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‘‘(A) Develop and implement innovative 
curricula in collaboration with community-based 
accredited primary care residency training pro-
grams, Federally qualified health centers, rural 
health clinics, behavioral and mental health fa-
cilities, public health departments, or other ap-
propriate facilities, with the goal of increasing 
the number of primary care physicians and 
other primary care providers prepared to serve 
in underserved areas and health disparity popu-
lations. 
‘‘(B) 
Coordinate 
community-based 
participatory research with academic health cen-
ters, and facilitate rapid flow and dissemination 
of evidence-based health care information, re-
search results, and best practices to improve 
quality, efficiency, and effectiveness of health 
care and health care systems within community 
settings. 
‘‘(C) Develop and implement other strate-
gies to address identified workforce needs and in-
crease and enhance the health care workforce in 
the area served by the area health education cen-
ter program. 
‘‘(d) REQUIREMENTS.— 
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‘‘(1) AREA
HEALTH
EDUCATION
CENTER
PRO-
GRAM.—In carrying out this section, the Secretary 
shall ensure the following: 
‘‘(A) An entity that receives an award 
under this section shall conduct at least 10 per-
cent of clinical education required for medical 
students in community settings that are removed 
from the primary teaching facility of the con-
tracting institution for grantees that operate a 
school of medicine or osteopathic medicine. In 
States in which an entity that receives an award 
under this section is a nursing school or its par-
ent institution, the Secretary shall alternatively 
ensure that— 
‘‘(i) the nursing school conducts at 
least 10 percent of clinical education re-
quired for nursing students in community 
settings that are remote from the primary 
teaching facility of the school; and 
‘‘(ii) the entity receiving the award 
maintains a written agreement with a 
school of medicine or osteopathic medicine 
to place students from that school in train-
ing sites in the area health education center 
program area. 
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‘‘(B) An entity receiving funds under sub-
section (a)(2) does not distribute such funding to 
a center that is eligible to receive funding under 
subsection (a)(1). 
‘‘(2) AREA HEALTH EDUCATION CENTER.—The 
Secretary shall ensure that each area health education 
center program includes at least 1 area health edu-
cation center, and that each such center— 
‘‘(A) is a public or private organization 
whose structure, governance, and operation is 
independent from the awardee and the parent 
institution of the awardee; 
‘‘(B) is not a school of medicine or osteo-
pathic medicine, the parent institution of such a 
school, or a branch campus or other subunit of 
a school of medicine or osteopathic medicine or 
its parent institution, or a consortium of such 
entities; 
‘‘(C) designates an underserved area or pop-
ulation to be served by the center which is in a 
location removed from the main location of the 
teaching facilities of the schools participating in 
the program with such center and does not du-
plicate, in whole or in part, the geographic area 
or population served by any other center; 
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‘‘(D) fosters networking and collaboration 
among communities and between academic 
health centers and community-based centers; 
‘‘(E) serves communities with a dem-
onstrated need of health professionals in partner-
ship with academic medical centers; 
‘‘(F) addresses the health care workforce 
needs of the communities served in coordination 
with the public workforce investment system; and 
‘‘(G) has a community-based governing or 
advisory board that reflects the diversity of the 
communities involved. 
‘‘(e) MATCHING FUNDS.—With respect to the costs of 
operating a program through a grant under this section, 
to be eligible for financial assistance under this section, an 
entity shall make available (directly or through contribu-
tions from State, county or municipal governments, or the 
private sector) recurring non-Federal contributions in cash 
or in kind, toward such costs in an amount that is equal 
to not less than 50 percent of such costs. At least 25 percent 
of the total required non-Federal contributions shall be in 
cash. An entity may apply to the Secretary for a waiver 
of not more than 75 percent of the matching fund amount 
required by the entity for each of the first 3 years the entity 
is funded through a grant under subsection (a)(1). 
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‘‘(f) LIMITATION.—Not less than 75 percent of the total 
amount provided to an area health education center pro-
gram under subsection (a)(1) or (a)(2) shall be allocated 
to the area health education centers participating in the 
program under this section. To provide needed flexibility 
to newly funded area health education center programs, the 
Secretary may waive the requirement in the sentence for 
the first 2 years of a new area health education center pro-
gram funded under subsection (a)(1). 
‘‘(g) AWARD.—An award to an entity under this sec-
tion shall be not less than $250,000 annually per area 
health education center included in the program involved. 
If amounts appropriated to carry out this section are not 
sufficient to comply with the preceding sentence, the Sec-
retary may reduce the per center amount provided for in 
such sentence as necessary, provided the distribution estab-
lished in subsection (j)(2) is maintained. 
