‘‘(i) IN GENERAL.—Subject to clause 
(ii), for purposes of reporting data on qual-
ity measures for covered professional serv-
ices furnished during 2010 and each subse-
quent 
year, 
subject 
to 
subsection 
(m)(3)(C), the quality measures (including 
electronic prescribing quality measures) 
specified under this paragraph shall be 
such measures selected by the Secretary 
from measures that have been endorsed by 
the entity with a contract with the Sec-
retary under section 1890(a). 
‘‘(ii) EXCEPTION.—In the case of a 
specified area or medical topic determined 
appropriate by the Secretary for which a 
feasible and practical measure has not 
been endorsed by the entity with a contract 
under section 1890(a), the Secretary may 
specify a measure that is not so endorsed 
as long as due consideration is given to 
measures that have been endorsed or 
adopted by a consensus organization iden-
tified by the Secretary, such as the AQA 
alliance.
‘‘(D) OPPORTUNITY TO PROVIDE INPUT ON 
MEASURES
FOR
2009
AND
SUBSEQUENT 
YEARS.—For each quality measure (including 
an electronic prescribing quality measure) 
adopted by the Secretary under subparagraph 
(B) (with respect to 2009) or subparagraph 
(C), the Secretary shall ensure that eligible pro-
fessionals have the opportunity to provide input 
during the development, endorsement, or selec-
tion of measures applicable to services they fur-
nish.’’. 
(2) REDESIGNATION OF REPORTING SYSTEM.— 
Subsection (c) of section 101 of division B of the 
Tax Relief and Health Care Act of 2006 (42 U.S.C. 
1395w–4 note), as amended by section 101(b)(2) of 
the Medicare, Medicaid, and SCHIP Extension Act 
of 2007 (Public Law 110–173), is redesignated as 
subsection (m) of section 1848 of the Social Security 
Act. 
(3) INCENTIVE PAYMENTS UNDER REPORTING 
SYSTEM.—Section 1848(m) of the Social Security 
Act, as redesignated by paragraph (2), is amended— 
(A) by amending the heading to read as 
follows: ‘‘INCENTIVE PAYMENTS FOR QUALITY 
REPORTING’’;
(B) by striking paragraph (1) and insert-
ing the following: 
‘‘(1) INCENTIVE PAYMENTS.— 
‘‘(A) IN
GENERAL.—For 2007 through 
2010, with respect to covered professional serv-
ices furnished during a reporting period by an 
eligible professional, if— 
‘‘(i) there are any quality measures 
that have been established under the physi-
cian reporting system that are applicable 
to any such services furnished by such pro-
fessional for such reporting period; and 
‘‘(ii) the eligible professional satisfac-
torily submits (as determined under this 
subsection) to the Secretary data on such 
quality measures in accordance with such 
reporting system for such reporting period, 
in addition to the amount otherwise paid under 
this part, there also shall be paid to the eligible 
professional (or to an employer or facility in the 
cases described in clause (A) of section 
1842(b)(6)) or, in the case of a group practice 
under paragraph (3)(C), to the group practice, 
from the Federal Supplementary Medical Insur-
ance Trust Fund established under section
1841 an amount equal to the applicable quality 
percent of the Secretary’s estimate (based on 
claims submitted not later than 2 months after 
the end of the reporting period) of the allowed 
charges under this part for all such covered 
professional services furnished by the eligible 
professional (or, in the case of a group practice 
under paragraph (3)(C), by the group practice) 
during the reporting period. 
‘‘(B) APPLICABLE
QUALITY
PERCENT.— 
For purposes of subparagraph (A), the term 
‘applicable quality percent’ means— 
‘‘(i) for 2007 and 2008, 1.5 percent; 
and 
‘‘(ii) for 2009 and 2010, 2.0 per-
cent.’’; 
(C) by striking paragraph (3) and redesig-
nating paragraph (2) as paragraph (3); 
(D) in paragraph (3), as so redesignated— 
(i) in the matter preceding subpara-
graph (A), by striking ‘‘For purposes’’ and 
inserting the following: 
‘‘(A) IN GENERAL.—For purposes’’; 
(ii) by redesignating subparagraphs 
(A) and (B) as clauses (i) and (ii), respec-
tively, and moving the indentation of such 
clauses 2 ems to the right; 
(iii) in subparagraph (A), as added by 
clause (i), by adding at the end the fol-
lowing flush sentence: 
‘‘For years after 2008, quality measures for 
purposes of this subparagraph shall not include 
electronic prescribing quality measures.’’; and 
(iv) by adding at the end the following 
new subparagraphs: 
‘‘(C) SATISFACTORY
REPORTING
MEAS-
URES FOR GROUP PRACTICES.— 
‘‘(i) IN
GENERAL.—By January 1, 
2010, the Secretary shall establish and 
have in place a process under which eligi-
ble professionals in a group practice (as 
defined by the Secretary) shall be treated 
as satisfactorily submitting data on quality 
measures under subparagraph (A) and as 
meeting the requirement described in sub-
paragraph (B)(ii) for covered professional 
services for a reporting period (or, for pur-
poses of subsection (a)(5), for a reporting 
period for a year) if, in lieu of reporting 
measures under subsection (k)(2)(C), the
group practice reports measures deter-
mined appropriate by the Secretary, such 
as measures that target high-cost chronic 
conditions and preventive care, in a form 
and manner, and at a time, specified by 
the Secretary. 
‘‘(ii) 
STATISTICAL
SAMPLING 
MODEL.—The process under clause (i) 
shall provide for the use of a statistical 
sampling model to submit data on meas-
ures, such as the model used under the 
Physician Group Practice demonstration 
project under section 1866A. 
‘‘(iii) NO DOUBLE PAYMENTS.—Pay-
ments to a group practice under this sub-
section by reason of the process under 
clause (i) shall be in lieu of the payments 
that would otherwise be made under this 
subsection to eligible professionals in the 
group practice for satisfactorily submitting 
data on quality measures. 
‘‘(D) AUTHORITY
TO
REVISE
SATISFAC-
TORILY
REPORTING
DATA.—For years after 
2009, the Secretary, in consultation with stake-
holders and experts, may revise the criteria
under this subsection for satisfactorily submit-
ting data on quality measures under subpara-
graph (A) and the criteria for submitting data 
on electronic prescribing quality measures 
under subparagraph (B)(ii).’’; 
(E) in paragraph (5)— 
(i) in subparagraph (C), by inserting 
‘‘for 2007, 2008, and 2009,’’ after ‘‘provi-
sion of law,’’; 
(ii) in subparagraph (D)— 
(I) in clause (i)— 
(aa) by inserting ‘‘for 2007 
and 2008’’ after ‘‘under this sub-
section’’; and 
(bb) by striking ‘‘paragraph 
(2)’’ and inserting ‘‘this sub-
section’’; 
(II) in clause (ii), by striking 
‘‘shall’’ and inserting ‘‘may establish 
procedures to’’; and 
(III) in clause (iii)— 
(aa) by inserting ‘‘(or, in the 
case of a group practice under 
paragraph 
(3)(C), 
the 
group
practice)’’ after ‘‘an eligible pro-
fessional’’; 
(bb) by striking ‘‘bonus in-
centive payment’’ and inserting 
‘‘incentive payment under this 
subsection’’; and 
(cc) by adding at the end 
the following new sentence: ‘‘If 
such payments for such period 
have already been made, the Sec-
retary shall recoup such pay-
ments from the eligible profes-
sional (or the group practice).’’; 
(iii) in subparagraph (E)— 
(I) by striking ‘‘(I)
IN
GEN-
ERAL.—’’; 
(II) by striking clause (ii); 
(III) by redesignating subclauses 
(I) through (IV) as clauses (i) 
through (iv), respectively, and moving 
the indentation of such clauses 2 ems 
to the left; 
(IV) in clause (ii), as so redesig-
nated, by striking ‘‘paragraph (2)’’ 
and inserting ‘‘this subsection’’; and
(V) in clause (iv), as so redesig-
nated— 
(aa) by striking ‘‘the bonus’’ 
and inserting ‘‘any’’; and 
(bb) by inserting ‘‘and the 
payment adjustment under sub-
section (a)(5)(A)’’ before the pe-
riod at the end; 
(iv) in subparagraph (F)— 
(I) by striking ‘‘2009, paragraph 
(3) shall not apply, and’’ and insert-
ing ‘‘subsequent years,’’; and 
(II) by striking ‘‘paragraph (2)’’ 
and inserting ‘‘this subsection’’; and 
(v) by adding at the end the following 
new subparagraph: 
‘‘(G) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names of the following: 
‘‘(i) The eligible professionals (or, in 
the case of reporting under paragraph 
(3)(C), the group practices) who satisfac-
torily submitted data on quality measures 
under this subsection. 
‘‘(ii) The eligible professionals (or, in 
the case of reporting under paragraph 
(3)(C), the group practices) who are suc-
cessful electronic prescribers.’’; and 
(F) in paragraph (6), by striking subpara-
graph (C) and inserting the following: 
‘‘(C) REPORTING PERIOD.— 
‘‘(i) IN GENERAL.—Subject to clauses 
(ii) and (iii), the term ‘reporting period’ 
means— 
‘‘(I) for 2007, the period begin-
ning on July 1, 2007, and ending on 
December 31, 2007; and 
‘‘(II) for 2008, 2009, 2010, and 
2011, the entire year. 
‘‘(ii) AUTHORITY TO REVISE REPORT-
ING PERIOD.—For years after 2009, the 
Secretary may revise the reporting period 
under clause (i) if the Secretary deter-
mines such revision is appropriate, pro-
duces valid results on measures reported, 
and is consistent with the goals of maxi-
mizing scientific validity and reducing ad-
ministrative burden. If the Secretary re-
vises such period pursuant to the preceding 
sentence, the term ‘reporting period’ shall 
mean such revised period. 
‘‘(iii) REFERENCE.—Any reference in 
this subsection to a reporting period with 
respect to the application of subsection 
(a)(5) shall be deemed a reference to the 
reporting 
period 
under 
subparagraph 
(D)(iii) of such subsection.’’. 
(4) INCLUSION
OF
QUALIFIED
AUDIOLOGISTS 
AS ELIGIBLE PROFESSIONALS.— 
(A) IN GENERAL.—Section 1848(k)(3)(B) 
of the Social Security Act (42 U.S.C. 1395w– 
4(k)(3)(B)), is amended by adding at the end 
the following new clause: 
‘‘(iv) Beginning with 2009, a qualified 
audiologist 
(as 
defined 
in 
section 
1861(ll)(3)(B)).’’. 
(B) NO CHANGE IN BILLING.—Nothing in 
the amendment made by subparagraph (A) 
shall be construed to change the way in which 
billing for audiology services (as defined in sec-
tion 1861(ll)(2) of the Social Security Act (42
U.S.C. 1395x(ll)(2))) occurs under title XVIII 
of such Act as of July 1, 2008. 
(5) 
CONFORMING
AMENDMENTS.—Section 
1848(m) of the Social Security Act, as added and 
amended by paragraphs (2) and (3), is amended— 
(A) in paragraph (5)— 
(i) in subparagraph (A)— 
(I) by striking ‘‘section 1848(k) 
of the Social Security Act, as added 
by subsection (b),’’ and inserting 
‘‘subsection (k)’’; and 
(II) by striking ‘‘such section’’ 
and inserting ‘‘such subsection’’; 
(ii) in subparagraph (B), by striking 
‘‘of the Social Security Act (42 U.S.C. 
1395l)’’; 
(iii) in subparagraph (E), in the mat-
ter preceding clause (i), by striking ‘‘1869 
or 1878 of the Social Security Act or oth-
erwise’’ and inserting ‘‘1869, section 1878, 
or otherwise’’; and 
(iv) in subparagraph (F)— 
(I) by striking ‘‘paragraph (2)(B) 
of section 1848(k) of the Social Secu-
rity Act (42 U.S.C. 1395w–4(k))’’ and 
inserting ‘‘subsection (k)(2)(B)’’; and 
(II) by striking ‘‘paragraph (4) 
of such section’’ and inserting ‘‘sub-
section (k)(4)’’; 
(B) in paragraph (6)— 
(i) in subparagraph (A), by striking 
‘‘section 1848(k)(3) of the Social Security 
Act, as added by subsection (b)’’ and in-
serting ‘‘subsection (k)(3)’’; and 
(ii) in subparagraph (B), by striking 
‘‘section 1848(k) of the Social Security 
Act, as added by subsection (b)’’ and in-
serting ‘‘subsection (k)’’; and 
(C) by striking paragraph (6)(D). 
(6) NO AFFECT ON INCENTIVE PAYMENTS FOR 
2007 OR 2008.—Nothing in the amendments made by 
this subsection or section 132 shall affect the oper-
ation of the provisions of section 1848(m) of the So-
cial Security Act, as redesignated and amended by 
such subsection and section, with respect to 2007 or 
2008. 
(c) PHYSICIAN FEEDBACK PROGRAM TO IMPROVE 
EFFICIENCY AND CONTROL COSTS.—
(1) IN GENERAL.—Section 1848 of the Social 
Security Act (42 U.S.C. 1395w–4), as amended by 
subsection (b), is amended by adding at the end the 
following new subsection: 
‘‘(n) PHYSICIAN FEEDBACK PROGRAM.— 
‘‘(1) ESTABLISHMENT.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish a Physician Feedback Program (in 
this subsection referred to as the ‘Program’) 
under which the Secretary shall use claims data 
under this title (and may use other data) to 
provide confidential reports to physicians (and, 
as determined appropriate by the Secretary, to 
groups of physicians) that measure the re-
sources involved in furnishing care to individ-
uals under this title. If determined appropriate 
by the Secretary, the Secretary may include in-
formation on the quality of care furnished to in-
dividuals under this title by the physician (or 
group of physicians) in such reports. 
‘‘(B) RESOURCE USE.—The resources de-
scribed in subparagraph (A) may be meas-
ured— 
‘‘(i) on an episode basis; 
‘‘(ii) on a per capita basis; or
‘‘(iii) on both an episode and a per 
capita basis. 
‘‘(2) IMPLEMENTATION.—The Secretary shall 
implement the Program by not later than January 
1, 2009. 
‘‘(3) DATA FOR REPORTS.—To the extent prac-
ticable, reports under the Program shall be based on 
the most recent data available. 
‘‘(4) AUTHORITY TO FOCUS APPLICATION.—The 
Secretary may focus the application of the Program 
as appropriate, such as focusing the Program on— 
‘‘(A) physician specialties that account for 
a certain percentage of all spending for physi-
cians’ services under this title; 
‘‘(B) physicians who treat conditions that 
have a high cost or a high volume, or both, 
under this title; 
‘‘(C) physicians who use a high amount of 
resources compared to other physicians; 
‘‘(D) physicians practicing in certain geo-
graphic areas; or 
‘‘(E) physicians who treat a minimum 
number of individuals under this title. 
‘‘(5) AUTHORITY TO EXCLUDE CERTAIN INFOR-
MATION IF INSUFFICIENT INFORMATION.—The Sec-
retary may exclude certain information regarding a 
service from a report under the Program with re-
spect to a physician (or group of physicians) if the 
Secretary determines that there is insufficient infor-
mation relating to that service to provide a valid re-
port on that service. 
‘‘(6) ADJUSTMENT
OF
DATA.—To the extent 
practicable, the Secretary shall make appropriate ad-
justments to the data used in preparing reports 
under the Program, such as adjustments to take 
into account variations in health status and other 
patient characteristics. 
‘‘(7) EDUCATION
AND
OUTREACH.—The Sec-
retary shall provide for education and outreach ac-
tivities to physicians on the operation of, and meth-
odologies employed under, the Program. 
‘‘(8) DISCLOSURE EXEMPTION.—Reports under 
the Program shall be exempt from disclosure under 
section 552 of title 5, United States Code.’’. 
(2) GAO STUDY AND REPORT ON THE PHYSI-
CIAN FEEDBACK PROGRAM.— 
(A) STUDY.—The Comptroller General of 
the United States shall conduct a study of the 
Physician Feedback Program conducted under 
section 1848(n) of the Social Security Act, as
added by paragraph (1), including the imple-
mentation of the Program. 
(B) REPORT.—Not later than March 1, 
2011, the Comptroller General of the United 
States shall submit a report to Congress con-
taining the results of the study conducted under 
subparagraph (A), together with recommenda-
tions for such legislation and administrative ac-
tion as the Comptroller General determines ap-
propriate. 
(d) PLAN FOR TRANSITION TO VALUE-BASED PUR-
CHASING PROGRAM FOR PHYSICIANS AND OTHER PRACTI-
TIONERS.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall develop a plan to transition to 
a value-based purchasing program for payment 
under the Medicare program for covered professional 
services (as defined in section 1848(k)(3)(A) of the 
Social Security Act (42 U.S.C. 1395w–4(k)(3)(A))). 
(2) REPORT.—Not later than May 1, 2010, the 
Secretary of Health and Human Services shall sub-
mit a report to Congress containing the plan devel-
oped under paragraph (1), together with rec-
ommendations for such legislation and administra-
tive action as the Secretary determines appropriate.
SEC. 132. INCENTIVES FOR ELECTRONIC PRESCRIBING. 
(a) INCENTIVE PAYMENTS.—Section 1848(m) of the 
Social Security Act, as added and amended by section 
131(b), is amended— 
(1) by inserting after paragraph (1), the fol-
lowing new paragraph: 
‘‘(2) INCENTIVE PAYMENTS FOR ELECTRONIC 
PRESCRIBING.— 
‘‘(A) IN
GENERAL.—For 2009 through 
2013, with respect to covered professional serv-
ices furnished during a reporting period by an 
eligible professional, if the eligible professional 
is a successful electronic prescriber for such re-
porting period, in addition to the amount other-
wise paid under this part, there also shall be 
paid to the eligible professional (or to an em-
ployer or facility in the cases described in 
clause (A) of section 1842(b)(6)) or, in the case 
of a group practice under paragraph (3)(C), to 
the group practice, from the Federal Supple-
mentary Medical Insurance Trust Fund estab-
lished under section 1841 an amount equal to 
the applicable electronic prescribing percent of 
the Secretary’s estimate (based on claims sub-
mitted not later than 2 months after the end of 
the reporting period) of the allowed charges
under this part for all such covered professional 
services furnished by the eligible professional 
(or, in the case of a group practice under para-
graph (3)(C), by the group practice) during the 
reporting period. 
‘‘(B) LIMITATION WITH RESPECT TO ELEC-
TRONIC
PRESCRIBING
QUALITY
MEASURES.— 
The provisions of this paragraph and subsection 
(a)(5) shall not apply to an eligible professional 
(or, in the case of a group practice under para-
graph (3)(C), to the group practice) if, for the 
reporting period (or, for purposes of subsection 
(a)(5), for the reporting period for a year)— 
‘‘(i) the allowed charges under this 
part for all covered professional services 
furnished by the eligible professional (or 
group, as applicable) for the codes to 
which the electronic prescribing quality 
measure applies (as identified by the Sec-
retary and published on the Internet 
website of the Centers for Medicare & 
Medicaid Services as of January 1, 2008, 
and as subsequently modified by the Sec-
retary) are less than 10 percent of the 
total of the allowed charges under this part
for all such covered professional services 
furnished by the eligible professional (or 
the group, as applicable); or 
‘‘(ii) if determined appropriate by the 
Secretary, the eligible professional does not 
submit (including both electronically and 
nonelectronically) a sufficient number (as 
determined by the Secretary) of prescrip-
tions under part D. 
If the Secretary makes the determination to 
apply clause (ii) for a period, then clause (i) 
shall not apply for such period. 
‘‘(C) 
APPLICABLE
ELECTRONIC
PRE-
SCRIBING PERCENT.—For purposes of subpara-
graph (A), the term ‘applicable electronic pre-
scribing percent’ means— 
‘‘(i) for 2009 and 2010, 2.0 percent; 
‘‘(ii) for 2011 and 2012, 1.0 percent; 
and 
‘‘(iii) for 2013, 0.5 percent.’’; 
(2) in paragraph (3), as redesignated by section 
131(b)— 
(A) in the heading, by inserting ‘‘AND SUC-
CESSFUL ELECTRONIC PRESCRIBER’’ after ‘‘RE-
PORTING’’; and
(B) by inserting after subparagraph (A) 
the following new subparagraph: 
‘‘(B) 
SUCCESSFUL
ELECTRONIC
PRE-
SCRIBER.— 
‘‘(i) IN
GENERAL.—For purposes of 
paragraph (2) and subsection (a)(5), an el-
igible professional shall be treated as a 
successful electronic prescriber for a re-
porting period (or, for purposes of sub-
section (a)(5), for the reporting period for 
a year) if the eligible professional meets 
the requirement described in clause (ii), or, 
if the Secretary determines appropriate, 
the requirement described in clause (iii). If 
the Secretary makes the determination 
under the preceding sentence to apply the 
requirement described in clause (iii) for a 
period, then the requirement described in 
clause (ii) shall not apply for such period. 
‘‘(ii) REQUIREMENT FOR SUBMITTING 
DATA ON ELECTRONIC PRESCRIBING QUAL-
ITY
MEASURES.—The 
requirement 
de-
scribed in this clause is that, with respect 
to covered professional services furnished 
by an eligible professional during a report-
ing period (or, for purposes of subsection 
(a)(5), for the reporting period for a year), 
if there are any electronic prescribing qual-
ity measures that have been established 
under the physician reporting system and 
are applicable to any such services fur-
nished by such professional for the period, 
such professional reported each such meas-
ure under such system in at least 50 per-
cent of the cases in which such measure is 
reportable by such professional under such 
system. 
‘‘(iii) REQUIREMENT FOR ELECTRONI-
CALLY PRESCRIBING UNDER PART D.—The 
requirement described in this clause is that 
the eligible professional electronically sub-
mitted a sufficient number (as determined 
by the Secretary) of prescriptions under 
part D during the reporting period (or, for 
purposes of subsection (a)(5), for the re-
porting period for a year). 
‘‘(iv) USE
OF
PART
D
DATA.—Not-
withstanding sections 1860D-15(d)(2)(B) 
and 1860D-15(f)(2), the Secretary may 
use data regarding drug claims submitted
for purposes of section 1860D-15 that are 
necessary for purposes of clause (iii), para-
graph (2)(B)(ii), and paragraph (5)(G). 
‘‘(v) STANDARDS
FOR
ELECTRONIC 
PRESCRIBING.—To the extent practicable, 
in determining whether eligible profes-
sionals 
meet 
the 
requirements 
under 
clauses (ii) and (iii) for purposes of clause 
(i), the Secretary shall ensure that eligible 
professionals utilize electronic prescribing 
systems in compliance with standards es-
tablished for such systems pursuant to the 
Part D Electronic Prescribing Program 
under section 1860D–4(e).’’; and 
(3) in paragraph (5)(E), by striking clause (iii) 
and inserting the following new clause: 
‘‘(iii) the determination of a successful 
electronic prescriber under paragraph (3), 
the limitation under paragraph (2)(B), and 
the exception under subsection (a)(5)(B); 
and’’. 
(b) INCENTIVE PAYMENT ADJUSTMENT.—Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w– 
4(a)) is amended by adding at the end the following new 
paragraph:
‘‘(5) 
INCENTIVES
FOR
ELECTRONIC
PRE-
SCRIBING.— 
‘‘(A) ADJUSTMENT.— 
‘‘(i) IN
GENERAL.—Subject to sub-
paragraph (B) and subsection (m)(2)(B), 
with respect to covered professional serv-
ices furnished by an eligible professional 
during 2012 or any subsequent year, if the 
eligible professional is not a successful 
electronic prescriber for the reporting pe-
riod for the year (as determined under 
subsection (m)(3)(B)), the fee schedule 
amount for such services furnished by such 
professional during the year (including the 
fee schedule amount for purposes of deter-
mining a payment based on such amount) 
shall be equal to the applicable percent of 
the fee schedule amount that would other-
wise apply to such services under this sub-
section (determined after application of 
paragraph (3) but without regard to this 
paragraph). 
‘‘(ii) 
APPLICABLE
PERCENT.—For 
purposes of clause (i), the term ‘applicable 
percent’ means—
‘‘(I) for 2012, 99 percent; 
‘‘(II) for 2013, 98.5 percent; and 
‘‘(III) for 2014 and each subse-
quent year, 98 percent. 
‘‘(B) 
SIGNIFICANT
HARDSHIP
EXCEP-
TION.—The Secretary may, on a case-by-case 
basis, exempt an eligible professional from the 
application of the payment adjustment under 
subparagraph (A) if the Secretary determines, 
subject to annual renewal, that compliance with 
the requirement for being a successful elec-
tronic prescriber would result in a significant 
hardship, such as in the case of an eligible pro-
fessional who practices in a rural area without 
sufficient Internet access. 
‘‘(C) APPLICATION.— 
‘‘(i) PHYSICIAN
REPORTING
SYSTEM 
RULES.—Paragraphs (5), (6), and (8) of 
subsection (k) shall apply for purposes of 
this paragraph in the same manner as they 
apply for purposes of such subsection. 
‘‘(ii) INCENTIVE
PAYMENT
VALIDA-
TION RULES.—Clauses (ii) and (iii) of sub-
section (m)(5)(D) shall apply for purposes
100 
of this paragraph in a similar manner as 
they apply for purposes of such subsection. 
