re-
classification extension under section 117(a)(2) 
of the Medicare, Medicaid, and SCHIP Exten-
sion Act of 2007 (Public Law 110–173). 
(b) NOT BUDGET NEUTRAL.—The provisions of this 
section shall not be effected in a budget-neutral manner. 
SEC. 106. EXTENSION OF MEDICARE REASONABLE COSTS 
PAYMENTS FOR CERTAIN CLINICAL DIAG-
NOSTIC LABORATORY TESTS FURNISHED TO 
HOSPITAL PATIENTS IN CERTAIN RURAL 
AREAS. 
Section 416(b) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (42 U.S.C. 
1395l–4), as amended by section 105 of division B of the 
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Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395l 
note), section 107 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (42 U.S.C. 1395l note), section 
3122 of the Patient Protection and Affordable Care Act 
(Public Law 111–148), and section 109 of the Medicare 
and Medicaid Extenders Act of 2010 (Public Law 111– 
309), is amended by striking ‘‘the 2-year period beginning 
on July 1, 2010’’ and inserting ‘‘the 30-month period be-
ginning on July 1, 2010’’. 
SEC. 107. ELIMINATION OF ISOLATION TEST FOR COST- 
BASED AMBULANCE REIMBURSEMENT FOR 
CRITICAL ACCESS HOSPITALS. 
(a) IN GENERAL.—Section 1834(l)(8) of the Social 
Security Act (42 U.S.C. 1395m(l)(8)) is amended— 
(1) in subparagraph (B)— 
(A) by striking ‘‘owned and’’; and 
(B) by inserting ‘‘(including when such 
services are provided by the entity under an ar-
rangement with the hospital)’’ after ‘‘hospital’’; 
and 
(2) by striking the comma at the end of sub-
paragraph (B) and all that follows and inserting a 
period. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to services furnished on or after 
January 1, 2012. 
SEC. 108. EXTENSION OF MEDICARE INCENTIVE PAYMENT 
PROGRAM FOR PHYSICIAN SCARCITY AREAS. 
Section 1833(u)(1) of the Social Security Act (42 
U.S.C. 1395l(u)(1)) is amended by inserting ‘‘, and such 
services furnished on or after January 1, 2012, and before 
January 1, 2013’’ after ‘‘2008’’. 
SEC. 109. EXTENSION OF FLOOR ON MEDICARE WORK GEO-
GRAPHIC ADJUSTMENT. 
Section 1848(e)(1)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)(E)) is amended by striking ‘‘before 
March 1, 2012’’ and inserting ‘‘before January 1, 2013’’. 
SEC. 110. IMPROVING CARE PLANNING FOR MEDICARE 
HOME HEALTH SERVICES. 
(a) PART A PROVISIONS.—Section 1814(a) of the So-
cial Security Act (42 U.S.C. 1395f(a)) is amended— 
(1) in paragraph (2)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘, a nurse practitioner or clin-
ical nurse specialist who is working in collabo-
ration with a physician in accordance with 
State law, a certified nurse-midwife (as defined 
in section 1861(gg)) as authorized by State law, 
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or a physician assistant (as defined in section 
1861(aa)(5)) under the supervision of a physi-
cian’’ after ‘‘1866(j)’’; and 
(B) in subparagraph (C)— 
(i) by inserting ‘‘, a nurse practi-
tioner, a clinical nurse specialist, a cer-
tified nurse-midwife, or a physician assist-
ant (as the case may be)’’ after ‘‘physi-
cian’’ the first 2 times it appears; and 
(ii) by striking ‘‘, and, in the case of 
a certification made by a physician’’ and 
all that follows through ‘‘face-to-face en-
counter’’ and inserting ‘‘, and, in the case 
of a certification made by a physician after 
January 1, 2010, or by a nurse practi-
tioner, clinical nurse specialist, certified 
nurse-midwife, or physician assistant (as 
the case may be) after January 1, 2012, 
prior to making such certification the phy-
sician, nurse practitioner, clinical nurse 
specialist, certified nurse-midwife, or physi-
cian assistant must document that the 
physician, nurse practitioner, clinical nurse 
specialist, certified nurse-midwife, or physi-
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cian assistant has had a face-to-face en-
counter’’; 
(2) in the second sentence, by inserting ‘‘cer-
tified nurse-midwife,’’ after ‘‘clinical nurse spe-
cialist,’’; 
(3) in the third sentence— 
(A) by striking ‘‘physician certification’’ 
and inserting ‘‘certification’’; 
(B) by inserting ‘‘(or on January 1, 2012, 
in the case of regulations to implement the 
amendments made by section 11 of the Rural 
Hospital and Provider Equity and 340B Im-
provement Act of 2012)’’ after ‘‘1981’’; and 
(C) by striking ‘‘a physician who’’ and in-
serting ‘‘a physician, nurse practitioner, clinical 
nurse specialist, certified nurse-midwife, or phy-
sician assistant who’’; and 
(4) in the fourth sentence, by inserting ‘‘, nurse 
practitioner, clinical nurse specialist, certified nurse- 
midwife, or physician assistant’’ after ‘‘physician’’. 
