H. R. 3590—312 
should be used to measure patient severity of illness and access 
to care, such as— 
(A) population density and relative patient access to 
care; 
(B) variations in service costs for providing care to 
individuals who are dually eligible under the Medicare 
and Medicaid programs; 
(C) the presence of severe or chronic diseases, as evi-
denced by multiple, discontinuous home health episodes; 
(D) poverty status, as evidenced by the receipt of 
Supplemental Security Income under title XVI of the Social 
Security Act; 
(E) the absence of caregivers; 
(F) language barriers; 
(G) atypical transportation costs; 
(H) security costs; and 
(I) other factors determined appropriate by the Sec-
retary. 
(3) REPORT.—Not later than March 1, 2011, the Secretary 
shall submit to Congress a report on the study conducted under 
paragraph (1), together with recommendations for such legisla-
tion and administrative action as the Secretary determines 
appropriate. 
(4) CONSULTATIONS.—In conducting the study under para-
graph (1) and preparing the report under paragraph (3), the 
Secretary shall consult with— 
(A) stakeholders representing home health agencies; 
(B) groups representing Medicare beneficiaries; 
(C) the Medicare Payment Advisory Commission; 
(D) the Inspector General of the Department of Health 
and Human Services; and 
(E) the Comptroller General of the United States. 
SEC. 3132. HOSPICE REFORM. 
(a) HOSPICE CARE PAYMENT REFORMS.— 
(1) IN
GENERAL.—Section 1814(i) of the Social Security 
Act (42 U.S.C. 1395f(i)), as amended by section 3004(c), is 
amended— 
(A) by redesignating paragraph (6) as paragraph (7); 
and 
(B) by inserting after paragraph (5) the following new 
paragraph: 
‘‘(6)(A) The Secretary shall collect additional data and 
information as the Secretary determines appropriate to revise 
payments for hospice care under this subsection pursuant to 
subparagraph (D) and for other purposes as determined appro-
priate by the Secretary. The Secretary shall begin to collect 
such data by not later than January 1, 2011. 
‘‘(B) The additional data and information to be collected 
under subparagraph (A) may include data and information 
on— 
‘‘(i) charges and payments; 
‘‘(ii) the number of days of hospice care which are 
attributable to individuals who are entitled to, or enrolled 
for, benefits under part A; and 
‘‘(iii) with respect to each type of service included in 
hospice care—
H. R. 3590—313 
‘‘(I) the number of days of hospice care attributable 
to the type of service; 
‘‘(II) the cost of the type of service; and 
‘‘(III) the amount of payment for the type of service; 
‘‘(iv) charitable contributions and other revenue of the 
hospice program; 
‘‘(v) the number of hospice visits; 
‘‘(vi) the type of practitioner providing the visit; and 
‘‘(vii) the length of the visit and other basic information 
with respect to the visit. 
‘‘(C) The Secretary may collect the additional data and 
information under subparagraph (A) on cost reports, claims, 
or other mechanisms as the Secretary determines to be appro-
priate. 
‘‘(D)(i) Notwithstanding the preceding paragraphs of this 
subsection, not earlier than October 1, 2013, the Secretary 
shall, by regulation, implement revisions to the methodology 
for determining the payment rates for routine home care and 
other services included in hospice care under this part, as 
the Secretary determines to be appropriate. Such revisions 
may be based on an analysis of data and information collected 
under subparagraph (A). Such revisions may include adjust-
ments to per diem payments that reflect changes in resource 
intensity in providing such care and services during the course 
of the entire episode of hospice care. 
‘‘(ii) Revisions in payment implemented pursuant to clause 
(i) shall result in the same estimated amount of aggregate 
expenditures under this title for hospice care furnished in the 
fiscal year in which such revisions in payment are implemented 
as would have been made under this title for such care in 
such fiscal year if such revisions had not been implemented. 
‘‘(E) The Secretary shall consult with hospice programs 
and the Medicare Payment Advisory Commission regarding 
the additional data and information to be collected under 
subparagraph (A) and the payment revisions under subpara-
graph (D).’’. 
(2) CONFORMING AMENDMENTS.—Section 1814(i)(1)(C) of the 
Social Security Act (42 U.S.C. 1395f(i)(1)(C)) is amended— 
(A) in clause (ii)— 
(i) in the matter preceding subclause (I), by 
inserting ‘‘(before the first fiscal year in which the 
payment revisions described in paragraph (6)(D) are 
implemented)’’ after ‘‘subsequent fiscal year’’; and 
(ii) in subclause (VII), by inserting ‘‘(before the 
first fiscal year in which the payment revisions 
described in paragraph (6)(D) are implemented), sub-
ject to clause (iv),’’ after ‘‘subsequent fiscal year’’; and 
(B) by adding at the end the following new clause: 
‘‘(iii) With respect to routine home care and other 
services included in hospice care furnished during fiscal 
years subsequent to the first fiscal year in which pay-
ment revisions described in paragraph (6)(D) are imple-
mented, the payment rates for such care and services 
shall be the payment rates in effect under this clause 
during the preceding fiscal year increased by, subject 
to clause (iv), the market basket percentage increase
H. R. 3590—314 
(as defined in section 1886(b)(3)(B)(iii)) for the fiscal 
year.’’. 
(b) ADOPTION OF MEDPAC HOSPICE PROGRAM ELIGIBILITY RE-
CERTIFICATION RECOMMENDATIONS.—Section 1814(a)(7) of the Social 
Security Act (42 U.S.C. 1395f(a)(7)) is amended— 
(1) in subparagraph (B), by striking ‘‘and’’ at the end; 
and 
(2) by adding at the end the following new subparagraph: 
‘‘(D) on and after January 1, 2011— 
‘‘(i) a hospice physician or nurse practitioner has 
a face-to-face encounter with the individual to deter-
mine continued eligibility of the individual for hospice 
care prior to the 180th-day recertification and each 
subsequent recertification under subparagraph (A)(ii) 
and attests that such visit took place (in accordance 
with procedures established by the Secretary); and 
‘‘(ii) in the case of hospice care provided an indi-
vidual for more than 180 days by a hospice program 
for which the number of such cases for such program 
comprises more than a percent (specified by the Sec-
retary) of the total number of such cases for all pro-
grams under this title, the hospice care provided to 
such individual is medically reviewed (in accordance 
with procedures established by the Secretary); and’’. 
SEC. 3133. IMPROVEMENT TO MEDICARE DISPROPORTIONATE SHARE 
HOSPITAL (DSH) PAYMENTS. 
Section 1886 of the Social Security Act (42 U.S.C. 1395ww), 
as amended by sections 3001, 3008, and 3025, is amended— 
(1) in subsection (d)(5)(F)(i), by striking ‘‘For’’ and inserting 
‘‘Subject to subsection (r), for’’; and 
(2) by adding at the end the following new subsection: 
‘‘(r) ADJUSTMENTS TO MEDICARE DSH PAYMENTS.— 
‘‘(1) EMPIRICALLY JUSTIFIED DSH PAYMENTS.—For fiscal year 
2015 and each subsequent fiscal year, instead of the amount 
of disproportionate share hospital payment that would other-
wise be made under subsection (d)(5)(F) to a subsection (d) 
hospital for the fiscal year, the Secretary shall pay to the 
subsection (d) hospital 25 percent of such amount (which rep-
resents the empirically justified amount for such payment, as 
determined by the Medicare Payment Advisory Commission 
in its March 2007 Report to the Congress). 
‘‘(2) ADDITIONAL
PAYMENT.—In addition to the payment 
made to a subsection (d) hospital under paragraph (1), for 
fiscal year 2015 and each subsequent fiscal year, the Secretary 
shall pay to such subsection (d) hospitals an additional amount 
equal to the product of the following factors: 
‘‘(A) FACTOR
ONE.—A factor equal to the difference 
between— 
‘‘(i) the aggregate amount of payments that would 
be made to subsection (d) hospitals under subsection 
(d)(5)(F) if this subsection did not apply for such fiscal 
year (as estimated by the Secretary); and 
‘‘(ii) the aggregate amount of payments that are 
made to subsection (d) hospitals under paragraph (1) 
for such fiscal year (as so estimated). 
‘‘(B) FACTOR TWO.—
H. R. 3590—315 
‘‘(i) FISCAL YEARS 2015, 2016, AND 2017.—For each 
of fiscal years 2015, 2016, and 2017, a factor equal 
to 1 minus the percent change (divided by 100) in 
the percent of individuals under the age of 65 who 
are uninsured, as determined by comparing the percent 
of such individuals— 
‘‘(I) who are uninsured in 2012, the last year 
before coverage expansion under the Patient 
Protection and Affordable Care Act (as calculated 
by the Secretary based on the most recent esti-
mates available from the Director of the Congres-
sional Budget Office before a vote in either House 
on such Act that, if determined in the affirmative, 
would clear such Act for enrollment); and 
‘‘(II) who are uninsured in the most recent 
period for which data is available (as so cal-
culated). 