‘‘(h) PROJECT TERMS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the period during which payments may be 
made under an award under subsection (a)(1) may 
not exceed— 
‘‘(A) in the case of a program, 12 years; or 
‘‘(B) in the case of a center within a pro-
gram, 6 years. 
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‘‘(2) EXCEPTION.—The periods described in 
paragraph (1) shall not apply to programs receiving 
point of service maintenance and enhancement 
awards under subsection (a)(2) to maintain existing 
centers and activities. 
‘‘(i) 
INAPPLICABILITY
OF
PROVISION.—Notwith-
standing any other provision of this title, section 791(a) 
shall not apply to an area health education center funded 
under this section. 
‘‘(j) AUTHORIZATION OF APPROPRIATIONS.— 
‘‘(1) IN GENERAL.—There is authorized to be ap-
propriated to carry out this section $125,000,000 for 
each of the fiscal years 2010 through 2014. 
‘‘(2) REQUIREMENTS.—Of the amounts appro-
priated for a fiscal year under paragraph (1)— 
‘‘(A) not more than 35 percent shall be used 
for awards under subsection (a)(1); 
‘‘(B) not less than 60 percent shall be used 
for awards under subsection (a)(2); 
‘‘(C) not more than 1 percent shall be used 
for grants and contracts to implement outcomes 
evaluation for the area health education centers; 
and 
‘‘(D) not more than 4 percent shall be used 
for grants and contracts to provide technical as-
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sistance to entities receiving awards under this 
section. 
‘‘(3) CARRYOVER
FUNDS.—An entity that re-
ceives an award under this section may carry over 
funds from 1 fiscal year to another without obtaining 
approval from the Secretary. In no case may any 
funds be carried over pursuant to the preceding sen-
tence for more than 3 years. 
‘‘(k) SENSE OF CONGRESS.—It is the sense of the Con-
gress that every State have an area health education center 
program in effect under this section.’’. 
(b) CONTINUING EDUCATIONAL SUPPORT FOR HEALTH 
PROFESSIONALS
SERVING
IN
UNDERSERVED
COMMU-
NITIES.—Part D of title VII of the Public Health Service 
Act (42 U.S.C. 294 et seq.) is amended by striking section 
752 and inserting the following: 
‘‘SEC. 752. CONTINUING EDUCATIONAL SUPPORT FOR 
HEALTH PROFESSIONALS SERVING IN UN-
DERSERVED COMMUNITIES. 
‘‘(a) IN GENERAL.—The Secretary shall make grants 
to, and enter into contracts with, eligible entities to improve 
health care, increase retention, increase representation of 
minority faculty members, enhance the practice environ-
ment, and provide information dissemination and edu-
cational support to reduce professional isolation through the 
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timely dissemination of research findings using relevant re-
sources. 
‘‘(b) ELIGIBLE ENTITIES.—For purposes of this sec-
tion, the term ‘eligible entity’ means an entity described 
in section 799(b). 
‘‘(c) APPLICATION.—An eligible entity desiring to re-
ceive an award under this section shall submit to the Sec-
retary an application at such time, in such manner, and 
containing such information as the Secretary may require. 
‘‘(d) USE OF FUNDS.—An eligible entity shall use 
amounts awarded under a grant or contract under this sec-
tion to provide innovative supportive activities to enhance 
education through distance learning, continuing edu-
cational activities, collaborative conferences, and electronic 
and telelearning activities, with priority for primary care. 
‘‘(e) AUTHORIZATION.—There is authorized to be ap-
propriated to carry out this section $5,000,000 for each of 
the fiscal years 2010 through 2014, and such sums as may 
be necessary for each subsequent fiscal year.’’. 
SEC. 5404. WORKFORCE DIVERSITY GRANTS. 
Section 821 of the Public Health Service Act (42 
U.S.C. 296m) is amended— 
(1) in subsection (a)— 
(A) by striking ‘‘The Secretary may’’ and 
inserting the following: 
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‘‘(1) AUTHORITY.—The Secretary may’’; 
(B) by striking ‘‘pre-entry preparation, and 
retention activities’’ and inserting the following: 
‘‘stipends for diploma or associate degree nurses 
to enter a bridge or degree completion program, 
student scholarships or stipends for accelerated 
nursing degree programs, pre-entry preparation, 
advanced education preparation, and retention 
activities’’; and 
(2) in subsection (b)— 
(A) by striking ‘‘First’’ and all that follows 
through ‘‘including the’’ and inserting ‘‘National 
Advisory Council on Nurse Education and Prac-
tice and consult with nursing associations in-
cluding the National Coalition of Ethnic Minor-
ity Nurse Associations,’’; and 
(B) by inserting before the period the fol-
lowing: ‘‘, and other organizations determined 
appropriate by the Secretary’’. 