(b) PART B PROVISIONS.—Section 1835(a) of the So-
cial Security Act (42 U.S.C. 1395n(a)) is amended— 
(1) in paragraph (2)— 
(A) in the matter preceding subparagraph 
(A), by inserting ‘‘, a nurse practitioner or clin-
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ical nurse specialist (as those terms are defined 
in section 1861(aa)(5)) who is working in col-
laboration with a physician in accordance with 
State law, a certified nurse-midwife (as defined 
in section 1861(gg)) as authorized by State law, 
or a physician assistant (as defined in section 
1861(aa)(5)) under the supervision of a physi-
cian’’ after ‘‘1866(j)’’; and 
(B) in subparagraph (A)— 
(i) in each of clauses (ii) and (iii) of 
subparagraph (A) by inserting ‘‘, a nurse 
practitioner, a clinical nurse specialist, a 
certified nurse-midwife, or a physician as-
sistant (as the case may be)’’ after ‘‘physi-
cian’’; and 
(ii) in clause (iv), by striking ‘‘after 
January 1, 2010’’ and all that follows 
through ‘‘face-to-face encounter’’ and in-
serting ‘‘made by a physician after Janu-
ary 1, 2010, or by a nurse practitioner, 
clinical nurse specialist, certified nurse- 
midwife, or physician assistant (as the case 
may be) after January 1, 2012, prior to 
making such certification the physician, 
nurse practitioner, clinical nurse specialist, 
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certified nurse-midwife, or physician assist-
ant must document that the physician, 
nurse practitioner, clinical nurse specialist, 
certified nurse-midwife, or physician assist-
ant has had a face-to-face encounter’’; 
(2) in the third sentence, by inserting ‘‘, nurse 
practitioner, clinical nurse specialist, certified nurse- 
midwife, or physician assistant (as the case may 
be)’’ after ‘‘physician’’; 
(3) in the fourth sentence— 
(A) by striking ‘‘physician certification’’ 
and inserting ‘‘certification’’; 
(B) by inserting ‘‘(or on January 1, 2012, 
in the case of regulations to implement the 
amendments made by section 11 of the Rural 
Hospital and Provider Equity and 340B Im-
provement Act of 2012)’’ after ‘‘1981’’; and 
(C) by striking ‘‘a physician who’’ and in-
serting ‘‘a physician, nurse practitioner, clinical 
nurse specialist, certified nurse-midwife, or phy-
sician assistant who’’; and 
(4) in the fifth sentence, by inserting ‘‘, nurse 
practitioner, clinical nurse specialist, certified nurse- 
midwife, or physician assistant’’ after ‘‘physician’’. 
(c) DEFINITION PROVISIONS.— 
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(A) by inserting ‘‘, nurse practitioners or 
clinical nurse specialists (as those terms are de-
fined in subsection (aa)(5)), certified nurse-mid-
wives (as defined in section 1861(gg)), or physi-
cian assistants (as defined in subsection 
(aa)(5))’’ after ‘‘physicians’’; and 
(B) by inserting ‘‘, nurse practitioner, clin-
ical nurse specialist, certified nurse-midwife, 
physician assistant,’’ after ‘‘physician’’. 