‘‘(ii) 2018 AND SUBSEQUENT YEARS.—For fiscal year 
2018 and each subsequent fiscal year, a factor equal 
to 1 minus the percent change (divided by 100) in 
the percent of individuals who are uninsured, as deter-
mined by comparing the percent of individuals— 
‘‘(I) who are uninsured in 2012 (as estimated 
by the Secretary, based on data from the Census 
Bureau or other sources the Secretary determines 
appropriate, and certified by the Chief Actuary 
of the Centers for Medicare & Medicaid Services); 
and 
‘‘(II) who are uninsured in the most recent 
period for which data is available (as so estimated 
and certified). 
‘‘(C) FACTOR THREE.—A factor equal to the percent, 
for each subsection (d) hospital, that represents the 
quotient of— 
‘‘(i) the amount of uncompensated care for such 
hospital for a period selected by the Secretary (as 
estimated by the Secretary, based on appropriate data 
(including, in the case where the Secretary determines 
that alternative data is available which is a better 
proxy for the costs of subsection (d) hospitals for 
treating the uninsured, the use of such alternative 
data)); and 
‘‘(ii) the aggregate amount of uncompensated care 
for all subsection (d) hospitals that receive a payment 
under this subsection for such period (as so estimated, 
based on such data). 
‘‘(3) LIMITATIONS ON REVIEW.—There shall be no adminis-
trative or judicial review under section 1869, section 1878, 
or otherwise of the following: 
‘‘(A) Any estimate of the Secretary for purposes of 
determining the factors described in paragraph (2). 
‘‘(B) Any period selected by the Secretary for such 
purposes.’’.
H. R. 3590—316 
SEC. 3134. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE. 
(a) IN GENERAL.—Section 1848(c)(2) of the Social Security Act 
(42 U.S.C. 1395w–4(c)(2)) is amended by adding at the end the 
following new subparagraphs: 
‘‘(K) POTENTIALLY MISVALUED CODES.— 
‘‘(i) IN GENERAL.—The Secretary shall— 
‘‘(I) periodically identify services as being 
potentially misvalued using criteria specified in 
clause (ii); and 
‘‘(II) review and make appropriate adjustments 
to the relative values established under this para-
graph for services identified as being potentially 
misvalued under subclause (I). 
‘‘(ii) IDENTIFICATION
OF
POTENTIALLY
MISVALUED 
CODES.—For 
purposes 
of 
identifying 
potentially 
misvalued services pursuant to clause (i)(I), the Sec-
retary shall examine (as the Secretary determines to 
be appropriate) codes (and families of codes as appro-
priate) for which there has been the fastest growth; 
codes (and families of codes as appropriate) that have 
experienced substantial changes in practice expenses; 
codes for new technologies or services within an appro-
priate period (such as 3 years) after the relative values 
are initially established for such codes; multiple codes 
that are frequently billed in conjunction with fur-
nishing a single service; codes with low relative values, 
particularly those that are often billed multiple times 
for a single treatment; codes which have not been 
subject to review since the implementation of the 
RBRVS (the so-called ‘Harvard-valued codes’); and such 
other codes determined to be appropriate by the Sec-
retary. 
‘‘(iii) REVIEW AND ADJUSTMENTS.— 
‘‘(I) The Secretary may use existing processes 
to receive recommendations on the review and 
appropriate adjustment of potentially misvalued 
services described in clause (i)(II). 
‘‘(II) The Secretary may conduct surveys, other 
data collection activities, studies, or other analyses 
as the Secretary determines to be appropriate to 
facilitate the review and appropriate adjustment 
described in clause (i)(II). 
‘‘(III) The Secretary may use analytic contrac-
tors to identify and analyze services identified 
under clause (i)(I), conduct surveys or collect data, 
and make recommendations on the review and 
appropriate adjustment of services described in 
clause (i)(II). 
‘‘(IV) The Secretary may coordinate the review 
and appropriate adjustment described in clause 
(i)(II) with the periodic review described in 
subparagraph (B). 
‘‘(V) As part of the review and adjustment 
described in clause (i)(II), including with respect 
to codes with low relative values described in 
clause (ii), the Secretary may make appropriate 
coding revisions (including using existing processes
H. R. 3590—317 
for consideration of coding changes) which may 
include consolidation of individual services into 
bundled codes for payment under the fee schedule 
under subsection (b). 
‘‘(VI) The provisions of subparagraph (B)(ii)(II) 
shall apply to adjustments to relative value units 
made pursuant to this subparagraph in the same 
manner as such provisions apply to adjustments 
under subparagraph (B)(ii)(II). 
‘‘(L) VALIDATING RELATIVE VALUE UNITS.— 
‘‘(i) IN GENERAL.—The Secretary shall establish a 
process to validate relative value units under the fee 
schedule under subsection (b). 
‘‘(ii) COMPONENTS AND ELEMENTS OF WORK.—The 
process described in clause (i) may include validation 
of work elements (such as time, mental effort and 
professional judgment, technical skill and physical 
effort, and stress due to risk) involved with furnishing 
a service and may include validation of the pre-, post- 
, and intra-service components of work. 
‘‘(iii) SCOPE
OF
CODES.—The validation of work 
relative value units shall include a sampling of codes 
for services that is the same as the codes listed under 
subparagraph (K)(ii). 
‘‘(iv) METHODS.—The Secretary may conduct the 
validation under this subparagraph using methods 
described in subclauses (I) through (V) of subparagraph 
(K)(iii) as the Secretary determines to be appropriate. 
‘‘(v) ADJUSTMENTS.—The Secretary shall make 
appropriate adjustments to the work relative value 
units under the fee schedule under subsection (b). The 
provisions of subparagraph (B)(ii)(II) shall apply to 
adjustments to relative value units made pursuant 
to this subparagraph in the same manner as such 
provisions apply to adjustments under subparagraph 
(B)(ii)(II).’’. 
(b) IMPLEMENTATION.— 
(1) ADMINISTRATION.— 
(A) Chapter 35 of title 44, United States Code and 
the provisions of the Federal Advisory Committee Act (5 
U.S.C. App.) shall not apply to this section or the amend-
ment made by this section. 
(B) Notwithstanding any other provision of law, the 
Secretary may implement subparagraphs (K) and (L) of 
1848(c)(2) of the Social Security Act, as added by subsection 
(a), by program instruction or otherwise. 
(C) Section 4505(d) of the Balanced Budget Act of 
1997 is repealed. 
(D) Except for provisions related to confidentiality of 
information, the provisions of the Federal Acquisition Regu-
lation shall not apply to this section or the amendment 
made by this section. 
(2) FOCUSING CMS RESOURCES ON POTENTIALLY OVERVALUED 
CODES.—Section 1868(a) of the Social Security Act (42 U.S.C. 
1395ee(a)) is repealed.
H. R. 3590—318 
SEC. 3135. MODIFICATION OF EQUIPMENT UTILIZATION FACTOR FOR 
ADVANCED IMAGING SERVICES. 
(a) ADJUSTMENT IN PRACTICE EXPENSE TO REFLECT HIGHER 
PRESUMED UTILIZATION.—Section 1848 of the Social Security Act 
(42 U.S.C. 1395w–4) is amended— 
(1) in subsection (b)(4)— 
(A) in subparagraph (B), by striking ‘‘subparagraph 
(A)’’ and inserting ‘‘this paragraph’’; and 
(B) by adding at the end the following new subpara-
graph: 
‘‘(C) ADJUSTMENT IN PRACTICE EXPENSE TO REFLECT 
HIGHER PRESUMED UTILIZATION.—Consistent with the meth-
odology for computing the number of practice expense rel-
ative value units under subsection (c)(2)(C)(ii) with respect 
to advanced diagnostic imaging services (as defined in sec-
tion 1834(e)(1)(B)) furnished on or after January 1, 2010, 
the Secretary shall adjust such number of units so it 
reflects— 
‘‘(i) in the case of services furnished on or after 
January 1, 2010, and before January 1, 2013, a 65 
percent (rather than 50 percent) presumed rate of utili-
zation of imaging equipment; 
‘‘(ii) in the case of services furnished on or after 
January 1, 2013, and before January 1, 2014, a 70 
percent (rather than 50 percent) presumed rate of utili-
zation of imaging equipment; and 
‘‘(iii) in the case of services furnished on or after 
January 1, 2014, a 75 percent (rather than 50 percent) 
presumed rate of utilization of imaging equipment.’’; 
and 
(2) in subsection (c)(2)(B)(v), by adding at the end the 
following new subclauses: 
‘‘(III) CHANGE IN PRESUMED UTILIZATION LEVEL 
OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERV-
ICES
FOR
2010
THROUGH
2012.—Effective for fee 
schedules established beginning with 2010 and 
ending with 2012, reduced expenditures attrib-
utable to the presumed rate of utilization of 
imaging equipment of 65 percent under subsection 
(b)(4)(C)(i) instead of a presumed rate of utilization 
of such equipment of 50 percent. 
