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payment system in the payment year before 
such changes; and 
(B) for payment years beginning with 
2014, the Secretary shall implement the geo-
graphic adjustment in a manner that does not 
result in any net change in aggregate expendi-
tures under title XVIII of the Social Security 
Act from the amount of such expenditures that 
the Secretary estimates would have occurred if 
no geographic adjustment had occurred under 
this section. 
(c) MEDICARE IMPROVEMENT FUND.— 
(1) Amounts in the Medicare Improvement 
Fund under section 1898 of the Social Security Act, 
as amended by paragraph (2), shall be available to 
the Secretary to make changes to the geographic ad-
justments factors as described in subsections (a) and 
(b) with respect to services furnished before January 
1, 2014.
No more than one-half of such amounts 
shall be available with respect to services furnished 
in any one payment year. 
(2) Section 1898(b) of the Social Security Act 
(42 U.S.C. 1395iii(b)) is amended— 
(A) by amending paragraph (1)(A) to read 
as follows: 
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‘‘(A) the period beginning with fiscal year 
2011 and ending with fiscal year 2019, 
$8,000,000,000; and’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(5) ADJUSTMENT FOR UNDERFUNDING.—For 
fiscal year 2014 or a subsequent fiscal year specified 
by the Secretary, the amount available to the fund 
under subsection (a) shall be increased by the Sec-
retary’s estimate of the amount (based on data on 
actual expenditures) by which— 
‘‘(A) the additional expenditures resulting 
from the implementation of subsection (a) of 
section 1158 of the Affordable Health Care for 
America Act for the period before fiscal year 
2014, is less than 
‘‘(B) the maximum amount of funds avail-
able under subsection (a) of such section for 
funding for such expenditures.’’. 
SEC. 1159. INSTITUTE OF MEDICINE STUDY OF GEO-
GRAPHIC 
VARIATION 
IN 
HEALTH 
CARE 
SPENDING 
AND 
PROMOTING 
HIGH-VALUE 
HEALTH CARE. 
(a) IN GENERAL.—The Secretary of Health and 
Human Services (in this section and the succeeding sec-
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tion referred to as the ‘‘Secretary’’) shall enter into an 
agreement with the Institute of Medicine of the National 
Academies (referred to in this section as the ‘‘Institute’’) 
to conduct a study on geographic variation and growth 
in volume and intensity of services in per capita health 
care spending among the Medicare, Medicaid, privately in-
sured and uninsured populations. Such study may draw 
on recent relevant reports of the Institute and shall in-
clude each of the following: 
(1) An evaluation of the extent and range of 
such variation using various units of geographic 
measurement, including micro areas within larger 
areas. 
(2) An evaluation of the extent to which geo-
graphic variation can be attributed to differences in 
input prices; health status; practice patterns; access 
to medical services; supply of medical services; socio- 
economic factors, including race, ethnicity, gender, 
age, income and educational status; and provider 
and payer organizational models. 
(3) An evaluation of the extent to which vari-
ations in spending are correlated with patient access 
to care, insurance status, distribution of health care 
resources, health care outcomes, and consensus- 
based measures of health care quality. 
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(4) An evaluation of the extent to which vari-
ation can be attributed to physician and practitioner 
discretion in making treatment decisions, and the 
degree to which discretionary treatment decisions 
are made that could be characterized as different 
from the best available medical evidence. 
(5) An evaluation of the extent to which vari-
ation can be attributed to patient preferences and 
patient compliance with treatment protocols. 
(6) An assessment of the degree to which vari-
ation cannot be explained by empirical evidence. 
(7) For Medicare beneficiaries, An evaluation of 
the extent to which variations in spending are cor-
related with insurance status prior to enrollment in 
the Medicare program under title XVIII of the So-
cial Security Act, and institutionalization status; 
whether beneficiaries are dually eligible for the 
Medicare program and Medicaid under title XIX of 
such Act; and whether beneficiaries are enrolled in 
fee-for-service Medicare or Medicare Advantage. 
(8) An evaluation of such other factors as the 
Institute deems appropriate. 
The Institute shall conduct public hearings and provide 
an opportunity for comments prior to completion of the 
reports under subsection (e). 