(d) HOME HEALTH PROSPECTIVE PAYMENT SYSTEM 
PROVISIONS.—Section 1895 of the Social Security Act (42 
U.S.C. 1395fff) is amended— 
(1) in subsection (c)(1), by inserting ‘‘, the 
nurse practitioner or clinical nurse specialist (as 
those terms are defined in section 1861(aa)(5)), the 
certified nurse-midwife (as defined in section 
1861(gg)), or the physician assistant (as defined in 
section 1861(aa)(5)),’’ after ‘‘physician’’; and 
(2) in subsection (e)— 
(A) in paragraph (1)(A), by inserting ‘‘, a 
nurse practitioner or clinical nurse specialist (as 
those terms are defined in section 1861(aa)(5)), 
a certified nurse-midwife (as defined in section 
1861(gg)), or a physician assistant (as defined 
in section 1861(aa)(5))’’ after ‘‘physician’’; and 
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(B) in paragraph (2)— 
(i) in the heading, by striking ‘‘PHY-
SICIAN
CERTIFICATION’’ 
and 
inserting 
‘‘RULE OF CONSTRUCTION REGARDING RE-
QUIREMENT FOR CERTIFICATION’’; and 
(ii) by striking ‘‘physician’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after January 1, 2012. 
SEC. 111. RURAL HEALTH CLINIC IMPROVEMENTS. 
Section 1833(f) of the Social Security Act (42 U.S.C. 
1395l(f)) is amended— 
(1) in paragraph (1), by striking ‘‘, and’’ at the 
end and inserting a semicolon; 
(2) in paragraph (2)— 
(A) by inserting ‘‘(before 2012)’’ after ‘‘in 
a subsequent year’’; and 
(B) by striking the period at the end and 
inserting a semicolon; and 
(3) by adding at the end the following new 
paragraphs: 
‘‘(3) in 2012, at $101 per visit; and 
‘‘(4) in a subsequent year, at the limit estab-
lished under this subsection for the previous year in-
creased by the percentage increase in the MEI (as 
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so defined) applicable to primary care services (as so 
defined) furnished as of the first day of that year.’’. 
SEC. 112. TEMPORARY MEDICARE PAYMENT INCREASE FOR 
HOME HEALTH SERVICES FURNISHED IN A 
RURAL AREA. 
Section 421(a) 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) and section 3131(c) of the Patient Pro-
tection and Affordable Care Act (Public Law 111–148; 
124 Stat. 428), is amended by striking ‘‘2016, 3 percent’’ 
and inserting ‘‘2011, and episodes and visits ending on 
or after January 1, 2013, and before January 1, 2016, 
3 percent’’. 
SEC. 113. EXTENSION OF INCREASED MEDICARE PAYMENTS 
FOR RURAL GROUND AMBULANCE SERVICES. 
(a) IN GENERAL.—Section 1834(l)(13)(A) of the So-
cial Security Act (42 U.S.C. 1395m(l)(13)(A)) is amend-
ed— 
(1) in the matter preceding clause (i)— 
(A) by striking ‘‘2007, and for’’ and in-
serting ‘‘2007, for’’; and 
(B) by inserting ‘‘, and for such services 
described in clause (i) furnished on or after 
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March 1, 2012, and before January 1, 2013’’ 
after ‘‘2012’’; and 
(2) in clause (i), by inserting ‘‘, or 5 percent if 
such service is furnished on or after March 1, 2012, 
and before January 1, 2013’’ after ‘‘2012’’. 
(b) 
SUPER
RURAL
AMBULANCE.—Section 
1834(l)(12)(A) of the Social Security Act (42 U.S.C. 
1395m(l)(12)(A)) is amended by striking ‘‘March 1, 
2012’’ and inserting ‘‘January 1, 2013’’. 
SEC. 114. EXTENSION OF PAYMENT FOR TECHNICAL COM-
PONENT OF CERTAIN PHYSICIAN PATHOL-
OGY SERVICES. 
Section 542(c) of the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Protection Act of 2000 
(as enacted into law by section 1(a)(6) of Public Law 106– 
554), as amended by section 732 of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395w–4 note), section 104 of division B of 
the Tax Relief and Health Care Act of 2006 (42 U.S.C. 
