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Sec. 1161. Phase-in of payment based on fee-for-service costs; quality bonus 
payments. 
Sec. 1162. Authority for Secretarial coding intensity adjustment authority. 
Sec. 1163. Simplification of annual beneficiary election periods. 
Sec. 1164. Extension of reasonable cost contracts. 
Sec. 1165. Limitation of waiver authority for employer group plans. 
Sec. 1166. Improving risk adjustment for payments. 
Sec. 1167. Elimination of MA Regional Plan Stabilization Fund. 
Sec. 1168. Study regarding the effects of calculating Medicare Advantage pay-
ment rates on a regional average of Medicare fee for service 
rates. 
PART 2—BENEFICIARY PROTECTIONS AND ANTI-FRAUD 
Sec. 1171. Limitation on cost-sharing for individual health services. 
Sec. 1172. Continuous open enrollment for enrollees in plans with enrollment 
suspension. 
Sec. 1173. Information for beneficiaries on MA plan administrative costs. 
Sec. 1174. Strengthening audit authority. 
Sec. 1175. Authority to deny plan bids. 
Sec. 1175A. State authority to enforce standardized marketing requirements. 
PART 3—TREATMENT OF SPECIAL NEEDS PLANS 
Sec. 1176. Limitation on enrollment outside open enrollment period of individ-
uals into chronic care specialized MA plans for special needs 
individuals. 
Sec. 1177. Extension of authority of special needs plans to restrict enrollment; 
service area moratorium for certain SNPs. 
Sec. 1178. Extension of Medicare senior housing plans. 
Subtitle E—Improvements to Medicare Part D 
Sec. 1181. Elimination of coverage gap. 
Sec. 1182. Discounts for certain part D drugs in original coverage gap. 
Sec. 1183. Repeal of provision relating to submission of claims by pharmacies 
located in or contracting with long-term care facilities. 
Sec. 1184. Including costs incurred by AIDS drug assistance programs and In-
dian Health Service in providing prescription drugs toward the 
annual out-of-pocket threshold under part D. 
Sec. 1185. No mid-year formulary changes permitted. 
Sec. 1186. Negotiation of lower covered part D drug prices on behalf of Medi-
care beneficiaries. 
Sec. 1187. Accurate dispensing in long-term care facilities. 
Sec. 1188. Free generic fill. 
Sec. 1189. State certification prior to waiver of licensure requirements under 
Medicare prescription drug program. 
Subtitle F—Medicare Rural Access Protections 
Sec. 1191. Telehealth expansion and enhancements. 
Sec. 1192. Extension of outpatient hold harmless provision. 
Sec. 1193. Extension of section 508 hospital reclassifications. 
Sec. 1194. Extension of geographic floor for work. 
Sec. 1195. Extension of payment for technical component of certain physician 
pathology services. 
Sec. 1196. Extension of ambulance add-ons. 
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TITLE II—MEDICARE BENEFICIARY IMPROVEMENTS 
Subtitle A—Improving and Simplifying Financial Assistance for Low Income 
Medicare Beneficiaries 
Sec. 1201. Improving assets tests for Medicare Savings Program and low-in-
come subsidy program. 
Sec. 1202. Elimination of part D cost-sharing for certain non-institutionalized 
full-benefit dual eligible individuals. 
Sec. 1203. Eliminating barriers to enrollment. 
Sec. 1204. Enhanced oversight relating to reimbursements for retroactive low 
income subsidy enrollment. 
Sec. 1205. Intelligent assignment in enrollment. 
Sec. 1206. Special enrollment period and automatic enrollment process for cer-
tain subsidy eligible individuals. 
Sec. 1207. Application of MA premiums prior to rebate and quality bonus pay-
ments in calculation of low income subsidy benchmark. 
Subtitle B—Reducing Health Disparities 
Sec. 1221. Ensuring effective communication in Medicare. 
Sec. 1222. Demonstration to promote access for Medicare beneficiaries with 
limited English proficiency by providing reimbursement for cul-
turally and linguistically appropriate services. 
Sec. 1223. IOM report on impact of language access services. 
Sec. 1224. Definitions. 
Subtitle C—Miscellaneous Improvements 
Sec. 1231. Extension of therapy caps exceptions process. 
Sec. 1232. Extended months of coverage of immunosuppressive drugs for kid-
ney transplant patients and other renal dialysis provisions. 
Sec. 1233. Voluntary advance care planning consultation. 
Sec. 1234. Part B special enrollment period and waiver of limited enrollment 
penalty for TRICARE beneficiaries. 
Sec. 1235. Exception for use of more recent tax year in case of gains from sale 
of primary residence in computing part B income-related pre-
mium. 
Sec. 1236. Demonstration program on use of patient decisions aids. 
TITLE III—PROMOTING PRIMARY CARE, MENTAL HEALTH 
SERVICES, AND COORDINATED CARE 
Sec. 1301. Accountable Care Organization pilot program. 
Sec. 1302. Medical home pilot program. 
Sec. 1303. Payment incentive for selected primary care services. 
Sec. 1304. Increased reimbursement rate for certified nurse-midwives. 
Sec. 1305. Coverage and waiver of cost-sharing for preventive services. 
Sec. 1306. Waiver of deductible for colorectal cancer screening tests regardless 
of coding, subsequent diagnosis, or ancillary tissue removal. 
Sec. 1307. Excluding clinical social worker services from coverage under the 
medicare skilled nursing facility prospective payment system 
and consolidated payment. 
Sec. 1308. Coverage of marriage and family therapist services and mental 
health counselor services. 
Sec. 1309. Extension of physician fee schedule mental health add-on. 
Sec. 1310. Expanding access to vaccines. 
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Sec. 1311. Expansion of Medicare-Covered Preventive Services at Federally 
Qualified Health Centers. 
Sec. 1312. Independence at home demonstration program. 
Sec. 1313. Recognition of certified diabetes educators as certified providers for 
purposes of Medicare diabetes outpatient self-management 
training services. 
TITLE IV—QUALITY 
Subtitle A—Comparative Effectiveness Research 
Sec. 1401. Comparative effectiveness research. 
Subtitle B—Nursing Home Transparency 
PART 1—IMPROVING TRANSPARENCY OF INFORMATION ON SKILLED NURS-
ING FACILITIES, NURSING FACILITIES, AND OTHER LONG-TERM CARE FA-
CILITIES 
Sec. 1411. Required disclosure of ownership and additional disclosable parties 
information. 
Sec. 1412. Accountability requirements. 
Sec. 1413. Nursing home compare Medicare website. 
Sec. 1414. Reporting of expenditures. 
Sec. 1415. Standardized complaint form. 
Sec. 1416. Ensuring staffing accountability. 
Sec. 1417. Nationwide program for national and State background checks on 
direct patient access employees of long-term care facilities and 
providers. 
PART 2—TARGETING ENFORCEMENT 
Sec. 1421. Civil money penalties. 
Sec. 1422. National independent monitor pilot program. 
Sec. 1423. Notification of facility closure. 
PART 3—IMPROVING STAFF TRAINING 
Sec. 1431. Dementia and abuse prevention training. 
Sec. 1432. Study and report on training required for certified nurse aides and 
supervisory staff. 
Sec. 1433. Qualification of director of food services of a skilled nursing facility 
or nursing facility. 
Subtitle C—Quality Measurements 
Sec. 1441. Establishment of national priorities for quality improvement. 
Sec. 1442. Development of new quality measures; GAO evaluation of data col-
lection process for quality measurement. 
Sec. 1443. Multi-stakeholder pre-rulemaking input into selection of quality 
measures. 
Sec. 1444. Application of quality measures. 
Sec. 1445. Consensus-based entity funding. 
Sec. 1446. Quality indicators for care of people with Alzheimer’s Disease. 
Subtitle D—Physician Payments Sunshine Provision 
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Sec. 1451. Reports on financial relationships between manufacturers and dis-
tributors of covered drugs, devices, biologicals, or medical sup-
plies under Medicare, Medicaid, or CHIP and physicians and 
other health care entities and between physicians and other 
health care entities. 
Subtitle E—Public Reporting on Health Care-Associated Infections 
Sec. 1461. Requirement for public reporting by hospitals and ambulatory sur-
gical centers on health care-associated infections. 
TITLE V—MEDICARE GRADUATE MEDICAL EDUCATION 
Sec. 1501. Distribution of unused residency positions. 
Sec. 1502. Increasing training in nonprovider settings. 
Sec. 1503. Rules for counting resident time for didactic and scholarly activities 
and other activities. 
Sec. 1504. Preservation of resident cap positions from closed hospitals. 
Sec. 1505. Improving accountability for approved medical residency training. 
TITLE VI—PROGRAM INTEGRITY 
Subtitle A—Increased Funding to Fight Waste, Fraud, and Abuse 
Sec. 1601. Increased funding and flexibility to fight fraud and abuse. 
Subtitle B—Enhanced Penalties for Fraud and Abuse 
Sec. 1611. Enhanced penalties for false statements on provider or supplier en-
rollment applications. 
Sec. 1612. Enhanced penalties for submission of false statements material to 
a false claim. 
Sec. 1613. Enhanced penalties for delaying inspections. 
Sec. 1614. Enhanced hospice program safeguards. 
Sec. 1615. Enhanced penalties for individuals excluded from program participa-
tion. 
Sec. 1616. Enhanced penalties for provision of false information by Medicare 
Advantage and part D plans. 
Sec. 1617. Enhanced penalties for Medicare Advantage and part D marketing 
violations. 
Sec. 1618. Enhanced penalties for obstruction of program audits. 
Sec. 1619. Exclusion of certain individuals and entities from participation in 
Medicare and State health care programs. 
Sec. 1620. OIG authority to exclude from Federal health care programs offi-
cers and owners of entities convicted of fraud. 
Sec. 1621. Self-referral disclosure protocol. 
Subtitle C—Enhanced Program and Provider Protections 
Sec. 1631. Enhanced CMS program protection authority. 
Sec. 1632. Enhanced Medicare, Medicaid, and CHIP program disclosure re-
quirements relating to previous affiliations. 
Sec. 1633. Required inclusion of payment modifier for certain evaluation and 
management services. 
Sec. 1634. Evaluations and reports required under Medicare Integrity Pro-
gram. 
Sec. 1635. Require providers and suppliers to adopt programs to reduce waste, 
fraud, and abuse. 
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Sec. 1636. Maximum period for submission of Medicare claims reduced to not 
more than 12 months. 
Sec. 1637. Physicians who order durable medical equipment or home health 
services required to be Medicare enrolled physicians or eligible 
professionals. 
Sec. 1638. Requirement for physicians to provide documentation on referrals to 
programs at high risk of waste and abuse. 
Sec. 1639. Face-to-face encounter with patient required before eligibility certifi-
cations for home health services or durable medical equipment. 
Sec. 1640. Extension of testimonial subpoena authority to program exclusion 
investigations. 
Sec. 1641. Required repayments of Medicare and Medicaid overpayments. 
Sec. 1642. Expanded application of hardship waivers for OIG exclusions to 
beneficiaries of any Federal health care program. 
Sec. 1643. Access to certain information on renal dialysis facilities. 
Sec. 1644. Billing agents, clearinghouses, or other alternate payees required to 
register under Medicare. 
Sec. 1645. Conforming civil monetary penalties to False Claims Act amend-
ments. 
Sec. 1646. Requiring provider and supplier payments under Medicare to be 
made through direct deposit or electronic funds transfer (EFT) 
at insured depository institutions. 
Sec. 1647. Inspector General for the Health Choices Administration. 
Subtitle D—Access to Information Needed to Prevent Fraud, Waste, and 
Abuse 
Sec. 1651. Access to Information Necessary to Identify Fraud, Waste, and 
Abuse. 
Sec. 1652. Elimination of duplication between the Healthcare Integrity and 
Protection Data Bank and the National Practitioner Data 
Bank. 
Sec. 1653. Compliance with HIPAA privacy and security standards. 
Sec. 1654. Disclosure of Medicare fraud and abuse hotline number on expla-
nation of benefits. 
TITLE VII—MEDICAID AND CHIP 
Subtitle A—Medicaid and Health Reform 
Sec. 1701. Eligibility for individuals with income below 150 percent of the Fed-
eral poverty level. 
Sec. 1702.
Requirements and special rules for certain Medicaid eligible individ-
uals. 
Sec. 1703. CHIP and Medicaid maintenance of eligibility. 
Sec. 1704. Reduction in Medicaid DSH. 
Sec. 1705. Expanded outstationing. 
Subtitle B—Prevention 
Sec. 1711. Required coverage of preventive services. 
Sec. 1712. Tobacco cessation. 
Sec. 1713. Optional coverage of nurse home visitation services. 
Sec. 1714. State eligibility option for family planning services. 
Subtitle C—Access 
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Sec. 1721. Payments to primary care practitioners. 
Sec. 1722. Medical home pilot program. 
Sec. 1723. Translation or interpretation services. 
Sec. 1724. Optional coverage for freestanding birth center services. 
Sec. 1725. Inclusion of public health clinics under the vaccines for children pro-
gram. 
Sec. 1726. Requiring coverage of services of podiatrists. 
Sec. 1726A. Requiring coverage of services of optometrists. 
Sec. 1727. Therapeutic foster care. 
Sec. 1728. Assuring adequate payment levels for services. 
Sec. 1729. Preserving Medicaid coverage for youths upon release from public 
institutions. 
Sec. 1730. Quality measures for maternity and adult health services under 
Medicaid and CHIP. 
Sec. 1730A. Accountable care organization pilot program. 
Sec. 1730B. FQHC coverage. 
