236 
‘‘(6) MEANINGFUL EHR USER ATTESTATION.— 
For purposes of this subsection and subsection (m), 
a qualifying MA organization shall submit an attes-
tation, in a form and manner specified by the Sec-
retary which may include the submission of such at-
testation 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)(3)) for a year specified 
by the Secretary; and 
‘‘(B) whether each eligible hospital de-
scribed in subsection (m)(1), with respect to 
such organization, is a meaningful EHR user 
(as defined in section 1886(n)(3)) for an appli-
cable period specified by the Secretary.’’. 
(d) CONFORMING AMENDMENTS.—Section 1853 of 
the Social Security Act (42 U.S.C. 1395w–23) is amend-
ed— 
(1) in subsection (a)(1)(A), by striking ‘‘and 
(i)’’ and inserting ‘‘(i), and (l)’’; 
(2) in subsection (c)— 
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(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 organi-
zation’’. 
(e) 
CONFORMING
AMENDMENTS
TO
E-PRE-
SCRIBING.— 
(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 sub-
sequent 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— 
(A) in subparagraph (A), by striking ‘‘For 
2009’’ and inserting ‘‘Subject to subparagraph 
(D), for 2009’’; and 
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(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 
certified EHR technology (as defined in sub-
section (o)(6)(A)) that has the capability of 
electronic prescribing.’’. 
SEC. 4312. INCENTIVES FOR HOSPITALS. 
(a) INCENTIVE PAYMENT.—Section 1886 of the So-
cial Security Act (42 U.S.C. 1395ww) is amended by add-
ing 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 inpa-
tient hospital services furnished by an eligible hos-
pital during a payment year (as defined in para-
graph (2)(G)), if the eligible hospital is a meaningful 
EHR user (as determined under paragraph (3)) for 
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the reporting period with respect to such year, in ad-
dition to the amount otherwise paid under this sec-
tion, there also shall be paid to the eligible hospital, 
from the Federal Hospital Insurance Trust Fund es-
tablished under section 1817, an amount equal to 
the applicable amount specified in paragraph (2)(A) 
for the hospital for such payment year. 
‘‘(2) PAYMENT AMOUNT.— 
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding subparagraphs of this paragraph, the 
applicable amount specified in this subpara-
graph 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 pay-
ment year. 
‘‘(ii) MEDICARE
SHARE.—The Medi-
care share as specified in subparagraph 
(D) for the hospital for a period selected 
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by the Secretary with respect to such pay-
ment year. 
‘‘(iii) 
TRANSITION
FACTOR.—The 
transition factor specified in subparagraph 
(E) for the hospital for the payment year. 
‘‘(B) BASE
AMOUNT.—The base amount 
specified in this subparagraph is $2,000,000. 
‘‘(C) DISCHARGE RELATED AMOUNT.—The 
discharge related amount specified in this sub-
paragraph for a 12-month period selected by 
the Secretary shall be determined as the sum of 
the amount, based upon total discharges (re-
gardless of any source of payment) for the pe-
riod, for each discharge up to the 23,000th dis-
charge as follows: 
‘‘(i) For the 1,150th through the 
9,200th discharge, $200. 
‘‘(ii) For the 9,201st through the 
13,800th discharge, 50 percent of the 
amount specified in clause (i). 
‘‘(iii) For the 13,801st through the 
23,000th discharge, 30 percent of the 
amount specified in clause (i). 
‘‘(D) MEDICARE
SHARE.—The Medicare 
share specified under this subparagraph for a 
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hospital for a period selected by the Secretary 
for a payment year is equal to the fraction— 
‘‘(i) the numerator of which is the 
sum (for such period and with respect to 
the hospital) of— 
‘‘(I) the number of inpatient-bed- 
days (as established by the Secretary) 
which are attributable to individuals 
with respect to whom payment may be 
made under part A; and 
‘‘(II) the number of inpatient- 
bed-days (as so established) which are 
attributable to individuals who are en-
rolled with a Medicare Advantage or-
ganization under part C; and 
‘‘(ii) the denominator of which is the 
product of— 
‘‘(I) the total number of inpa-
tient-bed-days with respect to the hos-
pital during such period; and 
‘‘(II) the total amount of the hos-
pital’s charges during such period, not 
including any charges that are attrib-
utable to charity care (as such term is 
used for purposes of hospital cost re-
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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 
calculate 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 elimi-
nate bad debt data from uncompensated care 
data. In the absence of the data necessary, with 
respect to a hospital, for the Secretary to com-
pute 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, necessary to compute the amount de-
scribed 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 
subparagraph for an eligible hospital for a 
payment year is as follows: 
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‘‘(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 pay-
ment year for such hospital, 0. 