1395w–4 note), section 104 of the Medicare, Medicaid, 
and SCHIP Extension Act of 2007 (Public Law 110– 
173), section 136 of the Medicare Improvements for Pa-
tients and Providers Act of 2008 (Public Law 110–275), 
section 3104 of the Patient Protection and Affordable 
Care Act (Public Law 111–148), section 105 of the Medi-
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care and Medicaid Extenders Act of 2010 (Public Law 
111–309), and section 305 of the Temporary Payroll Tax 
Cut Continuation Act of 2011 (Public Law 112–78) is 
amended by striking ‘‘the first two months of’’. 
SEC. 115. FACILITATING THE PROVISION OF TELEHEALTH 
SERVICES ACROSS STATE LINES. 
(a) IN GENERAL.—For purposes of expediting the 
provision of telehealth services, for which payment is made 
under the Medicare program, across State lines, the Sec-
retary of Health and Human Services shall, in consulta-
tion with representatives of States, physicians, health care 
practitioners, and patient advocates, encourage and facili-
tate the adoption of provisions allowing for multistate 
practitioner practice across State lines. 
(b) DEFINITIONS.—In subsection (a): 
(1) TELEHEALTH
SERVICE.—The term ‘‘tele-
health service’’ has the meaning given that term in 
subparagraph (F) of section 1834(m)(4) of the So-
cial Security Act (42 U.S.C. 1395m(m)(4)). 
(2) PHYSICIAN, 
PRACTITIONER.—The terms 
‘‘physician’’ and ‘‘practitioner’’ have the meaning 
given those terms in subparagraphs (D) and (E), re-
spectively, of such section. 
(3) MEDICARE PROGRAM.—The term ‘‘Medicare 
program’’ means the program of health insurance 
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administered by the Secretary of Health and Human 
Services under title XVIII of the Social Security Act 
(42 U.S.C. 1395 et seq.). 
SEC. 116. MEDICARE PART A PAYMENT FOR ANESTHESIOL-
OGIST SERVICES IN CERTAIN RURAL HOS-
PITALS BASED ON CRNA PASS-THROUGH 
RULES. 
(a) IN GENERAL.—Section 1814 of the Social Secu-
rity Act (42 U.S.C. 1395f) is amended by adding at the 
end the following new subsection: 
‘‘Anesthesiologist Services Provided in Certain Rural 
Hospitals 
‘‘(m)(1) Notwithstanding any other provision of this 
title, coverage and payment shall be provided under this 
part for physicians’ services that are anesthesia services 
furnished by a physician who is an anesthesiologist in a 
rural hospital described in paragraph (3) in the same 
manner as payment is made under the exception provided 
in section 9320(k) of the Omnibus Budget Reconciliation 
Act of 1986, as added by section 608(c)(2) of the Family 
Support Act of 1988 and amended by section 6132 of the 
Omnibus Budget Reconciliation Act of 1989, (relating to 
payment on a reasonable cost, pass-through basis) for cer-
tified registered nurse anesthetist services furnished by a 
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certified registered nurse anesthetist in a hospital de-
scribed in such section 9320(k). 
‘‘(2) No payment shall be made under any other pro-
vision of this title for physicians’ services for which pay-
ment is made under this subsection. 
‘‘(3) A rural hospital described in this paragraph is 
a hospital described in section 9320(k) of the Omnibus 
Budget Reconciliation Act of 1986, as so added and 
amended, except that— 
‘‘(A) any reference in such section to a ‘cer-
tified registered nurse anesthetist’ or an ‘anesthetist’ 
is deemed a reference to a ‘physician who is an anes-
thesiologist’ or an ‘anesthesiologist’, respectively; 
and 
‘‘(B) any reference to ‘January 1, 1988’ or 
‘1987’ is deemed a reference to such date and year 
as the Secretary shall specify.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to services furnished during cost 
reporting periods beginning on or after the date of the 
enactment of this Act. 
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SEC. 117. TEMPORARY FLOOR ON THE PRACTICE EXPENSE 
GEOGRAPHIC INDEX FOR SERVICES FUR-
NISHED IN RURAL AREAS OUTSIDE OF FRON-
TIER STATES UNDER THE MEDICARE PHYSI-
CIAN FEE SCHEDULE. 
