1359 
care under the Medicare program and the Medicaid 
program. 
(10) Such other issues as the Secretary deems 
appropriate. 
(c) CONSULTATIONS AND ANALYSIS.— 
(1) CONSULTATION WITH STAKEHOLDERS.—In 
developing the plan under subsection (a)(1), the Sec-
retary shall consult with relevant stakeholders and 
shall consider experience with such research studies 
and demonstrations that the Secretary determines 
appropriate. 
(2) ANALYSIS AND DATA COLLECTION.—In de-
veloping such plan, the Secretary shall— 
(A) analyze the issues described in sub-
section (b) and other issues that the Secretary 
determines appropriate; 
(B) analyze the impacts (including geo-
graphic impacts) of post acute service reform 
approaches, including bundling of such services 
on individuals, hospitals, post acute care pro-
viders, and physicians; 
(C) use existing data (such as data sub-
mitted on claims) and collect such data as the 
Secretary determines are appropriate to develop 
such plan required in this section; and 
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(D) if patient functional status measures 
are appropriate for the analysis, to the extent 
practical, build upon the CARE tool being de-
veloped pursuant to section 5008 of the Deficit 
Reduction Act of 2005. 
(d) ADMINISTRATION.— 
(1) FUNDING.—For purposes of carrying out 
the provisions of this section, in addition to funds 
otherwise available, out of any funds in the Treasury 
not otherwise appropriated, there are appropriated 
to the Secretary for the Center for Medicare & Med-
icaid 
Services 
Program 
Management 
Account 
$15,000,000 for each of the fiscal years 2010 
through 2012. Amounts appropriated under this 
paragraph for a fiscal year shall be available until 
expended. 
(2) EXPEDITED
DATA
COLLECTION.—Chapter 
35 of title 44, United States Code shall not apply to 
this section. 
(e) PUBLIC REPORTS.— 
(1) INTERIM
REPORTS.—The Secretary shall 
issue interim public reports on a periodic basis on 
the plan described in subsection (a)(1), the issues 
described in subsection (b), and impact analyses as 
the Secretary determines appropriate. 
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(2) FINAL REPORT.—Not later than the date 
that is 3 years after the date of the enactment of 
this Act, the Secretary shall issue a final public re-
port on such plan, including analysis of issues de-
scribed in subsection (b) and impact analyses. 
(f) CONVERSION OF ACUTE CARE EPISODE DEM-
ONSTRATION TO PILOT PROGRAM AND EXPANSION TO IN-
CLUDE POST ACUTE SERVICES.— 
(1) IN GENERAL.—Part E of title XVIII of the 
Social Security Act is amended by inserting after 
section 1866C the following new section: 
‘‘SEC. 1866D. CONVERSION OF ACUTE CARE EPISODE DEM-
ONSTRATION TO PILOT PROGRAM AND EX-
PANSION TO INCLUDE POST ACUTE SERV-
ICES. 
‘‘(a) IN GENERAL.—By not later than January 1, 
2011, the Secretary shall, for the purpose of promoting 
the use of bundled payments to promote efficient and high 
quality delivery of care— 
‘‘(1) convert the acute care episode demonstra-
tion program conducted under section 1866C to a 
pilot program; and 
‘‘(2) subject to subsection (c), expand such pro-
gram as so converted to include post acute services 
and such other services the Secretary determines to 
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be appropriate, which may include transitional serv-
ices. 
‘‘(b) SCOPE.—The pilot program under subsection 
(a) may include additional geographic areas and additional 
conditions which account for significant program spend-
ing, as defined by the Secretary. Nothing in this sub-
section shall be construed as limiting the number of hos-
pital and physician groups or the number of hospital and 
post-acute provider groups that may participate in the 
pilot program. 
‘‘(c) LIMITATION.—The Secretary shall only expand 
the pilot program under subsection (a)(2) if the Secretary 
finds that— 
‘‘(1) the demonstration program under section 
1866C and pilot program under this section main-
tain or increase the quality of care received by indi-
viduals enrolled under this title; and 
‘‘(2) such demonstration program and pilot pro-
gram reduce program expenditures and, based on 
the certification under subsection (d), that the ex-
pansion of such pilot program would result in esti-
mated spending that would be less than what spend-
ing would otherwise be in the absence of this section. 
‘‘(d) CERTIFICATION.—For purposes of subsection 
(c), the Chief Actuary of the Centers for Medicare & Med-
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icaid Services shall certify whether expansion of the pilot 
program under this section would result in estimated 
spending that would be less than what spending would 
otherwise be in the absence of this section. 
‘‘(e) VOLUNTARY PARTICIPATION.—Nothing in this 
paragraph shall be construed as requiring the participa-
tion of an entity in the pilot program under this section.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1866C(b) of the Social Security Act (42 U.S.C. 
1395cc–3(b)) is amended by striking ‘‘The Sec-
retary’’ and inserting ‘‘Subject to section 1866D, the 
Secretary’’. 
SEC. 1153. HOME HEALTH PAYMENT UPDATE FOR 2010. 
Section 1895(b)(3)(B)(ii) of the Social Security Act 
(42 U.S.C. 1395fff(b)(3)(B)(ii)) is amended— 
(1) in subclause (IV), by striking ‘‘and’’; 
(2) by redesignating subclause (V) as subclause 
(VII); and 
(3) by inserting after subclause (IV) the fol-
lowing new subclauses: 
‘‘(V) 2007, 2008, and 2009, sub-
ject to clause (v), the home health 
market basket percentage increase; 
‘‘(VI) 2010, subject to clause (v), 
0 percent; and’’. 
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SEC. 1154. PAYMENT ADJUSTMENTS FOR HOME HEALTH 
CARE. 
(a) ACCELERATION OF ADJUSTMENT FOR CASE MIX 
CHANGES.—Section 1895(b)(3)(B) of the Social Security 
Act (42 U.S.C. 1395fff(b)(3)(B)) is amended— 
(1) in clause (iv), by striking ‘‘Insofar as’’ and 
inserting ‘‘Subject to clause (vi), insofar as’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(vi) SPECIAL RULE FOR CASE MIX 
CHANGES FOR 2011.— 
‘‘(I) IN GENERAL.—With respect 
to the case mix adjustments estab-
lished in section 484.220(a) of title 
42, Code of Federal Regulations, the 
Secretary shall apply, in 2010, the ad-
justment established in paragraph (3) 
of such section for 2011, in addition 
to applying the adjustment established 
in paragraph (2) for 2010. 
‘‘(II) CONSTRUCTION.—Nothing 
in this clause shall be construed as 
limiting the amount of adjustment for 
case mix for 2010 or 2011 if more re-
cent data indicate an appropriate ad-
justment that is greater than the 
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amount established in the section de-
scribed in subclause (I).’’. 
(b) REBASING HOME HEALTH PROSPECTIVE PAY-
MENT AMOUNT.—Section 1895(b)(3)(A) of the Social Se-
curity Act (42 U.S.C. 1395fff(b)(3)(A)) is amended— 
(1) in clause (i)— 
(A) in subclause (III), by inserting ‘‘and 
before 2011’’ after ‘‘after the period described 
in subclause (II)’’; and 
(B) by inserting after subclause (III) the 
following new subclauses: 
‘‘(IV) Subject to clause (iii)(I), 
for 2011, such amount (or amounts) 
shall be adjusted by a uniform per-
centage determined to be appropriate 
by the Secretary based on analysis of 
factors such as changes in the average 
number and types of visits in an epi-
sode, the change in intensity of visits 
in an episode, growth in cost per epi-
sode, and other factors that the Sec-
retary considers to be relevant. 
‘‘(V) Subject to clause (iii)(II), 
for a year after 2011, such a amount 
(or amounts) shall be equal to the 
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amount 
(or 
amounts) 
determined 
under this clause for the previous 
year, updated under subparagraph 
(B).’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(iii) SPECIAL RULE IN CASE OF IN-
ABILITY TO EFFECT TIMELY REBASING.— 
‘‘(I) APPLICATION
OF
PROXY 
AMOUNT FOR 2011.—If the Secretary 
is not able to compute the amount (or 
amounts) under clause (i)(IV) so as to 
permit, on a timely basis, the applica-
tion of such clause for 2011, the Sec-
retary 
shall 
substitute 
for 
such 
amount (or amounts) 95 percent of 
the amount (or amounts) that would 
otherwise be specified under clause 
(i)(III) if it applied for 2011. 
‘‘(II) ADJUSTMENT FOR SUBSE-
QUENT
YEARS
BASED
ON
DATA.—If 
the Secretary applies subclause (I), 
the Secretary before July 1, 2011, 
shall 
compare 
the 
amount 
(or 
amounts) applied under such sub-
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clause with the amount (or amounts) 
that should have been applied under 
clause (i)(IV). The Secretary shall de-
crease or increase the prospective pay-
ment amount (or amounts) under 
clause (i)(V) for 2012 (or, at the Sec-
retary’s discretion, over a period of 
several years beginning with 2012) by 
the amount (if any) by which the 
amount (or amounts) applied under 
subclause (I) is greater or less, re-
spectively, 
than 
the 
amount 
(or 
amounts) that should have been ap-
plied under clause (i)(IV).’’. 
SEC. 
1155. 
INCORPORATING 
PRODUCTIVITY 
IMPROVE-
MENTS INTO MARKET BASKET UPDATE FOR 
HOME HEALTH SERVICES. 
(a) IN GENERAL.—Section 1895(b)(3)(B) of the So-
cial Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amend-
ed— 
(1) in clause (iii), by inserting ‘‘(including being 
subject to the productivity adjustment described in 
section 1886(b)(3)(B)(iii)(II))’’ after ‘‘in the same 
manner’’; and 
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(2) in clause (v)(I), by inserting ‘‘(but not 
below 0)’’ after ‘‘reduced’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to home health market basket 
percentage increases for years beginning with 2010. 
SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE 
PROHIBITION ON CERTAIN PHYSICIAN RE-
FERRALS MADE TO HOSPITALS. 
(a) IN GENERAL.—Section 1877 of the Social Secu-
rity Act (42 U.S.C. 1395nn) is amended— 
(1) in subsection (d)(2)— 
(A) in subparagraph (A), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(C) in the case where the entity is a hos-
pital, the hospital meets the requirements of 
paragraph (3)(D).’’; 
(2) in subsection (d)(3)— 
(A) in subparagraph (B), by striking 
‘‘and’’ at the end; 
(B) in subparagraph (C), by striking the 
period at the end and inserting ‘‘; and’’; and 
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(C) by adding at the end the following new 
subparagraph: 
‘‘(D) the hospital meets the requirements 
described in subsection (i)(1).’’; 
(3) by amending subsection (f) to read as fol-
lows: 
‘‘(f) 
REPORTING
AND
DISCLOSURE
REQUIRE-
MENTS.— 
‘‘(1) IN GENERAL.—Each entity providing cov-
ered items or services for which payment may be 
made under this title shall provide the Secretary 
with the information concerning the entity’s owner-
ship, investment, and compensation arrangements, 
including— 
‘‘(A) the covered items and services pro-
vided by the entity, and 
‘‘(B) the names and unique physician iden-
tification numbers of all physicians with an 
ownership or investment interest (as described 
in subsection (a)(2)(A)), or with a compensa-
tion arrangement (as described in subsection 
(a)(2)(B)), in the entity, or whose immediate 
relatives have such an ownership or investment 
interest or who have such a compensation rela-
tionship with the entity. 
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Such information shall be provided in such form, 
manner, and at such times as the Secretary shall 
specify. The requirement of this subsection shall not 
apply to designated health services provided outside 
the United States or to entities which the Secretary 
determines provide services for which payment may 
be made under this title very infrequently. 
‘‘(2) REQUIREMENTS
FOR
HOSPITALS
WITH 
PHYSICIAN
OWNERSHIP
OR
INVESTMENT.—In the 
case of a hospital that meets the requirements de-
scribed in subsection (i)(1), the hospital shall— 
‘‘(A) submit to the Secretary an initial re-
port, and periodic updates at a frequency deter-
mined by the Secretary, containing a detailed 
description of the identity of each physician 
owner and physician investor and any other 
owners or investors of the hospital; 
‘‘(B) require that any referring physician 
owner or investor discloses to the individual 
being referred, by a time that permits the indi-
vidual to make a meaningful decision regarding 
the receipt of services, as determined by the 
Secretary, the ownership or investment interest, 
as applicable, of such referring physician in the 
hospital; and 
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‘‘(C) disclose the fact that the hospital is 
partially or wholly owned by one or more physi-
cians or has one or more physician investors— 
‘‘(i) on any public website for the hos-
pital; and 
‘‘(ii) in any public advertising for the 
hospital. 
The information to be reported or disclosed under 
this paragraph shall be provided in such form, man-
ner, and at such times as the Secretary shall specify. 
The requirements of this paragraph shall not apply 
to designated health services furnished outside the 
United States or to entities which the Secretary de-
termines provide services for which payment may be 
made under this title very infrequently. 
‘‘(3) PUBLICATION
OF
INFORMATION.—The 
Secretary shall publish, and periodically update, the 
information submitted by hospitals under paragraph 
(2)(A) on the public Internet website of the Centers 
for Medicare & Medicaid Services.’’; 
(4) by amending subsection (g)(5) to read as 
follows: 
‘‘(5) FAILURE TO REPORT OR DISCLOSE INFOR-
MATION.— 
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‘‘(A) REPORTING.—Any person who is re-
quired, but fails, to meet a reporting require-
ment of paragraphs (1) and (2)(A) of sub-
section (f) is subject to a civil money penalty of 
not more than $10,000 for each day for which 
reporting is required to have been made. 
‘‘(B) DISCLOSURE.—Any physician who is 
required, but fails, to meet a disclosure require-
ment of subsection (f)(2)(B) or a hospital that 
is required, but fails, to meet a disclosure re-
quirement of subsection (f)(2)(C) is subject to 
a civil money penalty of not more than $10,000 
for each case in which disclosure is required to 
have been made. 
‘‘(C) APPLICATION.—The provisions of 
section 1128A (other than the first sentence of 
subsection (a) and other than subsection (b)) 
shall apply to a civil money penalty under sub-
paragraphs (A) and (B) in the same manner as 
such provisions apply to a penalty or proceeding 
under section 1128A(a).’’; and 
(5) by adding at the end the following new sub-
section: 
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‘‘(i) REQUIREMENTS TO QUALIFY FOR RURAL PRO-
VIDER
AND
HOSPITAL
OWNERSHIP
EXCEPTIONS
TO 
SELF-REFERRAL PROHIBITION.— 
‘‘(1) REQUIREMENTS
DESCRIBED.—For pur-
poses of subsection (d)(3)(D), the requirements de-
scribed in this paragraph are as follows: 
‘‘(A) PROVIDER
AGREEMENT.—The hos-
pital had— 
‘‘(i) physician ownership or invest-
ment on January 1, 2009; and 
‘‘(ii) a provider agreement under sec-
tion 1866 in effect on such date. 
‘‘(B) PROHIBITION ON PHYSICIAN OWNER-
SHIP OR INVESTMENT.—The percentage of the 
total value of the ownership or investment in-
terests held in the hospital, or in an entity 
whose assets include the hospital, by physician 
owners or investors in the aggregate does not 
exceed such percentage as of the date of enact-
ment of this subsection. 
‘‘(C) PROHIBITION ON EXPANSION OF FA-
CILITY CAPACITY.—Except as provided in para-
graph (2), the number of operating rooms, pro-
cedure rooms, or beds of the hospital at any 
time on or after the date of the enactment of 
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this subsection are no greater than the number 
of operating rooms, procedure rooms, or beds, 
respectively, as of such date. 
‘‘(D) ENSURING
BONA
FIDE
OWNERSHIP 
AND INVESTMENT.— 
‘‘(i) Any ownership or investment in-
terests that the hospital offers to a physi-
cian are not offered on more favorable 
terms than the terms offered to a person 
who is not in a position to refer patients 
or otherwise generate business for the hos-
pital. 
‘‘(ii) The hospital (or any investors in 
the hospital) does not directly or indirectly 
provide loans or financing for any physi-
cian owner or investor in the hospital. 
‘‘(iii) The hospital (or any investors in 
the hospital) does not directly or indirectly 
guarantee a loan, make a payment toward 
a loan, or otherwise subsidize a loan, for 
any physician owner or investor or group 
of physician owners or investors that is re-
lated to acquiring any ownership or invest-
ment interest in the hospital. 
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‘‘(iv) Ownership or investment returns 
are distributed to each owner or investor in 
the hospital in an amount that is directly 
proportional to the ownership or invest-
ment interest of such owner or investor in 
the hospital. 
‘‘(v) The investment interest of the 
owner or investor is directly proportional 
to the owner’s or investor’s capital con-
tributions made at the time the ownership 
or investment interest is obtained. 
‘‘(vi) Physician owners and investors 
do not receive, directly or indirectly, any 
guaranteed receipt of or right to purchase 
other business interests related to the hos-
pital, including the purchase or lease of 
any property under the control of other 
owners or investors in the hospital or lo-
cated near the premises of the hospital. 
‘‘(vii) The hospital does not offer a 
physician owner or investor the oppor-
tunity to purchase or lease any property 
under the control of the hospital or any 
other owner or investor in the hospital on 
more favorable terms than the terms of-
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fered to a person that is not a physician 
owner or investor. 
‘‘(viii) The hospital does not condition 
any physician ownership or investment in-
terests either directly or indirectly on the 
physician owner or investor making or in-
fluencing referrals to the hospital or other-
wise generating business for the hospital. 
‘‘(E) PATIENT SAFETY.—In the case of a 
hospital that does not offer emergency services, 
the hospital has the capacity to— 
‘‘(i) provide assessment and initial 
treatment for medical emergencies; and 
‘‘(ii) if the hospital lacks additional 
capabilities required to treat the emergency 
involved, refer and transfer the patient 
with the medical emergency to a hospital 
with the required capability. 
‘‘(F) LIMITATION
ON
APPLICATION
TO 
CERTAIN
CONVERTED
FACILITIES.—The hos-
pital was not converted from an ambulatory 
surgical center to a hospital on or after the date 
of enactment of this subsection. 
‘‘(2) EXCEPTION TO PROHIBITION ON EXPAN-
SION OF FACILITY CAPACITY.— 
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‘‘(A) PROCESS.— 
‘‘(i) ESTABLISHMENT.—The Secretary 
shall establish and implement a process 
under which a hospital may apply for an 
exception from the requirement under 
paragraph (1)(C). 
‘‘(ii) OPPORTUNITY FOR COMMUNITY 
INPUT.—The process under clause (i) shall 
provide persons and entities in the commu-
nity in which the hospital applying for an 
exception is located with the opportunity to 
provide input with respect to the applica-
tion. 
‘‘(iii) 
TIMING
FOR
IMPLEMENTA-
TION.—The Secretary shall implement the 
process under clause (i) on the date that is 
one month after the promulgation of regu-
lations described in clause (iv). 
‘‘(iv) REGULATIONS.—Not later than 
the first day of the month beginning 18 
months after the date of the enactment of 
this subsection, the Secretary shall promul-
gate regulations to carry out the process 
under clause (i). The Secretary may issue 
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such regulations as interim final regula-
tions. 
‘‘(B) FREQUENCY.—The process described 
in subparagraph (A) shall permit a hospital to 
apply for an exception up to once every 2 years. 
‘‘(C) PERMITTED INCREASE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii) and subparagraph (D), a hospital 
granted an exception under the process de-
scribed in subparagraph (A) may increase 
the number of operating rooms, procedure 
rooms, or beds of the hospital above the 
baseline number of operating rooms, proce-
dure rooms, or beds, respectively, of the 
hospital (or, if the hospital has been grant-
ed a previous exception under this para-
graph, above the number of operating 
rooms, procedure rooms, or beds, respec-
tively, of the hospital after the application 
of the most recent increase under such an 
exception). 
‘‘(ii) 100 PERCENT INCREASE LIMITA-
TION.—The Secretary shall not permit an 
increase in the number of operating rooms, 
procedure rooms, or beds of a hospital 
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under clause (i) to the extent such increase 
would result in the number of operating 
rooms, procedure rooms, or beds of the 
hospital exceeding 200 percent of the base-
line number of operating rooms, procedure 
rooms, or beds of the hospital. 
‘‘(iii) BASELINE
NUMBER
OF
OPER-
ATING
ROOMS, PROCEDURE
ROOMS, OR 
BEDS.—In this paragraph, the term ‘base-
line number of operating rooms, procedure 
rooms, or beds’ means the number of oper-
ating rooms, procedure rooms, or beds of a 
hospital as of the date of enactment of this 
subsection. 
‘‘(D) INCREASE
LIMITED
TO
FACILITIES 
ON THE MAIN CAMPUS OF THE HOSPITAL.— 
Any increase in the number of operating rooms, 
procedure rooms, or beds of a hospital pursuant 
to this paragraph may only occur in facilities on 
the main campus of the hospital. 