‘‘(ii) PHASE
DOWN
FOR
ELIGIBLE 
HOSPITALS FIRST ADOPTING EHR AFTER 
2013.—If the first payment year for an eli-
gible hospital is after 2013, then the tran-
sition factor 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 hos-
pital for which the first payment year is 
2013. If the first payment year for an eli-
gible hospital is after 2015 then the transi-
tion factor specified in this subparagraph 
for such hospital and for such year and 
any subsequent year shall be 0. 
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‘‘(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 pay-
ment year’, ‘third payment year’, and 
‘fourth payment year’ mean, with respect 
to an eligible hospital, each successive year 
immediately following the first payment 
year for that hospital. 
‘‘(3) MEANINGFUL EHR USER.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an eligible hospital shall be treated 
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as a meaningful EHR user for a reporting pe-
riod for a payment year (or, for purposes of 
subsection (b)(3)(B)(ix), for a reporting period 
under such subsection for a fiscal year) if 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 
period such certified EHR technology is 
connected in a manner that provides, in 
accordance with law and standards appli-
cable to the exchange of information, for 
the electronic exchange of health informa-
tion to improve the quality of health care, 
such as promoting care coordination. 
‘‘(iii) 
REPORTING
ON
MEASURES 
USING
EHR.—Subject to subparagraph 
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(B)(ii) and using such certified EHR tech-
nology, the eligible hospital submits infor-
mation for such period, in a form and 
manner specified by the Secretary, on such 
clinical quality measures and such other 
measures as selected 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 para-
graph. 
‘‘(B) REPORTING ON MEASURES.— 
‘‘(i) SELECTION.—The Secretary may 
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 en-
tity 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 ap-
plying 
subsection 
(b)(3)(B)(viii)) 
being selected under this subpara-
graph, 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 
Secretary has the capacity to accept the in-
formation electronically, which may be on 
a pilot basis. 
‘‘(iii) COORDINATION OF REPORTING 
OF
INFORMATION.—In 
selecting 
such 
measures, and in establishing the form and 
manner for reporting measures under sub-
paragraph (A)(iii), the Secretary shall seek 
to avoid redundant or duplicative reporting 
with reporting otherwise required, includ-
ing 
reporting 
under 
subsection 
(b)(3)(B)(viii). 
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‘‘(C) DEMONSTRATION
OF
MEANINGFUL 
USE OF CERTIFIED EHR TECHNOLOGY AND IN-
FORMATION 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.—Not-
withstanding sections 1860D–15(d)(2)(B) 
and 1860D–15(f)(2), the Secretary may 
use data regarding drug claims submitted 
for purposes of section 1860D–15 that are 
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necessary for purposes of subparagraph 
(A). 
‘‘(4) APPLICATION.— 
‘‘(A) LIMITATIONS
ON
REVIEW.—There 
shall be no administrative or judicial review 
under section 1869, section 1878, or otherwise 
of the determination of any incentive payment 
under this subsection and the payment adjust-
ment under subsection (b)(3)(B)(ix), including 
the determination of a meaningful EHR user 
under paragraph (3), determination of meas-
ures applicable to services furnished by eligible 
hospitals under this subsection, and the excep-
tion under subsection (b)(3)(B)(ix)(II). 
‘‘(B) POSTING
ON
WEBSITE.—The Sec-
retary shall post on the Internet website of the 
Centers for Medicare & Medicaid Services, in an 
easily understandable format, a list of the 
names of the eligible hospitals that are mean-
ingful EHR users under this subsection or sub-
section (b)(3)(B)(ix) and other relevant data as 
determined appropriate by the Secretary. The 
Secretary shall ensure that a hospital has the 
opportunity to review the other relevant data 
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that are to be made public with respect to the 
hospital prior to such data being made public. 
‘‘(5) CERTIFIED EHR TECHNOLOGY DEFINED.— 
The term ‘certified EHR technology’ has the mean-
ing given such term in section 1848(o)(4). 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) ELIGIBLE HOSPITAL.—The term ‘eli-
gible 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.— 
Section 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 
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(n)(3)) for the reporting period for such fiscal year, three- 
quarters of the applicable percentage increase otherwise 
applicable under clause (i) for such fiscal year shall be 
reduced by 331⁄3 percent for fiscal year 2016, 662⁄3 per-
cent 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 reduc-
tion in computing the applicable percentage increase under 
clause (i) for a subsequent 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 
determines, subject to annual renewal, that requiring such 
hospital 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 Inter-
net access. In no case may a hospital be granted an ex-
emption under this subclause for more than 5 years. 