Subtitle D—Coverage 
Sec. 1731. Optional Medicaid coverage of low-income HIV-infected individuals. 
Sec. 1732. Extending transitional Medicaid Assistance (TMA). 
Sec. 1733. Requirement of 12-month continuous coverage under certain CHIP 
programs. 
Sec. 1734. Preventing the application under CHIP of coverage waiting periods 
for certain children. 
Sec. 1735. Adult day health care services. 
Sec. 1736. Medicaid coverage for citizens of Freely Associated States. 
Sec. 1737. Continuing requirement of Medicaid coverage of nonemergency 
transportation to medically necessary services. 
Sec. 1738. State option to disregard certain income in providing continued 
Medicaid coverage for certain individuals with extremely high 
prescription costs. 
Sec. 1739. Provisions relating to community living assistance services and sup-
ports (CLASS). 
Sec. 1739A. Sense of Congress regarding Community First Choice Option to 
provide medicaid coverage of community-based attendant serv-
ices and supports. 
Subtitle E—Financing 
Sec. 1741. Payments to pharmacists. 
Sec. 1742. Prescription drug rebates. 
Sec. 1743. Extension of prescription drug discounts to enrollees of Medicaid 
managed care organizations. 
Sec. 1744. Payments for graduate medical education. 
Sec. 1745. Nursing Facility Supplemental Payment Program. 
Sec. 1746. Report on Medicaid payments. 
Sec. 1747. Reviews of Medicaid. 
Sec. 1748. Extension of delay in managed care organization provider tax elimi-
nation. 
Sec. 1749. Extension of ARRA increase in FMAP. 
Subtitle F—Waste, Fraud, and Abuse 
Sec. 1751. Health care acquired conditions. 
Sec. 1752. Evaluations and reports required under Medicaid Integrity Program. 
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Sec. 1753. Require providers and suppliers to adopt programs to reduce waste, 
fraud, and abuse. 
Sec. 1754. Overpayments. 
Sec. 1755. Managed care organizations. 
Sec. 1756. Termination of provider participation under Medicaid and CHIP if 
terminated under Medicare or other State plan or child health 
plan. 
Sec. 1757. Medicaid and CHIP exclusion from participation relating to certain 
ownership, control, and management affiliations. 
Sec. 1758. Requirement to report expanded set of data elements under MMIS 
to detect fraud and abuse. 
Sec. 1759. Billing agents, clearinghouses, or other alternate payees required to 
register under Medicaid. 
Sec. 1760. Denial of payments for litigation-related misconduct. 
Sec. 1761. Mandatory State use of national correct coding initiative. 
Subtitle G—Payments to the Territories 
Sec. 1771. Payment to territories. 
Subtitle H—Miscellaneous 
Sec. 1781. Technical corrections. 
Sec. 1782. Extension of QI program. 
Sec. 1783. Assuring transparency of information. 
Sec. 1784. Medicaid and CHIP Payment and Access Commission. 
Sec. 1785. Outreach and enrollment of Medicaid and CHIP eligible individuals. 
Sec. 1786. Prohibitions on Federal Medicaid and CHIP payment for undocu-
mented aliens. 
Sec. 1787. Demonstration project for stabilization of emergency medical condi-
tions by institutions for mental diseases. 
Sec. 1788. Application of Medicaid Improvement Fund. 
Sec. 1789. Treatment of certain Medicaid brokers. 
Sec. 1790. Rule for changes requiring State legislation. 
TITLE VIII—REVENUE-RELATED PROVISIONS 
Sec. 1801. Disclosures to facilitate identification of individuals likely to be ineli-
gible for the low-income assistance under the Medicare pre-
scription drug program to assist Social Security Administra-
tion’s outreach to eligible individuals. 
Sec. 1802. Comparative Effectiveness Research Trust Fund; financing for 
Trust Fund. 
TITLE IX—MISCELLANEOUS PROVISIONS 
Sec. 1901. Repeal of trigger provision. 
Sec. 1902. Repeal of comparative cost adjustment (CCA) program. 
Sec. 1903. Extension of gainsharing demonstration. 
Sec. 1904. Grants to States for quality home visitation programs for families 
with young children and families expecting children. 
Sec. 1905. Improved coordination and protection for dual eligibles. 
Sec. 1906. Assessment of medicare cost-intensive diseases and conditions. 
Sec. 1907. Establishment of Center for Medicare and Medicaid Innovation 
within CMS. 
Sec. 1908. Application of emergency services laws. 
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Sec. 1909. Disregard under the Supplemental Security Income program of com-
pensation for participation in clinical trials for rare diseases or 
conditions. 
TITLE I—IMPROVING HEALTH 
CARE VALUE 
Subtitle A—Provisions Related to 
Medicare Part A 
PART 1—MARKET BASKET UPDATES 
SEC. 1101. SKILLED NURSING FACILITY PAYMENT UPDATE. 
(a) IN GENERAL.—Section 1888(e)(4)(E)(ii) of the 
Social Security Act (42 U.S.C. 1395yy(e)(4)(E)(ii)) is 
amended— 
(1) in subclause (III), by striking ‘‘and’’ at the 
end; 
(2) by redesignating subclause (IV) as sub-
clause (VI); and 
(3) by inserting after subclause (III) the fol-
lowing new subclauses: 
‘‘(IV) for each of fiscal years 
2004 through 2009, the rate com-
puted for the previous fiscal year in-
creased by the skilled nursing facility 
market basket percentage change for 
the fiscal year involved; 
‘‘(V) for fiscal year 2010, the 
rate computed for the previous fiscal 
year; and’’. 
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(b) 
DELAYED
EFFECTIVE
DATE.—Section 
1888(e)(4)(E)(ii)(V) of the Social Security Act, as in-
serted by subsection (a)(3), shall not apply to payment 
for days before January 1, 2010. 
SEC. 1102. INPATIENT REHABILITATION FACILITY PAY-
MENT UPDATE. 
(a) IN GENERAL.—Section 1886(j)(3)(C) of the So-
cial Security Act (42 U.S.C. 1395ww(j)(3)(C)) is amended 
by striking ‘‘and 2009’’ and inserting ‘‘through 2010’’. 
(b) DELAYED EFFECTIVE DATE.—The amendment 
made by subsection (a) shall not apply to payment units 
occurring before January 1, 2010. 
SEC. 
1103. 
INCORPORATING 
PRODUCTIVITY 
IMPROVE-
MENTS 
INTO 
MARKET 
BASKET 
UPDATES 
THAT DO NOT ALREADY INCORPORATE SUCH 
IMPROVEMENTS. 
(a) 
INPATIENT
ACUTE
HOSPITALS.—Section 
1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)) is amended— 
(1) in clause (iii)— 
(A) by striking ‘‘(iii) For purposes of this 
subparagraph,’’ and inserting ‘‘(iii)(I) For pur-
poses of this subparagraph, subject to the pro-
ductivity adjustment described in subclause 
(II),’’; and 
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(b) 
SKILLED
NURSING
FACILITIES.—Section 
1888(e)(5)(B) of such Act (42 U.S.C. 1395yy(e)(5)(B)) 
is amended by inserting ‘‘subject to the productivity ad-
justment described in section 1886(b)(3)(B)(iii)(II)’’ after 
‘‘as calculated by the Secretary’’. 
(c) 
LONG
TERM
CARE
HOSPITALS.—Section 
1886(m) of the Social Security Act (42 U.S.C. 
1395ww(m)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(3) PRODUCTIVITY
ADJUSTMENT.—In imple-
menting the system described in paragraph (1) for 
discharges occurring on or after January 1, 2010, 
during the rate year ending in 2010 or any subse-
quent rate year for a hospital, to the extent that an 
annual percentage increase factor applies to a stand-
ard Federal rate for such discharges for the hos-
pital, such factor shall be subject to the productivity 
adjustment 
described 
in 
subsection 
(b)(3)(B)(iii)(II).’’. 
(d) INPATIENT REHABILITATION FACILITIES.—The 
second sentence of section 1886(j)(3)(C) of the Social Se-
curity Act (42 U.S.C. 1395ww(j)(3)(C)) is amended by in-
serting ‘‘(subject to the productivity adjustment described 
in subsection (b)(3)(B)(iii)(II))’’ after ‘‘appropriate per-
centage increase’’. 
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(e) PSYCHIATRIC HOSPITALS.—Section 1886 of the 
Social Security Act (42 U.S.C. 1395ww) is amended by 
adding at the end the following new subsection: 
‘‘(o) PROSPECTIVE
PAYMENT
FOR
PSYCHIATRIC 
HOSPITALS.— 
‘‘(1) REFERENCE TO ESTABLISHMENT AND IM-
PLEMENTATION OF SYSTEM.—For provisions related 
to the establishment and implementation of a pro-
spective payment system for payments under this 
title for inpatient hospital services furnished by psy-
chiatric hospitals (as described in clause (i) of sub-
section (d)(1)(B) and psychiatric units (as described 
in the matter following clause (v) of such sub-
section), see section 124 of the Medicare, Medicaid, 
and SCHIP Balanced Budget Refinement Act of 
1999. 
‘‘(2) PRODUCTIVITY
ADJUSTMENT.—In imple-
menting the system described in paragraph (1) for 
days occurring during the rate year ending in 2011 
or any subsequent rate year for a psychiatric hos-
pital or unit described in such paragraph, to the ex-
tent that an annual percentage increase factor ap-
plies to a base rate for such days for the hospital 
or unit, respectively, such factor shall be subject to 
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the productivity adjustment described in subsection 
(b)(3)(B)(iii)(II).’’. 
(f) HOSPICE CARE.—Subclause (VII) of section 
1814(i)(1)(C)(ii) of the Social Security Act (42 U.S.C. 
1395f(i)(1)(C)(ii)) is amended by inserting after ‘‘the 
market basket percentage increase’’ the following: ‘‘(which 
is subject to the productivity adjustment described in sec-
tion 1886(b)(3)(B)(iii)(II))’’. 
(g) EFFECTIVE DATES.— 
(1) IPPS.—The amendments made by sub-
section (a) shall apply to annual increases effected 
for fiscal years beginning with fiscal year 2010, but 
only with respect to discharges occurring on or after 
January 1, 2010. 
(2) SNF AND IRF.—The amendments made by 
subsections (b) and (d) shall apply to annual in-
creases effected for fiscal years beginning with fiscal 
year 2011. 
(3) HOSPICE CARE.—The amendment made by 
subsection (f) shall apply to annual increases ef-
fected for fiscal years beginning with fiscal year 
2010, but only with respect to days of care occurring 
on or after January 1, 2010. 
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PART 2—OTHER MEDICARE PART A PROVISIONS 
SEC. 1111. PAYMENTS TO SKILLED NURSING FACILITIES. 
(a) CHANGE IN RECALIBRATION FACTOR.— 
(1) ANALYSIS.—The Secretary of Health and 
Human Services shall conduct, using calendar year 
2006 claims data, an initial analysis comparing total 
payments under title XVIII of the Social Security 
Act for skilled nursing facility services under the 
RUG–53 and under the RUG–44 classification sys-
tems. 
(2) ADJUSTMENT
IN
RECALIBRATION
FAC-
TOR.—Based on the initial analysis under paragraph 
(1), the Secretary shall adjust the case mix indexes 
under section 1888(e)(4)(G)(i) of the Social Security 
Act (42 U.S.C. 1395yy(e)(4)(G)(i)) for fiscal year 
2010 by the appropriate recalibration factor as pro-
posed in the final rule for Medicare skilled nursing 
facilities issued by such Secretary on August 11, 
2009 (74 Fed. Reg. 40287 et seq.). 
(b) CHANGE IN PAYMENT FOR NONTHERAPY ANCIL-
LARY (NTA) SERVICES AND THERAPY SERVICES.— 
(1) CHANGES
UNDER
CURRENT
SNF
CLASSI-
FICATION SYSTEM.— 
(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary of Health and Human 
Services shall, under the system for payment of 
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skilled nursing facility services under section 
1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)), increase payment by 10 percent for 
non-therapy ancillary services (as specified by 
the Secretary in the notice issued on November 
27, 1998 (63 Fed. Reg. 65561 et seq.)) and 
shall decrease payment for the therapy case mix 
component of such rates by 5.5 percent. 
(B) EFFECTIVE
DATE.—The changes in 
payment described in subparagraph (A) shall 
apply for days on or after April 1, 2010, and 
until the Secretary implements an alternative 
case mix classification system for payment of 
skilled nursing facility services under section 
1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)). 
(C) IMPLEMENTATION.—Notwithstanding 
any other provision of law, the Secretary may 
implement by program instruction or otherwise 
the provisions of this paragraph. 
(2) CHANGES UNDER A FUTURE SNF CASE MIX 
CLASSIFICATION SYSTEM.— 
(A) ANALYSIS.— 
(i) IN
GENERAL.—The Secretary of 
Health and Human Services shall analyze 
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payments for non-therapy ancillary services 
under a future skilled nursing facility clas-
sification system to ensure the accuracy of 
payment for non-therapy ancillary services. 
Such analysis shall consider use of appro-
priate predictors which may include age, 
physical and mental status, ability to per-
form activities of daily living, prior nursing 
home stay, diagnoses, broad RUG cat-
egory, and a proxy for length of stay. 
(ii) 
APPLICATION.—Such 
analysis 
shall be conducted in a manner such that 
the future skilled nursing facility classifica-
tion system is implemented to apply to 
services furnished during a fiscal year be-
ginning with fiscal year 2011. 
(B) CONSULTATION.—In conducting the 
analysis under subparagraph (A), the Secretary 
shall consult with interested parties, including 
the Medicare Payment Advisory Commission 
and other interested stakeholders, to identify 
appropriate predictors of nontherapy ancillary 
costs. 