‘‘(D) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) ELIGIBLE
PROFESSIONAL; COV-
ERED
PROFESSIONAL
SERVICES.—The 
terms ‘eligible professional’ and ‘covered 
professional services’ have the meanings 
given such terms in subsection (k)(3). 
‘‘(ii) 
PHYSICIAN
REPORTING
SYS-
TEM.—The term ‘physician reporting sys-
tem’ means the system established under 
subsection (k). 
‘‘(iii) REPORTING PERIOD.—The term 
‘reporting period’ means, with respect to a 
year, a period specified by the Secretary.’’. 
(c) GAO REPORT ON ELECTRONIC PRESCRIBING.— 
Not later than September 1, 2012, the Comptroller Gen-
eral of the United States shall submit to Congress a report 
on the implementation of the incentives for electronic pre-
scribing established under the provisions of, and amend-
ments made by, this section. Such report shall include in-
formation regarding the following: 
(1) The percentage of eligible professionals (as 
defined in section 1848(k)(3) of the Social Security
101 
Act (42 U.S.C. 1395w–4(k)(3)) that are using elec-
tronic prescribing systems, including a determination 
of whether less than 50 percent of eligible profes-
sionals are using electronic prescribing systems. 
(2) If less than 50 percent of eligible profes-
sionals are using electronic prescribing systems, rec-
ommendations for increasing the use of electronic 
prescribing systems by eligible professionals, such as 
changes to the incentive payment adjustments estab-
lished under section 1848(a)(5) of such Act, as 
added by subsection (b). 
(3) The estimated savings to the Medicare pro-
gram under title XVIII of such Act resulting from 
the use of electronic prescribing systems. 
(4) Reductions in avoidable medical errors re-
sulting from the use of electronic prescribing sys-
tems. 
(5) The extent to which the privacy and secu-
rity of the personal health information of Medicare 
beneficiaries is protected when such beneficiaries’ 
prescription drug data and usage information is 
used for purposes other than their direct clinical 
care, including— 
(A) whether information identifying the 
beneficiary is, and remains, removed from data
102 
regarding the beneficiary’s prescription drug 
utilization; and 
(B) the extent to which current law re-
quires sufficient and appropriate oversight and 
audit capabilities to monitor the practice of pre-
scription drug data mining. 
(6) Such other recommendations and adminis-
trative action as the Comptroller General determines 
to be appropriate. 
SEC. 133. EXPANDING ACCESS TO PRIMARY CARE SERV-
ICES. 
(a) REVISIONS TO THE MEDICARE MEDICAL HOME 
DEMONSTRATION PROJECT.— 
(1) AUTHORITY TO EXPAND.—Section 204(b) 
of division B of the Tax Relief and Health Care Act 
of 2006 (42 U.S.C. 1395b–1 note) is amended— 
(A) in paragraph (1), by striking ‘‘The 
project’’ and inserting ‘‘Subject to paragraph 
(3), the project’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) EXPANSION.—The Secretary may expand 
the duration and the scope of the project under 
paragraph (1), to an extent determined appropriate 
by the Secretary, if the Secretary determines that
103 
such expansion will result in any of the following 
conditions being met: 
‘‘(A) The expansion of the project is ex-
pected to improve the quality of patient care 
without increasing spending under the Medicare 
program (not taking into account amounts 
available under subsection (g)). 
‘‘(B) The expansion of the project is ex-
pected to reduce spending under the Medicare 
program (not taking into account amounts 
available under subsection (g)) without reducing 
the quality of patient care.’’. 
(2) FUNDING AND APPLICATION.—Section 204 
of division B of the Tax Relief and Health Care Act 
of 2006 (42 U.S.C. 1395b–1 note) is amended by 
adding at the end the following new subsections: 
‘‘(g) FUNDING FROM SMI TRUST FUND.—There 
shall be available, from the Federal Supplementary Med-
ical Insurance Trust Fund (under section 1841 of the So-
cial Security Act (42 U.S.C. 1395t)), the amount of 
$100,000,000 to carry out the project. 
‘‘(h) APPLICATION.—Chapter 35 of title 44, United 
States Code, shall not apply to the conduct of the 
project.’’.
104 
(b) APPLICATION OF BUDGET-NEUTRALITY ADJUS-
TOR TO CONVERSION FACTOR.—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: 
‘‘(vi) ALTERNATIVE APPLICATION OF 
BUDGET-NEUTRALITY ADJUSTMENT.—Not-
withstanding subsection (d)(9)(A), effective 
for fee schedules established beginning 
with 2009, with respect to the 5-year re-
view of work relative value units used in 
fee schedules for 2007 and 2008, in lieu of 
continuing to apply budget-neutrality ad-
justments required under clause (ii) for 
2007 and 2008 to work relative value 
units, the Secretary shall apply such budg-
et-neutrality adjustments to the conversion 
factor otherwise determined for years be-
ginning with 2009.’’. 
SEC. 134. EXTENSION OF FLOOR ON MEDICARE WORK GEO-
GRAPHIC ADJUSTMENT UNDER THE MEDI-
CARE PHYSICIAN FEE SCHEDULE. 
(a) IN GENERAL.—Section 1848(e)(1)(E) of the So-
cial Security Act (42 U.S.C. 1395w–4(e)(1)(E)), as 
amended by section 103 of the Medicare, Medicaid, and 
SCHIP Extension Act of 2007 (Public Law 110–173), is
105 
amended by striking ‘‘before July 1, 2008’’ and inserting 
‘‘before January 1, 2010’’. 
(b) TREATMENT OF PHYSICIANS’ SERVICES FUR-
NISHED IN CERTAIN AREAS.—Section 1848(e)(1)(G) of 
the Social Security Act (42 U.S.C. 1395w–4(e)(1)(G)) is 
amended by adding at the end the following new sentence: 
‘‘For purposes of payment for services furnished in the 
State described in the preceding sentence on or after Jan-
uary 1, 2009, after calculating the work geographic index 
in subparagraph (A)(iii), the Secretary shall increase the 
work geographic index to 1.5 if such index would otherwise 
be less than 1.5’’. 
(c) TECHNICAL CORRECTION.—Section 602(1) of the 
Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173; 117 Stat. 
2301) is amended to read as follows: 
‘‘(1) in subparagraph (A), by striking ‘subpara-
graphs (B), (C), and (E)’ and inserting ‘subpara-
graphs (B), (C), (E), and (G)’; and’’. 
SEC. 135. IMAGING PROVISIONS. 
(a) ACCREDITATION REQUIREMENT.— 
(1) ACCREDITATION
REQUIREMENT.—Section 
1834 of the Social Security Act (42 U.S.C. 1395m) 
is amended by inserting after subsection (d) the fol-
lowing new subsection:
106 
‘‘(e) ACCREDITATION REQUIREMENT FOR ADVANCED 
DIAGNOSTIC IMAGING SERVICES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) IN GENERAL.—Beginning with Janu-
ary 1, 2012, with respect to the technical com-
ponent of advanced diagnostic imaging services 
for which payment is made under the fee sched-
ule established under section 1848(b) and that 
are furnished by a supplier, payment may only 
be made if such supplier is accredited by an ac-
creditation organization designated by the Sec-
retary under paragraph (2)(B)(i). 
‘‘(B) ADVANCED
DIAGNOSTIC
IMAGING 
SERVICES
DEFINED.—In this subsection, the 
term ‘advanced diagnostic imaging services’ in-
cludes— 
‘‘(i) diagnostic magnetic resonance 
imaging, computed tomography, and nu-
clear medicine (including positron emission 
tomography); and 
‘‘(ii) such other diagnostic imaging 
services, including services described in 
section 1848(b)(4)(B) (excluding X-ray, 
ultrasound, and fluoroscopy), as specified 
by the Secretary in consultation with phy-
107 
sician specialty organizations and other 
stakeholders. 
‘‘(C) SUPPLIER
DEFINED.—In this sub-
section, the term ‘supplier’ has the meaning 
given such term in section 1861(d). 
‘‘(2) ACCREDITATION ORGANIZATIONS.— 
‘‘(A) FACTORS FOR DESIGNATION OF AC-
CREDITATION ORGANIZATIONS.—The Secretary 
shall consider the following factors in desig-
nating accreditation organizations under sub-
paragraph (B)(i) and in reviewing and modi-
fying the list of accreditation organizations des-
ignated pursuant to subparagraph (C): 
‘‘(i) The ability of the organization to 
conduct timely reviews of accreditation ap-
plications. 
‘‘(ii) Whether the organization has es-
tablished a process for the timely integra-
tion of new advanced diagnostic imaging 
services into the organization’s accredita-
tion program. 
‘‘(iii) Whether the organization uses 
random site visits, site audits, or other 
strategies for ensuring accredited suppliers
108 
maintain adherence to the criteria de-
scribed in paragraph (3). 
‘‘(iv) The ability of the organization 
to take into account the capacities of sup-
pliers located in a rural area (as defined in 
section 1886(d)(2)(D)). 
‘‘(v) Whether the organization has es-
tablished reasonable fees to be charged to 
suppliers applying for accreditation. 
‘‘(vi) Such other factors as the Sec-
retary determines appropriate. 
‘‘(B) DESIGNATION.—Not later than Janu-
ary 1, 2010, the Secretary shall designate orga-
nizations to accredit suppliers furnishing the 
technical component of advanced diagnostic im-
aging services. The list of accreditation organi-
zations so designated may be modified pursuant 
to subparagraph (C). 
‘‘(C) REVIEW AND MODIFICATION OF LIST 
OF ACCREDITATION ORGANIZATIONS.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall review the list of accreditation organi-
zations designated under subparagraph (B) 
taking into account the factors under sub-
paragraph (A). Taking into account the re-
109 
sults of such review, the Secretary may, by 
regulation, modify the list of accreditation 
organizations designated under subpara-
graph (B). 
‘‘(ii) SPECIAL RULE FOR ACCREDITA-
TIONS
DONE
PRIOR
TO
REMOVAL
FROM 
LIST OF DESIGNATED ACCREDITATION OR-
GANIZATIONS.—In the case where the Sec-
retary removes an organization from the 
list of accreditation organizations des-
ignated under subparagraph (B), any sup-
plier that is accredited by the organization 
during the period beginning on the date on 
which the organization is designated as an 
accreditation organization under subpara-
graph (B) and ending on the date on 
which the organization is removed from 
such list shall be considered to have been 
accredited by an organization designated 
by the Secretary under subparagraph (B) 
for the remaining period such accreditation 
is in effect. 
‘‘(3) CRITERIA FOR ACCREDITATION.—The Sec-
retary shall establish procedures to ensure that the 
criteria used by an accreditation organization des-
110 
ignated under paragraph (2)(B) to evaluate a sup-
plier that furnishes the technical component of ad-
vanced diagnostic imaging services for the purpose 
of accreditation of such supplier is specific to each 
imaging modality. Such criteria shall include— 
‘‘(A) standards for qualifications of med-
ical personnel who are not physicians and who 
furnish the technical component of advanced di-
agnostic imaging services; 
‘‘(B) standards for qualifications and re-
sponsibilities of medical directors and super-
vising physicians, including standards that rec-
ognize the considerations described in para-
graph (4); 
‘‘(C) procedures to ensure that equipment 
used in furnishing the technical component of 
advanced diagnostic imaging services meets per-
formance specifications; 
‘‘(D) standards that require the supplier 
have procedures in place to ensure the safety of 
persons who furnish the technical component of 
advanced diagnostic imaging services and indi-
viduals to whom such services are furnished; 
‘‘(E) standards that require the establish-
ment and maintenance of a quality assurance
111 
and quality control program by the supplier 
that is adequate and appropriate to ensure the 
reliability, clarity, and accuracy of the technical 
quality of diagnostic images produced by such 
supplier; and 
‘‘(F) any other standards or procedures 
the Secretary determines appropriate. 
‘‘(4) RECOGNITION
IN
STANDARDS
FOR
THE 
EVALUATION OF MEDICAL DIRECTORS AND SUPER-
VISING
PHYSICIANS.—The standards described in 
paragraph (3)(B) shall recognize whether a medical 
director or supervising physician— 
‘‘(A) in a particular specialty receives 
training in advanced diagnostic imaging serv-
ices in a residency program; 
‘‘(B) has attained, through experience, the 
necessary expertise to be a medical director or 
a supervising physician; 
‘‘(C) has completed any continuing medical 
education courses relating to such services; or 
‘‘(D) has met such other standards as the 
Secretary determines appropriate. 
‘‘(5) RULE FOR ACCREDITATIONS MADE PRIOR 
TO DESIGNATION.—In the case of a supplier that is 
accredited before January 1, 2010, by an accredita-
112 
tion organization designated by the Secretary under 
paragraph (2)(B) as of January 1, 2010, such sup-
plier shall be considered to have been accredited by 
an organization designated by the Secretary under 
such paragraph as of January 1, 2012, for the re-
maining period such accreditation is in effect.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) IN GENERAL.—Section 1862(a) of the 
Social Security Act (42 U.S.C. 1395y(a)) is 
amended— 
(i) in paragraph (21), by striking ‘‘or’’ 
at the end; 
(ii) in paragraph (22), by striking the 
period at the end and inserting ‘‘; or’’; and 
(iii) by inserting after paragraph (22) 
the following new paragraph: 
‘‘(23) which are the technical component of ad-
vanced diagnostic imaging services described in sec-
tion 1834(e)(1)(B) for which payment is made under 
the fee schedule established under section 1848(b) 
and that are furnished by a supplier (as defined in 
section 1861(d)), if such supplier is not accredited 
by an accreditation organization designated by the 
Secretary under section 1834(e)(2)(B).’’.
113 
(B) EFFECTIVE DATE.—The amendments 
made by this paragraph shall apply to advanced 
diagnostic imaging services furnished on or 
after January 1, 2012. 
(b) DEMONSTRATION PROJECT TO ASSESS THE AP-
PROPRIATE USE OF IMAGING SERVICES.— 
(1) CONDUCT OF DEMONSTRATION PROJECT.— 
(A) 
IN
GENERAL.—The 
Secretary 
of 
Health and Human Services (in this section re-
ferred to as the ‘‘Secretary’’) shall conduct a 
demonstration project using the models de-
scribed in paragraph (2)(E) to collect data re-
garding physician compliance with appropriate-
ness criteria selected under paragraph (2)(D) in 
order to determine the appropriateness of ad-
vanced diagnostic imaging services furnished to 
Medicare beneficiaries. 
(B) 
ADVANCED
DIAGNOSTIC
IMAGING 
SERVICES.—In this subsection, the term ‘‘ad-
vanced diagnostic imaging services’’ has the 
meaning 
given 
such 
term 
in 
section 
1834(e)(1)(B) of the Social Security Act, as 
added by subsection (a). 
(C) AUTHORITY
TO
FOCUS
DEMONSTRA-
TION PROJECT.—The Secretary may focus the
114 
demonstration project with respect to certain 
advanced diagnostic imaging services, such as 
services that account for a large amount of ex-
penditures under the Medicare program, serv-
ices that have recently experienced a high rate 
of growth, or services for which appropriateness 
criteria exists. 
(2) IMPLEMENTATION
AND
DESIGN
OF
DEM-
ONSTRATION PROJECT.— 
(A) IMPLEMENTATION AND DURATION.— 
(i) IMPLEMENTATION.—The Secretary 
shall implement the demonstration project 
under this subsection not later than Janu-
ary 1, 2010. 
(ii) DURATION.—The Secretary shall 
conduct the demonstration project under 
this subsection for a 2-year period. 
(B) APPLICATION AND SELECTION OF PAR-
TICIPATING PHYSICIANS.— 
(i) 
APPLICATION.—Each 
physician 
that desires to participate in the dem-
onstration project under this subsection 
shall submit an application to the Sec-
retary at such time, in such manner, and
115 
containing such information as the Sec-
retary may require. 
(ii) SELECTION.—The Secretary shall 
select physicians to participate in the dem-
onstration project under this subsection 
from among physicians submitting applica-
tions under clause (i). The Secretary shall 
ensure that the physicians selected— 
(I) represent a wide range of geo-
graphic areas, demographic character-
istics (such as urban, rural, and sub-
urban), and practice settings (such as 
private and academic practices); and 
(II) have the capability to submit 
data to the Secretary (or an entity 
under a subcontract with the Sec-
retary) in an electronic format in ac-
cordance with standards established 
by the Secretary. 
(C) ADMINISTRATIVE COSTS AND INCEN-
TIVES.—The Secretary shall— 
(i) reimburse physicians for reason-
able administrative costs incurred in par-
ticipating in the demonstration project 
under this subsection; and
116 
(ii) provide reasonable incentives to 
physicians to encourage participation in 
the demonstration project under this sub-
section. 
(D) 
USE
OF
APPROPRIATENESS
CRI-
TERIA.— 
(i) IN GENERAL.—The Secretary, in 
consultation with medical specialty soci-
eties and other stakeholders, shall select 
criteria with respect to the clinical appro-
priateness of advanced diagnostic imaging 
services for use in the demonstration 
project under this subsection. 
(ii) CRITERIA
SELECTED.—Any cri-
teria selected under clause (i) shall— 
(I) be developed or endorsed by a 
medical specialty society; and 
(II) be developed in adherence to 
appropriateness principles developed 
by a consensus organization, such as 
the AQA alliance. 
(E) MODELS FOR COLLECTING DATA RE-
GARDING
PHYSICIAN
COMPLIANCE
WITH
SE-
LECTED
CRITERIA.—Subject to subparagraph 
(H), in carrying out the demonstration project
117 
under this subsection, the Secretary shall use 
each of the following models for collecting data 
regarding physician compliance with appro-
priateness criteria selected under subparagraph 
(D): 
(i) A model described in subparagraph 
(F). 
(ii) A model described in subpara-
graph (G). 
(iii) Any other model that the Sec-
retary determines to be useful in evalu-
ating the use of appropriateness criteria 
for advanced diagnostic imaging services. 
(F) POINT
OF
SERVICE
MODEL
DE-
SCRIBED.—A model described in this subpara-
graph is a model that— 
(i) uses an electronic or paper intake 
form that— 
(I) contains a certification by the 
physician furnishing the imaging serv-
ice that the data on the intake form 
was confirmed with the Medicare ben-
eficiary before the service was fur-
nished;
118 
(II) contains standardized data 
elements for diagnosis, service or-
dered, service furnished, and such 
other information determined by the 
Secretary, in consultation with med-
ical specialty societies and other 
stakeholders, to be germane to evalu-
ating the effectiveness of the use of 
appropriateness criteria selected under 
subparagraph (D); and 
(III) is accessible to physicians 
participating in the demonstration 
project under this subsection in a for-
mat that allows for the electronic sub-
mission of such form; and 
(ii) provides for feedback reports in 
accordance with paragraph (3)(B). 
(G) 
POINT
OF
ORDER
MODEL
DE-
SCRIBED.—A model described in this subpara-
graph is a model that— 
(i) uses a computerized order-entry 
system that requires the transmittal of rel-
evant supporting information at the time 
of referral for advanced diagnostic imaging 
services and provides automated decision-
119 
support feedback to the referring physician 
regarding the appropriateness of fur-
nishing such imaging services; and 
(ii) provides for feedback reports in 
accordance with paragraph (3)(B). 
(H) LIMITATION.—In no case may the 
Secretary use prior authorization— 
(i) as a model for collecting data re-
garding physician compliance with appro-
priateness criteria selected under subpara-
graph (D) under the demonstration project 
under this subsection; or 
(ii) under any model used for col-
lecting such data under the demonstration 
project. 
(I) REQUIRED CONTRACTS AND PERFORM-
ANCE STANDARDS FOR CERTAIN ENTITIES.— 
(i) IN GENERAL.—The Secretary shall 
enter into contracts with entities to carry 
out the model described in subparagraph 
(G). 
(ii) PERFORMANCE STANDARDS.—The 
Secretary shall establish and enforce per-
formance standards for such entities under 
the contracts entered into under clause (i),
120 
including performance standards with re-
spect to— 
(I) the satisfaction of Medicare 
beneficiaries who are furnished ad-
vanced diagnostic imaging services by 
a physician participating in the dem-
onstration project; 
(II) the satisfaction of physicians 
participating in the demonstration 
project; 
(III) if applicable, timelines for 
the provision of feedback reports 
under paragraph (3)(B); and 
(IV) any other areas determined 
appropriate by the Secretary. 
(3) COMPARISON
OF
UTILIZATION
OF
AD-
VANCED DIAGNOSTIC IMAGING SERVICES AND FEED-
BACK REPORTS.— 
(A) COMPARISON OF UTILIZATION OF AD-
VANCED DIAGNOSTIC IMAGING SERVICES.—The 
Secretary shall consult with medical specialty 
societies and other stakeholders to develop 
mechanisms for comparing the utilization of ad-
vanced diagnostic imaging services by physi-
121 
cians participating in the demonstration project 
under this subsection against— 
(i) the appropriateness criteria se-
lected under paragraph (2)(D); and 
(ii) to the extent feasible, the utiliza-
tion of such services by physicians not par-
ticipating in the demonstration project. 
(B) FEEDBACK REPORTS.—The Secretary 
shall, in consultation with medical specialty so-
cieties and other stakeholders, develop mecha-
nisms to provide feedback reports to physicians 
participating in the demonstration project 
under this subsection. Such feedback reports 
shall include— 
(i) a profile of the rate of compliance 
by the physician with appropriateness cri-
teria selected under paragraph (2)(D), in-
cluding a comparison of— 
(I) the rate of compliance by the 
physician with such criteria; and 
(II) the rate of compliance by the 
physician’s peers (as defined by the 
Secretary) with such criteria; and 
(ii) to the extent feasible, a compari-
son of—
122 
(I) the rate of utilization of ad-
vanced diagnostic imaging services by 
the physician; and 
(II) the rate of utilization of such 
services by the physician’s peers (as 
defined by the Secretary) who are not 
participating in the demonstration 
project. 
(4) CONDUCT
OF
DEMONSTRATION
PROJECT 
AND WAIVER.— 
(A) 
CONDUCT
OF
DEMONSTRATION 
PROJECT.—Chapter 35 of title 44, United 
States Code, shall not apply to the conduct of 
the demonstration project under this sub-
section. 
(B) WAIVER.—The Secretary may waive 
such provisions of titles XI and XVIII of the 
Social Security Act (42 U.S.C. 1301 et seq.; 
1395 et seq.) as may be necessary to carry out 
the demonstration project under this sub-
section. 
(5) EVALUATION AND REPORT.— 
(A) EVALUATION.—The Secretary shall 
evaluate the demonstration project under this 
subsection to—
123 
(i) assess the timeliness and efficacy 
of the demonstration project; 
(ii) assess the performance of entities 
under a contract entered into under para-
graph (2)(I)(i); 
(iii) analyze data— 
(I) on the rates of appropriate, 
uncertain, and inappropriate advanced 
diagnostic imaging services furnished 
by physicians participating in the 
demonstration project; 
(II) on patterns and trends in 
the appropriateness and inappropri-
ateness of such services furnished by 
such physicians; 
(III) on patterns and trends in 
national and regional variations of 
care with respect to the furnishing of 
such services; and 
(IV) on the correlation between 
the appropriateness of the services 
furnished and image results; and 
(iv) address— 
(I) the thresholds used under the 
demonstration project to identify ac-
124 
ceptable and outlier levels of perform-
ance with respect to the appropriate-
ness of advanced diagnostic imaging 
services furnished; 
(II) whether prospective use of 
appropriateness criteria could have an 
effect on the volume of such services 
furnished; 
(III) whether expansion of the 
use of appropriateness criteria with 
respect to such services to a broader 
population of Medicare beneficiaries 
would be advisable; 
(IV) whether, under such an ex-
pansion, physicians who demonstrate 
consistent compliance with such ap-
propriateness criteria should be ex-
empted from certain requirements; 
(V) the use of incident-specific 
versus practice-specific outlier infor-
mation in formulating future rec-
ommendations with respect to the use 
of appropriateness criteria for such 
services under the Medicare program; 
and
125 
(VI) the potential for using 
methods (including financial incen-
tives), in addition to those used under 
the models under the demonstration 
project, to ensure compliance with 
such criteria. 
(B) REPORT.—Not later than 1 year after 
the completion of the demonstration project 
under this subsection, the Secretary shall sub-
mit to Congress a report containing the results 
of the evaluation of the demonstration project 
conducted under subparagraph (A), together 
with recommendations for such legislation and 
administrative action as the Secretary deter-
mines appropriate. 
(6) FUNDING.—The Secretary shall provide for 
the transfer from the Federal Supplementary Med-
ical Insurance Trust Fund established under section 
1841 of the Social Security Act (42 U.S.C. 1395t) 
of $10,000,000, for carrying out the demonstration 
project under this subsection (including costs associ-
ated with administering the demonstration project, 
reimbursing physicians for administrative costs and 
providing incentives to encourage participation under 
paragraph (2)(C), entering into contracts under
126 
paragraph (2)(I), and evaluating the demonstration 
project under paragraph (5)). 