‘‘(E) CONDITIONS FOR APPROVAL OF AN 
INCREASE
IN
FACILITY
CAPACITY.—The Sec-
retary may grant an exception under the proc-
ess described in subparagraph (A) only to a 
hospital— 
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‘‘(i) that is located in a county in 
which the percentage increase in the popu-
lation during the most recent 5-year period 
for which data are available is estimated to 
be at least 150 percent of the percentage 
increase in the population growth of the 
State in which the hospital is located dur-
ing that period, as estimated by Bureau of 
the Census and available to the Secretary; 
‘‘(ii) whose annual percent of total in-
patient admissions that represent inpatient 
admissions under the program under title 
XIX is estimated to be equal to or greater 
than the average percent with respect to 
such admissions for all hospitals located in 
the county in which the hospital is located; 
‘‘(iii) that does not discriminate 
against beneficiaries of Federal health care 
programs and does not permit physicians 
practicing at the hospital to discriminate 
against such beneficiaries; 
‘‘(iv) that is located in a State in 
which the average bed capacity in the 
State is estimated to be less than the na-
tional average bed capacity; 
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‘‘(v) that has an average bed occu-
pancy rate that is estimated to be greater 
than the average bed occupancy rate in the 
State in which the hospital is located; and 
‘‘(vi) that meets other conditions as 
determined by the Secretary. 
‘‘(F) PROCEDURE
ROOMS.—In this sub-
section, the term ‘procedure rooms’ includes 
rooms in which catheterizations, angiographies, 
angiograms, and endoscopies are furnished, but 
such term shall not include emergency rooms or 
departments (except for rooms in which cath-
eterizations, angiographies, angiograms, and 
endoscopies are furnished). 
‘‘(G) 
PUBLICATION
OF
FINAL
DECI-
SIONS.—Not later than 120 days after receiving 
a complete application under this paragraph, 
the Secretary shall publish on the public Inter-
net website of the Centers for Medicare & Med-
icaid Services the final decision with respect to 
such application. 
‘‘(H) LIMITATION
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise 
of the exception process under this paragraph, 
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including the establishment of such process, 
and any determination made under such proc-
ess. 
‘‘(3) PHYSICIAN
OWNER
OR
INVESTOR
DE-
FINED.—For purposes of this subsection and sub-
section (f)(2), the term ‘physician owner or investor’ 
means a physician (or an immediate family member 
of such physician) with a direct or an indirect own-
ership or investment interest in the hospital. 
‘‘(4) PATIENT SAFETY REQUIREMENT.—In the 
case of a hospital to which the requirements of para-
graph (1) apply, insofar as the hospital admits a pa-
tient and does not have any physician available on 
the premises 24 hours per day, 7 days per week, be-
fore admitting the patient— 
‘‘(A) the hospital shall disclose such fact to 
the patient; and 
‘‘(B) following such disclosure, the hospital 
shall receive from the patient a signed acknowl-
edgment that the patient understands such fact. 
‘‘(5) CLARIFICATION.—Nothing in this sub-
section shall be construed as preventing the Sec-
retary from terminating a hospital’s provider agree-
ment if the hospital is not in compliance with regu-
lations pursuant to section 1866.’’. 
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(b) VERIFYING
COMPLIANCE.—The Secretary of 
Health and Human Services shall establish policies and 
procedures to verify compliance with the requirements de-
scribed in subsections (i)(1) and (i)(4) of section 1877 of 
the Social Security Act, as added by subsection (a)(5). 
The Secretary may use unannounced site reviews of hos-
pitals and audits to verify compliance with such require-
ments. 
(c) IMPLEMENTATION.— 
(1) FUNDING.—For purposes of carrying out 
the amendments made by subsection (a) and the 
provisions of subsection (b), in addition to funds 
otherwise available, out of any funds in the Treasury 
not otherwise appropriated there are appropriated to 
the Secretary of Health and Human Services for the 
Centers for Medicare & Medicaid Services Program 
Management Account $5,000,000 for each fiscal 
year beginning with fiscal year 2010. Amounts ap-
propriated under this paragraph for a fiscal year 
shall be available until expended. 
(2) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the amend-
ments made by subsection (a) and the provisions of 
subsection (b). 
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SEC. 1157. INSTITUTE OF MEDICINE STUDY OF GEO-
GRAPHIC 
ADJUSTMENT 
FACTORS 
UNDER 
MEDICARE. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall enter into a contract with the Insti-
tute of Medicine of the National Academy of Science to 
conduct a comprehensive empirical study, and provide rec-
ommendations as appropriate, on the accuracy of the geo-
graphic adjustment factors established under sections 
1848(e) and 1886(d)(3)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e), 11395ww(d)(3)). 
(b) MATTERS INCLUDED.—Such study shall include 
an evaluation and assessment of the following with respect 
to such adjustment factors: 
(1) Empirical validity of the adjustment factors. 
(2) Methodology used to determine the adjust-
ment factors. 
(3) Measures used for the adjustment factors, 
taking into account— 
(A) timeliness of data and frequency of re-
visions to such data; 
(B) sources of data and the degree to 
which such data are representative of costs; and 
(C) operational costs of providers who par-
ticipate in Medicare. 
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(c) EVALUATION.—Such study shall, within the con-
text of the United States health care marketplace, evalu-
ate and consider the following: 
(1) The effect of the adjustment factors on the 
level and distribution of the health care workforce 
and resources, including— 
(A) recruitment and retention that takes 
into account workforce mobility between urban 
and rural areas; 
(B) ability of hospitals and other facilities 
to maintain an adequate and skilled workforce; 
and 
(C) patient access to providers and needed 
medical technologies. 
(2) The effect of the adjustment factors on pop-
ulation health and quality of care. 
(3) The effect of the adjustment factors on the 
ability of providers to furnish efficient, high value 
care. 
(d) REPORT.—The contract under subsection (a) 
shall provide for the Institute of Medicine to submit, not 
later than one year after the date of the enactment of this 
Act, to the Secretary and the Congress a report containing 
results and recommendations of the study conducted 
under this section. 
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(e) FUNDING.—There are authorized to be appro-
priated to carry out this section such sums as may be nec-
essary. 
SEC. 1158. REVISION OF MEDICARE PAYMENT SYSTEMS TO 
ADDRESS GEOGRAPHIC INEQUITIES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services, taking into account the recommenda-
tions made in the report under section 1157(d), shall in-
clude in the proposed rules published to implement 
changes to payment systems for physicians and hospitals 
under sections 1848(e) and 1886(d)(3)(E), respectively, of 
the Social Security Act, proposals to revise geographic ad-
justment factors for such payment systems for services 
furnished under the Medicare program. Such proposed 
rules shall be published in the rulemaking period imme-
diately following submission of the report under section 
1157(d). 
(b) PAYMENT ADJUSTMENTS.— 
(1) FUNDING FOR IMPROVEMENTS.—In making 
any changes to the geographic adjustment factors in 
accordance with subsection (a), the Secretary shall 
use funds made available for such purposes under 
subsection (c). 
(2) ENSURING FAIRNESS.—In carrying out this 
subsection, the Secretary shall not change payment 
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rates to be less than they would have been had this 
section not been enacted. 
(c) FUNDING.—Amounts in the Medicare Improve-
ment Fund under section 1898 of the Social Security Act 
(42 U.S.C. 1395iii), as amended by section 1146, shall 
be available to the Secretary to make changes to the geo-
graphic adjustments factors established under sections 
1848(e) and 1886(d)(3)(E) of the Social Security Act. For 
such purpose, such funds shall be available for expenditure 
for services furnished before January 1, 2014, and shall 
not exceed the total amounts available under such Fund 
for such period. No more than one-half of such amounts 
shall be available for expenditure for services furnished in 
any one payment year. 
Subtitle D—Medicare Advantage 
Reforms 
PART 1—PAYMENT AND ADMINISTRATION 
SEC. 1161. PHASE-IN OF PAYMENT BASED ON FEE-FOR- 
SERVICE COSTS. 
Section 1853 of the Social Security Act (42 U.S.C. 
1395w–23) is amended— 
(1) in subsection (j)(1)(A)— 
(A) by striking ‘‘beginning with 2007’’ and 
inserting ‘‘for 2007, 2008, 2009, and 2010’’; 
and 
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(B) by inserting after ‘‘(k)(1)’’ the fol-
lowing: ‘‘, or, beginning with 2011, 1⁄12 of the 
blended benchmark amount determined under 
subsection (n)(1)’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(n) DETERMINATION
OF BLENDED BENCHMARK 
AMOUNT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(j), subject to paragraphs (3) and (4), the term 
‘blended benchmark amount’ means for an area— 
‘‘(A) for 2011 the sum of— 
‘‘(i) 2⁄3 of the applicable amount (as 
defined in subsection (k)) for the area and 
year; and 
‘‘(ii) 1⁄3 of the amount specified in 
paragraph (2) for the area and year; 
‘‘(B) for 2012 the sum of— 
‘‘(i) 1⁄3 of the applicable amount for 
the area and year; and 
‘‘(ii) 2⁄3 of the amount specified in 
paragraph (2) for the area and year; and 
‘‘(C) for a subsequent year the amount 
specified in paragraph (2) for the area and 
year. 
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‘‘(2) SPECIFIED AMOUNT.—The amount speci-
fied in this paragraph for an area and year is the 
amount specified in subsection (c)(1)(D)(i) for the 
area and year adjusted (in a manner specified by the 
Secretary) to take into account the phase-out in the 
indirect costs of medical education from capitation 
rates described in subsection (k)(4). 
‘‘(3) FEE-FOR-SERVICE
PAYMENT
FLOOR.—In 
no case shall the blended benchmark amount for an 
area and year be less than the amount specified in 
paragraph (2). 
‘‘(4) EXCEPTION FOR PACE PLANS.—This sub-
section shall not apply to payments to a PACE pro-
gram under section 1894.’’. 
SEC. 1162. QUALITY BONUS PAYMENTS. 
(a) IN GENERAL.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23), as amended by section 
1161, is amended— 
(1) in subsection (j), by inserting ‘‘subject to 
subsection (o),’’ after ‘‘For purposes of this part’’; 
and 
(2) by adding at the end the following new sub-
section: 
‘‘(o) QUALITY BASED PAYMENT ADJUSTMENT.— 
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‘‘(1) HIGH QUALITY PLAN ADJUSTMENT.—For 
years beginning with 2011, in the case of a Medicare 
Advantage plan that is identified (under paragraph 
(3)(E)(ii)) as a high quality MA plan with respect 
to the year, the blended benchmark amount under 
subsection (n)(1) shall be increased— 
‘‘(A) for 2011, by 1.0 percent; 
‘‘(B) for 2012, by 2.0 percent; and 
‘‘(C) for a subsequent year, by 3.0 percent. 
‘‘(2) IMPROVED QUALITY PLAN ADJUSTMENT.— 
For years beginning with 2011, in the case of a 
Medicare Advantage plan that is identified (under 
paragraph (3)(E)(iii)) as an improved quality MA 
plan with respect to the year, blended benchmark 
amount under subsection (n)(1) shall be increased— 
‘‘(A) for 2011, by 0.33 percent; 
‘‘(B) for 2012, by 0.66 percent; and 
‘‘(C) for a subsequent year, by 1.0 percent. 
‘‘(3) DETERMINATIONS OF QUALITY.— 
‘‘(A) QUALITY PERFORMANCE.—The Sec-
retary shall provide for the computation of a 
quality performance score for each Medicare 
Advantage plan to be applied for each year be-
ginning with 2010. 
‘‘(B) COMPUTATION OF SCORE.— 
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‘‘(i) FOR YEARS BEFORE 2014.—For 
years before 2014, the quality performance 
score for a Medicare Advantage plan shall 
be computed based on a blend (as des-
ignated by the Secretary) of the plan’s per-
formance on— 
‘‘(I) HEDIS effectiveness of care 
quality measures; 
‘‘(II) CAHPS quality measures; 
and 
‘‘(III) such other measures of 
clinical quality as the Secretary may 
specify. 
Such measures shall be risk-adjusted as 
the Secretary deems appropriate. 
‘‘(ii) ESTABLISHMENT OF OUTCOME- 
BASED MEASURES.—By not later than for 
2013 the Secretary shall implement report-
ing requirements for quality under this 
section on measures selected under clause 
(iii) that reflect the outcomes of care expe-
rienced by individuals enrolled in Medicare 
Advantage plans (in addition to measures 
described in clause (i)). Such measures 
may include— 
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‘‘(I) measures of rates of admis-
sion and readmission to a hospital; 
‘‘(II) measures of prevention 
quality, such as those established by 
the Agency for Healthcare Research 
and Quality (that include hospital ad-
mission rates for specified conditions); 
‘‘(III) measures of patient mor-
tality and morbidity following surgery; 
‘‘(IV) measures of health func-
tioning (such as limitations on activi-
ties of daily living) and survival for 
patients with chronic diseases; 
‘‘(V) measures of patient safety; 
and 
‘‘(VI) other measure of outcomes 
and patient quality of life as deter-
mined by the Secretary. 
Such measures shall be risk-adjusted as 
the Secretary deems appropriate. In deter-
mining the quality measures to be used 
under this clause, the Secretary shall take 
into consideration the recommendations of 
the Medicare Payment Advisory Commis-
sion in its report to Congress under section 
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168 of the Medicare Improvements for Pa-
tients and Providers Act of 2008 (Public 
Law 110–275) and shall provide pref-
erence to measures collected on and com-
parable to measures used in measuring 
quality under parts A and B. 
‘‘(iii) RULES
FOR
SELECTION
OF 
MEASURES.—The Secretary shall select 
measures for purposes of clause (ii) con-
sistent with the following: 
‘‘(I) The Secretary shall provide 
preference to clinical quality measures 
that have been endorsed by the entity 
with a contract with the Secretary 
under section 1890(a). 
‘‘(II) Prior to any measure being 
selected under this clause, the Sec-
retary shall publish in the Federal 
Register such measure and provide for 
a period of public comment on such 
measure. 
‘‘(iv) 
TRANSITIONAL
USE
OF 
BLEND.—For payments for 2014 and 
2015, the Secretary may compute the qual-
ity performance score for a Medicare Ad-
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vantage plan based on a blend of the meas-
ures specified in clause (i) and the meas-
ures described in clause (ii) and selected 
under clause (iii). 
‘‘(v) USE
OF
QUALITY
OUTCOMES 
MEASURES.—For payments beginning with 
2016, the preponderance of measures used 
under this paragraph shall be quality out-
comes measures described in clause (ii) 
and selected under clause (iii). 
‘‘(C) DATA USED IN COMPUTING SCORE.— 
Such score for application for— 
‘‘(i) payments in 2011 shall be based 
on quality performance data for plans for 
2009; and 
‘‘(ii) payments in 2012 and a subse-
quent year shall be based on quality per-
formance data for plans for the second 
preceding year. 
‘‘(D) REPORTING OF DATA.—Each Medi-
care Advantage organization shall provide for 
the reporting to the Secretary of quality per-
formance data described in subparagraph (B) 
(in order to determine a quality performance 
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score under this paragraph) in such time and 
manner as the Secretary shall specify. 
‘‘(E) RANKING OF PLANS.— 
‘‘(i) INITIAL RANKING.—Based on the 
quality performance score described in sub-
paragraph (B) achieved with respect to a 
year, the Secretary shall rank plan per-
formance— 
‘‘(I) from highest to lowest based 
on absolute scores; and 
‘‘(II) from highest to lowest 
based on percentage improvement in 
the score for the plan from the pre-
vious year. 
A plan which does not report quality per-
formance data under subparagraph (D) 
shall be counted, for purposes of such 
ranking, as having the lowest plan per-
formance and lowest percentage improve-
ment. 
‘‘(ii) IDENTIFICATION OF HIGH QUAL-
ITY PLANS IN TOP QUINTILE BASED ON 
PROJECTED ENROLLMENT.—The Secretary 
shall, based on the scores for each plan 
under clause (i)(I) and the Secretary’s pro-
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jected enrollment for each plan and subject 
to clause (iv), identify those Medicare Ad-
vantage plans with the highest score that, 
based upon projected enrollment, are pro-
jected to include in the aggregate 20 per-
cent of the total projected enrollment for 
the year. For purposes of this subsection, 
a plan so identified shall be referred to in 
this subsection as a ‘high quality MA 
plan’. 
‘‘(iii) IDENTIFICATION OF IMPROVED 
QUALITY PLANS IN TOP QUINTILE BASED 
ON PROJECTED ENROLLMENT.—The Sec-
retary shall, based on the percentage im-
provement score for each plan under clause 
(i)(II) and the Secretary’s projected enroll-
ment for each plan and subject to clause 
(iv), identify those Medicare Advantage 
plans with the greatest percentage im-
provement score that, based upon projected 
enrollment, are projected to include in the 
aggregate 20 percent of the total projected 
enrollment for the year. For purposes of 
this subsection, a plan so identified that is 
not a high quality plan for the year shall 
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be referred to in this subsection as an ‘im-
proved quality MA plan’. 
‘‘(iv) AUTHORITY
TO
DISQUALIFY 
CERTAIN PLANS.—In applying clauses (ii) 
and (iii), the Secretary may determine not 
to identify a Medicare Advantage plan if 
the Secretary has identified deficiencies in 
the plan’s compliance with rules for such 
plans under this part. 
‘‘(F) NOTIFICATION.—The Secretary, in 
the annual announcement required under sub-
section (b)(1)(B) in 2011 and each succeeding 
year, shall notify the Medicare Advantage orga-
nization that is offering a high quality plan or 
an improved quality plan of such identification 
for the year and the quality performance pay-
ment adjustment for such plan for the year. 
The Secretary shall provide for publication on 
the website for the Medicare program of the in-
formation described in the previous sentence.’’. 
SEC. 1163. EXTENSION OF SECRETARIAL CODING INTEN-
SITY ADJUSTMENT AUTHORITY. 
Section 1853(a)(1)(C)(ii) of the Social Security Act 
(42 U.S.C. 1395w–23(a)(1)(C)(ii)) is amended— 
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(1) in the matter before subclause (I), by strik-
ing ‘‘through 2010’’ and inserting ‘‘and each subse-
quent year’’; and 
(2) in subclause (II)— 
(A) by inserting ‘‘periodically’’ before ‘‘con-
duct an analysis’’; 
(B) by inserting ‘‘on a timely basis’’ after 
‘‘are incorporated’’; and 
(C) by striking ‘‘only for 2008, 2009, and 
2010’’ and inserting ‘‘for 2008 and subsequent 
years’’. 
SEC. 1164. SIMPLIFICATION OF ANNUAL BENEFICIARY 
ELECTION PERIODS. 
(a) 2 WEEK PROCESSING PERIOD FOR ANNUAL EN-
ROLLMENT PERIOD (AEP).—Paragraph (3)(B) of section 
1851(e) of the Social Security Act (42 U.S.C. 1395w– 
21(e)) is amended— 
(1) by striking ‘‘and’’ at the end of clause (iii); 
(2) in clause (iv)— 
(A) by striking ‘‘and succeeding years’’ 
and inserting ‘‘, 2008, 2009, and 2010’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by adding at the end the following new 
clause: 
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‘‘(v) with respect to 2011 and suc-
ceeding years, the period beginning on No-
vember 1 and ending on December 15 of 
the year before such year.’’. 
(b) ELIMINATION OF 3-MONTH ADDITIONAL OPEN 
ENROLLMENT PERIOD (OEP).—Effective for plan years 
beginning with 2011, paragraph (2) of such section is 
amended by striking subparagraph (C). 
SEC. 1165. EXTENSION OF REASONABLE COST CONTRACTS. 
Section 1876(h)(5)(C) of the Social Security Act (42 
U.S.C. 1395mm(h)(5)(C)) is amended— 
(1) in clause (ii), by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2012’’; and 
(2) in clause (iii), by striking ‘‘the service area 
for the year’’ and inserting ‘‘the portion of the 
plan’s service area for the year that is within the 
service area of a reasonable cost reimbursement con-
tract’’. 
SEC. 1166. LIMITATION OF WAIVER AUTHORITY FOR EM-
PLOYER GROUP PLANS. 
(a) IN GENERAL.—The first sentence of paragraph 
(2) of section 1857(i) of the Social Security Act (42 
U.S.C. 1395w–27(i)) is amended by inserting before the 
period at the end the following: ‘‘, but only if 90 percent 
of the Medicare Advantage eligible individuals enrolled 
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under such plan reside in a county in which the MA orga-
nization offers an MA local plan’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply for plan years beginning on or 
after January 1, 2011, and shall not apply to plans which 
were in effect as of December 31, 2010. 
SEC. 1167. IMPROVING RISK ADJUSTMENT FOR PAYMENTS. 
(a) REPORT TO CONGRESS.—Not later than 1 year 
after the date of the enactment of this Act, the Secretary 
of Health and Human Services shall submit to Congress 
a report that evaluates the adequacy of the risk adjust-
ment system under section 1853(a)(1)(C) of the Social Se-
curity Act (42 U.S.C. 1395–23(a)(1)(C)) in predicting 
costs for beneficiaries with chronic or co-morbid condi-
tions, beneficiaries dually-eligible for Medicare and Med-
icaid, and non-Medicaid eligible low-income beneficiaries; 
and the need and feasibility of including further grada-
tions of diseases or conditions and multiple years of bene-
ficiary data. 
(b) IMPROVEMENTS
TO RISK ADJUSTMENT.—Not 
later than January 1, 2012, the Secretary shall implement 
necessary improvements to the risk adjustment system 
under section 1853(a)(1)(C) of the Social Security Act (42 
U.S.C. 1395–23(a)(1)(C)), taking into account the evalua-
tion under subsection (a). 
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SEC. 1168. ELIMINATION OF MA REGIONAL PLAN STA-
BILIZATION FUND. 
(a) IN GENERAL.—Section 1858 of the Social Secu-
rity Act (42 U.S.C. 1395w–27a) is amended by striking 
subsection (e). 
(b) TRANSITION.—Any amount contained in the MA 
Regional Plan Stabilization Fund as of the date of the 
enactment of this Act shall be transferred to the Federal 
Supplementary Medical Insurance Trust Fund. 
