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being made public. The Secretary shall report quality 
measures of process, structure, outcome, patients’ per-
spective on care, efficiency, and costs of care that re-
late to services furnished in such hospitals on the 
Internet website of the Centers for Medicare & Med-
icaid Services.’’. 
SEC. 3006. PLANS FOR A VALUE-BASED PURCHASING PRO-
GRAM FOR SKILLED NURSING FACILITIES 
AND HOME HEALTH AGENCIES. 
(a) SKILLED NURSING FACILITIES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall develop a plan to implement a 
value-based purchasing program for payments under 
the Medicare program under title XVIII of the Social 
Security Act for skilled nursing facilities (as defined 
in section 1819(a) of such Act (42 U.S.C. 1395i– 
3(a))). 
(2) DETAILS.—In developing the plan under 
paragraph (1), the Secretary shall consider the fol-
lowing issues: 
(A) The ongoing development, selection, and 
modification process for measures (including 
under section 1890 of the Social Security Act (42 
U.S.C. 1395aaa) and section 1890A such Act, as 
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added by section 3014), to the extent feasible and 
practicable, of all dimensions of quality and effi-
ciency in skilled nursing facilities. 
(i) IN
GENERAL.—Subject to clause 
(ii), any measure specified by the Secretary 
under subparagraph (A)(iii) must have been 
endorsed by the entity with a contract 
under section 1890(a). 
(ii) EXCEPTION.—In the case of a spec-
ified area or medical topic determined ap-
propriate by the Secretary for which a fea-
sible and practical measure has not been en-
dorsed by the entity with a contract under 
section 1890(a), the Secretary may specify a 
measure that is not so endorsed as long as 
due consideration is given to measures that 
have been endorsed or adopted by a con-
sensus organization identified by the Sec-
retary. 
(B) The reporting, collection, and valida-
tion of quality data. 
(C) The structure of value-based payment 
adjustments, including the determination of 
thresholds or improvements in quality that 
would substantiate a payment adjustment, the 
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size of such payments, and the sources of funding 
for the value-based bonus payments. 
(D) Methods for the public disclosure of in-
formation on the performance of skilled nursing 
facilities. 
(E) Any other issues determined appro-
priate by the Secretary. 
(3) CONSULTATION.—In developing the plan 
under paragraph (1), the Secretary shall— 
(A) consult with relevant affected parties; 
and 
(B) consider experience with such dem-
onstrations that the Secretary determines are rel-
evant to the value-based purchasing program de-
scribed in paragraph (1). 
(4) REPORT TO CONGRESS.—Not later than Oc-
tober 1, 2011, the Secretary shall submit to Congress 
a report containing the plan developed under para-
graph (1). 
(b) HOME HEALTH AGENCIES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall develop a plan to implement a 
value-based purchasing program for payments under 
the Medicare program under title XVIII of the Social 
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Security Act for home health agencies (as defined in 
section 1861(o) of such Act (42 U.S.C. 1395x(o))). 
(2) DETAILS.—In developing the plan under 
paragraph (1), the Secretary shall consider the fol-
lowing issues: 
(A) The ongoing development, selection, and 
modification process for measures (including 
under section 1890 of the Social Security Act (42 
U.S.C. 1395aaa) and section 1890A such Act, as 
added by section 3014), to the extent feasible and 
practicable, of all dimensions of quality and effi-
ciency in home health agencies. 
(B) The reporting, collection, and valida-
tion of quality data. 
(C) The structure of value-based payment 
adjustments, including the determination of 
thresholds or improvements in quality that 
would substantiate a payment adjustment, the 
size of such payments, and the sources of funding 
for the value-based bonus payments. 
(D) Methods for the public disclosure of in-
formation on the performance of home health 
agencies. 
(E) Any other issues determined appro-
priate by the Secretary. 
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(3) CONSULTATION.—In developing the plan 
under paragraph (1), the Secretary shall— 
(A) consult with relevant affected parties; 
and 
(B) consider experience with such dem-
onstrations that the Secretary determines are rel-
evant to the value-based purchasing program de-
scribed in paragraph (1). 
(4) REPORT TO CONGRESS.—Not later than Oc-
tober 1, 2011, the Secretary shall submit to Congress 
a report containing the plan developed under para-
graph (1). 
SEC. 3007. VALUE-BASED PAYMENT MODIFIER UNDER THE 
PHYSICIAN FEE SCHEDULE. 
Section 1848 of the Social Security Act (42 U.S.C. 
1395w–4) is amended— 
(1) in subsection (b)(1), by inserting ‘‘subject to 
subsection (p),’’ after ‘‘1998,’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(p) ESTABLISHMENT
OF VALUE-BASED PAYMENT 
MODIFIER.— 
‘‘(1) IN GENERAL.—The Secretary shall establish 
a payment modifier that provides for differential 
payment to a physician or a group of physicians 
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under the fee schedule established under subsection (b) 
based upon the quality of care furnished compared to 
cost (as determined under paragraphs (2) and (3), re-
spectively) during a performance period. Such pay-
ment modifier shall be separate from the geographic 
adjustment factors established under subsection (e). 
‘‘(2) QUALITY.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), quality of care shall be evaluated, to 
the extent practicable, based on a composite of 
measures of the quality of care furnished (as es-
tablished by the Secretary under subparagraph 
(B)). 
‘‘(B) MEASURES.— 
‘‘(i) The Secretary shall establish ap-
propriate measures of the quality of care 
furnished by a physician or group of physi-
cians to individuals enrolled under this 
part, such as measures that reflect health 
outcomes. Such measures shall be risk ad-
justed as determined appropriate by the 
Secretary. 
‘‘(ii) The Secretary shall seek endorse-
ment of the measures established under this 
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subparagraph by the entity with a contract 
under section 1890(a). 
‘‘(3) COSTS.—For purposes of paragraph (1), 
costs shall be evaluated, to the extent practicable, 
based on a composite of appropriate measures of costs 
established by the Secretary (such as the composite 
measure under the methodology established under sub-
section (n)(9)(C)(iii)) that eliminate the effect of geo-
graphic adjustments in payment rates (as described 
in subsection (e)), and take into account risk factors 
(such as socioeconomic and demographic characteris-
tics, ethnicity, and health status of individuals (such 
as to recognize that less healthy individuals may re-
quire more intensive interventions) and other factors 
determined appropriate by the Secretary. 
‘‘(4) IMPLEMENTATION.— 
‘‘(A) PUBLICATION
OF
MEASURES, DATES 
OF IMPLEMENTATION, PERFORMANCE PERIOD.— 
Not later than January 1, 2012, the Secretary 
shall publish the following: 
‘‘(i) The measures of quality of care 
and costs established under paragraphs (2) 
and (3), respectively. 
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‘‘(ii) The dates for implementation of 
the payment modifier (as determined under 
subparagraph (B)). 
‘‘(iii) The initial performance period 
(as specified under subparagraph (B)(ii)). 
‘‘(B) DEADLINES FOR IMPLEMENTATION.— 
‘‘(i) INITIAL
IMPLEMENTATION.—Sub-
ject to the preceding provisions of this sub-
paragraph, the Secretary shall begin imple-
menting the payment modifier established 
under this subsection through the rule-
making process during 2013 for the physi-
cian fee schedule established under sub-
section (b). 
‘‘(ii) INITIAL PERFORMANCE PERIOD.— 
‘‘(I) IN GENERAL.—The Secretary 
shall specify an initial performance 
period for application of the payment 
modifier established under this sub-
section with respect to 2015. 
‘‘(II) PROVISION OF INFORMATION 
DURING
INITIAL
PERFORMANCE
PE-
RIOD.—During the initial performance 
period, the Secretary shall, to the ex-
tent practicable, provide information 
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to physicians and groups of physicians 
about the quality of care furnished by 
the physician or group of physicians to 
individuals enrolled under this part 
compared to cost (as determined under 
paragraphs (2) and (3), respectively) 
with respect to the performance period. 
‘‘(iii) APPLICATION.—The Secretary 
shall apply the payment modifier estab-
lished under this subsection for items and 
services furnished— 
‘‘(I) beginning on January 1, 
2015, with respect to specific physi-
cians and groups of physicians the 
Secretary determines appropriate; and 
‘‘(II) beginning not later than 
January 1, 2017, with respect to all 
physicians and groups of physicians. 
‘‘(C) BUDGET NEUTRALITY.—The payment 
modifier established under this subsection shall 
be implemented in a budget neutral manner. 
‘‘(5) 
SYSTEMS-BASED
CARE.—The 
Secretary 
shall, as appropriate, apply the payment modifier es-
tablished under this subsection in a manner that pro-
motes systems-based care. 
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‘‘(6) 
CONSIDERATION
OF
SPECIAL
CIR-
CUMSTANCES OF CERTAIN PROVIDERS.—In applying 
the payment modifier under this subsection, the Sec-
retary shall, as appropriate, take into account the 
special circumstances of physicians or groups of phy-
sicians in rural areas and other underserved commu-
nities. 
‘‘(7) APPLICATION.—For purposes of the initial 
application of the payment modifier established under 
this subsection during the period beginning on Janu-
ary 1, 2015, and ending on December 31, 2016, the 
term ‘physician’ has the meaning given such term in 
section 1861(r). On or after January 1, 2017, the Sec-
retary may apply this subsection to eligible profes-
sionals (as defined in subsection (k)(3)(B)) as the Sec-
retary determines appropriate. 
‘‘(8) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) COSTS.—The term ‘costs’ means ex-
penditures per individual as determined appro-
priate by the Secretary. In making the deter-
mination under the preceding sentence, the Sec-
retary may take into account the amount of 
growth in expenditures per individual for a phy-
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sician compared to the amount of such growth 
for other physicians. 
‘‘(B) PERFORMANCE
PERIOD.—The term 
‘performance period’ means a period specified by 
the Secretary. 
‘‘(9) COORDINATION WITH OTHER VALUE-BASED 
PURCHASING REFORMS.—The Secretary shall coordi-
nate the value-based payment modifier established 
under this subsection with the Physician Feedback 
Program under subsection (n) and, as the Secretary 
determines appropriate, other similar provisions of 
this title. 
‘‘(10) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of— 
‘‘(A) the establishment of the value-based 
payment modifier under this subsection; 
‘‘(B) the evaluation of quality of care under 
paragraph (2), including the establishment of 
appropriate measures of the quality of care 
under paragraph (2)(B); 
‘‘(C) the evaluation of costs under para-
graph (3), including the establishment of appro-
priate measures of costs under such paragraph; 
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‘‘(D) the dates for implementation of the 
value-based payment modifier; 
‘‘(E) the specification of the initial perform-
ance period and any other performance period 
under paragraphs (4)(B)(ii) and (8)(B), respec-
tively; 
‘‘(F) the application of the value-based pay-
ment modifier under paragraph (7); and 
‘‘(G) the determination of costs under para-
graph (8)(A).’’. 
SEC. 3008. PAYMENT ADJUSTMENT FOR CONDITIONS AC-
QUIRED IN HOSPITALS. 
(a) IN GENERAL.—Section 1886 of the Social Security 
Act (42 U.S.C. 1395ww), as amended by section 3001, is 
amended by adding at the end the following new subsection: 
‘‘(p) ADJUSTMENT TO HOSPITAL PAYMENTS FOR HOS-
PITAL ACQUIRED CONDITIONS.— 
‘‘(1) IN GENERAL.—In order to provide an in-
centive for applicable hospitals to reduce hospital ac-
quired conditions under this title, with respect to dis-
charges from an applicable hospital occurring during 
fiscal year 2015 or a subsequent fiscal year, the 
amount of payment under this section or section 
1814(b)(3), as applicable, for such discharges during 
the fiscal year shall be equal to 99 percent of the 
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amount of payment that would otherwise apply to 
such discharges under this section or section 
1814(b)(3) (determined after the application of sub-
sections (o) and (q) and section 1814(l)(4) but with-
out regard to this subsection). 
‘‘(2) APPLICABLE HOSPITALS.— 
‘‘(A) IN
GENERAL.—For purposes of this 
subsection, the term ‘applicable hospital’ means 
a subsection (d) hospital that meets the criteria 
described in subparagraph (B). 
‘‘(B) CRITERIA DESCRIBED.— 
‘‘(i) IN
GENERAL.—The criteria de-
scribed in this subparagraph, with respect 
to a subsection (d) hospital, is that the sub-
section (d) hospital is in the top quartile of 
all subsection (d) hospitals, relative to the 
national average, of hospital acquired con-
ditions during the applicable period, as de-
termined by the Secretary. 
‘‘(ii) RISK ADJUSTMENT.—In carrying 
out clause (i), the Secretary shall establish 
and apply an appropriate risk adjustment 
methodology. 
‘‘(C) EXEMPTION.—In the case of a hospital 
that is paid under section 1814(b)(3), the Sec-
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retary may exempt such hospital from the appli-
cation of this subsection if the State which is 
paid under such section submits an annual re-
port to the Secretary describing how a similar 
program in the State for a participating hos-
pital or hospitals achieves or surpasses the meas-
ured results in terms of patient health outcomes 
and cost savings established under this sub-
section. 
‘‘(3) HOSPITAL
ACQUIRED
CONDITIONS.—For 
purposes of this subsection, the term ‘hospital ac-
quired condition’ means a condition identified for 
purposes of subsection (d)(4)(D)(iv) and any other 
condition determined appropriate by the Secretary 
that an individual acquires during a stay in an ap-
plicable hospital, as determined by the Secretary. 
‘‘(4) APPLICABLE PERIOD.—In this subsection, 
the term ‘applicable period’ means, with respect to a 
fiscal year, a period specified by the Secretary. 
‘‘(5) REPORTING TO HOSPITALS.—Prior to fiscal 
year 2015 and each subsequent fiscal year, the Sec-
retary shall provide confidential reports to applicable 
hospitals with respect to hospital acquired conditions 
of the applicable hospital during the applicable pe-
riod. 
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‘‘(6) REPORTING HOSPITAL SPECIFIC INFORMA-
TION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
make information available to the public regard-
ing hospital acquired conditions of each applica-
ble hospital. 
‘‘(B) OPPORTUNITY TO REVIEW AND SUBMIT 
CORRECTIONS.—The Secretary shall ensure that 
an applicable hospital has the opportunity to re-
view, and submit corrections for, the information 
to be made public with respect to the hospital 
under subparagraph (A) prior to such informa-
tion being made public. 
‘‘(C) WEBSITE.—Such information shall be 
posted on the Hospital Compare Internet website 
in an easily understandable format. 
‘‘(7) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of the following: 
‘‘(A) The criteria described in paragraph 
(2)(A). 
‘‘(B) The specification of hospital acquired 
conditions under paragraph (3). 
‘‘(C) The specification of the applicable pe-
riod under paragraph (4). 
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‘‘(D) The provision of reports to applicable 
hospitals under paragraph (5) and the informa-
tion made available to the public under para-
graph (6).’’. 
(b) 
STUDY
AND
REPORT
ON
EXPANSION
OF 
HEALTHCARE ACQUIRED CONDITIONS POLICY TO OTHER 
PROVIDERS.— 
(1) STUDY.—The Secretary of Health and 
Human Services shall conduct a study on expanding 
the healthcare acquired conditions policy under sub-
section (d)(4)(D) of section 1886 of the Social Secu-
rity Act (42 U.S.C. 1395ww) to payments made to 
other facilities under the Medicare program under 
title XVIII of the Social Security Act, including such 
payments made to inpatient rehabilitation facilities, 
long-term care hospitals (as described in sub-
section(d)(1)(B)(iv) of such section), hospital out-
patient departments, and other hospitals excluded 
from the inpatient prospective payment system under 
such section, skilled nursing facilities, ambulatory 
surgical centers, and health clinics. Such study shall 
include an analysis of how such policies could impact 
quality of patient care, patient safety, and spending 
under the Medicare program. 
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(2) REPORT.—Not later than January 1, 2012, 
the Secretary shall submit to Congress a report con-
taining the results of the study conducted under para-
graph (1), together with recommendations for such 
legislation and administrative action as the Secretary 
determines appropriate. 
PART II—NATIONAL STRATEGY TO IMPROVE 
HEALTH CARE QUALITY 
SEC. 3011. NATIONAL STRATEGY. 
Title III of the Public Health Service Act (42 U.S.C. 
241 et seq.) is amended by adding at the end the following: 
‘‘PART S—HEALTH CARE QUALITY PROGRAMS 
‘‘Subpart I—National Strategy for Quality 
Improvement in Health Care 
‘‘SEC. 399HH. NATIONAL STRATEGY FOR QUALITY IMPROVE-
MENT IN HEALTH CARE. 
‘‘(a) ESTABLISHMENT OF NATIONAL STRATEGY AND 
PRIORITIES.— 
‘‘(1) 
NATIONAL
STRATEGY.—The 
Secretary, 
through a transparent collaborative process, shall es-
tablish a national strategy to improve the delivery of 
health care services, patient health outcomes, and 
population health. 
‘‘(2) IDENTIFICATION OF PRIORITIES.— 
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‘‘(A) IN
GENERAL.—The Secretary shall 
identify national priorities for improvement in 
developing the strategy under paragraph (1). 
‘‘(B) REQUIREMENTS.—The Secretary shall 
ensure that priorities identified under subpara-
graph (A) will— 
‘‘(i) have the greatest potential for im-
proving the health outcomes, efficiency, and 
patient-centeredness of health care for all 
populations, including children and vulner-
able populations; 
‘‘(ii) identify areas in the delivery of 
health care services that have the potential 
for rapid improvement in the quality and 
efficiency of patient care; 
‘‘(iii) address gaps in quality, effi-
ciency, comparative effectiveness informa-
tion, and health outcomes measures and 
data aggregation techniques; 
‘‘(iv) improve Federal payment policy 
to emphasize quality and efficiency; 
‘‘(v) enhance the use of health care 
data to improve quality, efficiency, trans-
parency, and outcomes; 
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‘‘(vi) address the health care provided 
to patients with high-cost chronic diseases; 
‘‘(vii) improve research and dissemina-
tion of strategies and best practices to im-
prove patient safety and reduce medical er-
rors, preventable admissions and readmis-
sions, and health care-associated infections; 
‘‘(viii) reduce health disparities across 
health disparity populations (as defined in 
section 485E) and geographic areas; and 
‘‘(ix) address other areas as determined 
appropriate by the Secretary. 
‘‘(C) CONSIDERATIONS.—In identifying pri-
orities under subparagraph (A), the Secretary 
shall take into consideration the recommenda-
tions submitted by the entity with a contract 
under section 1890(a) of the Social Security Act 
and other stakeholders. 
‘‘(D) COORDINATION
WITH
STATE
AGEN-
CIES.—The Secretary shall collaborate, coordi-
nate, and consult with State agencies responsible 
for administering the Medicaid program under 
title XIX of the Social Security Act and the 
Children’s Health Insurance Program under title 
XXI of such Act with respect to developing and 
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disseminating strategies, goals, models, and 
timetables that are consistent with the national 
priorities identified under subparagraph (A). 
‘‘(b) STRATEGIC PLAN.— 
‘‘(1) IN GENERAL.—The national strategy shall 
include a comprehensive strategic plan to achieve the 
priorities described in subsection (a). 
‘‘(2) REQUIREMENTS.—The strategic plan shall 
include provisions for addressing, at a minimum, the 
following: 
‘‘(A) Coordination among agencies within 
the Department, which shall include steps to 
minimize duplication of efforts and utilization of 
common quality measures, where available. Such 
common quality measures shall be measures 
identified by the Secretary under section 1139A 
or 1139B of the Social Security Act or endorsed 
under section 1890 of such Act. 
‘‘(B) Agency-specific strategic plans to 
achieve national priorities. 
‘‘(C) Establishment of annual benchmarks 
for each relevant agency to achieve national pri-
orities. 
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‘‘(D) A process for regular reporting by the 
agencies to the Secretary on the implementation 
of the strategic plan. 
‘‘(E) Strategies to align public and private 
payers with regard to quality and patient safety 
efforts. 
‘‘(F) Incorporating quality improvement 
and measurement in the strategic plan for health 
information technology required by the American 
Recovery and Reinvestment Act of 2009 (Public 
Law 111–5). 
‘‘(c) PERIODIC UPDATE OF NATIONAL STRATEGY.— 
The Secretary shall update the national strategy not less 
than annually. Any such update shall include a review of 
short- and long-term goals. 
‘‘(d) SUBMISSION AND AVAILABILITY OF NATIONAL 
STRATEGY AND UPDATES.— 
‘‘(1) DEADLINE FOR INITIAL SUBMISSION OF NA-
TIONAL STRATEGY.—Not later than January 1, 2011, 
the Secretary shall submit to the relevant committees 
of Congress the national strategy described in sub-
section (a). 
‘‘(2) UPDATES.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
submit to the relevant committees of Congress an 
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annual update to the strategy described in para-
graph (1). 