(c) GAO STUDY AND REPORTS ON ACCREDITATION 
REQUIREMENT
FOR ADVANCED DIAGNOSTIC IMAGING 
SERVICES.— 
(1) STUDY.— 
(A) IN GENERAL.—The Comptroller Gen-
eral of the United States (in this subsection re-
ferred to as the ‘‘Comptroller General’’) shall 
conduct a study, by imaging modality, on— 
(i) the effect of the accreditation re-
quirement under section 1834(e) of the So-
cial Security Act, as added by subsection 
(a); and 
(ii) any other relevant questions in-
volving access to, and the value of, ad-
vanced diagnostic imaging services for 
Medicare beneficiaries. 
(B) ISSUES.—The study conducted under 
subparagraph (A) shall examine the following: 
(i) The impact of such accreditation 
requirement on the number, type, and 
quality of imaging services furnished to 
Medicare beneficiaries.
127 
(ii) The cost of such accreditation re-
quirement, including costs to facilities of 
compliance with such requirement and 
costs to the Secretary of administering 
such requirement. 
(iii) Access to imaging services by 
Medicare beneficiaries, especially in rural 
areas, before and after implementation of 
such accreditation requirement. 
(iv) Such other issues as the Sec-
retary determines appropriate. 
(2) REPORTS.— 
(A) PRELIMINARY
REPORT.—Not later 
than March 1, 2013, the Comptroller General 
shall submit a preliminary report to Congress 
on the study conducted under paragraph (1). 
(B) FINAL
REPORT.—Not later than 
March 1, 2014, the Comptroller General shall 
submit a final report to Congress on the study 
conducted under paragraph (1), together with 
recommendations for such legislation and ad-
ministrative action as the Comptroller General 
determines appropriate.
128 
SEC. 136. EXTENSION OF TREATMENT OF CERTAIN PHYSI-
CIAN PATHOLOGY SERVICES UNDER MEDI-
CARE. 
Section 542(c) of the Medicare, Medicaid, and 
SCHIP Benefits Improvement and Protection Act of 2000 
(as enacted into law by section 1(a)(6) of Public Law 106– 
554), as amended by section 732 of the Medicare Prescrip-
tion Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395w–4 note), section 104 of division B of 
the Tax Relief and Health Care Act of 2006 (42 U.S.C. 
1395w–4 note), and section 104 of the Medicare, Med-
icaid, and SCHIP Extension Act of 2007 (Public Law 
110–173), is amended by striking ‘‘2007, and the first 6 
months of 2008’’ and inserting ‘‘2007, 2008, and 2009’’. 
SEC. 137. ACCOMMODATION OF PHYSICIANS ORDERED TO 
ACTIVE DUTY IN THE ARMED SERVICES. 
Section 1842(b)(6)(D)(iii) of the Social Security Act 
(42 U.S.C. 1395u(b)(6)(D)(iii)), as amended by section 
116 of the Medicare, Medicaid, and SCHIP Extension Act 
of 2007 (Public Law 110–173), is amended by striking 
‘‘(before July 1, 2008)’’. 
SEC. 138. ADJUSTMENT FOR MEDICARE MENTAL HEALTH 
SERVICES. 
(a) PAYMENT ADJUSTMENT.— 
(1) IN GENERAL.—For purposes of payment for 
services furnished under the physician fee schedule
129 
under section 1848 of the Social Security Act (42 
U.S.C. 1395w–4) during the period beginning on 
July 1, 2008, and ending on December 31, 2009, 
the Secretary of Health and Human Services shall 
increase the fee schedule otherwise applicable for 
specified services by 5 percent. 
(2) 
NONAPPLICATION
OF
BUDGET-NEU-
TRALITY.—The budget-neutrality provision of sec-
tion 1848(c)(2)(B)(ii) of the Social Security Act (42 
U.S.C. 1395w–4(c)(2)(B)(ii)) shall not apply to the 
adjustments described in paragraph (1). 
(b) DEFINITION OF SPECIFIED SERVICES.—In this 
section, the term ‘‘specified services’’ means procedure 
codes for services in the categories of the Health Care 
Common Procedure Coding System, established by the 
Secretary of Health and Human Services under section 
1848(c)(5) of the Social Security Act (42 U.S.C. 1395w– 
4(c)(5)), as of July 1, 2007, and as subsequently modified 
by the Secretary, consisting of psychiatric therapeutic pro-
cedures furnished in office or other outpatient facility set-
tings or in inpatient hospital, partial hospital, or residen-
tial care facility settings, but only with respect to such 
services in such categories that are in the subcategories 
of services which are—
130 
(1) insight oriented, behavior modifying, or sup-
portive psychotherapy; or 
(2) interactive psychotherapy. 
(c) IMPLEMENTATION.—Notwithstanding any other 
provision of law, the Secretary may implement this section 
by program instruction or otherwise. 
SEC. 139. IMPROVEMENTS FOR MEDICARE ANESTHESIA 
TEACHING PROGRAMS. 
(a) SPECIAL PAYMENT RULE FOR TEACHING ANES-
THESIOLOGISTS.—Section 1848(a) of the Social Security 
Act (42 U.S.C. 1395w–4(a)), as amended by section 
132(b), is amended— 
(1) in paragraph (4)(A), by inserting ‘‘except as 
provided in paragraph (5),’’ after ‘‘anesthesia 
cases,’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(6) SPECIAL RULE FOR TEACHING ANESTHE-
SIOLOGISTS.—With respect to physicians’ services 
furnished on or after January 1, 2010, in the case 
of teaching anesthesiologists involved in the training 
of physician residents in a single anesthesia case or 
two concurrent anesthesia cases, the fee schedule 
amount to be applied shall be 100 percent of the fee 
schedule amount otherwise applicable under this sec-
131 
tion if the anesthesia services were personally per-
formed by the teaching anesthesiologist alone and 
paragraph (4) shall not apply if— 
‘‘(A) 
the 
teaching 
anesthesiologist 
is 
present during all critical or key portions of the 
anesthesia service or procedure involved; and 
‘‘(B) the teaching anesthesiologist (or an-
other anesthesiologist with whom the teaching 
anesthesiologist has entered into an arrange-
ment) is immediately available to furnish anes-
thesia services during the entire procedure.’’. 
(b) TREATMENT OF CERTIFIED REGISTERED NURSE 
ANESTHETISTS.—With respect to items and services fur-
nished on or after January 1, 2010, the Secretary of 
Health and Human Services shall make appropriate ad-
justments to payments under the Medicare program under 
title XVIII of the Social Security Act for teaching certified 
registered nurse anesthetists to implement a policy with 
respect to teaching certified registered nurse anesthetists 
that— 
(1) is consistent with the adjustments made by 
the special rule for teaching anesthesiologists under 
section 1848(a)(6) of the Social Security Act, as 
added by subsection (a); and
132 
(2) maintains the existing payment differences 
between teaching anesthesiologists and teaching cer-
tified registered nurse anesthetists. 
PART II—OTHER PAYMENT AND COVERAGE 
IMPROVEMENTS 
SEC. 141. EXTENSION OF EXCEPTIONS PROCESS FOR MEDI-
CARE THERAPY CAPS. 
Section 1833(g)(5) of the Social Security Act (42 
U.S.C. 1395l(g)(5)), as amended by section 105 of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 
(Public Law 110–173), is amended by striking ‘‘June 30, 
2008’’ and inserting ‘‘December 31, 2009’’. 
SEC. 
142. 
EXTENSION 
OF 
PAYMENT 
RULE 
FOR 
BRACHYTHERAPY AND THERAPEUTIC RADIO-
PHARMACEUTICALS. 
Section 1833(t)(16)(C) of the Social Security Act (42 
U.S.C. 1395l(t)(16)(C)), as amended by section 106 of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 
(Public Law 110–173), is amended by striking ‘‘July 1, 
2008’’ each place it appears and inserting ‘‘January 1, 
2010’’. 
SEC. 143. SPEECH-LANGUAGE PATHOLOGY SERVICES. 
(a) IN GENERAL.—Section 1861(ll) of the Social Se-
curity Act (42 U.S.C. 1395x(ll)) is amended—
133 
(1) by redesignating paragraphs (2) and (3) as 
paragraphs (3) and (4), respectively; and 
(2) by inserting after paragraph (1) the fol-
lowing new paragraph: 
‘‘(2) The term ‘outpatient speech-language pathology 
services’ has the meaning given the term ‘outpatient phys-
ical therapy services’ in subsection (p), except that in ap-
plying such subsection— 
‘‘(A) ‘speech-language pathology’ shall be sub-
stituted for ‘physical therapy’ each place it appears; 
and 
‘‘(B) ‘speech-language pathologist’ shall be sub-
stituted for ‘physical therapist’ each place it ap-
pears.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 1832(a)(2)(C) of the Social Security 
Act (42 U.S.C. 1395k(a)(2)(C)) is amended— 
(A) by striking ‘‘and outpatient’’ and in-
serting ‘‘, outpatient’’; and 
(B) by inserting before the semicolon at 
the end the following: ‘‘, and outpatient speech- 
language pathology services (other than services 
to which the second sentence of section 1861(p) 
applies through the application of section 
1861(ll)(2))’’.
134 
(2) Subparagraphs (A) and (B) of section 
1833(a)(8) of the Social Security Act (42 U.S.C. 
1395l(a)(8)) are each amended by striking ‘‘(which 
includes outpatient speech-language pathology serv-
ices)’’ and inserting ‘‘, outpatient speech-language 
pathology services,’’. 
(3) Section 1833(g)(1) of the Social Security 
Act (42 U.S.C. 1395l(g)(1)) is amended— 
(A) by inserting ‘‘and speech-language pa-
thology services of the type described in such 
section through the application of section 
1861(ll)(2)’’ after ‘‘1861(p)’’; and 
(B) by inserting ‘‘and speech-language pa-
thology services’’ after ‘‘and physical therapy 
services’’. 
(4) The second sentence of section 1835(a) of 
the Social Security Act (42 U.S.C. 1395n(a)) is 
amended— 
(A) by striking ‘‘section 1861(g)’’ and in-
serting ‘‘subsection (g) or (ll)(2) of section 
1861’’ each place it appears; and 
(B) by inserting ‘‘or outpatient speech-lan-
guage pathology services, respectively’’ after 
‘‘occupational therapy services’’.
135 
(5) Section 1861(p) of the Social Security Act 
(42 U.S.C. 1395x(p)) is amended by striking the 
fourth sentence. 
(6) Section 1861(s)(2)(D) of the Social Secu-
rity Act (42 U.S.C. 1395x(s)(2)(D)) is amended by 
inserting ‘‘, outpatient speech-language pathology 
services,’’ after ‘‘physical therapy services’’. 
(7) Section 1862(a)(20) of the Social Security 
Act (42 U.S.C. 1395y(a)(20)) is amended— 
(A) by striking ‘‘outpatient occupational 
therapy services or outpatient physical therapy 
services’’ and inserting ‘‘outpatient physical 
therapy services, outpatient speech-language pa-
thology services, or outpatient occupational 
therapy services’’; and 
(B) by striking ‘‘section 1861(g)’’ and in-
serting ‘‘subsection (g) or (ll)(2) of section 
1861’’. 
(8) Section 1866(e)(1) of the Social Security 
Act (42 U.S.C. 1395cc(e)(1)) is amended— 
(A) by striking ‘‘section 1861(g)’’ and in-
serting ‘‘subsection (g) or (ll)(2) of section 
1861’’ the first two places it appears; 
(B) by striking ‘‘defined) or’’ and inserting 
‘‘defined),’’; and
136 
(C) by inserting before the semicolon at 
the end the following: ‘‘, or (through the oper-
ation of section 1861(ll)(2)) with respect to the 
furnishing of outpatient speech-language pa-
thology’’. 
(9) Section 1877(h)(6) of the Social Security 
Act (42 U.S.C. 1395nn(h)(6)) is amended by adding 
at the end the following new subparagraph: 
‘‘(L) Outpatient speech-language pathology 
services.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to services furnished on or after 
July 1, 2009. 
(d) CONSTRUCTION.—Nothing in this section shall be 
construed to affect existing regulations and policies of the 
Centers for Medicare & Medicaid Services that require 
physician oversight of care as a condition of payment for 
speech-language pathology services under part B of the 
Medicare program. 
SEC. 144. PAYMENT AND COVERAGE IMPROVEMENTS FOR 
PATIENTS 
WITH 
CHRONIC 
OBSTRUCTIVE 
PULMONARY DISEASE AND OTHER CONDI-
TIONS. 
(a) COVERAGE OF PULMONARY AND CARDIAC REHA-
BILITATION.—
137 
(1) IN GENERAL.—Section 1861 of the Social 
Security Act (42 U.S.C. 1395x), as amended by sec-
tion 101(a), is amended— 
(A) in subsection (s)(2)— 
(i) in subparagraph (AA), by striking 
‘‘and’’ at the end; 
(ii) by adding at the end the following 
new subparagraphs: 
‘‘(CC) items and services furnished under 
a cardiac rehabilitation program (as defined in 
subsection (eee)(1)) or under a pulmonary reha-
bilitation program (as defined in subsection 
(fff)(1)); and 
‘‘(DD) items and services furnished under 
an intensive cardiac rehabilitation program (as 
defined in subsection (eee)(4));’’; and 
(B) by adding at the end the following new 
subsections: 
‘‘Cardiac Rehabilitation Program; Intensive Cardiac 
Rehabilitation Program 
‘‘(eee)(1) The term ‘cardiac rehabilitation program’ 
means a physician-supervised program (as described in 
paragraph (2)) that furnishes the items and services de-
scribed in paragraph (3).
138 
‘‘(2) A program described in this paragraph is a pro-
gram under which— 
‘‘(A) items and services under the program are 
delivered— 
‘‘(i) in a physician’s office; 
‘‘(ii) in a hospital on an outpatient basis; 
or 
‘‘(iii) in other settings determined appro-
priate by the Secretary. 
‘‘(B) a physician is immediately available and 
accessible for medical consultation and medical 
emergencies at all times items and services are being 
furnished under the program, except that, in the 
case of items and services furnished under such a 
program in a hospital, such availability shall be pre-
sumed; and 
‘‘(C) individualized treatment is furnished 
under a written plan established, reviewed, and 
signed by a physician every 30 days that describes— 
‘‘(i) the individual’s diagnosis; 
‘‘(ii) the type, amount, frequency, and du-
ration of the items and services furnished under 
the plan; and 
‘‘(iii) the goals set for the individual under 
the plan.
139 
‘‘(3) The items and services described in this para-
graph are— 
‘‘(A) physician-prescribed exercise; 
‘‘(B) cardiac risk factor modification, including 
education, counseling, and behavioral intervention 
(to the extent such education, counseling, and behav-
ioral intervention is closely related to the individual’s 
care and treatment and is tailored to the individual’s 
needs); 
‘‘(C) psychosocial assessment; 
‘‘(D) outcomes assessment; and 
‘‘(E) such other items and services as the Sec-
retary may determine, but only if such items and 
services are— 
‘‘(i) reasonable and necessary for the diag-
nosis or active treatment of the individual’s 
condition; 
‘‘(ii) reasonably expected to improve or 
maintain the individual’s condition and func-
tional level; and 
‘‘(iii) furnished under such guidelines re-
lating to the frequency and duration of such 
items and services as the Secretary shall estab-
lish, taking into account accepted norms of
140 
medical practice and the reasonable expectation 
of improvement of the individual. 
‘‘(4)(A) The term ‘intensive cardiac rehabilitation 
program’ means a physician-supervised program (as de-
scribed in paragraph (2)) that furnishes the items and 
services described in paragraph (3) and has shown, in 
peer-reviewed published research, that it accomplished— 
‘‘(i) one or more of the following: 
‘‘(I) positively affected the progression of 
coronary heart disease; or 
‘‘(II) reduced the need for coronary bypass 
surgery; or 
‘‘(III) reduced the need for percutaneous 
coronary interventions; and 
‘‘(ii) a statistically significant reduction in 5 or 
more of the following measures from their level be-
fore receipt of cardiac rehabilitation services to their 
level after receipt of such services: 
‘‘(I) low density lipoprotein; 
‘‘(II) triglycerides; 
‘‘(III) body mass index; 
‘‘(IV) systolic blood pressure; 
‘‘(V) diastolic blood pressure; or 
‘‘(VI) the need for cholesterol, blood pres-
sure, and diabetes medications.
141 
‘‘(B) To be eligible for an intensive cardiac rehabilita-
tion program, an individual must have— 
‘‘(i) had an acute myocardial infarction within 
the preceding 12 months; 
‘‘(ii) had coronary bypass surgery; 
‘‘(iii) stable angina pectoris; 
‘‘(iv) had heart valve repair or replacement; 
‘‘(v) had percutaneous transluminal coronary 
angioplasty (PTCA) or coronary stenting; or 
‘‘(vi) had a heart or heart-lung transplant. 
‘‘(C) An intensive cardiac rehabilitation program may 
be provided in a series of 72 one-hour sessions (as defined 
in section 1848(b)(5)), up to 6 sessions per day, over a 
period of up to 18 weeks. 
‘‘(5) The Secretary shall establish standards to en-
sure that a physician with expertise in the management 
of individuals with cardiac pathophysiology who is licensed 
to practice medicine in the State in which a cardiac reha-
bilitation program (or the intensive cardiac rehabilitation 
program, as the case may be) is offered— 
‘‘(A) is responsible for such program; and 
‘‘(B) in consultation with appropriate staff, is 
involved substantially in directing the progress of in-
dividual in the program.
142 
‘‘Pulmonary Rehabilitation Program 
‘‘(fff)(1) The term ‘pulmonary rehabilitation pro-
gram’ means a physician-supervised program (as de-
scribed in subsection (eee)(2) with respect to a program 
under this subsection) that furnishes the items and serv-
ices described in paragraph (2). 
‘‘(2) The items and services described in this para-
graph are— 
‘‘(A) physician-prescribed exercise; 
‘‘(B) education or training (to the extent the 
education or training is closely and clearly related to 
the individual’s care and treatment and is tailored to 
such individual’s needs); 
‘‘(C) psychosocial assessment; 
‘‘(D) outcomes assessment; and 
‘‘(E) such other items and services as the Sec-
retary may determine, but only if such items and 
services are— 
‘‘(i) reasonable and necessary for the diag-
nosis or active treatment of the individual’s 
condition; 
‘‘(ii) reasonably expected to improve or 
maintain the individual’s condition and func-
tional level; and
143 
‘‘(iii) furnished under such guidelines re-
lating to the frequency and duration of such 
items and services as the Secretary shall estab-
lish, taking into account accepted norms of 
medical practice and the reasonable expectation 
of improvement of the individual. 
‘‘(3) The Secretary shall establish standards to en-
sure that a physician with expertise in the management 
of individuals with respiratory pathophysiology who is li-
censed to practice medicine in the State in which a pul-
monary rehabilitation program is offered— 
‘‘(A) is responsible for such program; and 
‘‘(B) in consultation with appropriate staff, is 
involved substantially in directing the progress of in-
dividual in the program.’’. 
(2) PAYMENT FOR INTENSIVE CARDIAC REHA-
BILITATION PROGRAMS.— 
(A) INCLUSION IN PHYSICIAN FEE SCHED-
ULE.—Section 1848(j)(3) of the Social Security 
Act (42 U.S.C. 1395w–4(j)(3)) is amended by 
inserting ‘‘(2)(DD),’’ after ‘‘(2)(AA),’’. 
(B) CONFORMING
AMENDMENT.—Section 
1848(b) of the Social Security Act (42 U.S.C. 
1395w–4(b)) is amended by adding at the end 
the following new paragraph:
144 
‘‘(5) TREATMENT OF INTENSIVE CARDIAC RE-
HABILITATION PROGRAM.— 
‘‘(A) IN GENERAL.—In the case of an in-
tensive cardiac rehabilitation program described 
in section 1861(eee)(4), the Secretary shall sub-
stitute the Medicare OPD fee schedule amount 
established under the prospective payment sys-
tem for hospital outpatient department service 
under paragraph (3)(D) of section 1833(t) for 
cardiac rehabilitation (under HCPCS codes 
93797 and 93798 for calendar year 2007, or 
any succeeding HCPCS codes for cardiac reha-
bilitation). 
‘‘(B) DEFINITION OF SESSION.—Each of 
the services described in subparagraphs (A) 
through (E) of section 1861(eee)(3), when fur-
nished for one hour, is a separate session of in-
tensive cardiac rehabilitation. 
‘‘(C) MULTIPLE SESSIONS PER DAY.—Pay-
ment may be made for up to 6 sessions per day 
of the series of 72 one-hour sessions of inten-
sive cardiac rehabilitation services described in 
section 1861(eee)(4)(B).’’.
145 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to items and services 
furnished on or after January 1, 2010. 
(b) REPEAL OF TRANSFER OF OWNERSHIP OF OXY-
GEN EQUIPMENT.— 
(1) IN GENERAL.—Section 1834(a)(5)(F) of the 
Social Security Act (42 U.S.C. 1395m(a)(5)(F)) is 
amended— 
(A) in the heading, by striking ‘‘OWNER-
SHIP OF EQUIPMENT’’ and inserting ‘‘RENT-
AL CAP’’; and 
(B) by striking clause (ii) and inserting the 
following: 
‘‘(ii) PAYMENTS
AND
RULES
AFTER 
RENTAL CAP.—After the 36th continuous 
month during which payment is made for 
the equipment under this paragraph— 
‘‘(I) the supplier furnishing such 
equipment under this subsection shall 
continue to furnish the equipment 
during any period of medical need for 
the remainder of the reasonable useful 
lifetime of the equipment, as deter-
mined by the Secretary;
146 
‘‘(II) payments for oxygen shall 
continue to be made in the amount 
recognized for oxygen under para-
graph (9) for the period of medical 
need; and 
‘‘(III) maintenance and servicing 
payments shall, if the Secretary deter-
mines such payments are reasonable 
and necessary, be made (for parts and 
labor not covered by the supplier’s or 
manufacturer’s warranty, as deter-
mined by the Secretary to be appro-
priate for the equipment), and such 
payments shall be in an amount deter-
mined to be appropriate by the Sec-
retary.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall take effect on January 1, 
2009. 
SEC. 145. CLINICAL LABORATORY TESTS. 
(a) REPEAL OF MEDICARE COMPETITIVE BIDDING 
DEMONSTRATION PROJECT FOR CLINICAL LABORATORY 
SERVICES.—
147 
(1) IN GENERAL.—Section 1847 of the Social 
Security Act (42 U.S.C. 1395w–3) is amended by 
striking subsection (e). 
(2) 
CONFORMING
AMENDMENTS.—Section 
1833(a)(1)(D) of the Social Security Act (42 U.S.C. 
1395l(a)(1)(D)) is amended— 
(A) by inserting ‘‘or’’ before ‘‘(ii)’’; and 
(B) by striking ‘‘or (iii) on the basis’’ and 
all that follows before the comma at the end. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall take effect on the date of the 
enactment of this Act. 
(b) CLINICAL LABORATORY TEST FEE SCHEDULE 
UPDATE ADJUSTMENT.—Section 1833(h)(2)(A)(i) of the 
Social Security Act (42 U.S.C. 1395l(h)(2)(A)(ii)) is 
amended by inserting ‘‘minus, for each of the years 2009 
through 2013, 0.5 percentage points’’ after ‘‘city aver-
age)’’. 
SEC. 146. IMPROVED ACCESS TO AMBULANCE SERVICES. 
(a) EXTENSION
OF INCREASED MEDICARE PAY-
MENTS FOR GROUND AMBULANCE SERVICES.—Section 
1834(l)(13) of the Social Security Act (42 U.S.C. 
1395m(l)(13)) is amended— 
(1) in subparagraph (A)—
148 
(A) in the matter preceding clause (i), by 
inserting ‘‘and for such services furnished on or 
after July 1, 2008, and before January 1, 
2010’’ after ‘‘2007,’’; 
(B) in clause (i), by inserting ‘‘(or 3 per-
cent if such service is furnished on or after July 
1, 2008, and before January 1, 2010)’’ after ‘‘2 
percent’’; and 
(C) in clause (ii), by inserting ‘‘(or 2 per-
cent if such service is furnished on or after July 
1, 2008, and before January 1, 2010)’’ after ‘‘1 
percent’’; and 
(2) in subparagraph (B)— 
(A) in the heading, by striking ‘‘2006’’ and 
inserting ‘‘APPLICABLE PERIOD’’; and 
(B) by inserting ‘‘applicable’’ before ‘‘pe-
riod’’. 
(b) AIR AMBULANCE PAYMENT IMPROVEMENTS.— 
(1) TREATMENT OF CERTAIN AREAS FOR PAY-
MENT FOR AIR AMBULANCE SERVICES UNDER THE 
AMBULANCE FEE SCHEDULE.—Notwithstanding any 
other provision of law, for purposes of making pay-
ments under section 1834(l) of the Social Security 
Act (42 U.S.C. 1395m(l)) for air ambulance services 
furnished during the period beginning on July 1,
149 
2008, and ending on December 31, 2009, any area 
that was designated as a rural area for purposes of 
making payments under such section for air ambu-
lance services furnished on December 31, 2006, shall 
be treated as a rural area for purposes of making 
payments under such section for air ambulance serv-
ices furnished during such period. 
(2) CLARIFICATION REGARDING SATISFACTION 
OF REQUIREMENT OF MEDICALLY NECESSARY.— 
(A) 
IN
GENERAL.—Section 
1834(l)(14)(B)(i) of the Social Security Act (42 
U.S.C. 1395m(l)(14)(B)(i)) is amended by 
striking ‘‘reasonably determines or certifies’’ 
and inserting ‘‘certifies or reasonably deter-
mines’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to serv-
ices furnished on or after the date of the enact-
ment of this Act.