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(b) RECOMMENDATIONS.—Taking into account the 
findings under subsection (a) and the changes to the pay-
ment systems made by this Act, the Institute shall rec-
ommend changes to payment for items and services under 
parts A and B of title XVIII of the Social Security Act, 
for addressing variation in Medicare per capita spending 
for items and services (not including add-ons for graduate 
medical education, disproportionate share payments, and 
health information technology, as specified in sections 
1886(d)(5)(F), 1886(d)(5)(B), 1886(h), 1848(o), and 
1886(n), respectively, of such Act) by promoting high- 
value care (as defined in subsection (f)), with particular 
attention to high-volume, high-cost conditions. In making 
such recommendations, the Institute shall consider each 
of the following: 
(1) Measurement and reporting on quality and 
population health. 
(2) Reducing fragmented and duplicative care. 
(3) Promoting the practice of evidence-based 
medicine. 
(4) Empowering patients to make value-based 
care decisions. 
(5) Leveraging the use of health information 
technology. 
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(6) The role of financial and other incentives 
affecting provision of care. 
(7) Variation in input costs. 
(8) The characteristics of the patient popu-
lation, including socio-economic factors (including 
race, ethnicity, gender, age, income and educational 
status), and whether the beneficiaries are dually eli-
gible for the Medicare program under title XVIII of 
the Social Security Act and Medicaid under title 
XIX of such Act. 
(9) Other topics the Institute deems appro-
priate. 
In making such recommendations, the Institute shall con-
sider an appropriate phase-in that takes into account the 
impact of payment changes on providers and facilities and 
preserves access to care for Medicare beneficiaries. 
(c) SPECIFIC CONSIDERATIONS.—In making the rec-
ommendations under subsection (b), the Institute shall 
specifically address whether payment systems under title 
XVIII of the Social Security Act for physicians and hos-
pitals should be further modified to incentivize high-value 
care. In so doing, the Institute shall consider the adoption 
of a value index based on a composite of appropriate meas-
ures of quality and cost that would adjust provider pay-
ments on a regional or provider-level basis. If the Institute 
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finds that application of such a value index would signifi-
cantly incentivize providers to furnish high-value care, it 
shall make specific recommendations on how such an 
index would be designed and implemented. In so doing, 
it should identify specific measures of quality and cost ap-
propriate for use in such an index, and include a thorough 
analysis (including on a geographic basis) of how pay-
ments and spending under such title would be affected by 
such an index. 
(d) ADDITIONAL CONSIDERATIONS.—The Institute 
shall consider the experience of governmental and commu-
nity-based programs that promote high-value care. 
(e) REPORTS.— 
(1) Not later than April 15, 2011, the Institute 
shall submit to the Secretary and each House of 
Congress a report containing findings and rec-
ommendations of the study conducted under this 
section. 
(2) Following submission of the report under 
paragraph (1), the Institute shall use the data col-
lected and analyzed in this section to issue a subse-
quent report, or series of reports, on how best to ad-
dress geographic variation or efforts to promote 
high-value care for items and services reimbursed by 
private insurance or other programs. Such reports 
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shall include a comparison to the Institute’s findings 
and recommendations regarding the Medicare pro-
gram. Such reports, and any recommendations, 
would not be subject to the procedures outlined in 
section 1160. 
(f) HIGH-VALUE CARE DEFINED.—For purposes of 
this section, the term ‘‘high-value care’’ means the effi-
cient delivery of high quality, evidence-based, patient-cen-
tered care. 
(g) APPROPRIATIONS.—There is appropriated from 
amounts in the general fund of the Treasury not otherwise 
appropriated $10,000,000 to carry out this section. Such 
sums are authorized to remain available until expended. 
SEC. 1160. IMPLEMENTATION, AND CONGRESSIONAL RE-
VIEW, OF PROPOSAL TO REVISE MEDICARE 
PAYMENTS 
TO 
PROMOTE 
HIGH 
VALUE 
HEALTH CARE. 
(a) PREPARATION AND SUBMISSION OF IMPLEMEN-
TATION PLANS.— 
(1) FINAL IMPLEMENTATION PLAN.—Not later 
than 240 days after the date of receipt by the Sec-
retary and each House of Congress of the report 
under section 1159(e)(1), the Secretary shall submit 
to each House of Congress a final implementation 
plan describing proposed changes to payment for 
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items and services under parts A and B of title 
XVIII of the Social Security Act (which may include 
payment for inpatient and outpatient hospital serv-
ices for services furnished in PPS and PPS-exempt 
hospitals, physicians’ services, dialysis facility serv-
ices, skilled nursing facility services, home health 
services, hospice care, clinical laboratory services, 
durable medical equipment, and other items and 
services, but which shall exclude add-on payments 
for graduate medical education, disproportionate 
share payments, and health information technology, 
as 
specified 
in 
sections 
1886(d)(5)(F), 
1886(d)(5)(B), 1886(h), 1848(o), and 1886(n), re-
spectively, of the Social Security Act) taking into 
consideration, as appropriate, the recommendations 
of the report submitted under section 1159(e)(1) 
and the changes to the payment systems made by 
this Act. To the extent such implementation plan re-
quires a substantial change to the payment system, 
it shall include a transition phase-in that takes into 
consideration possible disruption to provider partici-
pation in the Medicare program under title XVIII of 
the Social Security Act and preserves access to care 
for Medicare beneficiaries. 
