227 
EHR users and, as determined appropriate by 
the Secretary, of group practices receiving incen-
tive payments under paragraph (1). 
‘‘(4) CERTIFIED EHR TECHNOLOGY DEFINED.— 
For purposes of this section, the term ‘certified EHR 
technology’ means a qualified electronic health record 
(as defined in 3000(13) of the Public Health Service 
Act) that is certified pursuant to section 3001(c)(5) of 
such Act as meeting standards adopted under section 
3004 of such Act that are applicable to the type of 
record involved (as determined by the Secretary, such 
as an ambulatory electronic health record for office- 
based physicians or an inpatient hospital electronic 
health record for hospitals). 
‘‘(5) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) COVERED PROFESSIONAL SERVICES.— 
The term ‘covered professional services’ has the 
meaning given such term in subsection (k)(3). 
‘‘(B) ELIGIBLE PROFESSIONAL.—The term 
‘eligible professional’ means a physician, as de-
fined in section 1861(r). 
‘‘(C) REPORTING
PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
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with respect to a payment year, as specified by 
the Secretary.’’. 
(b) 
INCENTIVE
PAYMENT
ADJUSTMENT.—Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w–4(a)) 
is amended by adding at the end the following new para-
graph: 
‘‘(7) INCENTIVES FOR MEANINGFUL USE OF CER-
TIFIED EHR TECHNOLOGY.— 
‘‘(A) ADJUSTMENT.— 
‘‘(i) IN GENERAL.—Subject to subpara-
graphs (B) and (D), with respect to covered 
professional services furnished by an eligible 
professional during 2016 or any subsequent 
payment year, if the eligible professional is 
not a meaningful EHR user (as determined 
under subsection (o)(2)) for a reporting pe-
riod for the year, the fee schedule amount 
for such services furnished by such profes-
sional during the year (including the fee 
schedule amount for purposes of deter-
mining a payment based on such amount) 
shall be equal to the applicable percent of 
the fee schedule amount that would other-
wise apply to such services under this sub-
section (determined after application of 
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229 
paragraph (3) but without regard to this 
paragraph). 
‘‘(ii) APPLICABLE
PERCENT.—Subject 
to clause (iii), for purposes of clause (i), the 
term ‘applicable percent’ means— 
‘‘(I) for 2016, 99 percent; 
‘‘(II) for 2017, 98 percent; and 
‘‘(III) for 2018 and each subse-
quent year, 97 percent. 
‘‘(iii) AUTHORITY
TO
DECREASE
AP-
PLICABLE PERCENTAGE FOR 2019 AND SUB-
SEQUENT YEARS.—For 2019 and each sub-
sequent year, if the Secretary finds that the 
proportion of eligible professionals who are 
meaningful EHR users (as determined 
under subsection (o)(2)) is less than 75 per-
cent, the applicable percent shall be de-
creased by 1 percentage point from the ap-
plicable percent in the preceding year, but 
in no case shall the applicable percent be 
less than 95 percent. 
‘‘(B) SIGNIFICANT HARDSHIP EXCEPTION.— 
The Secretary may, on a case-by-case basis, ex-
empt an eligible professional from the applica-
tion of the payment adjustment under subpara-
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230 
graph (A) if the Secretary determines, subject to 
annual renewal, that compliance with the re-
quirement for being a meaningful EHR user 
would result in a significant hardship, such as 
in the case of an eligible professional who prac-
tices in a rural area without sufficient Internet 
access. In no case may an eligible professional be 
granted an exemption under this subparagraph 
for more than 5 years. 
‘‘(C) APPLICATION OF PHYSICIAN REPORT-
ING SYSTEM RULES.—Paragraphs (5), (6), and 
(8) of subsection (k) shall apply for purposes of 
this paragraph in the same manner as they 
apply for purposes of such subsection. 
‘‘(D) 
NON-APPLICATION
TO
HOSPITAL- 
BASED ELIGIBLE PROFESSIONALS.—No payment 
adjustment may be made under subparagraph 
(A) in the case of hospital-based eligible profes-
sionals (as defined in subsection (o)(1)(C)(ii)). 
‘‘(E) DEFINITIONS.—For purposes of this 
paragraph: 
‘‘(i) COVERED
PROFESSIONAL
SERV-
ICES.—The term ‘covered professional serv-
ices’ has the meaning given such term in 
subsection (k)(3). 
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‘‘(ii) ELIGIBLE
PROFESSIONAL.—The 
term ‘eligible professional’ means a physi-
cian, as defined in section 1861(r). 
‘‘(iii) REPORTING PERIOD.—The term 
‘reporting period’ means, with respect to a 
year, a period specified by the Secretary.’’. 