150 
SEC. 147. EXTENSION AND EXPANSION OF THE MEDICARE 
HOLD HARMLESS PROVISION UNDER THE 
PROSPECTIVE PAYMENT SYSTEM FOR HOS-
PITAL OUTPATIENT DEPARTMENT (HOPD) 
SERVICES FOR CERTAIN HOSPITALS. 
Section 1833(t)(7)(D)(i) of the Social Security Act 
(42 U.S.C. 1395l(t)(7)(D)(i)) is amended— 
(1) in subclause (II)— 
(A) in the first sentence, by striking 
‘‘2009’’ and inserting ‘‘2010’’; and 
(B) by striking the second sentence and in-
serting the following new sentence: ‘‘For pur-
poses of the preceding sentence, the applicable 
percentage shall be 95 percent with respect to 
covered OPD services furnished in 2006, 90 
percent with respect to such services furnished 
in 2007, and 85 percent with respect to such 
services furnished in 2008 or 2009.’’; and 
(2) by adding at the end the following new sub-
clause: 
‘‘(III) In the case of a sole community 
hospital 
(as 
defined 
in 
section 
1886(d)(5)(D)(iii)) that has not more than 
100 beds, for covered OPD services fur-
nished on or after January 1, 2009, and 
before January 1, 2010, for which the
151 
PPS amount is less than the pre-BBA 
amount, the amount of payment under this 
subsection shall be increased by 85 percent 
of the amount of such difference.’’. 
SEC. 148. CLARIFICATION OF PAYMENT FOR CLINICAL LAB-
ORATORY TESTS FURNISHED BY CRITICAL 
ACCESS HOSPITALS. 
(a) IN GENERAL.—Section 1834(g)(4) of the Social 
Security Act (42 U.S.C. 1395m(g)(4)) is amended— 
(1) in the heading, by striking ‘‘NO
BENE-
FICIARY COST-SHARING FOR’’ and inserting ‘‘TREAT-
MENT OF’’; and 
(2) by adding at the end the following new sen-
tence: ‘‘For purposes of the preceding sentence and 
section 1861(mm)(3), clinical diagnostic laboratory 
services furnished by a critical access hospital shall 
be treated as being furnished as part of outpatient 
critical access services without regard to whether the 
individual with respect to whom such services are 
furnished is physically present in the critical access 
hospital, or in a skilled nursing facility or a clinic 
(including a rural health clinic) that is operated by 
a critical access hospital, at the time the specimen 
is collected.’’.
152 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to services furnished on or after 
July 1, 2009. 
SEC. 149. ADDING CERTAIN ENTITIES AS ORIGINATING 
SITES FOR PAYMENT OF TELEHEALTH SERV-
ICES. 
(a) IN GENERAL.—Section 1834(m)(4)(C)(ii) of the 
Social Security Act (42 U.S.C. 1395m(m)(4)(C)(ii)) is 
amended by adding at the end the following new sub-
clauses: 
‘‘(VI) A hospital-based or critical 
access hospital-based renal dialysis 
center (including satellites). 
‘‘(VII) A skilled nursing facility 
(as defined in section 1819(a)). 
‘‘(VIII) A community mental 
health center (as defined in section 
1861(ff)(3)(B)).’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
1395yy(e)(2)(A)(ii)) is amended by inserting ‘‘telehealth 
services furnished under section 1834(m)(4)(C)(ii)(VII),’’ 
after ‘‘section 1861(s)(2),’’.
153 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to services furnished on or after 
January 1, 2009. 
SEC. 150. MEDPAC STUDY AND REPORT ON IMPROVING 
CHRONIC 
CARE 
DEMONSTRATION 
PRO-
GRAMS. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission (in this section referred to as the ‘‘Commission’’) 
shall conduct a study on the feasability and advisability 
of establishing a Medicare Chronic Care Practice Research 
Network that would serve as a standing network of pro-
viders testing new models of care coordination and other 
care approaches for chronically ill beneficiaries, including 
the initiation, operation, evaluation, and, if appropriate, 
expansion of such models to the broader Medicare patient 
population. In conducting such study, the Commission 
shall take into account the structure, implementation, and 
results of prior and existing care coordination and disease 
management demonstrations and pilots, including the 
Medicare Coordinated Care Demonstration Project under 
section 4016 of the Balanced Budget Act of 1997 (42 
U.S.C. 1395b–1 note) and the chronic care improvement 
programs under section 1807 of the Social Security Act 
(42 U.S.C. 1395b–8), commonly known to as ‘‘Medicare 
Health Support’’.
154 
(b) REPORT.—Not later than June 15, 2009, the 
Commission shall submit to Congress a report containing 
the results of the study conducted under subsection (a). 
SEC. 151. INCREASE OF FQHC PAYMENT LIMITS. 
(a) IN GENERAL.—Section 1833 of the Social Secu-
rity Act (42 U.S.C. 1395l) is amended by adding at the 
end the following new subsection: 
‘‘(v) INCREASE OF FQHC PAYMENT LIMITS.—In the 
case of services furnished by Federally qualified health 
centers (as defined in section 1861(aa)(4)), the Secretary 
shall establish payment limits with respect to such services 
under this part for services furnished— 
‘‘(1) in 2010, at the limits otherwise established 
under this part for such year increased by $5; and 
‘‘(2) in a subsequent year, at the limits estab-
lished under this subsection for the previous year in-
creased by the percentage increase in the MEI (as 
defined in section 1842(i)(3)) for such subsequent 
year.’’. 
(b) STUDY AND REPORT ON THE EFFECTS AND ADE-
QUACY
OF
THE
MEDICARE
FEDERALLY
QUALIFIED 
HEALTH CENTER PAYMENT STRUCTURE.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study to determine 
whether the structure for payments for services fur-
155 
nished by Federally qualified health centers (as de-
fined in section 1861(aa)(4) of the Social Security 
Act (42 U.S.C. 1395x(aa)(4)) under part B of title 
XVIII of the Social Security Act (42 U.S.C. 1395j 
et seq.) adequately reimburses Federally qualified 
health centers for the care furnished to Medicare 
beneficiaries. In conducting such study, the Comp-
troller General shall— 
(A) use the most current cost report data 
available; 
(B) examine the effects of the payment 
limits established with respect to such services 
under such part B on the ability of Federally 
qualified health centers to furnish care to Medi-
care beneficiaries; and 
(C) examine the cost of furnishing services 
covered under the Medicare program as of the 
date of the enactment of this Act that were not 
covered under such program as of the date on 
which the Secretary determined the payment 
rate for Federally qualified health centers in 
1991. 
(2) REPORT.—Not later than 15 months after 
the date of the enactment of this Act, the Comp-
troller General of the United States shall submit to
156 
Congress a report on the study conducted under 
paragraph (1), together with recommendations for 
such legislation and administrative action the Comp-
troller General determines appropriate, taking into 
consideration the structure and adequacy of the pro-
spective payment methodology used to make pay-
ments to Federally qualified health centers under 
the Medicaid program under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.). 
SEC. 152. KIDNEY DISEASE EDUCATION AND AWARENESS 
PROVISIONS. 
(a) CHRONIC KIDNEY DISEASE INITIATIVES.—Part 
P of title III of the Public Health Service Act (42 U.S.C. 
280g et seq.) is amended by adding at the end the fol-
lowing new section: 
‘‘SEC. 399R. CHRONIC KIDNEY DISEASE INITIATIVES. 
‘‘(a) IN GENERAL.—The Secretary shall establish 
pilot projects to— 
‘‘(1) increase public and medical community 
awareness (particularly of those who treat patients 
with diabetes and hypertension) regarding chronic 
kidney disease, focusing on prevention; 
‘‘(2) increase screening for chronic kidney dis-
ease, focusing on Medicare beneficiaries at risk of 
chronic kidney disease; and
157 
‘‘(3) enhance surveillance systems to better as-
sess the prevalence and incidence of chronic kidney 
disease. 
‘‘(b) SCOPE AND DURATION.— 
‘‘(1) SCOPE.—The Secretary shall select at 
least 3 States in which to conduct pilot projects 
under this section. 
‘‘(2) DURATION.—The pilot projects under this 
section shall be conducted for a period that is not 
longer than 5 years and shall begin on January 1, 
2009. 
‘‘(c) EVALUATION AND REPORT.—The Comptroller 
General of the United States shall conduct an evaluation 
of the pilot projects conducted under this section. Not 
later than 12 months after the date on which the pilot 
projects are completed, the Comptroller General shall sub-
mit to Congress a report on the evaluation. 
‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated such sums as may be 
necessary for the purpose of carrying out this section.’’. 
(b) MEDICARE COVERAGE OF KIDNEY DISEASE PA-
TIENT EDUCATION SERVICES.— 
(1) COVERAGE OF KIDNEY DISEASE EDUCATION 
SERVICES.—
158 
(A) COVERAGE.—Section 1861(s)(2) of the 
Social Security Act (42 U.S.C. 1395x(s)(2)), as 
amended by section 144(a), is amended— 
(i) in subparagraph (CC), by striking 
‘‘and’’ after the semicolon at the end; 
(ii) in subparagraph (DD), by adding 
‘‘and’’ after the semicolon at the end; and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(EE) kidney disease education services (as de-
fined in subsection (ggg));’’. 
(B) SERVICES DESCRIBED.—Section 1861 
of the Social Security Act (42 U.S.C. 1395x), 
as amended by section 144(a), is amended by 
adding at the end the following new subsection: 
‘‘Kidney Disease Education Services 
‘‘(ggg)(1) The term ‘kidney disease education serv-
ices’ means educational services that are— 
‘‘(A) furnished to an individual with stage IV 
chronic kidney disease who, according to accepted 
clinical guidelines identified by the Secretary, will re-
quire dialysis or a kidney transplant; 
‘‘(B) furnished, upon the referral of the physi-
cian managing the individual’s kidney condition, by 
a qualified person (as defined in paragraph (2)); and
159 
‘‘(C) designed— 
‘‘(i) to provide comprehensive information 
(consistent with the standards set under para-
graph (3)) regarding— 
‘‘(I) the management of comorbidities, 
including for purposes of delaying the need 
for dialysis; 
‘‘(II) the prevention of uremic com-
plications; and 
‘‘(III) each option for renal replace-
ment therapy (including hemodialysis and 
peritoneal dialysis at home and in-center 
as well as vascular access options and 
transplantation); 
‘‘(ii) to ensure that the individual has the 
opportunity to actively participate in the choice 
of therapy; and 
‘‘(iii) to be tailored to meet the needs of 
the individual involved. 
‘‘(2)(A) The term ‘qualified person’ means— 
‘‘(i) 
a 
physician 
(as 
defined 
in 
section 
1861(r)(1)) or a physician assistant, nurse practi-
tioner, or clinical nurse specialist (as defined in sec-
tion 1861(aa)(5)), who furnishes services for which
160 
payment may be made under the fee schedule estab-
lished under section 1848; and 
‘‘(ii) a provider of services located in a rural 
area (as defined in section 1886(d)(2)(D)). 
‘‘(B) Such term does not include a provider of serv-
ices (other than a provider of services described in sub-
paragraph (A)(ii)) or a renal dialysis facility. 
‘‘(3) The Secretary shall set standards for the con-
tent of such information to be provided under paragraph 
(1)(C)(i) after consulting with physicians, other health 
professionals, health educators, professional organizations, 
accrediting organizations, kidney patient organizations, di-
alysis facilities, transplant centers, network organizations 
described in section 1881(c)(2), and other knowledgeable 
persons. To the extent possible the Secretary shall consult 
with persons or entities described in the previous sentence, 
other than a dialysis facility, that has not received indus-
try funding from a drug or biological manufacturer or di-
alysis facility. 
‘‘(4) No individual shall be furnished more than 6 
sessions of kidney disease education services under this 
title.’’. 
(C) PAYMENT UNDER THE PHYSICIAN FEE 
SCHEDULE.—Section 1848(j)(3) of the Social 
Security Act (42 U.S.C. 1395w–4(j)(3)), as
161 
amended by section 144(b), is amended by in-
serting ‘‘(2)(EE),’’ after ‘‘(2)(DD),’’. 
(D) LIMITATION
ON
NUMBER
OF
SES-
SIONS.—Section 1862(a)(1) of the Social Secu-
rity Act (42 U.S.C. 1395y(a)(1)) is amended— 
(i) in subparagraph (M), by striking 
‘‘and’’ at the end; 
(ii) in subparagraph (N), by striking 
the semicolon at the end and inserting ‘‘, 
and’’; and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(O) in the case of kidney disease education 
services (as defined in paragraph (1) of section 
1861(ggg)), which are furnished in excess of the 
number of sessions covered under paragraph (4) of 
such section;’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to services furnished 
on or after January 1, 2010. 
SEC. 153. RENAL DIALYSIS PROVISIONS. 
(a) COMPOSITE RATE.— 
(1) UPDATE.—Section 1881(b)(12)(G) of the 
Social Security Act (42 U.S.C. 1395rr(b)(12)(G)) is 
amended—
162 
(A) in clause (i), by striking ‘‘and’’ at the 
end; 
(B) in clause (ii)— 
(i) by inserting ‘‘and before January 
1, 2009,’’ after ‘‘April 1, 2007,’’; and 
(ii) by striking the period at the end 
and inserting a semicolon; and 
(C) by adding at the end the following new 
clauses: 
‘‘(iii) furnished on or after January 1, 2009, 
and before January 1, 2010, by 1.0 percent above 
the amount of such composite rate component for 
such services furnished on December 31, 2008; and 
‘‘(iv) furnished on or after January 1, 2010, by 
1.0 percent above the amount of such composite rate 
component for such services furnished on December 
31, 2009.’’. 
(2) SITE NEUTRAL COMPOSITE RATE.—Section 
1881(b)(12)(A) of the Social Security Act (42 
U.S.C. 1395rr(b)(12)(A)) is amended by adding at 
the end the following new sentence: ‘‘Under such 
system, the payment rate for dialysis services fur-
nished on or after January 1, 2009, by providers of 
services shall be the same as the payment rate (com-
puted without regard to this sentence) for such serv-
163 
ices furnished by renal dialysis facilities, and in ap-
plying the geographic index under subparagraph (D) 
to providers of services, the labor share shall be 
based on the labor share otherwise applied for renal 
dialysis facilities.’’. 
(b) DEVELOPMENT OF ESRD BUNDLED PAYMENT 
SYSTEM.— 
(1) IN GENERAL.—Section 1881(b) of the So-
cial Security Act (42 U.S.C. 1395rr(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(14)(A)(i) Subject to subparagraph (E), for services 
furnished on or after January 1, 2011, the Secretary shall 
implement a payment system under which a single pay-
ment is made under this title to a provider of services or 
a renal dialysis facility for renal dialysis services (as de-
fined in subparagraph (B)) in lieu of any other payment 
(including a payment adjustment under paragraph 
(12)(B)(ii)) and for such services and items furnished pur-
suant to paragraph (4). 
‘‘(ii) In implementing the system under this para-
graph the Secretary shall ensure that the estimated total 
amount of payments under this title for 2011 for renal 
dialysis services shall equal 98 percent of the estimated 
total amount of payments for renal dialysis services, in-
cluding payments under paragraph (12)(B)(ii), that would
164 
have been made under this title with respect to services 
furnished in 2011 if such system had not been imple-
mented. In making the estimation under subclause (I), the 
Secretary shall use per patient utilization data from 2007, 
2008, or 2009, whichever has the lowest per patient utili-
zation. 
‘‘(B) For purposes of this paragraph, the term ‘renal 
dialysis services’ includes— 
‘‘(i) items and services included in the com-
posite rate for renal dialysis services as of December 
31, 2010; 
‘‘(ii) erythropoiesis stimulating agents and any 
oral form of such agents that are furnished to indi-
viduals for the treatment of end stage renal disease; 
‘‘(iii) other drugs and biologicals that are fur-
nished to individuals for the treatment of end stage 
renal disease and for which payment was (before the 
application of this paragraph) made separately 
under this title, and any oral equivalent form of 
such drug or biological; and 
‘‘(iv) diagnostic laboratory tests and other items 
and services not described in clause (i) that are fur-
nished to individuals for the treatment of end stage 
renal disease. 
Such term does not include vaccines.
165 
‘‘(C) The system under this paragraph may provide 
for payment on the basis of services furnished during a 
week or month or such other appropriate unit of payment 
as the Secretary specifies. 
‘‘(D) Such system— 
‘‘(i) shall include a payment adjustment based 
on case mix that may take into account patient 
weight, body mass index, comorbidities, length of 
time on dialysis, age, race, ethnicity, and other ap-
propriate factors; 
‘‘(ii) shall include a payment adjustment for 
high cost outliers due to unusual variations in the 
type or amount of medically necessary care, includ-
ing variations in the amount of erythropoiesis stimu-
lating agents necessary for anemia management; 
‘‘(iii) shall include a payment adjustment that 
reflects the extent to which costs incurred by low- 
volume facilities (as defined by the Secretary) in fur-
nishing renal dialysis services exceed the costs in-
curred by other facilities in furnishing such services, 
and for payment for renal dialysis services furnished 
on or after January 1, 2011, and before January 1, 
2014, such payment adjustment shall not be less 
than 10 percent; and
166 
‘‘(iv) may include such other payment adjust-
ments as the Secretary determines appropriate, such 
as a payment adjustment— 
‘‘(I) for pediatric providers of services and 
renal dialysis facilities; 
‘‘(II) by a geographic index, such as the 
index referred to in paragraph (12)(D), as the 
Secretary determines to be appropriate; and 
‘‘(III) for providers of services or renal di-
alysis facilities located in rural areas. 
The Secretary shall take into consideration the unique 
treatment needs of children and young adults in estab-
lishing such system. 
‘‘(E)(i) The Secretary shall provide for a four-year 
phase-in (in equal increments) of the payment amount 
under the payment system under this paragraph, with 
such payment amount being fully implemented for renal 
dialysis services furnished on or after January 1, 2014. 
‘‘(ii) A provider of services or renal dialysis facility 
may make a one-time election to be excluded from the 
phase-in under clause (i) and be paid entirely based on 
the payment amount under the payment system under this 
paragraph. Such an election shall be made prior to Janu-
ary 1, 2011, in a form and manner specified by the Sec-
retary, and is final and may not be rescinded.
167 
‘‘(iii) The Secretary shall make an adjustment to the 
payments under this paragraph for years during which the 
phase-in under clause (i) is applicable so that the esti-
mated total amount of payments under this paragraph, 
including payments under this subparagraph, shall equal 
the estimated total amount of payments that would other-
wise occur under this paragraph without such phase-in. 
‘‘(F)(i) Subject to clause (ii), beginning in 2012, the 
Secretary shall annually increase payment amounts estab-
lished under this paragraph by an ESRD market basket 
percentage increase factor for a bundled payment system 
for renal dialysis services that reflects changes over time 
in the prices of an appropriate mix of goods and services 
included in renal dialysis services minus 1.0 percentage 
point. 
‘‘(ii) For years during which a phase-in of the pay-
ment system pursuant to subparagraph (E) is applicable, 
the following rules shall apply to the portion of the pay-
ment under the system that is based on the payment of 
the composite rate that would otherwise apply if the sys-
tem under this paragraph had not been enacted: 
‘‘(I) The update under clause (i) shall not 
apply. 
‘‘(II) The Secretary shall annually increase 
such composite rate by the ESRD market basket
168 
percentage increase factor described in clause (i) 
minus 1.0 percentage point. 
‘‘(G) There shall be no administrative or judicial re-
view under section 1869, section 1878, or otherwise of the 
determination of payment amounts under subparagraph 
(A), the establishment of an appropriate unit of payment 
under subparagraph (C), the identification of renal dialy-
sis services included in the bundled payment, the adjust-
ments under subparagraph (D), the application of the 
phase-in under subparagraph (E), and the establishment 
of the market basket percentage increase factors under 
subparagraph (F). 
‘‘(H) Erythropoiesis stimulating agents and other 
drugs and biologicals shall be treated as prescribed and 
dispensed or administered and available only under part 
B if they are— 
‘‘(i) furnished to an individual for the treatment 
of end stage renal disease; and 
‘‘(ii) included in subparagraph (B) for purposes 
of payment under this paragraph.’’. 
(2) PROHIBITION
OF
UNBUNDLING.—Section 
1862(a) of the Social Security Act (42 U.S.C. 
1395y(a)), as amended by section 135(a)(2), is 
amended—
169 
(A) in paragraph (22), by striking ‘‘or’’ at 
the end; 
(B) in paragraph (23), by striking the pe-
riod at the end and inserting ‘‘; or’’; and 
(C) by inserting after paragraph (23) the 
following new paragraph: 
‘‘(24) where such expenses are for renal dialysis 
services (as defined in subparagraph (B) of section 
1881(b)(14)) for which payment is made under such 
section unless such payment is made under such sec-
tion to a provider of services or a renal dialysis facil-
ity for such services.’’. 
(3) CONFORMING AMENDMENTS.—(A) Section 
1881(b) of the Social Security Act (42 U.S.C. 
1395rr(b)) is amended— 
(i) in paragraph (12)(A), by striking ‘‘In 
lieu of payment’’ and inserting ‘‘Subject to 
paragraph (14), in lieu of payment’’; 
(ii) in the second sentence of paragraph 
(12)(F)— 
(I) by inserting ‘‘or paragraph (14)’’ 
after ‘‘this paragraph’’; and 
(II) by inserting ‘‘or under the system 
under paragraph (14)’’ after ‘‘subpara-
graph (B)’’; and
170 
(iii) in paragraph (13)— 
(I) in subparagraph (A), in the matter 
preceding clause (i), by striking ‘‘The pay-
ment amounts’’ and inserting ‘‘Subject to 
paragraph (14), the payment amounts’’; 
and 
(II) in subparagraph (B)— 
(aa) in clause (i), by striking 
‘‘(i)’’ after ‘‘(B)’’ and by inserting ‘‘, 
subject to paragraph (14)’’ before the 
period at the end; and 
(bb) by striking clause (ii). 
(B) Section 1861(s)(2)(F) of the Social Secu-
rity Act (42 U.S.C. 1395x(s)(2)(F)) is amended by 
inserting ‘‘, and, for items and services furnished on 
or after January 1, 2011, renal dialysis services (as 
defined in section 1881(b)(14)(B))’’ before the semi-
colon at the end. 
(C) Section 623(e) of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 
(42 U.S.C. 1395rr note) is repealed. 
(4) RULE OF CONSTRUCTION.—Nothing in this 
subsection or the amendments made by this sub-
section shall be construed as authorizing or requir-
ing the Secretary of Health and Human Services to
171 
make payments under the payment system imple-
mented under paragraph (14)(A)(i) of section 
1881(b) of the Social Security Act (42 U.S.C. 
1395rr(b)), as added by paragraph (1), for any un-
recovered amount for any bad debt attributable to 
deductible and coinsurance on items and services not 
included in the basic case-mix adjusted composite 
rate under paragraph (12) of such section as in ef-
fect before the date of the enactment of this Act. 
(c) QUALITY INCENTIVES IN THE END-STAGE RENAL 
DISEASE PROGRAM.—Section 1881 of the Social Security 
Act (42 U.S.C. 1395rr) is amended by adding at the end 
the following new subsection: 
‘‘(h) QUALITY INCENTIVES
IN
THE END-STAGE 
RENAL DISEASE PROGRAM.— 
‘‘(1) QUALITY INCENTIVES.— 
‘‘(A) IN GENERAL.—With respect to renal 
dialysis services (as defined in subsection 
(b)(14)(B)) furnished on or after January 1, 
2012, in the case of a provider of services or a 
renal dialysis facility that does not meet the re-
quirement described in subparagraph (B) with 
respect to the year, payments otherwise made 
to such provider or facility under the system 
under subsection (b)(14) for such services shall
172 
be reduced by up to 2.0 percent, as determined 
appropriate by the Secretary. 
‘‘(B) REQUIREMENT.—The requirement 
described in this subparagraph is that the pro-
vider or facility meets (or exceeds) the total 
performance score under paragraph (3) with re-
spect to performance standards established by 
the Secretary with respect to measures specified 
in paragraph (2). 
‘‘(C) 
NO
EFFECT
IN
SUBSEQUENT 
YEARS.—The reduction under subparagraph 
(A) shall apply only with respect to the year in-
volved, and the Secretary shall not take into ac-
count such reduction in computing the single 
payment amount under the system under para-
graph (14) in a subsequent year. 
‘‘(2) MEASURES.— 
‘‘(A) IN GENERAL.—The measures speci-
fied under this paragraph with respect to the 
year involved shall include— 
‘‘(i) measures on anemia management 
that reflect the labeling approved by the 
Food and Drug Administration for such 
management and measures on dialysis ade-
quacy;
173 
‘‘(ii) to the extent feasible, such meas-
ure (or measures) of patient satisfaction as 
the Secretary shall specify; and 
‘‘(iii) such other measures as the Sec-
retary specifies, including, to the extent 
feasible, measures on— 
‘‘(I) iron management; 
‘‘(II) bone mineral metabolism; 
and 
‘‘(III) vascular access, including 
for maximizing the placement of arte-
rial venous fistula. 