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(2) PRELIMINARY
IMPLEMENTATION
PLAN.— 
Not later than 90 days after the date the Institute 
of Medicine submits to each House of Congress the 
report under section 1159(e)(1), the Secretary shall 
submit to each House of Congress a preliminary 
version of the implementation plan provided for 
under paragraph (1)(A). 
(3) NO
INCREASE
IN
BUDGET
EXPENDI-
TURES.—The Secretary shall include with the sub-
mission of the final implementation plan under para-
graph (1) a certification by the Chief Actuary of the 
Centers for Medicare & Medicaid Services that over 
the initial 10-year period in which the plan is imple-
mented, the aggregate level of net expenditures 
under the Medicare program under title XVIII of 
the Social Security Act will not exceed the aggregate 
level of such expenditures that would have occurred 
if the plan were not implemented. 
(4) WAIVERS
REQUIRED.—To the extent the 
final implementation plan under paragraph (1) pro-
poses changes that are not otherwise permitted 
under title XVIII of the Social Security Act, the 
Secretary shall specify in the plan the specific waiv-
ers required under such title to implement such 
changes. Except as provided in subsection (c), the 
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Secretary is authorized to waive the requirements so 
specified in order to implement such changes. 
(5) ASSESSMENT
OF
IMPACT.—In addition, 
both the preliminary and final implementation plans 
under this subsection shall include a detailed assess-
ment of the effects of the proposed payment changes 
by provider or supplier type and State relative to the 
payments that would otherwise apply. 
(b) REVIEW BY MEDPAC AND GAO.—Not later than 
45 days after the date the preliminary implementation 
plan is received by each House of Congress under sub-
section (a)(2), the Medicare Payment Advisory Committee 
and the Comptroller General of the United States shall 
each evaluate such plan and submit to each House of Con-
gress a report containing its analysis and recommenda-
tions regarding implementation of the plan, including an 
analysis of the effects of the proposed changes in the plan 
on payments and projected spending. 
(c) IMPLEMENTATION.— 
(1) IN GENERAL.—The Secretary shall include, 
in applicable proposed rules for the next rulemaking 
cycle beginning after the Congressional action dead-
line, appropriate proposals to revise payments under 
title XVIII of the Social Security Act in accordance 
with the final implementation plan submitted under 
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subsection (a)(1), and the waivers specified in sub-
section (a)(4) to the extent required to carry out 
such plan are effective, unless a joint resolution (de-
scribed in subsection (d)(5)(A)) with respect to such 
plan is enacted by not later than such deadline. If 
such a joint resolution is enacted, the Secretary is 
not authorized to implement such plan and the waiv-
er authority provided under subsection (a)(4) shall 
no longer be effective. 
(2) CONGRESSIONAL ACTION DEADLINE.—For 
purposes of this section, the term ‘‘Congressional ac-
tion deadline’’ means, with respect to a final imple-
mentation plan under subsection (a)(1), May 31, 
2012, or, if later, the date that is 145 days after the 
date of receipt of such plan by each House of Con-
gress under subsection (a). 
(d) CONGRESSIONAL PROCEDURES.— 
(1) INTRODUCTION.—On the day on which the 
final implementation plan is received by the House 
of Representatives and the Senate under subsection 
(a), a joint resolution specified in paragraph (5)(A) 
shall be introduced in the House of Representatives 
by the majority leader and minority leader of the 
House of Representatives and in the Senate by the 
majority leader and minority leader of the Senate. If 
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either House is not in session on the day on which 
such a plan is received, the joint resolution with re-
spect to such plan shall be introduced in that House, 
as provided in the preceding sentence, on the first 
day thereafter on which that House is in session. 