PART 2—BENEFICIARY PROTECTIONS AND ANTI- 
FRAUD 
SEC. 1171. LIMITATION ON COST-SHARING FOR INDIVIDUAL 
HEALTH SERVICES. 
(a) IN GENERAL.—Section 1852(a)(1) of the Social 
Security Act (42 U.S.C. 1395w–22(a)(1)) is amended— 
(1) in subparagraph (A), by inserting before the 
period at the end the following: ‘‘with cost-sharing 
that is no greater (and may be less) than the cost- 
sharing that would otherwise be imposed under such 
program option’’; 
(2) in subparagraph (B)(i), by striking ‘‘or an 
actuarially equivalent level of cost-sharing as deter-
mined in this part’’; and 
(3) by amending clause (ii) of subparagraph 
(B) to read as follows: 
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‘‘(ii) PERMITTING USE OF FLAT CO-
PAYMENT OR PER DIEM RATE.—Nothing in 
clause (i) shall be construed as prohibiting 
a Medicare Advantage plan from using a 
flat copayment or per diem rate, in lieu of 
the cost-sharing that would be imposed 
under part A or B, so long as the amount 
of the cost-sharing imposed does not ex-
ceed the amount of the cost-sharing that 
would be imposed under the respective part 
if the individual were not enrolled in a plan 
under this part.’’. 
(b) LIMITATION FOR DUAL ELIGIBLES AND QUALI-
FIED MEDICARE BENEFICIARIES.—Section 1852(a) of 
such Act is amended by adding at the end the following 
new paragraph: 
‘‘(7) LIMITATION ON COST-SHARING FOR DUAL 
ELIGIBLES
AND
QUALIFIED
MEDICARE
BENE-
FICIARIES.—In the case of a individual who is a full- 
benefit dual eligible individual (as defined in section 
1935(c)(6)) or a qualified medicare beneficiary (as 
defined in section 1905(p)(1)) who is enrolled in a 
Medicare Advantage plan, the plan may not impose 
cost-sharing that exceeds the amount of cost-sharing 
that would be permitted with respect to the indi-
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vidual under this title and title XIX if the individual 
were not enrolled with such plan.’’. 
(c) EFFECTIVE DATES.— 
(1) The amendments made by subsection (a) 
shall apply to plan years beginning on or after Janu-
ary 1, 2011. 
(2) The amendments made by subsection (b) 
shall apply to plan years beginning on or after Janu-
ary 1, 2011. 
SEC. 1172. CONTINUOUS OPEN ENROLLMENT FOR ENROLL-
EES IN PLANS WITH ENROLLMENT SUSPEN-
SION. 
Section 1851(e)(4) of the Social Security Act (42 
U.S.C. 1395w(e)(4)) is amended— 
(1) in subparagraph (C), by striking at the end 
‘‘or’’; 
(2) in subparagraph (D)— 
(A) by inserting ‘‘, taking into account the 
health or well-being of the individual’’ before 
the period; and 
(B) by redesignating such subparagraph as 
subparagraph (E); and 
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph: 
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‘‘(D) the individual is enrolled in an MA 
plan and enrollment in the plan is suspended 
under paragraph (2)(B) or (3)(C) of section 
1857(g) because of a failure of the plan to meet 
applicable requirements; or’’. 
SEC. 1173. INFORMATION FOR BENEFICIARIES ON MA PLAN 
ADMINISTRATIVE COSTS. 
(a) DISCLOSURE OF MEDICAL LOSS RATIOS AND 
OTHER EXPENSE DATA.—Section 1851 of the Social Se-
curity Act (42 U.S.C. 1395w–21), as previously amended 
by this subtitle, is amended by adding at the end the fol-
lowing new subsection: 
‘‘(p) PUBLICATION OF MEDICAL LOSS RATIOS AND 
OTHER COST-RELATED INFORMATION.— 
‘‘(1) IN GENERAL.—The Secretary shall pub-
lish, not later than November 1 of each year (begin-
ning with 2011), for each MA plan contract, the 
medical loss ratio of the plan in the previous year. 
‘‘(2) SUBMISSION OF DATA.— 
‘‘(A) IN GENERAL.—Each MA organization 
shall submit to the Secretary, in a form and 
manner specified by the Secretary, data nec-
essary for the Secretary to publish the medical 
loss ratio on a timely basis. 
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‘‘(B) DATA FOR 2010 AND 2011.—The data 
submitted under subparagraph (A) for 2010 
and for 2011 shall be consistent in content with 
the data reported as part of the MA plan bid 
in June 2009 for 2010. 
‘‘(C) USE OF STANDARDIZED ELEMENTS 
AND DEFINITIONS.—The data to be submitted 
under subparagraph (A) relating to medical loss 
ratio for a year, beginning with 2012, shall be 
submitted based on the standardized elements 
and definitions developed under paragraph (3). 
‘‘(3) DEVELOPMENT
OF
DATA
REPORTING 
STANDARDS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
develop and implement standardized data ele-
ments and definitions for reporting under this 
subsection, for contract years beginning with 
2012, of data necessary for the calculation of 
the medical loss ratio for MA plans. Not later 
than December 31, 2010, the Secretary shall 
publish a report describing the elements and 
definitions so developed. 
‘‘(B) 
CONSULTATION.—The 
Secretary 
shall consult with the Health Choices Commis-
sioner, representatives of MA organizations, ex-
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perts on health plan accounting systems, and 
representatives of the National Association of 
Insurance Commissioners, in the development 
of such data elements and definitions. 
‘‘(4) MEDICAL LOSS RATIO TO BE DEFINED.— 
For purposes of this part, the term ‘medical loss 
ratio’ has the meaning given such term by the Sec-
retary, taking into account the meaning given such 
term by the Health Choices Commissioner under 
section 116 of the America’s Affordable Health 
Choices Act of 2009.’’. 
(b) MINIMUM
MEDICAL
LOSS
RATIO.—Section 
1857(e) of the Social Security Act (42 U.S.C. 1395w– 
27(e)) is amended by adding at the end the following new 
paragraph: 
‘‘(4) REQUIREMENT
FOR
MINIMUM
MEDICAL 
LOSS RATIO.—If the Secretary determines for a con-
tract year (beginning with 2014) that an MA plan 
has failed to have a medical loss ratio (as defined in 
section 1851(p)(4)) of at least .85— 
‘‘(A) the Secretary shall require the Medi-
care Advantage organization offering the plan 
to give enrollees a rebate (in the second suc-
ceeding contract year) of premiums under this 
part (or part B or part D, if applicable) by 
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such amount as would provide for a benefits 
ratio of at least .85; 
‘‘(B) for 3 consecutive contract years, the 
Secretary shall not permit the enrollment of 
new enrollees under the plan for coverage dur-
ing the second succeeding contract year; and 
‘‘(C) the Secretary shall terminate the plan 
contract if the plan fails to have such a medical 
loss ratio for 5 consecutive contract years.’’. 
SEC. 1174. STRENGTHENING AUDIT AUTHORITY. 
(a) FOR PART C PAYMENTS RISK ADJUSTMENT.— 
Section 1857(d)(1) of the Social Security Act (42 U.S.C. 
1395w–27(d)(1)) is amended by inserting after ‘‘section 
1858(c))’’ the following: ‘‘, and data submitted with re-
spect to risk adjustment under section 1853(a)(3)’’. 
(b) 
ENFORCEMENT
OF
AUDITS
AND
DEFI-
CIENCIES.— 
(1) IN GENERAL.—Section 1857(e) of such Act, 
as amended by section 1173, is amended by adding 
at the end the following new paragraph: 
‘‘(5) ENFORCEMENT
OF
AUDITS
AND
DEFI-
CIENCIES.— 
‘‘(A) INFORMATION
IN
CONTRACT.—The 
Secretary shall require that each contract with 
an MA organization under this section shall in-
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clude terms that inform the organization of the 
provisions in subsection (d). 
‘‘(B) ENFORCEMENT
AUTHORITY.—The 
Secretary is authorized, in connection with con-
ducting audits and other activities under sub-
section (d), to take such actions, including pur-
suit of financial recoveries, necessary to address 
deficiencies identified in such audits or other 
activities.’’. 
(2) APPLICATION UNDER PART D.—For provi-
sion applying the amendment made by paragraph 
(1) to prescription drug plans under part D, see sec-
tion 1860D–12(b)(3)(D) of the Social Security Act. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act and shall apply to audits and activities con-
ducted for contract years beginning on or after January 
1, 2011. 
SEC. 1175. 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.—Nothing in 
this section shall be construed as requiring the 
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Secretary to accept any or every bid by an MA 
organization under this subsection.’’. 
(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 
under this section in the same manner as it applies 
to bids by an MA organization under such section.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bids for contract years begin-
ning on or after January 1, 2011. 
PART 3—TREATMENT OF SPECIAL NEEDS PLANS 
SEC. 1176. LIMITATION ON ENROLLMENT OUTSIDE OPEN 
ENROLLMENT PERIOD OF INDIVIDUALS INTO 
CHRONIC CARE SPECIALIZED MA PLANS FOR 
SPECIAL NEEDS INDIVIDUALS. 
Section 1859(f)(4) of the Social Security Act (42 
U.S.C. 1395w–28(f)(4)) is amended by adding at the end 
the following new subparagraph: 
‘‘(C) The plan does not enroll an individual 
on or after January 1, 2011, other than during 
an annual, coordinated open enrollment period 
or when at the time of the diagnosis of the dis-
ease or condition that qualifies the individual as 
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an 
individual 
described 
in 
subsection 
(b)(6)(B)(iii).’’. 
SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS 
PLANS TO RESTRICT ENROLLMENT. 
(a) IN GENERAL.—Section 1859(f)(1) of the Social 
Security Act (42 U.S.C. 1395w–28(f)(1)) is amended by 
striking ‘‘January 1, 2011’’ and inserting ‘‘January 1, 
2013 (or January 1, 2016, in the case of a plan described 
in section 1177(b)(1) of the America’s Affordable Health 
Choices Act of 2009)’’. 
(b) GRANDFATHERING OF CERTAIN PLANS.— 
(1) PLANS DESCRIBED.—For purposes of sec-
tion 1859(f)(1) of the Social Security Act (42 
U.S.C. 1395w–28(f)(1)), a plan described in this 
paragraph is a plan that had a contract with a State 
that had a State program to operate an integrated 
Medicaid-Medicare program that had been approved 
by the Centers for Medicare & Medicaid Services as 
of January 1, 2004. 
(2) ANALYSIS; 
REPORT.—The Secretary of 
Health and Human Services shall provide, through 
a contract with an independent health services eval-
uation organization, for an analysis of the plans de-
scribed in paragraph (1) with regard to the impact 
of such plans on cost, quality of care, patient satis-
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faction, and other subjects as specified by the Sec-
retary. Not later than December 31, 2011, the Sec-
retary shall submit to Congress a report on such 
analysis and shall include in such report such rec-
ommendations with regard to the treatment of such 
plans as the Secretary deems appropriate. 
Subtitle E—Improvements to 
Medicare Part D 
SEC. 1181. ELIMINATION OF COVERAGE GAP. 
(a) IN GENERAL.—Section 1860D–2(b) of such Act 
(42 U.S.C. 1395w–102(b)) is amended— 
(1) in paragraph (3)(A), by striking ‘‘paragraph 
(4)’’ and inserting ‘‘paragraphs (4) and (7)’’; 
(2) in paragraph (4)(B)(i), by inserting ‘‘sub-
ject to paragraph (7)’’ after ‘‘purposes of this part’’; 
and 
(3) by adding at the end the following new 
paragraph: 
‘‘(7) PHASED-IN
ELIMINATION
OF
COVERAGE 
GAP.— 
‘‘(A) IN GENERAL.—For each year begin-
ning with 2011, the Secretary shall consistent 
with this paragraph progressively increase the 
initial coverage limit (described in subsection 
(b)(3)) and decrease the annual out-of-pocket 
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threshold from the amounts otherwise computed 
until there is a continuation of coverage from 
the initial coverage limit for expenditures in-
curred through the total amount of expendi-
tures at which benefits are available under 
paragraph (4). 
‘‘(B) INCREASE
IN
INITIAL
COVERAGE 
LIMIT.—For a year beginning with 2011, the 
initial coverage limit otherwise computed with-
out regard to this paragraph shall be increased 
by 1⁄2 of the cumulative phase-in percentage (as 
defined in subparagraph (D)(ii) for the year) 
times the out-of-pocket gap amount (as defined 
in subparagraph (E)) for the year. 
‘‘(C) DECREASE IN ANNUAL OUT-OF-POCK-
ET THRESHOLD.—For a year beginning with 
2011, the annual out-of-pocket threshold other-
wise computed without regard to this paragraph 
shall be decreased by 1⁄2 of the cumulative 
phase-in percentage of the out-of-pocket gap 
amount for the year multiplied by 1.75. 
‘‘(D) PHASE–IN.—For purposes of this 
paragraph: 
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‘‘(i) ANNUAL
PHASE-IN
PERCENT-
AGE.—The term ‘annual phase-in percent-
age’ means— 
‘‘(I) for 2011, 13 percent; 
‘‘(II) for 2012, 2013, 2014, and 
2015, 5 percent; 
‘‘(III) for 2016 through 2018, 
7.5 percent; and 
‘‘(IV) for 2019 and each subse-
quent year, 10 percent. 
‘‘(ii) CUMULATIVE
PHASE-IN
PER-
CENTAGE.—The term ‘cumulative phase-in 
percentage’ means for a year the sum of 
the annual phase-in percentage for the 
year and the annual phase-in percentages 
for each previous year beginning with 
2011, but in no case more than 100 per-
cent. 
‘‘(E) OUT-OF-POCKET GAP AMOUNT.—For 
purposes of this paragraph, the term ‘out-of- 
pocket gap amount’ means for a year the 
amount by which— 
‘‘(i) the annual out-of-pocket thresh-
old specified in paragraph (4)(B) for the 
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year (as determined as if this paragraph 
did not apply), exceeds 
‘‘(ii) the sum of— 
‘‘(I) the annual deductible under 
paragraph (1) for the year; and 
‘‘(II) 1⁄4 of the amount by which 
the initial coverage limit under para-
graph (3) for the year (as determined 
as if this paragraph did not apply) ex-
ceeds such annual deductible.’’. 
(b) REQUIRING DRUG MANUFACTURERS TO PRO-
VIDE DRUG REBATES FOR FULL-BENEFIT DUAL ELIGI-
BLES.— 
(1) IN GENERAL.—Section 1860D–2 of the So-
cial Security Act (42 U.S.C. 1396r–8) is amended— 
(A) in subsection (e)(1), in the matter be-
fore subparagraph (A), by inserting ‘‘and sub-
section (f)’’ after ‘‘this subsection’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘(f) PRESCRIPTION DRUG REBATE AGREEMENT FOR 
FULL-BENEFIT DUAL ELIGIBLE INDIVIDUALS.— 
‘‘(1) IN GENERAL.—In this part, the term ‘cov-
ered part D drug’ does not include any drug or bio-
logic that is manufactured by a manufacturer that 
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has not entered into and have in effect a rebate 
agreement described in paragraph (2). 
‘‘(2) REBATE
AGREEMENT.—A rebate agree-
ment under this subsection shall require the manu-
facturer to provide to the Secretary a rebate for 
each rebate period (as defined in paragraph (6)(B)) 
ending after December 31, 2010, in the amount 
specified in paragraph (3) for any covered part D 
drug of the manufacturer dispensed after December 
31, 2010, to any full-benefit dual eligible individual 
(as defined in paragraph (6)(A)) for which payment 
was made by a PDP sponsor under part D or a MA 
organization under part C for such period. Such re-
bate shall be paid by the manufacturer to the Sec-
retary not later than 30 days after the date of re-
ceipt of the information described in section 1860D– 
12(b)(7), including as such section is applied under 
section 1857(f)(3). 
‘‘(3) REBATE FOR FULL-BENEFIT DUAL ELIGI-
BLE MEDICARE DRUG PLAN ENROLLEES.— 
‘‘(A) IN GENERAL.—The amount of the re-
bate specified under this paragraph for a manu-
facturer for a rebate period, with respect to 
each dosage form and strength of any covered 
part D drug provided by such manufacturer 
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and dispensed to a full-benefit dual eligible indi-
vidual, shall be equal to the product of— 
‘‘(i) the total number of units of such 
dosage form and strength of the drug so 
provided and dispensed for which payment 
was made by a PDP sponsor under part D 
or a MA organization under part C for the 
rebate period (as reported under section 
1860D–12(b)(7), including as such section 
is applied under section 1857(f)(3)); and 
‘‘(ii) the amount (if any) by which— 
‘‘(I) the Medicaid rebate amount 
(as defined in subparagraph (B)) for 
such form, strength, and period, ex-
ceeds 
‘‘(II) the average Medicare drug 
program full-benefit dual eligible re-
bate amount (as defined in subpara-
graph (C)) for such form, strength, 
and period. 
‘‘(B) MEDICAID
REBATE
AMOUNT.—For 
purposes of this paragraph, the term ‘Medicaid 
rebate amount’ means, with respect to each 
dosage form and strength of a covered part D 
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drug provided by the manufacturer for a rebate 
period— 
‘‘(i) in the case of a single source 
drug or an innovator multiple source drug, 
the 
amount 
specified 
in 
paragraph 
(1)(A)(ii) of section 1927(b) plus the 
amount, if any, specified in paragraph 
(2)(A)(ii) of such section, for such form, 
strength, and period; or 
‘‘(ii) in the case of any other covered 
outpatient drug, the amount specified in 
paragraph (3)(A)(i) of such section for 
such form, strength, and period. 
‘‘(C) AVERAGE MEDICARE DRUG PROGRAM 
FULL-BENEFIT
DUAL
ELIGIBLE
REBATE 
AMOUNT.—For purposes of this subsection, the 
term ‘average Medicare drug program full-ben-
efit dual eligible rebate amount’ means, with re-
spect to each dosage form and strength of a 
covered part D drug provided by a manufac-
turer for a rebate period, the sum, for all PDP 
sponsors under part D and MA organizations 
administering a MA–PD plan under part C, 
of— 
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‘‘(i) the product, for each such spon-
sor or organization, of— 
‘‘(I) the sum of all rebates, dis-
counts, or other price concessions (not 
taking into account any rebate pro-
vided under paragraph (2) for such 
dosage form and strength of the drug 
dispensed, calculated on a per-unit 
basis, but only to the extent that any 
such rebate, discount, or other price 
concession applies equally to drugs 
dispensed to full-benefit dual eligible 
Medicare drug plan enrollees and 
drugs dispensed to PDP and MA–PD 
enrollees who are not full-benefit dual 
eligible individuals; and 
‘‘(II) the number of the units of 
such dosage and strength of the drug 
dispensed during the rebate period to 
full-benefit dual eligible individuals 
enrolled in the prescription drug plans 
administered by the PDP sponsor or 
the MA–PD plans administered by the 
MA–PD organization; divided by 
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‘‘(ii) the total number of units of such 
dosage and strength of the drug dispensed 
during the rebate period to full-benefit 
dual eligible individuals enrolled in all pre-
scription drug plans administered by PDP 
sponsors and all MA–PD plans adminis-
tered by MA–PD organizations. 
‘‘(4) LENGTH OF AGREEMENT.—The provisions 
of paragraph (4) of section 1927(b) (other than 
clauses (iv) and (v) of subparagraph (B)) shall apply 
to rebate agreements under this subsection in the 
same manner as such paragraph applies to a rebate 
agreement under such section. 
‘‘(5) OTHER
TERMS
AND
CONDITIONS.—The 
Secretary shall establish other terms and conditions 
of the rebate agreement under this subsection, in-
cluding terms and conditions related to compliance, 
that are consistent with this subsection. 
‘‘(6) DEFINITIONS.—In this subsection and sec-
tion 1860D–12(b)(7): 
‘‘(A) FULL-BENEFIT DUAL ELIGIBLE INDI-
VIDUAL.—The term ‘full-benefit dual eligible in-
dividual’ has the meaning given such term in 
section 1935(c)(6). 
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‘‘(B) REBATE PERIOD.—The term ‘rebate 
period’ has the meaning given such term in sec-
tion 1927(k)(8).’’. 
(2) REPORTING REQUIREMENT FOR THE DE-
TERMINATION AND PAYMENT OF REBATES BY MANU-
FACTURES RELATED TO REBATE FOR FULL-BENEFIT 
DUAL
ELIGIBLE
MEDICARE
DRUG
PLAN
ENROLL-
EES.— 
(A) 
REQUIREMENTS
FOR
PDP
SPON-
SORS.—Section 1860D–12(b) of the Social Se-
curity Act (42 U.S.C. 1395w–112(b)) is amend-
ed by adding at the end the following new para-
graph: 
‘‘(7) REPORTING REQUIREMENT FOR THE DE-
TERMINATION AND PAYMENT OF REBATES BY MANU-
FACTURERS RELATED TO REBATE FOR FULL-BEN-
EFIT DUAL ELIGIBLE MEDICARE DRUG PLAN EN-
ROLLEES.— 
‘‘(A) IN GENERAL.—For purposes of the 
rebate under section 1860D–2(f) for contract 
years beginning on or after January 1, 2011, 
each contract entered into with a PDP sponsor 
under this part with respect to a prescription 
drug plan shall require that the sponsor comply 
with subparagraphs (B) and (C). 