(C) RULEMAKING.—The Secretary shall 
include the result of the analysis under sub-
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paragraph (A) in the fiscal year 2011 rule-
making cycle for purposes of implementation 
beginning for such fiscal year. 
(D) IMPLEMENTATION.—Subject to sub-
paragraph (E) and consistent with subpara-
graph (A)(ii), the Secretary shall implement 
changes to payments for non-therapy ancillary 
services (which shall include a separate rate 
component for non-therapy ancillary services 
and may include use of a model that predicts 
payment amounts applicable for non-therapy 
ancillary services) under such future skilled 
nursing facility services classification system as 
the Secretary determines appropriate based on 
the analysis conducted pursuant to subpara-
graph (A). 
(E) BUDGET NEUTRALITY.—The Secretary 
shall implement changes described in subpara-
graph (D) in a manner such that the estimated 
expenditures under such future skilled nursing 
facility services classification system for a fiscal 
year beginning with fiscal year 2011 with such 
changes would be equal to the estimated ex-
penditures that would otherwise occur under 
title XVIII of the Social Security Act under 
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such future skilled nursing facility services clas-
sification system for such year without such 
changes. 
(c) OUTLIER POLICY FOR NTA AND THERAPY.—Sec-
tion 1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)) is amended by adding at the end the following 
new paragraph: 
‘‘(13) OUTLIERS FOR NTA AND THERAPY.— 
‘‘(A) 
IN
GENERAL.—With 
respect 
to 
outliers because of unusual variations in the 
type or amount of medically necessary care, be-
ginning with October 1, 2010, the Secretary— 
‘‘(i) shall provide for an addition or 
adjustment to the payment amount other-
wise made under this section with respect 
to non-therapy ancillary services in the 
case of such outliers; and 
‘‘(ii) may provide for such an addition 
or adjustment to the payment amount oth-
erwise made under this section with re-
spect to therapy services in the case of 
such outliers. 
‘‘(B) OUTLIERS
BASED
ON
AGGREGATE 
COSTS.—Outlier adjustments or additional pay-
ments described in subparagraph (A) shall be 
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based on aggregate costs during a stay in a 
skilled nursing facility and not on the number 
of days in such stay. 
‘‘(C) BUDGET
NEUTRALITY.—The Sec-
retary shall reduce estimated payments that 
would otherwise be made under the prospective 
payment system under this subsection with re-
spect to a fiscal year by 2 percent. The total 
amount of the additional payments or payment 
adjustments for outliers made under this para-
graph with respect to a fiscal year may not ex-
ceed 2 percent of the total payments projected 
or estimated to be made based on the prospec-
tive payment system under this subsection for 
the fiscal year.’’. 
(d) 
CONFORMING
AMENDMENTS.—Section 
1888(e)(8) of such Act (42 U.S.C. 1395yy(e)(8)) is 
amended— 
(1) in subparagraph (A)— 
(A) by striking ‘‘and’’ before ‘‘adjust-
ments’’; and 
(B) by inserting ‘‘, and adjustment under 
section 1111(b) of the Affordable Health Care 
for America Act’’ before the semicolon at the 
end; 
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(2) in subparagraph (B), by striking ‘‘and’’; 
(3) in subparagraph (C), by striking the period 
and inserting ‘‘; and’’; and 
(4) by adding at the end the following new sub-
paragraph: 
‘‘(D) the establishment of outliers under 
paragraph (13).’’. 
SEC. 1112. MEDICARE DSH REPORT AND PAYMENT ADJUST-
MENTS IN RESPONSE TO COVERAGE EXPAN-
SION. 
(a) DSH REPORT.— 
(1) IN GENERAL.—Not later than January 1, 
2016, the Secretary of Health and Human Services 
shall submit to Congress a report on Medicare DSH 
taking into account the impact of the health care re-
forms carried out under division A in reducing the 
number of uninsured individuals. The report shall 
include recommendations relating to the following: 
(A) The appropriate amount, targeting, 
and distribution of Medicare DSH to com-
pensate for higher Medicare costs associated 
with serving low-income beneficiaries (taking 
into account variations in the empirical jus-
tification for Medicare DSH attributable to hos-
pital characteristics, including bed size), con-
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sistent with the original intent of Medicare 
DSH. 
(B) The appropriate amount, targeting, 
and distribution of Medicare DSH to hospitals 
given their continued uncompensated care costs, 
to the extent such costs remain. 
(2) COORDINATION WITH MEDICAID DSH RE-
PORT.—The Secretary shall coordinate the report 
under this subsection with the report on Medicaid 
DSH under section 1704(a). 
(b) PAYMENT ADJUSTMENTS IN RESPONSE TO COV-
ERAGE EXPANSION.— 
(1) IN GENERAL.—If there is a significant de-
crease in the national rate of uninsurance as a result 
of this Act (as determined under paragraph (2)(A)), 
then the Secretary of Health and Human Services 
shall, beginning in fiscal year 2017, implement the 
following adjustments to Medicare DSH: 
(A) In lieu of the amount of Medicare 
DSH payment that would otherwise be made 
under section 1886(d)(5)(F) of the Social Secu-
rity Act, the amount of Medicare DSH payment 
shall be an amount based on the recommenda-
tions of the report under subsection (a)(1)(A) 
and shall take into account variations in the 
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empirical justification for Medicare DSH attrib-
utable to hospital characteristics, including bed 
size. 
(B) Subject to paragraph (3), make an ad-
ditional payment to a hospital by an amount 
that is estimated based on the amount of un-
compensated care provided by the hospital 
based on criteria for uncompensated care as de-
termined by the Secretary, which shall exclude 
bad debt. 
(2) SIGNIFICANT DECREASE IN NATIONAL RATE 
OF UNINSURANCE AS A RESULT OF THIS ACT.—For 
purposes of this subsection— 
(A) IN GENERAL.—There is a ‘‘significant 
decrease in the national rate of uninsurance as 
a result of this Act’’ if there is a decrease in 
the national rate of uninsurance (as defined in 
subparagraph (B)) from 2012 to 2014 that ex-
ceeds 8 percentage points. 
(B) NATIONAL
RATE
OF
UNINSURANCE 
DEFINED.—The 
term 
‘‘national 
rate 
of 
uninsurance’’ means, for a year, such rate for 
the under-65 population for the year as deter-
mined and published by the Bureau of the Cen-
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sus in its Current Population Survey in or 
about September of the succeeding year. 
(3) UNCOMPENSATED CARE INCREASE.— 
(A) COMPUTATION OF DSH SAVINGS.—For 
each fiscal year (beginning with fiscal year 
2017), the Secretary shall estimate the aggre-
gate reduction in the amount of Medicare DSH 
payment that would be expected to result from 
the adjustment under paragraph (1)(A). 
(B) 
STRUCTURE
OF
PAYMENT
IN-
CREASE.—The Secretary shall compute the ad-
ditional payment to a hospital as described in 
paragraph (1)(B) for a fiscal year in accordance 
with a formula established by the Secretary 
that provides that— 
(i) the estimated aggregate amount of 
such increase for the fiscal year does not 
exceed 50 percent of the aggregate reduc-
tion in Medicare DSH estimated by the 
Secretary for such fiscal year; and 
(ii) hospitals with higher levels of un-
compensated care receive a greater in-
crease. 
(c) MEDICARE DSH.—In this section, the term 
‘‘Medicare DSH’’ means adjustments in payments under 
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section 1886(d)(5)(F) of the Social Security Act (42 
U.S.C. 1395ww(d)(5)(F)) for inpatient hospital services 
furnished by disproportionate share hospitals. 
SEC. 1113. EXTENSION OF HOSPICE REGULATION MORATO-
RIUM. 
Section 4301(a) of division B of the American Recov-
ery and Reinvestment Act of 2009 (Public Law 111–5) 
is amended— 
(1) by striking ‘‘October 1, 2009’’ and inserting 
‘‘October 1, 2010’’; and 
(2) by striking ‘‘for fiscal year 2009’’ and in-
serting ‘‘for fiscal years 2009 and 2010’’. 
SEC. 1114. PERMITTING PHYSICIAN ASSISTANTS TO ORDER 
POST-HOSPITAL EXTENDED CARE SERVICES 
AND TO PROVIDE FOR RECOGNITION OF AT-
TENDING PHYSICIAN ASSISTANTS AS AT-
TENDING PHYSICIANS TO SERVE HOSPICE 
PATIENTS. 
(a) ORDERING POST-HOSPITAL EXTENDED CARE 
SERVICES.—Section 1814(a) of the Social Security Act 
(42 U.S.C. 1395f(a)) is amended— 
(1) in paragraph (2) in the matter preceding 
subparagraph (A), is amended by striking ‘‘nurse 
practitioner or clinical nurse specialist’’ and insert-
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ing ‘‘nurse practitioner, a clinical nurse specialist, or 
a physician assistant’’. 
(2) in the second sentence, by striking ‘‘or clin-
ical nurse specialist’’ and inserting ‘‘clinical nurse 
specialist, or physician assistant’’. 
(b) RECOGNITION OF ATTENDING PHYSICIAN AS-
SISTANTS AS ATTENDING PHYSICIANS TO SERVE HOSPICE 
PATIENTS.— 
(1) IN GENERAL.—Section 1861(dd)(3)(B) of 
such Act (42 U.S.C. 1395x(dd)(3)(B)) is amended— 
(A) by striking ‘‘or nurse’’ and inserting ‘‘, 
the nurse’’; and 
(B) by inserting ‘‘or the physician assist-
ant (as defined in such subsection),’’ after 
‘‘subsection (aa)(5)),’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
1814(a)(7)(A)(i)(I) 
of 
such 
Act 
(42 
U.S.C. 
1395f(a)(7)(A)(i)(I)) is amended by inserting ‘‘or a 
physician assistant’’ after ‘‘a nurse practitioner’’. 
(3) CONSTRUCTION.—Nothing in the amend-
ments made by this subsection shall be construed as 
changing the requirements of section 1842(b)(6)(C) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395u(b)(6)(C)) with respect to payment for serv-
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ices of physician assistants under part B of title 
XVIII of such Act. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to items and services furnished on 
or after January 1, 2010. 
Subtitle B—Provisions Related to 
Part B 
PART 1—PHYSICIANS’ SERVICES 
SEC. 1121. RESOURCE-BASED FEEDBACK PROGRAM FOR 
PHYSICIANS IN MEDICARE. 
Section 1848(n) of the Social Security Act (42 U.S.C. 
1395w–4(n)) is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(9) FEEDBACK IMPLEMENTATION PLAN.— 
‘‘(A) TIMELINE
FOR
FEEDBACK
PRO-
GRAM.— 
‘‘(i) EVALUATION.—During 2011 the 
Secretary shall conduct the evaluation 
specified in subparagraph (E)(i). 
‘‘(ii) 
EXPANSION.—The 
Secretary 
shall expand the Program under this sub-
section 
as 
specified 
in 
subparagraph 
(E)(ii). 
‘‘(B) ESTABLISHMENT OF NATURE OF RE-
PORTS.— 
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‘‘(i) IN
GENERAL.—The Secretary 
shall develop and specify the nature of the 
reports that will be disseminated under 
this subsection, based on results and find-
ings from the Program under this sub-
section as in existence before the date of 
the enactment of this paragraph. Such re-
ports may be based on a per capita basis, 
an episode basis that combines separate 
but clinically related physicians’ services 
and other items and services furnished or 
ordered by a physician into an episode of 
care, as appropriate, or both. 
‘‘(ii) 
TIMELINE
FOR
DEVELOP-
MENT.—The nature of the reports de-
scribed in clause (i) shall be developed by 
not later than January 1, 2012. 
‘‘(iii) 
PUBLIC
AVAILABILITY.—The 
Secretary shall make the details of the na-
ture of the reports developed under clause 
(i) available to the public. 
‘‘(C) ANALYSIS OF DATA.—The Secretary 
shall, for purposes of preparing reports under 
this subsection, establish methodologies as ap-
propriate such as to— 
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‘‘(i) attribute items and services, in 
whole or in part, to physicians; 
‘‘(ii) identify appropriate physicians 
for purposes of comparison under subpara-
graph (B)(i); and 
‘‘(iii) aggregate items and services at-
tributed to a physician under clause (i) 
into a composite measure per individual. 
‘‘(D) FEEDBACK
PROGRAM.—The Sec-
retary shall engage in efforts to disseminate re-
ports under this subsection. In disseminating 
such reports, the Secretary shall consider the 
following: 
‘‘(i) Direct meetings between con-
tracted physicians, facilitated by the Sec-
retary, to discuss the contents of reports 
under this subsection, including any rea-
sons for divergence from local or national 
averages. 
‘‘(ii) Contract with local, non-profit 
entities engaged in quality improvement ef-
forts at the community level. Such entities 
shall use the reports under this subsection, 
or such equivalent tool as specified by the 
Secretary. Any exchange of data under this 
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paragraph shall be protected by appro-
priate privacy safeguards. 
‘‘(iii) Mailings or other methods of 
communication that facilitate large-scale 
dissemination. 
‘‘(iv) Other methods specified by the 
Secretary. 
‘‘(E) EVALUATION AND EXPANSION.— 
‘‘(i) 
EVALUATION.—The 
Secretary 
shall evaluate the methods specified in sub-
paragraph (D) with regard to their efficacy 
in changing practice patterns to improve 
quality and decrease costs. 