‘‘(B) INFORMATION SUBMITTED.—Each up-
date submitted under subparagraph (A) shall in-
clude— 
‘‘(i) a review of the short- and long- 
term goals of the national strategy and any 
gaps in such strategy; 
‘‘(ii) an analysis of the progress, or 
lack of progress, in meeting such goals and 
any barriers to such progress; 
‘‘(iii) the information reported under 
section 1139A of the Social Security Act, 
consistent with the reporting requirements 
of such section; and 
‘‘(iv) in the case of an update required 
to be submitted on or after January 1, 
2014, the information reported under sec-
tion 1139B(b)(4) of the Social Security Act, 
consistent with the reporting requirements 
of such section. 
‘‘(C) SATISFACTION OF OTHER REPORTING 
REQUIREMENTS.—Compliance with the require-
ments of clauses (iii) and (iv) of subparagraph 
(B) shall satisfy the reporting requirements 
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under sections 1139A(a)(6) and 1139B(b)(4), re-
spectively, of the Social Security Act. 
‘‘(e) HEALTH CARE QUALITY INTERNET WEBSITE.— 
Not later than January 1, 2011, the Secretary shall create 
an Internet website to make public information regard-
ing— 
‘‘(1) the national priorities for health care qual-
ity improvement established under subsection (a)(2); 
‘‘(2) the agency-specific strategic plans for health 
care quality described in subsection (b)(2)(B); and 
‘‘(3) other information, as the Secretary deter-
mines to be appropriate.’’. 
SEC. 3012. INTERAGENCY WORKING GROUP ON HEALTH 
CARE QUALITY. 
(a) IN GENERAL.—The President shall convene a 
working group to be known as the Interagency Working 
Group on Health Care Quality (referred to in this section 
as the ‘‘Working Group’’). 
(b) GOALS.—The goals of the Working Group shall be 
to achieve the following: 
(1) Collaboration, cooperation, and consultation 
between Federal departments and agencies with re-
spect to developing and disseminating strategies, 
goals, models, and timetables that are consistent with 
the national priorities identified under section 
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399HH(a)(2) of the Public Health Service Act (as 
added by section 3011). 
(2) Avoidance of inefficient duplication of qual-
ity improvement efforts and resources, where prac-
ticable, and a streamlined process for quality report-
ing and compliance requirements. 
(3) Assess alignment of quality efforts in the 
public sector with private sector initiatives. 
(c) COMPOSITION.— 
(1) IN GENERAL.—The Working Group shall be 
composed of senior level representatives of— 
(A) the Department of Health and Human 
Services; 
(B) the Centers for Medicare & Medicaid 
Services; 
(C) the National Institutes of Health; 
(D) the Centers for Disease Control and 
Prevention; 
(E) the Food and Drug Administration; 
(F) the Health Resources and Services Ad-
ministration; 
(G) the Agency for Healthcare Research and 
Quality; 
(H) the Office of the National Coordinator 
for Health Information Technology; 
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(A) CHAIR.—The Working Group shall be 
chaired by the Secretary of Health and Human 
Services. 
(B) VICE CHAIR.—Members of the Working 
Group, other than the Secretary of Health and 
Human Services, shall serve as Vice Chair of the 
Group on a rotating basis, as determined by the 
Group. 
(d) REPORT TO CONGRESS.—Not later than December 
31, 2010, and annually thereafter, the Working Group shall 
submit to the relevant Committees of Congress, and make 
public on an Internet website, a report describing the 
progress and recommendations of the Working Group in 
meeting the goals described in subsection (b). 
SEC. 3013. QUALITY MEASURE DEVELOPMENT. 
(a) PUBLIC HEALTH SERVICE ACT.—Title IX of the 
Public Health Service Act (42 U.S.C. 299 et seq.) is amend-
ed— 
(1) by redesignating part D as part E; 
(2) by redesignating sections 931 through 938 as 
sections 941 through 948, respectively; 
(3) in section 948(1), as so redesignated, by 
striking ‘‘931’’ and inserting ‘‘941’’; and 
(4) by inserting after section 926 the following: 
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‘‘PART D—HEALTH CARE QUALITY IMPROVEMENT 
‘‘Subpart I—Quality Measure Development 
‘‘SEC. 931. QUALITY MEASURE DEVELOPMENT. 
‘‘(a) QUALITY MEASURE.—In this subpart, the term 
‘quality measure’ means a standard for measuring the per-
formance and improvement of population health or of 
health plans, providers of services, and other clinicians in 
the delivery of health care services. 
‘‘(b) IDENTIFICATION OF QUALITY MEASURES.— 
‘‘(1) IDENTIFICATION.—The Secretary, in con-
sultation with the Director of the Agency for 
Healthcare Research and Quality and the Adminis-
trator of the Centers for Medicare & Medicaid Serv-
ices, shall identify, not less often than triennially, 
gaps where no quality measures exist and existing 
quality measures that need improvement, updating, 
or expansion, consistent with the national strategy 
under section 399HH, to the extent available, for use 
in Federal health programs. In identifying such gaps 
and existing quality measures that need improvement, 
the Secretary shall take into consideration— 
‘‘(A) the gaps identified by the entity with 
a contract under section 1890(a) of the Social 
Security Act and other stakeholders; 
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‘‘(B) quality measures identified by the pe-
diatric quality measures program under section 
1139A of the Social Security Act; and 
‘‘(C) quality measures identified through 
the Medicaid Quality Measurement Program 
under section 1139B of the Social Security Act. 
‘‘(2) PUBLICATION.—The Secretary shall make 
available to the public on an Internet website a report 
on any gaps identified under paragraph (1) and the 
process used to make such identification. 
‘‘(c) GRANTS OR CONTRACTS FOR QUALITY MEASURE 
DEVELOPMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall award 
grants, contracts, or intergovernmental agreements to 
eligible entities for purposes of developing, improving, 
updating, or expanding quality measures identified 
under subsection (b). 
‘‘(2) PRIORITIZATION IN THE DEVELOPMENT OF 
QUALITY MEASURES.—In awarding grants, contracts, 
or agreements under this subsection, the Secretary 
shall give priority to the development of quality meas-
ures that allow the assessment of— 
‘‘(A) health outcomes and functional status 
of patients; 
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‘‘(B) the management and coordination of 
health care across episodes of care and care tran-
sitions for patients across the continuum of pro-
viders, health care settings, and health plans; 
‘‘(C) the experience, quality, and use of in-
formation provided to and used by patients, 
caregivers, and authorized representatives to in-
form decisionmaking about treatment options, 
including the use of shared decisionmaking tools 
and preference sensitive care (as defined in sec-
tion 936); 
‘‘(D) the meaningful use of health informa-
tion technology; 
‘‘(E) 
the 
safety, 
effectiveness, 
patient- 
centeredness, appropriateness, and timeliness of 
care; 
‘‘(F) the efficiency of care; 
‘‘(G) the equity of health services and health 
disparities across health disparity populations 
(as defined in section 485E) and geographic 
areas; 
‘‘(H) patient experience and satisfaction; 
‘‘(I) the use of innovative strategies and 
methodologies identified under section 933; and 
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‘‘(J) other areas determined appropriate by 
the Secretary. 
‘‘(3) ELIGIBLE ENTITIES.—To be eligible for a 
grant or contract under this subsection, an entity 
shall— 
‘‘(A) have demonstrated expertise and ca-
pacity in the development and evaluation of 
quality measures; 
‘‘(B) have adopted procedures to include in 
the quality measure development process— 
‘‘(i) the views of those providers or 
payers whose performance will be assessed 
by the measure; and 
‘‘(ii) the views of other parties who 
also will use the quality measures (such as 
patients, consumers, and health care pur-
chasers); 
‘‘(C) collaborate with the entity with a con-
tract under section 1890(a) of the Social Secu-
rity Act and other stakeholders, as practicable, 
and the Secretary so that quality measures devel-
oped by the eligible entity will meet the require-
ments to be considered for endorsement by the 
entity with a contract under such section 
1890(a); 
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‘‘(D) have transparent policies regarding 
governance and conflicts of interest; and 
‘‘(E) submit an application to the Secretary 
at such time and in such manner, as the Sec-
retary may require. 
‘‘(4) USE OF FUNDS.—An entity that receives a 
grant, contract, or agreement under this subsection 
shall use such award to develop quality measures that 
meet the following requirements: 
‘‘(A) Such measures support measures re-
quired to be reported under the Social Security 
Act, where applicable, and in support of gaps 
and existing quality measures that need im-
provement, as described in subsection (b)(1)(A). 
‘‘(B) Such measures support measures de-
veloped under section 1139A of the Social Secu-
rity Act and the Medicaid Quality Measurement 
Program under section 1139B of such Act, where 
applicable. 
‘‘(C) To the extent practicable, data on such 
quality measures is able to be collected using 
health information technologies. 
‘‘(D) Each quality measure is free of charge 
to users of such measure. 
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‘‘(E) Each quality measure is publicly 
available on an Internet website. 
‘‘(d) OTHER ACTIVITIES BY THE SECRETARY.—The 
Secretary may use amounts available under this section to 
update and test, where applicable, quality measures en-
dorsed by the entity with a contract under section 1890(a) 
of the Social Security Act or adopted by the Secretary. 
‘‘(e) COORDINATION OF GRANTS.—The Secretary shall 
ensure that grants or contracts awarded under this section 
are coordinated with grants and contracts awarded under 
sections 1139A(5) and 1139B(4)(A) of the Social Security 
Act.’’. 
(b) SOCIAL SECURITY ACT.—Section 1890A of the So-
cial Security Act, as added by section 3014(b), is amended 
by adding at the end the following new subsection: 
‘‘(e) DEVELOPMENT
OF QUALITY MEASURES.—The 
Administrator of the Center for Medicare & Medicaid Serv-
ices shall through contracts develop quality measures (as 
determined appropriate by the Administrator) for use 
under this Act. In developing such measures, the Adminis-
trator shall consult with the Director of the Agency for 
Healthcare Research and Quality.’’. 
(c) FUNDING.—There are authorized to be appro-
priated to the Secretary of Health and Human Services to 
carry out this section, $75,000,000 for each of fiscal years 
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2010 through 2014. Of the amounts appropriated under the 
preceding sentence in a fiscal year, not less than 50 percent 
of such amounts shall be used pursuant to subsection (e) 
of section 1890A of the Social Security Act, as added by 
subsection (b), with respect to programs under such Act. 
Amounts appropriated under this subsection for a fiscal 
year shall remain available until expended. 
SEC. 3014. QUALITY MEASUREMENT. 
(a) NEW DUTIES FOR CONSENSUS-BASED ENTITY.— 
(1) MULTI-STAKEHOLDER
GROUP
INPUT.—Sec-
tion 1890(b) of the Social Security Act (42 U.S.C. 
1395aaa(b)), as amended by section 3003, is amended 
by adding at the end the following new paragraphs: 
‘‘(7) 
CONVENING
MULTI-STAKEHOLDER 
GROUPS.— 
‘‘(A) IN GENERAL.—The entity shall con-
vene multi-stakeholder groups to provide input 
on— 
‘‘(i) the selection of quality measures 
described 
in 
subparagraph 
(B), 
from 
among— 
‘‘(I) such measures that have been 
endorsed by the entity; and 
‘‘(II) such measures that have not 
been considered for endorsement by 
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such entity but are used or proposed to 
be used by the Secretary for the collec-
tion or reporting of quality measures; 
and 
‘‘(ii) national priorities (as identified 
under section 399HH of the Public Health 
Service Act) for improvement in population 
health and in the delivery of health care 
services for consideration under the national 
strategy established under section 399HH of 
the Public Health Service Act. 
‘‘(B) QUALITY MEASURES.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the quality measures described in this 
subparagraph are quality measures— 
‘‘(I) for use pursuant to sections 
1814(i)(5)(D), 1833(i)(7), 1833(t)(17), 
1848(k)(2)(C), 
1866(k)(3), 
1881(h)(2)(A)(iii), 1886(b)(3)(B)(viii), 
1886(j)(7)(D), 
1886(m)(5)(D), 
1886(o)(2), and 1895(b)(3)(B)(v); 
‘‘(II) for use in reporting per-
formance information to the public; 
and 
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‘‘(III) for use in health care pro-
grams other than for use under this 
Act. 
‘‘(ii) EXCLUSION.—Data sets (such as 
the outcome and assessment information set 
for home health services and the minimum 
data set for skilled nursing facility services) 
that are used for purposes of classification 
systems used in establishing payment rates 
under this title shall not be quality meas-
ures described in this subparagraph. 
‘‘(C) REQUIREMENT FOR TRANSPARENCY IN 
PROCESS.— 
‘‘(i) 
IN
GENERAL.—In 
convening 
multi-stakeholder groups under subpara-
graph (A) with respect to the selection of 
quality measures, the entity shall provide 
for an open and transparent process for the 
activities conducted pursuant to such con-
vening. 
‘‘(ii) SELECTION
OF
ORGANIZATIONS 
PARTICIPATING
IN
MULTI-STAKEHOLDER 
GROUPS.—The process described in clause 
(i) shall ensure that the selection of rep-
resentatives comprising such groups pro-
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vides for public nominations for, and the 
opportunity for public comment on, such se-
lection. 
‘‘(D) MULTI-STAKEHOLDER
GROUP
DE-
FINED.—In this paragraph, the term ‘multi- 
stakeholder group’ means, with respect to a qual-
ity measure, a voluntary collaborative of organi-
zations representing a broad group of stake-
holders interested in or affected by the use of 
such quality measure. 
‘‘(8) TRANSMISSION
OF
MULTI-STAKEHOLDER 
INPUT.—Not later than February 1 of each year (be-
ginning with 2012), the entity shall transmit to the 
Secretary the input of multi-stakeholder groups pro-
vided under paragraph (7).’’. 
(2) ANNUAL REPORT.—Section 1890(b)(5)(A) of 
the Social Security Act (42 U.S.C. 1395aaa(b)(5)(A)) 
is amended— 
(A) in clause (ii), by striking ‘‘and’’ at the 
end; 
(B) in clause (iii), by striking the period at 
the end and inserting a semicolon; and 
(C) by adding at the end the following new 
clauses: 
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‘‘(iv) gaps in endorsed quality meas-
ures, which shall include measures that are 
within priority areas identified by the Sec-
retary under the national strategy estab-
lished under section 399HH of the Public 
Health Service Act, and where quality 
measures are unavailable or inadequate to 
identify or address such gaps; 
‘‘(v) areas in which evidence is insuffi-
cient to support endorsement of quality 
measures in priority areas identified by the 
Secretary under the national strategy estab-
lished under section 399HH of the Public 
Health Service Act and where targeted re-
search may address such gaps; and 
‘‘(vi) the matters described in clauses 
(i) and (ii) of paragraph (7)(A).’’. 
(b) MULTI-STAKEHOLDER GROUP INPUT INTO SELEC-
TION OF QUALITY MEASURES.—Title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) is amended by insert-
ing after section 1890 the following: 
‘‘QUALITY MEASUREMENT 
‘‘SEC. 1890A. (a) MULTI-STAKEHOLDER GROUP INPUT 
INTO SELECTION OF QUALITY MEASURES.—The Secretary 
shall establish a pre-rulemaking process under which the 
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following steps occur with respect to the selection of quality 
measures described in section 1890(b)(7)(B): 
‘‘(1) INPUT.—Pursuant to section 1890(b)(7), the 
entity with a contract under section 1890 shall con-
vene multi-stakeholder groups to provide input to the 
Secretary on the selection of quality measures de-
scribed in subparagraph (B) of such paragraph. 
‘‘(2) PUBLIC AVAILABILITY OF MEASURES CON-
SIDERED FOR SELECTION.—Not later than December 
1 of each year (beginning with 2011), the Secretary 
shall make available to the public a list of quality 
measures described in section 1890(b)(7)(B) that the 
Secretary is considering under this title. 
‘‘(3) TRANSMISSION
OF
MULTI-STAKEHOLDER 
INPUT.—Pursuant to section 1890(b)(8), not later 
than February 1 of each year (beginning with 2012), 
the entity shall transmit to the Secretary the input of 
multi-stakeholder groups described in paragraph (1). 
‘‘(4) CONSIDERATION
OF
MULTI-STAKEHOLDER 
INPUT.—The Secretary shall take into consideration 
the input from multi-stakeholder groups described in 
paragraph (1) in selecting quality measures described 
in section 1890(b)(7)(B) that have been endorsed by 
the entity with a contract under section 1890 and 
measures that have not been endorsed by such entity. 
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‘‘(5) RATIONALE FOR USE OF QUALITY MEAS-
URES.—The Secretary shall publish in the Federal 
Register the rationale for the use of any quality meas-
ure described in section 1890(b)(7)(B) that has not 
been endorsed by the entity with a contract under sec-
tion 1890. 
‘‘(6) ASSESSMENT OF IMPACT.—Not later than 
March 1, 2012, and at least once every three years 
thereafter, the Secretary shall— 
‘‘(A) conduct an assessment of the quality 
impact of the use of endorsed measures described 
in section 1890(b)(7)(B); and 
‘‘(B) make such assessment available to the 
public. 
‘‘(b) PROCESS
FOR DISSEMINATION
OF MEASURES 
USED BY THE SECRETARY.— 
‘‘(1) IN GENERAL.—The Secretary shall establish 
a process for disseminating quality measures used by 
the Secretary. Such process shall include the fol-
lowing: 
‘‘(A) The incorporation of such measures, 
where applicable, in workforce programs, train-
ing curricula, and any other means of dissemi-
nation determined appropriate by the Secretary. 
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‘‘(B) The dissemination of such quality 
measures through the national strategy developed 
under section 399HH of the Public Health Serv-
ice Act. 
‘‘(2) EXISTING METHODS.—To the extent prac-
ticable, the Secretary shall utilize and expand exist-
ing dissemination methods in disseminating quality 
measures under the process established under para-
graph (1). 
‘‘(c) REVIEW OF QUALITY MEASURES USED BY THE 
SECRETARY.— 
‘‘(1) IN GENERAL.—The Secretary shall— 
‘‘(A) periodically (but in no case less often 
than once every 3 years) review quality measures 
described in section 1890(b)(7)(B); and 
‘‘(B) with respect to each such measure, de-
termine whether to— 
‘‘(i) maintain the use of such measure; 
or 
‘‘(ii) phase out such measure. 
‘‘(2) CONSIDERATIONS.—In conducting the re-
view under paragraph (1), the Secretary shall take 
steps to— 
‘‘(A) seek to avoid duplication of measures 
used; and 
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‘‘(B) take into consideration current inno-
vative methodologies and strategies for quality 
improvement practices in the delivery of health 
care services that represent best practices for 
such quality improvement and measures en-
dorsed by the entity with a contract under sec-
tion 1890 since the previous review by the Sec-
retary. 
‘‘(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall preclude a State from using the quality measures 
identified under sections 1139A and 1139B.’’. 
(c) FUNDING.—For purposes of carrying out the 
amendments made by this section, the Secretary shall pro-
vide for the transfer, from the Federal Hospital Insurance 
Trust Fund under section 1817 of the Social Security Act 
(42 U.S.C. 1395i) and the Federal Supplementary Medical 
Insurance Trust Fund under section 1841 of such Act (42 
U.S.C. 1395t), in such proportion as the Secretary deter-
mines appropriate, of $20,000,000, to the Centers for Medi-
care & Medicaid Services Program Management Account 
for each of fiscal years 2010 through 2014. Amounts trans-
ferred under the preceding sentence shall remain available 
until expended. 
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SEC. 3015. DATA COLLECTION; PUBLIC REPORTING. 
Title III of the Public Health Service Act (42 U.S.C. 
241 et seq.), as amended by section 3011, is further amend-
ed by adding at the end the following: 
‘‘SEC. 399II. COLLECTION AND ANALYSIS OF DATA FOR 
QUALITY AND RESOURCE USE MEASURES. 
‘‘(a) IN GENERAL.—The Secretary shall collect and ag-
gregate consistent data on quality and resource use meas-
ures from information systems used to support health care 
delivery to implement the public reporting of performance 
information, as described in section 399JJ, and may award 
grants or contracts for this purpose. The Secretary shall en-
sure that such collection, aggregation, and analysis systems 
span an increasingly broad range of patient populations, 
providers, and geographic areas over time. 
‘‘(b) GRANTS
OR CONTRACTS
FOR DATA COLLEC-
TION.— 
‘‘(1) IN GENERAL.—The Secretary may award 
grants or contracts to eligible entities to support new, 
or improve existing, efforts to collect and aggregate 
quality and resource use measures described under 
subsection (c). 
‘‘(2) ELIGIBLE ENTITIES.—To be eligible for a 
grant or contract under this subsection, an entity 
shall— 
‘‘(A) be— 
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‘‘(i) a multi-stakeholder entity that co-
ordinates the development of methods and 
implementation plans for the consistent re-
porting of summary quality and cost infor-
mation; 
‘‘(ii) an entity capable of submitting 
such summary data for a particular popu-
lation and providers, such as a disease reg-
istry, regional collaboration, health plan 
collaboration, 
or 
other 
population-wide 
source; or 
‘‘(iii) a Federal Indian Health Service 
program or a health program operated by 
an Indian tribe (as defined in section 4 of 
the Indian Health Care Improvement Act); 
‘‘(B) promote the use of the systems that 
provide data to improve and coordinate patient 
care; 
‘‘(C) support the provision of timely, con-
sistent quality and resource use information to 
health care providers, and other groups and or-
ganizations as appropriate, with an opportunity 
for providers to correct inaccurate measures; and 
‘‘(D) agree to report, as determined by the 
Secretary, measures on quality and resource use 
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to the public in accordance with the public re-
porting process established under section 399JJ. 