‘‘(IV) CHANGE IN PRESUMED UTILIZATION LEVEL 
OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERV-
ICES FOR 2013.—Effective for fee schedules estab-
lished for 2013, reduced expenditures attributable 
to the presumed rate of utilization of imaging 
equipment 
of 
percent 
under 
subsection 
(b)(4)(C)(ii) instead of a presumed rate of utiliza-
tion of such equipment of 50 percent. 
‘‘(V) CHANGE IN PRESUMED UTILIZATION LEVEL 
OF CERTAIN ADVANCED DIAGNOSTIC IMAGING SERV-
ICES FOR 2014 AND SUBSEQUENT YEARS.—Effective 
for fee schedules established beginning with 2014, 
reduced expenditures attributable to the presumed
H. R. 3590—319 
rate of utilization of imaging equipment of 75 per-
cent under subsection (b)(4)(C)(iii) instead of a pre-
sumed rate of utilization of such equipment of 
50 percent.’’. 
(b) ADJUSTMENT
IN TECHNICAL COMPONENT ‘‘DISCOUNT’’ ON 
SINGLE-SESSION IMAGING TO CONSECUTIVE BODY PARTS.—Section 
1848 of the Social Security Act (42 U.S.C. 1395w–4), as amended 
by subsection (a), is amended— 
(1) in subsection (b)(4), by adding at the end the following 
new subparagraph: 
‘‘(D) ADJUSTMENT IN TECHNICAL COMPONENT DISCOUNT 
ON SINGLE-SESSION IMAGING INVOLVING CONSECUTIVE BODY 
PARTS.—For services furnished on or after July 1, 2010, 
the Secretary shall increase the reduction in payments 
attributable to the multiple procedure payment reduction 
applicable to the technical component for imaging under 
the final rule published by the Secretary in the Federal 
Register on November 21, 2005 (part 405 of title 42, Code 
of Federal Regulations) from 25 percent to 50 percent.’’; 
and 
(2) in subsection (c)(2)(B)(v), by adding at the end the 
following new subclause: 
‘‘(VI) ADDITIONAL REDUCED PAYMENT FOR MUL-
TIPLE
IMAGING
PROCEDURES.—Effective for fee 
schedules established beginning with 2010 (but 
not applied for services furnished prior to July 
1, 2010), reduced expenditures attributable to the 
increase in the multiple procedure payment reduc-
tion from 25 to 50 percent (as described in sub-
section (b)(4)(D)).’’. 
(c) ANALYSIS BY THE CHIEF ACTUARY OF THE CENTERS FOR 
MEDICARE & MEDICAID SERVICES.—Not later than January 1, 2013, 
the Chief Actuary of the Centers for Medicare & Medicaid Services 
shall make publicly available an analysis of whether, for the period 
of 2010 through 2019, the cumulative expenditure reductions under 
title XVIII of the Social Security Act that are attributable to the 
adjustments under the amendments made by this section are pro-
jected to exceed $3,000,000,000. 
SEC. 3136. REVISION OF PAYMENT FOR POWER-DRIVEN WHEELCHAIRS. 
(a) IN GENERAL.—Section 1834(a)(7)(A) of the Social Security 
Act (42 U.S.C. 1395m(a)(7)(A)) is amended— 
(1) in clause (i)— 
(A) in subclause (II), by inserting ‘‘subclause (III) and’’ 
after ‘‘Subject to’’; and 
(B) by adding at the end the following new subclause: 
‘‘(III) SPECIAL RULE FOR POWER-DRIVEN WHEEL-
CHAIRS.—For purposes of payment for power- 
driven wheelchairs, subclause (II) shall be applied 
by substituting ‘15 percent’ and ‘6 percent’ for ‘10 
percent’ and ‘7.5 percent’, respectively.’’; and 
(2) in clause (iii)— 
(A) in the heading, by inserting ‘‘COMPLEX, REHABILITA-
TIVE’’ before ‘‘POWER-DRIVEN’’; and 
(B) by inserting ‘‘complex, rehabilitative’’ before 
‘‘power-driven’’.
H. R. 3590—320 
(b) TECHNICAL AMENDMENT.—Section 1834(a)(7)(C)(ii)(II) of the 
Social Security Act (42 U.S.C. 1395m(a)(7)(C)(ii)(II)) is amended 
by striking ‘‘(A)(ii) or’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Subject to paragraph (2), the amendments 
made by subsection (a) shall take effect on January 1, 2011, 
and shall apply to power-driven wheelchairs furnished on or 
after such date. 
(2) APPLICATION
TO
COMPETITIVE
BIDDING.—The amend-
ments made by subsection (a) shall not apply to payment made 
for items and services furnished pursuant to contracts entered 
into under section 1847 of the Social Security Act (42 U.S.C. 
1395w–3) prior to January 1, 2011, pursuant to the implementa-
tion of subsection (a)(1)(B)(i)(I) of such section 1847. 
SEC. 3137. HOSPITAL WAGE INDEX IMPROVEMENT. 
(a) EXTENSION OF SECTION 508 HOSPITAL RECLASSIFICATIONS.— 
(1) IN GENERAL.—Subsection (a) of section 106 of division 
B of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 
1395 note), as amended by section 117 of the Medicare, Med-
icaid, and SCHIP Extension Act of 2007 (Public Law 110– 
173) and section 124 of the Medicare Improvements for Patients 
and Providers Act of 2008 (Public Law 110–275), is amended 
by striking ‘‘September 30, 2009’’ and inserting ‘‘September 
30, 2010’’. 
(2) USE OF PARTICULAR WAGE INDEX IN FISCAL YEAR 2010.— 
For purposes of implementation of the amendment made by 
this subsection during fiscal year 2010, the Secretary shall 
use the hospital wage index that was promulgated by the 
Secretary in the Federal Register on August 27, 2009 (74 Fed. 
Reg. 43754), and any subsequent corrections. 
(b) PLAN FOR REFORMING THE MEDICARE HOSPITAL WAGE INDEX 
SYSTEM.— 
(1) IN GENERAL.—Not later than December 31, 2011, the 
Secretary of Health and Human Services (in this section 
referred to as the ‘‘Secretary’’) shall submit to Congress a 
report that includes a plan to reform the hospital wage index 
system under section 1886 of the Social Security Act. 
(2) DETAILS.—In developing the plan under paragraph (1), 
the Secretary shall take into account the goals for reforming 
such system set forth in the Medicare Payment Advisory 
Commission June 2007 report entitled ‘‘Report to Congress: 
Promoting Greater Efficiency in Medicare’’, including estab-
lishing a new hospital compensation index system that— 
(A) uses Bureau of Labor Statistics data, or other data 
or methodologies, to calculate relative wages for each 
geographic area involved; 
(B) minimizes wage index adjustments between and 
within metropolitan statistical areas and statewide rural 
areas; 
(C) includes methods to minimize the volatility of wage 
index adjustments that result from implementation of 
policy, while maintaining budget neutrality in applying 
such adjustments; 
(D) takes into account the effect that implementation 
of the system would have on health care providers and 
on each region of the country;
H. R. 3590—321 
(E) addresses issues related to occupational mix, such 
as staffing practices and ratios, and any evidence on the 
effect on quality of care or patient safety as a result of 
the implementation of the system; and 
(F) provides for a transition. 
(3) CONSULTATION.—In developing the plan under para-
graph (1), the Secretary shall consult with relevant affected 
parties. 