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‘‘(B) REPORT FORM AND CONTENTS.—Not 
later than 60 days after the end of each rebate 
period (as defined in section 1860D–2(f)(6)(B)) 
within such a contract year to which such sec-
tion applies, a PDP sponsor of a prescription 
drug plan under this part shall report to each 
manufacturer— 
‘‘(i) information (by National Drug 
Code number) on the total number of units 
of each dosage, form, and strength of each 
drug of such manufacturer dispensed to 
full-benefit dual eligible Medicare drug 
plan enrollees under any prescription drug 
plan operated by the PDP sponsor during 
the rebate period; 
‘‘(ii) information on the price dis-
counts, price concessions, and rebates for 
such drugs for such form, strength, and 
period; 
‘‘(iii) information on the extent to 
which such price discounts, price conces-
sions, and rebates apply equally to full- 
benefit dual eligible Medicare drug plan 
enrollees and PDP enrollees who are not 
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full-benefit dual eligible Medicare drug 
plan enrollees; and 
‘‘(iv) any additional information that 
the Secretary determines is necessary to 
enable the Secretary to calculate the aver-
age Medicare drug program full-benefit 
dual eligible rebate amount (as defined in 
paragraph (3)(C) of such section), and to 
determine the amount of the rebate re-
quired under this section, for such form, 
strength, and period. 
Such report shall be in a form consistent with 
a standard reporting format established by the 
Secretary. 
‘‘(C) SUBMISSION TO SECRETARY.—Each 
PDP sponsor shall promptly transmit a copy of 
the information reported under subparagraph 
(B) to the Secretary for the purpose of audit 
oversight and evaluation. 
‘‘(D) 
CONFIDENTIALITY
OF
INFORMA-
TION.—The provisions of subparagraph (D) of 
section 1927(b)(3), relating to confidentiality of 
information, shall apply to information reported 
by PDP sponsors under this paragraph in the 
same manner that such provisions apply to in-
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formation disclosed by manufacturers or whole-
salers under such section, except— 
‘‘(i) that any reference to ‘this sec-
tion’ in clause (i) of such subparagraph 
shall be treated as being a reference to this 
section; 
‘‘(ii) the reference to the Director of 
the Congressional Budget Office in clause 
(iii) of such subparagraph shall be treated 
as including a reference to the Medicare 
Payment Advisory Commission; and 
‘‘(iii) clause (iv) of such subparagraph 
shall not apply. 
‘‘(E) OVERSIGHT.—Information reported 
under this paragraph may be used by the In-
spector General of the Department of Health 
and Human Services for the statutorily author-
ized purposes of audit, investigation, and eval-
uations. 
‘‘(F) PENALTIES
FOR
FAILURE
TO
PRO-
VIDE TIMELY INFORMATION AND PROVISION OF 
FALSE INFORMATION.—In the case of a PDP 
sponsor— 
‘‘(i) that fails to provide information 
required under subparagraph (B) on a 
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timely basis, the sponsor is subject to a 
civil money penalty in the amount of 
$10,000 for each day in which such infor-
mation has not been provided; or 
‘‘(ii) that knowingly (as defined in 
section 1128A(i)) provides false informa-
tion under such subparagraph, the sponsor 
is subject to a civil money penalty in an 
amount not to exceed $100,000 for each 
item of false information. 
Such civil money penalties are in addition to 
other penalties as may be prescribed by law. 
The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil 
money penalty under this subparagraph in the 
same manner as such provisions apply to a pen-
alty or proceeding under section 1128A(a).’’. 
(B) 
APPLICATION
TO
MA
ORGANIZA-
TIONS.—Section 1857(f)(3) of the Social Secu-
rity Act (42 U.S.C. 1395w–27(f)(3)) is amend-
ed by adding at the end the following: 
‘‘(D) REPORTING REQUIREMENT RELATED 
TO REBATE FOR FULL-BENEFIT DUAL ELIGIBLE 
MEDICARE
DRUG
PLAN
ENROLLEES.—Section 
1860D–12(b)(7).’’. 
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(3) DEPOSIT OF REBATES INTO MEDICARE PRE-
SCRIPTION DRUG ACCOUNT.—Section 1860D–16(c) 
of such Act (42 U.S.C. 1395w–116(c)) is amended 
by adding at the end the following new paragraph: 
‘‘(6) REBATE FOR FULL-BENEFIT DUAL ELIGI-
BLE MEDICARE DRUG PLAN ENROLLEES.—Amounts 
paid under a rebate agreement under section 
1860D–2(f) shall be deposited into the Account and 
shall be used to pay for all or part of the gradual 
elimination of the coverage gap under section 
1860D–2(b)(7).’’. 
SEC. 1182. DISCOUNTS FOR CERTAIN PART D DRUGS IN 
ORIGINAL COVERAGE GAP. 
Section 1860D–2 of the Social Security Act (42 
U.S.C. 1395w–102), as amended by section 1181(a), is 
amended— 
(1) in subsection (b)(4)(C)(ii), by inserting 
‘‘subject to subsection (g)(2)(C),’’ after ‘‘(ii)’’; 
(2) in subsection (e)(1), in the matter before 
subparagraph (A), by striking ‘‘subsection (f)’’ and 
inserting ‘‘subsections (f) and (g)’’ after ‘‘this sub-
section’’; and 
(3) by adding at the end the following new sub-
section: 
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‘‘(g) REQUIREMENT FOR MANUFACTURER DISCOUNT 
AGREEMENT FOR CERTAIN QUALIFYING DRUGS.— 
‘‘(1) IN GENERAL.—In this part, the term ‘cov-
ered part D drug’ does not include any drug or bio-
logic that is manufactured by a manufacturer that 
has not entered into and have in effect for all quali-
fying drugs (as defined in paragraph (5)(A)) a dis-
count agreement described in paragraph (2). 
‘‘(2) DISCOUNT AGREEMENT.— 
‘‘(A) PERIODIC
DISCOUNTS.—A discount 
agreement under this paragraph shall require 
the manufacturer involved to provide, to each 
PDP sponsor with respect to a prescription 
drug plan or each MA organization with respect 
to each MA–PD plan, a discount in an amount 
specified in paragraph (3) for qualifying drugs 
(as defined in paragraph (5)(A)) of the manu-
facturer dispensed to a qualifying enrollee after 
December 31, 2010, insofar as the individual is 
in the original gap in coverage (as defined in 
paragraph (5)(E)). 
‘‘(B) DISCOUNT AGREEMENT.—Insofar as 
not inconsistent with this subsection, the Sec-
retary shall establish terms and conditions of 
such agreement, including terms and conditions 
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relating to compliance, similar to the terms and 
conditions for rebate agreements under para-
graphs (2), (3), and (4) of section 1927(b), ex-
cept that— 
‘‘(i) discounts shall be applied under 
this subsection to prescription drug plans 
and MA–PD plans instead of State plans 
under title XIX; 
‘‘(ii) PDP sponsors and MA organiza-
tions shall be responsible, instead of 
States, for provision of necessary utiliza-
tion information to drug manufacturers; 
and 
‘‘(iii) sponsors and MA organizations 
shall be responsible for reporting informa-
tion on drug-component negotiated price, 
instead of other manufacturer prices. 
‘‘(C) COUNTING DISCOUNT TOWARD TRUE 
OUT-OF-POCKET
COSTS.—Under the discount 
agreement, in applying subsection (b)(4), with 
regard to subparagraph (C)(i) of such sub-
section, if a qualified enrollee purchases the 
qualified drug insofar as the enrollee is in an 
actual gap of coverage (as defined in paragraph 
(5)(D)), the amount of the discount under the 
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agreement shall be treated and counted as costs 
incurred by the plan enrollee. 
‘‘(3) DISCOUNT AMOUNT.—The amount of the 
discount specified in this paragraph for a discount 
period for a plan is equal to 50 percent of the 
amount of the drug-component negotiated price (as 
defined in paragraph (5)(C)) for qualifying drugs for 
the period involved. 
‘‘(4) ADDITIONAL TERMS.—In the case of a dis-
count provided under this subsection with respect to 
a prescription drug plan offered by a PDP sponsor 
or an MA–PD plan offered by an MA organization, 
if a qualified enrollee purchases the qualified drug— 
‘‘(A) insofar as the enrollee is in an actual 
gap of coverage (as defined in paragraph 
(5)(D)), the sponsor or plan shall provide the 
discount to the enrollee at the time the enrollee 
pays for the drug; and 
‘‘(B) insofar as the enrollee is in the por-
tion of the original gap in coverage (as defined 
in paragraph (5)(E)) that is not in the actual 
gap in coverage, the discount shall not be ap-
plied against the negotiated price (as defined in 
subsection (d)(1)(B)) for the purpose of calcu-
lating the beneficiary payment. 
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‘‘(5) DEFINITIONS.—In this subsection: 
‘‘(A) 
QUALIFYING
DRUG.—The 
term 
‘qualifying drug’ means, with respect to a pre-
scription drug plan or MA–PD plan, a drug or 
biological product that— 
‘‘(i)(I) is a drug produced or distrib-
uted under an original new drug applica-
tion approved by the Food and Drug Ad-
ministration, including a drug product 
marketed by any cross-licensed producers 
or distributors operating under the new 
drug application; 
‘‘(II) is a drug that was originally 
marketed under an original new drug ap-
plication approved by the Food and Drug 
Administration; or 
‘‘(III) is a biological product as ap-
proved under Section 351(a) of the Public 
Health Services Act; 
‘‘(ii) is covered under the formulary of 
the plan; and 
‘‘(iii) is dispensed to an individual 
who is in the original gap in coverage. 
‘‘(B) QUALIFYING ENROLLEE.—The term 
‘qualifying enrollee’ means an individual en-
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1430 
rolled in a prescription drug plan or MA–PD 
plan other than such an individual who is a 
subsidy-eligible individual (as defined in section 
1860D–14(a)(3)). 
‘‘(C) 
DRUG-COMPONENT
NEGOTIATED 
PRICE.—The term ‘drug-component negotiated 
price’ means, with respect to a qualifying drug, 
the negotiated price (as defined in subsection 
(d)(1)(B)), as determined without regard to any 
dispensing fee, of the drug under the prescrip-
tion drug plan or MA–PD plan involved. 
‘‘(D) ACTUAL
GAP
IN
COVERAGE.—The 
term ‘actual gap in coverage’ means the gap in 
prescription drug coverage that occurs between 
the initial coverage limit (as modified under 
subparagraph (B) of subsection (b)(7)) and the 
annual out-of-pocket threshold (as modified 
under subparagraph (C) of such subsection). 
‘‘(E) ORIGINAL GAP IN COVERAGE.—The 
term ‘original in gap coverage’ means the gap 
in prescription drug coverage that would occur 
between the initial coverage limit (described in 
subsection (b)(3)) and the out-of-pocket thresh-
old (as defined in subsection (b)(4))(B) if sub-
section (b)(7) did not apply.’’. 
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1431 
SEC. 1183. REPEAL OF PROVISION RELATING TO SUBMIS-
SION OF CLAIMS BY PHARMACIES LOCATED 
IN OR CONTRACTING WITH LONG-TERM CARE 
FACILITIES. 
(a) PART D SUBMISSION.—Section 1860D–12(b) of 
the Social Security Act (42 U.S.C. 1395w–112(b)), as 
amended by section 172(a)(1) of Public Law 110–275, is 
amended by striking paragraph (5) and redesignating 
paragraph (6) and paragraph (7), as added by section 
1181(b)(2), as paragraph (5) and paragraph (6), respec-
tively. 
(b) SUBMISSION
TO
MA–PD PLANS.—Section 
1857(f)(3) of the Social Security Act (42 U.S.C. 1395w– 
27(f)(3)), as added by section 171(b) of Public Law 110– 
275 and amended by section 172(a)(2) of such Public 
Law, is amended by striking subparagraph (B) and redes-
ignating subparagraph (C) as subparagraph (B). 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply for contract years beginning with 
2010. 
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1432 
SEC. 1184. INCLUDING COSTS INCURRED BY AIDS DRUG AS-
SISTANCE PROGRAMS AND INDIAN HEALTH 
SERVICE 
IN 
PROVIDING 
PRESCRIPTION 
DRUGS TOWARD THE ANNUAL OUT-OF-POCK-
ET THRESHOLD UNDER PART D. 
(a) IN GENERAL.—Section 1860D–2(b)(4)(C) of the 
Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)) is 
amended— 
(1) in clause (i), by striking ‘‘and’’ at the end; 
(2) in clause (ii)— 
(A) by striking ‘‘such costs shall be treated 
as incurred only if’’ and inserting ‘‘subject to 
clause (iii), such costs shall be treated as in-
curred only if’’; 
(B) by striking ‘‘, under section 1860D– 
14, or under a State Pharmaceutical Assistance 
Program’’; and 
(C) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by inserting after clause (ii) the following 
new clause: 
‘‘(iii) such costs shall be treated as in-
curred and shall not be considered to be 
reimbursed under clause (ii) if such costs 
are borne or paid— 
‘‘(I) under section 1860D–14; 
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‘‘(II) under a State Pharma-
ceutical Assistance Program; 
‘‘(III) by the Indian Health Serv-
ice, an Indian tribe or tribal organiza-
tion, or an urban Indian organization 
(as defined in section 4 of the Indian 
Health Care Improvement Act); or 
‘‘(IV) under an AIDS Drug As-
sistance Program under part B of 
title XXVI of the Public Health Serv-
ice Act.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to costs incurred on or after 
January 1, 2011. 
SEC. 1185. PERMITTING MID-YEAR CHANGES IN ENROLL-
MENT FOR FORMULARY CHANGES THAT AD-
VERSELY IMPACT AN ENROLLEE. 
(a) IN GENERAL.—Section 1860D–1(b)(3) of the So-
cial Security Act (42 U.S.C. 1395w–101(b)(3)) is amend-
ed by adding at the end the following new subparagraph: 
‘‘(F) CHANGE IN FORMULARY RESULTING 
IN INCREASE IN COST-SHARING.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), in the case of an indi-
vidual enrolled in a prescription drug plan 
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1434 
(or MA–PD plan) who has been prescribed 
and is using a covered part D drug while 
so enrolled, if the formulary of the plan is 
materially changed (other than at the end 
of a contract year) so to reduce the cov-
erage (or increase the cost-sharing) of the 
drug under the plan. 
‘‘(ii) EXCEPTION.—Clause (i) shall 
not apply in the case that a drug is re-
moved from the formulary of a plan be-
cause of a recall or withdrawal of the drug 
issued by the Food and Drug Administra-
tion, because the drug is replaced with a 
generic drug that is a therapeutic equiva-
lent, or because of utilization management 
applied to— 
‘‘(I) a drug whose labeling in-
cludes a boxed warning required by 
the Food and Drug Administration 
under section 210.57(c)(1) of title 21, 
Code of Federal Regulations (or a 
successor regulation); or 
‘‘(II) a drug required under sub-
section (c)(2) of section 505–1 of the 
Federal Food, Drug, and Cosmetic 
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Act to have a Risk Evaluation and 
Management Strategy that includes 
elements under subsection (f) of such 
section.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to contract years beginning on 
or after January 1, 2011. 
Subtitle F—Medicare Rural Access 
Protections 
SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS. 
(a) ADDITIONAL TELEHEALTH SITE.— 
(1) IN GENERAL.—Paragraph (4)(C)(ii) of sec-
tion 1834(m) of the Social Security Act (42 U.S.C. 
1395m(m)) is amended by adding at the end the fol-
lowing new subclause: 
‘‘(IX) A renal dialysis facility.’’ 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to services furnished on 
or after January 1, 2011. 
(b) TELEHEALTH ADVISORY COMMITTEE.— 
(1) ESTABLISHMENT.—Section 1868 of the So-
cial Security Act (42 U.S.C. 1395ee) is amended— 
(A) in the heading, by adding at the end 
the following: ‘‘TELEHEALTH
ADVISORY
COM-
MITTEE’’; and 
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1436 
(B) by adding at the end the following new 
subsection: 
‘‘(c) TELEHEALTH ADVISORY COMMITTEE.— 
‘‘(1) IN GENERAL.—The Secretary shall appoint 
a Telehealth Advisory Committee (in this subsection 
referred to as the ‘Advisory Committee’) to make 
recommendations to the Secretary on policies of the 
Centers for Medicare & Medicaid Services regarding 
telehealth services as established under section 
1834(m), including the appropriate addition or dele-
tion of services (and HCPCS codes) to those speci-
fied in paragraphs (4)(F)(i) and (4)(F)(ii) of such 
section and for authorized payment under paragraph 
(1) of such section. 
‘‘(2) MEMBERSHIP; TERMS.— 
‘‘(A) MEMBERSHIP.— 
‘‘(i) 
IN
GENERAL.—The 
Advisory 
Committee shall be composed of 9 mem-
bers, to be appointed by the Secretary, of 
whom— 
‘‘(I) 5 shall be practicing physi-
cians; 
‘‘(II) 2 shall be practicing non- 
physician health care practitioners; 
and 
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1437 
‘‘(III) 2 shall be administrators 
of telehealth programs. 
‘‘(ii) REQUIREMENTS
FOR
APPOINT-
ING MEMBERS.—In appointing members of 
the Advisory Committee, the Secretary 
shall— 
‘‘(I) ensure that each member 
has prior experience with the practice 
of telemedicine or telehealth; 
‘‘(II) give preference to individ-
uals who are currently providing tele-
medicine or telehealth services or who 
are involved in telemedicine or tele-
health programs; 
‘‘(III) ensure that the member-
ship of the Advisory Committee rep-
resents a balance of specialties and 
geographic regions; and 
‘‘(IV) take into account the rec-
ommendations of stakeholders. 
‘‘(B) TERMS.—The members of the Advi-
sory Committee shall serve for such term as the 
Secretary may specify. 
‘‘(C) CONFLICTS OF INTEREST.—An advi-
sory committee member may not participate 
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with respect to a particular matter considered 
in an advisory committee meeting if such mem-
ber (or an immediate family member of such 
member) has a financial interest that could be 
affected by the advice given to the Secretary 
with respect to such matter. 
‘‘(3) MEETINGS.—The Advisory Committee 
shall meet twice each calendar year and at such 
other times as the Secretary may provide. 
‘‘(4) PERMANENT COMMITTEE.—Section 14 of 
the Federal Advisory Committee Act (5 U.S.C. 
App.) shall not apply to the Advisory Committee.’’ 
(2) FOLLOWING
RECOMMENDATIONS.—Section 
1834(m)(4)(F) 
of 
such 
Act 
(42 
U.S.C. 
1395m(m)(4)(F)) is amended by adding at the end 
the following new clause: 
‘‘(iii) RECOMMENDATIONS
OF
THE 
TELEHEALTH
ADVISORY
COMMITTEE.—In 
making determinations under clauses (i) 
and (ii), the Secretary shall take into ac-
count the recommendations of the Tele-
health Advisory Committee (established 
under section 1868(c)) when adding or de-
leting services (and HCPCS codes) and in 
establishing policies of the Centers for 
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1439 
Medicare & Medicaid Services regarding 
the delivery of telehealth services. If the 
Secretary does not implement such a rec-
ommendation, the Secretary shall publish 
in the Federal Register a statement re-
garding the reason such recommendation 
was not implemented.’’ 
(3) WAIVER
OF
ADMINISTRATIVE
LIMITA-
TION.—The Secretary of Health and Human Serv-
ices shall establish the Telehealth Advisory Com-
mittee under the amendment made by paragraph (1) 
notwithstanding any limitation that may apply to 
the number of advisory committees that may be es-
tablished (within the Department of Health and 
Human Services or otherwise). 
SEC. 1192. EXTENSION OF OUTPATIENT HOLD HARMLESS 
PROVISION. 
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 
‘‘‘2010’’and inserting ‘‘2012’’; and 
(B) in the second sentence, by striking ‘‘or 
2009’’ and inserting ‘‘, 2009, 2010, or 2011’’; 
and 
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1440 
(2) in subclause (III), by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2012’’. 
SEC. 1193. EXTENSION OF SECTION 508 HOSPITAL RECLAS-
SIFICATIONS. 
Subsection (a) of section 106 of division B of the Tax 
Relief and Health Care Act of 2006 (42 U.S.C. 1395 
note), as amended by section 117 of the Medicare, Med-
icaid, and SCHIP Extension Act of 2007 (Public Law 
110–173) and section 124 of the Medicare Improvements 
for Patients and Providers Act of 2008 (Public Law 110– 
275), is amended by striking ‘‘September 30, 2009’’ and 
inserting ‘‘September 30, 2011’’. 
SEC. 1194. EXTENSION OF GEOGRAPHIC FLOOR FOR WORK. 
Section 1848(e)(1)(E) of the Social Security Act (42 
U.S.C. 1395w–4(e)(1)(E)) is amended by striking ‘‘before 
January 1, 2010’’ and inserting ‘‘before January 1, 
2012’’. 
SEC. 1195. 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 
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(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), and section 136 of the Medicare Improvements for 
Patients and Providers Act of 1008 (Public Law 110– 
275), is amended by striking ‘‘and 2009’’ and inserting 
‘‘2009, 2010, and 2011’’. 
SEC. 1196. EXTENSION OF AMBULANCE ADD-ONS. 
(a) IN GENERAL.—Section 1834(l)(13) of the Social 
Security Act (42 U.S.C. 1395m(l)(13)) is amended— 
(1) in subparagraph (A)— 
(A) in the matter preceding clause (i), by 
striking ‘‘before January 1, 2010’’ and insert-
ing ‘‘before January 1, 2012’’; and 
(B) in each of clauses (i) and (ii), by strik-
ing ‘‘before January 1, 2010’’ and inserting 
‘‘before January 1, 2012’’. 