‘‘(III) For fiscal year 2016 and each subsequent fis-
cal year, a State in which hospitals are paid for services 
under section 1814(b)(3) shall adjust the payments to 
each subsection (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 
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reduction in payments to hospitals in the State that is 
equivalent to the aggregate reduction that would have oc-
curred if payments had been reduced to each subsection 
(d) hospital in the State in a manner comparable to the 
reduction under the previous provisions of this clause. The 
State shall report to the Secretary the methodology it will 
use to make the payment 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 
ELIGIBLE HOSPITALS.—Section 1853 of the Social Secu-
rity Act (42 U.S.C. 1395w–23), as amended by section 
311(c), is further amended by adding at the end the fol-
lowing 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 
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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-
ner as they apply to eligible hospitals under such 
sections. Incentive payments under paragraph (3) 
shall be made to and payment adjustments under 
paragraph (4) shall apply to such qualifying organi-
zations. 
‘‘(2) ELIGIBLE
HOSPITAL
DESCRIBED.—With 
respect 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 simi-
lar to the estimated amount in the aggregate 
that would be payable if payment for services 
furnished by such hospitals was payable under 
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part A instead of this part. In implementing the 
previous sentence, the Secretary— 
‘‘(i) shall, insofar as data to deter-
mine the discharge related amount under 
section 1886(n)(2)(C) for an eligible hos-
pital are not available to the Secretary, use 
such alternative data and methodology to 
estimate such discharge related amount as 
the Secretary determines appropriate; and 
‘‘(ii) shall, insofar as data to deter-
mine the medicare share described in sec-
tion 1886(n)(2)(D) for an eligible hospital 
are not available to the Secretary, use such 
alternative data and methodology to esti-
mate such share, which data and method-
ology may include use of the inpatient bed 
days (or discharges) with respect to an eli-
gible hospital during the appropriate pe-
riod which are attributable to both individ-
uals for whom payment may be made 
under part A or individuals enrolled in an 
MA plan under a Medicare Advantage or-
ganization under this part as a proportion 
of the total number of patient-bed-days (or 
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subsection and under section 1886(n); 
and 
‘‘(II) to collect data from Medi-
care Advantage organizations to en-
sure 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 cor-
porate governance with such organization and 
that serve individuals enrolled under a plan of-
fered by such organization are not meaningful 
EHR users (as defined in section 1886(n)(3)) 
with respect to a period, the payment amount 
payable under this section for such organization 
for such period shall be the percent specified in 
subparagraph (B) for such period of the pay-
ment amount otherwise provided under this sec-
tion for such period. 
‘‘(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 the percentage 
point reduction effected under section 
1886(b)(3)(B)(ix)(I) for the period; and 
‘‘(ii) the Medicare hospital expendi-
ture 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 
applicable period, the Secretary shall apply the 
payment adjustment under this paragraph 
based on a methodology specified by the Sec-
retary, taking into account the proportion of 
such eligible hospitals, or discharges from such 
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hospitals, that are not meaningful EHR users 
for such period.’’. 
(d) CONFORMING AMENDMENTS.— 
(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 ‘‘, sub-
ject 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 
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259 
(ii) in paragraph (6)(A), by inserting 
‘‘and subsections (b)(3)(B)(ix) and (n) of 
section 1886’’ after ‘‘section 1848’’; and 
(B) in subsection (f), by inserting ‘‘and 
subsection (m)’’ after ‘‘under subsection (l)’’. 
SEC. 4313. TREATMENT OF PAYMENTS AND SAVINGS; IM-
PLEMENTATION FUNDING. 
(a) PREMIUM HOLD HARMLESS.— 
(1) IN GENERAL.—Section 1839(a)(1) of the 
Social Security Act (42 U.S.C. 1395r(a)(1)) is 
amended by adding at the end the following: ‘‘In ap-
plying this paragraph there shall not be taken into 
account additional payments under section 1848(o) 
and section 1853(l)(3) and the Government con-
tribution 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 pe-
riod 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 sec-
tions 1848(o) and 1853(l)(3).’’. 
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260 
(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 sec-
tion 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 Supple-
mental 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 projected shortfall in the conversion factor 
for 2014 relative to the conversion factor for 
2008 and adjustments to payments for items 
and services furnished by providers of services 
and suppliers under such original medicare fee- 
for-service program’’; 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— 
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‘‘(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 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
SUBSE-
QUENT YEARS.—In the case that expenditures from 
the Fund are applied to, or otherwise affect, a pay-
ment rate for an item or service under this title for 
a year, the payment 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 Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
ment Account, $60,000,000 for each of fiscal years 2009 
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through 2015 and $30,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
SEC. 4314. STUDY ON APPLICATION OF HIT 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 qualified health informa-
tion technology should be made available to health 
care providers who are receiving minimal or no pay-
ment incentives 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— 
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263 
(A) the adoption rates of qualified health 
information technology by such health care pro-
viders; 
(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; 
(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 pro-
viders; and 
(F) any other issues the Secretary deems 
to be appropriate. 