‘‘(B) USE OF ENDORSED MEASURES.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), any measure specified by the Secretary 
under subparagraph (A)(iii) must have 
been endorsed by the entity with a contract 
under section 1890(a). 
‘‘(ii) EXCEPTION.—In the case of a 
specified area or medical topic determined 
appropriate by the Secretary for which a 
feasible and practical measure has not 
been endorsed by the entity with a contract 
under section 1890(a), the Secretary may 
specify a measure that is not so endorsed
174 
as long as due consideration is given to 
measures that have been endorsed or 
adopted by a consensus organization iden-
tified by the Secretary. 
‘‘(C) UPDATING
MEASURES.—The Sec-
retary shall establish a process for updating the 
measures specified under subparagraph (A) in 
consultation with interested parties. 
‘‘(D) 
CONSIDERATION.—In 
specifying 
measures under subparagraph (A), the Sec-
retary shall consider the availability of meas-
ures that address the unique treatment needs of 
children and young adults with kidney failure. 
‘‘(3) PERFORMANCE SCORES.— 
‘‘(A) TOTAL PERFORMANCE SCORE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the Secretary shall develop a method-
ology for assessing the total performance 
of each provider of services and renal di-
alysis facility based on performance stand-
ards with respect to the measures selected 
under paragraph (2) for a performance pe-
riod established under paragraph (4)(D) 
(in this subsection referred to as the ‘total 
performance score’).
175 
‘‘(ii) APPLICATION.—For providers of 
services and renal dialysis facilities that do 
not meet (or exceed) the total performance 
score established by the Secretary, the Sec-
retary shall ensure that the application of 
the methodology developed under clause (i) 
results in an appropriate distribution of re-
ductions in payment under paragraph (1) 
among providers and facilities achieving 
different levels of total performance scores, 
with providers and facilities achieving the 
lowest total performance scores receiving 
the largest reduction in payment under 
paragraph (1)(A). 
‘‘(iii) WEIGHTING OF MEASURES.—In 
calculating the total performance score, the 
Secretary shall weight the scores with re-
spect to individual measures calculated 
under subparagraph (B) to reflect prior-
ities for quality improvement, such as 
weighting scores to ensure that providers 
of services and renal dialysis facilities have 
strong incentives to meet or exceed anemia 
management and dialysis adequacy per-
176 
formance standards, as determined appro-
priate by the Secretary. 
‘‘(B) PERFORMANCE
SCORE
WITH
RE-
SPECT
TO
INDIVIDUAL
MEASURES.—The Sec-
retary shall also calculate separate performance 
scores for each measure, including for dialysis 
adequacy and anemia management. 
‘‘(4) PERFORMANCE STANDARDS.— 
‘‘(A) ESTABLISHMENT.—Subject to sub-
paragraph (E), the Secretary shall establish 
performance standards with respect to meas-
ures selected under paragraph (2) for a per-
formance period with respect to a year (as es-
tablished under subparagraph (D)). 
‘‘(B) 
ACHIEVEMENT
AND
IMPROVE-
MENT.—The performance standards established 
under subparagraph (A) shall include levels of 
achievement and improvement, as determined 
appropriate by the Secretary. 
‘‘(C) TIMING.—The Secretary shall estab-
lish the performance standards under subpara-
graph (A) prior to the beginning of the per-
formance period for the year involved. 
‘‘(D) PERFORMANCE
PERIOD.—The Sec-
retary shall establish the performance period
177 
with respect to a year. Such performance period 
shall occur prior to the beginning of such year. 
‘‘(E) SPECIAL RULE.—The Secretary shall 
initially use as the performance standard for 
the 
measures 
specified 
under 
paragraph 
(2)(A)(i) for a provider of services or a renal di-
alysis facility the lesser of— 
‘‘(i) the performance of such provider 
or facility for such measures in the year 
selected by the Secretary under the second 
sentence of subsection (b)(14)(A)(ii); or 
‘‘(ii) a performance standard based on 
the national performance rates for such 
measures in a period determined by the 
Secretary. 
‘‘(5) LIMITATION ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of the following: 
‘‘(A) The determination of the amount of 
the payment reduction under paragraph (1). 
‘‘(B) The establishment of the performance 
standards and the performance period under 
paragraph (4). 
‘‘(C) The specification of measures under 
paragraph (2).
178 
‘‘(D) The methodology developed under 
paragraph (3) that is used to calculate total 
performance scores and performance scores for 
individual measures. 
‘‘(6) PUBLIC REPORTING.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish procedures for making information re-
garding performance under this subsection 
available to the public, including— 
‘‘(i) the total performance score 
achieved by the provider of services or 
renal dialysis facility under paragraph (3) 
and appropriate comparisons of providers 
of services and renal dialysis facilities to 
the national average with respect to such 
scores; and 
‘‘(ii) the performance score achieved 
by the provider or facility with respect to 
individual measures. 
‘‘(B) OPPORTUNITY TO REVIEW.—The pro-
cedures established under subparagraph (A) 
shall ensure that a provider of services and a 
renal dialysis facility has the opportunity to re-
view the information that is to be made public
179 
with respect to the provider or facility prior to 
such data being made public. 
‘‘(C) CERTIFICATES.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall provide certificates to providers of 
services and renal dialysis facilities who 
furnish renal dialysis services under this 
section to display in patient areas. The 
certificate shall indicate the total perform-
ance score achieved by the provider or fa-
cility under paragraph (3). 
‘‘(ii) DISPLAY.—Each facility or pro-
vider receiving a certificate under clause (i) 
shall prominently display the certificate at 
the provider or facility. 
‘‘(D) WEB-BASED
LIST.—The Secretary 
shall establish a list of providers of services and 
renal dialysis facilities who furnish renal dialy-
sis services under this section that indicates the 
total performance score and the performance 
score for individual measures achieved by the 
provider and facility under paragraph (3). Such 
information shall be posted on the Internet 
website of the Centers for Medicare & Medicaid 
Services in an easily understandable format.’’.
180 
(d) GAO REPORT ON ESRD BUNDLING SYSTEM AND 
QUALITY INITIATIVE.—Not later than March 1, 2013, the 
Comptroller General of the United States shall submit to 
Congress a report on the implementation of the payment 
system under subsection (b)(14) of section 1881 of the 
Social Security Act (as added by subsection (b)) for renal 
dialysis services and related services (defined in subpara-
graph (B) of such subsection (b)(14)) and the quality ini-
tiative under subsection (h) of such section 1881 (as 
added by subsection (b)). Such report shall include the fol-
lowing information: 
(1) The changes in utilization rates for 
erythropoiesis stimulating agents. 
(2) The mode of administering such agents, in-
cluding information on the proportion of individuals 
receiving such agents intravenously as compared to 
subcutaneously. 
(3) An analysis of the payment adjustment 
under subparagraph (D)(iii) of such subsection 
(b)(14), including an examination of the extent to 
which costs incurred by rural, low-volume providers 
and facilities (as defined by the Secretary) in fur-
nishing renal dialysis services exceed the costs in-
curred by other providers and facilities in furnishing
181 
such services, and a recommendation regarding the 
appropriateness of such adjustment. 
(4) The changes, if any, in utilization rates of 
drugs and biologicals that the Secretary identifies 
under subparagraph (B)(iii) of such subsection 
(b)(14), and any oral equivalent or oral substitutable 
forms of such drugs and biologicals or of drugs and 
biologicals described in clause (ii), that have oc-
curred after implementation of the payment system 
under such subsection (b)(14). 
(5) Any other information or recommendations 
for legislative and administrative actions determined 
appropriate by the Comptroller General. 
SEC. 154. DELAY IN AND REFORM OF MEDICARE DMEPOS 
COMPETITIVE ACQUISITION PROGRAM. 
(a) TEMPORARY DELAY AND REFORM.— 
(1) IN GENERAL.—Section 1847(a)(1) of the 
Social Security Act (42 U.S.C. 1395w–3(a)(1)) is 
amended— 
(A) in paragraph (1)— 
(i) in subparagraph (B)(i), in the 
matter before subclause (I), by inserting 
‘‘consistent with subparagraph (D)’’ after 
‘‘in a manner’’;
182 
(ii) in subparagraph (B)(i)(II), by 
striking ‘‘80’’ and ‘‘in 2009’’ and inserting 
‘‘an additional 70’’ and ‘‘in 2011’’, respec-
tively; 
(iii) in subparagraph (B)(i)(III), by 
striking ‘‘after 2009’’ and inserting ‘‘after 
2011 (or, in the case of national mail order 
for items and services, after 2010)’’; and 
(iv) by adding at the end the following 
new subparagraphs: 
‘‘(D) CHANGES IN COMPETITIVE ACQUISI-
TION PROGRAMS.— 
‘‘(i) ROUND 1 OF COMPETITIVE AC-
QUISITION
PROGRAM.—Notwithstanding 
subparagraph (B)(i)(I) and in imple-
menting the first round of the competitive 
acquisition programs under this section— 
‘‘(I) the contracts awarded under 
this section before the date of the en-
actment of this subparagraph are ter-
minated, no payment shall be made 
under this title on or after the date of 
the enactment of this subparagraph 
based on such a contract, and, to the 
extent that any damages may be ap-
183 
plicable as a result of the termination 
of such contracts, such damages shall 
be payable from the Federal Supple-
mentary Medical Insurance Trust 
Fund under section 1841; 
‘‘(II) the Secretary shall conduct 
the competition for such round in a 
manner so that it occurs in 2009 with 
respect to the same items and services 
and the same areas, except as pro-
vided in subclauses (III) and (IV); 
‘‘(III) the Secretary shall exclude 
Puerto Rico so that such round of 
competition covers 9, instead of 10, of 
the largest metropolitan statistical 
areas; and 
‘‘(IV) there shall be excluded 
negative 
pressure 
wound 
therapy 
items and services. 
Nothing in subclause (I) shall be construed 
to provide an independent cause of action 
or right to administrative or judicial review 
with regard to the termination provided 
under such subclause.
184 
‘‘(ii) ROUND 2 OF COMPETITIVE AC-
QUISITION
PROGRAM.—In 
implementing 
the second round of the competitive acqui-
sition programs under this section de-
scribed in subparagraph (B)(i)(II)— 
‘‘(I) the metropolitan statistical 
areas to be included shall be those 
metropolitan statistical areas selected 
by the Secretary for such round as of 
June 1, 2008; and 
‘‘(II) the Secretary may sub-
divide metropolitan statistical areas 
with populations (based upon the 
most recent data from the Census Bu-
reau) of at least 8,000,000 into sepa-
rate areas for competitive acquisition 
purposes. 
‘‘(iii) EXCLUSION OF CERTAIN AREAS 
IN SUBSEQUENT ROUNDS OF COMPETITIVE 
ACQUISITION
PROGRAMS.—In 
imple-
menting subsequent rounds of the competi-
tive acquisition programs under this sec-
tion, 
including 
under 
subparagraph 
(B)(i)(III), for competitions occurring be-
fore 2015, the Secretary shall exempt from
185 
the competitive acquisition program (other 
than national mail order) the following: 
‘‘(I) Rural areas. 
‘‘(II) 
Metropolitan 
statistical 
areas not selected under round 1 or 
round 2 with a population of less than 
250,000. 
‘‘(III) Areas with a low popu-
lation density within a metropolitan 
statistical area that is otherwise se-
lected, as determined for purposes of 
paragraph (3)(A). 
‘‘(E) VERIFICATION BY OIG.—The Inspec-
tor General of the Department of Health and 
Human Services shall, through post-award 
audit, survey, or otherwise, assess the process 
used by the Centers for Medicare & Medicaid 
Services to conduct competitive bidding and 
subsequent pricing determinations under this 
section that are the basis for pivotal bid 
amounts and single payment amounts for items 
and services in competitive bidding areas under 
rounds 1 and 2 of the competitive acquisition 
programs under this section and may continue
186 
to verify such calculations for subsequent 
rounds of such programs. 
‘‘(F) SUPPLIER FEEDBACK ON MISSING FI-
NANCIAL DOCUMENTATION.— 
‘‘(i) IN GENERAL.—In the case of a 
bid where one or more covered documents 
in connection with such bid have been sub-
mitted not later than the covered document 
review date specified in clause (ii), the Sec-
retary— 
‘‘(I) shall provide, by not later 
than 45 days (in the case of the first 
round of the competitive acquisition 
programs as described in subpara-
graph (B)(i)(I)) or 90 days (in the 
case of a subsequent round of such 
programs) after the covered document 
review date, for notice to the bidder of 
all such documents that are missing 
as of the covered document review 
date; and 
‘‘(II) may not reject the bid on 
the basis that any covered document 
is missing or has not been submitted 
on a timely basis, if all such missing
187 
documents identified in the notice pro-
vided to the bidder under subclause 
(I) are submitted to the Secretary not 
later than 10 business days after the 
date of such notice. 
‘‘(ii) COVERED
DOCUMENT
REVIEW 
DATE.—The covered document review date 
specified in this clause with respect to a 
competitive acquisition program is the 
later of— 
‘‘(I) the date that is 30 days be-
fore the final date specified by the 
Secretary for submission of bids 
under such program; or 
‘‘(II) the date that is 30 days 
after the first date specified by the 
Secretary for submission of bids 
under such program. 
‘‘(iii) LIMITATIONS
OF
PROCESS.— 
The process provided under this subpara-
graph— 
‘‘(I) applies only to the timely 
submission of covered documents; 
‘‘(II) does not apply to any deter-
mination as to the accuracy or com-
188 
pleteness of covered documents sub-
mitted or whether such documents 
meet applicable requirements; 
‘‘(III) shall not prevent the Sec-
retary from rejecting a bid based on 
any basis not described in clause 
(i)(II); and 
‘‘(IV) shall not be construed as 
permitting a bidder to change bidding 
amounts or to make other changes in 
a bid submission. 
‘‘(iv) 
COVERED
DOCUMENT
DE-
FINED.—In this subparagraph, the term 
‘covered document’ means a financial, tax, 
or other document required to be sub-
mitted by a bidder as part of an original 
bid submission under a competitive acqui-
sition program in order to meet required 
financial standards. Such term does not in-
clude other documents, such as the bid 
itself or accreditation documentation.’’; 
and 
(B) in paragraph (2)(A), by inserting be-
fore the period at the end the following: ‘‘and 
excluding certain complex rehabilitative power
189 
wheelchairs recognized by the Secretary as clas-
sified within group 3 or higher (and related ac-
cessories when furnished in connection with 
such wheelchairs)’’. 
(2) BUDGET NEUTRAL OFFSET.— 
(A) IN GENERAL.—Section 1834(a)(14) of 
such Act (42 U.S.C. 1395m(a)(14)) is amend-
ed— 
(i) by striking ‘‘and’’ at the end of 
subparagraphs (H) and (I); 
(ii) by redesignating subparagraph (J) 
as subparagraph (M); and 
(iii) by inserting after subparagraph 
(I) the following new subparagraphs: 
‘‘(J) for 2009— 
‘‘(i) in the case of items and services 
furnished in any geographic area, if such 
items or services were selected for competi-
tive acquisition in any area under the com-
petitive acquisition program under section 
1847(a)(1)(B)(i)(I) before July 1, 2008, 
including related accessories but only if 
furnished with such items and services se-
lected for such competition and diabetic
190 
supplies but only if furnished through mail 
order, - 9.5 percent; or 
‘‘(ii) in the case of other items and 
services, the percentage increase in the 
consumer price index for all urban con-
sumers (U.S. urban average) for the 12- 
month period ending with June 2008; 
‘‘(K) for 2010, 2011, 2012, and 2013, the 
percentage increase in the consumer price index 
for all urban consumers (U.S. urban average) 
for the 12-month period ending with June of 
the previous year; 
‘‘(L) for 2014— 
‘‘(i) in the case of items and services 
described in subparagraph (J)(i) for which 
a payment adjustment has not been made 
under subsection (a)(1)(F)(ii) in any pre-
vious year, the percentage increase in the 
consumer price index for all urban con-
sumers (U.S. urban average) for the 12- 
month period ending with June 2013, plus 
2.0 percentage points; or 
‘‘(ii) in the case of other items and 
services, the percentage increase in the 
consumer price index for all urban con-
191 
sumers (U.S. urban average) for the 12- 
month period ending with June 2013; 
and’’. 
(B) CONFORMING TREATMENT FOR CER-
TAIN ITEMS AND SERVICES.—The second sen-
tence of section 1842(s)(1) of such Act (42 
U.S.C. 1395u(s)(1)) is amended by striking 
‘‘except that’’ and all that follows and inserting 
the following: ‘‘except that for items and serv-
ices described in paragraph (2)(D)— 
‘‘(A) for 2009 section 1834(a)(14)(J)(i) shall 
apply under this paragraph instead of the percent-
age increase otherwise applicable; and 
‘‘(B) for 2014, if subparagraph (A) is applied 
to the items and services and there has not been a 
payment adjustment under paragraph (3)(B) for the 
items and services for any previous year, the per-
centage 
increase 
computed 
under 
section 
1834(a)(14)(L)(i) shall apply instead of the percent-
age increase otherwise applicable.’’. 
(3) 
CONFORMING
DELAY.—Subsections 
(a)(1)(F) and (h)(1)(H) of section 1834 of the So-
cial Security Act (42 U.S.C. 1395m) are each 
amended by striking ‘‘January 1, 2009’’ and insert-
ing ‘‘January 1, 2011’’.
192 
(4) CONSIDERATIONS
IN
APPLICATION.—Sec-
tion 1834 of such Act (42 U.S.C. 1395m) is amend-
ed— 
(A) in subsection (a)(1)— 
(i) in subparagraph (F), by inserting 
‘‘subject to subparagraph (G),’’ before 
‘‘that are included’’; and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(G) USE OF INFORMATION ON COMPETI-
TIVE BID RATES.—The Secretary shall specify 
by regulation the methodology to be used in ap-
plying the provisions of subparagraph (F)(ii) 
and subsection (h)(1)(H)(ii). In promulgating 
such regulation, the Secretary shall consider the 
costs of items and services in areas in which 
such provisions would be applied compared to 
the payment rates for such items and services 
in competitive acquisition areas.’’; and 
(B) in subsection (h)(1)(H), by inserting 
‘‘subject to subsection (a)(1)(G),’’ before ‘‘that 
are included’’. 
(b) QUALITY STANDARDS.— 
(1) APPLICATION OF ACCREDITATION REQUIRE-
MENT.—
193 
(A) IN GENERAL.—Section 1834(a)(20) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395m(a)(20)) is amended— 
(i) in subparagraph (E), by inserting 
‘‘including 
subparagraph 
(F),’’ 
after 
‘‘under this paragraph,’’; and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(F) APPLICATION OF ACCREDITATION RE-
QUIREMENT.—In implementing quality stand-
ards under this paragraph— 
‘‘(i) subject to clause (ii), the Sec-
retary shall require suppliers furnishing 
items and services described in subpara-
graph (D) on or after October 1, 2009, di-
rectly or as a subcontractor for another en-
tity, to have submitted to the Secretary 
evidence of accreditation by an accredita-
tion organization designated under sub-
paragraph (B) as meeting applicable qual-
ity standards; and 
‘‘(ii) in applying such standards and 
the accreditation requirement of clause (i) 
with respect to eligible professionals (as 
defined in section 1848(k)(3)(B)), and in-
194 
cluding such other persons, such as 
orthotists and prosthetists, as specified by 
the Secretary, furnishing such items and 
services— 
‘‘(I) such standards and accredi-
tation requirement shall not apply to 
such professionals and persons unless 
the Secretary determines that the 
standards being applied are designed 
specifically to be applied to such pro-
fessionals and persons; and 
‘‘(II) the Secretary may exempt 
such professionals and persons from 
such standards and requirement if the 
Secretary determines that licensing, 
accreditation, or other mandatory 
quality requirements apply to such 
professionals and persons with respect 
to the furnishing of such items and 
services.’’. 
(B) 
CONSTRUCTION.—Section 
1834(a)(20)(F)(ii) of the Social Security Act, 
as added by subparagraph (A), shall not be con-
strued as preventing the Secretary of Health 
and Human Services from implementing the
195 
first round of competition under section 1847 
of such Act on a timely basis. 
(2) DISCLOSURE OF SUBCONTRACTORS UNDER 
COMPETITIVE
ACQUISITION
PROGRAM.—Section 
1847(b)(3) of such Act (42 U.S.C. 1395w–3(b)(3)) 
is amended by adding at the end the following new 
subparagraph: 
‘‘(C) 
DISCLOSURE
OF
SUBCONTRAC-
TORS.— 
‘‘(i) INITIAL DISCLOSURE.—Not later 
than 10 days after the date a supplier en-
ters into a contract with the Secretary 
under this section, such supplier shall dis-
close to the Secretary, in a form and man-
ner specified by the Secretary, the infor-
mation on— 
‘‘(I) each subcontracting relation-
ship that such supplier has in fur-
nishing items and services under the 
contract; and 
‘‘(II) whether each such subcon-
tractor meets the requirement of sec-
tion 1834(a)(20)(F)(i), if applicable 
to such subcontractor.
196 
‘‘(ii) SUBSEQUENT DISCLOSURE.—Not 
later than 10 days after such a supplier 
subsequently enters into a subcontracting 
relationship described in clause (i)(II), 
such supplier shall disclose to the Sec-
retary, in such form and manner, the in-
formation described in subclauses (I) and 
(II) of clause (i).’’. 
(3) COMPETITIVE ACQUISITION OMBUDSMAN.— 
Such section is further amended by adding at the 
end the following new subsection: 
‘‘(f) COMPETITIVE ACQUISITION OMBUDSMAN.—The 
Secretary shall provide for a competitive acquisition om-
budsman within the Centers for Medicare & Medicaid 
Services in order to respond to complaints and inquiries 
made by suppliers and individuals relating to the applica-
tion of the competitive acquisition program under this sec-
tion. The ombudsman may be within the office of the 
Medicare Beneficiary Ombudsman appointed under sec-
tion 1808(c). The ombudsman shall submit to Congress 
an annual report on the activities under this subsection, 
which report shall be coordinated with the report provided 
under section 1808(c)(2)(C).’’. 
(c) CHANGE IN REPORTS AND DEADLINES.—
198 
impact on such access of awarding con-
tracts to bidders that— 
‘‘(I) did not have a physical pres-
ence in an area where they received a 
contract; or 
‘‘(II) had no previous experience 
providing the product category they 
were contracted to provide. 
‘‘(ii) Beneficiary satisfaction with the 
program and cost savings to beneficiaries 
under the program. 
‘‘(iii) Costs to suppliers of partici-
pating in the program and recommenda-
tions about ways to reduce those costs 
without compromising quality standards or 
savings to the Medicare program. 
‘‘(iv) Impact of the program on small 
business suppliers. 
‘‘(v) Analysis of the impact on utiliza-
tion of different items and services paid 
within the same Healthcare Common Pro-
cedure Coding System (HCPCS) code. 
‘‘(vi) Costs to the Centers for Medi-
care & Medicaid Services, including pay-
ments made to contractors, for admin-
199 
istering the program compared with ad-
ministration of a fee schedule, in compari-
son with the relative savings of the pro-
gram. 
‘‘(vii) Impact on access, Medicare 
spending, and beneficiary spending of any 
difference in treatment for diabetic testing 
supplies depending on how such supplies 
are furnished. 
‘‘(viii) Such other topics as the Comp-
troller General determines to be appro-
priate.’’. 
(2) DELAY IN OTHER DEADLINES.— 
(A) PROGRAM ADVISORY AND OVERSIGHT 
COMMITTEE.—Section 1847(c)(5) of the Social 
Security Act (42 U.S.C. 1395w–3(c)(5)) is 
amended by striking ‘‘December 31, 2009’’ and 
inserting ‘‘December 31, 2011’’. 
(B) 
SECRETARIAL
REPORT.—Section 
1847(d) of such Act (42 U.S.C. 1395w–3(d)) is 
amended by striking ‘‘July 1, 2009’’ and insert-
ing ‘‘July 1, 2011’’. 
(C) IG REPORT.—Section 302(e) of the 
Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-
200 
173) is amended by striking ‘‘July 1, 2009’’ 
and inserting ‘‘July 1, 2011’’. 
(3) EVALUATION OF CERTAIN CODE.—The Sec-
retary of Health and Human Services shall evaluate 
the existing Health Care Common Procedure Coding 
System (HCPCS) codes for negative pressure wound 
therapy to ensure accurate reporting and billing for 
items and services under such codes. In carrying out 
such evaluation, the Secretary shall use an existing 
process, administered by the Durable Medical Equip-
ment Medicare Administrative Contractors, for the 
consideration of coding changes and consider all rel-
evant studies and information furnished pursuant to 
such process. 
(d) OTHER PROVISIONS.— 
(1) EXEMPTION FROM COMPETITIVE ACQUISI-
TION FOR CERTAIN OFF-THE-SHELF ORTHOTICS.— 
Section 1847(a) of the Social Security Act (42 
U.S.C. 1395w–3(a)) is amended by adding at the 
end the following new paragraph: 
‘‘(7) EXEMPTION FROM COMPETITIVE ACQUISI-
TION.—The programs under this section shall not 
apply to the following:
201 
‘‘(A) 
CERTAIN
OFF-THE-SHELF 
ORTHOTICS.—Items and services described in 
paragraph (2)(C) if furnished— 
‘‘(i) by a physician or other practi-
tioner (as defined by the Secretary) to the 
physician’s or practitioner’s own patients 
as part of the physician’s or practitioner’s 
professional service; or 
‘‘(ii) by a hospital to the hospital’s 
own patients during an admission or on 
the date of discharge. 