‘‘(c) CONSISTENT DATA AGGREGATION.—The Sec-
retary may award grants or contracts under this section 
only to entities that enable summary data that can be inte-
grated and compared across multiple sources. The Secretary 
shall provide standards for the protection of the security 
and privacy of patient data. 
‘‘(d) MATCHING FUNDS.—The Secretary may not 
award a grant or contract under this section to an entity 
unless the entity agrees that it will make available (directly 
or through contributions from other public or private enti-
ties) non-Federal contributions toward the activities to be 
carried out under the grant or contract in an amount equal 
to $1 for each $5 of Federal funds provided under the grant 
or contract. Such non-Federal matching funds may be pro-
vided directly or through donations from public or private 
entities and may be in cash or in-kind, fairly evaluated, 
including plant, equipment, or services. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—To carry 
out this section, there are authorized to be appropriated 
such sums as may be necessary for fiscal years 2010 through 
2014. 
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‘‘SEC. 399JJ. PUBLIC REPORTING OF PERFORMANCE INFOR-
MATION. 
‘‘(a) DEVELOPMENT OF PERFORMANCE WEBSITES.— 
The Secretary shall make available to the public, through 
standardized Internet websites, performance information 
summarizing data on quality measures. Such information 
shall be tailored to respond to the differing needs of hos-
pitals and other institutional health care providers, physi-
cians and other clinicians, patients, consumers, researchers, 
policymakers, States, and other stakeholders, as the Sec-
retary may specify. 
‘‘(b) INFORMATION ON CONDITIONS.—The performance 
information made publicly available on an Internet 
website, as described in subsection (a), shall include infor-
mation regarding clinical conditions to the extent such in-
formation is available, and the information shall, where ap-
propriate, 
be 
provider-specific 
and 
sufficiently 
disaggregated and specific to meet the needs of patients with 
different clinical conditions. 
‘‘(c) CONSULTATION.— 
‘‘(1) IN GENERAL.—In carrying out this section, 
the Secretary shall consult with the entity with a con-
tract under section 1890(a) of the Social Security 
Act, and other entities, as appropriate, to determine 
the type of information that is useful to stakeholders 
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and the format that best facilitates use of the reports 
and of performance reporting Internet websites. 
‘‘(2) CONSULTATION WITH STAKEHOLDERS.—The 
entity with a contract under section 1890(a) of the 
Social Security Act shall convene multi-stakeholder 
groups, as described in such section, to review the de-
sign and format of each Internet website made avail-
able under subsection (a) and shall transmit to the 
Secretary the views of such multi-stakeholder groups 
with respect to each such design and format. 
‘‘(d) COORDINATION.—Where appropriate, the Sec-
retary shall coordinate the manner in which data are pre-
sented through Internet websites described in subsection (a) 
and for public reporting of other quality measures by the 
Secretary, including such quality measures under title 
XVIII of the Social Security Act. 
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—To carry 
out this section, there are authorized to be appropriated 
such sums as may be necessary for fiscal years 2010 through 
2014.’’. 
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PART III—ENCOURAGING DEVELOPMENT OF NEW 
PATIENT CARE MODELS 
SEC. 3021. ESTABLISHMENT OF CENTER FOR MEDICARE 
AND MEDICAID INNOVATION WITHIN CMS. 
(a) IN GENERAL.—Title XI of the Social Security Act 
is amended by inserting after section 1115 the following 
new section: 
‘‘CENTER FOR MEDICARE AND MEDICAID INNOVATION 
‘‘SEC. 1115A. (a) CENTER FOR MEDICARE AND MED-
ICAID INNOVATION ESTABLISHED.— 
‘‘(1) IN GENERAL.—There is created within the 
Centers for Medicare & Medicaid Services a Center 
for Medicare and Medicaid Innovation (in this sec-
tion referred to as the ‘CMI’) to carry out the duties 
described in this section. The purpose of the CMI is 
to test innovative payment and service delivery mod-
els to reduce program expenditures under the applica-
ble titles while preserving or enhancing the quality of 
care furnished to individuals under such titles. In se-
lecting such models, the Secretary shall give pref-
erence to models that also improve the coordination, 
quality, and efficiency of health care services fur-
nished to applicable individuals defined in paragraph 
(4)(A). 
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‘‘(2) DEADLINE.—The Secretary shall ensure 
that the CMI is carrying out the duties described in 
this section by not later than January 1, 2011. 
‘‘(3) CONSULTATION.—In carrying out the duties 
under this section, the CMI shall consult representa-
tives of relevant Federal agencies, and clinical and 
analytical experts with expertise in medicine and 
health care management. The CMI shall use open door 
forums or other mechanisms to seek input from inter-
ested parties. 
‘‘(4) DEFINITIONS.—In this section: 
‘‘(A) APPLICABLE
INDIVIDUAL.—The term 
‘applicable individual’ means— 
‘‘(i) an individual who is entitled to, 
or enrolled for, benefits under part A of title 
XVIII or enrolled for benefits under part B 
of such title; 
‘‘(ii) an individual who is eligible for 
medical assistance under title XIX, under a 
State plan or waiver; or 
‘‘(iii) an individual who meets the cri-
teria of both clauses (i) and (ii). 
‘‘(B) APPLICABLE TITLE.—The term ‘appli-
cable title’ means title XVIII, title XIX, or both. 
‘‘(b) TESTING OF MODELS (PHASE I).— 
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‘‘(1) IN GENERAL.—The CMI shall test payment 
and service delivery models in accordance with selec-
tion criteria under paragraph (2) to determine the ef-
fect of applying such models under the applicable title 
(as defined in subsection (a)(4)(B)) on program ex-
penditures under such titles and the quality of care 
received by individuals receiving benefits under such 
title. 
‘‘(2) SELECTION OF MODELS TO BE TESTED.— 
‘‘(A) IN GENERAL.—The Secretary shall se-
lect models to be tested from models where the 
Secretary determines that there is evidence that 
the model addresses a defined population for 
which there are deficits in care leading to poor 
clinical outcomes or potentially avoidable ex-
penditures. The models selected under the pre-
ceding sentence may include the models described 
in subparagraph (B). 
‘‘(B) OPPORTUNITIES.—The models de-
scribed in this subparagraph are the following 
models: 
‘‘(i) Promoting broad payment and 
practice reform in primary care, including 
patient-centered medical home models for 
high-need applicable individuals, medical 
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homes that address women’s unique health 
care needs, and models that transition pri-
mary care practices away from fee-for-serv-
ice based reimbursement and toward com-
prehensive payment or salary-based pay-
ment. 
‘‘(ii) Contracting directly with groups 
of providers of services and suppliers to pro-
mote innovative care delivery models, such 
as through risk-based comprehensive pay-
ment or salary-based payment. 
‘‘(iii) Utilizing geriatric assessments 
and comprehensive care plans to coordinate 
the care (including through interdiscipli-
nary teams) of applicable individuals with 
multiple chronic conditions and at least one 
of the following: 
‘‘(I) An inability to perform 2 or 
more activities of daily living. 
‘‘(II) Cognitive impairment, in-
cluding dementia. 
‘‘(iv) Promote care coordination be-
tween providers of services and suppliers 
that transition health care providers away 
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from fee-for-service based reimbursement 
and toward salary-based payment. 
‘‘(v) Supporting care coordination for 
chronically-ill applicable individuals at 
high risk of hospitalization through a health 
information 
technology-enabled 
provider 
network that includes care coordinators, a 
chronic disease registry, and home tele- 
health technology. 
‘‘(vi) Varying payment to physicians 
who order advanced diagnostic imaging 
services 
(as 
defined 
in 
section 
1834(e)(1)(B)) according to the physician’s 
adherence to appropriateness criteria for the 
ordering of such services, as determined in 
consultation 
with 
physician 
specialty 
groups and other relevant stakeholders. 
‘‘(vii) Utilizing medication therapy 
management services, such as those de-
scribed in section 935 of the Public Health 
Service Act. 
‘‘(viii) Establishing community-based 
health teams to support small-practice med-
ical homes by assisting the primary care 
practitioner in chronic care management, 
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including patient self-management, activi-
ties. 
‘‘(ix) Assisting applicable individuals 
in making informed health care choices by 
paying providers of services and suppliers 
for using patient decision-support tools, in-
cluding tools that meet the standards devel-
oped 
and 
identified 
under 
section 
936(c)(2)(A) of the Public Health Service 
Act, that improve applicable individual and 
caregiver understanding of medical treat-
ment options. 
‘‘(x) Allowing States to test and evalu-
ate fully integrating care for dual eligible 
individuals in the State, including the 
management and oversight of all funds 
under the applicable titles with respect to 
such individuals. 
‘‘(xi) Allowing States to test and evalu-
ate systems of all-payer payment reform for 
the medical care of residents of the State, 
including dual eligible individuals. 
‘‘(xii) Aligning nationally recognized, 
evidence-based guidelines of cancer care 
with payment incentives under title XVIII 
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in the areas of treatment planning and fol-
low-up care planning for applicable indi-
viduals described in clause (i) or (iii) of 
subsection (a)(4)(A) with cancer, including 
the identification of gaps in applicable 
quality measures. 
‘‘(xiii) 
Improving 
post-acute 
care 
through continuing care hospitals that offer 
inpatient rehabilitation, long-term care hos-
pitals, and home health or skilled nursing 
care during an inpatient stay and the 30 
days immediately following discharge. 
‘‘(xiv) Funding home health providers 
who offer chronic care management services 
to applicable individuals in cooperation 
with interdisciplinary teams. 
‘‘(xv) Promoting improved quality and 
reduced cost by developing a collaborative of 
high-quality, low-cost health care institu-
tions that is responsible for— 
‘‘(I) developing, documenting, and 
disseminating best practices and prov-
en care methods; 
‘‘(II) 
implementing 
such 
best 
practices and proven care methods 
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within such institutions to demonstrate 
further improvements in quality and 
efficiency; and 
‘‘(III) providing assistance to 
other health care institutions on how 
best to employ such best practices and 
proven care methods to improve health 
care quality and lower costs. 
‘‘(xvi) Facilitate inpatient care, in-
cluding intensive care, of hospitalized appli-
cable individuals at their local hospital 
through the use of electronic monitoring by 
specialists, including intensivists and crit-
ical care specialists, based at integrated 
health systems. 
‘‘(xvii) Promoting greater efficiencies 
and timely access to outpatient services 
(such as outpatient physical therapy serv-
ices) through models that do not require a 
physician or other health professional to 
refer the service or be involved in estab-
lishing the plan of care for the service, when 
such service is furnished by a health profes-
sional who has the authority to furnish the 
service under existing State law. 
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‘‘(xviii) 
Establishing 
comprehensive 
payments to Healthcare Innovation Zones, 
consisting of groups of providers that in-
clude a teaching hospital, physicians, and 
other clinical entities, that, through their 
structure, operations, and joint-activity de-
liver a full spectrum of integrated and com-
prehensive health care services to applicable 
individuals while also incorporating inno-
vative methods for the clinical training of 
future health care professionals. 
‘‘(C) ADDITIONAL FACTORS FOR CONSIDER-
ATION.—In selecting models for testing under 
subparagraph (A), the CMI may consider the fol-
lowing additional factors: 
‘‘(i) Whether the model includes a reg-
ular process for monitoring and updating 
patient care plans in a manner that is con-
sistent with the needs and preferences of ap-
plicable individuals. 
‘‘(ii) Whether the model places the ap-
plicable individual, including family mem-
bers and other informal caregivers of the 
applicable individual, at the center of the 
care team of the applicable individual. 
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‘‘(iii) Whether the model provides for 
in-person contact with applicable individ-
uals. 
‘‘(iv) Whether the model utilizes tech-
nology, such as electronic health records and 
patient-based remote monitoring systems, to 
coordinate care over time and across set-
tings. 
‘‘(v) Whether the model provides for the 
maintenance of a close relationship between 
care coordinators, primary care practi-
tioners, specialist physicians, community- 
based organizations, and other providers of 
services and suppliers. 
‘‘(vi) Whether the model relies on a 
team-based approach to interventions, such 
as comprehensive care assessments, care 
planning, and self-management coaching. 
‘‘(vii) Whether, under the model, pro-
viders of services and suppliers are able to 
share information with patients, caregivers, 
and other providers of services and sup-
pliers on a real time basis. 
‘‘(3) BUDGET NEUTRALITY.— 
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‘‘(A) INITIAL PERIOD.—The Secretary shall 
not require, as a condition for testing a model 
under paragraph (1), that the design of such 
model ensure that such model is budget neutral 
initially with respect to expenditures under the 
applicable title. 
‘‘(B) TERMINATION OR MODIFICATION.—The 
Secretary shall terminate or modify the design 
and implementation of a model unless the Sec-
retary determines (and the Chief Actuary of the 
Centers for Medicare & Medicaid Services, with 
respect to program spending under the applica-
ble title, certifies), after testing has begun, that 
the model is expected to— 
‘‘(i) improve the quality of care (as de-
termined by the Administrator of the Cen-
ters for Medicare & Medicaid Services) 
without increasing spending under the ap-
plicable title; 
‘‘(ii) reduce spending under the appli-
cable title without reducing the quality of 
care; or 
‘‘(iii) improve the quality of care and 
reduce spending. 
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Such termination may occur at any time after 
such testing has begun and before completion of 
the testing. 
‘‘(4) EVALUATION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
conduct an evaluation of each model tested under 
this subsection. Such evaluation shall include an 
analysis of— 
‘‘(i) the quality of care furnished under 
the model, including the measurement of 
patient-level 
outcomes 
and 
patient- 
centeredness criteria determined appro-
priate by the Secretary; and 
‘‘(ii) the changes in spending under the 
applicable titles by reason of the model. 
‘‘(B) INFORMATION.—The Secretary shall 
make the results of each evaluation under this 
paragraph available to the public in a timely 
fashion and may establish requirements for 
States and other entities participating in the 
testing of models under this section to collect and 
report information that the Secretary determines 
is necessary to monitor and evaluate such mod-
els. 
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‘‘(c) EXPANSION OF MODELS (PHASE II).—Taking 
into account the evaluation under subsection (b)(4), the Sec-
retary may, through rulemaking, expand (including imple-
mentation on a nationwide basis) the duration and the 
scope of a model that is being tested under subsection (b) 
or a demonstration project under section 1866C, to the ex-
tent determined appropriate by the Secretary, if— 
‘‘(1) the Secretary determines that such expan-
sion is expected to— 
‘‘(A) reduce spending under applicable title 
without reducing the quality of care; or 
‘‘(B) improve the quality of care and reduce 
spending; and 
‘‘(2) the Chief Actuary of the Centers for Medi-
care & Medicaid Services certifies that such expan-
sion would reduce program spending under applicable 
titles. 
‘‘(d) IMPLEMENTATION.— 
‘‘(1) WAIVER AUTHORITY.—The Secretary may 
waive such requirements of titles XI and XVIII and 
of 
sections 
1902(a)(1), 
1902(a)(13), 
and 
1903(m)(2)(A)(iii) as may be necessary solely for 
purposes of carrying out this section with respect to 
testing models described in subsection (b). 
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‘‘(2) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of— 
‘‘(A) the selection of models for testing or 
expansion under this section; 
‘‘(B) the selection of organizations, sites, or 
participants to test those models selected; 
‘‘(C) the elements, parameters, scope, and 
duration of such models for testing or dissemina-
tion; 
‘‘(D) determinations regarding budget neu-
trality under subsection (b)(3); 
‘‘(E) the termination or modification of the 
design and implementation of a model under 
subsection (b)(3)(B); and 
‘‘(F) determinations about expansion of the 
duration and scope of a model under subsection 
(c), including the determination that a model is 
not expected to meet criteria described in para-
graph (1) or (2) of such subsection. 
‘‘(3) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the testing and 
evaluation of models or expansion of such models 
under this section. 
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‘‘(e) APPLICATION TO CHIP.—The Center may carry 
out activities under this section with respect to title XXI 
in the same manner as provided under this section with 
respect to the program under the applicable titles. 
‘‘(f) FUNDING.— 
‘‘(1) IN
GENERAL.—There are appropriated, 
from amounts in the Treasury not otherwise appro-
priated— 
‘‘(A) $5,000,000 for the design, implementa-
tion, and evaluation of models under subsection 
(b) for fiscal year 2010; 
‘‘(B) $10,000,000,000 for the activities ini-
tiated under this section for the period of fiscal 
years 2011 through 2019; and 
‘‘(C) the amount described in subparagraph 
(B) for the activities initiated under this section 
for each subsequent 10-year fiscal period (begin-
ning with the 10-year fiscal period beginning 
with fiscal year 2020). 
Amounts appropriated under the preceding sentence 
shall remain available until expended. 
‘‘(2) USE OF CERTAIN FUNDS.—Out of amounts 
appropriated under subparagraphs (B) and (C) of 
paragraph (1), not less than $25,000,000 shall be 
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made available each such fiscal year to design, imple-
ment, and evaluate models under subsection (b). 
‘‘(g) REPORT TO CONGRESS.—Beginning in 2012, and 
not less than once every other year thereafter, the Secretary 
shall submit to Congress a report on activities under this 
section. Each such report shall describe the models tested 
under subsection (b), including the number of individuals 
described in subsection (a)(4)(A)(i) and of individuals de-
scribed in subsection (a)(4)(A)(ii) participating in such 
models and payments made under applicable titles for serv-
ices on behalf of such individuals, any models chosen for 
expansion under subsection (c), and the results from evalua-
tions under subsection (b)(4). In addition, each such report 
shall provide such recommendations as the Secretary deter-
mines are appropriate for legislative action to facilitate the 
development and expansion of successful payment models.’’. 
(b) MEDICAID CONFORMING AMENDMENT.—Section 
1902(a) of the Social Security Act (42 U.S.C. 1396a(a)), 
as amended by section 8002(b), is amended— 
(1) in paragraph (81), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (82), by striking the period at 
the end and inserting ‘‘; and’’; and 
(3) by inserting after paragraph (82) the fol-
lowing new paragraph: 
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‘‘(83) provide for implementation of the payment 
models specified by the Secretary under section 
1115A(c) for implementation on a nationwide basis 
unless the State demonstrates to the satisfaction of the 
Secretary that implementation would not be adminis-
tratively feasible or appropriate to the health care de-
livery system of the State.’’. 
(c) REVISIONS
TO HEALTH CARE QUALITY DEM-
ONSTRATION PROGRAM.—Subsections (b) and (f) of section 
1866C of the Social Security Act (42 U.S.C. 1395cc–3) are 
amended by striking ‘‘5-year’’ each place it appears. 
SEC. 3022. MEDICARE SHARED SAVINGS PROGRAM. 
Title XVIII of the Social Security Act (42 U.S.C. 1395 
et seq.) is amended by adding at the end the following new 
section: 
‘‘SHARED SAVINGS PROGRAM 
‘‘SEC. 1899. (a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—Not later than January 1, 
2012, the Secretary shall establish a shared savings 
program (in this section referred to as the ‘program’) 
that promotes accountability for a patient population 
and coordinates items and services under parts A and 
B, and encourages investment in infrastructure and 
redesigned care processes for high quality and effi-
cient service delivery. Under such program— 
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‘‘(A) groups of providers of services and 
suppliers meeting criteria specified by the Sec-
retary may work together to manage and coordi-
nate care for Medicare fee-for-service bene-
ficiaries through an accountable care organiza-
tion (referred to in this section as an ‘ACO’); 
and 
‘‘(B) ACOs that meet quality performance 
standards established by the Secretary are eligi-
ble to receive payments for shared savings under 
subsection (d)(2). 
‘‘(b) ELIGIBLE ACOS.— 
‘‘(1) IN
GENERAL.—Subject to the succeeding 
provisions of this subsection, as determined appro-
priate by the Secretary, the following groups of pro-
viders of services and suppliers which have established 
a mechanism for shared governance are eligible to 
participate as ACOs under the program under this 
section: 
‘‘(A) ACO professionals in group practice 
arrangements. 
‘‘(B) Networks of individual practices of 
ACO professionals. 
‘‘(C) Partnerships or joint venture arrange-
ments between hospitals and ACO professionals. 
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‘‘(D) Hospitals employing ACO profes-
sionals. 
‘‘(E) Such other groups of providers of serv-
ices and suppliers as the Secretary determines 
appropriate. 
‘‘(2) REQUIREMENTS.—An ACO shall meet the 
following requirements: 
‘‘(A) The ACO shall be willing to become 
accountable for the quality, cost, and overall care 
of the Medicare fee-for-service beneficiaries as-
signed to it. 