SEC. 5405. PRIMARY CARE EXTENSION PROGRAM. 
Part P of title III of the Public Health Service Act 
(42 U.S.C. 280g et seq.), as amended by section 5313, is 
further amended by adding at the end the following: 
‘‘SEC. 399W. PRIMARY CARE EXTENSION PROGRAM. 
‘‘(a) ESTABLISHMENT, PURPOSE AND DEFINITION.— 
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‘‘(1) 
IN
GENERAL.—The 
Secretary, 
acting 
through the Director of the Agency for Healthcare Re-
search and Quality, shall establish a Primary Care 
Extension Program. 
‘‘(2) PURPOSE.—The Primary Care Extension 
Program shall provide support and assistance to pri-
mary care providers to educate providers about pre-
ventive medicine, health promotion, chronic disease 
management, mental and behavioral health services 
(including substance abuse prevention and treatment 
services), and evidence-based and evidence-informed 
therapies and techniques, in order to enable providers 
to incorporate such matters into their practice and to 
improve community health by working with commu-
nity-based health connectors (referred to in this sec-
tion as ‘Health Extension Agents’). 
‘‘(3) DEFINITIONS.—In this section: 
‘‘(A) HEALTH
EXTENSION
AGENT.—The 
term ‘Health Extension Agent’ means any local, 
community-based health worker who facilitates 
and provides assistance to primary care prac-
tices by implementing quality improvement or 
system redesign, incorporating the principles of 
the patient-centered medical home to provide 
high-quality, effective, efficient, and safe pri-
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mary care and to provide guidance to patients 
in culturally and linguistically appropriate 
ways, and linking practices to diverse health sys-
tem resources. 
‘‘(B) PRIMARY CARE PROVIDER.—The term 
‘primary care provider’ means a clinician who 
provides integrated, accessible health care serv-
ices and who is accountable for addressing a 
large majority of personal health care needs, in-
cluding providing preventive and health pro-
motion services for men, women, and children of 
all ages, developing a sustained partnership with 
patients, and practicing in the context of family 
and community, as recognized by a State licens-
ing or regulatory authority, unless otherwise 
specified in this section. 
‘‘(b) GRANTS TO ESTABLISH STATE HUBS AND LOCAL 
PRIMARY CARE EXTENSION AGENCIES.— 
‘‘(1) GRANTS.—The Secretary shall award com-
petitive grants to States for the establishment of 
State- or multistate-level primary care Primary Care 
Extension Program State Hubs (referred to in this 
section as ‘Hubs’). 
‘‘(2) COMPOSITION OF HUBS.—A Hub established 
by a State pursuant to paragraph (1)— 
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‘‘(A) shall consist of, at a minimum, the 
State health department, the entity responsible 
for administering the State Medicaid program 
(if other than the State health department), the 
State-level entity administering the Medicare 
program, and the departments of 1 or more 
health professions schools in the State that train 
providers in primary care; and 
‘‘(B) may include entities such as hospital 
associations, primary care practice-based re-
search networks, health professional societies, 
State primary care associations, State licensing 
boards, organizations with a contract with the 
Secretary under section 1153 of the Social Secu-
rity Act, consumer groups, and other appro-
priate entities. 
‘‘(c) STATE AND LOCAL ACTIVITIES.— 
‘‘(1) HUB ACTIVITIES.—Hubs established under 
a grant under subsection (b) shall— 
‘‘(A) submit to the Secretary a plan to co-
ordinate functions with quality improvement or-
ganizations and area health education centers if 
such entities are members of the Hub not de-
scribed in subsection (b)(2)(A); 
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‘‘(B) contract with a county- or local-level 
entity that shall serve as the Primary Care Ex-
tension Agency to administer the services de-
scribed in paragraph (2); 
‘‘(C) organize and administer grant funds 
to county- or local-level Primary Care Extension 
Agencies that serve a catchment area, as deter-
mined by the State; and 
‘‘(D) organize State-wide or multistate net-
works of local-level Primary Care Extension 
Agencies to share and disseminate information 
and practices. 