(b) 
AIR
AMBULANCE
IMPROVEMENTS.—Section 
146(b)(1) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110–275) is amended 
by striking ‘‘ending on December 31, 2009’’ and inserting 
‘‘ending on December 31, 2011’’. 
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TITLE J—MEDICARE 
BENEFICIARY IMPROVEMENTS 
Subtitle A—Improving and Simpli-
fying Financial Assistance for 
Low 
Income 
Medicare 
Bene-
ficiaries 
SEC. 1201. IMPROVING ASSETS TESTS FOR MEDICARE SAV-
INGS PROGRAM AND LOW-INCOME SUBSIDY 
PROGRAM. 
(a) APPLICATION OF HIGHEST LEVEL PERMITTED 
UNDER LIS TO ALL SUBSIDY ELIGIBLE INDIVIDUALS.— 
(1) IN GENERAL.—Section 1860D–14(a)(1) of 
the Social Security Act (42 U.S.C. 1395w– 
114(a)(1)) is amended in the matter before subpara-
graph (A), by inserting ‘‘(or, beginning with 2012, 
paragraph (3)(E))’’ after ‘‘paragraph (3)(D)’’. 
(2) ANNUAL
INCREASE
IN
LIS
RESOURCE 
TEST.—Section 1860D–14(a)(3)(E)(i) of such Act 
(42 U.S.C. 1395w–114(a)(3)(E)(i)) is amended— 
(A) by striking ‘‘and’’ at the end of sub-
clause (I); 
(B) in subclause (II), by inserting ‘‘(before 
2012)’’ after ‘‘subsequent year’’; 
(C) by striking the period at the end of 
subclause (II) and inserting a semicolon; 
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(D) by inserting after subclause (II) the 
following new subclauses: 
‘‘(III) for 2012, $17,000 (or 
$34,000 in the case of the combined 
value of the individual’s assets or re-
sources and the assets or resources of 
the individual’s spouse); and 
‘‘(IV) for a subsequent year, the 
dollar amounts specified in this sub-
clause (or subclause (III)) for the pre-
vious year increased by the annual 
percentage increase in the consumer 
price index (all items; U.S. city aver-
age) as of September of such previous 
year.’’; and 
(E) in the last sentence, by inserting ‘‘or 
(IV)’’ after ‘‘subclause (II)’’. 
(3) APPLICATION OF LIS TEST UNDER MEDI-
CARE SAVINGS PROGRAM.—Section 1905(p)(1)(C) of 
such Act (42 U.S.C. 1396d(p)(1)(C)) is amended— 
(A) by striking ‘‘effective beginning with 
January 1, 2010’’ and inserting ‘‘effective for 
the period beginning with January 1, 2010, and 
ending with December 31, 2011’’; and 
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(B) by inserting before the period at the 
end the following: ‘‘or, effective beginning with 
January 1, 2012, whose resources (as so deter-
mined) do not exceed the maximum resource 
level applied for the year under subparagraph 
(E) of section 1860D–14(a)(3) (determined 
without regard to the life insurance policy ex-
clusion provided under subparagraph (G) of 
such section) applicable to an individual or to 
the individual and the individual’s spouse (as 
the case may be)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to eligibility determinations for 
income-related subsidies and medicare cost-sharing fur-
nished for periods beginning on or after January 1, 2012. 
SEC. 1202. ELIMINATION OF PART D COST-SHARING FOR 
CERTAIN 
NON-INSTITUTIONALIZED 
FULL- 
BENEFIT DUAL ELIGIBLE INDIVIDUALS. 
(a) IN GENERAL.—Section 1860D–14(a)(1)(D)(i) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395w– 
114(a)(1)(D)(i)) is amended— 
(1) by striking ‘‘INSTITUTIONALIZED INDIVID-
UALS.—In’’ and inserting ‘‘ELIMINATION OF COST- 
SHARING FOR CERTAIN FULL-BENEFIT DUAL ELIGI-
BLE INDIVIDUALS.— 
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‘‘(I) INSTITUTIONALIZED
INDI-
VIDUALS.—In’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(II) CERTAIN
OTHER
INDIVID-
UALS.—In the case of an individual 
who is a full-benefit dual eligible indi-
vidual and with respect to whom there 
has been a determination that but for 
the provision of home and community 
based care (whether under section 
1915, 1932, or under a waiver under 
section 1115) the individual would re-
quire the level of care provided in a 
hospital or a nursing facility or inter-
mediate care facility for the mentally 
retarded the cost of which could be re-
imbursed under the State plan under 
title XIX, the elimination of any bene-
ficiary coinsurance described in sec-
tion 1860D–2(b)(2) (for all amounts 
through the total amount of expendi-
tures at which benefits are available 
under section 1860D–2(b)(4)).’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to drugs dispensed on or after 
January 1, 2011. 
SEC. 1203. ELIMINATING BARRIERS TO ENROLLMENT. 
(a) ADMINISTRATIVE VERIFICATION OF INCOME AND 
RESOURCES UNDER
THE LOW-INCOME SUBSIDY PRO-
GRAM.— 
(1) IN
GENERAL.—Clause (iii) of section 
1860D–14(a)(3)(E) of the Social Security Act (42 
U.S.C. 1395w–114(a)(3)(E)) is amended to read as 
follows: 
‘‘(iii) CERTIFICATION OF INCOME AND 
RESOURCES.—For purposes of applying 
this section— 
‘‘(I) an individual shall be per-
mitted to apply on the basis of self- 
certification of income and resources; 
and 
‘‘(II) matters attested to in the 
application shall be subject to appro-
priate methods of verification without 
the need of the individual to provide 
additional documentation, except in 
extraordinary situations as determined 
by the Commissioner.’’. 
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(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply beginning January 1, 
2010. 
(b) DISCLOSURES TO FACILITATE IDENTIFICATION 
OF INDIVIDUALS LIKELY TO BE INELIGIBLE FOR THE 
LOW-INCOME ASSISTANCE UNDER THE MEDICARE PRE-
SCRIPTION DRUG PROGRAM TO ASSIST SOCIAL SECURITY 
ADMINISTRATION’S OUTREACH
TO ELIGIBLE INDIVID-
UALS.—For provision authorizing disclosure of return in-
formation to facilitate identification of individuals likely 
to be ineligible for low-income subsidies under Medicare 
prescription drug program, see section 1801. 
SEC. 1204. ENHANCED OVERSIGHT RELATING TO REIM-
BURSEMENTS FOR RETROACTIVE LOW IN-
COME SUBSIDY ENROLLMENT. 
(a) IN GENERAL.—In the case of a retroactive LIS 
enrollment beneficiary who is enrolled under a prescription 
drug plan under part D of title XVIII of the Social Secu-
rity Act (or an MA–PD plan under part C of such title), 
the beneficiary (or any eligible third party) is entitled to 
reimbursement by the plan for covered drug costs incurred 
by the beneficiary during the retroactive coverage period 
of the beneficiary in accordance with subsection (b) and 
in the case of such a beneficiary described in subsection 
(c)(4)(A)(i), such reimbursement shall be made automati-
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cally by the plan upon receipt of appropriate notice the 
beneficiary is eligible for assistance described in such sub-
section (c)(4)(A)(i) without further information required 
to be filed with the plan by the beneficiary. 
(b) ADMINISTRATIVE REQUIREMENTS RELATING TO 
REIMBURSEMENTS.— 
(1) LINE-ITEM DESCRIPTION.—Each reimburse-
ment made by a prescription drug plan or MA–PD 
plan under subsection (a) shall include a line-item 
description of the items for which the reimbursement 
is made. 
(2) TIMING OF REIMBURSEMENTS.—A prescrip-
tion drug plan or MA–PD plan must make a reim-
bursement under subsection (a) to a retroactive LIS 
enrollment beneficiary, with respect to a claim, not 
later than 45 days after— 
(A) in the case of a beneficiary described 
in subsection (c)(4)(A)(i), the date on which the 
plan receives notice from the Secretary that the 
beneficiary is eligible for assistance described in 
such subsection; or 
(B) in the case of a beneficiary described 
in subsection (c)(4)(A)(ii), the date on which 
the beneficiary files the claim with the plan. 
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(3) 
REPORTING
REQUIREMENT.—For 
each 
month beginning with January 2011, each prescrip-
tion drug plan and each MA–PD plan shall report 
to the Secretary the following: 
(A) The number of claims the plan has re-
adjudicated during the month due to a bene-
ficiary becoming retroactively eligible for sub-
sidies available under section 1860D–14 of the 
Social Security Act. 
(B) The total value of the readjudicated 
claim amount for the month. 
(C) The Medicare Health Insurance Claims 
Number of beneficiaries for whom claims were 
readjudicated. 
(D) For the claims described in subpara-
graphs (A) and (B), an attestation to the Ad-
ministrator of the Centers for Medicare & Med-
icaid Services of the total amount of reimburse-
ment the plan has provided to beneficiaries for 
premiums and cost-sharing that the beneficiary 
overpaid for which the plan received payment 
from the Centers for Medicare & Medicaid Serv-
ices. 
(c) DEFINITIONS.—For purposes of this section: 
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1450 
(1) COVERED DRUG COSTS.—The term ‘‘cov-
ered drug costs’’ means, with respect to a retroactive 
LIS enrollment beneficiary enrolled under a pre-
scription drug plan under part D of title XVIII of 
the Social Security Act (or an MA–PD plan under 
part C of such title), the amount by which— 
(A) the costs incurred by such beneficiary 
during the retroactive coverage period of the 
beneficiary for covered part D drugs, premiums, 
and cost-sharing under such title; exceeds 
(B) such costs that would have been in-
curred by such beneficiary during such period if 
the beneficiary had been both enrolled in the 
plan and recognized by such plan as qualified 
during such period for the low income subsidy 
under section 1860D–14 of the Social Security 
Act to which the individual is entitled. 
(2) ELIGIBLE THIRD PARTY.—The term ‘‘eligi-
ble third party’’ means, with respect to a retroactive 
LIS enrollment beneficiary, an organization or other 
third party that is owed payment on behalf of such 
beneficiary for covered drug costs incurred by such 
beneficiary during the retroactive coverage period of 
such beneficiary. 
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1451 
(3) RETROACTIVE
COVERAGE
PERIOD.—The 
term ‘‘retroactive coverage period’’ means— 
(A) with respect to a retroactive LIS en-
rollment beneficiary described in paragraph 
(4)(A)(i), the period— 
(i) beginning on the effective date of 
the assistance described in such paragraph 
for which the individual is eligible; and 
(ii) ending on the date the plan effec-
tuates the status of such individual as so 
eligible; and 
(B) with respect to a retroactive LIS en-
rollment beneficiary described in paragraph 
(4)(A)(ii), the period— 
(i) beginning on the date the indi-
vidual is both entitled to benefits under 
part A, or enrolled under part B, of title 
XVIII of the Social Security Act and eligi-
ble for medical assistance under a State 
plan under title XIX of such Act; and 
(ii) ending on the date the plan effec-
tuates the status of such individual as a 
full-benefit dual eligible individual (as de-
fined in section 1935(c)(6) of such Act). 
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1452 
(4) RETROACTIVE
LIS
ENROLLMENT
BENE-
FICIARY.— 
(A) IN GENERAL.—The term ‘‘retroactive 
LIS enrollment beneficiary’’ means an indi-
vidual who— 
(i) is enrolled in a prescription drug 
plan under part D of title XVIII of the So-
cial Security Act (or an MA–PD plan 
under part C of such title) and subse-
quently becomes eligible as a full-benefit 
dual eligible individual (as defined in sec-
tion 1935(c)(6) of such Act), an individual 
receiving a low-income subsidy under sec-
tion 1860D–14 of such Act, an individual 
receiving assistance under the Medicare 
Savings 
Program 
implemented 
under 
clauses (i), (iii), and (iv) of section 
1902(a)(10)(E) of such Act, or an indi-
vidual receiving assistance under the sup-
plemental security income program under 
section 1611 of such Act; or 
(ii) subject to subparagraph (B)(i), is 
a full-benefit dual eligible individual (as 
defined in section 1935(c)(6) of such Act) 
who is automatically enrolled in such a 
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1453 
plan under section 1860D–1(b)(1)(C) of 
such Act. 
(B) EXCEPTION FOR BENEFICIARIES EN-
ROLLED IN RFP PLAN.— 
(i) IN GENERAL.—In no case shall an 
individual 
described 
in 
subparagraph 
(A)(ii) include an individual who is en-
rolled, pursuant to a RFP contract de-
scribed in clause (ii), in a prescription 
drug plan offered by the sponsor of such 
plan awarded such contract. 
(ii) RFP CONTRACT
DESCRIBED.— 
The RFP contract described in this section 
is a contract entered into between the Sec-
retary and a sponsor of a prescription drug 
plan pursuant to the Centers for Medicare 
& Medicaid Services’ request for proposals 
issued on February 17, 2009, relating to 
Medicare part D retroactive coverage for 
certain low income beneficiaries, or a simi-
lar subsequent request for proposals. 
SEC. 1205. INTELLIGENT ASSIGNMENT IN ENROLLMENT. 
(a) IN GENERAL.—Section 1860D–1(b)(1)(C) of the 
Social Security Act (42 U.S.C. 1395w–101(b)(1)(C)) is 
amended by adding after ‘‘PDP region’’ the following: ‘‘or 
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1454 
through use of an intelligent assignment process that is 
designed to maximize the access of such individual to nec-
essary prescription drugs while minimizing costs to such 
individual and to the program under this part to the great-
est extent possible. In the case the Secretary enrolls such 
individuals through use of an intelligent assignment proc-
ess, such process shall take into account the extent to 
which prescription drugs necessary for the individual are 
covered in the case of a PDP sponsor of a prescription 
drug plan that uses a formulary, the use of prior author-
ization or other restrictions on access to coverage of such 
prescription drugs by such a sponsor, and the overall qual-
ity of a prescription drug plan as measured by quality rat-
ings established by the Secretary.’’ 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect for contract years begin-
ning with 2012. 
SEC. 1206. SPECIAL ENROLLMENT PERIOD AND AUTOMATIC 
ENROLLMENT PROCESS FOR CERTAIN SUB-
SIDY ELIGIBLE INDIVIDUALS. 
(a) 
SPECIAL
ENROLLMENT
PERIOD.—Section 
1860D–1(b)(3)(D) of the Social Security Act (42 U.S.C. 
1395w–101(b)(3)(D)) is amended to read as follows: 
‘‘(D) SUBSIDY
ELIGIBLE
INDIVIDUALS.— 
In the case of an individual (as determined by 
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1456 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to subsidy determinations made 
for months beginning with January 2011. 
SEC. 1207. APPLICATION OF MA PREMIUMS PRIOR TO RE-
BATE IN CALCULATION OF LOW INCOME SUB-
SIDY BENCHMARK. 
(a) IN GENERAL.—Section 1860D–14(b)(2)(B)(iii) 
of the Social Security Act (42 U.S.C. 1395w– 
114(b)(2)(B)(iii)) is amended by inserting before the pe-
riod the following: ‘‘before the application of the monthly 
rebate computed under section 1854(b)(1)(C)(i) for that 
plan and year involved’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to subsidy determinations made 
for months beginning with January 2011. 
Subtitle B—Reducing Health 
Disparities 
SEC. 1221. ENSURING EFFECTIVE COMMUNICATION IN 
MEDICARE. 
(a) ENSURING EFFECTIVE COMMUNICATION BY THE 
CENTERS FOR MEDICARE & MEDICAID SERVICES.— 
(1) STUDY ON MEDICARE PAYMENTS FOR LAN-
GUAGE
SERVICES.—The Secretary of Health and 
Human Services shall conduct a study that examines 
the extent to which Medicare service providers uti-
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1457 
lize, offer, or make available language services for 
beneficiaries who are limited English proficient and 
ways that Medicare should develop payment systems 
for language services. 
(2) ANALYSES.—The study shall include an 
analysis of each of the following: 
(A) How to develop and structure appro-
priate payment systems for language services 
for all Medicare service providers. 
(B) The feasibility of adopting a payment 
methodology for on-site interpreters, including 
interpreters who work as independent contrac-
tors and interpreters who work for agencies 
that provide on-site interpretation, pursuant to 
which such interpreters could directly bill Medi-
care for services provided in support of physi-
cian office services for an LEP Medicare pa-
tient. 
(C) The feasibility of Medicare contracting 
directly with agencies that provide off-site inter-
pretation including telephonic and video inter-
pretation pursuant to which such contractors 
could directly bill Medicare for the services pro-
vided in support of physician office services for 
an LEP Medicare patient. 
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(D) The feasibility of modifying the exist-
ing Medicare resource-based relative value scale 
(RBRVS) by using adjustments (such as multi-
pliers or add-ons) when a patient is LEP. 
(E) How each of options described in a 
previous paragraph would be funded and how 
such funding would affect physician payments, 
a physician’s practice, and beneficiary cost- 
sharing. 
(F) The extent to which providers under 
parts A and B of title XVIII of the Social Secu-
rity Act, MA organizations offering Medicare 
Advantage plans under part C of such title and 
PDP sponsors of a prescription drug plan 
under part D of such title utilize, offer, or make 
available language services for beneficiaries with 
limited English proficiency. 
(G) The nature and type of language serv-
ices provided by States under title XIX of the 
Social Security Act and the extent to which 
such services could be utilized by beneficiaries 
and providers under title XVIII of such Act. 
(3) VARIATION
IN
PAYMENT
SYSTEM
DE-
SCRIBED.—The payment systems described in para-
graph (2)(A) may allow variations based upon types 
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1459 
of service providers, available delivery methods, and 
costs for providing language services including such 
factors as— 
(A) the type of language services provided 
(such as provision of health care or health care 
related services directly in a non-English lan-
guage by a bilingual provider or use of an inter-
preter); 
(B) type of interpretation services provided 
(such as in-person, telephonic, video interpreta-
tion); 
(C) the methods and costs of providing 
language services (including the costs of pro-
viding language services with internal staff or 
through contract with external independent con-
tractors or agencies, or both); 
(D) providing services for languages not 
frequently encountered in the United States; 
and 
(E) providing services in rural areas. 
(4) REPORT.—The Secretary shall submit a re-
port on the study conducted under subsection (a) to 
appropriate committees of Congress not later than 
12 months after the date of the enactment of this 
Act. 
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1460 
(5) EXEMPTION FROM PAPERWORK REDUCTION 
ACT.—Chapter 35 of title 44, United States Code 
(commonly known as the ‘‘Paperwork Reduction 
Act’’), shall not apply for purposes of carrying out 
this subsection. 
(6) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated to carry out 
this subsection such sums as are necessary. 
(b) HEALTH PLANS.—Section 1857(g)(1) of the So-
cial Security Act (42 U.S.C. 1395w–27(g)(1)) is amend-
ed— 
(1) by striking ‘‘or’’ at the end of subparagraph 
(F); 
(2) by adding ‘‘or’’ at the end of subparagraph 
(G); and 
(3) by inserting after subparagraph (G) the fol-
lowing new subparagraph: 
‘‘(H) fails substantially to provide lan-
guage services to limited English proficient 
beneficiaries enrolled in the plan that are re-
quired under law;’’. 
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1461 
SEC. 1222. DEMONSTRATION TO PROMOTE ACCESS FOR 
MEDICARE BENEFICIARIES WITH LIMITED 
ENGLISH PROFICIENCY BY PROVIDING REIM-
BURSEMENT FOR CULTURALLY AND LINGUIS-
TICALLY APPROPRIATE SERVICES. 
(a) IN GENERAL.—Not later than 6 months after the 
date of the completion of the study described in section 
1221(a), the Secretary, acting through the Centers for 
Medicare & Medicaid Services, shall carry out a dem-
onstration program under which the Secretary shall award 
not fewer than 24 3-year grants to eligible Medicare serv-
ice providers (as described in subsection (b)(1)) to improve 
effective communication between such providers and Medi-
care beneficiaries who are living in communities where ra-
cial and ethnic minorities, including populations that face 
language barriers, are underserved with respect to such 
services. In designing and carrying out the demonstration 
the Secretary shall take into consideration the results of 
the study conducted under section 1221(a) and adjust, as 
appropriate, the distribution of grants so as to better tar-
get Medicare beneficiaries who are in the greatest need 
of language services. The Secretary shall not authorize a 
grant larger than $500,000 over three years for any grant-
ee. 
(b) ELIGIBILITY; PRIORITY.— 
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(1) ELIGIBILITY.—To be eligible to receive a 
grant under subsection (a) an entity shall— 
(A) be— 
(i) a provider of services under part A 
of title XVIII of the Social Security Act; 
(ii) a service provider under part B of 
such title; 
(iii) a part C organization offering a 
Medicare part C plan under part C of such 
title; or 
(iv) a PDP sponsor of a prescription 
drug plan under part D of such title; and 
(B) prepare and submit to the Secretary 
an application, at such time, in such manner, 
and accompanied by such additional informa-
tion as the Secretary may require. 
(2) PRIORITY.— 
(A) DISTRIBUTION.—To the extent fea-
sible, in awarding grants under this section, the 
Secretary shall award— 
(i) at least 6 grants to providers of 
services described in paragraph (1)(A)(i); 
(ii) at least 6 grants to service pro-
viders described in paragraph (1)(A)(ii); 
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(iii) at least 6 grants to organizations 
described in paragraph (1)(A)(iii); and 
(iv) at least 6 grants to sponsors de-
scribed in paragraph (1)(A)(iv). 
(B) FOR
COMMUNITY
ORGANIZATIONS.— 
The Secretary shall give priority to applicants 
that have developed partnerships with commu-
nity organizations or with agencies with experi-
ence in language access. 