‘‘(B) The ACO shall enter into an agree-
ment with the Secretary to participate in the 
program for not less than a 3-year period (re-
ferred to in this section as the ‘agreement pe-
riod’). 
‘‘(C) The ACO shall have a formal legal 
structure that would allow the organization to 
receive and distribute payments for shared sav-
ings under subsection (d)(2) to participating 
providers of services and suppliers. 
‘‘(D) The ACO shall include primary care 
ACO professionals that are sufficient for the 
number of Medicare fee-for-service beneficiaries 
assigned to the ACO under subsection (c). At a 
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minimum, the ACO shall have at least 5,000 
such beneficiaries assigned to it under subsection 
(c) in order to be eligible to participate in the 
ACO program. 
‘‘(E) The ACO shall provide the Secretary 
with such information regarding ACO profes-
sionals participating in the ACO as the Sec-
retary determines necessary to support the as-
signment of Medicare fee-for-service beneficiaries 
to an ACO, the implementation of quality and 
other reporting requirements under paragraph 
(3), and the determination of payments for 
shared savings under subsection (d)(2). 
‘‘(F) The ACO shall have in place a leader-
ship and management structure that includes 
clinical and administrative systems. 
‘‘(G) The ACO shall define processes to pro-
mote evidence-based medicine and patient en-
gagement, report on quality and cost measures, 
and coordinate care, such as through the use of 
telehealth, remote patient monitoring, and other 
such enabling technologies. 
‘‘(H) The ACO shall demonstrate to the Sec-
retary that it meets patient-centeredness criteria 
specified by the Secretary, such as the use of pa-
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tient and caregiver assessments or the use of in-
dividualized care plans. 
‘‘(3) QUALITY AND OTHER REPORTING REQUIRE-
MENTS.— 
‘‘(A) IN GENERAL.—The Secretary shall de-
termine appropriate measures to assess the qual-
ity of care furnished by the ACO, such as meas-
ures of— 
‘‘(i) clinical processes and outcomes; 
‘‘(ii) patient and, where practicable, 
caregiver experience of care; and 
‘‘(iii) utilization (such as rates of hos-
pital admissions for ambulatory care sen-
sitive conditions). 
‘‘(B) 
REPORTING
REQUIREMENTS.—An 
ACO shall submit data in a form and manner 
specified by the Secretary on measures the Sec-
retary determines necessary for the ACO to re-
port in order to evaluate the quality of care fur-
nished by the ACO. Such data may include care 
transitions across health care settings, including 
hospital discharge planning and post-hospital 
discharge follow-up by ACO professionals, as the 
Secretary determines appropriate. 
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‘‘(C) 
QUALITY
PERFORMANCE
STAND-
ARDS.—The Secretary shall establish quality 
performance standards to assess the quality of 
care furnished by ACOs. The Secretary shall seek 
to improve the quality of care furnished by ACOs 
over time by specifying higher standards, new 
measures, or both for purposes of assessing such 
quality of care. 
‘‘(D) OTHER REPORTING REQUIREMENTS.— 
The Secretary may, as the Secretary determines 
appropriate, incorporate reporting requirements 
and incentive payments related to the physician 
quality reporting initiative (PQRI) under sec-
tion 1848, including such requirements and such 
payments related to electronic prescribing, elec-
tronic health records, and other similar initia-
tives under section 1848, and may use alter-
native criteria than would otherwise apply 
under such section for determining whether to 
make such payments. The incentive payments 
described in the preceding sentence shall not be 
taken into consideration when calculating any 
payments otherwise made under subsection (d). 
‘‘(4) NO
DUPLICATION
IN
PARTICIPATION
IN 
SHARED SAVINGS PROGRAMS.—A provider of services 
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or supplier that participates in any of the following 
shall not be eligible to participate in an ACO under 
this section: 
‘‘(A) A model tested or expanded under sec-
tion 1115A that involves shared savings under 
this title, or any other program or demonstration 
project that involves such shared savings. 
‘‘(B) The independence at home medical 
practice pilot program under section 1866E. 
‘‘(c) ASSIGNMENT
OF MEDICARE FEE-FOR-SERVICE 
BENEFICIARIES TO ACOS.—The Secretary shall determine 
an appropriate method to assign Medicare fee-for-service 
beneficiaries to an ACO based on their utilization of pri-
mary care services provided under this title by an ACO pro-
fessional described in subsection (h)(1)(A). 
‘‘(d) PAYMENTS AND TREATMENT OF SAVINGS.— 
‘‘(1) PAYMENTS.— 
‘‘(A) IN
GENERAL.—Under the program, 
subject to paragraph (3), payments shall con-
tinue to be made to providers of services and 
suppliers participating in an ACO under the 
original Medicare fee-for-service program under 
parts A and B in the same manner as they 
would otherwise be made except that a partici-
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pating ACO is eligible to receive payment for 
shared savings under paragraph (2) if— 
‘‘(i) the ACO meets quality perform-
ance standards established by the Secretary 
under subsection (b)(3); and 
‘‘(ii) the ACO meets the requirement 
under subparagraph (B)(i). 
‘‘(B) SAVINGS REQUIREMENT AND BENCH-
MARK.— 
‘‘(i) DETERMINING SAVINGS.—In each 
year of the agreement period, an ACO shall 
be eligible to receive payment for shared 
savings under paragraph (2) only if the es-
timated average per capita Medicare ex-
penditures under the ACO for Medicare fee- 
for-service beneficiaries for parts A and B 
services, adjusted for beneficiary character-
istics, is at least the percent specified by the 
Secretary below the applicable benchmark 
under clause (ii). The Secretary shall deter-
mine the appropriate percent described in 
the preceding sentence to account for nor-
mal variation in expenditures under this 
title, based upon the number of Medicare 
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fee-for-service beneficiaries assigned to an 
ACO. 
‘‘(ii) ESTABLISH AND UPDATE BENCH-
MARK.—The Secretary shall estimate a 
benchmark for each agreement period for 
each ACO using the most recent available 3 
years of per-beneficiary expenditures for 
parts A and B services for Medicare fee-for- 
service beneficiaries assigned to the ACO. 
Such benchmark shall be adjusted for bene-
ficiary characteristics and such other fac-
tors as the Secretary determines appro-
priate and updated by the projected absolute 
amount of growth in national per capita 
expenditures for parts A and B services 
under the original Medicare fee-for-service 
program, as estimated by the Secretary. 
Such benchmark shall be reset at the start 
of each agreement period. 
‘‘(2) PAYMENTS FOR SHARED SAVINGS.—Subject 
to performance with respect to the quality perform-
ance standards established by the Secretary under 
subsection (b)(3), if an ACO meets the requirements 
under paragraph (1), a percent (as determined appro-
priate by the Secretary) of the difference between such 
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estimated average per capita Medicare expenditures 
in a year, adjusted for beneficiary characteristics, 
under the ACO and such benchmark for the ACO may 
be paid to the ACO as shared savings and the re-
mainder of such difference shall be retained by the 
program under this title. The Secretary shall establish 
limits on the total amount of shared savings that may 
be paid to an ACO under this paragraph. 
‘‘(3) MONITORING
AVOIDANCE
OF
AT-RISK
PA-
TIENTS.—If the Secretary determines that an ACO 
has taken steps to avoid patients at risk in order to 
reduce the likelihood of increasing costs to the ACO 
the Secretary may impose an appropriate sanction on 
the ACO, including termination from the program. 
‘‘(4) TERMINATION.—The Secretary may termi-
nate an agreement with an ACO if it does not meet 
the quality performance standards established by the 
Secretary under subsection (b)(3). 
‘‘(e) ADMINISTRATION.—Chapter 35 of title 44, United 
States Code, shall not apply to the program. 
‘‘(f) WAIVER AUTHORITY.—The Secretary may waive 
such requirements of sections 1128A and 1128B and title 
XVIII of this Act as may be necessary to carry out the pro-
visions of this section. 
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‘‘(g) LIMITATIONS ON REVIEW.—There shall be no ad-
ministrative or judicial review under section 1869, section 
1878, or otherwise of— 
‘‘(1) the specification of criteria under subsection 
(a)(1)(B); 
‘‘(2) the assessment of the quality of care fur-
nished by an ACO and the establishment of perform-
ance standards under subsection (b)(3); 
‘‘(3) the assignment of Medicare fee-for-service 
beneficiaries to an ACO under subsection (c); 
‘‘(4) the determination of whether an ACO is eli-
gible for shared savings under subsection (d)(2) and 
the amount of such shared savings, including the de-
termination of the estimated average per capita Medi-
care expenditures under the ACO for Medicare fee-for- 
service beneficiaries assigned to the ACO and the av-
erage benchmark for the ACO under subsection 
(d)(1)(B); 
‘‘(5) the percent of shared savings specified by 
the Secretary under subsection (d)(2) and any limit 
on the total amount of shared savings established by 
the Secretary under such subsection; and 
‘‘(6) the termination of an ACO under subsection 
(d)(4). 
‘‘(h) DEFINITIONS.—In this section: 
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‘‘(1) ACO PROFESSIONAL.—The term ‘ACO pro-
fessional’ means— 
‘‘(A) a physician (as defined in section 
1861(r)(1)); and 
‘‘(B) a practitioner described in section 
1842(b)(18)(C)(i). 
‘‘(2) HOSPITAL.—The term ‘hospital’ means a 
subsection (d) hospital (as defined in section 
1886(d)(1)(B)). 
‘‘(3) 
MEDICARE
FEE-FOR-SERVICE
BENE-
FICIARY.—The term ‘Medicare fee-for-service bene-
ficiary’ means an individual who is enrolled in the 
original Medicare fee-for-service program under parts 
A and B and is not enrolled in an MA plan under 
part C, an eligible organization under section 1876, 
or a PACE program under section 1894.’’. 
SEC. 3023. NATIONAL PILOT PROGRAM ON PAYMENT BUN-
DLING. 
Title XVIII of the Social Security Act, as amended by 
section 3021, is amended by inserting after section 1886C 
the following new section: 
‘‘NATIONAL PILOT PROGRAM ON PAYMENT BUNDLING 
‘‘SEC. 1866D. (a) IMPLEMENTATION.— 
‘‘(1) IN GENERAL.—The Secretary shall establish 
a pilot program for integrated care during an episode 
of care provided to an applicable beneficiary around 
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a hospitalization in order to improve the coordina-
tion, quality, and efficiency of health care services 
under this title. 
‘‘(2) DEFINITIONS.—In this section: 
‘‘(A) APPLICABLE BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual 
who— 
‘‘(i) is entitled to, or enrolled for, bene-
fits under part A and enrolled for benefits 
under part B of such title, but not enrolled 
under part C or a PACE program under 
section 1894; and 
‘‘(ii) is admitted to a hospital for an 
applicable condition. 
‘‘(B) APPLICABLE
CONDITION.—The term 
‘applicable condition’ means 1 or more of 8 con-
ditions selected by the Secretary. In selecting 
conditions under the preceding sentence, the Sec-
retary shall take into consideration the following 
factors: 
‘‘(i) Whether the conditions selected in-
clude a mix of chronic and acute conditions. 
‘‘(ii) Whether the conditions selected 
include a mix of surgical and medical con-
ditions. 
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‘‘(iii) Whether a condition is one for 
which there is evidence of an opportunity 
for providers of services and suppliers to 
improve the quality of care furnished while 
reducing total expenditures under this title. 
‘‘(iv) Whether a condition has signifi-
cant variation in— 
‘‘(I) the number of readmissions; 
and 
‘‘(II) the amount of expenditures 
for post-acute care spending under this 
title. 
‘‘(v) Whether a condition is high-vol-
ume and has high post-acute care expendi-
tures under this title. 
‘‘(vi) Which conditions the Secretary 
determines are most amenable to bundling 
across the spectrum of care given practice 
patterns under this title. 
‘‘(C) APPLICABLE
SERVICES.—The term 
‘applicable services’ means the following: 
‘‘(i) Acute care inpatient services. 
‘‘(ii) Physicians’ services delivered in 
and outside of an acute care hospital set-
ting. 
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‘‘(iii) Outpatient hospital services, in-
cluding emergency department services. 
‘‘(iv) Post-acute care services, includ-
ing home health services, skilled nursing 
services, inpatient rehabilitation services, 
and inpatient hospital services furnished by 
a long-term care hospital. 
‘‘(v) Other services the Secretary deter-
mines appropriate. 
‘‘(D) EPISODE OF CARE.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the term ‘episode of care’ means, with 
respect to an applicable condition and an 
applicable beneficiary, the period that in-
cludes— 
‘‘(I) the 3 days prior to the ad-
mission of the applicable beneficiary to 
a hospital for the applicable condition; 
‘‘(II) the length of stay of the ap-
plicable beneficiary in such hospital; 
and 
‘‘(III) the 30 days following the 
discharge of the applicable beneficiary 
from such hospital. 
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‘‘(ii) ESTABLISHMENT OF PERIOD BY 
THE SECRETARY.—The Secretary, as appro-
priate, may establish a period (other than 
the period described in clause (i)) for an 
episode of care under the pilot program. 
‘‘(E) PHYSICIANS’ 
SERVICES.—The term 
‘physicians’ services’ has the meaning given such 
term in section 1861(q). 
‘‘(F) PILOT
PROGRAM.—The term ‘pilot 
program’ means the pilot program under this 
section. 
‘‘(G) PROVIDER
OF
SERVICES.—The term 
‘provider of services’ has the meaning given such 
term in section 1861(u). 
‘‘(H) READMISSION.—The term ‘readmis-
sion’ has the meaning given such term in section 
1886(q)(5)(E). 
‘‘(I) SUPPLIER.—The term ‘supplier’ has 
the meaning given such term in section 1861(d). 
‘‘(3) DEADLINE
FOR
IMPLEMENTATION.—The 
Secretary shall establish the pilot program not later 
than January 1, 2013. 
‘‘(b) DEVELOPMENTAL PHASE.— 
‘‘(1) DETERMINATION OF PATIENT ASSESSMENT 
INSTRUMENT.—The Secretary shall determine which 
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patient assessment instrument (such as the Con-
tinuity Assessment Record and Evaluation (CARE) 
tool) shall be used under the pilot program to evaluate 
the applicable condition of an applicable beneficiary 
for purposes of determining the most clinically appro-
priate site for the provision of post-acute care to the 
applicable beneficiary. 
‘‘(2) DEVELOPMENT OF QUALITY MEASURES FOR 
AN EPISODE OF CARE AND FOR POST-ACUTE CARE.— 
‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with the Agency for Healthcare Re-
search and Quality and the entity with a con-
tract under section 1890(a) of the Social Secu-
rity Act, shall develop quality measures for use 
in the pilot program— 
‘‘(i) for episodes of care; and 
‘‘(ii) for post-acute care. 
‘‘(B) 
SITE-NEUTRAL
POST-ACUTE
CARE 
QUALITY MEASURES.—Any quality measures de-
veloped under subparagraph (A)(ii) shall be site- 
neutral. 
‘‘(C) COORDINATION WITH QUALITY MEAS-
URE DEVELOPMENT AND ENDORSEMENT PROCE-
DURES.—The Secretary shall ensure that the de-
velopment of quality measures under subpara-
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graph (A) is done in a manner that is consistent 
with the measures developed and endorsed under 
section 1890 and 1890A that are applicable to 
all post-acute care settings. 
‘‘(c) DETAILS.— 
‘‘(1) DURATION.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the pilot program shall be conducted 
for a period of 5 years. 
‘‘(B) EXTENSION.—The Secretary may ex-
tend the duration of the pilot program for pro-
viders of services and suppliers participating in 
the pilot program as of the day before the end of 
the 5-year period described in subparagraph (A), 
for a period determined appropriate by the Sec-
retary, if the Secretary determines that such ex-
tension will result in improving or not reducing 
the quality of patient care and reducing spend-
ing under this title. 
‘‘(2) PARTICIPATING
PROVIDERS
OF
SERVICES 
AND SUPPLIERS.— 
‘‘(A) IN GENERAL.—An entity comprised of 
providers of services and suppliers, including a 
hospital, a physician group, a skilled nursing fa-
cility, and a home health agency, who are other-
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scribed in subparagraph (B)) for applicable 
beneficiaries for a year shall be established 
in a manner that does not result in spend-
ing more for such entity for such bene-
ficiaries than would otherwise be expended 
for such entity for such beneficiaries for 
such year if the pilot program were not im-
plemented, as estimated by the Secretary. 
‘‘(B) INCLUSION OF CERTAIN SERVICES.—A 
payment methodology tested under the pilot pro-
gram shall include payment for the furnishing of 
applicable services and other appropriate serv-
ices, such as care coordination, medication rec-
onciliation, discharge planning, transitional care 
services, and other patient-centered activities as 
determined appropriate by the Secretary. 
‘‘(C) BUNDLED PAYMENTS.— 
‘‘(i) IN GENERAL.—A bundled payment 
under the pilot program shall— 
‘‘(I) be comprehensive, covering 
the costs of applicable services and 
other appropriate services furnished to 
an individual during an episode of 
care (as determined by the Secretary); 
and 
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‘‘(II) be made to the entity which 
is participating in the pilot program. 
‘‘(ii) REQUIREMENT FOR PROVISION OF 
APPLICABLE SERVICES AND OTHER APPRO-
PRIATE SERVICES.—Applicable services and 
other appropriate services for which pay-
ment is made under this subparagraph shall 
be furnished or directed by the entity which 
is participating in the pilot program. 
‘‘(D) PAYMENT
FOR
POST-ACUTE
CARE 
SERVICES AFTER THE EPISODE OF CARE.—The 
Secretary shall establish procedures, in the case 
where an applicable beneficiary requires contin-
ued post-acute care services after the last day of 
the episode of care, under which payment for 
such services shall be made. 
‘‘(4) QUALITY MEASURES.— 
‘‘(A) IN GENERAL.—The Secretary shall es-
tablish quality measures (including quality 
measures of process, outcome, and structure) re-
lated to care provided by entities participating 
in the pilot program. Quality measures estab-
lished under the preceding sentence shall include 
measures of the following: 
‘‘(i) Functional status improvement. 
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‘‘(ii) Reducing rates of avoidable hos-
pital readmissions. 
‘‘(iii) Rates of discharge to the commu-
nity. 
‘‘(iv) Rates of admission to an emer-
gency room after a hospitalization. 
‘‘(v) Incidence of health care acquired 
infections. 
‘‘(vi) Efficiency measures. 
‘‘(vii) Measures of patient-centeredness 
of care. 
‘‘(viii) Measures of patient perception 
of care. 
‘‘(ix) Other measures, including meas-
ures of patient outcomes, determined appro-
priate by the Secretary. 
‘‘(B) REPORTING ON QUALITY MEASURES.— 
‘‘(i) IN GENERAL.—A entity shall sub-
mit data to the Secretary on quality meas-
ures established under subparagraph (A) 
during each year of the pilot program (in 
a form and manner, subject to clause (iii), 
specified by the Secretary). 
‘‘(ii) SUBMISSION OF DATA THROUGH 
ELECTRONIC HEALTH RECORD.—To the ex-
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tent practicable, the Secretary shall specify 
that data on measures be submitted under 
clause (i) through the use of an qualified 
electronic health record (as defined in sec-
tion 3000(13) of the Public Health Service 
Act (42 U.S.C. 300jj–11(13)) in a manner 
specified by the Secretary. 
‘‘(d) WAIVER.—The Secretary may waive such provi-
sions of this title and title XI as may be necessary to carry 
out the pilot program. 
‘‘(e) INDEPENDENT EVALUATION AND REPORTS ON 
PILOT PROGRAM.— 
‘‘(1) INDEPENDENT EVALUATION.—The Secretary 
shall conduct an independent evaluation of the pilot 
program, including the extent to which the pilot pro-
gram has— 
‘‘(A) improved quality measures established 
under subsection (c)(4)(A); 
‘‘(B) improved health outcomes; 
‘‘(C) improved applicable beneficiary access 
to care; and 
‘‘(D) reduced spending under this title. 
‘‘(2) REPORTS.— 
‘‘(A) INTERIM REPORT.—Not later than 2 
years after the implementation of the pilot pro-
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gram, the Secretary shall submit to Congress a 
report on the initial results of the independent 
evaluation conducted under paragraph (1). 
‘‘(B) FINAL
REPORT.—Not later than 3 
years after the implementation of the pilot pro-
gram, the Secretary shall submit to Congress a 
report on the final results of the independent 
evaluation conducted under paragraph (1). 
‘‘(f) CONSULTATION.—The Secretary shall consult with 
representatives of small rural hospitals, including critical 
access hospitals (as defined in section 1861(mm)(1)), re-
garding their participation in the pilot program. Such con-
sultation shall include consideration of innovative methods 
of implementing bundled payments in hospitals described 
in the preceding sentence, taking into consideration any 
difficulties in doing so as a result of the low volume of serv-
ices provided by such hospitals. 