(b) REPORT.—Not later than June 30, 2010, the 
Secretary shall submit to Congress a report on the find-
ings and conclusions of the study conducted under sub-
section (a). 
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264 
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 Secu-
rity 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 
(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 at-
tributable to payments for certified EHR tech-
nology (and support services including mainte-
nance and training that is for, or is necessary 
for the adoption and operation of, such tech-
nology) by Medicaid providers described in sub-
section (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 pay-
ments described in clause (i) if the State meets 
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265 
the condition described in subsection (t)(9); 
plus’’; and 
(2) by inserting after subsection (s) the fol-
lowing 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 allowable costs of Medicaid providers (as defined in 
paragraph (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 
paragraph (3)(B)) who is not hospital-based and has 
at least 30 percent of the professional’s patient vol-
ume (as estimated in accordance with standards es-
tablished by the Secretary) attributable to individ-
uals 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 accord-
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266 
ance with standards established by the Secretary) 
attributable to individuals who are receiving medical 
assistance under this title; or 
‘‘(iii) a Federally-qualified health center or 
rural health clinic that has at least 30 percent of the 
center’s or clinic’s patient volume (as estimated in 
accordance with standards established by the Sec-
retary) attributable to individuals who are receiving 
medical assistance under this title. 
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 pay-
ment under section 1848(o) with respect to the adoption 
or support of certified EHR technology by the profes-
sional. In applying clauses (ii) and (iii) of subparagraph 
(B), the standards 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 de-
fined 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 sec-
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tion 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 elec-
tronic 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. 
‘‘(C) The term ‘hospital-based’ means, with re-
spect to an eligible professional, a professional (such 
as a pathologist, anesthesiologist, or emergency phy-
sician) 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 com-
puter equipment, of the hospital. 
‘‘(4)(A) The term ‘allowable costs’ means, with re-
spect to certified EHR technology of a Medicaid provider, 
costs of such technology (and support services including 
maintenance and training that is for, or is necessary for 
the adoption and operation of, such technology) as deter-
mined 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 
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‘‘(v) the allowable costs, whether for purchase 
and initial implementation, maintenance, or other-
wise, for a Medicaid provider described in paragraph 
(2)(B) exceed such aggregate or annual limitation as 
the Secretary shall establish, based on an amount 
determined by the Secretary as being adequate to 
adopt and maintain certified EHR technology, con-
sistent with paragraph (6). 
‘‘(5) Payments described in paragraph (1) are not in 
accordance with this subsection unless the following re-
quirements are met: 
‘‘(A) The State provides assurances satisfactory 
to the Secretary that amounts received under sub-
section (a)(3)(F) with respect to costs of a Medicaid 
provider are paid directly to such provider without 
any deduction or rebate. 
‘‘(B) Such Medicaid provider is responsible for 
payment of the costs described in such paragraph 
that are not provided under this title. 
‘‘(C) With respect to payments to such Med-
icaid provider for costs other than costs related to 
the initial adoption of certified EHR technology, the 
Medicaid provider demonstrates meaningful use of 
certified EHR technology through a means that is 
approved by the State and acceptable to the Sec-
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retary, and that may be based upon the methodolo-
gies applied under section 1848(o) or 1886(n). 
‘‘(D) To the extent specified by the Secretary, 
the certified EHR technology is compatible with 
State or Federal administrative management sys-
tems. 
‘‘(6)(A) In no case shall the payments described in 
paragraph (1), with respect to a hospital, exceed in the 
aggregate the product of— 
‘‘(i) the overall hospital HIT amount for the 
hospital computed under subparagraph (B); and 
‘‘(ii) the Medicaid share for such hospital com-
puted under subparagraph (C). 
‘‘(B) For purposes of this paragraph, the overall hos-
pital HIT amount, with respect to a hospital, is the sum 
of 
the 
applicable 
amounts 
specified 
in 
section 
1886(n)(2)(A) for such hospital for the first 4 payment 
years (as estimated by the Secretary) determined as if the 
Medicare share specified in clause (ii) of such section were 
1. The Secretary shall publish in the Federal Register the 
overall hospital HIT amount for each hospital eligible for 
payments under this subsection. In computing amounts 
under clause (ii) for payment years after the first payment 
year, the Secretary shall assume that in subsequent pay-
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ment years discharges increase at an annual rate of 2 per-
cent per year. 