‘‘(ii) EXPANSION.—Taking into ac-
count the cost of each method specified in 
subparagraph (D), the Secretary shall de-
velop a plan to disseminate reports under 
this subsection in a significant manner in 
the regions and cities of the country with 
the highest utilization of services under 
this title. To the extent practicable, reports 
under this subsection shall be disseminated 
to increasing numbers of physicians each 
year, such that during 2014 and subse-
quent years, reports are disseminated at 
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least to physicians with utilization rates 
among the highest 5 percent of the nation, 
subject the authority to focus under para-
graph (4). 
‘‘(F) ADMINISTRATION.— 
‘‘(i) Chapter 35 of title 44, United 
States Code, shall not apply to this para-
graph. 
‘‘(ii) Notwithstanding any other provi-
sion of law, the Secretary may implement 
the provisions of this paragraph by pro-
gram instruction or otherwise.’’. 
SEC. 1122. 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 appro-
priate adjustments to the relative val-
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ues established under this paragraph 
for services identified as being poten-
tially misvalued under subclause (I). 
‘‘(ii) 
IDENTIFICATION
OF
POTEN-
TIALLY MISVALUED CODES.—For purposes 
of identifying potentially misvalued services 
pursuant to clause (i)(I), the Secretary 
shall examine (as the Secretary determines 
to be appropriate) codes (and families of 
codes as appropriate) for which there has 
been the fastest growth; codes (and fami-
lies of codes as appropriate) that have ex-
perienced substantial changes in practice 
expenses; codes for new technologies or 
services within an appropriate period (such 
as three years) after the relative values are 
initially established for such codes; mul-
tiple codes that are frequently billed in 
conjunction with furnishing a single serv-
ice; codes with low relative values, particu-
larly 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 
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other codes determined to be appropriate 
by the Secretary. 
‘‘(iii) REVIEW AND ADJUSTMENTS.— 
‘‘(I) The Secretary may use ex-
isting 
processes 
to 
receive 
rec-
ommendations on the review and ap-
propriate adjustment of potentially 
misvalued services described clause 
(i)(II). 
‘‘(II) The Secretary may conduct 
surveys, other data collection activi-
ties, studies, or other analyses as the 
Secretary determines to be appro-
priate to facilitate the review and ap-
propriate adjustment described in 
clause (i)(II). 
‘‘(III) The Secretary may use 
analytic contractors to identify and 
analyze 
services 
identified 
under 
clause (i)(I), conduct surveys or col-
lect data, and make recommendations 
on the review and appropriate adjust-
ment of services described in clause 
(i)(II). 
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‘‘(IV) The Secretary may coordi-
nate the review and appropriate ad-
justment 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 appro-
priate 
coding 
revisions 
(including 
using existing processes for consider-
ation of coding changes) which may 
include consolidation of individual 
services into bundled codes for pay-
ment under the fee schedule under 
subsection (b). 
‘‘(VI) The provisions of subpara-
graph (B)(ii)(II) shall apply to adjust-
ments to relative value units made 
pursuant to this subparagraph in the 
same manner as such provisions apply 
to adjustments under subparagraph 
(B)(ii)(II). 
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‘‘(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) in-
volved with furnishing a service and may 
include validation of the pre, post, and 
intra-service components of work. 
‘‘(iii) SCOPE OF CODES.—The valida-
tion of work relative value units shall in-
clude a sampling of codes for services that 
is the same as the codes listed under sub-
paragraph (K)(ii) 
‘‘(iv) METHODS.—The Secretary may 
conduct the validation under this subpara-
graph using methods described in sub-
clauses (I) through (V) of subparagraph 
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(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 provi-
sions 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) FUNDING.—For purposes of carrying out 
the provisions of subparagraphs (K) and (L) of 
1848(c)(2) of the Social Security Act, as added by 
subsection (a), in addition to funds otherwise avail-
able, out of any funds in the Treasury not otherwise 
appropriated, there are appropriated to the Sec-
retary of Health and Human Services for the Center 
for Medicare & Medicaid Services Program Manage-
ment Account $20,000,000 for fiscal year 2010 and 
each subsequent fiscal year. Amounts appropriated 
under this paragraph for a fiscal year shall be avail-
able until expended. 
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(2) ADMINISTRATION.— 
(A) Chapter 35 of title 44, United States 
Code, and the provisions of the Federal Advi-
sory Committee Act (5 U.S.C. App.) shall not 
apply to this section or the amendment made by 
this section. 
(B) Notwithstanding any other provision of 
law, the Secretary may implement subpara-
graphs (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 con-
fidentiality of information, the provisions of the 
Federal Acquisition Regulation shall not apply 
to this section or the amendment made by this 
section. 
(3) FOCUSING
CMS
RESOURCES
ON
POTEN-
TIALLY
OVERVALUED
CODES.—Section 1868(a) of 
the Social Security Act (42 U.S.C. 1395ee(a)) is re-
pealed. 
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SEC. 1123. PAYMENTS FOR EFFICIENT AREAS. 
Section 1833 of the Social Security Act (42 U.S.C. 
1395l) is amended by adding at the end the following new 
subsection: 
‘‘(x) 
INCENTIVE
PAYMENTS
FOR
EFFICIENT 
AREAS.— 
‘‘(1) IN GENERAL.—In the case of services fur-
nished under the physician fee schedule under sec-
tion 1848 on or after January 1, 2011, and before 
January 1, 2013, by a supplier that is paid under 
such fee schedule in an efficient area (as identified 
under paragraph (2)), in addition to the amount of 
payment that would otherwise be made for such 
services under this part, there also shall be paid (on 
a monthly or quarterly basis) an amount equal to 5 
percent of the payment amount for the services 
under this part. 
‘‘(2) IDENTIFICATION OF EFFICIENT AREAS.— 
‘‘(A) IN GENERAL.—Based upon available 
data, the Secretary shall identify those counties 
or equivalent areas in the United States in the 
lowest fifth percentile of utilization based on 
per capita spending under this part and part A 
for services provided in the most recent year for 
which data are available as of the date of the 
enactment of this subsection, as standardized to 
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eliminate the effect of geographic adjustments 
in payment rates. 
‘‘(B) 
IDENTIFICATION
OF
COUNTIES 
WHERE
SERVICE
IS
FURNISHED..—For pur-
poses of paying the additional amount specified 
in paragraph (1), if the Secretary uses the 5- 
digit postal ZIP Code where the service is fur-
nished, the dominant county of the postal ZIP 
Code (as determined by the United States Post-
al Service, or otherwise) shall be used to deter-
mine whether the postal ZIP Code is in a coun-
ty described in subparagraph (A). 
‘‘(C) LIMITATION
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, 1878, or otherwise, respect-
ing— 
‘‘(i) the identification of a county or 
other area under subparagraph (A); or 
‘‘(ii) the assignment of a postal ZIP 
Code to a county or other area under sub-
paragraph (B). 
‘‘(D) PUBLICATION OF LIST OF COUNTIES; 
POSTING ON WEBSITE.—With respect to a year 
for which a county or area is identified under 
this paragraph, the Secretary shall identify 
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such counties or areas as part of the proposed 
and final rule to implement the physician fee 
schedule under section 1848 for the applicable 
year. The Secretary shall post the list of coun-
ties identified under this paragraph on the 
Internet website of the Centers for Medicare & 
Medicaid Services.’’. 
SEC. 1124. MODIFICATIONS TO THE PHYSICIAN QUALITY 
REPORTING INITIATIVE (PQRI). 
(a) FEEDBACK.—Section 1848(m)(5) of the Social 
Security Act (42 U.S.C. 1395w–4(m)(5)) is amended by 
adding at the end the following new subparagraph: 
‘‘(H) FEEDBACK.—The Secretary shall 
provide timely feedback to eligible professionals 
on the performance of the eligible professional 
with respect to satisfactorily submitting data on 
quality measures under this subsection.’’. 
(b) APPEALS.—Such section is further amended— 
(1) in subparagraph (E), by striking ‘‘There 
shall be’’ and inserting ‘‘Except as provided in sub-
paragraph (I), there shall be’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(I) INFORMAL
APPEALS
PROCESS.—By 
not later than January 1, 2011, the Secretary 
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shall establish and have in place an informal 
process for eligible professionals to seek a re-
view of the determination that an eligible pro-
fessional did not satisfactorily submit data on 
quality measures under this subsection.’’. 
(c) INTEGRATION OF PHYSICIAN QUALITY REPORT-
ING AND EHR REPORTING.—Section 1848(m) of such 
Act is amended by adding at the end the following new 
paragraph: 
‘‘(7) INTEGRATION OF PHYSICIAN QUALITY RE-
PORTING
AND
EHR
REPORTING.—Not later than 
January 1, 2012, the Secretary shall develop a plan 
to integrate clinical reporting on quality measures 
under this subsection with reporting requirements 
under subsection (o) relating to the meaningful use 
of electronic health records. Such integration shall 
consist of the following: 
‘‘(A) The development of measures, the re-
porting of which would both demonstrate— 
‘‘(i) meaningful use of an electronic 
health record for purposes of subsection 
(o); and 
‘‘(ii) clinical quality of care furnished 
to an individual. 
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‘‘(B) The collection of health data to iden-
tify deficiencies in the quality and coordination 
of care for individuals eligible for benefits under 
this part. 
‘‘(C) Such other activities as specified by 
the Secretary.’’. 
(d) EXTENSION OF INCENTIVE PAYMENTS.—Section 
1848(m)(1) of such Act (42 U.S.C. 1395w–4(m)(1)) is 
amended— 
(1) in subparagraph (A), by striking ‘‘2010’’ 
and inserting ‘‘2012’’; and 
(2) in subparagraph (B)(ii), by striking ‘‘2009 
and 2010’’ and inserting ‘‘for each of the years 2009 
through 2012’’. 
SEC. 1125. ADJUSTMENT TO MEDICARE PAYMENT LOCAL-
ITIES. 
(a) IN GENERAL.—Section 1848(e) of the Social Se-
curity Act (42 U.S.C.1395w–4(e)) is amended by adding 
at the end the following new paragraph: 
‘‘(6) TRANSITION
TO
USE
OF
MSAS
AS
FEE 
SCHEDULE AREAS IN CALIFORNIA.— 
‘‘(A) IN GENERAL.— 
‘‘(i) REVISION.—Subject to clause (ii) 
and notwithstanding the previous provi-
sions of this subsection, for services fur-
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nished on or after January 1, 2011, the 
Secretary shall revise the fee schedule 
areas used for payment under this section 
applicable to the State of California using 
the Metropolitan Statistical Area (MSA) 
iterative Geographic Adjustment Factor 
methodology as follows: 
‘‘(I) The Secretary shall con-
figure the physician fee schedule areas 
using the Metropolitan Statistical 
Areas (each in this paragraph referred 
to as an ‘MSA’), as defined by the Di-
rector of the Office of Management 
and Budget and published in the Fed-
eral Register, using the most recent 
available decennial population data as 
of the date of the enactment of the 
Affordable Health Care for America 
Act, as the basis for the fee schedule 
areas. 
‘‘(II) For purposes of this clause, 
the Secretary shall treat all areas not 
included in an MSA as a single rest of 
the State MSA. 
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‘‘(III) The Secretary shall list all 
MSAs within the State by Geographic 
Adjustment Factor described in para-
graph (2) (in this paragraph referred 
to as a ‘GAF’) in descending order. 
‘‘(IV) In the first iteration, the 
Secretary shall compare the GAF of 
the highest cost MSA in the State to 
the weighted-average GAF of all the 
remaining MSAs in the State (includ-
ing the rest of State MSA described 
in subclause (II)). If the ratio of the 
GAF of the highest cost MSA to the 
weighted-average of the GAF of re-
maining lower cost MSAs is 1.05 or 
greater, the highest cost MSA shall be 
a separate fee schedule area. 
‘‘(V) In the next iteration, the 
Secretary shall compare the GAF of 
the MSA with the second-highest 
GAF to the weighted-average GAF of 
the all the remaining MSAs (excluding 
MSAs that become separate fee sched-
ule areas). If the ratio of the second- 
highest MSA’s GAF to the weighted- 
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average of the remaining lower cost 
MSAs is 1.05 or greater, the second- 
highest MSA shall be a separate fee 
schedule area. 
‘‘(VI) The iterative process shall 
continue until the ratio of the GAF of 
the MSA with highest remaining GAF 
to the weighted-average of the remain-
ing MSAs with lower GAFS is less 
than 1.05, and the remaining group of 
MSAs with lower GAFS shall be 
treated as a single fee schedule area. 
‘‘(VII) For purposes of the 
iterative process described in this 
clause, if two MSAs have identical 
GAFs, they shall be combined. 
‘‘(ii) TRANSITION.—For services fur-
nished on or after January 1, 2011, and 
before January 1, 2016, in the State of 
California, after calculating the work, prac-
tice expense, and malpractice geographic 
indices that would otherwise be determined 
under clauses (i), (ii), and (iii) of para-
graph (1)(A) for a fee schedule area deter-
mined under clause (i), if the index for a 
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county within a fee schedule area is less 
than the index in effect for such county on 
December 31, 2010, the Secretary shall in-
stead apply the index in effect for such 
county on such date. 
‘‘(B) SUBSEQUENT REVISIONS.—After the 
transition described in subparagraph (A)(ii), 
not less than every 3 years the Secretary shall 
review and update the fee schedule areas using 
the methodology described in subparagraph 
(A)(i) and any updated MSAs as defined by the 
Director of the Office of Management and 
Budget and published in the Federal Register. 
The Secretary shall review and make any 
changes pursuant to such reviews concurrent 
with the application of the periodic review of 
the adjustment factors required under para-
graph (1)(C) for California. 