(C) VARIATION IN GRANTEES.—The Sec-
retary shall also ensure that the grantees under 
this section represent, among other factors, 
variations in— 
(i) different types of language services 
provided and of service providers and orga-
nizations under parts A through D of title 
XVIII of the Social Security Act; 
(ii) languages needed and their fre-
quency of use; 
(iii) urban and rural settings; 
(iv) at least two geographic regions, 
as defined by the Secretary; and 
(v) at least two large metropolitan 
statistical areas with diverse populations. 
(c) USE OF FUNDS.— 
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(1) IN GENERAL.—A grantee shall use grant 
funds received under this section to pay for the pro-
vision of competent language services to Medicare 
beneficiaries who are limited English proficient. 
Competent interpreter services may be provided 
through on-site interpretation, telephonic interpreta-
tion, or video interpretation or direct provision of 
health care or health care related services by a bilin-
gual health care provider. A grantee may use bilin-
gual providers, staff, or contract interpreters. A 
grantee may use grant funds to pay for competent 
translation services. A grantee may use up to 10 
percent of the grant funds to pay for administrative 
costs associated with the provision of competent lan-
guage services and for reporting required under sub-
section (e). 
(2) ORGANIZATIONS.—Grantees that are part C 
organizations or PDP sponsors must ensure that 
their network providers receive at least 50 percent of 
the grant funds to pay for the provision of com-
petent language services to Medicare beneficiaries 
who are limited English proficient, including physi-
cians and pharmacies. 
(3) DETERMINATION OF PAYMENTS FOR LAN-
GUAGE SERVICES.—Payments to grantees shall be 
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calculated based on the estimated numbers of lim-
ited English proficient Medicare beneficiaries in a 
grantee’s service area utilizing— 
(A) data on the numbers of limited 
English 
proficient 
individuals 
who 
speak 
English less than ‘‘very well’’ from the most re-
cently available data from the Bureau of the 
Census or other State-based study the Sec-
retary determines likely to yield accurate data 
regarding the number of such individuals served 
by the grantee; or 
(B) the grantee’s own data if the grantee 
routinely collects data on Medicare bene-
ficiaries’ primary language in a manner deter-
mined by the Secretary to yield accurate data 
and such data shows greater numbers of limited 
English proficient individuals than the data list-
ed in subparagraph (A). 
(4) LIMITATIONS.— 
(A) REPORTING.—Payments shall only be 
provided under this section to grantees that re-
port their costs of providing language services 
as required under subsection (e) and may be 
modified annually at the discretion of the Sec-
retary. If a grantee fails to provide the reports 
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under such section for the first year of a grant, 
the Secretary may terminate the grant and so-
licit applications from new grantees to partici-
pate in the subsequent two years of the dem-
onstration program. 
(B) TYPE OF SERVICES.— 
(i) IN
GENERAL.—Subject to clause 
(ii), payments shall be provided under this 
section only to grantees that utilize com-
petent bilingual staff or competent inter-
preter or translation services which— 
(I) if the grantee operates in a 
State that has statewide health care 
interpreter standards, meet the State 
standards currently in effect; or 
(II) if the grantee operates in a 
State that does not have statewide 
health care interpreter standards, uti-
lizes competent interpreters who fol-
low the National Council on Inter-
preting in Health Care’s Code of Eth-
ics and Standards of Practice. 
(ii) EXEMPTIONS.—The requirements 
of clause (i) shall not apply— 
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(I) in the case of a Medicare ben-
eficiary who is limited English pro-
ficient (who has been informed in the 
beneficiary’s primary language of the 
availability of free interpreter and 
translation services) and who requests 
the use of family, friends, or other 
persons untrained in interpretation or 
translation and the grantee documents 
the request in the beneficiary’s record; 
and 
(II) in the case of a medical 
emergency where the delay directly as-
sociated with obtaining a competent 
interpreter or translation services 
would jeopardize the health of the pa-
tient. 
Nothing in clause (ii)(II) shall be con-
strued to exempt emergency rooms or simi-
lar entities that regularly provide health 
care services in medical emergencies from 
having in place systems to provide com-
petent interpreter and translation services 
without undue delay. 
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(d) ASSURANCES.—Grantees under this section 
shall— 
(1) ensure that appropriate clinical and support 
staff receive ongoing education and training in lin-
guistically appropriate service delivery; 
(2) ensure the linguistic competence of bilingual 
providers; 
(3) offer and provide appropriate language serv-
ices at no additional charge to each patient with lim-
ited English proficiency at all points of contact, in 
a timely manner during all hours of operation; 
(4) notify Medicare beneficiaries of their right 
to receive language services in their primary lan-
guage; 
(5) post signage in the languages of the com-
monly encountered group or groups present in the 
service area of the organization; and 
(6) ensure that— 
(A) primary language data are collected 
for recipients of language services; and 
(B) consistent with the privacy protections 
provided under the regulations promulgated 
pursuant to section 264(c) of the Health Insur-
ance Portability and Accountability Act of 1996 
(42 U.S.C. 1320d–2 note), if the recipient of 
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language services is a minor or is incapacitated, 
the primary language of the parent or legal 
guardian is collected and utilized. 
(e) REPORTING REQUIREMENTS.—Grantees under 
this section shall provide the Secretary with reports at the 
conclusion of the each year of a grant under this section. 
Each report shall include at least the following informa-
tion: 
(1) The number of Medicare beneficiaries to 
whom language services are provided. 
(2) The languages of those Medicare bene-
ficiaries. 
(3) The types of language services provided 
(such as provision of services directly in non-English 
language by a bilingual health care provider or use 
of an interpreter). 
(4) Type of interpretation (such as in-person, 
telephonic, or video interpretation). 
(5) The methods of providing language services 
(such as staff or contract with external independent 
contractors or agencies). 
(6) The length of time for each interpretation 
encounter. 
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(7) The costs of providing language services 
(which may be actual or estimated, as determined by 
the Secretary). 
(f) NO COST SHARING.—Limited English proficient 
Medicare beneficiaries shall not have to pay cost-sharing 
or co-pays for language services provided through this 
demonstration program. 
(g) EVALUATION AND REPORT.—The Secretary shall 
conduct an evaluation of the demonstration program 
under this section and shall submit to the appropriate 
committees of Congress a report not later than 1 year 
after the completion of the program. The report shall in-
clude the following: 
(1) An analysis of the patient outcomes and 
costs of furnishing care to the limited English pro-
ficient Medicare beneficiaries participating in the 
project as compared to such outcomes and costs for 
limited English proficient Medicare beneficiaries not 
participating. 
(2) The effect of delivering culturally and lin-
guistically appropriate services on beneficiary access 
to care, utilization of services, efficiency and cost-ef-
fectiveness of health care delivery, patient satisfac-
tion, and select health outcomes. 
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(3) Recommendations, if any, regarding the ex-
tension of such project to the entire Medicare pro-
gram. 
(h) GENERAL PROVISIONS.—Nothing in this section 
shall be construed to limit otherwise existing obligations 
of recipients of Federal financial assistance under title VI 
of the Civil Rights Act of 1964 (42 U.S.C. 2000(d) et 
seq.) or any other statute. 
(i) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
$16,000,000 for each fiscal year of the demonstration pro-
gram. 
SEC. 1223. IOM REPORT ON IMPACT OF LANGUAGE ACCESS 
SERVICES. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall enter into an arrangement with the 
Institute of Medicine under which the Institute will pre-
pare and publish, not later than 3 years after the date 
of the enactment of this Act, a report on the impact of 
language access services on the health and health care of 
limited English proficient populations. 
(b) CONTENTS.—Such report shall include— 
(1) recommendations on the development and 
implementation of policies and practices by health 
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care organizations and providers for limited English 
proficient patient populations; 
(2) a description of the effect of providing lan-
guage access services on quality of health care and 
access to care and reduced medical error; and 
(3) a description of the costs associated with or 
savings related to provision of language access serv-
ices. 
SEC. 1224. DEFINITIONS. 
In this subtitle: 
(1) BILINGUAL.—The term ‘‘bilingual’’ with re-
spect to an individual means a person who has suffi-
cient degree of proficiency in two languages and can 
ensure effective communication can occur in both 
languages. 
(2) COMPETENT INTERPRETER SERVICES.—The 
term ‘‘competent interpreter services’’ means a 
trans-language rendition of a spoken message in 
which the interpreter comprehends the source lan-
guage and can speak comprehensively in the target 
language to convey the meaning intended in the 
source language. The interpreter knows health and 
health-related terminology and provides accurate in-
terpretations by choosing equivalent expressions that 
convey the best matching and meaning to the source 
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language and captures, to the greatest possible ex-
tent, all nuances intended in the source message. 
(3) COMPETENT TRANSLATION SERVICES.—The 
term ‘‘competent translation services’’ means a 
trans-language rendition of a written document in 
which the translator comprehends the source lan-
guage and can write comprehensively in the target 
language to convey the meaning intended in the 
source language. The translator knows health and 
health-related terminology and provides accurate 
translations by choosing equivalent expressions that 
convey the best matching and meaning to the source 
language and captures, to the greatest possible ex-
tent, all nuances intended in the source document. 
(4) EFFECTIVE
COMMUNICATION.—The term 
‘‘effective communication’’ means an exchange of in-
formation between the provider of health care or 
health care-related services and the limited English 
proficient recipient of such services that enables lim-
ited English proficient individuals to access, under-
stand, and benefit from health care or health care- 
related services. 
(5) 
INTERPRETING/INTERPRETATION.—The 
terms ‘‘interpreting’’ and ‘‘interpretation’’ mean the 
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transmission of a spoken message from one language 
into another, faithfully, accurately, and objectively. 
(6) 
HEALTH
CARE
SERVICES.—The 
term 
‘‘health care services’’ means services that address 
physical as well as mental health conditions in all 
care settings. 
(7) HEALTH
CARE-RELATED
SERVICES.—The 
term ‘‘health care-related services’’ means human or 
social services programs or activities that provide ac-
cess, referrals or links to health care. 
(8) LANGUAGE ACCESS.—The term ‘‘language 
access’’ means the provision of language services to 
an LEP individual designed to enhance that individ-
ual’s access to, understanding of or benefit from 
health care or health care-related services. 
(9) LANGUAGE
SERVICES.—The term ‘‘lan-
guage services’’ means provision of health care serv-
ices directly in a non-English language, interpreta-
tion, translation, and non-English signage. 
(10) LIMITED
ENGLISH
PROFICIENT.—The 
term ‘‘limited English proficient’’ or ‘‘LEP’’ with re-
spect to an individual means an individual who 
speaks a primary language other than English and 
who cannot speak, read, write or understand the 
English language at a level that permits the indi-
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vidual to effectively communicate with clinical or 
nonclinical staff at an entity providing health care or 
health care related services. 
(11) 
MEDICARE
BENEFICIARY.—The 
term 
‘‘Medicare beneficiary’’ means an individual entitled 
to benefits under part A of title XVIII of the Social 
Security Act or enrolled under part B of such title. 
(12) MEDICARE PROGRAM.—The term ‘‘Medi-
care program’’ means the programs under parts A 
through D of title XVIII of the Social Security Act. 
(13) SERVICE PROVIDER.—The term ‘‘service 
provider’’ includes all suppliers, providers of services, 
or entities under contract to provide coverage, items 
or services under any part of title XVIII of the So-
cial Security Act. 
Subtitle C—Miscellaneous 
Improvements 
SEC. 1231. EXTENSION OF THERAPY CAPS EXCEPTIONS 
PROCESS. 
Section 1833(g)(5) of the Social Security Act (42 
U.S.C. 1395l(g)(5)), as amended by section 141 of the 
Medicare Improvements for Patients and Providers Act of 
2008 (Public Law 110–275), is amended by striking ‘‘De-
cember 31, 2009’’ and inserting ‘‘December 31, 2011’’. 
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SEC. 1232. EXTENDED MONTHS OF COVERAGE OF IMMUNO-
SUPPRESSIVE DRUGS FOR KIDNEY TRANS-
PLANT PATIENTS AND OTHER RENAL DIALY-
SIS PROVISIONS. 
(a) PROVISION OF APPROPRIATE COVERAGE OF IM-
MUNOSUPPRESSIVE DRUGS UNDER THE MEDICARE PRO-
GRAM FOR KIDNEY TRANSPLANT RECIPIENTS.— 
(1) CONTINUED
ENTITLEMENT
TO
IMMUNO-
SUPPRESSIVE DRUGS.— 
(A) KIDNEY TRANSPLANT RECIPIENTS.— 
Section 226A(b)(2) of the Social Security Act 
(42 U.S.C. 426–1(b)(2)) is amended by insert-
ing ‘‘(except for coverage of immunosuppressive 
drugs under section 1861(s)(2)(J))’’ before ‘‘, 
with the thirty-sixth month’’. 
(B) APPLICATION.—Section 1836 of such 
Act (42 U.S.C. 1395o) is amended— 
(i) by striking ‘‘Every individual who’’ 
and inserting ‘‘(a) IN GENERAL.—Every 
individual who’’; and 
(ii) by adding at the end the following 
new subsection: 
‘‘(b) SPECIAL RULES APPLICABLE TO INDIVIDUALS 
ONLY ELIGIBLE FOR COVERAGE OF IMMUNOSUPPRESSIVE 
DRUGS.— 
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‘‘(1) IN GENERAL.—In the case of an individual 
whose eligibility for benefits under this title has 
ended on or after January 1, 2012, except for the 
coverage of immunosuppressive drugs by reason of 
section 226A(b)(2), the following rules shall apply: 
‘‘(A) The individual shall be deemed to be 
enrolled under this part for purposes of receiv-
ing coverage of such drugs. 
‘‘(B) The individual shall be responsible 
for providing for payment of the portion of the 
premium under section 1839 which is not cov-
ered under the Medicare savings program (as 
defined in section 1144(c)(7)) in order to re-
ceive such coverage. 
‘‘(C) The provision of such drugs shall be 
subject to the application of— 
‘‘(i) the deductible under section 
1833(b); and 
‘‘(ii) the coinsurance amount applica-
ble for such drugs (as determined under 
this part). 
‘‘(D) If the individual is an inpatient of a 
hospital or other entity, the individual is enti-
tled to receive coverage of such drugs under 
this part. 
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‘‘(2) ESTABLISHMENT
OF
PROCEDURES
IN 
ORDER TO IMPLEMENT COVERAGE.—The Secretary 
shall establish procedures for— 
‘‘(A) identifying individuals that are enti-
tled to coverage of immunosuppressive drugs by 
reason of section 226A(b)(2); and 
‘‘(B) distinguishing such individuals from 
individuals that are enrolled under this part for 
the complete package of benefits under this 
part.’’. 
(C) TECHNICAL AMENDMENT TO CORRECT 
DUPLICATE
SUBSECTION
DESIGNATION.—Sub-
section (d) of section 226A of such Act (42 
U.S.C. 
426–1), 
as 
added 
by 
section 
201(a)(3)(D)(ii) of the Social Security Inde-
pendence and Program Improvements Act of 
1994 (Public Law 103–296; 108 Stat. 1497), is 
redesignated as subsection (d). 
(2) EXTENSION
OF
SECONDARY
PAYER
RE-
QUIREMENTS
FOR
ESRD
BENEFICIARIES.—Section 
1862(b)(1)(C) 
of 
such 
Act 
(42 
U.S.C. 
1395y(b)(1)(C)) is amended by adding at the end 
the following new sentence: ‘‘With regard to im-
munosuppressive drugs furnished on or after the 
date of the enactment of the America’s Affordable 
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Health Choices Act of 2009, this subparagraph shall 
be applied without regard to any time limitation.’’. 
(b) MEDICARE COVERAGE FOR ESRD PATIENTS.— 
Section 1881 of such Act is further amended— 
(1) in subsection (b)(14)(B)(iii), by inserting ‘‘, 
including oral drugs that are not the oral equivalent 
of an intravenous drug (such as oral phosphate bind-
ers and calcimimetics),’’ after ‘‘other drugs and 
biologicals’’; 
(2) in subsection (b)(14)(E)(ii)— 
(A) in the first sentence— 
(i) by striking ‘‘a one-time election to 
be excluded from the phase-in’’ and insert-
ing ‘‘an election, with respect to 2011, 
2012, or 2013, to be excluded from the 
phase-in (or the remainder of the phase- 
in)’’; and 
(ii) by adding at the end the fol-
lowing: ‘‘for such year and for each subse-
quent year during the phase-in described 
in clause (i)’’; and 
(B) in the second sentence— 
(i) by striking ‘‘January 1, 2011’’ and 
inserting ‘‘the first date of such year’’; and 
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(ii) by inserting ‘‘and at a time’’ after 
‘‘form and manner’’; and 
(3) in subsection (h)(4)(E), by striking ‘‘lesser’’ 
and inserting ‘‘greater’’. 
SEC. 1233. ADVANCE CARE PLANNING CONSULTATION. 
(a) MEDICARE.— 
(1) IN GENERAL.—Section 1861 of the Social 
Security Act (42 U.S.C. 1395x) is amended— 
(A) in subsection (s)(2)— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (DD); 
(ii) by adding ‘‘and’’ at the end of 
subparagraph (EE); and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(FF) advance care planning consultation (as 
defined in subsection (hhh)(1));’’; and 
(B) by adding at the end the following new 
subsection: 
‘‘Advance Care Planning Consultation 
‘‘(hhh)(1) Subject to paragraphs (3) and (4), the 
term ‘advance care planning consultation’ means a con-
sultation between the individual and a practitioner de-
scribed in paragraph (2) regarding advance care planning, 
if, subject to paragraph (3), the individual involved has 
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not had such a consultation within the last 5 years. Such 
consultation shall include the following: 
‘‘(A) An explanation by the practitioner of ad-
vance care planning, including key questions and 
considerations, important steps, and suggested peo-
ple to talk to. 
‘‘(B) An explanation by the practitioner of ad-
vance directives, including living wills and durable 
powers of attorney, and their uses. 
‘‘(C) An explanation by the practitioner of the 
role and responsibilities of a health care proxy. 
‘‘(D) The provision by the practitioner of a list 
of national and State-specific resources to assist con-
sumers and their families with advance care plan-
ning, including the national toll-free hotline, the ad-
vance care planning clearinghouses, and State legal 
service 
organizations 
(including 
those 
funded 
through the Older Americans Act of 1965). 
‘‘(E) An explanation by the practitioner of the 
continuum of end-of-life services and supports avail-
able, including palliative care and hospice, and bene-
fits for such services and supports that are available 
under this title. 
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‘‘(F)(i) Subject to clause (ii), an explanation of 
orders regarding life sustaining treatment or similar 
orders, which shall include— 
‘‘(I) the reasons why the development of 
such an order is beneficial to the individual and 
the individual’s family and the reasons why 
such an order should be updated periodically as 
the health of the individual changes; 
‘‘(II) the information needed for an indi-
vidual or legal surrogate to make informed deci-
sions regarding the completion of such an 
order; and 
‘‘(III) the identification of resources that 
an individual may use to determine the require-
ments of the State in which such individual re-
sides so that the treatment wishes of that indi-
vidual will be carried out if the individual is un-
able to communicate those wishes, including re-
quirements regarding the designation of a sur-
rogate decisionmaker (also known as a health 
care proxy). 
‘‘(ii) The Secretary shall limit the requirement 
for explanations under clause (i) to consultations 
furnished in a State— 
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‘‘(I) in which all legal barriers have been 
addressed for enabling orders for life sustaining 
treatment to constitute a set of medical orders 
respected across all care settings; and 
‘‘(II) that has in effect a program for or-
ders for life sustaining treatment described in 
clause (iii). 
‘‘(iii) A program for orders for life sustaining 
treatment for a States described in this clause is a 
program that— 
‘‘(I) ensures such orders are standardized 
and uniquely identifiable throughout the State; 
‘‘(II) distributes or makes accessible such 
orders to physicians and other health profes-
sionals that (acting within the scope of the pro-
fessional’s authority under State law) may sign 
orders for life sustaining treatment; 
‘‘(III) provides training for health care 
professionals across the continuum of care 
about the goals and use of orders for life sus-
taining treatment; and 
‘‘(IV) is guided by a coalition of stake-
holders includes representatives from emergency 
medical services, emergency department physi-
cians or nurses, state long-term care associa-
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tion, state medical association, state surveyors, 
agency responsible for senior services, state de-
partment of health, state hospital association, 
home health association, state bar association, 
and state hospice association. 
‘‘(2) A practitioner described in this paragraph is— 
‘‘(A) a physician (as defined in subsection 
(r)(1)); and 
‘‘(B) a nurse practitioner or physician’s assist-
ant who has the authority under State law to sign 
orders for life sustaining treatments. 
‘‘(3)(A) An initial preventive physical examination 
under subsection (WW), including any related discussion 
during such examination, shall not be considered an ad-
vance care planning consultation for purposes of applying 
the 5-year limitation under paragraph (1). 
‘‘(B) An advance care planning consultation with re-
spect to an individual may be conducted more frequently 
than provided under paragraph (1) if there is a significant 
change in the health condition of the individual, including 
diagnosis of a chronic, progressive, life-limiting disease, a 
life-threatening or terminal diagnosis or life-threatening 
injury, or upon admission to a skilled nursing facility, a 
long-term care facility (as defined by the Secretary), or 
a hospice program. 
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‘‘(4) A consultation under this subsection may in-
clude the formulation of an order regarding life sustaining 
treatment or a similar order. 