(c) APPLICATION TO CERTAIN HMO-AFFILIATED ELI-
GIBLE PROFESSIONALS.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23) is amended by adding at 
the end the following new subsection: 
‘‘(l) APPLICATION OF ELIGIBLE PROFESSIONAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
AND
MEANINGFUL
USE
OF
CERTIFIED
EHR TECH-
NOLOGY.— 
‘‘(1) IN GENERAL.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the provisions of sections 1848(o) and 1848(a)(7) 
shall apply with respect to eligible professionals de-
scribed in paragraph (2) of the organization who the 
organization attests under paragraph (6) to be mean-
ingful EHR users in a similar manner as they apply 
to eligible professionals under such sections. Incentive 
payments under paragraph (3) shall be made to and 
payment adjustments under paragraph (4) shall 
apply to such qualifying organizations. 
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‘‘(2) ELIGIBLE
PROFESSIONAL
DESCRIBED.— 
With respect to a qualifying MA organization, an eli-
gible professional described in this paragraph is an 
eligible professional (as defined for purposes of section 
1848(o)) who— 
‘‘(A)(i) is employed by the organization; or 
‘‘(ii)(I) is employed by, or is a partner of, 
an entity that through contract with the organi-
zation furnishes at least 80 percent of the enti-
ty’s patient care services to enrollees of such or-
ganization; and 
‘‘(II) furnishes at least 75 percent of the 
professional services of the eligible professional to 
enrollees of the organization; and 
‘‘(B) furnishes, on average, at least 20 hours 
per week of patient care services. 
‘‘(3) ELIGIBLE PROFESSIONAL INCENTIVE PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(o) under paragraph (1), instead of the ad-
ditional 
payment 
amount 
under 
section 
1848(o)(1)(A) and subject to subparagraph (B), 
the Secretary may substitute an amount deter-
mined by the Secretary to the extent feasible and 
practical to be similar to the estimated amount 
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‘‘(II) to collect data from Medi-
care Advantage organizations to ensure 
against such duplicate payments. 
‘‘(C) FIXED
SCHEDULE
FOR
APPLICATION 
OF
LIMITATION
ON
INCENTIVE
PAYMENTS
FOR 
ALL
ELIGIBLE
PROFESSIONALS.—In applying 
section 1848(o)(1)(B)(ii) under subparagraph 
(A), in accordance with rules specified by the 
Secretary, a qualifying MA organization shall 
specify a year (not earlier than 2011) that shall 
be treated as the first payment year for all eligi-
ble professionals with respect to such organiza-
tion. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In applying section 
1848(a)(7) under paragraph (1), instead of the 
payment adjustment being an applicable percent 
of the fee schedule amount for a year under such 
section, subject to subparagraph (D), the pay-
ment adjustment under paragraph (1) shall be 
equal to the percent specified in subparagraph 
(B) for such year of the payment amount other-
wise provided under this section for such year. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
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100 percent minus a number of percentage 
points equal to the product of— 
‘‘(i) the number of percentage points by 
which the applicable percent (under section 
1848(a)(7)(A)(ii)) for the year is less than 
100 percent; and 
‘‘(ii) the Medicare physician expendi-
ture proportion specified in subparagraph 
(C) for the year. 
‘‘(C) MEDICARE
PHYSICIAN
EXPENDITURE 
PROPORTION.—The Medicare physician expendi-
ture proportion under this subparagraph for a 
year is the Secretary’s estimate of the propor-
tion, of the expenditures under parts A and B 
that are not attributable to this part, that are 
attributable to expenditures for physicians’ serv-
ices. 
‘‘(D) APPLICATION
OF
PAYMENT
ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible professionals 
are meaningful EHR users with respect to a 
year, the Secretary shall apply the payment ad-
justment under this paragraph based on the pro-
portion of such eligible professionals that are not 
meaningful EHR users for such year. 
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‘‘(5) QUALIFYING MA ORGANIZATION DEFINED.— 
In this subsection and subsection (m), the term ‘quali-
fying MA organization’ means a Medicare Advantage 
organization that is organized as a health mainte-
nance organization (as defined in section 2791(b)(3) 
of the Public Health Service Act). 
‘‘(6) MEANINGFUL
EHR
USER
ATTESTATION.— 
For purposes of this subsection and subsection (m), a 
qualifying MA organization shall submit an attesta-
tion, in a form and manner specified by the Secretary 
which may include the submission of such attestation 
as part of submission of the initial bid under section 
1854(a)(1)(A)(iv), identifying— 
‘‘(A) whether each eligible professional de-
scribed in paragraph (2), with respect to such 
organization is a meaningful EHR user (as de-
fined in section 1848(o)(2)) for a year specified 
by the Secretary; and 
‘‘(B) whether each eligible hospital described 
in subsection (m)(1), with respect to such organi-
zation, is a meaningful EHR user (as defined in 
section 1886(n)(3)) for an applicable period 
specified by the Secretary.’’. 