‘‘(g) IMPLEMENTATION PLAN.— 
‘‘(1) IN GENERAL.—Not later than January 1, 
2016, the Secretary shall submit a plan for the imple-
mentation of an expansion of the pilot program if the 
Secretary determines that such expansion will result 
in improving or not reducing the quality of patient 
care and reducing spending under this title. 
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‘‘(h) ADMINISTRATION.—Chapter 35 of title 44, United 
States Code, shall not apply to the selection, testing, and 
evaluation of models or the expansion of such models under 
this section.’’. 
SEC. 3024. INDEPENDENCE AT HOME DEMONSTRATION 
PROGRAM. 
Title XVIII of the Social Security Act is amended by 
inserting after section 1866D, as inserted by section 3023, 
the following new section: 
‘‘INDEPENDENCE AT HOME MEDICAL PRACTICE 
DEMONSTRATION PROGRAM 
‘‘SEC. 1866D. (a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—The Secretary shall conduct 
a demonstration program (in this section referred to 
as the ‘demonstration program’) to test a payment in-
centive and service delivery model that utilizes physi-
cian and nurse practitioner directed home-based pri-
mary care teams designed to reduce expenditures and 
improve health outcomes in the provision of items and 
services under this title to applicable beneficiaries (as 
defined in subsection (d)). 
‘‘(2) REQUIREMENT.—The demonstration pro-
gram shall test whether a model described in para-
graph (1), which is accountable for providing com-
prehensive, coordinated, continuous, and accessible 
care to high-need populations at home and coordi-
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nating health care across all treatment settings, re-
sults in— 
‘‘(A) reducing preventable hospitalizations; 
‘‘(B) preventing hospital readmissions; 
‘‘(C) reducing emergency room visits; 
‘‘(D) improving health outcomes commensu-
rate with the beneficiaries’ stage of chronic ill-
ness; 
‘‘(E) improving the efficiency of care, such 
as by reducing duplicative diagnostic and lab-
oratory tests; 
‘‘(F) reducing the cost of health care services 
covered under this title; and 
‘‘(G) achieving beneficiary and family care-
giver satisfaction. 
‘‘(b) INDEPENDENCE AT HOME MEDICAL PRACTICE.— 
‘‘(1) INDEPENDENCE AT HOME MEDICAL PRAC-
TICE DEFINED.—In this section: 
‘‘(A) IN GENERAL.—The term ‘independence 
at home medical practice’ means a legal entity 
that— 
‘‘(i) is comprised of an individual phy-
sician or nurse practitioner or group of 
physicians and nurse practitioners that 
provides care as part of a team that in-
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cludes physicians, nurses, physician assist-
ants, pharmacists, and other health and so-
cial services staff as appropriate who have 
experience providing home-based primary 
care to applicable beneficiaries, make in- 
home visits, and are available 24 hours per 
day, 7 days per week to carry out plans of 
care that are tailored to the individual 
beneficiary’s chronic conditions and de-
signed to achieve the results in subsection 
(a); 
‘‘(ii) is organized at least in part for 
the purpose of providing physicians’ serv-
ices; 
‘‘(iii) has documented experience in 
providing home-based primary care services 
to high-cost chronically ill beneficiaries, as 
determined appropriate by the Secretary; 
‘‘(iv) furnishes services to at least 200 
applicable beneficiaries (as defined in sub-
section (d)) during each year of the dem-
onstration program; 
‘‘(v) has entered into an agreement 
with the Secretary; 
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‘‘(vi) uses electronic health information 
systems, remote monitoring, and mobile di-
agnostic technology; and 
‘‘(vii) meets such other criteria as the 
Secretary determines to be appropriate to 
participate in the demonstration program. 
The entity shall report on quality measures (in 
such form, manner, and frequency as specified 
by the Secretary, which may be for the group, for 
providers of services and suppliers, or both) and 
report to the Secretary (in a form, manner, and 
frequency as specified by the Secretary) such 
data as the Secretary determines appropriate to 
monitor and evaluate the demonstration pro-
gram. 
‘‘(B) PHYSICIAN.—The term ‘physician’ in-
cludes, except as the Secretary may otherwise 
provide, any individual who furnishes services 
for which payment may be made as physicians’ 
services and has the medical training or experi-
ence to fulfill the physician’s role described in 
subparagraph (A)(i). 
‘‘(2) PARTICIPATION OF NURSE PRACTITIONERS 
AND PHYSICIAN ASSISTANTS.—Nothing in this section 
shall be construed to prevent a nurse practitioner or 
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physician assistant from participating in, or leading, 
a home-based primary care team as part of an inde-
pendence at home medical practice if— 
‘‘(A) all the requirements of this section are 
met; 
‘‘(B) the nurse practitioner or physician as-
sistant, as the case may be, is acting consistent 
with State law; and 
‘‘(C) the nurse practitioner or physician as-
sistant has the medical training or experience to 
fulfill the nurse practitioner or physician assist-
ant role described in paragraph (1)(A)(i). 
‘‘(3) INCLUSION
OF
PROVIDERS
AND
PRACTI-
TIONERS.—Nothing in this subsection shall be con-
strued as preventing an independence at home med-
ical practice from including a provider of services or 
a participating practitioner described in section 
1842(b)(18)(C) that is affiliated with the practice 
under an arrangement structured so that such pro-
vider of services or practitioner participates in the 
demonstration program and shares in any savings 
under the demonstration program. 
‘‘(4) QUALITY AND PERFORMANCE STANDARDS.— 
The Secretary shall develop quality performance 
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standards for independence at home medical practices 
participating in the demonstration program. 
‘‘(c) PAYMENT METHODOLOGY.— 
‘‘(1) ESTABLISHMENT
OF
TARGET
SPENDING 
LEVEL.—The Secretary shall establish an estimated 
annual spending target, for the amount the Secretary 
estimates would have been spent in the absence of the 
demonstration, for items and services covered under 
parts A and B furnished to applicable beneficiaries 
for each qualifying independence at home medical 
practice under this section. Such spending targets 
shall be determined on a per capita basis. Such 
spending targets shall include a risk corridor that 
takes into account normal variation in expenditures 
for items and services covered under parts A and B 
furnished to such beneficiaries with the size of the cor-
ridor being related to the number of applicable bene-
ficiaries furnished services by each independence at 
home medical practice. The spending targets may also 
be adjusted for other factors as the Secretary deter-
mines appropriate. 
‘‘(2) INCENTIVE PAYMENTS.—Subject to perform-
ance on quality measures, a qualifying independence 
at home medical practice is eligible to receive an in-
centive payment under this section if actual expendi-
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tures for a year for the applicable beneficiaries it en-
rolls are less than the estimated spending target estab-
lished under paragraph (1) for such year. An incen-
tive payment for such year shall be equal to a portion 
(as determined by the Secretary) of the amount by 
which actual expenditures (including incentive pay-
ments under this paragraph) for applicable bene-
ficiaries under parts A and B for such year are esti-
mated to be less than 5 percent less than the estimated 
spending target for such year, as determined under 
paragraph (1). 
‘‘(d) APPLICABLE BENEFICIARIES.— 
‘‘(1) DEFINITION.—In this section, the term ‘ap-
plicable beneficiary’ means, with respect to a quali-
fying independence at home medical practice, an in-
dividual who the practice has determined— 
‘‘(A) is entitled to benefits under part A 
and enrolled for benefits under part B; 
‘‘(B) is not enrolled in a Medicare Advan-
tage plan under part C or a PACE program 
under section 1894; 
‘‘(C) has 2 or more chronic illnesses, such as 
congestive heart failure, diabetes, other dementias 
designated by the Secretary, chronic obstructive 
pulmonary disease, ischemic heart disease, 
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stroke, 
Alzheimer’s 
Disease 
and 
neurodegenerative diseases, and other diseases 
and conditions designated by the Secretary 
which result in high costs under this title; 
‘‘(D) within the past 12 months has had a 
nonelective hospital admission; 
‘‘(E) within the past 12 months has received 
acute or subacute rehabilitation services; 
‘‘(F) has 2 or more functional dependencies 
requiring the assistance of another person (such 
as bathing, dressing, toileting, walking, or feed-
ing); and 
‘‘(G) meets such other criteria as the Sec-
retary determines appropriate. 
‘‘(2) PATIENT ELECTION TO PARTICIPATE.—The 
Secretary shall determine an appropriate method of 
ensuring that applicable beneficiaries have agreed to 
enroll in an independence at home medical practice 
under the demonstration program. Enrollment in the 
demonstration program shall be voluntary. 
‘‘(3) BENEFICIARY ACCESS TO SERVICES.—Noth-
ing in this section shall be construed as encouraging 
physicians or nurse practitioners to limit applicable 
beneficiary access to services covered under this title 
and applicable beneficiaries shall not be required to 
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relinquish access to any benefit under this title as a 
condition of receiving services from an independence 
at home medical practice. 
‘‘(e) IMPLEMENTATION.— 
‘‘(1) STARTING DATE.—The demonstration pro-
gram shall begin no later than January 1, 2012. An 
agreement with an independence at home medical 
practice under the demonstration program may cover 
not more than a 3-year period. 
‘‘(2) NO
PHYSICIAN
DUPLICATION
IN
DEM-
ONSTRATION PARTICIPATION.—The Secretary shall not 
pay an independence at home medical practice under 
this section that participates in section 1899. 
‘‘(3) NO
BENEFICIARY
DUPLICATION
IN
DEM-
ONSTRATION PARTICIPATION.—The Secretary shall en-
sure that no applicable beneficiary enrolled in an 
independence at home medical practice under this sec-
tion is participating in the programs under section 
1899. 
‘‘(4) PREFERENCE.—In approving an independ-
ence at home medical practice, the Secretary shall 
give preference to practices that are— 
‘‘(A) located in high-cost areas of the coun-
try; 
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‘‘(B) have experience in furnishing health 
care services to applicable beneficiaries in the 
home; and 
‘‘(C) use electronic medical records, health 
information 
technology, 
and 
individualized 
plans of care. 
‘‘(5) LIMITATION ON NUMBER OF PRACTICES.— 
In selecting qualified independence at home medical 
practices to participate under the demonstration pro-
gram, the Secretary shall limit the number of such 
practices so that the number of applicable bene-
ficiaries that may participate in the demonstration 
program does not exceed 10,000. 
‘‘(6) WAIVER.—The Secretary may waive such 
provisions of this title and title XI as the Secretary 
determines necessary in order to implement the dem-
onstration program. 
‘‘(7) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to this section. 
‘‘(f) EVALUATION AND MONITORING.— 
‘‘(1) IN GENERAL.—The Secretary shall evaluate 
each independence at home medical practice under the 
demonstration program to assess whether the practice 
achieved the results described in subsection (a). 
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‘‘(2) 
MONITORING
APPLICABLE
BENE-
FICIARIES.—The Secretary may monitor data on ex-
penditures and quality of services under this title 
after an applicable beneficiary discontinues receiving 
services under this title through a qualifying inde-
pendence at home medical practice. 
‘‘(g) REPORTS TO CONGRESS.—The Secretary shall 
conduct an independent evaluation of the demonstration 
program and submit to Congress a final report, including 
best practices under the demonstration program. Such re-
port shall include an analysis of the demonstration pro-
gram on coordination of care, expenditures under this title, 
applicable beneficiary access to services, and the quality of 
health care services provided to applicable beneficiaries. 
‘‘(h) FUNDING.—For purposes of administering and 
carrying out the demonstration program, other than for 
payments for items and services furnished under this title 
and incentive payments under subsection (c), in addition 
to funds otherwise appropriated, there shall be transferred 
to the Secretary for the Center for Medicare & Medicaid 
Services Program Management Account from the Federal 
Hospital Insurance Trust Fund under section 1817 and the 
Federal Supplementary Medical Insurance Trust Fund 
under section 1841 (in proportions determined appropriate 
by the Secretary) $5,000,000 for each of fiscal years 2010 
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through 2015. Amounts transferred under this subsection 
for a fiscal year shall be available until expended. 
‘‘(i) TERMINATION.— 
‘‘(1) MANDATORY TERMINATION.—The Secretary 
shall terminate an agreement with an independence 
at home medical practice if— 
‘‘(A) the Secretary estimates or determines 
that such practice will not receive an incentive 
payment for the second of 2 consecutive years 
under the demonstration program; or 
‘‘(B) such practice fails to meet quality 
standards during any year of the demonstration 
program. 
‘‘(2) PERMISSIVE TERMINATION.—The Secretary 
may terminate an agreement with an independence at 
home medical practice for such other reasons deter-
mined appropriate by the Secretary.’’. 
SEC. 3025. HOSPITAL READMISSIONS REDUCTION PRO-
GRAM. 
(a) IN GENERAL.—Section 1886 of the Social Security 
Act (42 U.S.C. 1395ww), as amended by sections 3001 and 
3008, is amended by adding at the end the following new 
subsection: 
‘‘(q) HOSPITAL
READMISSIONS
REDUCTION
PRO-
GRAM.— 
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‘‘(1) IN GENERAL.—With respect to payment for 
discharges from an applicable hospital (as defined in 
paragraph (5)(C)) occurring during a fiscal year be-
ginning on or after October 1, 2012, in order to ac-
count for excess readmissions in the hospital, the Sec-
retary shall reduce the payments that would otherwise 
be made to such hospital under subsection (d) (or sec-
tion 1814(b)(3), as the case may be) for such a dis-
charge 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 
DEFINED.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), in this subsection, the term 
‘base operating DRG payment amount’ means, 
with respect to a hospital for a fiscal year— 
‘‘(i) the payment amount that would 
otherwise be made under subsection (d) (de-
termined without regard to subsection (o)) 
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for a discharge if this subsection did not 
apply; reduced by 
‘‘(ii) any portion of such payment 
amount that is attributable to payments 
under paragraphs (5)(A), (5)(B), (5)(F), 
and (12) of subsection (d). 
‘‘(B) SPECIAL RULES FOR CERTAIN HOS-
PITALS.— 
‘‘(i) SOLE COMMUNITY HOSPITALS AND 
MEDICARE-DEPENDENT, SMALL RURAL HOS-
PITALS.—In the case of a medicare-depend-
ent, small rural hospital (with respect to 
discharges occurring during fiscal years 
2012 and 2013) or a sole community hos-
pital, in applying subparagraph (A)(i), the 
payment amount that would otherwise be 
made under subsection (d) shall be deter-
mined without regard to subparagraphs (I) 
and (L) of subsection (b)(3) and subpara-
graphs (D) and (G) of subsection (d)(5). 
‘‘(ii) HOSPITALS PAID UNDER SECTION 
1814.—In the case of a hospital that is paid 
under section 1814(b)(3), the Secretary may 
exempt such hospitals provided that States 
paid under such section submit an annual 
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report to the Secretary describing how a 
similar program in the State for a partici-
pating hospital or hospitals achieves or sur-
passes the measured results in terms of pa-
tient health outcomes and cost savings es-
tablished herein with respect to this section. 
‘‘(3) ADJUSTMENT FACTOR.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the adjustment factor under this para-
graph 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 applicable 
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 excess 
readmissions (as defined in paragraph 
(4)(A)) with respect to an applicable hos-
pital for the applicable period; and 
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‘‘(ii) the aggregate payments for all 
discharges (as defined in paragraph (4)(B)) 
with respect to such applicable hospital for 
such applicable period. 
‘‘(C) FLOOR
ADJUSTMENT
FACTOR.—For 
purposes of subparagraph (A), the floor adjust-
ment factor specified in this subparagraph for— 
‘‘(i) fiscal year 2013 is 0.99; 
‘‘(ii) fiscal year 2014 is 0.98; or 
‘‘(iii) fiscal year 2015 and subsequent 
fiscal years is 0.97. 
‘‘(4) AGGREGATE PAYMENTS, EXCESS READMIS-
SION
RATIO
DEFINED.—For purposes of this sub-
section: 
‘‘(A) AGGREGATE
PAYMENTS
FOR
EXCESS 
READMISSIONS.—The term ‘aggregate payments 
for excess readmissions’ means, for a hospital for 
an applicable period, the sum, for applicable 
conditions (as defined in paragraph (5)(A)), of 
the product, for each applicable condition, of— 
‘‘(i) the base operating DRG payment 
amount for such hospital for such applicable 
period for such condition; 
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‘‘(ii) the number of admissions for such 
condition for such hospital for such applica-
ble period; and 
‘‘(iii) the excess readmissions ratio (as 
defined in subparagraph (C)) for such hos-
pital for such applicable period minus 1. 
‘‘(B) AGGREGATE PAYMENTS FOR ALL DIS-
CHARGES.—The term ‘aggregate payments for all 
discharges’ means, for a hospital for an applica-
ble period, the sum of the base operating DRG 
payment amounts for all discharges for all con-
ditions from such hospital for such applicable 
period. 
‘‘(C) EXCESS READMISSION RATIO.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the term ‘excess readmissions ratio’ 
means, with respect to an applicable condi-
tion for a hospital for an applicable period, 
the ratio (but not less than 1.0) of— 
‘‘(I) the risk adjusted readmis-
sions based on actual readmissions, as 
determined consistent with a readmis-
sion measure methodology that has 
been 
endorsed 
under 
paragraph 
(5)(A)(ii)(I), for an applicable hospital 
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for such condition with respect to such 
applicable period; to 
‘‘(II) the risk adjusted expected re-
admissions (as determined consistent 
with such a methodology) for such hos-
pital 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. 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) APPLICABLE
CONDITION.—The term 
‘applicable condition’ means, subject to subpara-
graph (B), a condition or procedure selected by 
the Secretary among conditions and procedures 
for which— 
‘‘(i) readmissions (as defined in sub-
paragraph (E)) that represent conditions or 
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procedures that are high volume or high ex-
penditures under this title (or other criteria 
specified by the Secretary); and 
‘‘(ii) measures of such readmissions— 
‘‘(I) have been endorsed by the en-
tity with a contract under section 
1890(a); and 
‘‘(II) such endorsed measures have 
exclusions for readmissions that are 
unrelated to the prior discharge (such 
as a planned readmission or transfer 
to another applicable hospital). 
‘‘(B) EXPANSION
OF
APPLICABLE
CONDI-
TIONS.—Beginning with fiscal year 2015, the 
Secretary shall, to the extent practicable, expand 
the applicable conditions beyond the 3 conditions 
for which measures have been endorsed as de-
scribed in subparagraph (A)(ii)(I) as of the date 
of the enactment of this subsection to the addi-
tional 4 conditions that have been identified by 
the Medicare Payment Advisory Commission in 
its report to Congress in June 2007 and to other 
conditions and procedures as determined appro-
priate by the Secretary. In expanding such ap-
plicable conditions, the Secretary shall seek the 
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endorsement 
described 
in 
subparagraph 
(A)(ii)(I) but may apply such measures without 
such an endorsement in the case of a specified 
area or medical topic determined appropriate by 
the Secretary for which a feasible and practical 
measure has not been endorsed by the entity with 
a contract under section 1890(a) as long as due 
consideration is given to measures that have been 
endorsed or adopted by a consensus organization 
identified by the Secretary. 
‘‘(C) APPLICABLE
HOSPITAL.—The term 
‘applicable hospital’ means a subsection (d) hos-
pital or a hospital that is paid under section 
1814(b)(3), as the case may be. 
‘‘(D) APPLICABLE PERIOD.—The term ‘ap-
plicable period’ means, with respect to a fiscal 
year, such period as the Secretary shall specify. 
‘‘(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 
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 ap-
plicable condition for which there is an endorsed 
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measure described in subparagraph (A)(ii)(I), 
such time period (such as 30 days) shall be con-
sistent with the time period specified for such 
measure. 
‘‘(6) REPORTING HOSPITAL SPECIFIC INFORMA-
TION.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
make information available to the public regard-
ing readmission rates of each subsection (d) hos-
pital under the program. 
‘‘(B) OPPORTUNITY TO REVIEW AND SUBMIT 
CORRECTIONS.—The Secretary shall ensure that 
a subsection (d) hospital has the opportunity to 
review, and submit corrections for, the informa-
tion to be made public with respect to the hos-
pital under subparagraph (A) prior to such in-
formation being made public. 
‘‘(C) WEBSITE.—Such information shall be 
posted on the Hospital Compare Internet website 
in an easily understandable format. 
‘‘(7) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of the following: 
‘‘(A) The determination of base operating 
DRG payment amounts. 
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‘‘(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). 
‘‘(8) READMISSION RATES FOR ALL PATIENTS.— 
‘‘(A) CALCULATION OF READMISSION.—The 
Secretary shall calculate readmission rates for 
all patients (as defined in subparagraph (D)) for 
a specified hospital (as defined in subparagraph 
(D)(ii)) for an applicable condition (as defined 
in paragraph (5)(B)) and other conditions 
deemed appropriate by the Secretary for an ap-
plicable period (as defined in paragraph (5)(D)) 
in the same manner as used to calculate such re-
admission rates for hospitals with respect to this 
title and posted on the CMS Hospital Compare 
website. 