‘‘(5)(A) For purposes of this section, the term ‘order 
regarding life sustaining treatment’ means, with respect 
to an individual, an actionable medical order relating to 
the treatment of that individual that— 
‘‘(i) is signed and dated by a physician (as de-
fined in subsection (r)(1)) or another health care 
professional (as specified by the Secretary and who 
is acting within the scope of the professional’s au-
thority under State law in signing such an order, in-
cluding a nurse practitioner or physician assistant) 
and is in a form that permits it to stay with the in-
dividual and be followed by health care professionals 
and providers across the continuum of care; 
‘‘(ii) effectively communicates the individual’s 
preferences regarding life sustaining treatment, in-
cluding an indication of the treatment and care de-
sired by the individual; 
‘‘(iii) is uniquely identifiable and standardized 
within a given locality, region, or State (as identified 
by the Secretary); and 
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‘‘(iv) may incorporate any advance directive (as 
defined in section 1866(f)(3)) if executed by the in-
dividual. 
‘‘(B) The level of treatment indicated under subpara-
graph (A)(ii) may range from an indication for full treat-
ment to an indication to limit some or all or specified 
interventions. Such indicated levels of treatment may in-
clude indications respecting, among other items— 
‘‘(i) the intensity of medical intervention if the 
patient is pulse less, apneic, or has serious cardiac 
or pulmonary problems; 
‘‘(ii) the individual’s desire regarding transfer 
to a hospital or remaining at the current care set-
ting; 
‘‘(iii) the use of antibiotics; and 
‘‘(iv) the use of artificially administered nutri-
tion and hydration.’’. 
(2) PAYMENT.—Section 1848(j)(3) of such Act 
(42 U.S.C. 1395w–4(j)(3)) is amended by inserting 
‘‘(2)(FF),’’ after ‘‘(2)(EE),’’. 
(3) FREQUENCY LIMITATION.—Section 1862(a) 
of such Act (42 U.S.C. 1395y(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (N), by striking 
‘‘and’’ at the end; 
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(ii) in subparagraph (O) by striking 
the semicolon at the end and inserting ‘‘, 
and’’; and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(P) in the case of advance care planning 
consultations 
(as 
defined 
in 
section 
1861(hhh)(1)), which are performed more fre-
quently than is covered under such section;’’; 
and 
(B) in paragraph (7), by striking ‘‘or (K)’’ 
and inserting ‘‘(K), or (P)’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to consultations fur-
nished on or after January 1, 2011. 
(b) EXPANSION OF PHYSICIAN QUALITY REPORTING 
INITIATIVE FOR END OF LIFE CARE.— 
(1) PHYSICIAN’S QUALITY REPORTING INITIA-
TIVE.—Section 1848(k)(2) of the Social Security Act 
(42 U.S.C. 1395w–4(k)(2)) is amended by adding at 
the end the following new paragraphs: 
‘‘(3) PHYSICIAN’S QUALITY REPORTING INITIA-
TIVE.— 
‘‘(A) IN GENERAL.—For purposes of re-
porting data on quality measures for covered 
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professional services furnished during 2011 and 
any subsequent year, to the extent that meas-
ures are available, the Secretary shall include 
quality measures on end of life care and ad-
vanced care planning that have been adopted or 
endorsed by a consensus-based organization, if 
appropriate. Such measures shall measure both 
the creation of and adherence to orders for life- 
sustaining treatment. 
‘‘(B) PROPOSED SET OF MEASURES.—The 
Secretary shall publish in the Federal Register 
proposed quality measures on end of life care 
and advanced care planning that the Secretary 
determines are described in subparagraph (A) 
and would be appropriate for eligible profes-
sionals to use to submit data to the Secretary. 
The Secretary shall provide for a period of pub-
lic comment on such set of measures before fi-
nalizing such proposed measures.’’. 
(c) INCLUSION OF INFORMATION IN MEDICARE & 
YOU HANDBOOK.— 
(1) MEDICARE & YOU HANDBOOK.— 
(A) IN GENERAL.—Not later than 1 year 
after the date of the enactment of this Act, the 
Secretary of Health and Human Services shall 
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update the online version of the Medicare & 
You Handbook to include the following: 
(i) An explanation of advance care 
planning and advance directives, includ-
ing— 
(I) living wills; 
(II) durable power of attorney; 
(III) orders of life-sustaining 
treatment; and 
(IV) health care proxies. 
(ii) A description of Federal and State 
resources available to assist individuals 
and their families with advance care plan-
ning and advance directives, including— 
(I) available State legal service 
organizations to assist individuals 
with advance care planning, including 
those organizations that receive fund-
ing pursuant to the Older Americans 
Act of 1965 (42 U.S.C. 93001 et 
seq.); 
(II) website links or addresses for 
State-specific advance directive forms; 
and 
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(III) any additional information, 
as determined by the Secretary. 
(B) UPDATE OF PAPER AND SUBSEQUENT 
VERSIONS.—The Secretary shall include the in-
formation described in subparagraph (A) in all 
paper and electronic versions of the Medicare & 
You Handbook that are published on or after 
the date that is 1 year after the date of the en-
actment of this Act. 
SEC. 1234. PART B SPECIAL ENROLLMENT PERIOD AND 
WAIVER OF LIMITED ENROLLMENT PENALTY 
FOR TRICARE BENEFICIARIES. 
(a) PART B SPECIAL ENROLLMENT PERIOD.— 
(1) IN GENERAL.—Section 1837 of the Social 
Security Act (42 U.S.C. 1395p) is amended by add-
ing at the end the following new subsection: 
‘‘(l)(1) In the case of any individual who is a covered 
beneficiary (as defined in section 1072(5) of title 10, 
United States Code) at the time the individual is entitled 
to hospital insurance benefits under part A under section 
226(b) or section 226A and who is eligible to enroll but 
who has elected not to enroll (or to be deemed enrolled) 
during the individual’s initial enrollment period, there 
shall be a special enrollment period described in paragraph 
(2). 
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‘‘(2) The special enrollment period described in this 
paragraph, with respect to an individual, is the 12-month 
period beginning on the day after the last day of the initial 
enrollment period of the individual or, if later, the 12- 
month period beginning with the month the individual is 
notified of enrollment under this section. 
‘‘(3) In the case of an individual who enrolls during 
the special enrollment period provided under paragraph 
(1), the coverage period under this part shall begin on the 
first day of the month in which the individual enrolls or, 
at the option of the individual, on the first day of the sec-
ond month following the last month of the individual’s ini-
tial enrollment period. 
‘‘(4) The Secretary of Defense shall establish a meth-
od for identifying individuals described in paragraph (1) 
and providing notice to them of their eligibility for enroll-
ment during the special enrollment period described in 
paragraph (2).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to elections made on or 
after the date of the enactment of this Act. 
(b) WAIVER OF INCREASE OF PREMIUM.— 
(1) IN GENERAL.—Section 1839(b) of the So-
cial Security Act (42 U.S.C. 1395r(b)) is amended 
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by striking ‘‘section 1837(i)(4)’’ and inserting ‘‘sub-
section (i)(4) or (l) of section 1837’’. 
(2) EFFECTIVE DATE.— 
(A) IN GENERAL.—The amendment made 
by paragraph (1) shall apply with respect to 
elections made on or after the date of the en-
actment of this Act. 
(B) REBATES
FOR
CERTAIN
DISABLED 
AND ESRD BENEFICIARIES.— 
(i) IN
GENERAL.—With respect to 
premiums for months on or after January 
2005 and before the month of the enact-
ment of this Act, no increase in the pre-
mium shall be effected for a month in the 
case of any individual who is a covered 
beneficiary (as defined in section 1072(5) 
of title 10, United States Code) at the time 
the individual is entitled to hospital insur-
ance benefits under part A of title XVIII 
of the Social Security Act under section 
226(b) or 226A of such Act, and who is el-
igible to enroll, but who has elected not to 
enroll (or to be deemed enrolled), during 
the individual’s initial enrollment period, 
and who enrolls under this part within the 
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12-month period that begins on the first 
day of the month after the month of notifi-
cation of entitlement under this part. 
(ii) CONSULTATION
WITH
DEPART-
MENT
OF
DEFENSE.—The Secretary of 
Health and Human Services shall consult 
with the Secretary of Defense in identi-
fying individuals described in this para-
graph. 
(iii) REBATES.—The Secretary of 
Health and Human Services shall establish 
a method for providing rebates of premium 
increases paid for months on or after Jan-
uary 1, 2005, and before the month of the 
enactment of this Act for which a penalty 
was applied and collected. 
SEC. 1235. EXCEPTION FOR USE OF MORE RECENT TAX 
YEAR IN CASE OF GAINS FROM SALE OF PRI-
MARY RESIDENCE IN COMPUTING PART B IN-
COME-RELATED PREMIUM. 
(a) IN GENERAL.—Section 1839(i)(4)(C)(ii)(II) of 
the Social Security Act (42 U.S.C. 1395r(i)(4)(C)(ii)(II)) 
is amended by inserting ‘‘sale of primary residence,’’ after 
‘‘divorce of such individual,’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to premiums and payments for 
years beginning with 2011. 
SEC. 1236. DEMONSTRATION PROGRAM ON USE OF PA-
TIENT DECISIONS AIDS. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services shall establish a shared decision making 
demonstration program (in this subsection referred to as 
the ‘‘program’’) under the Medicare program using pa-
tient decision aids to meet the objective of improving the 
understanding by Medicare beneficiaries of their medical 
treatment options, as compared to comparable Medicare 
beneficiaries who do not participate in a shared decision 
making process using patient decision aids. 
(b) SITES.— 
(1) ENROLLMENT.—The Secretary shall enroll 
in the program not more than 30 eligible providers 
who have experience in implementing, and have in-
vested in the necessary infrastructure to implement, 
shared decision making using patient decision aids. 
(2) APPLICATION.—An eligible provider seeking 
to participate in the program shall submit to the 
Secretary an application at such time and containing 
such information as the Secretary may require. 
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(3) PREFERENCE.—In enrolling eligible pro-
viders in the program, the Secretary shall give pref-
erence to eligible providers that— 
(A) have documented experience in using 
patient decision aids for the conditions identi-
fied by the Secretary and in using shared deci-
sion making; 
(B) have the necessary information tech-
nology infrastructure to collect the information 
required by the Secretary for reporting pur-
poses; and 
(C) are trained in how to use patient deci-
sion aids and shared decision making. 
(c) FOLLOW-UP COUNSELING VISIT.— 
(1) IN GENERAL.—An eligible provider partici-
pating in the program shall routinely schedule Medi-
care beneficiaries for a counseling visit after the 
viewing of such a patient decision aid to answer any 
questions the beneficiary may have with respect to 
the medical care of the condition involved and to as-
sist the beneficiary in thinking through how their 
preferences and concerns relate to their medical 
care. 
(2) PAYMENT
FOR
FOLLOW-UP
COUNSELING 
VISIT.—The Secretary shall establish procedures for 
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making payments for such counseling visits provided 
to Medicare beneficiaries under the program. Such 
procedures shall provide for the establishment— 
(A) of a code (or codes) to represent such 
services; and 
(B) of a single payment amount for such 
service that includes the professional time of 
the health care provider and a portion of the 
reasonable costs of the infrastructure of the eli-
gible provider such as would be made under the 
applicable payment systems to that provider for 
similar covered services. 
(d) COSTS OF AIDS.—An eligible provider partici-
pating in the program shall be responsible for the costs 
of selecting, purchasing, and incorporating such patient 
decision aids into the provider’s practice, and reporting 
data on quality and outcome measures under the program. 
(e) FUNDING.—The Secretary shall provide for the 
transfer from the Federal Supplementary Medical Insur-
ance Trust Fund established under section 1841 of the 
Social Security Act (42 U.S.C. 1395t) of such funds as 
are necessary for the costs of carrying out the program. 
(f) WAIVER AUTHORITY.—The Secretary may waive 
such requirements of titles XI and XVIII of the Social 
Security Act (42 U.S.C. 1301 et seq. and 1395 et seq.) 
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as may be necessary for the purpose of carrying out the 
program. 
(g) REPORT.—Not later than 12 months after the 
date of completion of the program, the Secretary shall sub-
mit to Congress a report on such program, together with 
recommendations for such legislation and administrative 
action as the Secretary determines to be appropriate. The 
final report shall include an evaluation of the impact of 
the use of the program on health quality, utilization of 
health care services, and on improving the quality of life 
of such beneficiaries. 
(h) DEFINITIONS.—In this section: 
(1) ELIGIBLE PROVIDER.—The term ‘‘eligible 
provider’’ means the following: 
(A) A primary care practice. 
(B) A specialty practice. 
(C) A multispecialty group practice. 
(D) A hospital. 
(E) A rural health clinic. 
(F) A federally qualified health center (as 
defined in section 1861(aa)(4) of the Social Se-
curity Act (42 U.S.C. 1395x(aa)(4)). 
(G) An integrated delivery system. 
(H) A State cooperative entity that in-
cludes the State government and at least one 
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other health care provider which is set up for 
the purpose of testing shared decision making 
and patient decision aids. 
(2) PATIENT
DECISION
AID.—The term ‘‘pa-
tient decision aid’’ means an educational tool (such 
as the Internet, a video, or a pamphlet) that helps 
patients (or, if appropriate, the family caregiver of 
the patient) understand and communicate their be-
liefs and preferences related to their treatment op-
tions, and to decide with their health care provider 
what treatments are best for them based on their 
treatment options, scientific evidence, circumstances, 
beliefs, and preferences. 
(3) SHARED
DECISION
MAKING.—The term 
‘‘shared decision making’’ means a collaborative 
process between patient and clinician that engages 
the patient in decision making, provides patients 
with information about trade-offs among treatment 
options, and facilitates the incorporation of patient 
preferences and values into the medical plan. 
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TITLE K—PROMOTING PRIMARY 
CARE, 
MENTAL 
HEALTH 
SERVICES, 
AND 
COORDI-
NATED CARE 
SEC. 1301. ACCOUNTABLE CARE ORGANIZATION PILOT 
PROGRAM. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1866C the following new section: 
‘‘ACCOUNTABLE CARE ORGANIZATION PILOT PROGRAM 
‘‘SEC. 1866D. (a) IN GENERAL.—The Secretary shall 
conduct a pilot program (in this section referred to as the 
‘pilot program’) to test different payment incentive mod-
els, including (to the extent practicable) the specific pay-
ment incentive models described in subsection (c), de-
signed to reduce the growth of expenditures and improve 
health outcomes in the provision of items and services 
under this title to applicable beneficiaries (as defined in 
subsection (d)) by qualifying accountable care organiza-
tions (as defined in subsection (b)(1)) in order to— 
‘‘(1) promote accountability for a patient popu-
lation and coordinate items and services under parts 
A and B; 
‘‘(2) encourage investment in infrastructure and 
redesigned care processes for high quality and effi-
cient service delivery; and 
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‘‘(3) reward physician practices and other phy-
sician organizational models for the provision of high 
quality and efficient health care services. 
‘‘(b) QUALIFYING ACCOUNTABLE CARE ORGANIZA-
TIONS (ACOS).— 
‘‘(1) QUALIFYING ACO DEFINED.—In this sec-
tion: 
‘‘(A) IN GENERAL.—The terms ‘qualifying 
accountable care organization’ and ‘qualifying 
ACO’ mean a group of physicians or other phy-
sician organizational model (as defined in sub-
paragraph (D)) that— 
‘‘(i) is organized at least in part for 
the purpose of providing physicians’ serv-
ices; and 
‘‘(ii) meets such criteria as the Sec-
retary determines to be appropriate to par-
ticipate in the pilot program, including the 
criteria specified in paragraph (2). 
‘‘(B) INCLUSION OF OTHER PROVIDERS.— 
Nothing in this subsection shall be construed as 
preventing a qualifying ACO from including a 
hospital or any other provider of services or 
supplier furnishing items or services for which 
payment may be made under this title that is 
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affiliated with the ACO under an arrangement 
structured so that such provider or supplier 
participates in the pilot program and shares in 
any incentive payments under the pilot pro-
gram. 
‘‘(C) PHYSICIAN.—The term ‘physician’ in-
cludes, except as the Secretary may otherwise 
provide, any individual who furnishes services 
for which payment may be made as physicians’ 
services. 
‘‘(D) OTHER PHYSICIAN ORGANIZATIONAL 
MODEL.—The term ‘other physician organiza-
tion model’ means, with respect to a qualifying 
ACO any model of organization under which 
physicians enter into agreements with other 
providers for the purposes of participation in 
the pilot program in order to provide high qual-
ity and efficient health care services and share 
in any incentive payments under such program. 
‘‘(E) OTHER SERVICES.—Nothing in this 
paragraph shall be construed as preventing a 
qualifying ACO from furnishing items or serv-
ices, for which payment may not be made under 
this title, for purposes of achieving performance 
goals under the pilot program. 
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‘‘(2) QUALIFYING CRITERIA.—The following are 
criteria described in this paragraph for an organized 
group of physicians to be a qualifying ACO: 
‘‘(A) The group has a legal structure that 
would allow the group to receive and distribute 
incentive payments under this section. 
‘‘(B) The group includes a sufficient num-
ber of primary care physicians for the applica-
ble beneficiaries for whose care the group is ac-
countable (as determined by the Secretary). 
‘‘(C) The group reports on quality meas-
ures in such form, manner, and frequency as 
specified by the Secretary (which may be for 
the group, for providers of services and sup-
pliers, or both). 
‘‘(D) The group reports to the Secretary 
(in a form, manner and frequency as specified 
by the Secretary) such data as the Secretary 
determines appropriate to monitor and evaluate 
the pilot program. 
‘‘(E) The group provides notice to applica-
ble beneficiaries regarding the pilot program (as 
determined appropriate by the Secretary). 
‘‘(F) The group contributes to a best prac-
tices network or website, that shall be main-
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tained by the Secretary for the purpose of shar-
ing strategies on quality improvement, care co-
ordination, and efficiency that the groups be-
lieve are effective. 
‘‘(G) The group utilizes patient-centered 
processes of care, including those that empha-
size patient and caregiver involvement in plan-
ning and monitoring of ongoing care manage-
ment plan. 
‘‘(H) The group meets other criteria deter-
mined to be appropriate by the Secretary. 
‘‘(c) SPECIFIC PAYMENT INCENTIVE MODELS.—The 
specific payment incentive models described in this sub-
section are the following: 
‘‘(1) PERFORMANCE
TARGET
MODEL.—Under 
the performance target model under this paragraph 
(in this paragraph referred to as the ‘performance 
target model’): 
‘‘(A) IN
GENERAL.—A qualifying ACO 
qualifies to receive an incentive payment if ex-
penditures for applicable beneficiaries are less 
than a target spending level or a target rate of 
growth. The incentive payment shall be made 
only if savings are greater than would result 
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from normal variation in expenditures for items 
and services covered under parts A and B. 
‘‘(B) COMPUTATION
OF
PERFORMANCE 
TARGET.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall establish a performance target for 
each qualifying ACO comprised of a base 
amount (described in clause (ii)) increased 
to the current year by an adjustment fac-
tor (described in clause (iii)). Such a tar-
get may be established on a per capita 
basis, as the Secretary determines to be 
appropriate. 
‘‘(ii) BASE AMOUNT.—For purposes of 
clause (i), the base amount in this sub-
paragraph is equal to the average total 
payments (or allowed charges) under parts 
A and B (and may include part D, if the 
Secretary determines appropriate) for ap-
plicable beneficiaries for whom the quali-
fying ACO furnishes items and services in 
a base period determined by the Secretary. 
Such base amount may be determined on 
a per capita basis. 
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‘‘(iii) 
ADJUSTMENT
FACTOR.—For 
purposes of clause (i), the adjustment fac-
tor in this clause may equal an annual per 
capita amount that reflects changes in ex-
penditures from the period of the base 
amount to the current year that would rep-
resent an appropriate performance target 
for applicable beneficiaries (as determined 
by the Secretary). Such adjustment factor 
may be determined as an amount or rate, 
may be determined on a national, regional, 
local, or organization-specific basis, and 
may be determined on a per capita basis. 
Such adjustment factor also may be ad-
justed for risk as determined appropriate 
by the Secretary. 
‘‘(iv) REBASING.—Under this model 
the Secretary shall periodically rebase the 
base expenditure amount described in 
clause (ii). 
‘‘(C) MEETING TARGET.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), a qualifying ACO that meet or exceeds 
annual quality and performance targets for 
a year shall receive an incentive payment 
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for such year equal to a portion (as deter-
mined appropriate by the Secretary) of the 
amount by which payments under this title 
for such year relative are estimated to be 
below the performance target for such 
year, as determined by the Secretary. The 
Secretary may establish a cap on incentive 
payments for a year for a qualifying ACO. 
‘‘(ii) 
LIMITATION.—The 
Secretary 
shall limit incentive payments to each 
qualifying ACO under this paragraph as 
necessary to ensure that the aggregate ex-
penditures with respect to applicable bene-
ficiaries for such ACOs under this title (in-
clusive of incentive payments described in 
this subparagraph) do not exceed the 
amount that the Secretary estimates would 
be expended for such ACO for such bene-
ficiaries if the pilot program under this 
section were not implemented. 
‘‘(D) REPORTING
AND
OTHER
REQUIRE-
MENTS.—In carrying out such model, the Sec-
retary may (as the Secretary determines to be 
appropriate) 
incorporate 
reporting 
require-
ments, incentive payments, and penalties re-
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lated to the physician quality reporting initia-
tive (PQRI), electronic prescribing, electronic 
health records, and other similar initiatives 
under section 1848, and may use alternative 
criteria than would otherwise apply under such 
section for determining whether to make such 
payments. The incentive payments described in 
this subparagraph shall not be included in the 
limit described in subparagraph (C)(ii) or in the 
performance target model described in this 
paragraph. 