(c) USE OF PARTICULAR CRITERIA FOR DETERMINING RECLASSI-
FICATIONS.—Notwithstanding any other provision of law, in making 
decisions on applications for reclassification of a subsection (d) 
hospital (as defined in paragraph (1)(B) of section 1886(d) of the 
Social Security Act (42 U.S.C. 1395ww(d)) for the purposes described 
in paragraph (10)(D)(v) of such section for fiscal year 2011 and 
each subsequent fiscal year (until the first fiscal year beginning 
on or after the date that is 1 year after the Secretary of Health 
and Human Services submits the report to Congress under sub-
section (b)), the Geographic Classification Review Board established 
under paragraph (10) of such section shall use the average hourly 
wage comparison criteria used in making such decisions as of Sep-
tember 30, 2008. The preceding sentence shall be effected in a 
budget neutral manner. 
SEC. 3138. TREATMENT OF CERTAIN CANCER HOSPITALS. 
Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) 
is amended by adding at the end the following new paragraph: 
‘‘(18) AUTHORIZATION
OF
ADJUSTMENT
FOR
CANCER
HOS-
PITALS.— 
‘‘(A) STUDY.—The Secretary shall conduct a study to 
determine if, under the system under this subsection, costs 
incurred by hospitals described in section 1886(d)(1)(B)(v) 
with respect to ambulatory payment classification groups 
exceed those costs incurred by other hospitals furnishing 
services under this subsection (as determined appropriate 
by the Secretary). In conducting the study under this 
subparagraph, the Secretary shall take into consideration 
the cost of drugs and biologicals incurred by such hospitals. 
‘‘(B) AUTHORIZATION OF ADJUSTMENT.—Insofar as the 
Secretary determines under subparagraph (A) that costs 
incurred by hospitals described in section 1886(d)(1)(B)(v) 
exceed those costs incurred by other hospitals furnishing 
services under this subsection, the Secretary shall provide 
for an appropriate adjustment under paragraph (2)(E) to 
reflect those higher costs effective for services furnished 
on or after January 1, 2011.’’. 
SEC. 3139. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS. 
(a) IN GENERAL.—Section 1847A of the Social Security Act 
(42 U.S.C. 1395w–3a) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1)— 
(i) in subparagraph (A), by striking ‘‘or’’ at the 
end; 
(ii) in subparagraph (B), by striking the period 
at the end and inserting ‘‘; or’’; and 
(iii) by adding at the end the following new 
subparagraph:
H. R. 3590—322 
‘‘(C) in the case of a biosimilar biological product (as 
defined in subsection (c)(6)(H)), the amount determined 
under paragraph (8).’’; and 
(B) by adding at the end the following new paragraph: 
‘‘(8) BIOSIMILAR BIOLOGICAL PRODUCT.—The amount speci-
fied in this paragraph for a biosimilar biological product 
described in paragraph (1)(C) is the sum of— 
‘‘(A) the average sales price as determined using the 
methodology described under paragraph (6) applied to a 
biosimilar biological product for all National Drug Codes 
assigned to such product in the same manner as such 
paragraph is applied to drugs described in such paragraph; 
and 
‘‘(B) 6 percent of the amount determined under para-
graph (4) for the reference biological product (as defined 
in subsection (c)(6)(I)).’’; and 
(2) in subsection (c)(6), by adding at the end the following 
new subparagraph: 
‘‘(H) BIOSIMILAR BIOLOGICAL PRODUCT.—The term ‘bio-
similar biological product’ means a biological product 
approved under an abbreviated application for a license 
of a biological product that relies in part on data or informa-
tion in an application for another biological product licensed 
under section 351 of the Public Health Service Act. 
‘‘(I) REFERENCE BIOLOGICAL PRODUCT.—The term ‘ref-
erence biological product’ means the biological product 
licensed under such section 351 that is referred to in the 
application described in subparagraph (H) of the biosimilar 
biological product.’’. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply to payments for biosimilar biological products begin-
ning with the first day of the second calendar quarter after enact-
ment of legislation providing for a biosimilar pathway (as deter-
mined by the Secretary). 
SEC. 3140. MEDICARE HOSPICE CONCURRENT CARE DEMONSTRATION 
PROGRAM. 
(a) ESTABLISHMENT.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services (in this section referred to as the ‘‘Secretary’’) shall 
establish a Medicare Hospice Concurrent Care demonstration 
program at participating hospice programs under which Medi-
care beneficiaries are furnished, during the same period, hos-
pice care and any other items or services covered under title 
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) from 
funds otherwise paid under such title to such hospice programs. 
(2) DURATION.—The demonstration program under this sec-
tion shall be conducted for a 3-year period. 
(3) SITES.—The Secretary shall select not more than 15 
hospice programs at which the demonstration program under 
this section shall be conducted. Such hospice programs shall 
be located in urban and rural areas. 
(b) INDEPENDENT EVALUATION AND REPORTS.— 
(1) INDEPENDENT EVALUATION.—The Secretary shall pro-
vide for the conduct of an independent evaluation of the dem-
onstration program under this section. Such independent 
evaluation shall determine whether the demonstration program
H. R. 3590—323 
has improved patient care, quality of life, and cost-effectiveness 
for Medicare beneficiaries participating in the demonstration 
program. 
(2) REPORTS.—The Secretary shall submit to Congress a 
report containing the results of the evaluation conducted under 
paragraph (1), together with such recommendations as the Sec-
retary determines appropriate. 
(c) BUDGET NEUTRALITY.—With respect to the 3-year period 
of the demonstration program under this section, the Secretary 
shall ensure that the aggregate expenditures under title XVIII 
for such period shall not exceed the aggregate expenditures that 
would have been expended under such title if the demonstration 
program under this section had not been implemented. 
SEC. 3141. APPLICATION OF BUDGET NEUTRALITY ON A NATIONAL 
BASIS IN THE CALCULATION OF THE MEDICARE HOS-
PITAL WAGE INDEX FLOOR. 
In the case of discharges occurring on or after October 1, 
2010, for purposes of applying section 4410 of the Balanced Budget 
Act of 1997 (42 U.S.C. 1395ww note) and paragraph (h)(4) of section 
412.64 of title 42, Code of Federal Regulations, the Secretary of 
Health and Human Services shall administer subsection (b) of such 
section 4410 and paragraph (e) of such section 412.64 in the same 
manner as the Secretary administered such subsection (b) and 
paragraph (e) for discharges occurring during fiscal year 2008 
(through a uniform, national adjustment to the area wage index). 
SEC. 3142. HHS STUDY ON URBAN MEDICARE-DEPENDENT HOSPITALS. 
(a) STUDY.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services (in this section referred to as the ‘‘Secretary’’) shall 
conduct a study on the need for an additional payment for 
urban Medicare-dependent hospitals for inpatient hospital serv-
ices under section 1886 of the Social Security Act (42 U.S.C. 
1395ww). Such study shall include an analysis of— 
(A) the Medicare inpatient margins of urban Medicare- 
dependent hospitals, as compared to other hospitals which 
receive 1 or more additional payments or adjustments 
under such section (including those payments or adjust-
ments described in paragraph (2)(A)); and 
(B) whether payments to medicare-dependent, small 
rural hospitals under subsection (d)(5)(G) of such section 
should be applied to urban Medicare-dependent hospitals. 
(2) URBAN MEDICARE-DEPENDENT HOSPITAL DEFINED.—For 
purposes of this section, the term ‘‘urban Medicare-dependent 
hospital’’ means a subsection (d) hospital (as defined in sub-
section (d)(1)(B) of such section) that— 
(A) does not receive any additional payment or adjust-
ment under such section, such as payments for indirect 
medical education costs under subsection (d)(5)(B) of such 
section, disproportionate share payments under subsection 
(d)(5)(A) of such section, payments to a rural referral center 
under subsection (d)(5)(C) of such section, payments to 
a critical access hospital under section 1814(l) of such Act 
(42 U.S.C. 1395f(l)), payments to a sole community hospital 
under subsection (d)(5)(D) of such section 1886, or pay-
ments to a medicare-dependent, small rural hospital under 
subsection (d)(5)(G) of such section 1886; and
H. R. 3590—324 
(B) for which more than 60 percent of its inpatient 
days or discharges during 2 of the 3 most recently audited 
cost reporting periods for which the Secretary has a settled 
cost report were attributable to inpatients entitled to bene-
fits under part A of title XVIII of such Act. 
(b) REPORT.—Not later than 9 months after the date of enact-
ment of this Act, the Secretary shall submit to Congress a report 
containing the results of the study conducted under subsection 
(a), together with recommendations for such legislation and 
administrative action as the Secretary determines appropriate. 
SEC. 3143. PROTECTING HOME HEALTH BENEFITS. 
Nothing in the provisions of, or amendments made by, this 
Act shall result in the reduction of guaranteed home health benefits 
under title XVIII of the Social Security Act. 