(d) CONFORMING AMENDMENTS.—Section 1853 of the 
Social Security Act (42 U.S.C. 1395w–23) is amended— 
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(1) in subsection (a)(1)(A), by striking ‘‘and (i)’’ 
and inserting ‘‘(i), and (l)’’; 
(2) in subsection (c)— 
(A) in paragraph (1)(D)(i), by striking 
‘‘section 
1886(h)’’ 
and 
inserting 
‘‘sections 
1848(o) and 1886(h)’’; and 
(B) in paragraph (6)(A), by inserting after 
‘‘under part B,’’ the following: ‘‘excluding ex-
penditures attributable to subsections (a)(7) and 
(o) of section 1848,’’; and 
(3) in subsection (f), by inserting ‘‘and for pay-
ments under subsection (l)’’ after ‘‘with the organiza-
tion’’. 
(e) CONFORMING AMENDMENTS TO E-PRESCRIBING.— 
(1) Section 1848(a)(5)(A) of the Social Security 
Act (42 U.S.C. 1395w–4(a)(5)(A)) is amended— 
(A) in clause (i), by striking ‘‘or any subse-
quent year’’ and inserting ‘‘, 2013, 2014, or 
2015’’; and 
(B) in clause (ii), by striking ‘‘and each 
subsequent year’’ and inserting ‘‘and 2015’’. 
(2) Section 1848(m)(2) of such Act (42 U.S.C. 
1395w–4(m)(2)) is amended— 
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(A) in subparagraph (A), by striking ‘‘For 
2009’’ and inserting ‘‘Subject to subparagraph 
(D), for 2009’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) LIMITATION WITH RESPECT TO EHR 
INCENTIVE
PAYMENTS.—The provisions of this 
paragraph shall not apply to an eligible profes-
sional (or, in the case of a group practice under 
paragraph (3)(C), to the group practice) if, for 
the reporting period the eligible professional (or 
group practice) receives an incentive payment 
under subsection (o)(1)(A) with respect to a cer-
tified EHR technology (as defined in subsection 
(o)(4)) that has the capability of electronic pre-
scribing.’’. 
SEC. 4312. INCENTIVES FOR HOSPITALS. 
(a) INCENTIVE PAYMENT.—Section 1886 of the Social 
Security Act (42 U.S.C. 1395ww) is amended by adding 
at the end the following new subsection: 
‘‘(n) INCENTIVES FOR ADOPTION AND MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY.— 
‘‘(1) IN
GENERAL.—Subject to the succeeding 
provisions of this subsection, with respect to inpatient 
hospital services furnished by an eligible hospital dur-
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ing a payment year (as defined in paragraph 
(2)(G)), if the eligible hospital is a meaningful EHR 
user (as determined under paragraph (3)) for the re-
porting period with respect to such year, in addition 
to the amount otherwise paid under this section, there 
also shall be paid to the eligible hospital, from the 
Federal Hospital Insurance Trust Fund established 
under section 1817, an amount equal to the applica-
ble amount specified in paragraph (2)(A) for the hos-
pital for such payment year. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding subparagraphs of this paragraph, the ap-
plicable amount specified in this subparagraph 
for an eligible hospital for a payment year is 
equal to the product of the following: 
‘‘(i) INITIAL AMOUNT.—The sum of— 
‘‘(I) the base amount specified in 
subparagraph (B); plus 
‘‘(II) the discharge related amount 
specified in subparagraph (C) for a 12- 
month period selected by the Secretary 
with respect to such payment year. 
‘‘(ii) MEDICARE
SHARE.—The Medi-
care share as specified in subparagraph (D) 
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utable to charity care (as such term is 
used for purposes of hospital cost re-
porting under this title), divided by the 
total amount of the hospital’s charges 
during such period. 
Insofar as the Secretary determines that data are 
not available on charity care necessary to cal-
culate the portion of the formula specified in 
clause (ii)(II), the Secretary shall use data on 
uncompensated care and may adjust such data 
so as to be an appropriate proxy for charity care 
including a downward adjustment to eliminate 
bad debt data from uncompensated care data. In 
the absence of the data necessary, with respect to 
a hospital, for the Secretary to compute the 
amount described in clause (ii)(II), the amount 
under such clause shall be deemed to be 1. In the 
absence of data, with respect to a hospital, nec-
essary to compute the amount described in clause 
(i)(II), the amount under such clause shall be 
deemed to be 0. 
‘‘(E) TRANSITION FACTOR SPECIFIED.— 
‘‘(i) IN
GENERAL.—Subject to clause 
(ii), the transition factor specified in this 
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subparagraph for an eligible hospital for a 
payment year is as follows: 
‘‘(I) For the first payment year 
for such hospital, 1. 
‘‘(II) For the second payment 
year for such hospital, 3⁄4. 
‘‘(III) For the third payment year 
for such hospital, 1⁄2. 
‘‘(IV) For the fourth payment 
year for such hospital, 1⁄4. 
‘‘(V) For any succeeding payment 
year for such hospital, 0. 