‘‘(2) LOCAL PRIMARY CARE EXTENSION AGENCY 
ACTIVITIES.— 
‘‘(A) 
REQUIRED
ACTIVITIES.—Primary 
Care Extension Agencies established by a Hub 
under paragraph (1) shall— 
‘‘(i) assist primary care providers to 
implement a patient-centered medical home 
to improve the accessibility, quality, and ef-
ficiency of primary care services, including 
health homes; 
‘‘(ii) develop and support primary 
care learning communities to enhance the 
dissemination of research findings for evi-
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dence-based practice, assess implementation 
of practice improvement, share best prac-
tices, and involve community clinicians in 
the generation of new knowledge and identi-
fication of important questions for research; 
‘‘(iii) participate in a national net-
work of Primary Care Extension Hubs and 
propose how the Primary Care Extension 
Agency will share and disseminate lessons 
learned and best practices; and 
‘‘(iv) develop a plan for financial sus-
tainability involving State, local, and pri-
vate contributions, to provide for the reduc-
tion in Federal funds that is expected after 
an initial 6-year period of program estab-
lishment, infrastructure development, and 
planning. 
‘‘(B) 
DISCRETIONARY
ACTIVITIES.—Pri-
mary Care Extension Agencies established by a 
Hub under paragraph (1) may— 
‘‘(i) provide technical assistance, train-
ing, and organizational support for commu-
nity health teams established under section 
3602 of the Patient Protection and Afford-
able Care Act; 
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‘‘(ii) collect data and provision of pri-
mary care provider feedback from standard-
ized measurements of processes and out-
comes to aid in continuous performance im-
provement; 
‘‘(iii) collaborate with local health de-
partments, community health centers, tribes 
and tribal entities, and other community 
agencies to identify community health pri-
orities and local health workforce needs, and 
participate in community-based efforts to 
address the social and primary deter-
minants of health, strengthen the local pri-
mary care workforce, and eliminate health 
disparities; 
‘‘(iv) develop measures to monitor the 
impact of the proposed program on the 
health of practice enrollees and of the wider 
community served; and 
‘‘(v) participate in other activities, as 
determined appropriate by the Secretary. 
‘‘(d) FEDERAL PROGRAM ADMINISTRATION.— 
‘‘(1) GRANTS; TYPES.—Grants awarded under 
subsection (b) shall be— 
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‘‘(A) program grants, that are awarded to 
State or multistate entities that submit fully-de-
veloped plans for the implementation of a Hub, 
for a period of 6 years; or 
‘‘(B) planning grants, that are awarded to 
State or multistate entities with the goal of de-
veloping a plan for a Hub, for a period of 2 
years. 
‘‘(2) APPLICATIONS.—To be eligible for a grant 
under subsection (b), a State or multistate entity 
shall submit to the Secretary an application, at such 
time, in such manner, and containing such informa-
tion as the Secretary may require. 
‘‘(3) EVALUATION.—A State that receives a grant 
under subsection (b) shall be evaluated at the end of 
the grant period by an evaluation panel appointed by 
the Secretary. 
‘‘(4) CONTINUING
SUPPORT.—After the sixth 
year in which assistance is provided to a State under 
a grant awarded under subsection (b), the State may 
receive additional support under this section if the 
State program has received satisfactory evaluations 
with respect to program performance and the merits 
of the State sustainability plan, as determined by the 
Secretary. 
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‘‘(5) LIMITATION.—A State shall not use in ex-
cess of 10 percent of the amount received under a 
grant to carry out administrative activities under 
this section. Funds awarded pursuant to this section 
shall not be used for funding direct patient care. 
‘‘(e) REQUIREMENTS ON THE SECRETARY.—In car-
rying out this section, the Secretary shall consult with the 
heads of other Federal agencies with demonstrated experi-
ence and expertise in health care and preventive medicine, 
such as the Centers for Disease Control and Prevention, the 
Substance Abuse and Mental Health Administration, the 
Health Resources and Services Administration, the Na-
tional Institutes of Health, the Office of the National Coor-
dinator for Health Information Technology, the Indian 
Health Service, the Agricultural Cooperative Extension 
Service of the Department of Agriculture, and other entities, 
as the Secretary determines appropriate. 
‘‘(f) 
AUTHORIZATION
OF
APPROPRIATIONS.—To 
awards grants as provided in subsection (d), there are au-
thorized to be appropriated $120,000,000 for each of fiscal 
years 2011 and 2012, and such sums as may be necessary 
to carry out this section for each of fiscal years 2013 
through 2014.’’. 
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Subtitle F—Strengthening Primary 
Care and Other Workforce Im-
provements 
SEC. 5501. EXPANDING ACCESS TO PRIMARY CARE SERV-
ICES AND GENERAL SURGERY SERVICES. 
(a) INCENTIVE PAYMENT PROGRAM
FOR PRIMARY 
CARE SERVICES.— 
(1) IN GENERAL.—Section 1833 of the Social Se-
curity Act (42 U.S.C. 1395l) is amended by adding 
at the end the following new subsection: 
‘‘(x) INCENTIVE PAYMENTS FOR PRIMARY CARE SERV-
ICES.— 
‘‘(1) IN GENERAL.—In the case of primary care 
services furnished on or after January 1, 2011, and 
before January 1, 2016, by a primary care practi-
tioner, in addition to the amount of payment that 
would otherwise be made for such services under this 
part, there also shall be paid (on a monthly or quar-
terly basis) an amount equal to 10 percent of the pay-
ment amount for the service under this part. 