Section 1848(e)(1) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)) is amended— 
(1) in subparagraph (A), by striking ‘‘and (I)’’ 
and inserting ‘‘(I), and (J)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(J) FLOOR AT 1.0 ON PRACTICE EXPENSE 
GEOGRAPHIC INDEX FOR SERVICES FURNISHED 
IN
RURAL
AREAS
OUTSIDE
OF
FRONTIER 
STATES.—For purposes of payment for services 
furnished in a rural area (other than a rural 
area located in a State to which subparagraph 
(I) applies) on or after January 1, 2012, and 
before January 1, 2013, after calculating the 
practice expense index under subparagraph 
(A)(i), the Secretary shall increase any such 
index to 1.0 if such index would otherwise be 
less than 1.0. The preceding sentence shall not 
be applied in a budget neutral manner.’’. 
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SEC. 118. REVISIONS TO STANDARD FOR DESIGNATION OF 
SOLE COMMUNITY HOSPITALS. 
Section 1886(d)(5)(D)(iv) of the Social Security Act 
(42 U.S.C. 1395ww(d)(5)(D)(iv)) is amended by adding 
at the end the following new sentence: ‘‘Under such stand-
ard, the time required for an individual to travel to the 
nearest alternative source of care shall be measured over 
improved roads maintained by a local, State, or Federal 
Government entity for use by the general public which is 
the most expeditious and accessible route as designated 
by law enforcement for emergency vehicle travel.’’. 
SEC. 119. STATE OFFICES OF RURAL HEALTH. 
Section 338J(j)(1) of the Public Health Service Act 
(42 U.S.C. 254r(j)(1)) is amended by inserting ‘‘and 2012 
through 2013’’ before the period. 
SEC. 120. ENSURING PROPORTIONAL REPRESENTATION OF 
INTERESTS OF RURAL AREAS ON MEDPAC. 
(a) IN GENERAL.—Section 1805(c)(2) of the Social 
Security Act (42 U.S.C. 1395b–6(c)(2)) is amended— 
(1) in subparagraph (A), by inserting ‘‘(con-
sistent with the requirements of subparagraph (E))’’ 
after ‘‘rural representatives’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(E) PROPORTIONAL REPRESENTATION OF 
INTERESTS OF RURAL AREAS.—In order to pro-
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vide a balance between urban and rural rep-
resentatives under subparagraph (A), the pro-
portion of members who represent the interests 
of health care providers and Medicare bene-
ficiaries located in rural areas shall be no less 
than the proportion of the total number of 
Medicare beneficiaries who reside in rural 
areas.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to appointments made to the 
Medicare Payment Advisory Commission after the date of 
the enactment of this Act. 
TITLE II—340B PROGRAM 
IMPROVEMENT 
SEC. 
201. 
EXTENSION 
OF 
DISCOUNTS 
TO 
INPATIENT 
DRUGS. 
(a) IN GENERAL.—Section 340B of the Public 
Health Service Act (42 U.S.C. 256b) is amended— 
(1) in subsection (a)— 
(A) in paragraphs (1), (2), and (5), by 
striking ‘‘covered outpatient drug’’ each place 
such term appears and inserting ‘‘covered 
drug’’; and 
(B) in paragraphs (1), (7), and (9), by 
striking ‘‘covered outpatient drugs’’ each place 
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such term appears and inserting ‘‘covered 
drugs’’; 
(2) in subsection (b)(2)(B) by striking ‘‘para-
graph (3)(A)’’ and inserting ‘‘paragraph (3)’’; and 
(3) in subsection (d), by striking ‘‘covered out-
patient drugs’’ each place such term appears and in-
serting ‘‘covered drugs’’. 
(b) MEDICAID CREDITS ON INPATIENT DRUGS.— 
Section 340B of the Public Health Service Act (42 U.S.C. 
256b) is amended by inserting after subsection (b) the fol-
lowing new subsection: 
‘‘(c) MEDICAID CREDITS ON INPATIENT DRUGS.— 
‘‘(1) IN GENERAL.—For each cost reporting pe-
riod, based on the most recently filed Medicare cost 
report under title XVIII of the Social Security Act 
and subject to paragraph (5), a hospital described in 
subparagraph (L), (M), (N), or (O) of subsection 
(a)(4) and enrolled to participate in the drug dis-
count program under this section shall provide to 
each State that has a plan for medical assistance 
under title XIX of such Act and that makes pay-
ment to such hospital for covered drugs provided to 
Medicaid recipients for inpatient use, a credit on the 
estimated annual purchases by such hospital of such 
covered drugs provided to such Medicaid recipients. 