‘‘(ii) PHASE DOWN FOR ELIGIBLE HOS-
PITALS FIRST ADOPTING EHR AFTER 2013.— 
If the first payment year for an eligible hos-
pital is after 2013, then the transition fac-
tor specified in this subparagraph for a 
payment year for such hospital is the same 
as the amount specified in clause (i) for 
such payment year for an eligible hospital 
for which the first payment year is 2013. If 
the first payment year for an eligible hos-
pital is after 2015 then the transition factor 
specified in this subparagraph for such hos-
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pital and for such year and any subsequent 
year shall be 0. 
‘‘(F) FORM
OF
PAYMENT.—The payment 
under this subsection for a payment year may be 
in the form of a single consolidated payment or 
in the form of such periodic installments as the 
Secretary may specify. 
‘‘(G) PAYMENT YEAR DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘payment year’ 
means a fiscal year beginning with fiscal 
year 2011. 
‘‘(ii) FIRST, SECOND, ETC. PAYMENT 
YEAR.—The term ‘first payment year’ 
means, with respect to inpatient hospital 
services furnished by an eligible hospital, 
the first fiscal year for which an incentive 
payment is made for such services under 
this subsection. The terms ‘second payment 
year’, ‘third payment year’, and ‘fourth 
payment year’ mean, with respect to an eli-
gible hospital, each successive year imme-
diately following the first payment year for 
that hospital. 
‘‘(3) MEANINGFUL EHR USER.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible hospital shall be treated as 
a meaningful EHR user for a reporting period 
for a payment year (or, for purposes of sub-
section (b)(3)(B)(ix), for a reporting period 
under such subsection for a fiscal year) if each 
of the following requirements are met: 
‘‘(i) MEANINGFUL USE OF CERTIFIED 
EHR
TECHNOLOGY.—The eligible hospital 
demonstrates to the satisfaction of the Sec-
retary, in accordance with subparagraph 
(C)(i), that during such period the hospital 
is using certified EHR technology in a 
meaningful manner. 
‘‘(ii) INFORMATION
EXCHANGE.—The 
eligible hospital demonstrates to the satis-
faction of the Secretary, in accordance with 
subparagraph (C)(i), that during such pe-
riod such certified EHR technology is con-
nected in a manner that provides, in ac-
cordance with law and standards applicable 
to the exchange of information, for the elec-
tronic exchange of health information to im-
prove the quality of health care, such as 
promoting care coordination. 
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‘‘(iii) REPORTING ON MEASURES USING 
EHR.—Subject to subparagraph (B)(ii) and 
using such certified EHR technology, the el-
igible hospital submits information for such 
period, in a form and manner specified by 
the Secretary, on such clinical quality 
measures and such other measures as se-
lected by the Secretary under subparagraph 
(B)(i). 
The Secretary shall seek to improve the use of 
electronic health records and health care quality 
over time by requiring more stringent measures 
of meaningful use selected under this paragraph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary shall 
select measures for purposes of subpara-
graph (A)(iii) but only consistent with the 
following: 
‘‘(I) The Secretary shall provide 
preference to clinical quality measures 
that have been selected for purposes of 
applying subsection (b)(3)(B)(viii) or 
that have been endorsed by the entity 
with a contract with the Secretary 
under section 1890(a). 
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‘‘(II) Prior to any measure (other 
than a clinical quality measure that 
has been selected for purposes of apply-
ing subsection (b)(3)(B)(viii)) being se-
lected under this subparagraph, the 
Secretary shall publish in the Federal 
Register such measure and provide for 
a period of public comment on such 
measure. 
‘‘(ii) 
LIMITATIONS.—The 
Secretary 
may not require the electronic reporting of 
information on clinical quality measures 
under subparagraph (A)(iii) unless the Sec-
retary has the capacity to accept the infor-
mation electronically, which may be on a 
pilot basis. 
‘‘(iii) COORDINATION
OF
REPORTING 
OF INFORMATION.—In selecting such meas-
ures, and in establishing the form and man-
ner for reporting measures under subpara-
graph (A)(iii), the Secretary shall seek to 
avoid redundant or duplicative reporting 
with reporting otherwise required, including 
reporting under subsection (b)(3)(B)(viii). 
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‘‘(C) DEMONSTRATION OF MEANINGFUL USE 
OF CERTIFIED EHR TECHNOLOGY AND INFORMA-
TION EXCHANGE.— 
‘‘(i) IN
GENERAL.—A hospital may 
satisfy the demonstration requirement of 
clauses (i) and (ii) of subparagraph (A) 
through means specified by the Secretary, 
which may include— 
‘‘(I) an attestation; 
‘‘(II) the submission of claims 
with appropriate coding (such as a 
code indicating that inpatient care 
was documented using certified EHR 
technology); 
‘‘(III) a survey response; 
‘‘(IV) reporting under subpara-
graph (A)(iii); and 
‘‘(V) other means specified by the 
Secretary. 