‘‘(2) DEFINITIONS.—In this subsection: 
‘‘(A) PRIMARY
CARE
PRACTITIONER.—The 
term ‘primary care practitioner’ means an indi-
vidual— 
‘‘(i) who— 
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‘‘(I) is a physician (as described 
in section 1861(r)(1)) who has a pri-
mary specialty designation of family 
medicine, internal medicine, geriatric 
medicine, or pediatric medicine; or 
‘‘(II) is a nurse practitioner, clin-
ical nurse specialist, or physician as-
sistant (as those terms are defined in 
section 1861(aa)(5)); and 
‘‘(ii) for whom primary care services 
accounted for at least 60 percent of the al-
lowed charges under this part for such phy-
sician or practitioner in a prior period as 
determined appropriate by the Secretary. 
‘‘(B) PRIMARY CARE SERVICES.—The term 
‘primary care services’ means services identified, 
as of January 1, 2009, by the following HCPCS 
codes (and as subsequently modified by the Sec-
retary): 
‘‘(i) 99201 through 99215. 
‘‘(ii) 99304 through 99340. 
‘‘(iii) 99341 through 99350. 
‘‘(3) COORDINATION WITH OTHER PAYMENTS.— 
The amount of the additional payment for a service 
under this subsection and subsection (m) shall be de-
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termined without regard to any additional payment 
for the service under subsection (m) and this sub-
section, respectively. 
‘‘(4) LIMITATION ON REVIEW.—There shall be no 
administrative or judicial review under section 1869, 
1878, or otherwise, respecting the identification of 
primary care practitioners under this subsection.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1834(g)(2)(B) of the Social Security Act (42 U.S.C. 
1395m(g)(2)(B)) is amended by adding at the end the 
following sentence: ‘‘Section 1833(x) shall not be 
taken into account in determining the amounts that 
would otherwise be paid pursuant to the preceding 
sentence.’’. 
(b) INCENTIVE PAYMENT PROGRAM FOR MAJOR SUR-
GICAL PROCEDURES FURNISHED
IN HEALTH PROFES-
SIONAL SHORTAGE AREAS.— 
(1) IN GENERAL.—Section 1833 of the Social Se-
curity Act (42 U.S.C. 1395l), as amended by sub-
section (a)(1), is amended by adding at the end the 
following new subsection: 
‘‘(y) INCENTIVE PAYMENTS
FOR MAJOR SURGICAL 
PROCEDURES
FURNISHED
IN
HEALTH
PROFESSIONAL 
SHORTAGE AREAS.— 
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‘‘(1) IN GENERAL.—In the case of major surgical 
procedures furnished on or after January 1, 2011, 
and before January 1, 2016, by a general surgeon in 
an 
area 
that 
is 
designated 
(under 
section 
332(a)(1)(A) of the Public Health Service Act) as a 
health professional shortage area as identified by the 
Secretary prior to the beginning of the year involved, 
in addition to the amount of payment that would oth-
erwise be made for such services under this part, there 
also shall be paid (on a monthly or quarterly basis) 
an amount equal to 10 percent of the payment 
amount for the service under this part. 
‘‘(2) DEFINITIONS.—In this subsection: 
‘‘(A) GENERAL
SURGEON.—In this sub-
section, the term ‘general surgeon’ means a phy-
sician (as described in section 1861(r)(1)) who 
has designated CMS specialty code 02–General 
Surgery as their primary specialty code in the 
physician’s enrollment under section 1866(j). 
‘‘(B) MAJOR SURGICAL PROCEDURES.—The 
term ‘major surgical procedures’ means physi-
cians’ services which are surgical procedures for 
which a 10-day or 90-day global period is used 
for payment under the fee schedule under section 
1848(b). 
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‘‘(3) COORDINATION WITH OTHER PAYMENTS.— 
The amount of the additional payment for a service 
under this subsection and subsection (m) shall be de-
termined without regard to any additional payment 
for the service under subsection (m) and this sub-
section, respectively. 
‘‘(4) APPLICATION.—The provisions of para-
graph (2) and (4) of subsection (m) shall apply to the 
determination of additional payments under this sub-
section in the same manner as such provisions apply 
to the determination of additional payments under 
subsection (m).’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1834(g)(2)(B) of the Social Security Act (42 U.S.C. 