Subtitle C—Provisions Relating to Part C 
SEC. 3201. MEDICARE ADVANTAGE PAYMENT. 
(a) MA BENCHMARK BASED ON PLAN’S COMPETITIVE BIDS.— 
(1) IN
GENERAL.—Section 1853(j) of the Social Security 
Act (42 U.S.C. 1395w–23(j)) is amended— 
(A) 
by 
striking 
‘‘AMOUNTS.—For 
purposes’’ 
and 
inserting ‘‘AMOUNTS.— 
‘‘(1) IN GENERAL.—For purposes’’; 
(B) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), respectively, and indenting the subpara-
graphs appropriately; 
(C) in subparagraph (A), as redesignated by subpara-
graph (B)— 
(i) by redesignating subparagraphs (A) and (B) 
as clauses (i) and (ii), respectively, and indenting the 
clauses appropriately; and 
(ii) in clause (i), as redesignated by clause (i), 
by striking ‘‘an amount equal to’’ and all that follows 
through the end and inserting ‘‘an amount equal to— 
‘‘(I) for years before 2007, 1⁄12 of the annual 
MA capitation rate under section 1853(c)(1) for 
the area for the year, adjusted as appropriate for 
the purpose of risk adjustment; 
‘‘(II) for 2007 through 2011, 
1⁄12
of the 
applicable amount determined under subsection 
(k)(1) for the area for the year; 
‘‘(III) for 2012, the sum of— 
‘‘(aa) 2⁄3 of the quotient of— 
‘‘(AA) the applicable amount deter-
mined under subsection (k)(1) for the area 
for the year; and 
‘‘(BB) 12; and 
‘‘(bb) 1⁄3 of the MA competitive benchmark 
amount (determined under paragraph (2)) for 
the area for the month; 
‘‘(IV) for 2013, the sum of— 
‘‘(aa) 1⁄3 of the quotient of—
H. R. 3590—325 
‘‘(AA) the applicable amount deter-
mined under subsection (k)(1) for the area 
for the year; and 
‘‘(BB) 12; and 
‘‘(bb) 2⁄3 of the MA competitive benchmark 
amount (as so determined) for the area for 
the month; 
‘‘(V) for 2014, the MA competitive benchmark 
amount for the area for a month in 2013 (as so 
determined), increased by the national per capita 
MA growth percentage, described in subsection 
(c)(6) for 2014, but not taking into account any 
adjustment under subparagraph (C) of such sub-
section for a year before 2004; and 
‘‘(VI) for 2015 and each subsequent year, the 
MA competitive benchmark amount (as so deter-
mined) for the area for the month; or’’; 
(iii) in clause (ii), as redesignated by clause (i), 
by striking ‘‘subparagraph (A)’’ and inserting ‘‘clause 
(i)’’; 
(D) by adding at the end the following new paragraphs: 
‘‘(2) 
COMPUTATION
OF
MA
COMPETITIVE
BENCHMARK 
AMOUNT.— 
‘‘(A) IN GENERAL.—Subject to subparagraph (B) and 
paragraph (3), for months in each year (beginning with 
2012) for each MA payment area the Secretary shall com-
pute an MA competitive benchmark amount equal to the 
weighted average of the unadjusted MA statutory non- 
drug 
monthly 
bid 
amount 
(as 
defined 
in 
section 
1854(b)(2)(E)) for each MA plan in the area, with the weight 
for each plan being equal to the average number of bene-
ficiaries enrolled under such plan in the reference month 
(as defined in section 1858(f)(4), except that, in applying 
such definition for purposes of this paragraph, ‘to compute 
the MA competitive benchmark amount under section 
1853(j)(2)’ shall be substituted for ‘to compute the percent-
age specified in subparagraph (A) and other relevant 
percentages under this part’). 
‘‘(B) WEIGHTING RULES.— 
‘‘(i) SINGLE
PLAN
RULE.—In the case of an MA 
payment area in which only a single MA plan is being 
offered, the weight under subparagraph (A) shall be 
equal to 1. 
‘‘(ii) USE
OF
SIMPLE
AVERAGE
AMONG
MULTIPLE 
PLANS IF NO PLANS OFFERED IN PREVIOUS YEAR.—In 
the case of an MA payment area in which no MA 
plan was offered in the previous year and more than 
1 MA plan is offered in the current year, the Secretary 
shall use a simple average of the unadjusted MA statu-
tory non-drug monthly bid amount (as so defined) for 
purposes of computing the MA competitive benchmark 
amount under subparagraph (A). 
‘‘(3) CAP ON MA COMPETITIVE BENCHMARK AMOUNT.—In no 
case shall the MA competitive benchmark amount for an area 
for a month in a year be greater than the applicable amount
H. R. 3590—326 
that would (but for the application of this subsection) be deter-
mined under subsection (k)(1) for the area for the month in 
the year.’’; and 
(E) in subsection (k)(2)(B)(ii)(III), by striking ‘‘(j)(1)(A)’’ 
and inserting ‘‘(j)(1)(A)(i)’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1853(k)(2) of the Social Security Act (42 
U.S.C. 1395w–23(k)(2)) is amended— 
(i) in subparagraph (A), by striking ‘‘through 2010’’ 
and inserting ‘‘and subsequent years’’; and 
(ii) in subparagraph (C)— 
(I) in clause (iii), by striking ‘‘and’’ at the 
end; 
(II) in clause (iv), by striking the period at 
the end and inserting ‘‘; and’’; and 
(III) by adding at the end the following new 
clause: 
‘‘(v) for 2011 and subsequent years, 0.00.’’. 
(B) Section 1854(b) of the Social Security Act (42 U.S.C. 
1395w–24(b)) is amended— 
(i) in paragraph (3)(B)(i), by striking ‘‘1853(j)(1)’’ 
and inserting ‘‘1853(j)(1)(A)’’; and 
(ii) in paragraph (4)(B)(i), by striking ‘‘1853(j)(2)’’ 
and inserting ‘‘1853(j)(1)(B)’’. 
(C) Section 1858(f) of the Social Security Act (42 U.S.C. 
1395w–27(f)) is amended— 
(i) in paragraph (1), by striking ‘‘1853(j)(2)’’ and 
inserting ‘‘1853(j)(1)(B)’’; and 
(ii) in paragraph (3)(A), by striking ‘‘1853(j)(1)(A)’’ 
and inserting ‘‘1853(j)(1)(A)(i)’’. 
(D) Section 1860C–1(d)(1)(A) of the Social Security Act 
(42 U.S.C. 1395w–29(d)(1)(A)) is amended by striking 
‘‘1853(j)(1)(A)’’ and inserting ‘‘1853(j)(1)(A)(i)’’. 
(b) REDUCTION OF NATIONAL PER CAPITA GROWTH PERCENTAGE 
FOR 2011.—Section 1853(c)(6) of the Social Security Act (42 U.S.C. 
1395w–23(c)(6)) is amended— 
(1) in clause (v), by striking ‘‘and’’ at the end; 
(2) in clause (vi)— 
(A) by striking ‘‘for a year after 2002’’ and inserting 
‘‘for 2003 through 2010’’; and 
(B) by striking the period at the end and inserting 
a comma; and 
(C) by adding at the end the following new clauses: 
‘‘(vii) for 2011, 3 percentage points; and 
‘‘(viii) for a year after 2011, 0 percentage points.’’. 
(c) 
ENHANCEMENT
OF
BENEFICIARY
REBATES.—Section 
1854(b)(1)(C)(i) of the Social Security Act (42 U.S.C. 1395w– 
24(b)(1)(C)(i)) is amended by inserting ‘‘(or 100 percent in the case 
of plan years beginning on or after January 1, 2014)’’ after ‘‘75 
percent’’. 
(d) BIDDING RULES.— 
(1) REQUIREMENTS FOR INFORMATION SUBMITTED.—Section 
1854(a)(6)(A) of the Social Security Act (42 U.S.C. 1395w– 
24(a)(6)(A)) is amended, in the flush matter following clause 
(v), by adding at the end the following sentence: ‘‘Information 
to be submitted under this paragraph shall be certified by 
a qualified member of the American Academy of Actuaries
H. R. 3590—327 
and shall meet actuarial guidelines and rules established by 
the Secretary under subparagraph (B)(v).’’. 