‘‘(B) POSTING OF HOSPITAL SPECIFIC ALL 
PATIENT
READMISSION
RATES.—The Secretary 
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shall make information on all patient readmis-
sion rates calculated under subparagraph (A) 
available on the CMS Hospital Compare website 
in a form and manner determined appropriate 
by the Secretary. The Secretary may also make 
other information determined appropriate by the 
Secretary available on such website. 
‘‘(C) HOSPITAL
SUBMISSION
OF
ALL
PA-
TIENT DATA.— 
‘‘(i) Except as provided for in clause 
(ii), each specified hospital (as defined in 
subparagraph (D)(ii)) shall submit to the 
Secretary, in a form, manner and time 
specified by the Secretary, data and infor-
mation determined necessary by the Sec-
retary for the Secretary to calculate the all 
patient readmission rates described in sub-
paragraph (A). 
‘‘(ii) Instead of a specified hospital 
submitting to the Secretary the data and 
information described in clause (i), such 
data and information may be submitted to 
the Secretary, on behalf of such a specified 
hospital, by a state or an entity determined 
appropriate by the Secretary. 
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‘‘(D) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) The term ‘all patients’ means pa-
tients who are treated on an inpatient basis 
and discharged from a specified hospital (as 
defined in clause (ii)). 
‘‘(ii) The term ‘specified hospital’ 
means a subsection (d) hospital, hospitals 
described in clauses (i) through (v) of sub-
section (d)(1)(B) and, as determined fea-
sible and appropriate by the Secretary, 
other hospitals not otherwise described in 
this subparagraph.’’. 
(b) QUALITY IMPROVEMENT.—Part S of title III of the 
Public Health Service Act, as amended by section 3015, is 
further amended by adding at the end the following: 
‘‘SEC. 399KK. QUALITY IMPROVEMENT PROGRAM FOR HOS-
PITALS WITH A HIGH SEVERITY ADJUSTED 
READMISSION RATE. 
‘‘(a) ESTABLISHMENT.— 
‘‘(1) IN GENERAL.—Not later than 2 years after 
the date of enactment of this section, the Secretary 
shall make available a program for eligible hospitals 
to improve their readmission rates through the use of 
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patient safety organizations (as defined in section 
921(4)). 
‘‘(2) ELIGIBLE
HOSPITAL
DEFINED.—In this 
subsection, the term ‘eligible hospital’ means a hos-
pital that the Secretary determines has a high rate of 
risk adjusted readmissions for the conditions described 
in section 1886(q)(8)(A) of the Social Security Act 
and has not taken appropriate steps to reduce such 
readmissions and improve patient safety as evidenced 
through historically high rates of readmissions, as de-
termined by the Secretary. 
‘‘(3) RISK
ADJUSTMENT.—The Secretary shall 
utilize appropriate risk adjustment measures to deter-
mine eligible hospitals. 
‘‘(b) REPORT TO THE SECRETARY.—As determined ap-
propriate by the Secretary, eligible hospitals and patient 
safety organizations working with those hospitals shall re-
port to the Secretary on the processes employed by the hos-
pital to improve readmission rates and the impact of such 
processes on readmission rates.’’. 
SEC. 3026. COMMUNITY-BASED CARE TRANSITIONS PRO-
GRAM. 
(a) IN GENERAL.—The Secretary shall establish a 
Community-Based Care Transitions Program under which 
the Secretary provides funding to eligible entities that fur-
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nish improved care transition services to high-risk Medicare 
beneficiaries. 
(b) DEFINITIONS.—In this section: 
(1) ELIGIBLE ENTITY.—The term ‘‘eligible enti-
ty’’ means the following: 
(A) A subsection (d) hospital (as defined in 
section 1886(d)(1)(B) of the Social Security Act 
(42 U.S.C. 1395ww(d)(1)(B))) identified by the 
Secretary as having a high readmission rate, 
such as under section 1886(q) of the Social Secu-
rity Act, as added by section 3025. 
(B) An appropriate community-based orga-
nization that provides care transition services 
under this section across a continuum of care 
through arrangements with subsection (d) hos-
pitals (as so defined) to furnish the services de-
scribed in subsection (c)(2)(B)(i) and whose gov-
erning body includes sufficient representation of 
multiple health care stakeholders (including con-
sumers). 
(2) HIGH-RISK
MEDICARE
BENEFICIARY.—The 
term ‘‘high-risk Medicare beneficiary’’ means a Medi-
care beneficiary who has attained a minimum hier-
archical condition category score, as determined by 
the Secretary, based on a diagnosis of multiple chron-
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ic conditions or other risk factors associated with a 
hospital readmission or substandard transition into 
post-hospitalization care, which may include 1 or 
more of the following: 
(A) Cognitive impairment. 
(B) Depression. 
(C) A history of multiple readmissions. 
(D) Any other chronic disease or risk factor 
as determined by the Secretary. 
(3) MEDICARE BENEFICIARY.—The term ‘‘Medi-
care beneficiary’’ means an individual who is entitled 
to benefits under part A of title XVIII of the Social 
Security Act (42 U.S.C. 1395 et seq.) and enrolled 
under part B of such title, but not enrolled under 
part C of such title. 
(4) PROGRAM.—The term ‘‘program’’ means the 
program conducted under this section. 
(5) READMISSION.—The term ‘‘readmission’’ has 
the meaning given such term in section 1886(q)(5)(E) 
of the Social Security Act, as added by section 3025. 
(6) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(c) REQUIREMENTS.— 
(1) DURATION.— 
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(A) IN
GENERAL.—The program shall be 
conducted for a 5-year period, beginning Janu-
ary 1, 2011. 
(B) EXPANSION.—The Secretary may ex-
pand the duration and the scope of the program, 
to the extent determined appropriate by the Sec-
retary, if the Secretary determines (and the Chief 
Actuary of the Centers for Medicare & Medicaid 
Services, with respect to spending under this 
title, certifies) that such expansion would reduce 
spending under this title without reducing qual-
ity. 
(2) APPLICATION; PARTICIPATION.— 
(A) IN GENERAL.— 
(i) APPLICATION.—An eligible entity 
seeking to participate in the program shall 
submit an application to the Secretary at 
such time, in such manner, and containing 
such information as the Secretary may re-
quire. 
(ii) PARTNERSHIP.—If an eligible enti-
ty is a hospital, such hospital shall enter 
into a partnership with a community-based 
organization to participate in the program. 
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(B) INTERVENTION PROPOSAL.—Subject to 
subparagraph (C), an application submitted 
under subparagraph (A)(i) shall include a de-
tailed proposal for at least 1 care transition 
intervention, which may include the following: 
(i) Initiating care transition services 
for a high-risk Medicare beneficiary not 
later than 24 hours prior to the discharge of 
the beneficiary from the eligible entity. 
(ii) Arranging timely post-discharge 
follow-up services to the high-risk Medicare 
beneficiary to provide the beneficiary (and, 
as appropriate, the primary caregiver of the 
beneficiary) with information regarding re-
sponding to symptoms that may indicate 
additional health problems or a deterio-
rating condition. 
(iii) Providing the high-risk Medicare 
beneficiary (and, as appropriate, the pri-
mary caregiver of the beneficiary) with as-
sistance to ensure productive and timely 
interactions between patients and post-acute 
and outpatient providers. 
(iv) Assessing and actively engaging 
with a high-risk Medicare beneficiary (and, 
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as appropriate, the primary caregiver of the 
beneficiary) through the provision of self- 
management support and relevant informa-
tion that is specific to the beneficiary’s con-
dition. 
(v) Conducting comprehensive medica-
tion review and management (including, if 
appropriate, counseling and self-manage-
ment support). 
(C) LIMITATION.—A care transition inter-
vention proposed under subparagraph (B) may 
not include payment for services required under 
the discharge planning process described in sec-
tion 1861(ee) of the Social Security Act (42 
U.S.C. 1395x(ee)). 
(3) SELECTION.—In selecting eligible entities to 
participate in the program, the Secretary shall give 
priority to eligible entities that— 
(A) participate in a program administered 
by the Administration on Aging to provide con-
current care transitions interventions with mul-
tiple hospitals and practitioners; or 
(B) provide services to medically under-
served populations, small communities, and 
rural areas. 
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(d) IMPLEMENTATION.—Notwithstanding any other 
provision of law, the Secretary may implement the provi-
sions of this section by program instruction or otherwise. 
(e) WAIVER AUTHORITY.—The Secretary may waive 
such requirements of titles XI and XVIII of the Social Secu-
rity Act as may be necessary to carry out the program. 
(f) FUNDING.—For purposes of carrying out this sec-
tion, the Secretary of Health and Human Services shall 
provide for the transfer, from the Federal Hospital Insur-
ance Trust Fund under section 1817 of the Social Security 
Act (42 U.S.C. 1395i) and the Federal Supplementary Med-
ical Insurance Trust Fund under section 1841 of such Act 
(42 U.S.C. 1395t), in such proportion as the Secretary de-
termines appropriate, of $500,000,000, to the Centers for 
Medicare & Medicaid Services Program Management Ac-
count for the period of fiscal years 2011 through 2015. 
Amounts transferred under the preceding sentence shall re-
main available until expended. 
SEC. 3027. EXTENSION OF GAINSHARING DEMONSTRATION. 
(a) IN GENERAL.—Subsection (d)(3) of section 5007 
of the Deficit Reduction Act of 2005 (Public Law 109–171) 
is amended by inserting ‘‘(or September 30, 2011, in the 
case of a demonstration project in operation as of October 
1, 2008)’’ after ‘‘December 31, 2009’’. 
(b) FUNDING.— 
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(1) IN GENERAL.—Subsection (f)(1) of such sec-
tion is amended by inserting ‘‘and for fiscal year 
2010, $1,600,000,’’ after ‘‘$6,000,000,’’. 
(2) AVAILABILITY.—Subsection (f)(2) of such sec-
tion is amended by striking ‘‘2010’’ and inserting 
‘‘2014 or until expended’’. 
(c) REPORTS.— 
(1) QUALITY IMPROVEMENT AND SAVINGS.—Sub-
section (e)(3) of such section is amended by striking 
‘‘December 1, 2008’’ and inserting ‘‘March 31, 2011’’. 
(2) FINAL REPORT.—Subsection (e)(4) of such 
section is amended by striking ‘‘May 1, 2010’’ and 
inserting ‘‘March 31, 2013’’. 
Subtitle B—Improving Medicare for 
Patients and Providers 
PART I—ENSURING BENEFICIARY ACCESS TO 
PHYSICIAN CARE AND OTHER SERVICES 
SEC. 3101. INCREASE IN THE PHYSICIAN PAYMENT UPDATE. 
Section 1848(d) of the Social Security Act (42 U.S.C. 
1395w–4(d)) is amended by adding at the end the following 
new paragraph: 
‘‘(10) UPDATE FOR 2010.— 
‘‘(A) IN GENERAL.—Subject to paragraphs 
(7)(B), (8)(B), and (9)(B), in lieu of the update 
to the single conversion factor established in 
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paragraph (1)(C) that would otherwise apply for 
2010, the update to the single conversion factor 
shall be 0.5 percent. 
‘‘(B) NO EFFECT ON COMPUTATION OF CON-
VERSION
FACTOR
FOR
2011
AND
SUBSEQUENT 
YEARS.—The conversion factor under this sub-
section shall be computed under paragraph 
(1)(A) for 2011 and subsequent years as if sub-
paragraph (A) had never applied.’’. 
SEC. 3102. EXTENSION OF THE WORK GEOGRAPHIC INDEX 
FLOOR AND REVISIONS TO THE PRACTICE EX-
PENSE GEOGRAPHIC ADJUSTMENT UNDER 
THE MEDICARE PHYSICIAN FEE SCHEDULE. 
(a) EXTENSION
OF WORK GPCI FLOOR.—Section 
1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w– 
4(e)(1)(E)) is amended by striking ‘‘before January 1, 
2010’’ and inserting ‘‘before January 1, 2011’’. 
(b) PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT 
FOR 2010 AND SUBSEQUENT YEARS.—Section 1848(e)(1) of 
the Social Security Act (42 U.S.C. 1395w4(e)(1)) is amend-
ed— 
(1) in subparagraph (A), by striking ‘‘and (G)’’ 
and inserting ‘‘(G), and (H)’’; and 
(2) by adding at the end the following new sub-
paragraph: 
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‘‘(H) PRACTICE EXPENSE GEOGRAPHIC AD-
JUSTMENT FOR 2010 AND SUBSEQUENT YEARS.— 
‘‘(i) FOR 2010.—Subject to clause (iii), 
for services furnished during 2010, the em-
ployee wage and rent portions of the prac-
tice expense geographic index described in 
subparagraph (A)(i) shall reflect 3⁄4 of the 
difference between the relative costs of em-
ployee wages and rents in each of the dif-
ferent fee schedule areas and the national 
average of such employee wages and rents. 
‘‘(ii) FOR 2011.—Subject to clause (iii), 
for services furnished during 2011, the em-
ployee wage and rent portions of the prac-
tice expense geographic index described in 
subparagraph (A)(i) shall reflect 1⁄2 of the 
difference between the relative costs of em-
ployee wages and rents in each of the dif-
ferent fee schedule areas and the national 
average of such employee wages and rents. 
‘‘(iii) HOLD HARMLESS.—The practice 
expense portion of the geographic adjust-
ment factor applied in a fee schedule area 
for services furnished in 2010 or 2011 shall 
not, as a result of the application of clause 
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(i) or (ii), be reduced below the practice ex-
pense portion of the geographic adjustment 
factor under subparagraph (A)(i) (as cal-
culated prior to the application of such 
clause (i) or (ii), respectively) for such area 
for such year. 
‘‘(iv) ANALYSIS.—The Secretary shall 
analyze current methods of establishing 
practice expense geographic adjustments 
under subparagraph (A)(i) and evaluate 
data that fairly and reliably establishes dis-
tinctions in the costs of operating a medical 
practice in the different fee schedule areas. 
Such analysis shall include an evaluation of 
the following: 
‘‘(I) The feasibility of using ac-
tual data or reliable survey data devel-
oped by medical organizations on the 
costs of operating a medical practice, 
including office rents and non-physi-
cian staff wages, in different fee sched-
ule areas. 
‘‘(II) The office expense portion of 
the practice expense geographic adjust-
ment described in subparagraph (A)(i), 
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including the extent to which types of 
office expenses are determined in local 
markets instead of national markets. 
‘‘(III) The weights assigned to 
each of the categories within the prac-
tice expense geographic adjustment de-
scribed in subparagraph (A)(i). 
‘‘(v) REVISION FOR 2012 AND SUBSE-
QUENT YEARS.—As a result of the analysis 
described in clause (iv), the Secretary shall, 
not later than January 1, 2012, make ap-
propriate adjustments to the practice ex-
pense geographic adjustment described in 
subparagraph (A)(i) to ensure accurate geo-
graphic adjustments across fee schedule 
areas, including— 
‘‘(I) basing the office rents compo-
nent and its weight on office expenses 
that vary among fee schedule areas; 
and 
‘‘(II) considering a representative 
range of professional and non-profes-
sional personnel employed in a med-
ical office based on the use of the 
American Community Survey data or 
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other reliable data for wage adjust-
ments. 
Such adjustments shall be made without re-
gard to adjustments made pursuant to 
clauses (i) and (ii) and shall be made in a 
budget neutral manner.’’. 
SEC. 3103. EXTENSION OF EXCEPTIONS PROCESS FOR 
MEDICARE THERAPY CAPS. 
Section 1833(g)(5) of the Social Security Act (42 
U.S.C. 1395l(g)(5)) is amended by striking ‘‘December 31, 
2009’’ and inserting ‘‘December 31, 2010’’. 
SEC. 3104. EXTENSION OF PAYMENT FOR TECHNICAL COM-
PONENT OF CERTAIN PHYSICIAN PATHOLOGY 
SERVICES. 
Section 542(c) of the Medicare, Medicaid, and SCHIP 
Benefits Improvement and Protection Act of 2000 (as en-
acted into law by section 1(a)(6) of Public Law 106–554), 
as amended by section 732 of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (42 
U.S.C. 1395w–4 note), section 104 of division B of the Tax 
Relief and Health Care Act of 2006 (42 U.S.C. 1395w–4 
note), section 104 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (Public Law 110–173), and section 
136 of the Medicare Improvements for Patients and Pro-
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viders Act of 2008 (Public Law 110–275), is amended by 
striking ‘‘and 2009’’ and inserting ‘‘2009, and 2010’’. 
SEC. 3105. EXTENSION OF AMBULANCE ADD-ONS. 
(a) GROUND AMBULANCE.—Section 1834(l)(13)(A) of 
the Social Security Act (42 U.S.C. 1395m(l)(13)(A)) is 
amended— 
(1) in the matter preceding clause (i)— 
(A) by striking ‘‘2007, and for’’ and insert-
ing ‘‘2007, for’’; and 
(B) by striking ‘‘2010’’ and inserting 
‘‘2010, and for such services furnished on or 
after April 1, 2010, and before January 1, 
2011,’’; and 
(2) in each of clauses (i) and (ii), by inserting 
‘‘, and on or after April 1, 2010, and before January 
1, 2011’’ after ‘‘January 1, 2010’’ each place it ap-
pears. 
(b) AIR AMBULANCE.—Section 146(b)(1) of the Medi-
care Improvements for Patients and Providers Act of 2008 
(Public Law 110–275) is amended by striking ‘‘December 
31, 2009’’ and inserting ‘‘December 31, 2009, and during 
the period beginning on April 1, 2010, and ending on Janu-
ary 1, 2011’’. 
(c) 
SUPER
RURAL
AMBULANCE.—Section 
1834(l)(12)(A) of the Social Security Act (42 U.S.C. 
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1395m(l)(12)(A)) is amended by striking ‘‘2010’’ and in-
serting ‘‘2010, and on or after April 1, 2010, and before 
January 1, 2011’’. 
SEC. 3106. EXTENSION OF CERTAIN PAYMENT RULES FOR 
LONG-TERM CARE HOSPITAL SERVICES AND 
OF MORATORIUM ON THE ESTABLISHMENT 
OF CERTAIN HOSPITALS AND FACILITIES. 
(a) EXTENSION OF CERTAIN PAYMENT RULES.—Sec-
tion 114(c) of the Medicare, Medicaid, and SCHIP Exten-
sion Act of 2007 (42 U.S.C. 1395ww note), as amended by 
section 4302(a) of the American Recovery and Reinvestment 
Act (Public Law 111–5), is further amended by striking 
‘‘3-year period’’ each place it appears and inserting ‘‘4-year 
period’’. 
(b) EXTENSION OF MORATORIUM.—Section 114(d)(1) 
of such Act (42 U.S.C. 1395ww note), in the matter pre-
ceding subparagraph (A), is amended by striking ‘‘3-year 
period’’ and inserting ‘‘4-year period’’. 
SEC. 3107. EXTENSION OF PHYSICIAN FEE SCHEDULE MEN-
TAL HEALTH ADD-ON. 
Section 138(a)(1) of the Medicare Improvements for 
Patients and Providers Act of 2008 (Public Law 110–275) 
is amended by striking ‘‘December 31, 2009’’ and inserting 
‘‘December 31, 2010’’. 
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SEC. 3108. PERMITTING PHYSICIAN ASSISTANTS TO ORDER 
POST-HOSPITAL EXTENDED CARE SERVICES. 
(a) ORDERING
POST-HOSPITAL
EXTENDED
CARE 
SERVICES.— 
(1) IN GENERAL.—Section 1814(a)(2) of the So-
cial Security Act (42 U.S.C. 1395f(a)(2)), in the mat-
ter preceding subparagraph (A), is amended by strik-
ing ‘‘or clinical nurse specialist’’ and inserting ‘‘, a 
clinical nurse specialist, or a physician assistant (as 
those terms are defined in section 1861(aa)(5))’’ after 
‘‘nurse practitioner’’. 
(2) CONFORMING AMENDMENT.—Section 1814(a) 
of the Social Security Act (42 U.S.C. 1395f(a)) is 
amended, in the second sentence, by striking ‘‘or clin-
ical nurse specialist’’ and inserting ‘‘clinical nurse 
specialist, or physician assistant’’ after ‘‘nurse practi-
tioner,’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to items and services furnished on or 
after January 1, 2011. 
SEC. 3109. EXEMPTION OF CERTAIN PHARMACIES FROM AC-
CREDITATION REQUIREMENTS. 
(a) IN GENERAL.—Section 1834(a)(20) of the Social 
Security Act (42 U.S.C. 1395m(a)(20)), as added by section 
154(b)(1)(A) of the Medicare Improvements for Patients 
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and Providers Act of 2008 (Public Law 100–275), is 
amended— 
(1) in subparagraph (F)(i)— 
(A) by inserting ‘‘and subparagraph (G)’’ 
after ‘‘clause (ii)’’; and 
(B) by inserting ‘‘, except that the Secretary 
shall not require a pharmacy to have submitted 
to the Secretary such evidence of accreditation 
prior to January 1, 2011’’ before the semicolon 
at the end; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(G) APPLICATION OF ACCREDITATION RE-
QUIREMENT TO CERTAIN PHARMACIES.— 
‘‘(i) IN
GENERAL.—With respect to 
items and services furnished on or after 
January 1, 2011, in implementing quality 
standards under this paragraph— 
‘‘(I) subject to subclause (II), in 
applying such standards and the ac-
creditation requirement of subpara-
graph (F)(i) with respect to phar-
macies described in clause (ii) fur-
nishing such items and services, such 
standards and accreditation require-
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ment shall not apply to such phar-
macies; and 
‘‘(II) the Secretary may apply to 
such pharmacies an alternative accred-
itation requirement established by the 
Secretary if the Secretary determines 
such alternative accreditation require-
ment is more appropriate for such 
pharmacies. 