‘‘(C) REFERENCES
TO
FEE
SCHEDULE 
AREAS.—Effective for services furnished on or 
after January 1, 2011, for the State of Cali-
fornia, any reference in this section to a fee 
schedule area shall be deemed a reference to an 
MSA in the State (including the single rest of 
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state 
MSA 
described 
in 
subparagraph 
(A)(i)(II)).’’. 
(b) CONFORMING AMENDMENT TO DEFINITION OF 
FEE SCHEDULE AREA.—Section 1848(j)(2) of the Social 
Security Act (42 U.S.C. 1395w(j)(2)) is amended by strik-
ing ‘‘The term’’ and inserting ‘‘Except as provided in sub-
section (e)(6)(C), the term’’. 
PART 2—MARKET BASKET UPDATES 
SEC. 
1131. 
INCORPORATING 
PRODUCTIVITY 
IMPROVE-
MENTS 
INTO 
MARKET 
BASKET 
UPDATES 
THAT DO NOT ALREADY INCORPORATE SUCH 
IMPROVEMENTS. 
(a) OUTPATIENT HOSPITALS.— 
(1) IN GENERAL.—Section 1833(t)(3)(C)(iv) of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395l(t)(3)(C)(iv)) is amended— 
(A) in the first sentence— 
(i) by inserting ‘‘(which is subject to 
the productivity adjustment described in 
subclause (II) of such section)’’ after 
‘‘1886(b)(3)(B)(iii)’’; and 
(ii) by inserting ‘‘(but not below 0)’’ 
after ‘‘reduced’’; and 
(B) in the second sentence, by inserting 
‘‘and which is subject, beginning with 2010, to 
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the productivity adjustment described in section 
1886(b)(3)(B)(iii)(II)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to increase factors for 
services furnished in years beginning with 2010. 
(b) AMBULANCE SERVICES.—Section 1834(l)(3)(B) 
of such Act (42 U.S.C. 1395m(l)(3)(B))) is amended by 
inserting before the period at the end the following: ‘‘and, 
in the case of years beginning with 2010, subject to the 
productivity 
adjustment 
described 
in 
section 
1886(b)(3)(B)(iii)(II)’’. 
(c) AMBULATORY SURGICAL CENTER SERVICES.— 
Section 
1833(i)(2)(D) 
of 
such 
Act 
(42 
U.S.C. 
1395l(i)(2)(D)) is amended— 
(1) by redesignating clause (v) as clause (vi); 
and 
(2) by inserting after clause (iv) the following 
new clause: 
‘‘(v) In implementing the system described in clause 
(i), for services furnished during 2010 or any subsequent 
year, to the extent that an annual percentage change fac-
tor applies, such factor shall be subject to the productivity 
adjustment described in section 1886(b)(3)(B)(iii)(II).’’. 
(d) LABORATORY SERVICES.—Section 1833(h)(2)(A) 
of such Act (42 U.S.C. 1395l(h)(2)(A)) is amended— 
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(3) in subparagraph (L)(ii), by inserting after 
‘‘June 2013’’ the following: ‘‘, subject to the produc-
tivity 
adjustment 
described 
in 
section 
1886(b)(3)(B)(iii)(II)’’; and 
(4) in subparagraph (M), by inserting before 
the period at the end the following: ‘‘, subject to the 
productivity 
adjustment 
described 
in 
section 
1886(b)(3)(B)(iii)(II)’’. 
PART 3—OTHER PROVISIONS 
SEC. 1141. RENTAL AND PURCHASE OF POWER-DRIVEN 
WHEELCHAIRS. 
(a) IN GENERAL.—Section 1834(a)(7)(A)(iii) of the 
Social Security Act (42 U.S.C. 1395m(a)(7)(A)(iii)) is 
amended— 
(1) in the heading, by inserting ‘‘CERTAIN COM-
PLEX REHABILITATIVE’’ after ‘‘OPTION FOR’’; and 
(2) by striking ‘‘power-driven wheelchair’’ and 
inserting ‘‘complex rehabilitative power-driven wheel-
chair recognized by the Secretary as classified within 
group 3 or higher’’. 
(b) EFFECTIVE DATE.—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. Such amendments shall not apply to con-
tracts entered into under section 1847 of the Social Secu-
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rity Act (42 U.S.C. 1395w–3) pursuant to a bid submitted 
under such section before October 1, 2010, under sub-
section (a)(1)(B)(i)(I) of such section. 
SEC. 1141A. ELECTION TO TAKE OWNERSHIP, OR TO DE-
CLINE OWNERSHIP, OF A CERTAIN ITEM OF 
COMPLEX DURABLE MEDICAL EQUIPMENT 
AFTER THE 13-MONTH CAPPED RENTAL PE-
RIOD ENDS. 
(a) IN GENERAL.—Section 1834(a)(7)(A) of the So-
cial Security Act (42 U.S.C. 1395m(a)(7)(A)) is amend-
ed— 
(1) in clause (ii)— 
(A) by striking ‘‘RENTAL.—On’’ and in-
serting ‘‘RENTAL.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), on’’; and 
(B) by adding at the end the following new 
subclause: 
‘‘(II) OPTION TO ACCEPT OR RE-
JECT TRANSFER OF TITLE TO GROUP 
3 SUPPORT SURFACE.— 
‘‘(aa) IN GENERAL.—During 
the 10th continuous month dur-
ing which payment is made for 
the rental of a Group 3 Support 
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Surface under clause (i), the sup-
plier of such item shall offer the 
individual the option to accept or 
reject transfer of title to a Group 
3 Support Surface after the 13th 
continuous month during which 
payment is made for the rental of 
the Group 3 Support Surface 
under clause (i). Such title shall 
be transferred to the individual 
only if the individual notifies the 
supplier not later than 1 month 
after the supplier makes such 
offer that the individual agrees to 
accept transfer of the title to the 
Group 3 Support Surface. Unless 
the individual accepts transfer of 
title to the Group 3 Support Sur-
face in the manner set forth in 
this subclause, the individual 
shall be deemed to have rejected 
transfer of title. If the individual 
agrees to accept the transfer of 
the title to the Group 3 Support 
Surface, the supplier shall trans-
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fer such title to the individual on 
the first day that begins after the 
13th continuous month during 
which payment is made for the 
rental of the Group 3 Support 
Surface under clause (i). 
‘‘(bb) SPECIAL
RULE.—If, 
on the effective date of this sub-
clause, an individual’s rental pe-
riod for a Group 3 Support Sur-
face has exceeded 10 continuous 
months, but the first day that be-
gins after the 13th continuous 
month during which payment is 
made for the rental under clause 
(i) has not been reached, the sup-
plier shall, within 1 month fol-
lowing such effective date, offer 
the individual the option to ac-
cept or reject transfer of title to 
a Group 3 Support Surface. Such 
title shall be transferred to the 
individual only if the individual 
notifies the supplier not later 
than 1 month after the supplier 
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makes such offer that the indi-
vidual agrees to accept transfer 
of title to the Group 3 Support 
Surface. Unless the individual ac-
cepts transfer of title to the 
Group 3 Support Surface in the 
manner set forth in this sub-
clause, the individual shall be 
deemed to have rejected transfer 
of title. If the individual agrees 
to accept the transfer of the title 
to the Group 3 Support Surface, 
the supplier shall transfer such 
title to the individual on the first 
day that begins after the 13th 
continuous month during which 
payment is made for the rental of 
the Group 3 Support Surface 
under clause (i) unless that day 
has passed, in which case the 
supplier shall transfer such title 
to the individual not later than 1 
month after notification that the 
individual accepts transfer of 
title. 
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ment is made under clause (i),’’ after ‘‘under clause 
(ii)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to durable medical 
equipment not later than January 1, 2011. 
SEC. 
1142. 
EXTENSION 
OF 
PAYMENT 
RULE 
FOR 
BRACHYTHERAPY. 
Section 1833(t)(16)(C) of the Social Security Act (42 
U.S.C. 1395l(t)(16)(C)), as amended by section 142 of the 
Medicare Improvements for Patients and Providers Act of 
2008 (Public Law 110–275), is amended by striking, the 
first place it appears, ‘‘January 1, 2010’’ and inserting 
‘‘January 1, 2012’’. 
SEC. 1143. HOME INFUSION THERAPY REPORT TO CON-
GRESS. 
Not later than July 1, 2011, the Medicare Payment 
Advisory Commission shall submit to Congress a report 
on the following: 
(1) The scope of coverage for home infusion 
therapy in the fee-for-service Medicare program 
under title XVIII of the Social Security Act, Medi-
care Advantage under part C of such title, the vet-
eran’s health care program under chapter 17 of title 
38, United States Code, and among private payers, 
including an analysis of the scope of services pro-
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vided by home infusion therapy providers to their 
patients in such programs. 
(2) The benefits and costs of providing such 
coverage under the Medicare program, including a 
calculation of the potential savings achieved through 
avoided or shortened hospital and nursing home 
stays as a result of Medicare coverage of home infu-
sion therapy. 
(3) An assessment of sources of data on the 
costs of home infusion therapy that might be used 
to construct payment mechanisms in the Medicare 
program. 
(4) Recommendations, if any, on the structure 
of a payment system under the Medicare program 
for home infusion therapy, including an analysis of 
the payment methodologies used under Medicare Ad-
vantage plans and private health plans for the provi-
sion of home infusion therapy and their applicability 
to the Medicare program. 
SEC. 1144. REQUIRE AMBULATORY SURGICAL CENTERS 
(ASCS) TO SUBMIT COST DATA AND OTHER 
DATA. 
(a) COST REPORTING.— 
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(1) IN GENERAL.—Section 1833(i) of the Social 
Security Act (42 U.S.C. 1395l(i)) is amended by 
adding at the end the following new paragraph: 
‘‘(8) The Secretary shall require, as a condition of 
the agreement described in section 1832(a)(2)(F)(i), the 
submission of such cost report as the Secretary may speci-
fy, taking into account the requirements for such reports 
under section 1815 in the case of a hospital.’’. 
(2) DEVELOPMENT
OF
COST
REPORT.—Not 
later than 3 years after the date of the enactment 
of this Act, the Secretary of Health and Human 
Services shall develop a cost report form for use 
under section 1833(i)(8) of the Social Security Act, 
as added by paragraph (1). 
(3) AUDIT REQUIREMENT.—The Secretary shall 
provide for periodic auditing of cost reports sub-
mitted under section 1833(i)(8) of the Social Secu-
rity Act, as added by paragraph (1). 
(4) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to agreements applica-
ble to cost reporting periods beginning 18 months 
after the date the Secretary develops the cost report 
form under paragraph (2). 
(b) ADDITIONAL DATA ON QUALITY.— 
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(1) IN GENERAL.—Section 1833(i)(7) of such 
Act (42 U.S.C. 1395l(i)(7)) is amended— 
(A) in subparagraph (B), by inserting 
‘‘subject to subparagraph (C),’’ after ‘‘may oth-
erwise provide,’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(C) Under subparagraph (B) the Secretary shall re-
quire the reporting of such additional data relating to 
quality of services furnished in an ambulatory surgical fa-
cility, including data on health care associated infections, 
as the Secretary may specify.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall to reporting for years begin-
ning with 2012. 
SEC. 1145. 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 HOSPITALS.— 
‘‘(A) STUDY.—The Secretary shall conduct 
a study to determine if, under the system under 
this subsection, costs incurred by hospitals de-
scribed in section 1886(d)(1)(B)(v) with respect 
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to ambulatory payment classification groups ex-
ceed those costs incurred by other hospitals fur-
nishing services under this subsection (as deter-
mined appropriate by the Secretary). 
‘‘(B) AUTHORIZATION OF ADJUSTMENT.— 
Insofar as the Secretary determines under sub-
paragraph (A) that costs incurred by hospitals 
described in section 1886(d)(1)(B)(v) exceed 
those costs incurred by other hospitals fur-
nishing services under this subsection, the Sec-
retary shall provide for an appropriate adjust-
ment under paragraph (2)(E) to reflect those 
higher costs effective for services furnished on 
or after January 1, 2011.’’. 
SEC. 1146. PAYMENT FOR IMAGING SERVICES. 
(a) ADJUSTMENT IN PRACTICE EXPENSE TO RE-
FLECT A PRESUMED LEVEL OF 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 ‘‘sub-
paragraph (A)’’ and inserting ‘‘this paragraph’’; 
and 
(B) by adding at the end the following new 
subparagraph: 
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‘‘(C) ADJUSTMENT IN PRACTICE EXPENSE 
TO REFLECT A PRESUMED LEVEL OF UTILIZA-
TION.—Consistent with the methodology 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 section 1834(e)(1)(B)) 
furnished on or after January 1, 2011, the Sec-
retary shall adjust such number of units so it 
reflects a presumed rate of utilization of imag-
ing equipment of 75 percent.’’; and 
(2) in subsection (c)(2)(B)(v)), by adding at the 
end the following new subclause: 
‘‘(III) CHANGE
IN
PRESUMED 
UTILIZATION LEVEL OF CERTAIN AD-
VANCED DIAGNOSTIC IMAGING SERV-
ICES.—Effective for fee schedules es-
tablished beginning with 2011, re-
duced expenditures attributable to the 
presumed utilization of 75 percent 
under subsection (b)(4)(C) instead of 
a presumed utilization of imaging 
equipment of 50 percent.’’. 
(b) ADJUSTMENT IN TECHNICAL COMPONENT ‘‘DIS-
COUNT’’ ON SINGLE-SESSION IMAGING TO CONSECUTIVE 
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BODY PARTS.—Section 1848 of such Act (42 U.S.C. 