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‘‘(2) AMOUNT OF CREDIT.— 
‘‘(A) IN GENERAL.—The credit described 
in paragraph (1), with respect to a hospital and 
cost reporting period described in such para-
graph shall be equal to— 
‘‘(i) the product of— 
‘‘(I) the sum of the annual credit 
amounts (described in subparagraph 
(B)) calculated under subparagraph 
(B)(i) for each dosage form and 
strength of each covered drug pur-
chased by the hospital during the cost 
reporting period; and 
‘‘(II) the estimated percentage of 
the purchases of covered drugs by the 
hospital during such period attrib-
utable to Medicaid recipients for inpa-
tient use, as determined in accordance 
with subparagraph (D); and 
‘‘(ii) subject to paragraph (3)(D), re-
duced by the amount by which the Med-
icaid inpatient reimbursement (as defined 
in subparagraph (E)(ii)) of the hospital for 
such period was reduced as a result of par-
ticipation in the drug discount program 
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under this section during such period by 
the hospital, as determined in accordance 
with subparagraph (E). 
‘‘(B) ANNUAL
CREDIT
AMOUNTS.—For 
purposes of subparagraph (A)(i)(I), an annual 
credit amount, with respect to a covered drug 
purchased by a hospital described in paragraph 
(1) during a cost reporting period of the hos-
pital— 
‘‘(i) is equal to the sum of the quar-
terly credit amounts calculated under sub-
paragraph (C)(i), for each of the 4 quar-
ters of the cost reporting period for such 
covered drug; and 
‘‘(ii) shall be calculated for each dos-
age form and strength of such covered 
drug. 
‘‘(C) QUARTERLY CREDIT AMOUNTS.—For 
purposes of subparagraph (B)(ii), a quarterly 
credit amount, with respect to a covered drug 
purchased by a hospital described in paragraph 
(1) during a quarter of the cost reporting pe-
riod of the hospital— 
‘‘(i) is equal to the product of— 
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‘‘(I) the total number of units of 
each dosage form and strength of 
such covered drug purchased by the 
hospital during such quarter; 
‘‘(II) the average manufacturer 
price of the covered drug (for the unit 
of the dosage form and strength in-
volved) during such quarter; and 
‘‘(III) half of the rebate percent-
age for the covered drug, as defined in 
subsection (a)(2); and 
‘‘(ii) shall be calculated for— 
‘‘(I) 
each 
dosage 
form 
and 
strength of the covered drug pur-
chased by the hospital; and 
‘‘(II) each of the 4 quarters of 
such cost reporting period. 
‘‘(D) PERCENTAGE OF DRUG PURCHASES 
ATTRIBUTABLE TO MEDICAID RECIPIENTS FOR 
IMPATIENT
USE.—For purposes of subpara-
graph (A)(i)(II), the estimated percentage of 
the drug purchases of the hospital attributable 
to Medicaid recipients for inpatient use shall be 
equal to the Medicaid inpatient drug charges as 
reported on the most recently filed Medicare 
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cost report of the hospital, divided by the total 
drug charges reported on the cost report. 
‘‘(E) CREDIT OFFSET.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (A)(ii), the amount by which 
the Medicaid inpatient reimbursement of a 
hospital, with respect to a cost reporting 
period, is reduced as a result of the partici-
pation in the drug discount program under 
this section by the hospital shall be com-
puted as the difference between— 
‘‘(I) the Medicaid inpatient reim-
bursement that would have otherwise 
been payable to the hospital for the 
cost reporting period if the hospital 
did not participate in such drug dis-
count program; and 
‘‘(II) the actual Medicaid inpa-
tient reimbursement payable to the 
hospital for the cost reporting period. 