‘‘(ii) USE OF PART D DATA.—Notwith-
standing sections 1860D–15(d)(2)(B) and 
1860D–15(f)(2), the Secretary may use data 
regarding drug claims submitted for pur-
poses of section 1860D–15 that are nec-
essary for purposes of subparagraph (A). 
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249 
‘‘(4) APPLICATION.— 
‘‘(A) LIMITATIONS ON REVIEW.—There shall 
be no administrative or judicial review under 
section 1869, section 1878, or otherwise of the de-
termination of any incentive payment under this 
subsection and the payment adjustment under 
subsection (b)(3)(B)(ix), including the deter-
mination of a meaningful EHR user under 
paragraph (3), determination of measures appli-
cable to services furnished by eligible hospitals 
under this subsection, and the exception under 
subsection (b)(3)(B)(ix)(II). 
‘‘(B) POSTING ON WEBSITE.—The Secretary 
shall post on the Internet website of the Centers 
for Medicare & Medicaid Services, in an easily 
understandable format, a list of the names of the 
eligible hospitals that are meaningful EHR users 
under this subsection or subsection (b)(3)(B)(ix) 
and other relevant data as determined appro-
priate by the Secretary. The Secretary shall en-
sure that a hospital has the opportunity to re-
view the other relevant data that are to be made 
public with respect to the hospital prior to such 
data being made public. 
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‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 
The term ‘certified EHR technology’ has the meaning 
given such term in section 1848(o)(4). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eligi-
ble hospital’ means a subsection (d) hospital. 
‘‘(B) REPORTING
PERIOD.—The term ‘re-
porting period’ means any period (or periods), 
with respect to a payment year, as specified by 
the Secretary.’’. 
(b) INCENTIVE MARKET BASKET ADJUSTMENT.—Sec-
tion 1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)) is amended— 
(1) in clause (viii)(I), by inserting ‘‘(or, begin-
ning with fiscal year 2016, by one-quarter)’’ after 
‘‘2.0 percentage points’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ix)(I) For purposes of clause (i) for fiscal year 2016 
and each subsequent fiscal year, in the case of an eligible 
hospital (as defined in subsection (n)(6)(A)) that is not a 
meaningful EHR user (as defined in subsection (n)(3)) for 
the reporting period for such fiscal year, three-quarters of 
the applicable percentage increase otherwise applicable 
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under clause (i) for such fiscal year shall be reduced by 
331⁄3 percent for fiscal year 2016, 662⁄3 percent for fiscal 
year 2017, and 100 percent for fiscal year 2018 and each 
subsequent fiscal year. Such reduction shall apply only with 
respect to the fiscal year involved and the Secretary shall 
not take into account such reduction in computing the ap-
plicable percentage increase under clause (i) for a subse-
quent fiscal year. 
‘‘(II) The Secretary may, on a case-by-case basis, ex-
empt a subsection (d) hospital from the application of sub-
clause (I) with respect to a fiscal year if the Secretary deter-
mines, subject to annual renewal, that requiring such hos-
pital to be a meaningful EHR user during such fiscal year 
would result in a significant hardship, such as in the case 
of a hospital in a rural area without sufficient Internet ac-
cess. In no case may a hospital be granted an exemption 
under this subclause for more than 5 years. 
‘‘(III) For fiscal year 2016 and each subsequent fiscal 
year, a State in which hospitals are paid for services under 
section 1814(b)(3) shall adjust the payments to each sub-
section (d) hospital in the State that is not a meaningful 
EHR user (as defined in subsection (n)(3)) in a manner 
that is designed to result in an aggregate reduction in pay-
ments to hospitals in the State that is equivalent to the ag-
gregate reduction that would have occurred if payments had 
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been reduced to each subsection (d) hospital in the State 
in a manner comparable to the reduction under the pre-
vious provisions of this clause. The State shall report to 
the Secretary the methodology it will use to make the pay-
ment adjustment under the previous sentence. 
‘‘(IV) For purposes of this clause, the term ‘reporting 
period’ means, with respect to a fiscal year, any period (or 
periods), with respect to the fiscal year, as specified by the 
Secretary.’’. 
(c) APPLICATION TO CERTAIN HMO-AFFILIATED ELI-
GIBLE HOSPITALS.—Section 1853 of the Social Security 
Act (42 U.S.C. 1395w–23), as amended by section 4311(c), 
is further amended by adding at the end the following new 
subsection: 
‘‘(m) APPLICATION OF ELIGIBLE HOSPITAL INCEN-
TIVES FOR CERTAIN MA ORGANIZATIONS FOR ADOPTION 
AND
MEANINGFUL
USE
OF
CERTIFIED
EHR TECH-
NOLOGY.— 
‘‘(1) APPLICATION.—Subject to paragraphs (3) 
and (4), in the case of a qualifying MA organization, 
the 
provisions 
of 
sections 
1886(n) 
and 
1886(b)(3)(B)(ix) shall apply with respect to eligible 
hospitals described in paragraph (2) of the organiza-
tion which the organization attests under subsection 
(l)(6) to be meaningful EHR users in a similar man-
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ner as they apply to eligible hospitals under such sec-
tions. Incentive payments under paragraph (3) shall 
be made to and payment adjustments under para-
graph (4) shall apply to such qualifying organiza-
tions. 