(2) CONSIDERATION IN THE HOUSE OF REP-
RESENTATIVES.— 
(A) REPORTING
AND
DISCHARGE.—Any 
committee of the House of Representatives to 
which a joint resolution introduced under para-
graph (1) is referred shall report such joint res-
olution to the House not later than 50 legisla-
tive days after the applicable date of introduc-
tion of the joint resolution. If a committee fails 
to report such joint resolution within that pe-
riod, a motion to discharge the committee from 
further consideration of the joint resolution 
shall be in order. Such a motion shall be in 
order only at a time designated by the Speaker 
in the legislative schedule within two legislative 
days after the day on which the proponent an-
nounces an intention to offer the motion. Notice 
may not be given on an anticipatory basis. Such 
a motion shall not be in order after the last 
committee authorized to consider the joint reso-
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lution reports it to the House or after the 
House has disposed of a motion to discharge 
the joint resolution. The previous question shall 
be considered as ordered on the motion to its 
adoption without intervening motion except 20 
minutes of debate equally divided and controlled 
by the proponent and an opponent. A motion to 
reconsider the vote by which the motion is dis-
posed of shall not be in order. 
(B) PROCEEDING
TO
CONSIDERATION.— 
After each committee authorized to consider a 
joint resolution reports such joint resolution to 
the House of Representatives or has been dis-
charged from its consideration, a motion to pro-
ceed to consider such joint resolution shall be in 
order. Such a motion shall be in order only at 
a time designated by the Speaker in the legisla-
tive schedule within two legislative days after 
the day on which the proponent announces an 
intention to offer the motion. Notice may not be 
given on an anticipatory basis. Such a motion 
shall not be in order after the House of Rep-
resentatives has disposed of a motion to proceed 
on the joint resolution. The previous question 
shall be considered as ordered on the motion to 
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its adoption without intervening motion. A mo-
tion to reconsider the vote by which the motion 
is disposed of shall not be in order. 
(C) CONSIDERATION.—The joint resolution 
shall be considered in the House and shall be 
considered as read. All points of order against 
a joint resolution and against its consideration 
are waived. The previous question shall be con-
sidered as ordered on the joint resolution to its 
passage without intervening motion except two 
hours of debate equally divided and controlled 
by the proponent and an opponent. A motion to 
reconsider the vote on passage of a joint resolu-
tion shall not be in order. 
(3) CONSIDERATION IN THE SENATE.— 
(A) REPORTING
AND
DISCHARGE.—Any 
committee of the Senate to which a joint resolu-
tion introduced under paragraph (1) is referred 
shall report such joint resolution to the Senate 
within 50 legislative days. If a committee fails 
to report such joint resolution at the close of 
the 15th legislative day after its receipt by the 
Senate, such committee shall be automatically 
discharged from further consideration of such 
joint resolution and such joint resolution or 
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joint resolutions shall be placed on the calendar. 
A vote on final passage of such joint resolution 
shall be taken in the Senate on or before the 
close of the second legislative day after such 
joint resolution is reported by the committee or 
committees of the Senate to which it was re-
ferred, or after such committee or committees 
have been discharged from further consider-
ation of such joint resolution. 
(B) PROCEEDING TO CONSIDERATION.—A 
motion in the Senate to proceed to the consider-
ation of a joint resolution shall be privileged 
and not debatable. An amendment to such a 
motion shall not be in order, nor shall it be in 
order to move to reconsider the vote by which 
such a motion is agreed to or disagreed to. 
(C) CONSIDERATION.— 
(i) Debate in the Senate on a joint 
resolution, and all debatable motions and 
appeals in connection therewith, shall be 
limited to not more than 20 hours. The 
time shall be equally divided between, and 
controlled by, the majority leader and the 
minority leader or their designees. 
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(ii) Debate in the Senate on any de-
batable motion or appeal in connection 
with a joint resolution shall be limited to 
not more than 1 hour, to be equally di-
vided between, and controlled by, the 
mover and the manager of the resolution, 
except that in the event the manager of the 
joint resolution is in favor of any such mo-
tion or appeal, the time in opposition 
thereto shall be controlled by the minority 
leader or a designee. Such leaders, or ei-
ther of them, may, from time under their 
control on the passage of a joint resolu-
tion, allot additional time to any Senator 
during the consideration of any debatable 
motion or appeal. 
(iii) A motion in the Senate to further 
limit debate is not debatable. A motion to 
recommit a joint resolution is not in order. 
(4) RULES RELATING TO SENATE AND HOUSE 
OF REPRESENTATIVES.— 
(A) COORDINATION
WITH
ACTION
BY 
OTHER HOUSE.—If, before the passage by one 
House of a joint resolution of that House, that 
House receives from the other House a joint 
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resolution, then the following procedures shall 
apply: 
(i) The joint resolution of the other 
House shall not be referred to a com-
mittee. 