1395m(g)(2)(B)), as amended by subsection (a)(2), is 
amended by striking ‘‘Section 1833(x)’’ and inserting 
‘‘Subsections (x) and (y) of section 1833’’ in the last 
sentence. 
(c) 
BUDGET-NEUTRALITY
ADJUSTMENT.—Section 
1848(c)(2)(B) of the Social Security Act (42 U.S.C. 1395w– 
4(c)(2)(B)) is amended by adding at the end the following 
new clause: 
‘‘(vii) ADJUSTMENT FOR CERTAIN PHY-
SICIAN
INCENTIVE
PAYMENTS.—Fifty per-
cent of the additional expenditures under 
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this part attributable to subsections (x) and 
(y) of section 1833 for a year (as estimated 
by the Secretary) shall be taken into ac-
count in applying clause (ii)(II) for 2011 
and subsequent years. In lieu of applying 
the budget-neutrality adjustments required 
under clause (ii)(II) to relative value units 
to account for such costs for the year, the 
Secretary shall apply such budget-neu-
trality adjustments to the conversion factor 
otherwise determined for the year. For 2011 
and subsequent years, the Secretary shall 
increase the incentive payment otherwise 
applicable under section 1833(m) by a per-
cent estimated to be equal to the additional 
expenditures estimated under the first sen-
tence of this clause for such year that is ap-
plicable to physicians who primarily fur-
nish services in areas designated (under sec-
tion 332(a)(1)(A) of the Public Health Serv-
ice Act) as health professional shortage 
areas.’’. 
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SEC. 5502. MEDICARE FEDERALLY QUALIFIED HEALTH CEN-
TER IMPROVEMENTS. 
(a) EXPANSION OF MEDICARE-COVERED PREVENTIVE 
SERVICES
AT
FEDERALLY
QUALIFIED
HEALTH
CEN-
TERS.— 
(1) IN GENERAL.—Section 1861(aa)(3)(A) of the 
Social Security Act (42 U.S.C. 1395w (aa)(3)(A)) is 
amended to read as follows: 
‘‘(A) services of the type described subpara-
graphs (A) through (C) of paragraph (1) and 
preventive 
services 
(as 
defined 
in 
section 
1861(ddd)(3)); and’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to services furnished on or 
after January 1, 2011. 
(b) PROSPECTIVE PAYMENT SYSTEM FOR FEDERALLY 
QUALIFIED HEALTH CENTERS.—Section 1834 of the Social 
Security Act (42 U.S.C. 1395m) is amended by adding at 
the end the following new subsection: 
‘‘(n) DEVELOPMENT AND IMPLEMENTATION OF PRO-
SPECTIVE PAYMENT SYSTEM.— 
‘‘(1) DEVELOPMENT.— 
‘‘(A) IN GENERAL.—The Secretary shall de-
velop a prospective payment system for payment 
for Federally qualified health services furnished 
by Federally qualified health centers under this 
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title. Such system shall include a process for ap-
propriately describing the services furnished by 
Federally qualified health centers. 
‘‘(B) COLLECTION OF DATA AND EVALUA-
TION.—The Secretary shall require Federally 
qualified health centers to submit to the Sec-
retary such information as the Secretary may 
require in order to develop and implement the 
prospective payment system under this para-
graph and paragraph (2), respectively, including 
the reporting of services using HCPCS codes. 
‘‘(2) IMPLEMENTATION.— 
‘‘(A) IN
GENERAL.—Notwithstanding sec-
tion 1833(a)(3)(B), the Secretary shall provide, 
for cost reporting periods beginning on or after 
October 1, 2014, for payments for Federally 
qualified health services furnished by Federally 
qualified health centers under this title in ac-
cordance with the prospective payment system 
developed by the Secretary under paragraph (1). 
‘‘(B) PAYMENTS.— 
‘‘(i) INITIAL
PAYMENTS.—The Sec-
retary shall implement such prospective 
payment system so that the estimated 
amount of expenditures under this title for 
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Federally qualified health services in the 
first year that the prospective payment sys-
tem is implemented is equal to 103 percent 
of the estimated amount of expenditures 
under this title that would have occurred for 
such services in such year if the system had 
not been implemented. 
‘‘(ii) 
PAYMENTS
IN
SUBSEQUENT 
YEARS.—In the year after the first year of 
implementation of such system, and in each 
subsequent year, the payment rate for Fed-
erally qualified health services furnished in 
the year shall be equal to the payment rate 
established for such services furnished in the 
preceding year under this subparagraph in-
creased by the percentage increase in the 
MEI (as defined in 1842(i)(3)) for the year 
involved.’’. 
SEC. 5503. DISTRIBUTION OF ADDITIONAL RESIDENCY PO-
SITIONS. 