‘‘(ii) MEDICAID
INPATIENT
REIM-
BURSEMENT
DEFINED.—For purposes of 
this subsection, the term ‘Medicaid inpa-
tient reimbursement’ means the total pay-
ments received by the hospital under the 
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State plan under title XIX of the Social 
Security Act for providing inpatient serv-
ices to Medicaid recipients. 
‘‘(3) REQUIREMENTS.— 
‘‘(A) IN GENERAL.—A hospital shall not be 
required to provide a credit under paragraph 
(1) to a State unless, not later than 30 days 
after receiving the information described in sub-
paragraph (B), the State calculates in accord-
ance with paragraph (2) the amount of the 
credit owed by the hospital under paragraph (1) 
and provides the hospital with both the amount 
of such credit so owed and an explanation of 
how the State calculated such credit. 
‘‘(B) HOSPITAL PROVISION OF INFORMA-
TION.—Not later than 30 days after the date of 
the filing of the most recently filed Medicare 
cost report of a hospital described in paragraph 
(1), the hospital shall provide the State involved 
with the information described in subpara-
graphs (C)(i)(I) and (D) of paragraph (2). 
With respect to each covered drug purchased 
during the cost reporting period, the hospital 
shall provide the National Drug Code, date of 
purchase, and the number of units purchased. 
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Submission of such information shall not be re-
quired if a covered drug has not been assigned 
a National Drug Code at the time of purchase. 
‘‘(C) ACCESS
TO
AMP
AND
REBATE 
DATA.—The Secretary shall establish a system 
for giving States access to the information nec-
essary for them to calculate credits under para-
graph (2), with respect to covered drugs, in-
cluding the average manufacturer price and re-
bate percentage for such covered drugs. 
‘‘(D) 
CREDIT
OFFSET.—Paragraph 
(2)(A)(ii) shall be applied, with respect to a 
credit owed by a hospital under paragraph (1), 
only if, not later than 30 days after filing the 
most recent Medicare cost report, the hospital 
submits to the State involved— 
‘‘(i) a request for the State to apply 
such paragraph and to calculate the 
amount described in such paragraph in ac-
cordance with paragraph (2)(E); and 
‘‘(ii) the data needed by the State to 
determine the amount of the Medicaid in-
patient reimbursement described in para-
graph (2)(E)(i)(I) for such hospital. 
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‘‘(E) DISPUTES.—A State and hospital de-
scribed in paragraph (1) shall have access to 
the same State dispute resolution procedures 
and system applicable to Medicaid reimburse-
ment matters under title XIX of the Social Se-
curity Act. 
‘‘(4) PAYMENT
DEADLINE.—A hospital shall 
provide to a State the credits owed by such hospital 
under paragraph (1) not later than 60 days after 
the hospital receives the information described in 
paragraph (3)(A). 
‘‘(5) OPT
OUT.—A hospital shall not be re-
quired to provide a credit under paragraph (1) to a 
State if the hospital and State agree to an alter-
native arrangement. 
‘‘(6) OFFSET AGAINST MEDICAL ASSISTANCE.— 
Amounts received by a State under this subsection 
shall be considered to be a reduction in the amount 
expended under the State plan for medical assist-
ance for purposes of section 1903(a)(1) of the Social 
Security Act. 
‘‘(7) MEDICAID
RECIPIENT
DEFINED.—For 
purposes of this subsection, the term ‘Medicaid re-
cipient’ means, with respect to a State, an individual 
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who receives benefits under the State plan under 
title XIX of the Social Security Act.’’. 
(c) CONFORMING AMENDMENTS.—Section 1927 of 
the Social Security Act (42 U.S.C. 1396r–8) is amended— 
(1) in subsection (a)(5)— 
(A) in subparagraph (A), by striking ‘‘cov-
ered outpatient drugs’’ and inserting ‘‘covered 
drugs (as defined in section 340B(b)(2) of the 
Public Health Service Act)’’; and 
(B) by striking subparagraphs (D) and 
(E); and 
(2) in subsection (c)(1)(C)(i)— 
(A) 
by 
redesignating 
subclauses 
(II) 
through (VI) as subclauses (III) through (VII), 
respectively; and 
(B) by inserting after subclause (I) the fol-
lowing: 
‘‘(II) any prices charged for a 
covered drug, as defined in section 
340B(b)(2) of the Public Health Serv-
ice Act;’’. 
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