(2) ESTABLISHMENT
OF
ACTUARIAL
GUIDELINES.—Section 
1854(a)(6)(B) of the Social Security Act (42 U.S.C. 1395w– 
24(a)(6)(B)) is amended— 
(A) in clause (i), by striking ‘‘(iii) and (iv)’’ and inserting 
‘‘(iii), (iv), and (v)’’; and 
(B) by adding at the end the following new clause: 
‘‘(v) ESTABLISHMENT OF ACTUARIAL GUIDELINES.— 
‘‘(I) IN GENERAL.—In order to establish fair 
MA 
competitive 
benchmarks 
under 
section 
1853(j)(1)(A)(i), the Secretary, acting through the 
Chief Actuary of the Centers for Medicare & Med-
icaid Services (in this clause referred to as the 
‘Chief Actuary’), shall establish— 
‘‘(aa) actuarial guidelines for the submis-
sion of bid information under this paragraph; 
and 
‘‘(bb) bidding rules that are appropriate 
to ensure accurate bids and fair competition 
among MA plans. 
‘‘(II) DENIAL OF BID AMOUNTS.—The Secretary 
shall deny monthly bid amounts submitted under 
subparagraph (A) that do not meet the actuarial 
guidelines and rules established under subclause 
(I). 
‘‘(III) REFUSAL TO ACCEPT CERTAIN BIDS DUE 
TO
MISREPRESENTATIONS
AND
FAILURES
TO
ADE-
QUATELY MEET REQUIREMENTS.—In the case where 
the Secretary determines that information sub-
mitted by an MA organization under subparagraph 
(A) contains consistent misrepresentations and 
failures to adequately meet requirements of the 
organization, the Secretary may refuse to accept 
any additional such bid amounts from the 
organization for the plan year and the Chief 
Actuary shall, if the Chief Actuary determines that 
the actuaries of the organization were complicit 
in those misrepresentations and failures, report 
those actuaries to the Actuarial Board for Coun-
seling and Discipline.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to bid amounts submitted on or after 
January 1, 2012. 
(e) MA LOCAL PLAN SERVICE AREAS.— 
(1) IN GENERAL.—Section 1853(d) of the Social Security 
Act (42 U.S.C. 1395w–23(d)) is amended— 
(A) in the subsection heading, by striking ‘‘MA REGION’’ 
and inserting ‘‘MA REGION; MA LOCAL PLAN SERVICE 
AREA’’; 
(B) in paragraph (1), by striking subparagraph (A) 
and inserting the following: 
‘‘(A) with respect to an MA local plan— 
‘‘(i) for years before 2012, an MA local area (as 
defined in paragraph (2)); and
H. R. 3590—328 
‘‘(ii) for 2012 and succeeding years, a service area 
that is an entire urban or rural area, as applicable 
(as described in paragraph (5)); and’’; and 
(C) by adding at the end the following new paragraph: 
‘‘(5) MA LOCAL PLAN SERVICE AREA.—For 2012 and suc-
ceeding years, the service area for an MA local plan shall 
be an entire urban or rural area in each State as follows: 
‘‘(A) URBAN AREAS.— 
‘‘(i) IN GENERAL.—Subject to clause (ii) and sub-
paragraphs (C) and (D), the service area for an MA 
local plan in an urban area shall be the Core Based 
Statistical Area (in this paragraph referred to as a 
‘CBSA’) or, if applicable, a conceptually similar alter-
native classification, as defined by the Director of the 
Office of Management and Budget. 
‘‘(ii) CBSA COVERING
MORE
THAN
ONE
STATE.— 
In the case of a CBSA (or alternative classification) 
that covers more than one State, the Secretary shall 
divide the CBSA (or alternative classification) into 
separate service areas with respect to each State cov-
ered by the CBSA (or alternative classification). 
‘‘(B) RURAL AREAS.—Subject to subparagraphs (C) and 
(D), the service area for an MA local plan in a rural 
area shall be a county that does not qualify for inclusion 
in a CBSA (or alternative classification), as defined by 
the Director of the Office of Management and Budget. 
‘‘(C) REFINEMENTS TO SERVICE AREAS.—For 2015 and 
succeeding years, in order to reflect actual patterns of 
health care service utilization, the Secretary may adjust 
the boundaries of service areas for MA local plans in urban 
areas and rural areas under subparagraphs (A) and (B), 
respectively, but may only do so based on recent analyses 
of actual patterns of care. 
‘‘(D) ADDITIONAL AUTHORITY TO MAKE LIMITED EXCEP-
TIONS
TO
SERVICE
AREA
REQUIREMENTS
FOR
MA
LOCAL 
PLANS.—The Secretary may, in addition to any adjustments 
under subparagraph (C), make limited exceptions to service 
area requirements otherwise applicable under this part 
for MA local plans that have in effect (as of the date 
of enactment of the Patient Protection and Affordable Care 
Act)— 
‘‘(i) agreements with another MA organization or 
MA plan that preclude the offering of benefits through-
out an entire service area; or 
‘‘(ii) limitations in their structural capacity to sup-
port adequate networks throughout an entire service 
area as a result of the delivery system model of the 
MA local plan.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) IN GENERAL.— 
(i) Section 1851(b)(1) of the Social Security Act 
(42 U.S.C. 1395w–21(b)(1)) is amended by striking 
subparagraph (C). 
(ii) Section 1853(b)(1)(B)(i) of such Act (42 U.S.C. 
1395w–23(b)(1)(B)(i))—
H. R. 3590—329 
(I) in the matter preceding subclause (I), by 
striking ‘‘MA payment area’’ and inserting ‘‘MA 
local area (as defined in subsection (d)(2))’’; and 
(II) in subclause (I), by striking ‘‘MA payment 
area’’ and inserting ‘‘MA local area (as so defined)’’. 
(iii) Section 1853(b)(4) of such Act (42 U.S.C. 
1395w–23(b)(4)) is amended by striking ‘‘Medicare 
Advantage payment area’’ and inserting ‘‘MA local area 
(as so defined)’’. 
(iv) Section 1853(c)(1) of such Act (42 U.S.C. 
1395w–23(c)(1)) is amended— 
(I) in the matter preceding subparagraph (A), 
by striking ‘‘a Medicare Advantage payment area 
that is’’; and 
(II) in subparagraph (D)(i), by striking ‘‘MA 
payment area’’ and inserting ‘‘MA local area (as 
defined in subsection (d)(2))’’. 
(v) Section 1854 of such Act (42 U.S.C. 1395w– 
24) is amended by striking subsection (h). 
(B) EFFECTIVE DATE.—The amendments made by this 
paragraph shall take effect on January 1, 2012. 
(f) PERFORMANCE BONUSES.— 
(1) MA PLANS.— 
(A) IN GENERAL.—Section 1853 of the Social Security 
Act (42 U.S.C. 1395w–23) is amended by adding at the 
end the following new subsection: 
‘‘(n) PERFORMANCE BONUSES.— 
‘‘(1) CARE COORDINATION AND MANAGEMENT PERFORMANCE 
BONUS.— 
‘‘(A) IN GENERAL.—For years beginning with 2014, sub-
ject to subparagraph (B), in the case of an MA plan that 
conducts 1 or more programs described in subparagraph 
(C) with respect to the year, the Secretary shall, in addition 
to any other payment provided under this part, make 
monthly payments, with respect to coverage of an indi-
vidual under this part, to the MA plan in an amount 
equal to the product of— 
‘‘(i) 0.5 percent of the national monthly per capita 
cost for expenditures for individuals enrolled under 
the original medicare fee-for-service program for the 
year; and 
‘‘(ii) the total number of programs described in 
clauses (i) through (ix) of subparagraph (C) that the 
Secretary determines the plan is conducting for the 
year under such subparagraph. 
‘‘(B) LIMITATION.—In no case may the total amount 
of payment with respect to a year under subparagraph 
(A) be greater than 2 percent of the national monthly 
per capita cost for expenditures for individuals enrolled 
under the original medicare fee-for-service program for the 
year, as determined prior to the application of risk adjust-
ment under paragraph (4). 
‘‘(C) PROGRAMS DESCRIBED.—The following programs 
are described in this paragraph: 
‘‘(i) Care management programs that— 
‘‘(I) target individuals with 1 or more chronic 
conditions;
H. R. 3590—330 
‘‘(II) identify gaps in care; and 
‘‘(III) facilitate improved care by using addi-
tional resources like nurses, nurse practitioners, 
and physician assistants. 
‘‘(ii) Programs that focus on patient education and 
self-management of health conditions, including inter-
ventions that— 
‘‘(I) help manage chronic conditions; 
‘‘(II) reduce declines in health status; and 
‘‘(III) foster patient and provider collaboration. 
‘‘(iii) Transitional care interventions that focus on 
care provided around a hospital inpatient episode, 
including programs that target post-discharge patient 
care in order to reduce unnecessary health complica-
tions and readmissions. 