(a) IN GENERAL.—Section 1886(h) of the Social Secu-
rity Act (42 U.S.C. 1395ww(h)) is amended— 
(1) in paragraph (4)(F)(i), by striking ‘‘para-
graph (7)’’ and inserting ‘‘paragraphs (7) and (8)’’; 
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(2) in paragraph (4)(H)(i), by striking ‘‘para-
graph (7)’’ and inserting ‘‘paragraphs (7) and (8)’’; 
(3) in paragraph (7)(E), by inserting ‘‘or para-
graph (8)’’ before the period at the end; and 
(4) by adding at the end the following new para-
graph: 
‘‘(8) DISTRIBUTION OF ADDITIONAL RESIDENCY 
POSITIONS.— 
‘‘(A) REDUCTIONS IN LIMIT BASED ON UN-
USED POSITIONS.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), if a hospital’s reference resi-
dent level (as defined in subparagraph 
(H)(i)) is less than the otherwise applicable 
resident limit (as defined in subparagraph 
(H)(iii)), effective for portions of cost re-
porting periods occurring on or after July 
1, 2011, the otherwise applicable resident 
limit shall be reduced by 65 percent of the 
difference between such otherwise applicable 
resident limit and such reference resident 
level. 
‘‘(ii) 
EXCEPTIONS.—This 
subpara-
graph shall not apply to— 
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‘‘(I) a hospital located in a rural 
area 
(as 
defined 
in 
subsection 
(d)(2)(D)(ii)) with fewer than 250 
acute care inpatient beds; 
‘‘(II) a hospital that was part of 
a qualifying entity which had a vol-
untary residency reduction plan ap-
proved under paragraph (6)(B) or 
under the authority of section 402 of 
Public Law 90–248, if the hospital 
demonstrates to the Secretary that it 
has a specified plan in place for filling 
the unused positions by not later than 
2 years after the date of enactment of 
this paragraph; or 
‘‘(III) a hospital described in 
paragraph (4)(H)(v). 
‘‘(B) DISTRIBUTION.— 
‘‘(i) IN GENERAL.—The Secretary shall 
increase the otherwise applicable resident 
limit for each qualifying hospital that sub-
mits an application under this subpara-
graph by such number as the Secretary may 
approve for portions of cost reporting peri-
ods occurring on or after July 1, 2011. The 
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aggregate number of increases in the other-
wise applicable resident limit under this 
subparagraph shall be equal to the aggregate 
reduction in such limits attributable to sub-
paragraph (A) (as estimated by the Sec-
retary). 
‘‘(ii) 
REQUIREMENTS.—Subject 
to 
clause (iii), a hospital that receives an in-
crease in the otherwise applicable resident 
limit under this subparagraph shall ensure, 
during the 5-year period beginning on the 
date of such increase, that— 
‘‘(I) the number of full-time equiv-
alent primary care residents, as de-
fined in paragraph (5)(H) (as deter-
mined by the Secretary), excluding any 
additional positions under subclause 
(II), is not less than the average num-
ber of full-time equivalent primary 
care residents (as so determined) dur-
ing the 3 most recent cost reporting pe-
riods ending prior to the date of enact-
ment of this paragraph; and 
‘‘(II) not less than 75 percent of 
the positions attributable to such in-
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crease are in a primary care or gen-
eral surgery residency (as determined 
by the Secretary). 
The Secretary may determine whether a 
hospital has met the requirements under 
this clause during such 5-year period in 
such manner and at such time as the Sec-
retary determines appropriate, including at 
the end of such 5-year period. 
‘‘(iii) REDISTRIBUTION OF POSITIONS 
IF HOSPITAL NO LONGER MEETS CERTAIN 
REQUIREMENTS.—In the case where the Sec-
retary determines that a hospital described 
in clause (ii) does not meet either of the re-
quirements under subclause (I) or (II) of 
such clause, the Secretary shall— 
‘‘(I) reduce the otherwise applica-
ble resident limit of the hospital by the 
amount by which such limit was in-
creased under this paragraph; and 
‘‘(II) provide for the distribution 
of positions attributable to such reduc-
tion in accordance with the require-
ments of this paragraph. 
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‘‘(C) 
CONSIDERATIONS
IN
REDISTRIBU-
TION.—In determining for which hospitals the 
increase in the otherwise applicable resident 
limit is provided under subparagraph (B), the 
Secretary shall take into account— 
‘‘(i) the demonstration likelihood of the 
hospital filling the positions made available 
under this paragraph within the first 3 cost 
reporting periods beginning on or after July 
1, 2011, as determined by the Secretary; 
and 
‘‘(ii) whether the hospital has an ac-
credited rural training track (as described 
in paragraph (4)(H)(iv)). 