‘‘(B) CERTAIN DURABLE MEDICAL EQUIP-
MENT.—Those items and services described in 
paragraph (2)(A)— 
‘‘(i) that are furnished by a hospital 
to the hospital’s own patients during an 
admission or on the date of discharge; and 
‘‘(ii) to which such programs would 
not apply, as specified by the Secretary, if 
furnished by a physician to the physician’s 
own patients as part of the physician’s 
professional service.’’. 
(2) CORRECTION IN FACE-TO-FACE EXAMINA-
TION REQUIREMENT.—Section 1834(a)(1)(E)(ii) of
202 
such Act (42 U.S.C. 1395m(a)(1)(E)(ii)) is amended 
by striking ‘‘1861(r)(1)’’ and inserting ‘‘1861(r)’’. 
(3) SPECIAL RULE IN CASE OF NATIONAL MAIL- 
ORDER
COMPETITION
FOR
DIABETIC
TESTING 
STRIPS.—Section 1847(b) of such Act (42 U.S.C. 
1395w–3(b)) is amended— 
(A) by redesignating paragraph (10) as 
paragraph (11); and 
(B) by inserting after paragraph (9) the 
following new paragraph: 
‘‘(10) SPECIAL RULE IN CASE OF COMPETITION 
FOR DIABETIC TESTING STRIPS.— 
‘‘(A) IN GENERAL.—With respect to the 
competitive acquisition program for diabetic 
testing strips conducted after the first round of 
the competitive acquisition programs, if an enti-
ty does not demonstrate to the Secretary that 
its bid covers types of diabetic testing strip 
products that, in the aggregate and taking into 
account volume for the different products, cover 
50 percent (or such higher percentage as the 
Secretary may specify) of all such types of 
products, the Secretary shall reject such bid. 
The volume for such types of products may be 
determined in accordance with such data (which
203 
may be market based data) as the Secretary 
recognizes. 
‘‘(B) STUDY OF TYPES OF TESTING STRIP 
PRODUCTS.—Before 2011, the Inspector Gen-
eral of the Department of Health and Human 
Services shall conduct a study to determine the 
types of diabetic testing strip products by vol-
ume that could be used to make determinations 
pursuant to subparagraph (A) for the first com-
petition under the competitive acquisition pro-
gram described in such subparagraph and sub-
mit to the Secretary a report on the results of 
the study. The Inspector General shall also con-
duct such a study and submit such a report be-
fore the Secretary conducts a subsequent com-
petitive acquistion program described in sub-
paragraph (A).’’. 
(4) OTHER CONFORMING AMENDMENTS.—Sec-
tion 1847(b)(11) of such Act, as redesignated by 
paragraph (3), is amended— 
(A) in subparagraph (C), by inserting ‘‘and 
the identification of areas under subsection 
(a)(1)(D)(iii)’’ after ‘‘(a)(1)(A)’’;
205 
ferred under this paragraph for a fiscal year shall be 
available until expended. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as of June 30, 2008. 
Subtitle D—Provisions Relating to 
Part C 
SEC. 161. PHASE-OUT OF INDIRECT MEDICAL EDUCATION 
(IME). 
(a) IN GENERAL.—Section 1853(k) of the Social Se-
curity Act (42 U.S.C. 1395w–23(k)) is amended— 
(1) in paragraph (1), in the matter preceding 
subparagraph (A), by striking ‘‘paragraph (2)’’ and 
inserting ‘‘paragraphs (2) and (4)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) PHASE-OUT OF THE INDIRECT COSTS OF 
MEDICAL EDUCATION FROM CAPITATION RATES.— 
‘‘(A) IN GENERAL.—After determining the 
applicable amount for an area for a year under 
paragraph (1) (beginning with 2010), the Sec-
retary shall adjust such applicable amount to 
exclude from such applicable amount the phase- 
in percentage (as defined in subparagraph 
(B)(i)) for the year of the Secretary’s estimate 
of the standardized costs for payments under
206 
section 1886(d)(5)(B) in the area for the year. 
Any adjustment under the preceding sentence 
shall be made prior to the application of para-
graph (2). 
‘‘(B) PERCENTAGES DEFINED.—For pur-
poses of this paragraph: 
‘‘(i) 
PHASE-IN
PERCENTAGE.—The 
term ‘phase-in percentage’ means, for an 
area for a year, the ratio (expressed as a 
percentage, but in no case greater than 
100 percent) of— 
‘‘(I) the maximum cumulative ad-
justment percentage for the year (as 
defined in clause (ii)); to 
‘‘(II) the standardized IME cost 
percentage (as defined in clause (iii)) 
for the area and year. 
‘‘(ii) MAXIMUM CUMULATIVE ADJUST-
MENT PERCENTAGE.—The term ‘maximum 
cumulative adjustment percentage’ means, 
for— 
‘‘(I) 2010, 0.60 percent; and 
‘‘(II) a subsequent year, the max-
imum cumulative adjustment percent-
207 
age for the previous year increased by 
0.60 percentage points. 
‘‘(iii) STANDARDIZED IME COST PER-
CENTAGE.—The term ‘standardized IME 
cost percentage’ means, for an area for a 
year, the per capita costs for payments 
under section 1886(d)(5)(B) (expressed as 
a percentage of the fee-for-service amount 
specified in subparagraph (C)) for the area 
and the year. 
‘‘(C) 
FEE-FOR-SERVICE
AMOUNT.—The 
fee-for-service amount specified in this subpara-
graph for an area for a year is the amount 
specified under subsection (c)(1)(D) for the 
area and the year.’’. 
(b) EXCLUDING
ADJUSTMENT
FROM
THE
UP-
DATE.—Section 1853(k)(1)(B)(i) of the Social Security 
Act (42 U.S.C. 1395w–23(k)(1)(B)(i)) is amended by 
striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs (2) 
and (4)’’. 
(c) HOLD HARMLESS FOR PACE PROGRAM PAY-
MENTS.—Section 1894(d) of the Social Security Act (42 
U.S.C. 1395eee(d)) is amended by adding at the end the 
following new paragraph:
208 
‘‘(3) CAPITATION
RATES
DETERMINED
WITH-
OUT REGARD TO THE PHASE-OUT OF THE INDIRECT 
COSTS OF MEDICAL EDUCATION FROM THE ANNUAL 
MEDICARE ADVANTAGE CAPITATION RATE.—Capita-
tion amounts under this subsection shall be deter-
mined without regard to the application of section 
1853(k)(4).’’. 
SEC. 162. REVISIONS TO REQUIREMENTS FOR MEDICARE 
ADVANTAGE 
PRIVATE 
FEE-FOR-SERVICE 
PLANS. 
(a) REQUIREMENTS TO ASSURE ACCESS TO NET-
WORK COVERAGE.— 
(1) INDIVIDUAL MARKET.—Section 1852(d) of 
the Social Security Act (42 U.S.C. 1395w–22(d)) is 
amended— 
(A) in paragraph (4), in the second sen-
tence, by striking ‘‘The Secretary’’ and insert-
ing ‘‘Subject to paragraph (5), the Secretary’’; 
and 
(B) by adding at the end the following new 
paragraph: 
‘‘(5) 
REQUIREMENT
OF
CERTAIN
NON-
EMPLOYER
MEDICARE
ADVANTAGE
PRIVATE
FEE- 
FOR-SERVICE PLANS TO USE CONTRACTS WITH PRO-
VIDERS.—
209 
‘‘(A) IN GENERAL.—For plan year 2011 
and subsequent plan years, in the case of a 
Medicare Advantage private fee-for-service plan 
not described in paragraph (1) or (2) of section 
1857(i) operating in a network area (as defined 
in subparagraph (B)), the plan shall meet the 
access standards under paragraph (4) in that 
area only through entering into written con-
tracts as provided for under subparagraph (B) 
of such paragraph and not, in whole or in part, 
through the establishment of payment rates 
meeting the requirements under subparagraph 
(A) of such paragraph. 
‘‘(B) NETWORK AREA DEFINED.—For pur-
poses of subparagraph (A), the term ‘network 
area’ means, for a plan year, an area which the 
Secretary identifies (in the Secretary’s an-
nouncement of the proposed payment rates for 
the 
previous 
plan 
year 
under 
section 
1853(b)(1)(B)) as having at least 2 network- 
based plans (as defined in subparagraph (C)) 
with enrollment under this part as of the first 
day of the year in which such announcement is 
made. 
‘‘(C) NETWORK-BASED PLAN DEFINED.—
210 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (B), the term ‘network- 
based plan’ means— 
‘‘(I) except as provided in clause 
(ii), a Medicare Advantage plan that 
is a coordinated care plan described in 
section 1851(a)(2)(A)(i); 
‘‘(II) a network-based MSA plan; 
and 
‘‘(III) a reasonable cost reim-
bursement plan under section 1876. 
‘‘(ii) EXCLUSION
OF
NON-NETWORK 
REGIONAL
PPOS.—The term ‘network- 
based plan’ shall not include an MA re-
gional plan that, with respect to the area, 
meets access adequacy standards under 
this part substantially through the author-
ity of section 422.112(a)(1)(ii) of title 42, 
Code of Federal Regulations, rather than 
through written contracts.’’. 
(2) EMPLOYER PLANS.—Section 1852(d) of the 
Social Security Act (42 U.S.C. 1395w–22(d)), as 
amended by paragraph (1), is amended—
211 
(A) in paragraph (4), in the second sen-
tence, by striking ‘‘paragraph (5)’’ and insert-
ing ‘‘paragraphs (5) and (6)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(6) REQUIREMENT OF ALL EMPLOYER MEDI-
CARE ADVANTAGE PRIVATE FEE-FOR-SERVICE PLANS 
TO
USE
CONTRACTS
WITH
PROVIDERS.—For plan 
year 2011 and subsequent plan years, in the case of 
a Medicare Advantage private fee-for-service plan 
that is described in paragraph (1) or (2) of section 
1857(i), the plan shall meet the access standards 
under paragraph (4) only through entering into writ-
ten contracts as provided for under subparagraph 
(B) of such paragraph and not, in whole or in part, 
through the establishment of payment rates meeting 
the requirements under subparagraph (A) of such 
paragraph.’’. 
(3) ACCESS REQUIREMENTS.— 
(A) IN GENERAL.—Section 1852(d)(4)(B) 
of the Social Security Act (42 U.S.C. 1395w– 
22(d)(4)(B)) is amended by striking ‘‘a suffi-
cient number’’ through ‘‘terms of the plan’’ and 
inserting ‘‘a sufficient number and range of 
providers within such category to meet the ac-
212 
cess standards in subparagraphs (A) through 
(E) of paragraph (1)’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to plan 
year 2010 and subsequent plan years. 
(b) CLARIFICATION REGARDING UTILIZATION.—Sec-
tion 1859(b)(2) of the Social Security Act (42 U.S.C. 
1395w–28(b)(2)) is amended by adding at the end the fol-
lowing flush sentence: 
‘‘Nothing in subparagraph (B) shall be construed to 
preclude a plan from varying rates for such a pro-
vider based on the specialty of the provider, the loca-
tion of the provider, or other factors related to such 
provider that are not related to utilization, or to pre-
clude a plan from increasing rates for such a pro-
vider based on increased utilization of specified pre-
ventive or screening services.’’. 
SEC. 163. REVISIONS TO QUALITY IMPROVEMENT PRO-
GRAMS. 
(a) REQUIREMENT
FOR MA PRIVATE FEE-FOR- 
SERVICE AND MSA PLANS TO HAVE A QUALITY IM-
PROVEMENT PROGRAM.—Section 1852(e)(1) of the Social 
Security Act (42 U.S.C. 1395w–22(e)(1)) is amended by 
striking ‘‘(other than an MA private fee-for-service plan 
or an MSA plan)’’.
213 
(b) DATA COLLECTION REQUIREMENTS FOR MA RE-
GIONAL PLANS, MA PRIVATE FEE-FOR-SERVICE PLANS, 
AND MSA PLANS.—Section 1852(e)(3)(A) of the Social 
Security Act (42 U.S.C. 1395w–22(e)(3)(A)) is amend-
ed— 
(1) in clause (i), by adding at the end the fol-
lowing new sentence: ‘‘With respect to MA private 
fee-for-service plans and MSA plans, the require-
ments under the preceding sentence may not exceed 
the requirements under this subparagraph with re-
spect to MA local plans that are preferred provider 
organization plans, except that, for plan year 2010, 
the limitation under clause (iii) shall not apply and 
such requirements shall apply only with respect to 
administrative claims data.’’ 
(2) by striking clause (ii); and 
(3) in clause (iii)— 
(A) in the heading— 
(i) by inserting ‘‘LOCAL’’ after ‘‘TO’’; 
and 
(ii) by inserting ‘‘AND MA REGIONAL 
PLANS’’ after ‘‘ORGANIZATIONS’’; and 
(B) by inserting ‘‘and to MA regional 
plans’’ after ‘‘organization plans’’.
214 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2010. 
SEC. 164. REVISIONS RELATING TO SPECIALIZED MEDI-
CARE 
ADVANTAGE 
PLANS 
FOR 
SPECIAL 
NEEDS INDIVIDUALS. 
(a) EXTENSION OF AUTHORITY TO RESTRICT EN-
ROLLMENT.—Section 1859(f) of the Social Security Act 
(42 U.S.C. 1395w–28(f)), as amended by section 108(a) 
of the Medicare, Medicaid, and SCHIP Extension Act of 
2007 (Public Law 110–173) is amended by striking 
‘‘2010’’ and inserting ‘‘2011’’. 
(b) MORATORIUM ON AUTHORITY TO DESIGNATE 
OTHER PLANS AS SPECIALIZED MA PLANS.—During the 
period beginning on January 1, 2010, and ending on De-
cember 31, 2010, the Secretary of Health and Human 
Services may not exercise the authority provided under 
section 231(d) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (42 U.S.C. 
1395w–21 note) to designate other plans as specialized 
MA plans for special needs individuals. 
(c) REQUIREMENTS FOR ENROLLMENT.— 
(1) IN GENERAL.—Section 1859 of the Social 
Security Act (42 U.S.C. 1395w–28) is amended—
215 
(A) in subsection (b)(6)(A), by inserting 
‘‘and that, as of January 1, 2010, meets the 
applicable requirements of paragraph (2), (3), 
or (4) of subsection (f), as the case may be’’ be-
fore the period at the end; and 
(B) in subsection (f)— 
(i) by amending the heading to read 
as follows: ‘‘REQUIREMENTS REGARDING 
ENROLLMENT IN SPECIALIZED MA PLANS 
FOR SPECIAL NEEDS INDIVIDUALS’’; 
(ii) by designating the sentence begin-
ning ‘‘In the case of’’ as paragraph (1) 
with the heading ‘‘REQUIREMENTS
FOR 
ENROLLMENT.—’’ and with appropriate in-
dentation; and 
(iii) by adding at the end the fol-
lowing new paragraphs: 
‘‘(2) ADDITIONAL REQUIREMENTS FOR INSTI-
TUTIONAL SNPS.—In the case of a specialized MA 
plan for special needs individuals described in sub-
section (b)(6)(B)(i), the applicable requirements de-
scribed in this paragraph are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individuals 
described 
in 
subsection
216 
(b)(6)(B)(i). In the case of an individual who is 
living in the community but requires an institu-
tional level of care, such individual shall not be 
considered a special needs individual described 
in subsection (b)(6)(B)(i) unless the determina-
tion that the individual requires an institutional 
level of care was made— 
‘‘(i) using a State assessment tool of 
the State in which the individual resides; 
and 
‘‘(ii) by an entity other than the orga-
nization offering the plan. 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5). 
‘‘(3) ADDITIONAL
REQUIREMENTS
FOR
DUAL 
SNPS.—In the case of a specialized MA plan for spe-
cial needs individuals described in subsection 
(b)(6)(B)(ii), the applicable requirements described 
in this paragraph are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individuals 
described 
in 
subsection 
(b)(6)(B)(ii). 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5).
217 
‘‘(C) The plan provides each prospective 
enrollee, prior to enrollment, with a comprehen-
sive written statement (using standardized con-
tent and format established by the Secretary) 
that describes— 
‘‘(i) the benefits and cost-sharing pro-
tections that the individual is entitled to 
under the State Medicaid program under 
title XIX; and 
‘‘(ii) which of such benefits and cost- 
sharing protections are covered under the 
plan. 
Such statement shall be included with any de-
scription of benefits offered by the plan. 
‘‘(D) The plan has a contract with the 
State Medicaid agency to provide benefits, or 
arrange for benefits to be provided, for which 
such individual is entitled to receive as medical 
assistance under title XIX. Such benefits may 
include long-term care services consistent with 
State policy. 
‘‘(4) ADDITIONAL REQUIREMENTS FOR SEVERE 
OR DISABLING CHRONIC CONDITION SNPS.—In the 
case of a specialized MA plan for special needs indi-
viduals described in subsection (b)(6)(B)(iii), the ap-
218 
plicable requirements described in this paragraph 
are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individual 
described 
in 
subsection 
(b)(6)(B)(iii). 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5).’’. 
(2) AUTHORITY TO OPERATE BUT NO SERVICE 
AREA EXPANSION FOR DUAL SNPS THAT DO NOT 
MEET
CERTAIN
REQUIREMENTS.—Notwithstanding 
subsection (f) of section 1859 of the Social Security 
Act (42 U.S.C. 1395w–28), during the period begin-
ning on January 1, 2010, and ending on December 
31, 2010, in the case of a specialized Medicare Ad-
vantage plan for special needs individuals described 
in subsection (b)(6)(B)(ii) of such section, as 
amended by this section, that does not meet the re-
quirement described in subsection (f)(3)(D) of such 
section, the Secretary of Health and Human Serv-
ices— 
(A) shall permit such plan to be offered 
under part C of title XVIII of such Act; and 
(B) shall not permit an expansion of the 
service area of the plan under such part C.
219 
(3) RESOURCES FOR STATE MEDICAID AGEN-
CIES.—The Secretary of Health and Human Serv-
ices shall provide for the designation of appropriate 
staff and resources that can address State inquiries 
with respect to the coordination of State and Fed-
eral policies for specialized MA plans for special 
needs 
individuals 
described 
in 
section 
1859(b)(6)(B)(ii) of the Social Security Act (42 
U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this 
section. 
(4) NO REQUIREMENT FOR CONTRACT.—Noth-
ing in the provisions of, or amendments made by, 
this subsection shall require a State to enter into a 
contract with a Medicare Advantage organization 
with respect to a specialized MA plan for special 
needs 
individuals 
described 
in 
section 
1859(b)(6)(B)(ii) of the Social Security Act (42 
U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this 
section. 
(d) CARE MANAGEMENT REQUIREMENTS FOR ALL 
SNPS.— 
(1) REQUIREMENTS.—Section 1859(f) of the 
Social Security Act (42 U.S.C. 1395w–28(f)), as 
amended by subsection (c)(1), is amended by adding 
at the end the following new paragraph:
220 
‘‘(5) CARE MANAGEMENT REQUIREMENTS FOR 
ALL
SNPS.—The requirements described in this 
paragraph are that the organization offering a spe-
cialized MA plan for special needs individuals de-
scribed in subsection (b)(6)(B)(i)— 
‘‘(A) have in place an evidenced-based 
model of care with appropriate networks of pro-
viders and specialists; and 
‘‘(B) with respect to each individual en-
rolled in the plan— 
‘‘(i) conduct an initial assessment and 
an annual reassessment of the individual’s 
physical, 
psychosocial, 
and 
functional 
needs; 
‘‘(ii) develop a plan, in consultation 
with the individual as feasible, that identi-
fies goals and objectives, including measur-
able outcomes as well as specific services 
and benefits to be provided; and 
‘‘(iii) use an interdisciplinary team in 
the management of care.’’. 
(2) REVIEW
TO
ENSURE
COMPLIANCE
WITH 
CARE
MANAGEMENT
REQUIREMENTS.—Section 
1857(d) of the Social Security Act (42 U.S.C.
221 
1395w–27(d)) is amended by adding at the end the 
following new paragraph: 
‘‘(6) REVIEW TO ENSURE COMPLIANCE WITH 
CARE MANAGEMENT REQUIREMENTS FOR SPECIAL-
IZED
MEDICARE
ADVANTAGE
PLANS
FOR
SPECIAL 
NEEDS INDIVIDUALS.—In conjunction with the peri-
odic audit of a specialized Medicare Advantage plan 
for special needs individuals under paragraph (1), 
the Secretary shall conduct a review to ensure that 
such organization offering the plan meets the re-
quirements described in section 1859(f)(5).’’. 
(e) CLARIFICATION OF THE DEFINITION OF A SE-
VERE OR DISABLING CHRONIC CONDITIONS SPECIALIZED 
NEEDS INDIVIDUAL.— 
(1) IN GENERAL.—Section 1859(b)(6)(B)(iii) of 
the Social Security Act (42 U.S.C. 1395w– 
28(b)(6)(B)(iii)) is amended by inserting ‘‘who have 
one or more comorbid and medically complex chronic 
conditions that are substantially disabling or life 
threatening, have a high risk of hospitalization or 
other significant adverse health outcomes, and re-
quire specialized delivery systems across domains of 
care’’ before the period at the end. 
(2) PANEL.—The Secretary of Health and 
Human Services shall convene a panel of clinical ad-
222 
visors to determine the conditions that meet the def-
inition of severe and disabling chronic conditions 
under section 1859(b)(6)(B)(iii) of the Social Secu-
rity Act (42 U.S.C. 1395w–28(b)(6)(B)(iii)), as 
amended by paragraph (1). The panel shall include 
the Director of the Agency for Healthcare Research 
and Quality (or the Director’s designee). 
(f) SPECIAL REQUIREMENTS REGARDING QUALITY 
REPORTING FOR SPECIALIZED MA PLANS FOR SPECIAL 
NEEDS INDIVIDUALS.— 
(1) IN GENERAL.—Section 1852(e)(3)(A) of the 
Social Security Act (42 U.S.C. 1395w–22(e)(3)(A)), 
as amended by section 163, is amended by inserting 
after clause (i) the following new clause: 
‘‘(ii) SPECIAL
REQUIREMENTS
FOR 
SPECIALIZED
MA
PLANS
FOR
SPECIAL 
NEEDS INDIVIDUALS.—In addition to the 
data required to be collected, analyzed, and 
reported under clause (i) and notwith-
standing the limitations under subpara-
graph (B), as part of the quality improve-
ment program under paragraph (1), each 
MA organization offering a specialized 
Medicare Advantage plan for special needs 
individuals shall provide for the collection,
223 
analysis, and reporting of data that per-
mits the measurement of health outcomes 
and other indices of quality with respect to 
the requirements described in paragraphs 
(2) through (5) of subsection (f). Such 
data may be based on claims data and 
shall be at the plan level.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on a date specified 
by the Secretary of Health and Human Services (but 
in no case later than January 1, 2010), and shall 
apply to all specialized Medicare Advantage plans 
for special needs individuals regardless of when the 
plan first entered the Medicare Advantage program 
under part C of title XVIII of the Social Security 
Act. 
(g) EFFECTIVE
DATE
AND
APPLICATION.—The 
amendments made by subsections (c)(1), (d), and (e)(1) 
shall apply to plan years beginning on or after January 
1, 2010, and shall apply to all specialized Medicare Advan-
tage plans for special needs individuals regardless of when 
the plan first entered the Medicare Advantage program 
under part C of title XVIII of the Social Security Act. 
(h) NO
AFFECT
ON
MEDICAID
BENEFITS
FOR 
DUALS.—Nothing in the provisions of, or amendments
224 
made by, this section shall affect the benefits available 
under the Medicaid program under title XIX of the Social 
Security Act for special needs individuals described in sec-
tion 1859(b)(6)(B)(ii) of such Act (42 U.S.C. 1395w– 
28(b)(6)(B)(ii)). 
SEC. 165. LIMITATION ON OUT-OF-POCKET COSTS FOR 
DUAL ELIGIBLES AND QUALIFIED MEDICARE 
BENEFICIARIES ENROLLED IN A SPECIAL-
IZED MEDICARE ADVANTAGE PLAN FOR SPE-
CIAL NEEDS INDIVIDUALS. 
(a) IN GENERAL.—Section 1852(a) of the Social Se-
curity Act (42 U.S.C. 1395w–22(a)) 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 an individual who is a 
full-benefit dual eligible individual (as defined in sec-
tion 1935(c)(6)) or a qualified medicare beneficiary 
(as defined in section 1905(p)(1)) and who is en-
rolled in a specialized Medicare Advantage plan for 
special needs individuals described in section 
1859(b)(6)(B)(ii), the plan may not impose cost- 
sharing that exceeds the amount of cost-sharing that 
would be permitted with respect to the individual
225 
under title XIX if the individual were not enrolled 
in such plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to plan years beginning on or 
after January 1, 2010. 