(ii) With respect to the joint resolu-
tion of the House receiving the resolution, 
the procedure in that House shall be the 
same as if no such joint resolution had 
been received from the other House; but 
the vote on passage shall be on the joint 
resolution of the other House. 
(B) TREATMENT
OF
COMPANION
MEAS-
URES.—If, following passage of a joint resolu-
tion in the Senate, the Senate then receives the 
companion measure from the House of Rep-
resentatives, the companion measure shall not 
be debatable. 
(C) RULES OF HOUSE OF REPRESENTA-
TIVES AND SENATE.—This paragraph and the 
preceding paragraphs are enacted by Con-
gress— 
(i) as an exercise of the rulemaking 
power of the Senate and House of Rep-
resentatives, respectively, and as such it is 
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deemed a part of the rules of each House, 
respectively, but applicable only with re-
spect to the procedure to be followed in 
that House in the case of a joint resolu-
tion, and it supersedes other rules only to 
the extent that it is inconsistent with such 
rules; and 
(ii) with full recognition of the con-
stitutional right of either House to change 
the rules (so far as relating to the proce-
dure of that House) at any time, in the 
same manner, and to the same extent as in 
the case of any other rule of that House. 
(5) DEFINITIONS.—In this section: 
(A) JOINT RESOLUTION.—The term ‘‘joint 
resolution’’ means only a joint resolution— 
(i) which does not have a preamble; 
(ii) the title of which is as follows: 
‘‘Joint resolution disapproving a Medicare 
final implementation plan of the Secretary 
of Health and Human Services submitted 
under section 1160(a) of the Affordable 
Health Care for America Act’’; and 
(iii) the sole matter after the resolving 
clause of which is as follows: ‘‘That the 
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Congress disapproves the final implementa-
tion plan of the Secretary of Health and 
Human Services transmitted to the Con-
gress on—————.’’, the blank space 
being filled with the appropriate date. 
(B) LEGISLATIVE DAY.—The term ‘‘legis-
lative day’’ means any calendar day excluding 
any day on which that House was not in ses-
sion. 
(6) BUDGETARY
TREATMENT.—For the pur-
poses of consideration of a joint resolution, the 
Chairmen of the House of Representatives and Sen-
ate Committees on the Budget shall exclude from 
the evaluation of the budgetary effects of the meas-
ure, any such effects that are directly attributable to 
disapproving a Medicare final implementation plan 
of the Secretary submitted under subsection (a). 
Subtitle D—Medicare Advantage 
Reforms 
PART 1—PAYMENT AND ADMINISTRATION 
SEC. 1161. PHASE-IN OF PAYMENT BASED ON FEE-FOR- 
SERVICE COSTS; QUALITY BONUS PAYMENTS. 
(a) 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— 
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(1) in subsection (j)(1)(A)— 
(A) by striking ‘‘beginning with 2007’’ and 
inserting ‘‘for 2007, 2008, 2009, and 2010’’; 
and 
(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 
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‘‘(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. 
‘‘(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.’’. 
(b) QUALITY BONUS PAYMENTS.—Section 1853 of 
the Social Security Act (42 U.S.C. 1395w–23), as amend-
ed by subsection (a), is amended— 
(1) in subsection (j), by inserting ‘‘subject to 
subsection (o),’’ after ‘‘For purposes of this part,’’; 
and 
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progress of any investigation involving 
such violation, whether the Secretary 
intends to pursue the recommendation 
from the State, and in the case the 
Secretary does not intend to pursue 
such recommendation, the reason for 
such decision. 
‘‘(iii) NON-DUPLICATION
OF
PEN-
ALTIES.—In the case that an action has 
been initiated against a Medicare Advan-
tage organization, PDP sponsor, or agent 
or broker of such an organization or spon-
sor for a violation of a marketing require-
ment under subsection (h)(4), (h)(6), or (j) 
of section 1851 or section 1857(g)(1)(E)— 
‘‘(I) in the case such action has 
been initiated by the Secretary, no 
State may bring an action under such 
applicable 
subsection 
or 
section 
against such organization, sponsor, 
agent, or broker with respect to such 
violation during the pendency period 
of the action initiated by the Sec-
retary and, if a penalty is imposed 
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such form, strength, and period, ex-
ceeds 
‘‘(II) the average Medicare drug 
program rebate eligible rebate amount 
(as defined in subparagraph (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 
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(c) 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 
REBATE ELIGIBLE REBATE AMOUNT.—For pur-
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