1395w–4) is further amended— 
(1) in subsection (b)(4), by adding at the end 
the following new subparagraph: 
‘‘(D) ADJUSTMENT IN TECHNICAL COMPO-
NENT DISCOUNT ON SINGLE-SESSION IMAGING 
INVOLVING
CONSECUTIVE
BODY
PARTS.—For 
services furnished on or after January 1, 2011, 
the Secretary shall increase the reduction in ex-
penditures attributable to the multiple proce-
dure payment reduction applicable to the tech-
nical 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: 
‘‘(III) 
ADDITIONAL
REDUCED 
PAYMENT
FOR
MULTIPLE
IMAGING 
PROCEDURES.—Effective 
for 
fee 
schedules established beginning with 
2011, reduced expenditures attrib-
utable to the increase in the multiple 
procedure payment reduction from 25 
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percent to 50 percent as described in 
subsection (b)(4)(D).’’. 
SEC. 1147. DURABLE MEDICAL EQUIPMENT PROGRAM IM-
PROVEMENTS. 
(a) WAIVER OF SURETY BOND REQUIREMENT.—Sec-
tion 1834(a)(16) of the Social Security Act (42 U.S.C. 
1395m(a)(16)) is amended by adding at the end the fol-
lowing sentence: ‘‘The requirement for a surety bond de-
scribed in subparagraph (B) shall not apply in the case 
of a pharmacy or supplier that exclusively furnishes eye-
glasses or contact lenses described in section 1861(s)(8) 
if the pharmacy or supply has been enrolled under section 
1866(j) as a supplier of durable medical equipment, pros-
thetics, orthotics, and supplies and has been issued (which 
may include renewal of) a supplier number (as described 
in the first sentence of this paragraph) for at least 5 years, 
and if a final adverse action (as defined in section 
424.57(a) of title 42, Code of Federal Regulations) has 
never been imposed for such pharmacy or supplier.’’. 
(b) ENSURING SUPPLY OF OXYGEN EQUIPMENT .— 
(1) IN GENERAL.—Section 1834(a)(5)(F) of the 
Social Security Act (42 U.S.C. 1395m(a)(5)(F)) is 
amended— 
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(A) in clause (ii), by striking ‘‘After the’’ 
and inserting ‘‘Except as provided in clause 
(iii), after the’’; and 
(B) by adding at the end the following new 
clause: 
‘‘(iii) CONTINUATION OF SUPPLY.—In 
the case of a supplier furnishing such 
equipment to an individual under this sub-
section as of the 27th month of the 36 
months described in clause (i), the supplier 
furnishing such equipment as of such 
month shall continue to furnish such 
equipment to such individual (either di-
rectly or though arrangements with other 
suppliers of such equipment) during any 
subsequent period of medical need for the 
remainder of the reasonable useful lifetime 
of the equipment, as determined by the 
Secretary, regardless of the location of the 
individual, unless another supplier has ac-
cepted responsibility for continuing to fur-
nish such equipment during the remainder 
of such period.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall take effect as of the date of 
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the enactment of this Act and shall apply to the fur-
nishing of equipment to individuals for whom the 
27th month of a continuous period of use of oxygen 
equipment described in section 1834(a)(5)(F) of the 
Social Security Act occurs on or after July 1, 2010. 
(c) TREATMENT OF CURRENT ACCREDITATION AP-
PLICATIONS.—Section 1834(a)(20)(F) of such Act (42 
U.S.C. 1395m(a)(20)(F)) is amended— 
(1) in clause (i)— 
(A) by striking ‘‘clause (ii)’’ and inserting 
‘‘clauses (ii) and (iii)’’; and 
(B) by striking ‘‘and’’ at the end; 
(2) by striking the period at the end of clause 
(ii)(II) and by inserting a semicolon; 
(3) by inserting after clause (ii) the following 
new clauses: 
‘‘(iii) the requirement for accredita-
tion described in clause (i) shall not apply 
for purposes of supplying diabetic testing 
supplies, canes, and crutches in the case of 
a pharmacy that is enrolled under section 
1866(j) as a supplier of durable medical 
equipment, prosthetics, orthotics, and sup-
plies; and 
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‘‘(iv) a supplier that has submitted an 
application for accreditation before August 
1, 2009, shall retain the supplier’s provider 
or supplier number until an independent 
accreditation organization determines if 
such supplier complies with requirements 
under this paragraph.’’; and 
(4) by adding at the end the following new sen-
tence: ‘‘Nothing in clauses (iii) and (iv) shall be con-
strued as affecting the application of an accredita-
tion requirement for suppliers to qualify for bidding 
in a competitive acquisition area under section 
1847,’’. 
(d) RESTORING 36-MONTH OXYGEN RENTAL PERIOD 
IN CASE OF SUPPLIER BANKRUPTCY FOR CERTAIN INDI-
VIDUALS.—Section 1834(a)(5)(F) of such Act (42 U.S.C. 
1395m(a)(5)(F)), as amended by subsection (b), is further 
amended by adding at the end the following new clause: 
‘‘(iv) 
EXCEPTION
FOR
BANK-
RUPTCY.—If a supplier who furnishes oxy-
gen and oxygen equipment to an individual 
is declared bankrupt and its assets are liq-
uidated and at the time of such declaration 
and liquidation more than 24 months of 
rental payments have been made, such in-
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dividual may begin a new 36-month rental 
period under this subparagraph with an-
other supplier of oxygen.’’. 
SEC. 1148. MEDPAC STUDY AND REPORT ON BONE MASS 
MEASUREMENT. 
(a) IN GENERAL.—The Medicare Payment Advisory 
Commission shall conduct a study regarding bone mass 
measurement, including computed tomography, duel-en-
ergy x-ray absorptriometry, and vertebral fracture assess-
ment. The study shall focus on the following: 
(1) An assessment of the adequacy of Medicare 
payment rates for such services, taking into account 
costs of acquiring the necessary equipment, profes-
sional work time, and practice expense costs. 
(2) The impact of Medicare payment changes 
since 2006 on beneficiary access to bone mass meas-
urement benefits in general and in rural and minor-
ity communities specifically. 
(3) A review of the clinically appropriate and 
recommended use among Medicare beneficiaries and 
how usage rates among such beneficiaries compares 
to such recommendations. 
(4) In conjunction with the findings under (3), 
recommendations, if necessary, regarding methods 
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for reaching appropriate use of bone mass measure-
ment studies among Medicare beneficiaries. 
(b) REPORT.—The Commission shall submit a report 
to the Congress, not later than 9 months after the date 
of the enactment of this Act, containing a description of 
the results of the study conducted under subsection (a) 
and the conclusions and recommendations, if any, regard-
ing each of the issues described in paragraphs (1), (2) (3) 
and (4) of such subsection. 
SEC. 1149. TIMELY ACCESS TO POST-MASTECTOMY ITEMS. 
(a) IN GENERAL.—Section 1834(h)(1) of the Social 
Security Act (42 U.S.C. 1395m) is amended— 
(1) by redesignating subparagraph (H) as sub-
paragraph (I); and 
(2) by inserting after subparagraph (G) the fol-
lowing new subparagraph: 
‘‘(H) SPECIAL PAYMENT RULE FOR POST- 
MASTECTOMY EXTERNAL BREAST PROSTHESIS 
GARMENTS.—Payment for post-mastectomy ex-
ternal breast prosthesis garments shall be made 
regardless of whether such items are supplied to 
the beneficiary prior to or after the mastectomy 
procedure or other breast cancer surgical proce-
dure. The Secretary shall develop policies to en-
sure appropriate beneficiary access and utiliza-
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tion safeguards for such items supplied to a 
beneficiary prior to the mastectomy or other 
breast cancer surgical procedure.’’. 
(b) EFFECTIVE DATE.—This amendment shall apply 
not later than January 1, 2011. 
SEC. 1149A. PAYMENT FOR BIOSIMILAR BIOLOGICAL PROD-
UCTS. 
(a) IN GENERAL.—Section 1847A of the Social Secu-
rity Act (42 U.S.C. 1395w–3a) is amended— 
(1) in subsection (b)(1)— 
(A) in subparagraph (A), by striking ‘‘or’’ 
at the end; 
(B) in subparagraph (B), by striking the 
period at the end and inserting ‘‘; or’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(C) in the case of one or more inter-
changeable biological products (as defined in 
subsection (c)(6)(I)) and their reference biologi-
cal product (as defined in subsection (c)(6)(J)), 
which shall be included in the same billing and 
payment code, the sum of— 
‘‘(i) the average sales price as deter-
mined using the methodology described in 
paragraph (6) applied to such interchange-
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able and reference products for all Na-
tional Drug Codes assigned to such prod-
ucts in the same manner as such para-
graph (6) is applied to multiple source 
drugs; and 
‘‘(ii) 6 percent of the amount deter-
mined under clause (i); 
‘‘(D) in the case of a biosimilar biological 
product (as defined in subsection (c)(6)(H)), 
the sum of— 
‘‘(i) the average sales price as deter-
mined using the methodology described in 
paragraph (4) applied to such biosimilar 
biological product for all National Drug 
Codes assigned to such product in the 
same manner as such paragraph (4) is ap-
plied to a single source drug; and 
‘‘(ii) 6 percent of the amount deter-
mined under paragraph (4) or the amount 
determined under subparagraph (C)(ii), as 
the case may be, for the reference biologi-
cal product (as defined in subsection 
(c)(6)(J)); or 
‘‘(E) in the case of a reference biological 
product for both an interchangeable biological 
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product and a biosimilar product, the amount 
determined in subparagraph (C).’’; and 
(2) in subsection (c)(6)— 
(A) by amending subparagraph (D)(i) to 
read as follows: 
‘‘(i) a biological, including a reference 
biological product for a biosimilar product, 
but excluding— 
‘‘(I) a biosimilar biological prod-
uct; 
‘‘(II) an interchangeable biologi-
cal product; 
‘‘(III) a reference biological prod-
uct for an interchangeable biological 
product; and 
‘‘(IV) a reference biological prod-
uct for both an interchangeable bio-
logical product and a biosimilar prod-
uct; or’’; and 
(B) by adding at the end the following new 
subparagraphs: 
‘‘(H) BIOSIMILAR BIOLOGICAL PRODUCT.— 
The term ‘biosimilar biological product’ means 
a biological product licensed as a biosimilar bio-
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logical product under section 351(k) of the 
Public Health Service Act. 
‘‘(I) 
INTERCHANGEABLE
BIOLOGICAL 
PRODUCT.—The term ‘interchangeable biologi-
cal product’ means a biological product licensed 
as an interchangeable biological product under 
section 351(k) of the Public Health Service Act 
‘‘(J) REFERENCE BIOLOGICAL PRODUCT.— 
The term ‘reference biological product’ means 
the biological product that is referred to in the 
application for a biosimilar or interchangeable 
biological product licensed under section 351(k) 
of the Public Health Service Act.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to payments for biosimilar bio-
logical products, interchangeable biological products, and 
reference biological products beginning with the first day 
of the second calendar quarter after the date of the enact-
ment of this Act. 
SEC. 1149B. STUDY AND REPORT ON DME COMPETITIVE 
BIDDING PROCESS. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study to evaluate the potential es-
tablishment of a program under Medicare under title 
XVIII of the Social Security Act to acquire durable med-
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ical equipment and supplies through a competitive bidding 
process among manufacturers of such equipment and sup-
plies. Such study shall address the following: 
(1) Identification of types of durable medical 
equipment and supplies that would be appropriate 
for bidding under such a program. 
(2) Recommendations on how to structure such 
an acquisition program in order to promote fiscal re-
sponsibility while also ensuring beneficiary access to 
high quality equipment and supplies. 
(3) Recommendations on how such a program 
could be phased-in and on what geographic level 
would bidding be most appropriate. 
(4) In addition to price, recommendations on 
criteria that could be factored into the bidding proc-
ess. 
(5) Recommendations on how suppliers could be 
compensated for furnishing and servicing equipment 
and supplies acquired under such a program. 
(6) Comparison of such a program to the cur-
rent competitive bidding program under Medicare 
for durable medical equipment, as well as any other 
similar Federal acquisition programs, such as the 
General Services Administration’s vehicle purchasing 
program. 
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(7) Any other consideration relevant to the ac-
quisition, supply, and service of durable medical 
equipment and supplies that is deemed appropriate 
by the Comptroller General. 
(b) REPORT.—Not later than 12 months after the 
date of the enactment of this Act, the Comptroller General 
of the United States shall submit to Congress a report 
on the findings of the study under subsection (a). 
Subtitle C—Provisions Related to 
Medicare Parts A and B 
SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOS-
PITAL READMISSIONS. 
(a) HOSPITALS.— 
(1) IN GENERAL.—Section 1886 of the Social 
Security Act (42 U.S.C. 1395ww), as amended by 
section 1103(a), is amended by adding at the end 
the following new subsection: 
‘‘(p) ADJUSTMENT
TO HOSPITAL PAYMENTS
FOR 
EXCESS READMISSIONS.— 
‘‘(1) IN GENERAL.—With respect to payment 
for discharges from an applicable hospital (as de-
fined in paragraph (5)(C)) occurring during a fiscal 
year beginning on or after October 1, 2011, in order 
to account for excess readmissions in the hospital, 
the Secretary shall reduce the payments that would 
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otherwise be made to such hospital under subsection 
(d) (or section 1814(b)(3), as the case may be) for 
such a discharge by an amount equal to the product 
of— 
‘‘(A) the base operating DRG payment 
amount (as defined in paragraph (2)) for the 
discharge; and 
‘‘(B) the adjustment factor (described in 
paragraph (3)(A)) for the hospital for the fiscal 
year. 