‘‘(2) ELIGIBLE HOSPITAL DESCRIBED.—With re-
spect to a qualifying MA organization, an eligible 
hospital described in this paragraph is an eligible 
hospital that is under common corporate governance 
with such organization and serves individuals en-
rolled under an MA plan offered by such organiza-
tion. 
‘‘(3) 
ELIGIBLE
HOSPITAL
INCENTIVE
PAY-
MENTS.— 
‘‘(A) IN
GENERAL.—In applying section 
1886(n)(2) under paragraph (1), instead of the 
additional 
payment 
amount 
under 
section 
1886(n)(2), there shall be substituted an amount 
determined by the Secretary to be similar to the 
estimated amount in the aggregate that would be 
payable if payment for services furnished by 
such hospitals was payable under part A instead 
of this part. In implementing the previous sen-
tence, the Secretary— 
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‘‘(II) to collect data from Medi-
care Advantage organizations to ensure 
against such duplicate payments. 
‘‘(4) PAYMENT ADJUSTMENT.— 
‘‘(A) Subject to paragraph (3), in the case 
of a qualifying MA organization (as defined in 
section 1853(l)(5)), if, according to the attesta-
tion of the organization submitted under sub-
section (l)(6) for an applicable period, one or 
more eligible hospitals (as defined in section 
1886(n)(6)(A)) that are under common corporate 
governance with such organization and that 
serve individuals enrolled under a plan offered 
by such organization are not meaningful EHR 
users (as defined in section 1886(n)(3)) with re-
spect to a period, the payment amount payable 
under this section for such organization for such 
period shall be the percent specified in subpara-
graph (B) for such period of the payment 
amount otherwise provided under this section for 
such period. 
‘‘(B) SPECIFIED
PERCENT.—The percent 
specified under this subparagraph for a year is 
100 percent minus a number of percentage 
points equal to the product of— 
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‘‘(i) the number of the percentage point 
reduction 
effected 
under 
section 
1886(b)(3)(B)(ix)(I) for the period; and 
‘‘(ii) the Medicare hospital expenditure 
proportion specified in subparagraph (C) 
for the year. 
‘‘(C) MEDICARE
HOSPITAL
EXPENDITURE 
PROPORTION.—The Medicare hospital expendi-
ture proportion under this subparagraph for a 
year is the Secretary’s estimate of the propor-
tion, of the expenditures under parts A and B 
that are not attributable to this part, that are 
attributable to expenditures for inpatient hos-
pital services. 
‘‘(D) APPLICATION
OF
PAYMENT
ADJUST-
MENT.—In the case that a qualifying MA orga-
nization attests that not all eligible hospitals are 
meaningful EHR users with respect to an appli-
cable period, the Secretary shall apply the pay-
ment adjustment under this paragraph based on 
a methodology specified by the Secretary, taking 
into account the proportion of such eligible hos-
pitals, or discharges from such hospitals, that are 
not meaningful EHR users for such period.’’. 
(d) CONFORMING AMENDMENTS.— 
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(1) Section 1814(b) of the Social Security Act 
(42 U.S.C. 1395f(b)) is amended— 
(A) in paragraph (3), in the matter pre-
ceding subparagraph (A), by inserting ‘‘, subject 
to section 1886(d)(3)(B)(ix)(III),’’ after ‘‘then’’; 
and 
(B) by adding at the end the following: 
‘‘For purposes of applying paragraph (3), there 
shall be taken into account incentive payments, 
and payment adjustments under subsection 
(b)(3)(B)(ix) or (n) of section 1886.’’. 
(2) Section 1851(i)(1) of the Social Security Act 
(42 U.S.C. 1395w–21(i)(1)) is amended by striking 
‘‘and 1886(h)(3)(D)’’ and inserting ‘‘1886(h)(3)(D), 
and 1853(m)’’. 
(3) Section 1853 of the Social Security Act (42 
U.S.C. 1395w–23), as amended by section 4311(d)(1), 
is amended— 
(A) in subsection (c)— 
(i) in paragraph (1)(D)(i), by striking 
‘‘1848(o)’’ and inserting ‘‘, 1848(o), and 
1886(n)’’; and 
(ii) in paragraph (6)(A), by inserting 
‘‘and subsections (b)(3)(B)(ix) and (n) of 
section 1886’’ after ‘‘section 1848’’; and 
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259 
(B) in subsection (f), by inserting ‘‘and sub-
section (m)’’ after ‘‘under subsection (l)’’. 