‘‘(ii) 
PHARMACIES
DESCRIBED.—A 
pharmacy described in this clause is a 
pharmacy that meets each of the following 
criteria: 
‘‘(I) The total billings by the 
pharmacy for such items and services 
under this title are less than 5 percent 
of total pharmacy sales, as determined 
based on the average total pharmacy 
sales for the previous 3 calendar years, 
3 fiscal years, or other yearly period 
specified by the Secretary. 
‘‘(II) The pharmacy has been en-
rolled under section 1866(j) as a sup-
plier of durable medical equipment, 
prosthetics, orthotics, and supplies, has 
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been issued (which may include the re-
newal of) a provider number for at 
least 5 years, and for which a final ad-
verse action (as defined in section 
424.57(a) of title 42, Code of Federal 
Regulations) has not been imposed in 
the past 5 years. 
‘‘(III) The pharmacy submits to 
the Secretary an attestation, in a form 
and manner, and at a time, specified 
by the Secretary, that the pharmacy 
meets the criteria described in sub-
clauses (I) and (II). Such attestation 
shall be subject to section 1001 of title 
18, United States Code. 
‘‘(IV) The pharmacy agrees to 
submit materials as requested by the 
Secretary, or during the course of an 
audit conducted on a random sample 
of pharmacies selected annually, to 
verify that the pharmacy meets the cri-
teria described in subclauses (I) and 
(II). Materials submitted under the 
preceding sentence shall include a cer-
tification by an accountant on behalf 
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of the pharmacy or the submission of 
tax returns filed by the pharmacy dur-
ing the relevant periods, as requested 
by the Secretary.’’. 
(b) ADMINISTRATION.—Notwithstanding any other 
provision of law, the Secretary may implement the amend-
ments made by subsection (a) by program instruction or 
otherwise. 
(c) RULE OF CONSTRUCTION.—Nothing in the provi-
sions of or amendments made by this section shall be con-
strued as affecting the application of an accreditation re-
quirement for pharmacies to qualify for bidding in a com-
petitive acquisition area under section 1847 of the Social 
Security Act (42 U.S.C. 1395w–3). 
SEC. 3110. PART B SPECIAL ENROLLMENT PERIOD FOR DIS-
ABLED TRICARE BENEFICIARIES. 
(a) IN GENERAL.— 
(1) IN GENERAL.—Section 1837 of the Social Se-
curity Act (42 U.S.C. 1395p) is amended by adding 
at the end the following new subsection: 
‘‘(l)(1) In the case of any individual who is a covered 
beneficiary (as defined in section 1072(5) of title 10, United 
States Code) at the time the individual is entitled to part 
A under section 226(b) or section 226A and who is eligible 
to enroll but who has elected not to enroll (or to be deemed 
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enrolled) during the individual’s initial enrollment period, 
there shall be a special enrollment period described in para-
graph (2). 
‘‘(2) The special enrollment period described in this 
paragraph, with respect to an individual, is the 12-month 
period beginning on the day after the last day of the initial 
enrollment period of the individual or, if later, the 12- 
month period beginning with the month the individual is 
notified of enrollment under this section. 
‘‘(3) In the case of an individual who enrolls during 
the special enrollment period provided under paragraph 
(1), the coverage period under this part shall begin on the 
first day of the month in which the individual enrolls, or, 
at the option of the individual, the first month after the 
end of the individual’s initial enrollment period. 
‘‘(4) An individual may only enroll during the special 
enrollment period provided under paragraph (1) one time 
during the individual’s lifetime. 
‘‘(5) The Secretary shall ensure that the materials re-
lating to coverage under this part that are provided to an 
individual described in paragraph (1) prior to the individ-
ual’s initial enrollment period contain information con-
cerning the impact of not enrolling under this part, includ-
ing the impact on health care benefits under the TRICARE 
program under chapter 55 of title 10, United States Code. 
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‘‘(6) The Secretary of Defense shall collaborate with 
the Secretary of Health and Human Services and the Com-
missioner of Social Security to provide for the accurate 
identification of individuals described in paragraph (1). 
The Secretary of Defense shall provide such individuals 
with notification with respect to this subsection. The Sec-
retary of Defense shall collaborate with the Secretary of 
Health and Human Services and the Commissioner of So-
cial Security to ensure appropriate follow up pursuant to 
any notification provided under the preceding sentence.’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall apply to elections made with re-
spect to initial enrollment periods that end after the 
date of the enactment of this Act. 
(b) WAIVER
OF INCREASE
OF PREMIUM.—Section 
1839(b) of the Social Security Act (42 U.S.C. 1395r(b)) is 
amended by striking ‘‘section 1837(i)(4)’’ and inserting 
‘‘subsection (i)(4) or (l) of section 1837’’. 
SEC. 3111. PAYMENT FOR BONE DENSITY TESTS. 
(a) PAYMENT.— 
(1) IN GENERAL.—Section 1848 of the Social Se-
curity Act (42 U.S.C. 1395w–4) is amended— 
(A) in subsection (b)— 
(i) in paragraph (4)(B), by inserting 
‘‘, and for 2010 and 2011, dual-energy x- 
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ray absorptiometry services (as described in 
paragraph (6))’’ before the period at the 
end; and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(6) TREATMENT OF BONE MASS SCANS.—For 
dual-energy x-ray absorptiometry services (identified 
in 2006 by HCPCS codes 76075 and 76077 (and any 
succeeding codes)) furnished during 2010 and 2011, 
instead of the payment amount that would otherwise 
be determined under this section for such years, the 
payment amount shall be equal to 70 percent of the 
product of— 
‘‘(A) the relative value for the service (as de-
termined in subsection (c)(2)) for 2006; 
‘‘(B) the conversion factor (established 
under subsection (d)) for 2006; and 
‘‘(C) the geographic adjustment factor (es-
tablished under subsection (e)(2)) for the service 
for the fee schedule area for 2010 and 2011, re-
spectively.’’; and 
(B) in subsection (c)(2)(B)(iv)— 
(i) in subclause (II), by striking ‘‘and’’ 
at the end; 
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(ii) in subclause (III), by striking the 
period at the end and inserting ‘‘; and’’; 
and 
(iii) by adding at the end the following 
new subclause: 
‘‘(IV) subsection (b)(6) shall not 
be taken into account in applying 
clause (ii)(II) for 2010 or 2011.’’. 
(2) 
IMPLEMENTATION.—Notwithstanding 
any 
other provision of law, the Secretary may implement 
the amendments made by paragraph (1) by program 
instruction or otherwise. 
(b) STUDY AND REPORT BY THE INSTITUTE OF MEDI-
CINE.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services is authorized to enter into an agree-
ment with the Institute of Medicine of the National 
Academies to conduct a study on the ramifications of 
Medicare payment reductions for dual-energy x-ray 
absorptiometry (as described in section 1848(b)(6) of 
the Social Security Act, as added by subsection 
(a)(1)) during 2007, 2008, and 2009 on beneficiary 
access to bone mass density tests. 
(2) REPORT.—An agreement entered into under 
paragraph (1) shall provide for the Institute of Medi-
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cine to submit to the Secretary and to Congress a re-
port containing the results of the study conducted 
under such paragraph. 
SEC. 3112. REVISION TO THE MEDICARE IMPROVEMENT 
FUND. 
Section 1898(b)(1)(A) of the Social Security Act (42 
U.S.C. 1395iii) is amended by striking ‘‘$22,290,000,000’’ 
and inserting ‘‘$0’’. 
SEC. 3113. TREATMENT OF CERTAIN COMPLEX DIAGNOSTIC 
LABORATORY TESTS. 
(a) DEMONSTRATION PROJECT.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall conduct a demonstration project 
under part B title XVIII of the Social Security Act 
under which separate payments are made under such 
part for complex diagnostic laboratory tests provided 
to individuals under such part. Under the demonstra-
tion project, the Secretary shall establish appropriate 
payment rates for such tests. 
(2) COVERED COMPLEX DIAGNOSTIC LABORATORY 
TEST DEFINED.—In this section, the term ‘‘complex 
diagnostic laboratory test’’ means a diagnostic lab-
oratory test— 
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(A) that is an analysis of gene protein ex-
pression, topographic genotyping, or a cancer 
chemotherapy sensitivity assay; 
(B) that is determined by the Secretary to 
be a laboratory test for which there is not an al-
ternative test having equivalent performance 
characteristics; 
(C) which is billed using a Health Care 
Procedure Coding System (HCPCS) code other 
than a not otherwise classified code under such 
Coding System; 
(D) which is approved or cleared by the 
Food and Drug Administration or is covered 
under title XVIII of the Social Security Act; and 
(E) is described in section 1861(s)(3) of the 
Social Security Act (42 U.S.C. 1395x(s)(3)). 
(3) SEPARATE PAYMENT DEFINED.—In this sec-
tion, the term ‘‘separate payment’’ means direct pay-
ment to a laboratory (including a hospital-based or 
independent laboratory) that performs a complex di-
agnostic laboratory test with respect to a specimen 
collected from an individual during a period in which 
the individual is a patient of a hospital if the test is 
performed after such period of hospitalization and if 
separate payment would not otherwise be made under 
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title XVIII of the Social Security Act by reason of 
sections 1862(a)(14) and 1866(a)(1)(H)(i) of the such 
Act 
(42 
U.S.C. 
1395y(a)(14); 
U.S.C. 
1395cc(a)(1)(H)(i)). 
(b) DURATION.—Subject to subsection (c)(2), the Sec-
retary shall conduct the demonstration project under this 
section for the 2-year period beginning on July 1, 2011. 
(c) PAYMENTS AND LIMITATION.—Payments under the 
demonstration project under this section shall— 
(1) be made from the Federal Supplemental Med-
ical Insurance Trust Fund under section 1841 of the 
Social Security Act (42 U.S.C. 1395t); and 
(2) may not exceed $100,000,000. 
(d) REPORT.—Not later than 2 years after the comple-
tion of the demonstration project under this section, the Sec-
retary shall submit to Congress a report on the project. Such 
report shall include— 
(1) an assessment of the impact of the dem-
onstration project on access to care, quality of care, 
health outcomes, and expenditures under title XVIII 
of the Social Security Act (including any savings 
under such title); and 
(2) such recommendations as the Secretary deter-
mines appropriate. 
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(e) IMPLEMENTATION FUNDING.—For purposes of ad-
ministering this section (including preparing and submit-
ting the report under subsection (d)), the Secretary shall 
provide for the transfer, from the Federal Supplemental 
Medical Insurance Trust Fund under section 1841 of the 
Social Security Act (42 U.S.C. 1395t), to the Centers for 
Medicare & Medicaid Services Program Management Ac-
count, of $5,000,000. Amounts transferred under the pre-
ceding sentence shall remain available until expended. 
SEC. 3114. IMPROVED ACCESS FOR CERTIFIED NURSE-MID-
WIFE SERVICES. 
Section 1833(a)(1)(K) of the Social Security Act (42 
U.S.C. 1395l(a)(1)(K)) is amended by inserting ‘‘(or 100 
percent for services furnished on or after January 1, 2011)’’ 
after ‘‘1992, 65 percent’’. 
PART II—RURAL PROTECTIONS 
SEC. 3121. EXTENSION OF OUTPATIENT HOLD HARMLESS 
PROVISION. 
(a) IN GENERAL.—Section 1833(t)(7)(D)(i) of the So-
cial Security Act (42 U.S.C. 1395l(t)(7)(D)(i)) is amend-
ed— 
(1) in subclause (II)— 
(A) in the first sentence, by striking 
‘‘2010’’and inserting ‘‘2011’’; and 
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(B) in the second sentence, by striking ‘‘or 
2009’’ and inserting ‘‘, 2009, or 2010’’; and 
(2) in subclause (III), by striking ‘‘January 1, 
2010’’ and inserting ‘‘January 1, 2011’’. 
(b) PERMITTING ALL SOLE COMMUNITY HOSPITALS 
TO
BE
ELIGIBLE
FOR
HOLD
HARMLESS.—Section 
1833(t)(7)(D)(i)(III) of the Social Security Act (42 U.S.C. 
1395l(t)(7)(D)(i)(III)) is amended by adding at the end the 
following new sentence: ‘‘In the case of covered OPD services 
furnished on or after January 1, 2010, and before January 
1, 2011, the preceding sentence shall be applied without re-
gard to the 100-bed limitation.’’. 
SEC. 3122. EXTENSION OF MEDICARE REASONABLE COSTS 
PAYMENTS FOR CERTAIN CLINICAL DIAG-
NOSTIC LABORATORY TESTS FURNISHED TO 
HOSPITAL 
PATIENTS 
IN 
CERTAIN 
RURAL 
AREAS. 
Section 416(b) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (42 U.S.C. 
1395l–4), as amended by section 105 of division B of the 
Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395l 
note) and section 107 of the Medicare, Medicaid, and 
SCHIP Extension Act of 2007 (42 U.S.C. 1395l note), is 
amended by inserting ‘‘or during the 1-year period begin-
ning on July 1, 2010’’ before the period at the end. 
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SEC. 3123. EXTENSION OF THE RURAL COMMUNITY HOS-
PITAL DEMONSTRATION PROGRAM. 
(a) ONE-YEAR EXTENSION.—Section 410A of the Medi-
care Prescription Drug, Improvement, and Modernization 
Act of 2003 (Public Law 108–173; 117 Stat. 2272) is 
amended by adding at the end the following new subsection: 
‘‘(g) ONE-YEAR EXTENSION OF DEMONSTRATION PRO-
GRAM.— 
‘‘(1) IN
GENERAL.—Subject to the succeeding 
provisions of this subsection, the Secretary shall con-
duct the demonstration program under this section for 
an additional 1-year period (in this section referred 
to as the ‘1-year extension period’) that begins on the 
date immediately following the last day of the initial 
5-year period under subsection (a)(5). 
‘‘(2) EXPANSION OF DEMONSTRATION STATES.— 
Notwithstanding subsection (a)(2), during the 1-year 
extension period, the Secretary shall expand the num-
ber of States with low population densities deter-
mined by the Secretary under such subsection to 20. 
In determining which States to include in such ex-
pansion, the Secretary shall use the same criteria and 
data that the Secretary used to determine the States 
under such subsection for purposes of the initial 5- 
year period. 
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‘‘(3) INCREASE IN MAXIMUM NUMBER OF HOS-
PITALS PARTICIPATING IN THE DEMONSTRATION PRO-
GRAM.—Notwithstanding subsection (a)(4), during the 
1-year extension period, not more than 30 rural com-
munity hospitals may participate in the demonstra-
tion program under this section. 
‘‘(4) NO AFFECT ON HOSPITALS IN DEMONSTRA-
TION PROGRAM ON DATE OF ENACTMENT.—In the case 
of a rural community hospital that is participating 
in the demonstration program under this section as 
of the last day of the initial 5-year period, the Sec-
retary shall provide for the continued participation of 
such rural community hospital in the demonstration 
program during the 1-year extension period unless the 
rural community hospital makes an election, in such 
form and manner as the Secretary may specify, to 
discontinue such participation.’’. 
(b) CONFORMING AMENDMENTS.—Subsection (a)(5) of 
section 410A of the Medicare Prescription Drug, Improve-
ment, and Modernization Act of 2003 (Public Law 108– 
173; 117 Stat. 2272) is amended by inserting ‘‘(in this sec-
tion referred to as the ‘initial 5-year period’) and, as pro-
vided in subsection (g), for the 1-year extension period’’ 
after ‘‘5-year period’’. 
(c) TECHNICAL AMENDMENTS.— 
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(1) Subsection (b) of section 410A of the Medi-
care Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173; 117 
Stat. 2272) is amended— 
(A) in paragraph (1)(B)(ii), by striking 
‘‘2)’’ and inserting ‘‘2))’’; and 
(B) in paragraph (2), by inserting ‘‘cost’’ 
before ‘‘reporting period’’ the first place such 
term appears in each of subparagraphs (A) and 
(B). 
(2) Subsection (f)(1) of section 410A of the Medi-
care Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (Public Law 108–173; 117 
Stat. 2272) is amended— 
(A) in subparagraph (A)(ii), by striking 
‘‘paragraph (2)’’ and inserting ‘‘subparagraph 
(B)’’; and 
(B) in subparagraph (B), by striking 
‘‘paragraph (1)(B)’’ and inserting ‘‘subpara-
graph (A)(ii)’’. 
SEC. 3124. EXTENSION OF THE MEDICARE-DEPENDENT 
HOSPITAL (MDH) PROGRAM. 
(a) EXTENSION OF PAYMENT METHODOLOGY.—Sec-
tion 1886(d)(5)(G) of the Social Security Act (42 U.S.C. 
1395ww(d)(5)(G)) is amended— 
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(1) in clause (i), by striking ‘‘October 1, 2011’’ 
and inserting ‘‘October 1, 2012’’; and 
(2) in clause (ii)(II), by striking ‘‘October 1, 
2011’’ and inserting ‘‘October 1, 2012’’. 
(b) CONFORMING AMENDMENTS.— 
(1) EXTENSION
OF
TARGET
AMOUNT.—Section 
1886(b)(3)(D) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(D)) is amended— 
(A) in the matter preceding clause (i), by 
striking ‘‘October 1, 2011’’ and inserting ‘‘Octo-
ber 1, 2012’’; and 
(B) in clause (iv), by striking ‘‘through fis-
cal year 2011’’ and inserting ‘‘through fiscal 
year 2012’’. 
(2) PERMITTING
HOSPITALS
TO
DECLINE
RE-
CLASSIFICATION.—Section 13501(e)(2) of the Omni-
bus Budget Reconciliation Act of 1993 (42 U.S.C. 
1395ww note) is amended by striking ‘‘through fiscal 
year 2011’’ and inserting ‘‘through fiscal year 2012’’. 
SEC. 3125. TEMPORARY IMPROVEMENTS TO THE MEDICARE 
INPATIENT 
HOSPITAL 
PAYMENT 
ADJUST-
MENT FOR LOW-VOLUME HOSPITALS. 
Section 1886(d)(12) of the Social Security Act (42 
U.S.C. 1395ww(d)(12)) is amended— 
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(1) in subparagraph (A), by inserting ‘‘or (D)’’ 
after ‘‘subparagraph (B)’’; 
(2) in subparagraph (B), in the matter pre-
ceding clause (i), by striking ‘‘The Secretary’’ and in-
serting ‘‘For discharges occurring in fiscal years 2005 
through 2010 and for discharges occurring in fiscal 
year 2013 and subsequent fiscal years, the Secretary’’; 
(3) in subparagraph (C)(i)— 
(A) by inserting ‘‘(or, with respect to fiscal 
years 2011 and 2012, 15 road miles)’’ after ‘‘25 
road miles’’; and 
(B) by inserting ‘‘(or, with respect to fiscal 
years 2011 and 2012, 1,500 discharges of indi-
viduals entitled to, or enrolled for, benefits under 
part A)’’ after ‘‘800 discharges’’; and 
(4) by adding at the end the following new sub-
paragraph: 
‘‘(D) TEMPORARY APPLICABLE PERCENTAGE 
INCREASE.—For discharges occurring in fiscal 
years 2011 and 2012, the Secretary shall deter-
mine an applicable percentage increase for pur-
poses of subparagraph (A) using a continuous 
linear sliding scale ranging from 25 percent for 
low-volume hospitals with 200 or fewer dis-
charges of individuals entitled to, or enrolled for, 
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benefits under part A in the fiscal year to 0 per-
cent for low-volume hospitals with greater than 
1,500 discharges of such individuals in the fiscal 
year.’’. 
SEC. 
3126. 
IMPROVEMENTS 
TO 
THE 
DEMONSTRATION 
PROJECT ON COMMUNITY HEALTH INTEGRA-
TION MODELS IN CERTAIN RURAL COUNTIES. 
(a) REMOVAL OF LIMITATION ON NUMBER OF ELIGI-
BLE COUNTIES SELECTED.—Subsection (d)(3) of section 
123 of the Medicare Improvements for Patients and Pro-
viders Act of 2008 (42 U.S.C. 1395i–4 note) is amended 
by striking ‘‘not more than 6’’. 