‘‘(2) 
BASE
OPERATING
DRG
PAYMENT 
AMOUNT.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), for purposes of this sub-
section, the term ‘base operating DRG payment 
amount’ means, with respect to a hospital for a 
fiscal year, the payment amount that would 
otherwise be made under subsection (d) for a 
discharge if this subsection did not apply, re-
duced by any portion of such amount that is at-
tributable to payments under subparagraphs 
(B) and (F) of paragraph (5). 
‘‘(B) ADJUSTMENTS.—For purposes of 
subparagraph (A), in the case of a hospital that 
is paid under section 1814(b)(3), the term ‘base 
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operating DRG payment amount’ means the 
payment amount under such section. 
‘‘(3) ADJUSTMENT FACTOR.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the adjustment factor under this 
paragraph for an applicable hospital for a fiscal 
year is equal to the greater of— 
‘‘(i) the ratio described in subpara-
graph (B) for the hospital for the applica-
ble period (as defined in paragraph (5)(D)) 
for such fiscal year; or 
‘‘(ii) the floor adjustment factor speci-
fied in subparagraph (C). 
‘‘(B) RATIO.—The ratio described in this 
subparagraph for a hospital for an applicable 
period is equal to 1 minus the ratio of— 
‘‘(i) the aggregate payments for ex-
cess readmissions (as defined in paragraph 
(4)(A)) with respect to an applicable hos-
pital for the applicable period; and 
‘‘(ii) the aggregate payments for all 
discharges 
(as 
defined 
in 
paragraph 
(4)(B)) with respect to such applicable 
hospital for such applicable period. 
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sistent with such a methodology) for 
such hospital for such condition with 
respect to such applicable period. 
‘‘(ii) EXCLUSION
OF
CERTAIN
RE-
ADMISSIONS.—For purposes of clause (i), 
with respect to a hospital, excess readmis-
sions shall not include readmissions for an 
applicable condition for which there are 
fewer than a minimum number (as deter-
mined by the Secretary) of discharges for 
such applicable condition for the applicable 
period and such hospital. 
‘‘(iii) ADJUSTMENT.—In order to pro-
mote a reduction over time in the overall 
rate of readmissions for applicable condi-
tions, the Secretary may provide, beginning 
with discharges for fiscal year 2014, for 
the determination of the excess readmis-
sions ratio under subparagraph (C) to be 
based on a ranking of hospitals by read-
mission ratios (from lower to higher read-
mission ratios) normalized to a benchmark 
that is lower than the 50th percentile. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
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‘‘(A) APPLICABLE CONDITION.—The term 
‘applicable condition’ means, subject to sub-
paragraph (B), a condition or procedure se-
lected by the Secretary among conditions and 
procedures for which— 
‘‘(i) readmissions (as defined in sub-
paragraph (E)) that represent conditions 
or procedures that are high volume or high 
expenditures under this title (or other cri-
teria specified by the Secretary); and 
‘‘(ii) measures of such readmissions— 
‘‘(I) have been endorsed by the 
entity with a contract under section 
1890(a); and 
‘‘(II) such endorsed measures 
have appropriate exclusions for re-
admissions that are unrelated to the 
prior discharge (such as a planned re-
admission or transfer to another ap-
plicable hospital). 
‘‘(B) EXPANSION OF APPLICABLE CONDI-
TIONS.—Beginning with fiscal year 2013, the 
Secretary shall expand the applicable conditions 
beyond the 3 conditions for which measures 
have been endorsed as described in subpara-
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graph (A)(ii)(I) as of the date of the enactment 
of this subsection to the additional 4 conditions 
that have been so identified by the Medicare 
Payment Advisory Commission in its report to 
Congress in June 2007 and to other conditions 
and procedures which may include an all-condi-
tion measure of readmissions, as determined 
appropriate by the Secretary. In expanding 
such applicable conditions, the Secretary shall 
seek the endorsement described in subpara-
graph (A)(ii)(I) but may apply such measures 
without such an endorsement. 
‘‘(C) APPLICABLE
HOSPITAL.—The term 
‘applicable hospital’ means a subsection (d) hos-
pital or a hospital that is paid under section 
1814(b)(3). 
‘‘(D) APPLICABLE PERIOD.—The term ‘ap-
plicable period’ means, with respect to a fiscal 
year, such period as the Secretary shall specify 
for purposes of determining excess readmis-
sions. 
‘‘(E) READMISSION.—The term ‘readmis-
sion’ means, in the case of an individual who is 
discharged from an applicable hospital, the ad-
mission of the individual to the same or another 
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applicable hospital within a time period speci-
fied by the Secretary from the date of such dis-
charge. Insofar as the discharge relates to an 
applicable condition for which there is an en-
dorsed measure described in subparagraph 
(A)(ii)(I), such time period (such as 30 days) 
shall be consistent with the time period speci-
fied for such measure. 
‘‘(6) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of— 
‘‘(A) the determination of base operating 
DRG payment amounts; 
‘‘(B) the methodology for determining the 
adjustment factor under paragraph (3), includ-
ing excess readmissions ratio under paragraph 
(4)(C), aggregate payments for excess readmis-
sions under paragraph (4)(A), and aggregate 
payments for all discharges under paragraph 
(4)(B), and applicable periods and applicable 
conditions under paragraph (5); 
‘‘(C) the measures of readmissions as de-
scribed in paragraph (5)(A)(ii); and 
‘‘(D) the determination of a targeted hos-
pital under paragraph (8)(B)(i), the increase in 
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payment under paragraph (8)(B)(ii), the aggre-
gate cap under paragraph (8)(C)(i), the hos-
pital-specific limit under paragraph (8)(C)(ii), 
and the form of payment made by the Secretary 
under paragraph (8)(D). 
‘‘(7) MONITORING INAPPROPRIATE CHANGES IN 
ADMISSIONS PRACTICES.—The Secretary shall mon-
itor the activities of applicable hospitals to determine 
if such hospitals have taken steps to avoid patients 
at risk in order to reduce the likelihood of increasing 
readmissions for applicable conditions or taken other 
inappropriate steps involving readmissions or trans-
fers. If the Secretary determines that such a hos-
pital has taken such a step, after notice to the hos-
pital and opportunity for the hospital to undertake 
action to alleviate such steps, the Secretary may im-
pose an appropriate sanction. 
‘‘(8) ASSISTANCE TO CERTAIN HOSPITALS.— 
‘‘(A) IN GENERAL.—For purposes of pro-
viding funds to applicable hospitals to take 
steps described in subparagraph (E) to address 
factors that may impact readmissions of indi-
viduals who are discharged from such a hos-
pital, for fiscal years beginning on or after Oc-
tober 1, 2011, the Secretary shall make a pay-
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ment adjustment for a hospital described in 
subparagraph (B), with respect to each such 
fiscal year, by a percent estimated by the Sec-
retary to be consistent with subparagraph (C). 
The Secretary shall provide priority to hospitals 
that serve Medicare beneficiaries at highest risk 
for readmission or for a poor transition from 
such a hospital to a post-hospital site of care. 
‘‘(B) TARGETED
HOSPITALS.—Subpara-
graph (A) shall apply to an applicable hospital 
that— 
‘‘(i) had (or, in the case of an 
1814(b)(3) hospital, otherwise would have 
had) a disproportionate patient percentage 
(as defined in section 1886(d)(5)(F)) of at 
least 30 percent, using the latest available 
data as estimated by the Secretary; and 
‘‘(ii) provides assurances satisfactory 
to the Secretary that the increase in pay-
ment under this paragraph shall be used 
for purposes described in subparagraph 
(E). 
‘‘(C) CAPS.— 
‘‘(i) AGGREGATE CAP.—The aggregate 
amount of the payment adjustment under 
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this paragraph for a fiscal year shall not 
exceed 5 percent of the estimated dif-
ference in the spending that would occur 
for such fiscal year with and without appli-
cation of the adjustment factor described 
in paragraph (3) and applied pursuant to 
paragraph (1). 
‘‘(ii) HOSPITAL-SPECIFIC LIMIT.—The 
aggregate amount of the payment adjust-
ment for a hospital under this paragraph 
shall not exceed the estimated difference in 
spending that would occur for such fiscal 
year for such hospital with and without ap-
plication of the adjustment factor de-
scribed in paragraph (3) and applied pur-
suant to paragraph (1). 
‘‘(D) FORM OF PAYMENT.—The Secretary 
may make the additional payments under this 
paragraph on a lump sum basis, a periodic 
basis, a claim by claim basis, or otherwise. 
‘‘(E) USE OF ADDITIONAL PAYMENT.— 
‘‘(i) IN
GENERAL.—Funding under 
this paragraph shall be used by targeted 
hospitals for activities designed to address 
the patient noncompliance issues that re-
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sult in higher than normal readmission 
rates, including transitional care services 
described in clause (ii) and any or all of 
the other activities described in clause (iii). 
‘‘(ii) 
TRANSITIONAL
CARE
SERV-
ICES.—The transitional care services de-
scribed in this clause are transitional care 
services furnished by a qualified transi-
tional care provider, such as a nurse or 
other health professional, who meets rel-
evant experience and training requirements 
as specified by the Secretary that support 
a beneficiary under this section beginning 
on the date of an individual’s admission to 
a hospital for inpatient hospital services 
and ending at the latest on the last day of 
the 90-day period beginning on the date of 
the individual’s discharge from the applica-
ble hospital. The Secretary shall determine 
and update services to be included in tran-
sitional care services under this clause as 
appropriate, based on evidence of their ef-
fectiveness in reducing hospital readmis-
sions and improving health outcomes. Such 
services shall include the following: 
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‘‘(I) Conduct of an assessment 
prior to discharge, which assessment 
may include an assessment of the in-
dividual’s physical and mental condi-
tion, cognitive and functional capac-
ities, medication regimen and adher-
ence, social and environmental needs, 
and primary caregiver needs and re-
sources. 
‘‘(II) Development of a evidence- 
based plan of transitional care for the 
individual developed after consultation 
with the individual and the individ-
ual’s primary caregiver and other 
health team members, as appropriate. 
Such plan shall include a list of cur-
rent therapies prescribed, treatment 
goals and may include other items or 
elements as determined by the Sec-
retary, such as identifying list of po-
tential health risks and future services 
for both the individual and any pri-
mary caregiver. 
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‘‘(iii) OTHER ACTIVITIES.—The other 
activities described in this clause are the 
following: 
‘‘(I) Providing other care coordi-
nation services not described under 
clause (ii). 
‘‘(II) Hiring translators and in-
terpreters. 
‘‘(III) Increasing services offered 
by discharge planners. 
‘‘(IV) Ensuring that individuals 
receive a summary of care and medi-
cation orders upon discharge. 
‘‘(V) Developing a quality im-
provement plan to assess and remedy 
preventable readmission rates. 
‘‘(VI) Assigning appropriate fol-
low-up care for discharged individuals. 
‘‘(VII) Doing other activities as 
determined appropriate by the Sec-
retary. 
‘‘(F) GAO REPORT ON USE OF FUNDS.— 
Not later than 3 years after the date on which 
funds are first made available under this para-
graph, the Comptroller General of the United 
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States shall submit to Congress a report on the 
use of such funds. Such report shall consider 
information on the effective uses of such funds, 
how the uses of such funds affected hospital re-
admission rates (including at 6 months post- 
discharge), health outcomes and quality, reduc-
tions in expenditures under this title and the 
experiences of beneficiaries, primary caregivers, 
and providers, as well as any appropriate rec-
ommendations.’’. 
(b) APPLICATION
TO
CRITICAL
ACCESS
HOS-
PITALS.—Section 1814(l) of the Social Security Act (42 
U.S.C. 1395f(l)) is amended— 
(1) in paragraph (5)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (C); 
(B) by striking the period at the end of 
subparagraph (D) and inserting ‘‘; and’’; 
(C) by inserting at the end the following 
new subparagraph: 
‘‘(E) the methodology for determining the ad-
justment factor under paragraph (5), including the 
determination of aggregate payments for actual and 
expected readmissions, applicable periods, applicable 
conditions and measures of readmissions.’’; and 
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(D) by redesignating such paragraph as 
paragraph (6); and 
(2) by inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5) The adjustment factor described in section 
1886(p)(3) shall apply to payments with respect to a crit-
ical access hospital with respect to a cost reporting period 
beginning in fiscal year 2012 and each subsequent fiscal 
year (after application of paragraph (4) of this subsection) 
in a manner similar to the manner in which such section 
applies with respect to a fiscal year to an applicable hos-
pital as described in section 1886(p)(2).’’. 
(c) POST ACUTE CARE PROVIDERS.— 
(1) INTERIM POLICY.— 
(A) IN GENERAL.—With respect to a read-
mission to an applicable hospital or a critical 
access hospital (as described in section 1814(l) 
of the Social Security Act) from a post acute 
care provider (as defined in paragraph (3)) and 
such a readmission is not governed by section 
412.531 of title 42, Code of Federal Regula-
tions, if the claim submitted by such a post- 
acute care provider under title XVIII of the So-
cial Security Act indicates that the individual 
was readmitted to a hospital from such a post- 
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acute care provider or admitted from home and 
under the care of a home health agency within 
30 days of an initial discharge from an applica-
ble hospital or critical access hospital, the pay-
ment under such title on such claim shall be the 
applicable percent specified in subparagraph 
(B) of the payment that would otherwise be 
made under the respective payment system 
under such title for such post-acute care pro-
vider if this subsection did not apply. In apply-
ing the previous sentence, the Secretary shall 
exclude a period of 1 day from the date the in-
dividual is first admitted to or under the care 
of the post-acute care provider. 