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IMPLE-
MENTATION FUNDING. 
(a) PREMIUM HOLD HARMLESS.— 
(1) IN GENERAL.—Section 1839(a)(1) of the So-
cial Security Act (42 U.S.C. 1395r(a)(1)) is amended 
by adding at the end the following: ‘‘In applying this 
paragraph there shall not be taken into account addi-
tional payments under section 1848(o) and section 
1853(l)(3) and the Government contribution under 
section 1844(a)(3).’’. 
(2) PAYMENT.—Section 1844(a) of such Act (42 
U.S.C. 1395w(a)) is amended— 
(A) in paragraph (2), by striking the period 
at the end and inserting ‘‘; plus’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(3) a Government contribution equal to the 
amount of payment incentives payable under sections 
1848(o) and 1853(l)(3).’’. 
(b) MEDICARE IMPROVEMENT FUND.—Section 1898 of 
the Social Security Act (42 U.S.C. 1395iii), as added by 
section 7002(a) of the Supplemental Appropriations Act, 
2008 (Public Law 110–252) and as amended by section 
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188(a)(2) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110–275; 122 Stat. 
2589) and by section 6 of the QI Program Supplemental 
Funding Act of 2008, is amended— 
(1) in subsection (a)— 
(A) by inserting ‘‘medicare’’ before ‘‘fee-for- 
service’’; and 
(B) by inserting before the period at the end 
the following: ‘‘including, but not limited to, an 
increase in the conversion factor under section 
1848(d) to address, in whole or in part, any pro-
jected shortfall in the conversion factor for 2014 
relative to the conversion factor for 2008 and ad-
justments to payments for items and services fur-
nished by providers of services and suppliers 
under such original medicare fee-for-service pro-
gram’’; and 
(2) in subsection (b)— 
(A) in paragraph (1), by striking ‘‘during 
fiscal year 2014,’’ and all that follows and in-
serting the following: ‘‘during— 
‘‘(A) fiscal year 2014, $22,290,000,000; and 
‘‘(B) fiscal year 2020 and each subsequent 
fiscal year, the Secretary’s estimate, as of July 
1 of the fiscal year, of the aggregate reduction in 
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expenditures under this title during the pre-
ceding fiscal year directly resulting from the re-
duction in payment amounts under sections 
1848(a)(7), 
1853(l)(4), 
1853(m)(4), 
and 
1886(b)(3)(B)(ix).’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) NO EFFECT ON PAYMENTS IN SUBSEQUENT 
YEARS.—In the case that expenditures from the Fund 
are applied to, or otherwise affect, a payment rate for 
an item or service under this title for a year, the pay-
ment rate for such item or service shall be computed 
for a subsequent year as if such application or effect 
had never occurred.’’. 
(c) IMPLEMENTATION FUNDING.—In addition to funds 
otherwise available, out of any funds in the Treasury not 
otherwise appropriated, there are appropriated to the Sec-
retary of Health and Human Services for the Center for 
Medicare & Medicaid Services Program Management Ac-
count, $60,000,000 for each of fiscal years 2009 through 
2015 and $30,000,000 for each succeeding fiscal year 
through fiscal year 2019, which shall be available for pur-
poses of carrying out the provisions of (and amendments 
made by) this part. Amounts appropriated under this sub-
section for a fiscal year shall be available until expended. 
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262 
SEC. 4314. STUDY ON APPLICATION OF EHR PAYMENT IN-
CENTIVES FOR PROVIDERS NOT RECEIVING 
OTHER INCENTIVE PAYMENTS. 
(a) STUDY.— 
(1) IN GENERAL.—The Secretary of Health and 
Human Services shall conduct a study to determine 
the extent to which and manner in which payment 
incentives (such as under title XVIII or XIX of the 
Social Security Act) and other funding for purposes 
of implementing and using certified EHR technology 
(as defined in section 3000 of the Public Health Serv-
ice Act) should be made available to health care pro-
viders who are receiving minimal or no payment in-
centives or other funding under this Act, under title 
XVIII or XIX of the Social Security Act, or otherwise, 
for such purposes. 
(2) DETAILS OF STUDY.—Such study shall in-
clude an examination of— 
(A) the adoption rates of certified EHR 
technology by such health care providers; 
(B) the clinical utility of such technology by 
such health care providers; 
(C) whether the services furnished by such 
health care providers are appropriate for or 
would benefit from the use of such technology; 
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(D) the extent to which such health care 
providers work in settings that might otherwise 
receive an incentive payment or other funding 
under this Act, title XVIII or XIX of the Social 
Security Act, or otherwise; 
(E) the potential costs and the potential 
benefits of making payment incentives and other 
funding available to such health care providers; 
and 
(F) any other issues the Secretary deems to 
be appropriate. 
(b) REPORT.—Not later than June 30, 2010, the Sec-
retary shall submit to Congress a report on the findings 
and conclusions of the study conducted under subsection (a). 