‘‘(D) PRIORITY
FOR
CERTAIN
AREAS.—In 
determining for which hospitals the increase in 
the otherwise applicable resident limit is pro-
vided under subparagraph (B), subject to sub-
paragraph (E), the Secretary shall distribute the 
increase to hospitals based on the following fac-
tors: 
‘‘(i) Whether the hospital is located in 
a State with a resident-to-population ratio 
in the lowest quartile (as determined by the 
Secretary). 
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‘‘(ii) Whether the hospital is located in 
a State, a territory of the United States, or 
the District of Columbia that is among the 
top 10 States, territories, or Districts in 
terms of the ratio of— 
‘‘(I) the total population of the 
State, territory, or District living in 
an area designated (under such section 
332(a)(1)(A)) as a health professional 
shortage area (as of the date of enact-
ment of this paragraph); to 
‘‘(II) the total population of the 
State, territory, or District (as deter-
mined by the Secretary based on the 
most recent available population data 
published by the Bureau of the Cen-
sus). 
‘‘(iii) Whether the hospital is located 
in a rural area (as defined in subsection 
(d)(2)(D)(ii)). 
‘‘(E) RESERVATION OF POSITIONS FOR CER-
TAIN HOSPITALS.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the Secretary shall reserve the positions 
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available for distribution under this para-
graph as follows: 
‘‘(I) 70 percent of such positions 
for distribution to hospitals described 
in clause (i) of subparagraph (D). 
‘‘(II) 30 percent of such positions 
for distribution to hospitals described 
in clause (ii) and (iii) of such sub-
paragraph. 
‘‘(ii) EXCEPTION
IF
POSITIONS
NOT 
REDISTRIBUTED BY JULY 1, 2011.—In the 
case where the Secretary does not distribute 
positions to hospitals in accordance with 
clause (i) by July 1, 2011, the Secretary 
shall distribute such positions to other hos-
pitals in accordance with the considerations 
described in subparagraph (C) and the pri-
ority described in subparagraph (D). 
‘‘(F) LIMITATION.—A hospital may not re-
ceive more than 75 full-time equivalent addi-
tional residency positions under this paragraph. 
‘‘(G) 
APPLICATION
OF
PER
RESIDENT 
AMOUNTS FOR PRIMARY CARE AND NONPRIMARY 
CARE.—With respect to additional residency po-
sitions in a hospital attributable to the increase 
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provided under this paragraph, the approved 
FTE per resident amounts are deemed to be 
equal to the hospital per resident amounts for 
primary care and nonprimary care computed 
under paragraph (2)(D) for that hospital. 
‘‘(H) DEFINITIONS.—In this paragraph: 
‘‘(i) REFERENCE RESIDENT LEVEL.— 
The term ‘reference resident level’ means, 
with respect to a hospital, the highest resi-
dent level for any of the 3 most recent cost 
reporting periods (ending before the date of 
the enactment of this paragraph) of the hos-
pital for which a cost report has been settled 
(or, if not, submitted (subject to audit)), as 
determined by the Secretary. 
‘‘(ii) RESIDENT
LEVEL.—The term 
‘resident level’ has the meaning given such 
term in paragraph (7)(C)(i). 
‘‘(iii) OTHERWISE
APPLICABLE
RESI-
DENT LIMIT.—The term ‘otherwise applica-
ble resident limit’ means, with respect to a 
hospital, the limit otherwise applicable 
under subparagraphs (F)(i) and (H) of 
paragraph (4) on the resident level for the 
hospital determined without regard to this 
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paragraph but taking into account para-
graph (7)(A).’’. 
(b) IME.— 
(1) IN
GENERAL.—Section 1886(d)(5)(B)(v) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(d)(5)(B)(v)), in the second sentence, is 
amended— 
(A) by striking ‘‘subsection (h)(7)’’ and in-
serting ‘‘subsections (h)(7) and (h)(8)’’; and 
(B) by striking ‘‘it applies’’ and inserting 
‘‘they apply’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1886(d)(5)(B) of the Social Security Act (42 U.S.C. 
1395ww(d)(5)(B)) is amended by adding at the end 
the following clause: 
‘‘(x) For discharges occurring on or after July 1, 
2011, insofar as an additional payment amount 
under this subparagraph is attributable to resident 
positions distributed to a hospital under subsection 
(h)(8)(B), the indirect teaching adjustment factor 
shall be computed in the same manner as provided 
under clause (ii) with respect to such resident posi-
tions.’’. 
(c) CONFORMING AMENDMENT.—Section 422(b)(2) of 
the Medicare Prescription Drug, Improvement, and Mod-
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