(B) APPLICABLE PERCENT DEFINED.—For 
purposes of subparagraph (A), the applicable 
percent is— 
(i) for fiscal or rate year 2012 is 
0.996; 
(ii) for fiscal or rate year 2013 is 
0.993; and 
(iii) for fiscal or rate year 2014 is 
0.99. 
(C) EFFECTIVE DATE.—Subparagraph (1) 
shall apply to discharges or services furnished 
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applicable hospitals and critical access hospitals 
under the amendments made by subsection (a). 
The provisions of paragraph (1) shall apply 
with respect to any period on or after October 
1, 2014, and before such application date de-
scribed in the previous sentence in the same 
manner as such provisions apply with respect to 
fiscal or rate year 2014. 
(C) MONITORING
AND
PENALTIES.—The 
provisions of paragraph (7) of such section 
1886(p) shall apply to providers under this 
paragraph in the same manner as they apply to 
hospitals under such section. 
(3) DEFINITIONS.—For purposes of this sub-
section: 
(A) POST
ACUTE
CARE
PROVIDER.—The 
term ‘‘post acute care provider’’ means— 
(i) a skilled nursing facility (as de-
fined in section 1819(a) of the Social Secu-
rity Act); 
(ii) an inpatient rehabilitation facility 
(described in section 1886(h)(1)(A) of such 
Act); 
(iii) a home health agency (as defined 
in section 1861(o) of such Act); and 
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(iv) a long term care hospital (as de-
fined in section 1861(ccc) of such Act). 
(B) OTHER TERMS .—The terms ‘‘applica-
ble condition’’, ‘‘applicable hospital’’, and ‘‘re-
admission’’ have the meanings given such terms 
in section 1886(p)(5) of the Social Security 
Act, as added by subsection (a)(1). 
(d) PHYSICIANS.— 
(1) STUDY.—The Secretary of Health and 
Human Services shall conduct a study to determine 
how the readmissions policy described in the pre-
vious subsections could be applied to physicians. 
(2) 
CONSIDERATIONS.—In 
conducting 
the 
study, the Secretary shall consider approaches such 
as— 
(A) creating a new code (or codes) and 
payment amount (or amounts) under the fee 
schedule in section 1848 of the Social Security 
Act (in a budget neutral manner) for services 
furnished by an appropriate physician who sees 
an individual within the first week after dis-
charge from a hospital or critical access hos-
pital; 
(B) developing measures of rates of read-
mission for individuals treated by physicians; 
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(C) applying a payment reduction for phy-
sicians who treat the patient during the initial 
admission that results in a readmission; and 
(D) methods for attributing payments or 
payment reductions to the appropriate physi-
cian or physicians. 
(3) REPORT.—The Secretary shall issue a pub-
lic report on such study not later than the date that 
is one year after the date of the enactment of this 
Act. 
(e) FUNDING.—For purposes of carrying out the pro-
visions of this section, in addition to funds otherwise avail-
able, out of any funds in the Treasury not otherwise ap-
propriated, there are appropriated to the Secretary of 
Health and Human Services for the Center for Medicare 
& Medicaid Services Program Management Account 
$25,000,000 for each fiscal year beginning with 2010. 
Amounts appropriated under this subsection for a fiscal 
year shall be available until expended. 
SEC. 1152. POST ACUTE CARE SERVICES PAYMENT REFORM 
PLAN AND BUNDLING PILOT PROGRAM. 
(a) PLAN.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall develop a detailed plan to reform 
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payment for post acute care (PAC) services under 
the Medicare program under title XVIII of the So-
cial Security Act (in this section referred to as the 
‘‘Medicare program)’’. The goals of such payment 
reform are to— 
(A) improve the coordination, quality, and 
efficiency of such services; and 
(B) improve outcomes for individuals such 
as reducing the need for readmission to hos-
pitals from providers of such services. 
(2) BUNDLING
POST
ACUTE
SERVICES.—The 
plan described in paragraph (1) shall include de-
tailed specifications for a bundled payment for post 
acute services (in this section referred to as the 
‘‘post acute care bundle’’), and may include other 
approaches determined appropriate by the Secretary. 
(3) POST ACUTE SERVICES.—For purposes of 
this section, the term ‘‘post acute services’’ means 
services for which payment may be made under the 
Medicare program that are furnished by skilled 
nursing facilities, inpatient rehabilitation facilities, 
long term care hospitals, hospital based outpatient 
rehabilitation facilities and home health agencies to 
an individual after discharge of such individual from 
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a hospital, and such other services determined ap-
propriate by the Secretary. 
(b) DETAILS.—The plan described in subsection 
(a)(1) shall include consideration of the following issues: 
(1) The nature of payments under a post acute 
care bundle, including the type of provider or entity 
to whom payment should be made, the scope of ac-
tivities and services included in the bundle, whether 
payment for physicians’ services should be included 
in the bundle, and the period covered by the bundle. 
(2) Whether the payment should be consoli-
dated with the payment under the inpatient prospec-
tive system under section 1886 of the Social Secu-
rity Act (in this section referred to as MS–DRGs) 
or a separate payment should be established for such 
bundle, and if a separate payment is established, 
whether it should be made only upon use of post 
acute care services or for every discharge. 
(3) Whether the bundle should be applied 
across all categories of providers of inpatient serv-
ices (including critical access hospitals) and post 
acute care services or whether it should be limited 
to certain categories of providers, services, or dis-
charges, such as high volume or high cost MS– 
DRGs. 
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(4) The extent to which payment rates could be 
established to achieve offsets for efficiencies that 
could be expected to be achieved with a bundle pay-
ment, whether such rates should be established on a 
national basis or for different geographic areas, 
should vary according to discharge, case mix, 
outliers, and geographic differences in wages or 
other appropriate adjustments, and how to update 
such rates. 
(5) The nature of protections needed for indi-
viduals under a system of bundled payments to en-
sure that individuals receive quality care, are fur-
nished the level and amount of services needed as 
determined by an appropriate assessment instru-
ment, are offered choice of provider, and the extent 
to which transitional care services would improve 
quality of care for individuals and the functioning of 
a bundled post-acute system. 
(6) The nature of relationships that may be re-
quired between hospitals and providers of post acute 
care services to facilitate bundled payments, includ-
ing the application of gainsharing, anti-referral, 
anti-kickback, and anti-trust laws. 
(7) Quality measures that would be appropriate 
for reporting by hospitals and post acute providers 
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(such as measures that assess changes in functional 
status and quality measures appropriate for each 
type of post acute services provider including how 
the reporting of such quality measures could be co-
ordinated with other reporting of such quality meas-
ures by such providers otherwise required). 
(8) How cost-sharing for a post acute care bun-
dle should be treated relative to current rules for 
cost-sharing for inpatient hospital, home health, 
skilled nursing facility, and other services. 
(9) How other programmatic issues should be 
treated in a post acute care bundle, including rules 
specific to various types of post-acute providers such 
as the post-acute transfer policy, 3-day hospital stay 
to qualify for services furnished by skilled nursing 
facilities, and the coordination of payments and care 
under the Medicare program and the Medicaid pro-
gram. 
(10) Such other issues as the Secretary deems 
appropriate. 
(c) CONSULTATIONS AND ANALYSIS.— 
(1) CONSULTATION WITH STAKEHOLDERS.—In 
developing the plan under subsection (a)(1), the Sec-
retary shall consult with relevant stakeholders and 
shall consider experience with such research studies 
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and demonstrations that the Secretary determines 
appropriate. 
(2) ANALYSIS AND DATA COLLECTION.—In de-
veloping such plan, the Secretary shall— 
(A) analyze the issues described in sub-
section (b) and other issues that the Secretary 
determines appropriate; 
(B) analyze the impacts (including geo-
graphic impacts) of post acute service reform 
approaches, including bundling of such services 
on individuals, hospitals, post acute care pro-
viders, and physicians; 
(C) use existing data (such as data sub-
mitted on claims) and collect such data as the 
Secretary determines are appropriate to develop 
such plan required in this section; and 
(D) if patient functional status measures 
are appropriate for the analysis, to the extent 
practical, build upon the CARE tool being de-
veloped pursuant to section 5008 of the Deficit 
Reduction Act of 2005. 
(d) ADMINISTRATION.— 
(1) FUNDING.—For purposes of carrying out 
the provisions of this section, in addition to funds 
otherwise available, out of any funds in the Treasury 
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not otherwise appropriated, there are appropriated 
to the Secretary for the Center for Medicare & Med-
icaid 
Services 
Program 
Management 
Account 
$15,000,000 for each of the fiscal years 2010 
through 2012. Amounts appropriated under this 
paragraph for a fiscal year shall be available until 
expended. 
(2) EXPEDITED
DATA
COLLECTION.—Chapter 
35 of title 44, United States Code, shall not apply 
to this section. 
(e) PUBLIC REPORTS.— 
(1) INTERIM
REPORTS.—The Secretary shall 
issue interim public reports on a periodic basis on 
the plan described in subsection (a)(1), the issues 
described in subsection (b), and impact analyses as 
the Secretary determines appropriate. 
(2) FINAL REPORT.—Not later than the date 
that is 3 years after the date of the enactment of 
this Act, the Secretary shall issue a final public re-
port on such plan, including analysis of issues de-
scribed in subsection (b) and impact analyses. 
(f) CONVERSION OF ACUTE CARE EPISODE DEM-
ONSTRATION TO PILOT PROGRAM AND EXPANSION TO IN-
CLUDE POST ACUTE SERVICES.— 
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(1) IN GENERAL.—Part E of title XVIII of the 
Social Security Act is amended by inserting after 
section 1866C the following new section: 
‘‘CONVERSION OF ACUTE CARE EPISODE DEMONSTRATION 
TO PILOT PROGRAM AND EXPANSION TO INCLUDE 
POST ACUTE SERVICES 
‘‘SEC. 1866D. (a) CONVERSION AND EXPANSION.— 
‘‘(1) IN GENERAL.—By not later than January 
1, 2011, the Secretary shall, for the purpose of pro-
moting the use of bundled payments to promote effi-
cient, coordinated, and high quality delivery of 
care— 
‘‘(A) convert the acute care episode dem-
onstration program conducted under section 
1866C to a pilot program; and 
‘‘(B) subject to subsection (c), expand such 
program as so converted to include post acute 
services and such other services the Secretary 
determines to be appropriate, which may in-
clude transitional services. 
‘‘(2) BUNDLED PAYMENT STRUCTURES.— 
‘‘(A) IN GENERAL.—In carrying out para-
graph (1), the Secretary may apply bundled 
payments with respect to— 
‘‘(i) hospitals and physicians; 
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‘‘(ii) hospitals and post-acute care 
providers; 
‘‘(iii) hospitals, physicians, and post- 
acute care providers; or 
‘‘(iv) combinations of post-acute pro-
viders. 
‘‘(B) FURTHER APPLICATION.— 
‘‘(i) IN
GENERAL.—In carrying out 
paragraph (1), the Secretary shall apply 
bundled payments in a manner so as to in-
clude collaborative care networks and con-
tinuing care hospitals. 
‘‘(ii) COLLABORATIVE CARE NETWORK 
DEFINED.—For purposes of this subpara-
graph, the term ‘collaborative care net-
work’ means a consortium of health care 
providers that provides a comprehensive 
range of coordinated and integrated health 
care services to low-income patient popu-
lations (including the uninsured) which 
may include coordinated and comprehen-
sive care by safety net providers to reduce 
any unnecessary use of items and services 
furnished in emergency departments, man-
age chronic conditions, improve quality and 
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amount 
(or 
amounts) 
determined 
under this clause for the previous 
year, updated under subparagraph 
(B).’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(iii) SPECIAL RULE IN CASE OF IN-
ABILITY TO EFFECT TIMELY REBASING.— 
‘‘(I) APPLICATION
OF
PROXY 
AMOUNT FOR 2011.—If the Secretary 
is not able to compute the amount (or 
amounts) under clause (i)(IV) so as to 
permit, on a timely basis, the applica-
tion of such clause for 2011, the Sec-
retary 
shall 
substitute 
for 
such 
amount (or amounts) 95 percent of 
the amount (or amounts) that would 
otherwise be specified under clause 
(i)(III) if it applied for 2011. 
‘‘(II) ADJUSTMENT FOR SUBSE-
QUENT
YEARS
BASED
ON
DATA.—If 
the Secretary applies subclause (I), 
the Secretary before July 1, 2011, 
shall 
compare 
the 
amount 
(or 
amounts) applied under such sub-
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‘‘(D) that the State maintain a consumer- 
oriented website providing useful information to 
consumers regarding all skilled nursing facili-
ties and all nursing facilities in the State, in-
cluding for each facility, Form 2567 State in-
spection reports (or a successor form), com-
plaint investigation reports, the facility’s plan of 
correction, and such other information that the 
State or the Secretary considers useful in as-
sisting the public to assess the quality of long 
term care options and the quality of care pro-
vided by individual facilities;’’. 
(3) DEFINITIONS.—In this subsection: 
(A) NURSING FACILITY.—The term ‘‘nurs-
ing facility’’ has the meaning given such term 
in section 1919(a) of the Social Security Act 
(42 U.S.C. 1396r(a)). 
(B) SECRETARY.—The term ‘‘Secretary’’ 
means the Secretary of Health and Human 
Services. 
(C) SKILLED
NURSING
FACILITY.—The 
term ‘‘skilled nursing facility’’ has the meaning 
given such term in section 1819(a) of the Social 
Security Act (42 U.S.C. 1395i–3(a)). 
VerDate Nov 24 2008 
21:32 Nov 16, 2009
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