PART III—MEDICAID FUNDING 
SEC. 4321. MEDICAID PROVIDER HIT ADOPTION AND OPER-
ATION PAYMENTS; IMPLEMENTATION FUND-
ING. 
(a) IN GENERAL.—Section 1903 of the Social Security 
Act (42 U.S.C. 1396b) is amended— 
(1) in subsection (a)(3)— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D); 
(B) by striking ‘‘plus’’ at the end of sub-
paragraph (E) and inserting ‘‘and’’; and 
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264 
(C) by adding at the end the following new 
subparagraph: 
‘‘(F)(i) 100 percent of so much of the sums 
expended during such quarter as are attributable 
to payments for certified EHR technology (and 
support services including maintenance and 
training that is for, or is necessary for the adop-
tion and operation of, such technology) by Med-
icaid providers described in subsection (t)(1); 
and 
‘‘(ii) 90 percent of so much of the sums ex-
pended during such quarter as are attributable 
to payments for reasonable administrative ex-
penses related to the administration of payments 
described in clause (i) if the State meets the con-
dition described in subsection (t)(9); plus’’; and 
(2) by inserting after subsection (s) the following 
new subsection: 
‘‘(t)(1) For purposes of subsection (a)(3)(F), the pay-
ments for certified EHR technology (and support services 
including maintenance that is for, or is necessary for the 
operation of, such technology) by Medicaid providers de-
scribed in this paragraph are payments made by the State 
in accordance with this subsection of 85 percent of the net 
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allowable costs of Medicaid providers (as defined in para-
graph (2)) for such technology (and support services). 
‘‘(2) In this subsection and subsection (a)(3)(F), the 
term ‘Medicaid provider’ means— 
‘‘(A) an eligible professional (as defined in para-
graph (3)(B)) who is not hospital-based and has at 
least 30 percent of the professional’s patient volume 
(as estimated in accordance with standards estab-
lished by the Secretary) attributable to individuals 
who are receiving medical assistance under this title; 
and 
‘‘(B)(i) a children’s hospital, 
‘‘(ii) an acute-care hospital that is not described 
in clause (i) and that has at least 10 percent of the 
hospital’s patient volume (as estimated in accordance 
with standards established by the Secretary) attrib-
utable to individuals who are receiving medical as-
sistance under this title, or 
‘‘(iii) a Federally-qualified health center or rural 
health clinic that has at least 30 percent of the cen-
ter’s or clinic’s patient volume (as estimated in ac-
cordance with standards established by the Secretary) 
attributable to individuals who are receiving medical 
assistance under this title. 
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A professional shall not qualify as a Medicaid provider 
under this subsection unless the professional has waived, in 
a manner specified by the Secretary, any right to payment 
under section 1848(o) with respect to the adoption or sup-
port of certified EHR technology by the professional. In ap-
plying clauses (ii) and (iii) of subparagraph (B), the stand-
ards established by the Secretary for patient volume shall 
include individuals enrolled in a Medicaid managed care 
plan (under section 1903(m) or section 1932). 
‘‘(3) In this subsection and subsection (a)(3)(F): 
‘‘(A) The term ‘certified EHR technology’ means 
a qualified electronic health record (as defined in 
3000(13) of the Public Health Service Act) that is cer-
tified pursuant to section 3001(c)(5) of such Act as 
meeting standards adopted under section 3004 of such 
Act that are applicable to the type of record involved 
(as determined by the Secretary, such as an ambula-
tory electronic health record for office-based physi-
cians or an inpatient hospital electronic health record 
for hospitals). 
‘‘(B) The term ‘eligible professional’ means a 
physician as defined in paragraphs (1) and (2) of 
section 1861(r), and includes a nurse mid-wife and a 
nurse practitioner. 
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267 
‘‘(C) The term ‘hospital-based’ means, with re-
spect to an eligible professional, a professional (such 
as a pathologist, anesthesiologist, or emergency physi-
cian) who furnishes substantially all of the individ-
ual’s professional services in a hospital setting 
(whether inpatient or outpatient) and through the use 
of the facilities and equipment, including computer 
equipment, of the hospital. 
‘‘(4)(A) The term ‘allowable costs’ means, with respect 
to certified EHR technology of a Medicaid provider, costs 
of such technology (and support services including mainte-
nance and training that is for, or is necessary for the adop-
tion and operation of, such technology) as determined by 
the Secretary to be reasonable. 
‘‘(B) The term ‘net allowable costs’ means allowable 
costs reduced by any payment that is made to the provider 
involved from any other source that is directly attributable 
to payment for certified EHR technology or services de-
scribed in subparagraph (A). 
‘‘(C) In no case shall— 
‘‘(i) the aggregate allowable costs under this sub-
section (covering one or more years) with respect to 
a Medicaid provider described in paragraph (2)(A) 
for purchase and initial implementation of certified 
EHR technology (and services described in subpara-
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