‘‘(2) PARTIAL CAPITATION MODEL.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a partial capitation model described 
in this paragraph (in this paragraph referred to 
as a ‘partial capitation model’) is a model in 
which a qualifying ACO would be at financial 
risk for some, but not all, of the items and serv-
ices covered under parts A and B, such as at 
risk for some or all physicians’ services or all 
items and services under part B. The Secretary 
may limit a partial capitation model to ACOs 
that are highly integrated systems of care and 
to ACOs capable of bearing risk, as determined 
to be appropriate by the Secretary. 
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‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Payments to a qualifying ACO for ap-
plicable beneficiaries for a year under the par-
tial capitation model shall be established in a 
manner that does not result in spending more 
for such ACO for such beneficiaries than would 
otherwise be expended for such ACO for such 
beneficiaries for such year if the pilot program 
were not implemented, as estimated by the Sec-
retary. 
‘‘(3) OTHER PAYMENT MODELS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary may develop other 
payment models that meet the goals of this 
pilot program to improve quality and efficiency. 
‘‘(B) NO ADDITIONAL PROGRAM EXPENDI-
TURES.—Subparagraph (B) of paragraph (2) 
shall apply to a payment model under subpara-
graph (A) in a similar manner as such subpara-
graph (B) applies to the payment model under 
paragraph (2). 
‘‘(d) APPLICABLE BENEFICIARIES.— 
‘‘(1) IN GENERAL.—In this section, the term 
‘applicable beneficiary’ means, with respect to a 
qualifying ACO, an individual who— 
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‘‘(A) is enrolled under part B and entitled 
to benefits under part A; 
‘‘(B) is not enrolled in a Medicare Advan-
tage plan under part C or a PACE program 
under section 1894; and 
‘‘(C) meets such other criteria as the Sec-
retary determines appropriate, which may in-
clude criteria relating to frequency of contact 
with physicians in the ACO. 
‘‘(2) 
FOLLOWING
APPLICABLE
BENE-
FICIARIES.—The Secretary may monitor data on ex-
penditures and quality of services under this title 
after an applicable beneficiary discontinues receiving 
services under this title through a qualifying ACO. 
‘‘(e) IMPLEMENTATION.— 
‘‘(1) STARTING DATE.—The pilot program shall 
begin no later than January 1, 2012. An agreement 
with a qualifying ACO under the pilot program may 
cover a multi-year period of between 3 and 5 years. 
‘‘(2) WAIVER.—The Secretary may waive such 
provisions of this title (including section 1877) and 
title XI in the manner the Secretary determines nec-
essary in order implement the pilot program. 
‘‘(3) PERFORMANCE RESULTS REPORTS.—The 
Secretary shall report performance results to quali-
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fying ACOs under the pilot program at least annu-
ally. 
‘‘(4) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of— 
‘‘(A) the elements, parameters, scope, and 
duration of the pilot program; 
‘‘(B) the selection of qualifying ACOs for 
the pilot program; 
‘‘(C) the establishment of targets, meas-
urement of performance, determinations with 
respect to whether savings have been achieved 
and the amount of savings; 
‘‘(D) determinations regarding whether, to 
whom, and in what amounts incentive payments 
are paid; and 
‘‘(E) decisions about the extension of the 
program under subsection (g), expansion of the 
program under subsection (h) or extensions 
under subsection (i). 
‘‘(5) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code shall not apply to this section. 
‘‘(f) EVALUATION; MONITORING.— 
‘‘(1) IN GENERAL.—The Secretary shall evalu-
ate the payment incentive model for each qualifying 
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ACO under the pilot program to assess impacts on 
beneficiaries, providers of services, suppliers and the 
program under this title. The Secretary shall make 
such evaluation publicly available within 60 days of 
the date of completion of such report. 
‘‘(2) MONITORING.—The Inspector General of 
the Department of Health and Human Services shall 
provide for monitoring of the operation of ACOs 
under the pilot program with regard to violations of 
section 1877 (popularly known as the ‘Stark law’). 
‘‘(g) EXTENSION OF PILOT AGREEMENT WITH SUC-
CESSFUL ORGANIZATIONS.— 
‘‘(1) REPORTS TO CONGRESS.—Not later than 
2 years after the date the first agreement is entered 
into under this section, and biennially thereafter for 
six years, the Secretary shall submit to Congress 
and make publicly available a report on the use of 
authorities under the pilot program. Each report 
shall address the impact of the use of those authori-
ties on expenditures, access, and quality under this 
title. 
‘‘(2) EXTENSION.—Subject to the report pro-
vided under paragraph (1), with respect to a quali-
fying ACO, the Secretary may extend the duration 
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of the agreement for such ACO under the pilot pro-
gram as the Secretary determines appropriate if— 
‘‘(A) the ACO receives incentive payments 
with respect to any of the first 4 years of the 
pilot agreement and is consistently meeting 
quality standards; or 
‘‘(B) the ACO is consistently exceeding 
quality standards and is not increasing spend-
ing under the program. 
‘‘(3) TERMINATION.—The Secretary may termi-
nate an agreement with a qualifying ACO under the 
pilot program if such ACO did not receive incentive 
payments or consistently failed to meet quality 
standards in any of the first 3 years under the pro-
gram. 
‘‘(h) EXPANSION TO ADDITIONAL ACOS.— 
‘‘(1) TESTING AND REFINEMENT OF PAYMENT 
INCENTIVE MODELS.—Subject to the evaluation de-
scribed in subsection (f), the Secretary may enter 
into agreements under the pilot program with addi-
tional qualifying ACOs to further test and refine 
payment incentive models with respect to qualifying 
ACOs. 
‘‘(2) EXPANDING USE OF SUCCESSFUL MODELS 
TO PROGRAM IMPLEMENTATION.— 
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‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary may issue regulations 
to implement, on a permanent basis, 1 or more 
models if, and to the extent that, such models 
are beneficial to the program under this title, as 
determined by the Secretary. 
‘‘(B) CERTIFICATION.—The Chief Actuary 
of the Centers for Medicare & Medicaid Serv-
ices shall certify that 1 or more of such models 
described in subparagraph (A) would result in 
estimated spending that would be less than 
what spending would otherwise be estimated to 
be in the absence of such expansion. 
‘‘(i) TREATMENT OF PHYSICIAN GROUP PRACTICE 
DEMONSTRATION.— 
‘‘(1) EXTENSION.—The Secretary may enter in 
to an agreement with a qualifying ACO under the 
demonstration under section 1866A, subject to re-
basing and other modifications deemed appropriate 
by the Secretary, until the pilot program under this 
section is operational. 
‘‘(2) TRANSITION.—For purposes of extension 
of an agreement with a qualifying ACO under sub-
section (g)(2), the Secretary shall treat receipt of an 
incentive payment for a year by an organization 
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under the physician group practice demonstration 
pursuant to section 1866A as a year for which an 
incentive payment is made under such subsection, as 
long as such practice group practice organization 
meets the criteria under subsection (b)(2). 
‘‘(j) ADDITIONAL PROVISIONS.— 
‘‘(1) AUTHORITY
FOR
SEPARATE
INCENTIVE 
ARRANGEMENTS.—The Secretary may create sepa-
rate incentive arrangements (including using mul-
tiple years of data, varying thresholds, varying 
shared savings amounts, and varying shared savings 
limits) for different categories of qualifying ACOs to 
reflect natural variations in data availability, vari-
ation in average annual attributable expenditures, 
program integrity, and other matters the Secretary 
deems appropriate. 
‘‘(2) ENCOURAGEMENT OF PARTICIPATION OF 
SMALLER ORGANIZATIONS.—In order to encourage 
the participation of smaller accountable care organi-
zations under the pilot program, the Secretary may 
limit a qualifying ACO’s exposure to high cost pa-
tients under the program. 
‘‘(3) INVOLVEMENT
IN
PRIVATE
PAYER
AR-
RANGEMENTS.—Nothing in this section shall be con-
strued as preventing qualifying ACOs participating 
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in the pilot program from negotiating similar con-
tracts with private payers. 
‘‘(4) ANTIDISCRIMINATION
LIMITATION.—The 
Secretary shall not enter into an agreement with an 
entity to provide health care items or services under 
the pilot program, or with an entity to administer 
the program, unless such entity guarantees that it 
will not deny, limit, or condition the coverage or pro-
vision of benefits under the program, for individuals 
eligible to be enrolled under such program, based on 
any health status-related factor described in section 
2702(a)(1) of the Public Health Service Act. 
‘‘(5) CONSTRUCTION.—Nothing in this section 
shall be construed to compel or require an organiza-
tion to use an organization-specific target growth 
rate for an accountable care organization under this 
section for purposes of section 1848. 
‘‘(6) FUNDING.—For purposes of administering 
and carrying out the pilot program, other than for 
payments for items and services furnished under this 
title and incentive payments under subsection (c)(1), 
in addition to funds otherwise appropriated, there 
are appropriated to the Secretary for the Center for 
Medicare & Medicaid Services Program Management 
Account $25,000,000 for each of fiscal years 2010 
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through 2014 and $20,000,000 for fiscal year 2015. 
Amounts appropriated under this paragraph for a 
fiscal year shall be available until expended.’’. 
SEC. 1302. MEDICAL HOME PILOT PROGRAM. 
(a) IN GENERAL.—Title XVIII of the Social Security 
Act is amended by inserting after section 1866D, as in-
serted by section 1301, the following new section: 
‘‘MEDICAL HOME PILOT PROGRAM 
‘‘SEC. 1866E. (a) ESTABLISHMENT AND MEDICAL 
HOME MODELS.— 
‘‘(1) ESTABLISHMENT OF PILOT PROGRAM.— 
The Secretary shall establish a medical home pilot 
program (in this section referred to as the ‘pilot pro-
gram’) for the purpose of evaluating the feasibility 
and advisability of reimbursing qualified patient-cen-
tered medical homes for furnishing medical home 
services (as defined under subsection (b)(1)) to high 
need 
beneficiaries 
(as 
defined 
in 
subsection 
(d)(1)(C)) and to targeted high need beneficiaries 
(as defined in subsection (c)(1)(C)). 
‘‘(2) SCOPE.—Subject to subsection (g), the 
pilot program shall include urban, rural, and under-
served areas. 
‘‘(3) MODELS
OF
MEDICAL
HOMES
IN
THE 
PILOT PROGRAM.—The pilot program shall evaluate 
each of the following medical home models: 
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‘‘(A) INDEPENDENT
PATIENT-CENTERED 
MEDICAL HOME MODEL.—Independent patient- 
centered medical home model under subsection 
(c). 
‘‘(B) COMMUNITY-BASED
MEDICAL
HOME 
MODEL.—Community-based 
medical 
home 
model under subsection (d). 
‘‘(4) PARTICIPATION OF NURSE PRACTITIONERS 
AND PHYSICIAN ASSISTANTS.— 
‘‘(A) Nothing in this section shall be con-
strued as preventing a nurse practitioner from 
leading a patient centered medical home so long 
as— 
‘‘(i) all the requirements of this sec-
tion are met; and 
‘‘(ii) the nurse practitioner is acting 
consistently with State law. 
‘‘(B) Nothing in this section shall be con-
strued as preventing a physician assistant from 
participating in a patient centered medical 
home so long as— 
‘‘(i) all the requirements of this sec-
tion are met; and 
‘‘(ii) the physician assistant is acting 
consistently with State law. 
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‘‘(b) DEFINITIONS.—For purposes of this section: 
‘‘(1) 
PATIENT-CENTERED
MEDICAL
HOME 
SERVICES.—The 
term 
‘patient-centered 
medical 
home services’ means services that— 
‘‘(A) provide beneficiaries with direct and 
ongoing access to a primary care or principal 
care by a physician or nurse practitioner who 
accepts responsibility for providing first contact, 
continuous and comprehensive care to such ben-
eficiary; 
‘‘(B) coordinate the care provided to a ben-
eficiary by a team of individuals at the practice 
level across office, institutional and home set-
tings led by a primary care or principal care 
physician or nurse practitioner, as needed and 
appropriate; 
‘‘(C) provide for all the patient’s health 
care needs or take responsibility for appro-
priately arranging care with other qualified pro-
viders for all stages of life; 
‘‘(D) provide continuous access to care and 
communication with participating beneficiaries; 
‘‘(E) provide support for patient self-man-
agement, proactive and regular patient moni-
toring, support for family caregivers, use pa-
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tient-centered processes, and coordination with 
community resources; 
‘‘(F) integrate readily accessible, clinically 
useful information on participating patients 
that enables the practice to treat such patients 
comprehensively and systematically; and 
‘‘(G) implement evidence-based guidelines 
and apply such guidelines to the identified 
needs of beneficiaries over time and with the in-
tensity needed by such beneficiaries. 
‘‘(2) PRIMARY CARE.—The term ‘primary care’ 
means health care that is provided by a physician or 
nurse practitioner who practices in the field of fam-
ily medicine, general internal medicine, geriatric 
medicine, or pediatric medicine. 
‘‘(3) PRINCIPAL
CARE.—The term ‘principal 
care’ means integrated, accessible health care that is 
provided by a physician who is a medical sub-
specialist that addresses the majority of the personal 
health care needs of patients with chronic conditions 
requiring the subspecialist’s expertise, and for whom 
the subspecialist assumes care management. 
‘‘(c) INDEPENDENT PATIENT-CENTERED MEDICAL 
HOME MODEL.— 
‘‘(1) IN GENERAL.— 
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‘‘(A) PAYMENT
AUTHORITY.—Under the 
independent patient-centered medical home 
model under this subsection, the Secretary shall 
make payments for medical home services fur-
nished by an independent patient-centered med-
ical home (as defined in subparagraph (B)) 
pursuant to paragraph (3)(B) for a targeted 
high need beneficiaries (as defined in subpara-
graph (C)). 
‘‘(B) INDEPENDENT
PATIENT-CENTERED 
MEDICAL HOME DEFINED.—In this section, the 
term ‘independent patient-centered medical 
home’ means a physician-directed or nurse- 
practitioner-directed practice that is qualified 
under paragraph (2) as— 
‘‘(i) providing beneficiaries with pa-
tient-centered medical home services; and 
‘‘(ii) meets such other requirements as 
the Secretary may specify. 
‘‘(C) TARGETED HIGH NEED BENEFICIARY 
DEFINED.—For purposes of this subsection, the 
term ‘targeted high need beneficiary’ means a 
high need beneficiary who, based on a risk score 
as specified by the Secretary, is generally within 
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the upper 50th percentile of Medicare bene-
ficiaries. 
‘‘(D) BENEFICIARY ELECTION TO PARTICI-
PATE.—The Secretary shall determine an ap-
propriate method of ensuring that beneficiaries 
have agreed to participate in the pilot program. 
‘‘(E) IMPLEMENTATION.—The pilot pro-
gram under this subsection shall begin no later 
than 6 months after the date of the enactment 
of this section. 
‘‘(2) STANDARD SETTING AND QUALIFICATION 
PROCESS
FOR
PATIENT-CENTERED
MEDICAL 
HOMES.—The Secretary shall review alternative 
models for standard setting and qualification, and 
shall establish a process— 
‘‘(A) to establish standards to enable med-
ical practices to qualify as patient-centered 
medical homes; and 
‘‘(B) to initially provide for the review and 
certification of medical practices as meeting 
such standards. 
‘‘(3) PAYMENT.— 
‘‘(A) 
ESTABLISHMENT
OF
METHOD-
OLOGY.—The Secretary shall establish a meth-
odology for the payment for medical home serv-
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ices furnished by independent patient-centered 
medical homes. Under such methodology, the 
Secretary shall adjust payments to medical 
homes based on beneficiary risk scores to en-
sure that higher payments are made for higher 
risk beneficiaries. 
‘‘(B) PER BENEFICIARY PER MONTH PAY-
MENTS.—Under such payment methodology, the 
Secretary shall pay independent patient-cen-
tered medical homes a monthly fee for each tar-
geted high need beneficiary who consents to re-
ceive medical home services through such med-
ical home. 
‘‘(C) PROSPECTIVE
PAYMENT.—The fee 
under subparagraph (B) shall be paid on a pro-
spective basis. 
‘‘(D) AMOUNT
OF
PAYMENT.—In deter-
mining the amount of such fee, the Secretary 
shall consider the following: 
‘‘(i) The clinical work and practice ex-
penses involved in providing the medical 
home services provided by the independent 
patient-centered medical home (such as 
providing increased access, care coordina-
tion, population disease management, and 
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teaching self-care skills for managing 
chronic illnesses) for which payment is not 
made under this title as of the date of the 
enactment of this section. 
‘‘(ii) Allow for differential payments 
based on capabilities of the independent 
patient-centered medical home. 
‘‘(iii) Use appropriate risk-adjustment 
in determining the amount of the per bene-
ficiary per month payment under this 
paragraph in a manner that ensures that 
higher payments are made for higher risk 
beneficiaries. 
‘‘(4) ENCOURAGING
PARTICIPATION
OF
VARI-
ETY OF PRACTICES.—The pilot program under this 
subsection shall be designed to include the participa-
tion of physicians in practices with fewer than 10 
full-time equivalent physicians, as well as physicians 
in larger practices, particularly in underserved and 
rural areas, as well as federally qualified community 
health centers, and rural health centers. 
‘‘(5) NO
DUPLICATION
IN
PILOT
PARTICIPA-
TION.—A physician in a group practice that partici-
pates in the accountable care organization pilot pro-
gram under section 1866D shall not be eligible to 
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participate in the pilot program under this sub-
section, unless the pilot program under this section 
has been implemented on a permanent basis under 
subsection (e)(3). 
‘‘(d) COMMUNITY-BASED MEDICAL HOME MODEL.— 
‘‘(1) IN GENERAL.— 
‘‘(A) AUTHORITY FOR PAYMENTS.—Under 
the community-based medical home model 
under this subsection (in this section referred to 
as the ‘CBMH model’), the Secretary shall 
make payments for the furnishing of medical 
home services by a community-based medical 
home (as defined in subparagraph (B)) pursu-
ant to paragraph (5)(B) for high need bene-
ficiaries. 
‘‘(B) COMMUNITY-BASED MEDICAL HOME 
DEFINED.—In this section, the term ‘commu-
nity-based medical home’ means a nonprofit 
community-based or State-based organization 
that is certified under paragraph (2) as meeting 
the following requirements: 
‘‘(i) The organization provides bene-
ficiaries with medical home services. 
‘‘(ii) The organization provides med-
ical home services under the supervision of 
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and in close collaboration with the primary 
care or principal care physician or nurse 
practitioner designated by the beneficiary 
as his or her community-based medical 
home provider. 
‘‘(iii) The organization employs com-
munity health workers, including nurses or 
other 
non-physician 
practitioners, 
lay 
health workers, or other persons as deter-
mined appropriate by the Secretary, that 
assist the primary or principal care physi-
cian or nurse practitioner in chronic care 
management activities such as teaching 
self-care skills for managing chronic ill-
nesses, transitional care services, care plan 
setting, medication therapy management 
services for patients with multiple chronic 
diseases, or help beneficiaries access the 
health care and community-based resources 
in their local geographic area. 
‘‘(iv) The organization meets such 
other requirements as the Secretary may 
specify. 
‘‘(C) HIGH NEED BENEFICIARY.—In this 
section, the term ‘high need beneficiary’ means 
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an individual who requires regular medical 
monitoring, advising, or treatment. 
‘‘(2) QUALIFICATION
PROCESS
FOR
COMMU-
NITY-BASED MEDICAL HOMES.—The Secretary shall 
establish a process— 
‘‘(A) for the initial qualification of commu-
nity-based or State-based organizations as com-
munity-based medical homes; and 
‘‘(B) to provide for the review and quali-
fication of such community-based and State- 
based organizations pursuant to criteria estab-
lished by the Secretary. 
‘‘(3) DURATION.—The pilot program for com-
munity-based medical homes under this subsection 
shall start no later than 2 years after the date of the 
enactment of this section. Each demonstration site 
under the pilot program shall operate for a period 
of up to 5 years after the initial implementation 
phase, without regard to the receipt of a initial im-
plementation funding under subsection (i). 
‘‘(4) PREFERENCE.—In selecting sites for the 
CBMH model, the Secretary may give preference 
to— 
‘‘(A) applications from geographic areas 
that propose to coordinate health care services 
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for chronically ill beneficiaries across a variety 
of health care settings, such as primary care 
physician practices with fewer than 10 physi-
cians, specialty physicians, nurse practitioner 
practices, Federally qualified health centers, 
rural health clinics, and other settings; 
‘‘(B) applications that include other payors 
that furnish medical home services for chron-
ically ill patients covered by such payors; and 
‘‘(C) applications from States that propose 
to use the medical home model to coordinate 
health care services for individuals enrolled 
under this title, individuals enrolled under title 
XIX, and full-benefit dual eligible individuals 
(as defined in section 1935(c)(6)) with chronic 
diseases across a variety of health care settings. 
‘‘(5) PAYMENTS.— 
‘‘(A) 
ESTABLISHMENT
OF
METHOD-
OLOGY.—The Secretary shall establish a meth-
odology for the payment for medical home serv-
ices furnished under the CBMH model. 
‘‘(B) PER BENEFICIARY PER MONTH PAY-
MENTS.—Under such payment methodology, the 
Secretary shall make two separate monthly pay-
ments for each high need beneficiary who con-
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