SEC. 166. ADJUSTMENT TO THE MEDICARE ADVANTAGE 
STABILIZATION FUND. 
Section 1858(e)(2)(A)(i) of the Social Security Act 
(42 U.S.C. 1395w–27a(e)(2)(A)(i)), as amended by sec-
tion 110 of the Medicare, Medicaid, and SCHIP Extension 
Act of 2007 (Public Law 110–173), is amended— 
(1) by striking ‘‘2013’’ and inserting ‘‘2014’’; 
and 
(2) by striking ‘‘$1,790,000,000’’ and inserting 
‘‘$1’’. 
SEC. 167. ACCESS TO MEDICARE REASONABLE COST CON-
TRACT PLANS. 
(a) EXTENSION
OF
REASONABLE
COST
CON-
TRACTS.—Section 1876(h)(5)(C)(ii) of the Social Security 
Act (42 U.S.C. 1395mm(h)(5)(C)(ii)), as amended by sec-
tion 109 of the Medicare, Medicaid, and SCHIP Extension 
Act of 2007 (Public Law 110–173), is amended by strik-
ing ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’ 
in the matter preceding subclause (I).
226 
(b) REQUIREMENT FOR AT LEAST TWO MEDICARE 
ADVANTAGE ORGANIZATIONS TO BE OFFERING A PLAN 
IN AN AREA FOR THE PROHIBITION TO BE APPLICA-
BLE.—Subclauses (I) and (II) of section 1876(h)(5)(C)(ii) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395mm(h)(5)(C)(ii)) are each amended by inserting ‘‘, 
provided that all such plans are not offered by the same 
Medicare Advantage organization’’ after ‘‘clause (iii)’’. 
(c) REVISION OF REQUIREMENTS FOR A PLAN THAT 
ARE USED TO DETERMINE IF PROHIBITION IS APPLICA-
BLE.— 
(1) IN GENERAL.—Section 1876(h)(5)(C)(iii)(I) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395mm(h)(5)(C)(iii)(I)) is amended by inserting 
‘‘that are not in another Metropolitan Statistical 
Area with a population of more than 250,000’’ after 
‘‘such Metropolitan Statistical Area’’. 
(2) 
CLARIFICATION.—Section 
1876(h)(5)(C)(iii)(I) of the Social Security Act (42 
U.S.C. 1395mm(h)(5)(C)(iii)(I)) is amended by add-
ing at the end the following new sentence: ‘‘If the 
service area includes a portion in more than 1 Met-
ropolitan Statistical Area with a population of more 
than 250,000, the minimum enrollment determina-
tion under the preceding sentence shall be made
227 
with respect to each such Metropolitan Statistical 
Area (and such applicable contiguous counties to 
such Metropolitan Statistical Area).’’. 
(d) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study of the reasons 
(if any) why reasonable cost contracts under section 
1876(h) of the Social Security Act (42 U.S.C. 
1395mm(h)) are unable to become Medicare Advan-
tage plans under part C of title XVIII of such Act. 
(2) REPORT.—Not later than December 31, 
2009, the Comptroller General of the United States 
shall submit to Congress a report containing the re-
sults of the study conducted under paragraph (1), 
together with recommendations for such legislation 
and administrative action as the Comptroller Gen-
eral determines appropriate. 
SEC. 168. MEDPAC STUDY AND REPORT ON QUALITY MEAS-
URES. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on how comparable meas-
ures of performance and patient experience can be col-
lected and reported by 2011 for the Medicare Advantage 
program under part C of title XVIII of the Social Security 
Act and the original Medicare fee-for-service program
228 
under parts A and B of such title. Such study shall ad-
dress technical issues, such as data requirements, in addi-
tion to issues relating to appropriate quality benchmarks 
that— 
(1) compare the quality of care Medicare bene-
ficiaries receive across Medicare Advantage plans; 
and 
(2) compare the quality of care Medicare bene-
ficiaries receive under Medicare Advantage plans 
and under the original Medicare fee-for-service pro-
gram. 
(b) REPORT.—Not later than March 31, 2010, the 
Medicare Payment Advisory Commission shall submit to 
Congress a report containing the results of the study con-
ducted under subsection (a), together with recommenda-
tions for such legislation and administrative action as the 
Medicare Payment Advisory Commission determines ap-
propriate. 
SEC. 169. MEDPAC STUDY AND REPORT ON MEDICARE AD-
VANTAGE PAYMENTS. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission (in this section referred to as the ‘‘Commission’’) 
shall conduct a study of the following: 
(1) The correlation between—
229 
(A) the costs that Medicare Advantage or-
ganizations with respect to Medicare Advantage 
plans incur in providing coverage under the 
plan for items and services covered under the 
original Medicare fee-for-service program under 
parts A and B of title XVIII of the Social Secu-
rity Act, as reflected in plan bids; and 
(B) county-level spending under such origi-
nal Medicare fee-for-service program on a per 
capita basis, as calculated by the Chief Actuary 
of the Centers for Medicare & Medicaid Serv-
ices. 
The study with respect to the issue described in the 
preceding sentence shall include differences in cor-
relation statistics by plan type and geographic area. 
(2) Based on these results of the study with re-
spect to the issue described in paragraph (1), and 
other data the Commission determines appro-
priate— 
(A) alternate approaches to payment with 
respect to a Medicare beneficiary enrolled in a 
Medicare Advantage plan other than through 
county-level payment area equivalents. 
(B) the accuracy and completeness of 
county-level estimates of per capita spending
231 
Subtitle E—Provisions Relating to 
Part D 
PART I—IMPROVING PHARMACY ACCESS 
SEC. 171. PROMPT PAYMENT BY PRESCRIPTION DRUG 
PLANS AND MA–PD PLANS UNDER PART D. 
(a) PROMPT PAYMENT
BY PRESCRIPTION DRUG 
PLANS.—Section 1860D–12(b) of the Social Security Act 
(42 U.S.C. 1395w–112(b)) is amended by adding at the 
end the following new paragraph: 
‘‘(4) PROMPT PAYMENT OF CLEAN CLAIMS.— 
‘‘(A) PROMPT PAYMENT.— 
‘‘(i) IN GENERAL.—Each contract en-
tered into with a PDP sponsor under this 
part with respect to a prescription drug 
plan offered by such sponsor shall provide 
that payment shall be issued, mailed, or 
otherwise transmitted with respect to all 
clean claims submitted by pharmacies 
(other than pharmacies that dispense 
drugs by mail order only or are located in, 
or contract with, a long-term care facility) 
under this part within the applicable num-
ber of calendar days after the date on 
which the claim is received.
232 
‘‘(ii) CLEAN CLAIM DEFINED.—In this 
paragraph, the term ‘clean claim’ means a 
claim that has no defect or impropriety 
(including any lack of any required sub-
stantiating documentation) or particular 
circumstance requiring special treatment 
that prevents timely payment from being 
made on the claim under this part. 
‘‘(iii) DATE OF RECEIPT OF CLAIM.— 
In this paragraph, a claim is considered to 
have been received— 
‘‘(I) with respect to claims sub-
mitted electronically, on the date on 
which the claim is transferred; and 
‘‘(II) with respect to claims sub-
mitted otherwise, on the 5th day after 
the postmark date of the claim or the 
date specified in the time stamp of the 
transmission. 
‘‘(B) APPLICABLE NUMBER OF CALENDAR 
DAYS DEFINED.—In this paragraph, the term 
‘applicable number of calendar days’ means— 
‘‘(i) with respect to claims submitted 
electronically, 14 days; and
233 
‘‘(ii) with respect to claims submitted 
otherwise, 30 days. 
‘‘(C) INTEREST PAYMENT.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), if payment is not issued, mailed, or 
otherwise transmitted within the applicable 
number of calendar days (as defined in 
subparagraph (B)) after a clean claim is 
received, the PDP sponsor shall pay inter-
est to the pharmacy that submitted the 
claim at a rate equal to the weighted aver-
age of interest on 3-month marketable 
Treasury securities determined for such 
period, increased by 0.1 percentage point 
for the period beginning on the day after 
the required payment date and ending on 
the date on which payment is made (as de-
termined under subparagraph (D)(iv)). In-
terest amounts paid under this subpara-
graph shall not be counted against the ad-
ministrative costs of a prescription drug 
plan or treated as allowable risk corridor 
costs under section 1860D–15(e). 
‘‘(ii) AUTHORITY NOT TO CHARGE IN-
TEREST.—The Secretary may provide that
234 
a PDP sponsor is not charged interest 
under clause (i) in the case where there 
are exigent circumstances, including nat-
ural disasters and other unique and unex-
pected events, that prevent the timely proc-
essing of claims. 
‘‘(D) PROCEDURES INVOLVING CLAIMS.— 
‘‘(i) CLAIM DEEMED TO BE CLEAN.— 
A claim is deemed to be a clean claim if 
the PDP sponsor involved does not provide 
notice to the claimant of any deficiency in 
the claim— 
‘‘(I) with respect to claims sub-
mitted electronically, within 10 days 
after the date on which the claim is 
received; and 
‘‘(II) with respect to claims sub-
mitted otherwise, within 15 days after 
the date on which the claim is re-
ceived. 
‘‘(ii) CLAIM DETERMINED TO NOT BE 
A CLEAN CLAIM.— 
‘‘(I) IN
GENERAL.—If a PDP 
sponsor determines that a submitted 
claim is not a clean claim, the PDP
235 
sponsor shall, not later than the end 
of the period described in clause (i), 
notify the claimant of such determina-
tion. Such notification shall specify all 
defects or improprieties in the claim 
and shall list all additional informa-
tion or documents necessary for the 
proper processing and payment of the 
claim. 
‘‘(II) 
DETERMINATION
AFTER 
SUBMISSION
OF
ADDITIONAL
INFOR-
MATION.—A claim is deemed to be a 
clean claim under this paragraph if 
the PDP sponsor involved does not 
provide notice to the claimant of any 
defect or impropriety in the claim 
within 10 days of the date on which 
additional 
information 
is 
received 
under subclause (I). 
‘‘(iii) OBLIGATION TO PAY.—A claim 
submitted to a PDP sponsor that is not 
paid or contested by the sponsor within the 
applicable number of days (as defined in 
subparagraph (B)) after the date on which 
the claim is received shall be deemed to be
236 
a clean claim and shall be paid by the 
PDP sponsor in accordance with subpara-
graph (A). 
‘‘(iv) DATE OF PAYMENT OF CLAIM.— 
Payment of a clean claim under such sub-
paragraph is considered to have been made 
on the date on which— 
‘‘(I) with respect to claims paid 
electronically, the payment is trans-
ferred; and 
‘‘(II) with respect to claims paid 
otherwise, the payment is submitted 
to the United States Postal Service or 
common carrier for delivery. 
‘‘(E) 
ELECTRONIC
TRANSFER
OF 
FUNDS.—A PDP sponsor shall pay all clean 
claims submitted electronically by electronic 
transfer of funds if the pharmacy so requests or 
has so requested previously. In the case where 
such payment is made electronically, remittance 
may be made by the PDP sponsor electronically 
as well. 
‘‘(F) PROTECTING THE RIGHTS OF CLAIM-
ANTS.—
237 
‘‘(i) IN
GENERAL.—Nothing in this 
paragraph shall be construed to prohibit or 
limit a claim or action not covered by the 
subject matter of this section that any in-
dividual or organization has against a pro-
vider or a PDP sponsor. 
‘‘(ii) ANTI-RETALIATION.—Consistent 
with applicable Federal or State law, a 
PDP sponsor shall not retaliate against an 
individual or provider for exercising a right 
of action under this subparagraph. 
‘‘(G) RULE OF CONSTRUCTION.—A deter-
mination under this paragraph that a claim 
submitted by a pharmacy is a clean claim shall 
not be construed as a positive determination re-
garding eligibility for payment under this title, 
nor is it an indication of government approval 
of, or acquiescence regarding, the claim sub-
mitted. The determination shall not relieve any 
party of civil or criminal liability with respect to 
the claim, nor does it offer a defense to any ad-
ministrative, civil, or criminal action with re-
spect to the claim.’’. 
(b) PROMPT PAYMENT BY MA–PD PLANS.—Section 
1857(f) of the Social Security Act (42 U.S.C. 1395w–27)
238 
is amended by adding at the end the following new para-
graph: 
‘‘(3) INCORPORATION
OF
CERTAIN
PRESCRIP-
TION DRUG PLAN CONTRACT REQUIREMENTS.—The 
following provisions shall apply to contracts with a 
Medicare Advantage organization offering an MA– 
PD plan in the same manner as they apply to con-
tracts with a PDP sponsor offering a prescription 
drug plan under part D: 
‘‘(A) PROMPT PAYMENT.—Section 1860D– 
12(b)(4).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2010. 
SEC. 172. SUBMISSION OF CLAIMS BY PHARMACIES LO-
CATED IN OR CONTRACTING WITH LONG- 
TERM CARE FACILITIES. 
(a) SUBMISSION OF CLAIMS BY PHARMACIES LO-
CATED IN OR CONTRACTING WITH LONG-TERM CARE FA-
CILITIES.— 
(1) SUBMISSION OF CLAIMS TO PRESCRIPTION 
DRUG PLANS.—Section 1860D–12(b) of the Social 
Security Act (42 U.S.C. 1395w–112(b)), as amend-
ed by section 171(a), is amended by adding at the 
end the following new paragraph:
239 
‘‘(5) SUBMISSION OF CLAIMS BY PHARMACIES 
LOCATED
IN
OR
CONTRACTING
WITH
LONG-TERM 
CARE FACILITIES.—Each contract entered into with 
a PDP sponsor under this part with respect to a 
prescription drug plan offered by such sponsor shall 
provide that a pharmacy located in, or having a con-
tract with, a long-term care facility shall have not 
less than 30 days (but not more than 90 days) to 
submit claims to the sponsor for reimbursement 
under the plan.’’. 
(2) 
SUBMISSION
OF
CLAIMS
TO
MA–PD 
PLANS.—Section 1857(f)(3) of the Social Security 
Act, as added by section 171(b), is amended by add-
ing at the end the following new subparagraph: 
‘‘(B) SUBMISSION
OF
CLAIMS
BY
PHAR-
MACIES
LOCATED
IN
OR
CONTRACTING
WITH 
LONG-TERM
CARE
FACILITIES.—Section 
1860D–12(b)(5).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2010. 
SEC. 173. REGULAR UPDATE OF PRESCRIPTION DRUG 
PRICING STANDARD. 
(a) 
REQUIREMENT
FOR
PRESCRIPTION
DRUG 
PLANS.—Section 1860D–12(b) of the Social Security Act
240 
(42 U.S.C. 1395w–112(b)), as amended by section 
172(a)(1), is amended by adding at the end the following 
new paragraph: 
‘‘(6) REGULAR
UPDATE
OF
PRESCRIPTION 
DRUG PRICING STANDARD.—If the PDP sponsor of 
a prescription drug plan uses a standard for reim-
bursement of pharmacies based on the cost of a 
drug, each contract entered into with such sponsor 
under this part with respect to the plan shall provide 
that the sponsor shall update such standard not less 
frequently than once every 7 days, beginning with an 
initial update on January 1 of each year, to accu-
rately reflect the market price of acquiring the 
drug.’’. 
(b) REQUIREMENT
FOR MA–PD PLANS.—Section 
1857(f)(3) of the Social Security Act, as amended by sec-
tion 172(a)(2), is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(C) REGULAR UPDATE OF PRESCRIPTION 
DRUG
PRICING
STANDARD.—Section 1860D– 
12(b)(6).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2009.
241 
PART II—OTHER PROVISIONS 
SEC. 
175. 
INCLUSION 
OF 
BARBITURATES 
AND 
BENZODIAZEPINES 
AS 
COVERED 
PART 
D 
DRUGS. 
(a) IN GENERAL.—Section 1860D–2(e)(2)(A) of the 
Social Security Act (42 U.S.C. 1395w–102(e)(2)(A)) is 
amended by inserting after ‘‘agents),’’ the following ‘‘other 
than subparagraph (I) of such section (relating to barbitu-
rates) if the barbiturate is used in the treatment of epi-
lepsy, cancer, or a chronic mental health disorder, and 
other than subparagraph (J) of such section (relating to 
benzodiazepines),’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to prescriptions dispensed on or 
after January 1, 2013. 
SEC. 176. FORMULARY REQUIREMENTS WITH RESPECT TO 
CERTAIN 
CATEGORIES 
OR 
CLASSES 
OF 
DRUGS. 
Section 1860D–4(b)(3) of the Social Security Act (42 
U.S.C. 1395w–104(b)(3)) is amended— 
(1) in subparagraph (C)(i), by striking ‘‘The 
formulary’’ and inserting ‘‘Subject to subparagraph 
(G), the formulary’’; and 
(2) by inserting after subparagraph (F) the fol-
lowing new subparagraph:
242 
‘‘(G) REQUIRED INCLUSION OF DRUGS IN 
CERTAIN CATEGORIES AND CLASSES.— 
‘‘(i) IDENTIFICATION
OF
DRUGS
IN 
CERTAIN CATEGORIES AND CLASSES.—Be-
ginning with plan year 2010, the Secretary 
shall identify, as appropriate, categories 
and classes of drugs for which both of the 
following criteria are met: 
‘‘(I) Restricted access to drugs in 
the category or class would have 
major or life threatening clinical con-
sequences for individuals who have a 
disease or disorder treated by the 
drugs in such category or class. 
‘‘(II) There is significant clinical 
need for such individuals to have ac-
cess to multiple drugs within a cat-
egory or class due to unique chemical 
actions and pharmacological effects of 
the drugs within the category or class, 
such as drugs used in the treatment 
of cancer. 
‘‘(ii) FORMULARY
REQUIREMENTS.— 
Subject to clause (iii), PDP sponsors offer-
ing prescription drug plans shall be re-
243 
quired to include all covered part D drugs 
in the categories and classes identified by 
the Secretary under clause (i). 
‘‘(iii) EXCEPTIONS.—The Secretary 
may establish exceptions that permits a 
PDP sponsor of a prescription drug plan 
to exclude from its formulary a particular 
covered part D drug in a category or class 
that is otherwise required to be included in 
the formulary under clause (ii) (or to oth-
erwise limit access to such a drug, includ-
ing through prior authorization or utiliza-
tion management). Any exceptions estab-
lished under the preceding sentence shall 
be provided under a process that— 
‘‘(I) ensures that any exception 
to such requirement is based upon sci-
entific evidence and medical standards 
of practice (and, in the case of 
antiretroviral medications, is con-
sistent with the Department of Health 
and Human Services Guidelines for 
the Use of Antiretroviral Agents in 
HIV-1-Infected Adults and Adoles-
cents); and
244 
‘‘(II) includes a public notice and 
comment period.’’. 
Subtitle F—Other Provisions 
SEC. 181. USE OF PART D DATA. 
Section 1860D–12(b)(3)(D) of the Social Security 
Act (42 U.S.C. 1395w–112(b)(3)(D)) is amended by add-
ing at the end the following sentence: ‘‘Notwithstanding 
any other provision of law, information provided to the 
Secretary under the application of section 1857(e)(1) to 
contracts under this section under the preceding sen-
tence— 
‘‘(i) may be used for the purposes of 
carrying out this part, improving public 
health through research on the utilization, 
safety, effectiveness, quality, and efficiency 
of health care services (as the Secretary 
determines appropriate); and 
‘‘(ii) shall be made available to Con-
gressional support agencies (in accordance 
with their obligations to support Congress 
as set out in their authorizing statutes) for 
the purposes of conducting Congressional 
oversight, 
monitoring, 
making 
rec-
ommendations, and analysis of the pro-
gram under this title.’’.
245 
SEC. 182. REVISION OF DEFINITION OF MEDICALLY AC-
CEPTED INDICATION FOR DRUGS. 
(a) REVISION
OF
DEFINITION
FOR
PART
D 
DRUGS.— 
(1) IN
GENERAL.—Section 1860D–2(e)(1) of 
the Social Security Act (42 U.S.C. 1395w– 
102(e)(1)) is amended, in the matter following sub-
paragraph (B)— 
(A) by striking ‘‘(as defined in section 
1927(k)(6))’’ and inserting ‘‘(as defined in 
paragraph (4))’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) MEDICALLY
ACCEPTED
INDICATION
DE-
FINED.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘medically accepted indica-
tion’ has the meaning given that term— 
‘‘(i) in the case of a covered part D 
drug 
used 
in 
an 
anticancer 
chemotherapeutic 
regimen, 
in 
section 
1861(t)(2)(B), except that in applying 
such section— 
‘‘(I) ‘prescription drug plan or 
MA–PD plan’ shall be substituted for 
‘carrier’ each place it appears; and
246 
‘‘(II) subject to subparagraph 
(B), the compendia described in sec-
tion 1927(g)(1)(B)(i)(III) shall be in-
cluded in the list of compendia de-
scribed 
in 
clause 
(ii)(I) 
section 
1861(t)(2)(B); and 
‘‘(ii) in the case of any other covered 
part D drug, in section 1927(k)(6). 
‘‘(B) CONFLICT
OF
INTEREST.—On and 
after January 1, 2010, subparagraph (A)(i)(II) 
shall not apply unless the compendia described 
in section 1927(g)(1)(B)(i)(III) meets the re-
quirement in the third sentence of section 
1861(t)(2)(B). 
‘‘(C) UPDATE.—For purposes of applying 
subparagraph (A)(ii), the Secretary shall revise 
the list of compendia described in section 
1927(g)(1)(B)(i) as is appropriate for identi-
fying medically accepted indications for drugs. 
Any such revision shall be done in a manner 
consistent with the process for revising com-
pendia under section 1861(t)(2)(B).’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to plan years begin-
ning on or after January 1, 2009.
247 
(b) 
CONFLICTS
OF
INTEREST.—Section 
1861(t)(2)(B) of the Social Security Act (42 U.S.C. 
1395x(t)(2)(B)) is amended by adding at the end the fol-
lowing new sentence: ‘‘On and after January 1, 2010, no 
compendia may be included on the list of compendia under 
this subparagraph unless the compendia has a publicly 
transparent process for evaluating therapies and for iden-
tifying potential conflicts of interests.’’. 
SEC. 183. CONTRACT WITH A CONSENSUS-BASED ENTITY 
REGARDING PERFORMANCE MEASUREMENT. 
(a) CONTRACT.— 
(1) IN GENERAL.—Part E of title XVIII of the 
Social Security Act (42 U.S.C. 1395x et seq.) is 
amended by inserting after section 1889 the fol-
lowing new section: 
‘‘CONTRACT WITH A CONSENSUS-BASED ENTITY 
REGARDING PERFORMANCE MEASUREMENT 
‘‘SEC. 1890. (a) CONTRACT.— 
‘‘(1) IN GENERAL.—For purposes of activities 
conducted under this Act, the Secretary shall iden-
tify and have in effect a contract with a consensus- 
based entity, such as the National Quality Forum, 
that meets the requirements described in subsection 
(c). Such contract shall provide that the entity will 
perform the duties described in subsection (b).
248 
‘‘(2) TIMING FOR FIRST CONTRACT.—As soon 
as practicable after the date of the enactment of this 
subsection, the Secretary shall enter into the first 
contract under paragraph (1). 
‘‘(3) PERIOD OF CONTRACT.—A contract under 
paragraph (1) shall be for a period of 4 years (ex-
cept as may be renewed after a subsequent bidding 
process). 
‘‘(4) COMPETITIVE PROCEDURES.—Competitive 
procedures (as defined in section 4(5) of the Office 
of Federal Procurement Policy Act (41 U.S.C. 
403(5))) shall be used to enter into a contract under 
paragraph (1). 
‘‘(b) DUTIES.—The duties described in this sub-
section are the following: 
‘‘(1) PRIORITY SETTING PROCESS.—The entity 
shall synthesize evidence and convene key stake-
holders to make recommendations, with respect to 
activities conducted under this Act, on an integrated 
national strategy and priorities for health care per-
formance measurement in all applicable settings. In 
making such recommendations, the entity shall— 
‘‘(A) ensure that priority is given to meas-
ures—
249 
‘‘(i) that address the health care pro-
vided to patients with prevalent, high-cost 
chronic diseases; 
‘‘(ii) with the greatest potential for 
improving the quality, efficiency, and pa-
tient-centeredness of health care; and 
‘‘(iii) that may be implemented rap-
idly due to existing evidence, standards of 
care, or other reasons; and 
‘‘(B) take into account measures that— 
‘‘(i) may assist consumers and pa-
tients in making informed health care deci-
sions; 
‘‘(ii) address health disparities across 
groups and areas; and 
‘‘(iii) address the continuum of care a 
patient receives, including services fur-
nished by multiple health care providers or 
practitioners and across multiple settings. 
‘‘(2) ENDORSEMENT OF MEASURES.—The enti-
ty shall provide for the endorsement of standardized 
health care performance measures. The endorsement 
process under the preceding sentence shall consider 
whether a measure—
250 
‘‘(A) is evidence-based, reliable, valid, 
verifiable, relevant to enhanced health out-
comes, actionable at the caregiver level, feasible 
to collect and report, and responsive to vari-
ations in patient characteristics, such as health 
status, language capabilities, race or ethnicity, 
and income level; and 
‘‘(B) is consistent across types of health 
care providers, including hospitals and physi-
cians. 