‘‘(C) The Medicaid share computed under this sub-
paragraph, for a hospital for a period specified by the Sec-
retary, shall be calculated in the same manner as the 
Medicare share under section 1886(n)(2)(D) for such a 
hospital and period, except that there shall be substituted 
for the numerator under clause (i) of such section the 
amount that is equal to the number of inpatient-bed-days 
(as established by the Secretary) which are attributable 
to individuals who are receiving medical assistance under 
this title and who are not described in section 
1886(n)(2)(D)(i). In computing inpatient-bed-days under 
the previous sentence, the Secretary shall take into ac-
count inpatient-bed-days attributable to inpatient-bed- 
days that are paid for individuals enrolled in a Medicaid 
managed care plan (under section 1903(m) or section 
1932). 
‘‘(7) With respect to health care providers other than 
hospitals, the Secretary shall ensure coordination of the 
different programs for payment of such health care pro-
viders for adoption or use of health information technology 
(including certified EHR technology), as well as payments 
for such health care providers provided under this title or 
title XVIII, to assure no duplication of funding. 
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272 
‘‘(8) In carrying out paragraph (5)(C), the State and 
Secretary shall seek, to the maximum extent practicable, 
to avoid duplicative requirements from Federal and State 
Governments to demonstrate meaningful use of certified 
EHR technology under this title and title XVIII. In doing 
so, the Secretary may deem satisfaction of requirements 
for such meaningful use for a payment year under title 
XVIII to be sufficient to qualify as meaningful use under 
this subsection. The Secretary may also specify the report-
ing periods under this subsection in order to carry out this 
paragraph. 
‘‘(9) In order to be provided Federal financial partici-
pation under subsection (a)(3)(F)(ii), a State must dem-
onstrate to the satisfaction of the Secretary, that the 
State— 
‘‘(A) is using the funds provided for the pur-
poses of administering payments under this sub-
section, including tracking of meaningful use by 
Medicaid providers; 
‘‘(B) conducting adequate oversight of the pro-
gram under this subsection, including routine track-
ing of meaningful use attestations and reporting 
mechanisms; and 
‘‘(C) be pursuing initiatives to encourage the 
adoption of certified EHR technology to promote 
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health care quality and the exchange of health care 
information under this title, subject to applicable 
laws and regulations governing such exchange. 
‘‘(10) The Secretary shall periodically submit reports 
to the Committee on Energy and Commerce of the House 
of Representatives and the Committee on Finance of the 
Senate on status, progress, and oversight of payments 
under paragraph (1).’’. 
(b) IMPLEMENTATION FUNDING.—In addition to 
funds otherwise available, out of any funds in the Treas-
ury not otherwise appropriated, there are appropriated to 
the Secretary of Health and Human Services for the Cen-
ter for Medicare & Medicaid Services Program Manage-
ment Account, $40,000,000 for each of fiscal years 2009 
through 2015 and $20,000,000 for each succeeding fiscal 
year through fiscal year 2019, which shall be available for 
purposes of carrying out the provisions of (and the amend-
ments made by) this part. Amounts appropriated under 
this subsection for a fiscal year shall be available until ex-
pended. 
Subtitle D—Privacy 
SEC. 4400. DEFINITIONS. 
In this subtitle, except as specified otherwise: 
(1) BREACH.—The term ‘‘breach’’ means the 
unauthorized acquisition, access, use, or disclosure 
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of protected health information which compromises 
the security, privacy, or integrity of protected health 
information maintained by or on behalf of a person. 
Such term does not include any unintentional acqui-
sition, access, use, or disclosure of such information 
by an employee or agent of the covered entity or 
business associate involved if such acquisition, ac-
cess, use, or disclosure, respectively, was made in 
good faith and within the course and scope of the 
employment or other contractual relationship of such 
employee or agent, respectively, with the covered en-
tity or business associate and if such information is 
not further acquired, accessed, used, or disclosed by 
such employee or agent. 
(2) BUSINESS ASSOCIATE.—The term ‘‘business 
associate’’ has the meaning given such term in sec-
tion 160.103 of title 45, Code of Federal Regula-
tions. 
(3) COVERED ENTITY.—The term ‘‘covered en-
tity’’ has the meaning given such term in section 
160.103 of title 45, Code of Federal Regulations. 
(4) DISCLOSE.—The terms ‘‘disclose’’ and ‘‘dis-
closure’’ have the meaning given the term ‘‘disclo-
sure’’ in section 160.103 of title 45, Code of Federal 
Regulations. 
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