‘‘(iv) Patient safety programs, including provisions 
for hospital-based patient safety programs in contracts 
that the Medicare Advantage organization offering the 
MA plan has with hospitals. 
‘‘(v) Financial policies that promote systematic 
coordination of care by primary care physicians across 
the full spectrum of specialties and sites of care, such 
as medical homes, capitation arrangements, or pay- 
for-performance programs. 
‘‘(vi) Programs that address, identify, and amelio-
rate health care disparities among principal at-risk 
subpopulations. 
‘‘(vii) Medication therapy management programs 
that are more extensive than is required under section 
1860D–4(c) (as determined by the Secretary). 
‘‘(viii) Health information technology programs, 
including clinical decision support and other tools to 
facilitate data collection and ensure patient-centered, 
appropriate care. 
‘‘(ix) Such other care management and coordination 
programs as the Secretary determines appropriate. 
‘‘(D) CONDUCT
OF
PROGRAM
IN
URBAN
AND
RURAL 
AREAS.—An MA plan may conduct a program described 
in subparagraph (C) in a manner appropriate for an urban 
or rural area, as applicable. 
‘‘(E) REPORTING OF DATA.—Each Medicare Advantage 
organization shall provide to the Secretary the information 
needed to determine whether they are eligible for a care 
coordination and management performance bonus at a time 
and in a manner specified by the Secretary. 
‘‘(F) PERIODIC AUDITING.—The Secretary shall provide 
for the annual auditing of programs described in subpara-
graph (C) for which an MA plan receives a care coordination 
and management performance bonus under this paragraph. 
The Comptroller General shall monitor auditing activities 
conducted under this subparagraph. 
‘‘(2) QUALITY PERFORMANCE BONUSES.— 
‘‘(A) QUALITY BONUS.—For years beginning with 2014, 
the Secretary shall, in addition to any other payment pro-
vided under this part, make monthly payments, with 
respect to coverage of an individual under this part, to 
an MA plan that achieves at least a 3 star rating (or
H. R. 3590—331 
comparable rating) on a rating system described in 
subparagraph (C) in an amount equal to— 
‘‘(i) in the case of a plan that achieves a 3 star 
rating (or comparable rating) on such system 2 percent 
of the national monthly per capita cost for expenditures 
for individuals enrolled under the original medicare 
fee-for-service program for the year; and 
‘‘(ii) in the case of a plan that achieves a 4 or 
5 star rating (or comparable rating on such system, 
4 percent of such national monthly per capita cost 
for the year. 
‘‘(B) IMPROVED QUALITY BONUS.—For years beginning 
with 2014, in the case of an MA plan that does not receive 
a quality bonus under subparagraph (A) and is an improved 
quality MA plan with respect to the year (as identified 
by the Secretary), the Secretary shall, in addition to any 
other payment provided under this part, make monthly 
payments, with respect to coverage of an individual under 
this part, to the MA plan in an amount equal to 1 percent 
of such national monthly per capita cost for the year. 
‘‘(C) USE OF RATING SYSTEM.—For purposes of subpara-
graph (A), a rating system described in this paragraph 
is— 
‘‘(i) a rating system that uses up to 5 stars to 
rate clinical quality and enrollee satisfaction and 
performance at the Medicare Advantage contract or 
MA plan level; or 
‘‘(ii) such other system established by the Secretary 
that provides for the determination of a comparable 
quality performance rating to the rating system 
described in clause (i). 
‘‘(D) DATA USED IN DETERMINING SCORE.— 
‘‘(i) IN GENERAL.—The rating of an MA plan under 
the rating system described in subparagraph (C) with 
respect to a year shall be based on based on the most 
recent data available. 
‘‘(ii) PLANS THAT FAIL TO REPORT DATA.—An MA 
plan which does not report data that enables the Sec-
retary to rate the plan for purposes of subparagraph 
(A) or identify the plan for purposes of subparagraph 
(B) shall be counted, for purposes of such rating or 
identification, as having the lowest plan performance 
rating and the lowest percentage improvement, respec-
tively. 
‘‘(3) QUALITY BONUS FOR NEW AND LOW ENROLLMENT MA 
PLANS.— 
‘‘(A) NEW MA PLANS.—For years beginning with 2014, 
in the case of an MA plan that first submits a bid under 
section 1854(a)(1)(A) for 2012 or a subsequent year, only 
receives enrollments made during the coverage election 
periods described in section 1851(e), and is not able to 
receive a bonus under subparagraph (A) or (B) of paragraph 
(2) for the year, the Secretary shall, in addition to any 
other payment provided under this part, make monthly 
payments, with respect to coverage of an individual under 
this part, to the MA plan in an amount equal to 2 percent 
of national monthly per capita cost for expenditures for
H. R. 3590—332 
individuals enrolled under the original medicare fee-for- 
service program for the year. In its fourth year of operation, 
the MA plan shall be paid in the same manner as other 
MA plans with comparable enrollment. 
‘‘(B) LOW
ENROLLMENT
PLANS.—For years beginning 
with 2014, in the case of an MA plan that has low enroll-
ment (as defined by the Secretary) and would not otherwise 
be able to receive a bonus under subparagraph (A) or 
(B) of paragraph (2) or subparagraph (A) of this paragraph 
for the year (referred to in this subparagraph as a ‘low 
enrollment plan’), the Secretary shall use a regional or 
local mean of the rating of all MA plans in the region 
or local area, as determined appropriate by the Secretary, 
on measures used to determine whether MA plans are 
eligible for a quality or an improved quality bonus, as 
applicable, to determine whether the low enrollment plan 
is eligible for a bonus under such a subparagraph. 
‘‘(4) RISK ADJUSTMENT.—The Secretary shall risk adjust 
a performance bonus under this subsection in the same manner 
as the Secretary risk adjusts beneficiary rebates described in 
section 1854(b)(1)(C). 
‘‘(5) 
NOTIFICATION.—The 
Secretary, 
in 
the 
annual 
announcement required under subsection (b)(1)(B) for 2014 and 
each succeeding year, shall notify the Medicare Advantage 
organization of any performance bonus (including a care 
coordination and management performance bonus under para-
graph (1), a quality performance bonus under paragraph (2), 
and a quality bonus for new and low enrollment plans under 
paragraph (3)) that the organization will receive under this 
subsection with respect to the year. The Secretary shall provide 
for the publication of the information described in the previous 
sentence on the Internet website of the Centers for Medicare 
& Medicaid Services.’’ 
(B) CONFORMING
AMENDMENT.—Section 1853(a)(1)(B) 
of the Social Security Act (42 U.S.C. 1395w–23(a)(1)(B)) 
is amended— 
(i) in clause (i), by inserting ‘‘and any performance 
bonus under subsection (n)’’ before the period at the 
end; and 
(ii) in clause (ii), by striking ‘‘(G)’’ and inserting 
‘‘(G), plus the amount (if any) of any performance bonus 
under subsection (n)’’. 
(2) APPLICATION
OF
PERFORMANCE
BONUSES
TO
MA 
REGIONAL PLANS.—Section 1858 of the Social Security Act (42 
U.S.C. 1395w–27a) is amended— 
(A) in subsection (f)(1), by striking ‘‘subsection (e)’’ 
and inserting ‘‘subsections (e) and (i)’’; and 
(B) by adding at the end the following new subsection: 
‘‘(i) APPLICATION OF PERFORMANCE BONUSES TO MA REGIONAL 
PLANS.—For years beginning with 2014, the Secretary shall apply 
the performance bonuses under section 1853(n) (relating to bonuses 
for care coordination and management, quality performance, and 
new and low enrollment MA plans) to MA regional plans in a 
similar manner as such performance bonuses apply to MA plans 
under such subsection.’’. 
(g) GRANDFATHERING SUPPLEMENTAL BENEFITS FOR CURRENT 
ENROLLEES AFTER IMPLEMENTATION OF COMPETITIVE BIDDING.—
H. R. 3590—333 
Section 1853 of the Social Security Act (42 U.S.C. 1395w–23), as 
amended by subsection (f), is amended by adding at the end the 
following new subsection: 
‘‘(o) GRANDFATHERING SUPPLEMENTAL BENEFITS FOR CURRENT 
ENROLLES AFTER IMPLEMENTATION OF COMPETITIVE BIDDING.— 
‘‘(1) IDENTIFICATION OF AREAS.—The Secretary shall iden-
tify MA local areas in which, with respect to 2009, average 
bids submitted by an MA organization under section 1854(a) 
for MA local plans in the area are not greater than 75 percent 
of the adjusted average per capita cost for the year involved, 
determined under section 1876(a)(4), for the area for individuals 
who are not enrolled in an MA plan under this part for the 
year, but adjusted to exclude costs attributable to payments 
under section 1848(o), 1886(n), and 1886(h). 