‘‘(3) MAINTENANCE OF MEASURES.—The entity 
shall establish and implement a process to ensure 
that measures endorsed under paragraph (2) are up-
dated (or retired if obsolete) as new evidence is de-
veloped. 
‘‘(4) PROMOTION
OF
THE
DEVELOPMENT
OF 
ELECTRONIC HEALTH RECORDS.—The entity shall 
promote the development and use of electronic 
health records that contain the functionality for 
automated collection, aggregation, and transmission 
of performance measurement information. 
‘‘(5) ANNUAL REPORT TO CONGRESS AND THE 
SECRETARY; SECRETARIAL PUBLICATION AND COM-
MENT.—
251 
‘‘(A) ANNUAL REPORT.—By not later than 
March 1 of each year (beginning with 2009), 
the entity shall submit to Congress and the Sec-
retary a report containing a description of— 
‘‘(i) the implementation of quality 
measurement initiatives under this Act and 
the coordination of such initiatives with 
quality initiatives implemented by other 
payers; 
‘‘(ii) 
the 
recommendations 
made 
under paragraph (1); and 
‘‘(iii) the performance by the entity of 
the duties required under the contract en-
tered into with the Secretary under sub-
section (a). 
‘‘(B) SECRETARIAL REVIEW AND PUBLICA-
TION OF ANNUAL REPORT.—Not later than 6 
months after receiving a report under subpara-
graph (A) for a year, the Secretary shall— 
‘‘(i) review such report; and 
‘‘(ii) publish such report in the Fed-
eral Register, together with any comments 
of the Secretary on such report. 
‘‘(c) REQUIREMENTS
DESCRIBED.—The require-
ments described in this subsection are the following:
252 
‘‘(1) PRIVATE NONPROFIT.—The entity is a pri-
vate nonprofit entity governed by a board. 
‘‘(2) BOARD
MEMBERSHIP.—The members of 
the board of the entity include— 
‘‘(A) representatives of health plans and 
health care providers and practitioners or rep-
resentatives of groups representing such health 
plans and health care providers and practi-
tioners; 
‘‘(B) health care consumers or representa-
tives of groups representing health care con-
sumers; and 
‘‘(C) representatives of purchasers and em-
ployers or representatives of groups rep-
resenting purchasers or employers. 
‘‘(3) ENTITY MEMBERSHIP.—The membership 
of the entity includes persons who have experience 
with— 
‘‘(A) urban health care issues; 
‘‘(B) safety net health care issues; 
‘‘(C) rural and frontier health care issues; 
and 
‘‘(D) health care quality and safety issues. 
‘‘(4) OPEN AND TRANSPARENT.—With respect 
to matters related to the contract with the Secretary
253 
under subsection (a), the entity conducts its business 
in an open and transparent manner and provides the 
opportunity for public comment on its activities. 
‘‘(5) VOLUNTARY CONSENSUS STANDARDS SET-
TING ORGANIZATION.—The entity operates as a vol-
untary consensus standards setting organization as 
defined for purposes of section 12(d) of the National 
Technology Transfer and Advancement Act of 1995 
(Public Law 104–113) and Office of Management 
and Budget Revised Circular A–119 (published in 
the Federal Register on February 10, 1998). 
‘‘(6) EXPERIENCE.—The entity has at least 4 
years of experience in establishing national con-
sensus standards. 
‘‘(7) MEMBERSHIP
FEES.—If the entity re-
quires a membership fee for participation in the 
functions of the entity, such fees shall be reasonable 
and adjusted based on the capacity of the potential 
member to pay the fee. In no case shall membership 
fees pose a barrier to the participation of individuals 
or groups with low or nominal resources to partici-
pate in the functions of the entity. 
‘‘(d) FUNDING.—For purposes of carrying out this 
section, the Secretary shall provide for the transfer, from 
the Federal Hospital Insurance Trust Fund under section
254 
1817 and the Federal Supplementary Medical Insurance 
Trust Fund under section 1841 (in such proportion as the 
Secretary determines appropriate), of $10,000,000 to the 
Centers for Medicare & Medicaid Services Program Man-
agement Account for each of fiscal years 2009 through 
2012.’’. 
(2) SENSE OF THE SENATE.—It is the Sense of 
the Senate that the selection by the Secretary of 
Health and Human Services of an entity to contract 
with under section 1890(a) of the Social Security 
Act, as added by paragraph (1), should not be con-
strued as diminishing the significant contributions of 
the Boards of Medicine, the quality alliances, and 
other clinical and technical experts to efforts to 
measure and improve the quality of health care serv-
ices. 
(b) GAO STUDY AND REPORTS ON THE PERFORM-
ANCE AND COSTS OF THE CONSENSUS-BASED ENTITY 
UNDER THE CONTRACT.— 
(1) IN GENERAL.—The Comptroller General of 
the United States shall conduct a study on— 
(A) the performance of the entity with a 
contract with the Secretary of Health and 
Human Services under section 1890(a) of the
255 
Social Security Act, as added by subsection (a), 
of its duties under such contract; and 
(B) the costs incurred by such entity in 
performing such duties. 
(2) REPORTS.—Not later than 18 months and 
36 months after the effective date of the first con-
tract entered into under such section 1890(a), the 
Comptroller General of the United States shall sub-
mit to Congress a report containing the results of 
the study conducted under paragraph (1), together 
with recommendations for such legislation and ad-
ministrative action as the Comptroller General deter-
mines appropriate. 
SEC. 184. COST-SHARING FOR CLINICAL TRIALS. 
Section 1833 of the Social Security Act (42 U.S.C. 
1395l), as amended by section 151(a), is amended by add-
ing at the end the following new subsection: 
‘‘(w) METHODS OF PAYMENT.—The Secretary may 
develop alternative methods of payment for items and 
services provided under clinical trials and comparative ef-
fectiveness studies sponsored or supported by an agency 
of the Department of Health and Human Services, as de-
termined by the Secretary, to those that would otherwise 
apply under this section, to the extent such alternative 
methods are necessary to preserve the scientific validity
256 
of such trials or studies, such as in the case where mask-
ing the identity of interventions from patients and inves-
tigators is necessary to comply with the particular trial 
or study design.’’. 
SEC. 185. ADDRESSING HEALTH CARE DISPARITIES. 
Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by inserting after section 1808 
the following new section: 
‘‘ADDRESSING HEALTH CARE DISPARITIES 
‘‘SEC. 1809. (a) EVALUATING DATA COLLECTION 
APPROACHES.—The Secretary shall evaluate approaches 
for the collection of data under this title, to be performed 
in conjunction with existing quality reporting require-
ments and programs under this title, that allow for the 
ongoing, accurate, and timely collection and evaluation of 
data on disparities in health care services and performance 
on the basis of race, ethnicity, and gender. In conducting 
such evaluation, the Secretary shall consider the following 
objectives: 
‘‘(1) Protecting patient privacy. 
‘‘(2) Minimizing the administrative burdens of 
data collection and reporting on providers and health 
plans participating under this title. 
‘‘(3) Improving Medicare program data on race, 
ethnicity, and gender. 
‘‘(b) REPORTS TO CONGRESS.—
257 
‘‘(1) REPORT ON EVALUATION.—Not later than 
18 months after the date of the enactment of this 
section, the Secretary shall submit to Congress a re-
port on the evaluation conducted under subsection 
(a). Such report shall, taking into consideration the 
results of such evaluation— 
‘‘(A) identify approaches (including defin-
ing methodologies) for identifying and collecting 
and evaluating data on health care disparities 
on the basis of race, ethnicity, and gender for 
the original Medicare fee-for-service program 
under parts A and B, the Medicare Advantage 
program under part C, and the Medicare pre-
scription drug program under part D; and 
‘‘(B) include recommendations on the most 
effective strategies and approaches to reporting 
HEDIS quality measures as required under sec-
tion 1852(e)(3) and other nationally recognized 
quality performance measures, as appropriate, 
on the basis of race, ethnicity, and gender. 
‘‘(2) REPORTS ON DATA ANALYSES.—Not later 
than 4 years after the date of the enactment of this 
section, and 4 years thereafter, the Secretary shall 
submit to Congress a report that includes rec-
ommendations for improving the identification of
258 
health care disparities for Medicare beneficiaries 
based on analyses of the data collected under sub-
section (c). 
‘‘(c) IMPLEMENTING EFFECTIVE APPROACHES.—Not 
later than 24 months after the date of the enactment of 
this section, the Secretary shall implement the approaches 
identified in the report submitted under subsection (b)(1) 
for the ongoing, accurate, and timely collection and eval-
uation of data on health care disparities on the basis of 
race, ethnicity, and gender.’’. 
SEC. 186. DEMONSTRATION TO IMPROVE CARE TO PRE-
VIOUSLY UNINSURED. 
(a) ESTABLISHMENT.—Within one year after the 
date of the enactment of this Act, the Secretary (in this 
section referred to as the ‘‘Secretary’’) shall establish a 
demonstration project to determine the greatest needs and 
most effective methods of outreach to medicare bene-
ficiaries who were previously uninsured. 
(b) SCOPE.—The demonstration shall be in no fewer 
than 10 sites, and shall include state health insurance as-
sistance programs, community health centers, community- 
based organizations, community health workers, and other 
service providers under parts A, B, and C of title XVIII 
of the Social Security Act. Grantees that are plans oper-
ating under part C shall document that enrollees who were
259 
previously uninsured receive the ‘‘Welcome to Medicare’’ 
physical exam. 
(c) DURATION.—The Secretary shall conduct the 
demonstration project for a period of 2 years. 
(d) REPORT AND EVALUATION.—The Secretary shall 
conduct an evaluation of the demonstration and not later 
than 1 year after the completion of the project shall sub-
mit to Congress a report including the following: 
(1) An analysis of the effectiveness of outreach 
activities targeting beneficiaries who were previously 
uninsured, such as revising outreach and enrollment 
materials (including the potential for use of video in-
formation), providing one-on-one counseling, working 
with community health workers, and amending the 
Medicare and You handbook. 
(2) The effect of such outreach on beneficiary 
access to care, utilization of services, efficiency and 
cost-effectiveness of health care delivery, patient sat-
isfaction, and select health outcomes.
260 
SEC. 187. OFFICE OF THE INSPECTOR GENERAL REPORT 
ON COMPLIANCE WITH AND ENFORCEMENT 
OF NATIONAL STANDARDS ON CULTURALLY 
AND LINGUISTICALLY APPROPRIATE SERV-
ICES (CLAS) IN MEDICARE. 
(a) REPORT.—Not later than two years after the date 
of the enactment of this Act, the Inspector General of the 
Department of Health and Human Services shall prepare 
and publish a report on— 
(1) the extent to which Medicare providers and 
plans are complying with the Office for Civil Rights’ 
Guidance to Federal Financial Assistance Recipients 
Regarding Title VI Prohibition Against National Or-
igin Discrimination Affecting Limited English Pro-
ficient Persons and the Office of Minority Health’s 
Culturally and Linguistically Appropriate Services 
Standards in health care; and 
(2) a description of the costs associated with or 
savings related to the provision of language services. 
Such report shall include recommendations on improving 
compliance with CLAS Standards and recommendations 
on improving enforcement of CLAS Standards. 
(b) IMPLEMENTATION.—Not later than one year 
after the date of publication of the report under subsection 
(a), the Department of Health and Human Services shall
261 
implement changes responsive to any deficiencies identi-
fied in the report. 
SEC. 188. MEDICARE IMPROVEMENT FUNDING. 
(a) MEDICARE IMPROVEMENT FUND.— 
(1) IN GENERAL.—Subject to paragraph (2), 
title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by adding at the end the 
following new section: 
‘‘MEDICARE IMPROVEMENT FUND 
‘‘SEC. 1898. (a) ESTABLISHMENT.— 
‘‘The Secretary shall establish under this title a 
Medicare Improvement Fund (in this section re-
ferred to as the ‘Fund’) which shall be available to 
the Secretary to make improvements under the origi-
nal fee-for-service program under parts A and B for 
individuals entitled to, or enrolled for, benefits under 
part A or enrolled under part B. 
‘‘(b) FUNDING.— 
‘‘(1) IN GENERAL.—There shall be available to 
the Fund, for expenditures from the Fund for serv-
ices furnished during fiscal years 2014 through 
2017, $19,900,000,000. 
‘‘(2) PAYMENT
FROM
TRUST
FUNDS.—The 
amount specified under paragraph (1) shall be avail-
able to the Fund, as expenditures are made from the 
Fund, from the Federal Hospital Insurance Trust
262 
Fund and the Federal Supplementary Medical In-
surance Trust Fund in such proportion as the Sec-
retary determines appropriate. 
‘‘(3) FUNDING LIMITATION.—Amounts in the 
Fund shall be available in advance of appropriations 
but only if the total amount obligated from the 
Fund does not exceed the amount available to the 
Fund under paragraph (1). The Secretary may obli-
gate funds from the Fund only if the Secretary de-
termines (and the Chief Actuary of the Centers for 
Medicare & Medicaid Services and the appropriate 
budget officer certify) that there are available in the 
Fund sufficient amounts to cover all such obligations 
incurred consistent with the previous sentence.’’. 
(2) CONTINGENCY.— 
(A) IN GENERAL.—If there is enacted, be-
fore, on, or after the date of the enactment of 
this Act, a Supplemental Appropriations Act, 
2008 that includes a provision providing for a 
Medicare Improvement Fund under a section 
1898 of the Social Security Act, the alternative 
amendment described in subparagraph (B)— 
(i) shall apply instead of the amend-
ment made by paragraph (1); and
263 
(ii) shall be executed after such provi-
sion in such Supplemental Appropriations 
Act. 
(B) 
ALTERNATIVE
AMENDMENT
DE-
SCRIBED.—The 
alternative 
amendment 
de-
scribed in this subparagraph is as follows: Sec-
tion 1898(b)(1) of the Social Security Act, as 
added by the Supplemental Appropriations Act, 
2008, is amended by inserting before the period 
at the end the following: ‘‘ and, in addition for 
services furnished during fiscal years 2014 
through 2017, $19,900,000,000’’. 
(b) IMPLEMENTATION.—For purposes of carrying out 
the provisions of, and amendments made by, this title, in 
addition to any other amounts provided in such provisions 
and amendments, the Secretary of Health and Human 
Services shall provide for the transfer, from the Federal 
Hospital Insurance Trust Fund under section 1817 of the 
Social Security Act (42 U.S.C. 1395i) and the Federal 
Supplementary Medical Insurance Trust Fund under sec-
tion 1841 of such Act (42 U.S.C. 1395t), in the same pro-
portion as the Secretary determines under section 1853(f) 
of such Act (42 U.S.C. 1395w–23(f)), of $140,000,000 
to the Centers for Medicare & Medicaid Services Program
264 
Management Account for the period of fiscal years 2009 
through 2013. 
SEC. 189. INCLUSION OF MEDICARE PROVIDERS AND SUP-
PLIERS IN FEDERAL PAYMENT LEVY AND AD-
MINISTRATIVE OFFSET PROGRAM. 
(a) IN GENERAL.—Section 1874 of the Social Secu-
rity Act (42 U.S.C. 1395kk) is amended by adding at the 
end the following new subsection: 
‘‘(d) INCLUSION OF MEDICARE PROVIDER AND SUP-
PLIER PAYMENTS
IN FEDERAL PAYMENT LEVY PRO-
GRAM.— 
‘‘(1) IN GENERAL.—The Centers for Medicare 
& Medicaid Services shall take all necessary steps to 
participate in the Federal Payment Levy Program 
under section 6331(h) of the Internal Revenue Code 
of 1986 as soon as possible and shall ensure that— 
‘‘(A) at least 50 percent of all payments 
under parts A and B are processed through 
such program beginning within 1 year after the 
date of the enactment of this section; 
‘‘(B) at least 75 percent of all payments 
under parts A and B are processed through 
such program beginning within 2 years after 
such date; and
265 
‘‘(C) all payments under parts A and B 
are processed through such program beginning 
not later than September 30, 2011. 
‘‘(2) ASSISTANCE.—The Financial Management 
Service and the Internal Revenue Service shall pro-
vide assistance to the Centers for Medicare & Med-
icaid Services to ensure that all payments described 
in paragraph (1) are included in the Federal Pay-
ment Levy Program by the deadlines specified in 
that subsection.’’. 
(b) APPLICATION OF ADMINISTRATIVE OFFSET PRO-
VISIONS
TO MEDICARE PROVIDER
OR SUPPLIER PAY-
MENTS.—Section 3716 of title 31, United States Code, is 
amended— 
(1) by inserting ‘‘the Department of Health and 
Human Services,’’ after ‘‘United States Postal Serv-
ice,’’ in subsection (c)(1)(A); and 
(2) by adding at the end of subsection (c)(3) 
the following new subparagraph: 
‘‘(D) This section shall apply to payments 
made after the date which is 90 days after the 
enactment of this subparagraph (or such earlier 
date as designated by the Secretary of Health 
and Human Services) with respect to claims or
266 
debts, and to amounts payable, under title 
XVIII 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. 
TITLE II—MEDICAID 
SEC. 201. EXTENSION OF TRANSITIONAL MEDICAL ASSIST-
ANCE (TMA) AND ABSTINENCE EDUCATION 
PROGRAM. 
Section 401 of division B of the Tax Relief and 
Health Care Act of 2006 (Public Law 109–432, 120 Stat. 
2994), as amended by section 1 of Public Law 110–48 
(121 Stat. 244), section 2 of the TMA, Abstinence, Edu-
cation, and QI Programs Extension Act of 2007 (Public 
Law 110–90, 121 Stat. 984), and section 202 of the Medi-
care, Medicaid, and SCHIP Extension Act of 2007 (Public 
Law 110–173) is amended— 
(1) by striking ‘‘June 30, 2008’’ and inserting 
‘‘June 30, 2009’’; 
(2) by striking ‘‘the third quarter of fiscal year 
2008’’ and inserting ‘‘the third quarter of fiscal year 
2009’’; and 
(3) by striking ‘‘the third quarter of fiscal year 
2007’’ and inserting ‘‘the third quarter of fiscal year 
2008’’.
267 
SEC. 202. MEDICAID DSH EXTENSION. 
Section 1923(f)(6) of the Social Security Act (42 
U.S.C. 1396r–4(f)(6)) is amended— 
(1) in the heading, by striking ‘‘FISCAL YEAR 
2007 AND PORTIONS OF FISCAL YEAR 2008’’ and in-
serting ‘‘FISCAL YEARS 2007 THROUGH 2009 AND THE 
FIRST CALENDAR QUARTER OF FISCAL YEAR 2010’’; 
and 
(2) in subparagraph (A)— 
(A) in clause (i)— 
(i) in the second sentence— 
(I) by striking ‘‘fiscal year 2008 
for the period ending on June 30, 
2008’’ and inserting ‘‘fiscal years 
2008 and 2009’’; and 
(II) by striking ‘‘3⁄4 of’’; and 
(ii) by adding at the end the following 
new sentences: ‘‘Only with respect to fiscal 
year 2010 for the period ending on Decem-
ber 31, 2009, the DSH allotment for Ten-
nessee for such portion of the fiscal year, 
notwithstanding such table or terms, shall 
be 1⁄4 of the amount specified in the first 
sentence for fiscal year 2007.’’;
268 
(B) in clause (ii), by striking ‘‘or for a pe-
riod in fiscal year 2008’’ and inserting ‘‘, 2008, 
2009, or for a period in fiscal year 2010’’; 
(C) in clause (iv)— 
(i) in the heading, by striking ‘‘FISCAL 
YEAR 2007 AND FISCAL YEAR 2008’’ and in-
serting ‘‘FISCAL YEARS 2007 THROUGH 2009 
AND THE FIRST CALENDAR QUARTER OF 
FISCAL YEAR 2010’’; 
(ii) in subclause (I), by striking ‘‘or 
for a period in fiscal year 2008’’ and in-
serting ‘‘, 2008, 2009, or for a period in 
fiscal year 2010’’; and 
(iii) in subclause (II), by striking ‘‘or 
for a period in fiscal year 2008’’ and in-
serting ‘‘, 2008, 2009, or for a period in 
fiscal year 2010’’; and 
(3) in subparagraph (B)(i)— 
(A) in the first sentence, by striking ‘‘fiscal 
year 2007’’ and inserting ‘‘each of fiscal years 
2007 through 2009’’; and 
(B) by striking the second sentence and in-
serting the following: ‘‘Only with respect to fis-
cal year 2010 for the period ending on Decem-
ber 31, 2009, the DSH allotment for Hawaii
269 
for such portion of the fiscal year, notwith-
standing the table set forth in paragraph (2), 
shall be $2,500,000.’’. 
SEC. 203. PHARMACY REIMBURSEMENT UNDER MEDICAID. 
(a) DELAY
IN APPLICATION
OF NEW PAYMENT 
LIMIT
FOR MULTIPLE SOURCE DRUGS UNDER MED-
ICAID.—Notwithstanding paragraphs (4) and (5) of sub-
section (e) of section 1927 of the Social Security Act (42 
U.S.C. 1396r–8) or part 447 of title 42, Code of Federal 
Regulations, as published on July 17, 2007 (72 Federal 
Register 39142)— 
(1) the specific upper limit under section 
447.332 of title 42, Code of Federal Regulations (as 
in effect on December 31, 2006) applicable to pay-
ments made by a State for multiple source drugs 
under a State Medicaid plan shall continue to apply 
through September 30, 2009, for purposes of the 
availability of Federal financial participation for 
such payments; and 
(2) the Secretary of Health and Human Serv-
ices shall not, prior to October 1, 2009, finalize, im-
plement, enforce, or otherwise take any action 
(through promulgation of regulation, issuance of 
regulatory guidance, use of Federal payment audit 
procedures, or other administrative action, policy, or
270 
practice, including a Medical Assistance Manual 
transmittal or letter to State Medicaid directors) to 
impose the specific upper limit established under 
section 447.514(b) of title 42, Code of Federal Reg-
ulations as published on July 17, 2007 (72 Federal 
Register 39142). 
(b) TEMPORARY SUSPENSION
OF UPDATED PUB-
LICLY AVAILABLE AMP DATA.—Notwithstanding clause 
(v) of section 1927(b)(3)(D) of the Social Security Act (42 
U.S.C. 1396r–8(b)(3)(D)), the Secretary of Health and 
Human Services shall not, prior to October 1, 2009, make 
publicly available any AMP disclosed to the Secretary. 
(c) DEFINITIONS.—In this subsection: 
(1) The term ‘‘multiple source drug’’ has the 
meaning given that term in section 1927(k)(7)(A)(i) 
of the Social Security Act (42 U.S.C. 1396r– 
8(k)(7)(A)(i)). 
(2) The term ‘‘AMP’’ has the meaning given 
‘‘average manufacturer price’’ in section 1927(k)(1) 
of the Social Security Act (42 U.S.C. 1396r– 
8(k)(1)) and ‘‘AMP’’ in section 447.504(a) of title 
42, Code of Federal Regulations as published on 
July 17, 2007 (72 Federal Register 39142).
271 
SEC. 204. REVIEW OF ADMINISTRATIVE CLAIM DETERMINA-
TIONS. 
(a) IN GENERAL.—Section 1116 of the Social Secu-
rity Act (42 U.S.C. 1316) is amended by adding at the 
end the following new subsection: 
‘‘(e)(1) Whenever the Secretary determines that any 
item or class of items on account of which Federal finan-
cial participation is claimed under title XIX shall be dis-
allowed for such participation, the State shall be entitled 
to and upon request shall receive a reconsideration of the 
disallowance, provided that such request is made during 
the 60-day period that begins on the date the State re-
ceives notice of the disallowance. 
‘‘(2)(A) A State may appeal a disallowance of a claim 
for federal financial participation under title XIX by the 
Secretary, or an unfavorable reconsideration of a disallow-
ance, during the 60-day period that begins on the date 
the State receives notice of the disallowance or of the unfa-
vorable reconsideration, in whole or in part, to the Depart-
mental Appeals Board, established in the Department of 
Health and Human Services (in this paragraph referred 
to as the ‘Board’), by filing a notice of appeal with the 
Board. 
‘‘(B) The Board shall consider a State’s appeal of 
a disallowance of such a claim (or of an unfavorable recon-
sideration of a disallowance) on the basis of such docu-
272 
mentation as the State may submit and as the Board may 
require to support the final decision of the Board. In de-
ciding whether to uphold a disallowance of such a claim 
or any portion thereof, the Board shall be bound by all 
applicable laws and regulations and shall conduct a thor-
ough review of the issues, taking into account all relevant 
evidence. The Board’s decision of an appeal under sub-
paragraph (A) shall be the final decision of the Secretary 
and shall be subject to reconsideration by the Board only 
upon motion of either party filed during the 60-day period 
that begins on the date of the Board’s decision or to judi-
cial review in accordance with subparagraph (C). 
‘‘(C) A State may obtain judicial review of a decision 
of the Board by filing an action in any United States Dis-
trict Court located within the appealing State (or, if sev-
eral States jointly appeal the disallowance of claims for 
Federal financial participation under section 1903, in any 
United States District Court that is located within any 
State that is a party to the appeal) or the United States 
District Court for the District of Columbia. Such an ac-
tion may only be filed— 
‘‘(i) if no motion for reconsideration was filed 
within the 60-day period specified in subparagraph 
(B), during such 60-day period; or