(b) REMOVAL OF REFERENCES TO RURAL HEALTH 
CLINIC SERVICES AND INCLUSION OF PHYSICIANS’ SERV-
ICES IN SCOPE OF DEMONSTRATION PROJECT.—Such sec-
tion 123 is amended— 
(1) in subsection (d)(4)(B)(i)(3), by striking sub-
clause (III); and 
(2) in subsection (j)— 
(A) in paragraph (8), by striking subpara-
graph (B) and inserting the following: 
‘‘(B) Physicians’ services (as defined in sec-
tion 1861(q) of the Social Security Act (42 
U.S.C. 1395x(q)).’’; 
(B) by striking paragraph (9); and 
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(C) by redesignating paragraph (10) as 
paragraph (9). 
SEC. 3127. MEDPAC STUDY ON ADEQUACY OF MEDICARE 
PAYMENTS FOR HEALTH CARE PROVIDERS 
SERVING IN RURAL AREAS. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on the adequacy of payments 
for items and services furnished by providers of services and 
suppliers in rural areas under the Medicare program under 
title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.). Such study shall include an analysis of— 
(1) any adjustments in payments to providers of 
services and suppliers that furnish items and services 
in rural areas; 
(2) access by Medicare beneficiaries to items and 
services in rural areas; 
(3) the adequacy of payments to providers of 
services and suppliers that furnish items and services 
in rural areas; and 
(4) the quality of care furnished in rural areas. 
(b) REPORT.—Not later than January 1, 2011, the 
Medicare Payment Advisory Commission shall submit to 
Congress a report containing the results of the study con-
ducted under subsection (a). Such report shall include rec-
ommendations on appropriate modifications to any adjust-
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ments in payments to providers of services and suppliers 
that furnish items and services in rural areas, together with 
recommendations for such legislation and administrative 
action as the Medicare Payment Advisory Commission de-
termines appropriate. 
SEC. 3128. TECHNICAL CORRECTION RELATED TO CRITICAL 
ACCESS HOSPITAL SERVICES. 
(a) IN GENERAL.—Subsections (g)(2)(A) and (l)(8) of 
section 1834 of the Social Security Act (42 U.S.C. 1395m) 
are each amended by inserting ‘‘101 percent of’’ before ‘‘the 
reasonable costs’’. 
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall take effect as if included in the enactment 
of section 405(a) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (Public Law 
108–173; 117 Stat. 2266). 
SEC. 3129. EXTENSION OF AND REVISIONS TO MEDICARE 
RURAL HOSPITAL FLEXIBILITY PROGRAM. 
(a) AUTHORIZATION.—Section 1820(j) of the Social 
Security Act (42 U.S.C. 1395i–4(j)) is amended— 
(1) by striking ‘‘2010, and for’’ and inserting 
‘‘2010, for’’; and 
(2) by inserting ‘‘and for making grants to all 
States under subsection (g), such sums as may be nec-
essary in each of fiscal years 2011 and 2012, to re-
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main available until expended’’ before the period at 
the end. 
(b) USE OF FUNDS.—Section 1820(g)(3) of the Social 
Security Act (42 U.S.C. 1395i–4(g)(3)) is amended— 
(1) in subparagraph (A), by inserting ‘‘and to 
assist such hospitals in participating in delivery sys-
tem reforms under the provisions of and amendments 
made by the Patient Protection and Affordable Care 
Act, such as value-based purchasing programs, ac-
countable care organizations under section 1899, the 
National pilot program on payment bundling under 
section 1866D, and other delivery system reform pro-
grams determined appropriate by the Secretary’’ be-
fore the period at the end; and 
(2) in subparagraph (E)— 
(A) by striking ‘‘, and to offset’’ and insert-
ing ‘‘, to offset’’; and 
(B) by inserting ‘‘and to participate in de-
livery system reforms under the provisions of 
and amendments made by the Patient Protection 
and Affordable Care Act, such as value-based 
purchasing programs, accountable care organiza-
tions under section 1899, the National pilot pro-
gram on payment bundling under section 
1866D, and other delivery system reform pro-
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grams determined appropriate by the Secretary’’ 
before the period at the end. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to grants made on or after January 1, 
2010. 
PART III—IMPROVING PAYMENT ACCURACY 
SEC. 3131. PAYMENT ADJUSTMENTS FOR HOME HEALTH 
CARE. 
(a) REBASING HOME HEALTH PROSPECTIVE PAYMENT 
AMOUNT.— 
(1) IN GENERAL.—Section 1895(b)(3)(A) of the 
Social Security Act (42 U.S.C. 1395fff(b)(3)(A)) is 
amended— 
(A) in clause (i)(III), by striking ‘‘For peri-
ods’’ and inserting ‘‘Subject to clause (iii), for 
periods’’; and 
(B) by adding at the end the following new 
clause: 
‘‘(iii) ADJUSTMENT FOR 2013 AND SUB-
SEQUENT YEARS.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), for 2013 and subsequent 
years, the amount (or amounts) that 
would otherwise be applicable under 
clause (i)(III) shall be adjusted by a 
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percentage determined appropriate by 
the Secretary to reflect such factors as 
changes in the number of visits in an 
episode, the mix of services in an epi-
sode, the level of intensity of services in 
an episode, the average cost of pro-
viding care per episode, and other fac-
tors that the Secretary considers to be 
relevant. In conducting the analysis 
under the preceding sentence, the Sec-
retary may consider differences be-
tween hospital-based and freestanding 
agencies, between for-profit and non-
profit agencies, and between the re-
source costs of urban and rural agen-
cies. Such adjustment shall be made be-
fore the update under subparagraph 
(B) is applied for the year. 
‘‘(II) 
TRANSITION.—The 
Sec-
retary shall provide for a 4-year phase- 
in (in equal increments) of the adjust-
ment under subclause (I), with such 
adjustment being fully implemented for 
2016. During each year of such phase- 
in, the amount of any adjustment 
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under subclause (I) for the year may 
not exceed 3.5 percent of the amount 
(or amounts) applicable under clause 
(i)(III) as of the date of enactment of 
the Patient Protection and Affordable 
Care Act.’’. 
(2) MEDPAC STUDY AND REPORT.— 
(A) STUDY.—The Medicare Payment Advi-
sory Commission shall conduct a study on the 
implementation of the amendments made by 
paragraph (1). Such study shall include an 
analysis of the impact of such amendments on— 
(i) access to care; 
(ii) quality outcomes; 
(iii) the number of home health agen-
cies; and 
(iv) rural agencies, urban agencies, 
for-profit agencies, and nonprofit agencies. 
(B) REPORT.—Not later than January 1, 
2015, the Medicare Payment Advisory Commis-
sion shall submit to Congress a report on the 
study conducted under subparagraph (A), to-
gether with recommendations for such legislation 
and administrative action as the Commission 
determines appropriate. 
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(b) 
PROGRAM-SPECIFIC
OUTLIER
CAP.—Section 
1895(b) of the Social Security Act (42 U.S.C. 1395fff(b)) 
is amended— 
(1) in paragraph (3)(C), by striking ‘‘the aggre-
gate’’ and all that follows through the period at the 
end and inserting ‘‘5 percent of the total payments es-
timated to be made based on the prospective payment 
system under this subsection for the period.’’; and 
(2) in paragraph (5)— 
(A) by striking ‘‘OUTLIERS.—The Sec-
retary’’ 
and 
inserting 
the 
following: 
‘‘OUTLIERS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary’’; 
(B) in subparagraph (A), as added by sub-
paragraph (A), by striking ‘‘5 percent’’ and in-
serting ‘‘2.5 percent’’; and 
(C) by adding at the end the following new 
subparagraph: 
‘‘(B) PROGRAM SPECIFIC OUTLIER CAP.— 
The estimated total amount of additional pay-
ments or payment adjustments made under sub-
paragraph (A) with respect to a home health 
agency for a year (beginning with 2011) may 
not exceed an amount equal to 10 percent of the 
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estimated total amount of payments made under 
this section (without regard to this paragraph) 
with respect to the home health agency for the 
year.’’. 
(c) APPLICATION OF THE MEDICARE RURAL HOME 
HEALTH ADD-ON POLICY.—Section 421 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 
2003 (Public Law 108–173; 117 Stat. 2283), as amended 
by section 5201(b) of the Deficit Reduction Act of 2005 
(Public Law 109–171; 120 Stat. 46), is amended— 
(1) in the section heading, by striking ‘‘ONE- 
YEAR’’ and inserting ‘‘TEMPORARY’’; and 
(2) in subsection (a)— 
(A) by striking ‘‘, and episodes’’ and insert-
ing ‘‘, episodes’’; 
(B) by inserting ‘‘and episodes and visits 
ending on or after April 1, 2010, and before 
January 1, 2016,’’ after ‘‘January 1, 2007,’’; 
and 
(C) by inserting ‘‘(or, in the case of episodes 
and visits ending on or after April 1, 2010, and 
before January 1, 2016, 3 percent)’’ before the 
period at the end. 
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(d) STUDY AND REPORT ON THE DEVELOPMENT OF 
HOME HEALTH PAYMENT REFORMS IN ORDER TO ENSURE 
ACCESS TO CARE AND QUALITY SERVICES.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services (in this section referred to as the 
‘‘Secretary’’) shall conduct a study to evaluate the 
costs and quality of care among efficient home health 
agencies relative to other such agencies in providing 
ongoing access to care and in treating Medicare bene-
ficiaries with varying severity levels of illness. Such 
study shall include an analysis of the following: 
(A) Methods to revise the home health pro-
spective payment system under section 1895 of 
the Social Security Act (42 U.S.C. 1395fff) to 
more accurately account for the costs related to 
patient severity of illness or to improving bene-
ficiary access to care, including— 
(i) payment adjustments for services 
that may be under- or over-valued; 
(ii) necessary changes to reflect the re-
source use relative to providing home health 
services to low-income Medicare bene-
ficiaries or Medicare beneficiaries living in 
medically underserved areas; 
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(iii) ways the outlier payment may be 
improved to more accurately reflect the cost 
of treating Medicare beneficiaries with high 
severity levels of illness; 
(iv) the role of quality of care incen-
tives and penalties in driving provider and 
patient behavior; 
(v) improvements in the application of 
a wage index; and 
(vi) other areas determined appro-
priate by the Secretary. 
(B) The validity and reliability of responses 
on the OASIS instrument with particular em-
phasis on questions that relate to higher pay-
ment under the home health prospective payment 
system and higher outcome scores under Home 
Care Compare. 
(C) Additional research or payment revi-
sions under the home health prospective payment 
system that may be necessary to set the payment 
rates for home health services based on costs of 
high-quality and efficient home health agencies 
or to improve Medicare beneficiary access to 
care. 
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(D) A timetable for implementation of any 
appropriate changes based on the analysis of the 
matters described in subparagraphs (A), (B), 
and (C). 
(E) Other areas determined appropriate by 
the Secretary. 
(2) CONSIDERATIONS.—In conducting the study 
under paragraph (1), the Secretary shall consider 
whether certain factors should be used to measure pa-
tient severity of illness and access to care, such as— 
(A) population density and relative patient 
access to care; 
(B) variations in service costs for providing 
care to individuals who are dually eligible under 
the Medicare and Medicaid programs; 
(C) the presence of severe or chronic dis-
eases, as evidenced by multiple, discontinuous 
home health episodes; 
(D) poverty status, as evidenced by the re-
ceipt of Supplemental Security Income under 
title XVI of the Social Security Act; 
(E) the absence of caregivers; 
(F) language barriers; 
(G) atypical transportation costs; 
(H) security costs; and 
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(I) other factors determined appropriate by 
the Secretary. 
(3) REPORT.—Not later than March 1, 2011, the 
Secretary shall submit to Congress a report on the 
study conducted under paragraph (1), together with 
recommendations for such legislation and administra-
tive action as the Secretary determines appropriate. 
(4) CONSULTATIONS.—In conducting the study 
under paragraph (1) and preparing the report under 
paragraph (3), the Secretary shall consult with— 
(A) stakeholders representing home health 
agencies; 
(B) groups representing Medicare bene-
ficiaries; 
(C) the Medicare Payment Advisory Com-
mission; 
(D) the Inspector General of the Depart-
ment of Health and Human Services; and 
(E) the Comptroller General of the United 
States. 
SEC. 3132. HOSPICE REFORM. 
(a) HOSPICE CARE PAYMENT REFORMS.— 
(1) IN GENERAL.—Section 1814(i) of the Social 
Security Act (42 U.S.C. 1395f(i)), as amended by sec-
tion 3004(c), is amended— 
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(A) by redesignating paragraph (6) as 
paragraph (7); and 
(B) by inserting after paragraph (5) the fol-
lowing new paragraph: 
‘‘(6)(A) The Secretary shall collect additional 
data and information as the Secretary determines ap-
propriate to revise payments for hospice care under 
this subsection pursuant to subparagraph (D) and for 
other purposes as determined appropriate by the Sec-
retary. The Secretary shall begin to collect such data 
by not later than January 1, 2011. 
‘‘(B) The additional data and information to be 
collected under subparagraph (A) may include data 
and information on— 
‘‘(i) charges and payments; 
‘‘(ii) the number of days of hospice care 
which are attributable to individuals who are en-
titled to, or enrolled for, benefits under part A; 
and 
‘‘(iii) with respect to each type of service in-
cluded in hospice care— 
‘‘(I) the number of days of hospice care 
attributable to the type of service; 
‘‘(II) the cost of the type of service; and 
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‘‘(III) the amount of payment for the 
type of service; 
‘‘(iv) charitable contributions and other rev-
enue of the hospice program; 
‘‘(v) the number of hospice visits; 
‘‘(vi) the type of practitioner providing the 
visit; and 
‘‘(vii) the length of the visit and other basic 
information with respect to the visit. 
‘‘(C) The Secretary may collect the additional 
data and information under subparagraph (A) on 
cost reports, claims, or other mechanisms as the Sec-
retary determines to be appropriate. 
‘‘(D)(i) Notwithstanding the preceding para-
graphs of this subsection, not earlier than October 1, 
2013, the Secretary shall, by regulation, implement 
revisions to the methodology for determining the pay-
ment rates for routine home care and other services 
included in hospice care under this part, as the Sec-
retary determines to be appropriate. Such revisions 
may be based on an analysis of data and information 
collected under subparagraph (A). Such revisions may 
include adjustments to per diem payments that reflect 
changes in resource intensity in providing such care 
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and services during the course of the entire episode of 
hospice care. 
‘‘(ii) Revisions in payment implemented pursu-
ant to clause (i) shall result in the same estimated 
amount of aggregate expenditures under this title for 
hospice care furnished in the fiscal year in which 
such revisions in payment are implemented as would 
have been made under this title for such care in such 
fiscal year if such revisions had not been imple-
mented. 
‘‘(E) The Secretary shall consult with hospice 
programs and the Medicare Payment Advisory Com-
mission regarding the additional data and informa-
tion to be collected under subparagraph (A) and the 
payment revisions under subparagraph (D).’’. 
(2) 
CONFORMING
AMENDMENTS.—Section 
1814(i)(1)(C) of the Social Security Act (42 U.S.C. 
1395f(i)(1)(C)) is amended— 
(A) in clause (ii)— 
(i) in the matter preceding subclause 
(I), by inserting ‘‘(before the first fiscal year 
in which the payment revisions described in 
paragraph (6)(D) are implemented)’’ after 
‘‘subsequent fiscal year’’; and 
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(ii) in subclause (VII), by inserting 
‘‘(before the first fiscal year in which the 
payment revisions described in paragraph 
(6)(D) are implemented), subject to clause 
(iv),’’ after ‘‘subsequent fiscal year’’; and 
(B) by adding at the end the following new 
clause: 
‘‘(iii) With respect to routine home 
care and other services included in hospice 
care furnished during fiscal years subse-
quent to the first fiscal year in which pay-
ment revisions described in paragraph 
(6)(D) are implemented, the payment rates 
for such care and services shall be the pay-
ment rates in effect under this clause during 
the preceding fiscal year increased by, sub-
ject to clause (iv), the market basket per-
centage increase (as defined in section 
1886(b)(3)(B)(iii)) for the fiscal year.’’. 
(b) ADOPTION OF MEDPAC HOSPICE PROGRAM ELIGI-
BILITY
RECERTIFICATION
RECOMMENDATIONS.—Section 
1814(a)(7) of the Social Security Act (42 U.S.C. 
1395f(a)(7)) is amended— 
(1) in subparagraph (B), by striking ‘‘and’’ at 
the end; and 
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(2) by adding at the end the following new sub-
paragraph: 
‘‘(D) on and after January 1, 2011— 
‘‘(i) a hospice physician or nurse prac-
titioner has a face-to-face encounter with 
the individual to determine continued eligi-
bility of the individual for hospice care 
prior to the 180th-day recertification and 
each subsequent recertification under sub-
paragraph (A)(ii) and attests that such 
visit took place (in accordance with proce-
dures established by the Secretary); and 
‘‘(ii) in the case of hospice care pro-
vided an individual for more than 180 days 
by a hospice program for which the number 
of such cases for such program comprises 
more than a percent (specified by the Sec-
retary) of the total number of such cases for 
all programs under this title, the hospice 
care provided to such individual is medi-
cally reviewed (in accordance with proce-
dures established by the Secretary); and’’. 
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SEC. 
3133. 
IMPROVEMENT 
TO 
MEDICARE 
DISPROPOR-
TIONATE SHARE HOSPITAL (DSH) PAYMENTS. 
Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by sections 3001, 3008, and 3025, 
is amended— 
(1) in subsection (d)(5)(F)(i), by striking ‘‘For’’ 
and inserting ‘‘Subject to subsection (r), for’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(r) ADJUSTMENTS TO MEDICARE DSH PAYMENTS.— 
‘‘(1) EMPIRICALLY JUSTIFIED DSH PAYMENTS.— 
For fiscal year 2015 and each subsequent fiscal year, 
instead of the amount of disproportionate share hos-
pital payment that would otherwise be made under 
subsection (d)(5)(F) to a subsection (d) hospital for 
the fiscal year, the Secretary shall pay to the sub-
section (d) hospital 25 percent of such amount (which 
represents the empirically justified amount for such 
payment, as determined by the Medicare Payment 
Advisory Commission in its March 2007 Report to 
the Congress). 
‘‘(2) ADDITIONAL PAYMENT.—In addition to the 
payment made to a subsection (d) hospital under 
paragraph (1), for fiscal year 2015 and each subse-
quent fiscal year, the Secretary shall pay to such sub-
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section (d) hospitals an additional amount equal to 
the product of the following factors: 
‘‘(A) FACTOR ONE.—A factor equal to the 
difference between— 
‘‘(i) the aggregate amount of payments 
that would be made to subsection (d) hos-
pitals under subsection (d)(5)(F) if this sub-
section did not apply for such fiscal year 
(as estimated by the Secretary); and 
‘‘(ii) the aggregate amount of pay-
ments that are made to subsection (d) hos-
pitals under paragraph (1) for such fiscal 
year (as so estimated). 
‘‘(B) FACTOR TWO.— 
‘‘(i) FISCAL
YEARS
2015, 2016, AND 
2017.—For each of fiscal years 2015, 2016, 
and 2017, a factor equal to 1 minus the 
percent change (divided by 100) in the per-
cent of individuals under the age of 65 who 
are uninsured, as determined by comparing 
the percent of such individuals— 
‘‘(I) who are uninsured in 2012, 
the last year before coverage expansion 
under the Patient Protection and Af-
fordable Care Act (as calculated by the 
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Secretary based on the most recent esti-
mates available from the Director of 
the Congressional Budget Office before 
a vote in either House on such Act 
that, if determined in the affirmative, 
would clear such Act for enrollment); 
and 
‘‘(II) who are uninsured in the 
most recent period for which data is 
available (as so calculated). 
‘‘(ii) 2018 AND SUBSEQUENT YEARS.— 
For fiscal year 2018 and each subsequent 
fiscal year, a factor equal to 1 minus the 
percent change (divided by 100) in the per-
cent of individuals who are uninsured, as 
determined by comparing the percent of in-
dividuals— 
‘‘(I) who are uninsured in 2012 
(as estimated by the Secretary, based 
on data from the Census Bureau or 
other sources the Secretary determines 
appropriate, and certified by the Chief 
Actuary of the Centers for Medicare & 
Medicaid Services); and 
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HR 3590 EAS/PP 
‘‘(II) who are uninsured in the 
most recent period for which data is 
available (as so estimated and cer-
tified). 
‘‘(C) FACTOR THREE.—A factor equal to the 
percent, for each subsection (d) hospital, that 
represents the quotient of— 
‘‘(i) the amount of uncompensated care 
for such hospital for a period selected by the 
Secretary (as estimated by the Secretary, 
based on appropriate data (including, in 
the case where the Secretary determines that 
alternative data is available which is a bet-
ter proxy for the costs of subsection (d) hos-
pitals for treating the uninsured, the use of 
such alternative data)); and 
‘‘(ii) the aggregate amount of uncom-
pensated care for all subsection (d) hospitals 
that receive a payment under this sub-
section for such period (as so estimated, 
based on such data). 
‘‘(3) LIMITATIONS ON REVIEW.—There shall be 
no administrative or judicial review under section 
1869, section 1878, or otherwise of the following: 
VerDate Nov 24 2008 
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H3590
wwoods2 on DSK1DXX6B1PROD with BILLS