‘‘(2) ELECTION
TO
PROVIDE
REBATES
TO
GRANDFATHERED 
ENROLLEES.— 
‘‘(A) IN GENERAL.—For years beginning with 2012, each 
Medicare Advantage organization offering an MA local plan 
in an area identified by the Secretary under paragraph 
(1) may elect to provide rebates to grandfathered enrollees 
under section 1854(b)(1)(C). In the case where an MA 
organization makes such an election, the monthly per 
capita dollar amount of such rebates shall not exceed the 
applicable amount for the year (as defined in subparagraph 
(B)). 
‘‘(B) APPLICABLE AMOUNT.—For purposes of this sub-
section, the term ‘applicable amount’ means— 
‘‘(i) for 2012, the monthly per capita dollar amount 
of such rebates provided to enrollees under the MA 
local plan with respect to 2011; and 
‘‘(ii) for a subsequent year, 95 percent of the 
amount determined under this subparagraph for the 
preceding year. 
‘‘(3) SPECIAL RULES FOR PLANS IN IDENTIFIED AREAS.—Not-
withstanding any other provision of this part, the following 
shall apply with respect to each Medicare Advantage organiza-
tion offering an MA local plan in an area identified by the 
Secretary under paragraph (1) that makes an election described 
in paragraph (2): 
‘‘(A) PAYMENTS.—The amount of the monthly payment 
under this section to the Medicare Advantage organization, 
with respect to coverage of a grandfathered enrollee under 
this part in the area for a month, shall be equal to— 
‘‘(i) for 2012 and 2013, the sum of— 
‘‘(I) the bid amount under section 1854(a) for 
the MA local plan; and 
‘‘(II) the applicable amount (as defined in para-
graph (2)(B)) for the MA local plan for the year. 
‘‘(ii) for 2014 and subsequent years, the sum of— 
‘‘(I) the MA competitive benchmark amount 
under subsection (j)(1)(A)(i) for the area for the 
month, adjusted, only to the extent the Secretary 
determines necessary, to account for induced utili-
zation as a result of rebates provided to grand-
fathered enrollees (except that such adjustment 
shall not exceed 0.5 percent of such MA competi-
tive benchmark amount); and
H. R. 3590—334 
‘‘(II) the applicable amount (as so defined) for 
the MA local plan for the year. 
‘‘(B) REQUIREMENT TO SUBMIT BIDS UNDER COMPETITIVE 
BIDDING.—The Medicare Advantage organization shall 
submit a single bid amount under section 1854(a) for the 
MA local plan. The Medicare Advantage organization shall 
remove from such bid amount any effects of induced 
demand for care that may result from the higher rebates 
available to grandfathered enrollees under this subsection. 
‘‘(C) NONAPPLICATION OF BONUS PAYMENTS AND ANY 
OTHER
REBATES.—The Medicare Advantage organization 
offering the MA local plan shall not be eligible for any 
bonus payment under subsection (n) or any rebate under 
this part (other than as provided under this subsection) 
with respect to grandfathered enrollees. 
‘‘(D) NONAPPLICATION OF UNIFORM BID AND PREMIUM 
AMOUNTS TO GRANDFATHERED ENROLLEES.—Section 1854(c) 
shall not apply with respect to the MA local plan. 
‘‘(E) NONAPPLICATION OF LIMITATION ON APPLICATION 
OF PLAN REBATES TOWARD PAYMENT OF PART B PREMIUM.— 
Notwithstanding clause (iii) of section 1854(b)(1)(C), in the 
case of a grandfathered enrollee, a rebate under such sec-
tion may be used for the purpose described in clause (ii)(III) 
of such section. 
‘‘(F) RISK
ADJUSTMENT.—The Secretary shall risk 
adjust rebates to grandfathered enrollees under this sub-
section in the same manner as the Secretary risk adjusts 
beneficiary rebates described in section 1854(b)(1)(C). 
‘‘(4) DEFINITION
OF
GRANDFATHERED
ENROLLEE.—In this 
subsection, the term ‘grandfathered enrollee’ means an indi-
vidual who is enrolled (effective as of the date of enactment 
of this subsection) in an MA local plan in an area that is 
identified by the Secretary under paragraph (1).’’. 
(h) TRANSITIONAL EXTRA BENEFITS.—Section 1853 of the Social 
Security Act (42 U.S.C. 1395w–23), as amended by subsections 
(f) and (g), is amended by adding at the end the following new 
subsection: 
‘‘(p) TRANSITIONAL EXTRA BENEFITS.— 
‘‘(1) IN GENERAL.—For years beginning with 2012, the Sec-
retary shall provide transitional rebates under section 
1854(b)(1)(C) for the provision of extra benefits (as specified 
by the Secretary) to enrollees described in paragraph (2). 
‘‘(2) ENROLLEES DESCRIBED.—An enrollee described in this 
paragraph is an individual who— 
‘‘(A) enrolls in an MA local plan in an applicable area; 
and 
‘‘(B) experiences a significant reduction in extra bene-
fits described in clause (ii) of section 1854(b)(1)(C) as a 
result of competitive bidding under this part (as determined 
by the Secretary). 
‘‘(3) APPLICABLE
AREAS.—In this subsection, the term 
‘applicable area’ means the following: 
‘‘(A) The 2 largest metropolitan statistical areas, if 
the Secretary determines that the total amount of such 
extra benefits for each enrollee for the month in those 
areas is greater than $100. 
‘‘(B) A county where—
H. R. 3590—335 
‘‘(i) the MA area-specific non-drug monthly bench-
mark amount for a month in 2011 is equal to the 
legacy urban floor amount (as described in subsection 
(c)(1)(B)(iii)), as determined by the Secretary for the 
area for 2011; 
‘‘(ii) the percentage of Medicare Advantage eligible 
beneficiaries in the county who are enrolled in an 
MA plan for 2009 is greater than 30 percent (as deter-
mined by the Secretary); and 
‘‘(iii) average bids submitted by an MA organiza-
tion under section 1854(a) for MA local plans in the 
county for 2011 are not greater than the adjusted 
average per capita cost for the year involved, deter-
mined under section 1876(a)(4), for the county for 
individuals who are not enrolled in an MA plan under 
this part for the year, but adjusted to exclude costs 
attributable to payments under section 1848(o), 
1886(n), and 1886(h). 
‘‘(C) If the Secretary determines appropriate, a county 
contiguous to an area or county described in subparagraph 
(A) or (B), respectively. 
‘‘(4) REVIEW OF PLAN BIDS.—In the case of a bid submitted 
by an MA organization under section 1854(a) for an MA local 
plan in an applicable area, the Secretary shall review such 
bid in order to ensure that extra benefits (as specified by 
the Secretary) are provided to enrollees described in paragraph 
(2). 
‘‘(5) FUNDING.—The Secretary shall provide for the transfer 
from the Federal Hospital Insurance Trust Fund under section 
1817 and the Federal Supplementary Medical Insurance Trust 
Fund established under section 1841, in such proportion as 
the Secretary determines appropriate, of an amount not to 
exceed $5,000,000,000 for the period of fiscal years 2012 
through 2019 for the purpose of providing transitional rebates 
under section 1854(b)(1)(C) for the provision of extra benefits 
under this subsection.’’. 
(i) NONAPPLICATION
OF COMPETITIVE BIDDING
AND RELATED 
PROVISIONS AND CLARIFICATION OF MA PAYMENT AREA FOR PACE 
PROGRAMS.— 
(1) NONAPPLICATION OF COMPETITIVE BIDDING AND RELATED 
PROVISIONS FOR PACE PROGRAMS.—Section 1894 of the Social 
Security Act (42 U.S.C. 1395eee) is amended— 
(A) by redesignating subsections (h) and (i) as sub-
sections (i) and (j), respectively; 
(B) by inserting after subsection (g) the following new 
subsection: 
‘‘(h) NONAPPLICATION OF COMPETITIVE BIDDING AND RELATED 
PROVISIONS UNDER PART C.—With respect to a PACE program 
under this section, the following provisions (and regulations relating 
to such provisions) shall not apply: 
‘‘(1) Section 1853(j)(1)(A)(i), relating to MA area-specific 
non-drug monthly benchmark amount being based on competi-
tive bids. 
‘‘(2) Section 1853(d)(5), relating to the establishment of 
MA local plan service areas. 
‘‘(3) Section 1853(n), relating to the payment of performance 
bonuses.