931 
•AMDT. NO. 2786 
nancial assistance for the purchase or pro-
vision of prescription drug coverage on be-
half of applicable beneficiaries as the Sec-
retary may specify; 
‘‘(vi) the establishment of procedures 
to implement the special rule for supple-
mental benefits under paragraph (2); and 
‘‘(vii) providing a reasonable dispute 
resolution mechanism to resolve disagree-
ments between manufacturers, applicable 
beneficiaries, and the third party with a 
contract under subsection (d)(3). 
‘‘(B) MONITORING COMPLIANCE.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall monitor compliance by a manufac-
turer with the terms of an agreement 
under this section. 
‘‘(ii) NOTIFICATION.—If a third party 
with a contract under subsection (d)(3) de-
termines that the manufacturer is not in 
compliance with such agreement, the third 
party shall notify the Secretary of such 
noncompliance for appropriate enforcement 
under subsection (e). 
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•AMDT. NO. 2786 
‘‘(C) COLLECTION
OF
DATA
FROM
PRE-
SCRIPTION DRUG PLANS AND MA–PD PLANS.— 
The Secretary may collect appropriate data 
from prescription drug plans and MA–PD plans 
in a timeframe that allows for discounted prices 
to be provided for applicable drugs under this 
section. 
‘‘(2) SPECIAL RULE FOR SUPPLEMENTAL BENE-
FITS.—For plan year 2010 and each subsequent 
plan year, in the case where an applicable bene-
ficiary has supplemental benefits with respect to ap-
plicable drugs under the prescription drug plan or 
MA–PD plan that the applicable beneficiary is en-
rolled in, the applicable beneficiary shall not be pro-
vided a discounted price for an applicable drug 
under this section until after such supplemental ben-
efits have been applied with respect to the applicable 
drug. 
‘‘(d) ADMINISTRATION.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the Secretary shall provide for the implementation of 
this section, including the performance of the duties 
described in subsection (c)(1). 
‘‘(2) LIMITATION.— 
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•AMDT. NO. 2786 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), in providing for such implementa-
tion, the Secretary shall not receive or dis-
tribute any funds of a manufacturer under the 
program. 
‘‘(B) EXCEPTION.—The limitation under 
subparagraph (A) shall not apply to the Sec-
retary with respect to drugs dispensed during 
the period beginning on July 1, 2010, and end-
ing on December 31, 2010, but only if the Sec-
retary determines that the exception to such 
limitation under this subparagraph is necessary 
in order for the Secretary to begin implementa-
tion of this section and provide applicable bene-
ficiaries timely access to discounted prices dur-
ing such period. 
‘‘(3) CONTRACT
WITH
THIRD
PARTIES.—The 
Secretary shall enter into a contract with 1 or more 
third parties to administer the requirements estab-
lished by the Secretary in order to carry out this 
section. At a minimum, the contract with a third 
party under the preceding sentence shall require 
that the third party— 
‘‘(A) receive and transmit information be-
tween the Secretary, manufacturers, and other 
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•AMDT. NO. 2786 
individuals or entities the Secretary determines 
appropriate; 
‘‘(B) receive, distribute, or facilitate the 
distribution of funds of manufacturers to ap-
propriate individuals or entities in order to 
meet the obligations of manufacturers under 
agreements under this section; 
‘‘(C) provide adequate and timely informa-
tion to manufacturers, consistent with the 
agreement with the manufacturer under this 
section, as necessary for the manufacturer to 
fulfill its obligations under this section; and 
‘‘(D) permit manufacturers to conduct 
periodic audits, directly or through contracts, of 
the data and information used by the third 
party to determine discounts for applicable 
drugs of the manufacturer under the program. 
‘‘(4) 
PERFORMANCE
REQUIREMENTS.—The 
Secretary shall establish performance requirements 
for a third party with a contract under paragraph 
(3) and safeguards to protect the independence and 
integrity of the activities carried out by the third 
party under the program under this section. 
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•AMDT. NO. 2786 
‘‘(5) IMPLEMENTATION.—The Secretary may 
implement the program under this section by pro-
gram instruction or otherwise. 
‘‘(6) ADMINISTRATION.—Chapter 35 of title 44, 
United States Code, shall not apply to the program 
under this section. 
‘‘(e) ENFORCEMENT.— 
‘‘(1) AUDITS.—Each manufacturer with an 
agreement in effect under this section shall be sub-
ject to periodic audit by the Secretary. 
‘‘(2) CIVIL MONEY PENALTY.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
impose a civil money penalty on a manufacturer 
that fails to provide applicable beneficiaries dis-
counts for applicable drugs of the manufacturer 
in accordance with such agreement for each 
such failure in an amount the Secretary deter-
mines is commensurate with the sum of— 
‘‘(i) the amount that the manufac-
turer would have paid with respect to such 
discounts under the agreement, which will 
then be used to pay the discounts which 
the manufacturer had failed to provide; 
and 
‘‘(ii) 25 percent of such amount. 
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•AMDT. NO. 2786 
‘‘(B) APPLICATION.—The provisions of 
section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under 
this paragraph in the same manner as such 
provisions apply to a penalty or proceeding 
under section 1128A(a). 
‘‘(f) CLARIFICATION REGARDING AVAILABILITY OF 
OTHER COVERED PART D DRUGS.—Nothing in this sec-
tion shall prevent an applicable beneficiary from pur-
chasing a covered part D drug that is not an applicable 
drug (including a generic drug or a drug that is not on 
the formulary of the prescription drug plan or MA–PD 
plan that the applicable beneficiary is enrolled in). 
‘‘(g) DEFINITIONS.—In this section: 
‘‘(1) APPLICABLE
BENEFICIARY.—The term 
‘applicable beneficiary’ means an individual who, on 
the date of dispensing an applicable drug— 
‘‘(A) is enrolled in a prescription drug plan 
or an MA–PD plan; 
‘‘(B) is not enrolled in a qualified retiree 
prescription drug plan; 
‘‘(C) is not entitled to an income-related 
subsidy under section 1860D–14(a); 
‘‘(D) is not subject to a reduction in pre-
mium subsidy under section 1839(i); and 
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•AMDT. NO. 2786 
‘‘(E) who— 
‘‘(i) has reached or exceeded the ini-
tial coverage limit under section 1860D– 
2(b)(3) during the year; and 
‘‘(ii) has not incurred costs for cov-
ered part D drugs in the year equal to the 
annual out-of-pocket threshold specified in 
section 1860D–2(b)(4)(B). 
‘‘(2) APPLICABLE DRUG.—The term ‘applicable 
drug’ means, with respect to an applicable bene-
ficiary, a covered part D drug— 
‘‘(A) approved under a new drug applica-
tion under section 505(b) of the Federal Food, 
Drug, and Cosmetic Act or, in the case of a bio-
logic product, licensed under section 351 of the 
Public Health Service Act (other than a product 
licensed under subsection (k) of such section 
351); and 
‘‘(B)(i) if the PDP sponsor of the prescrip-
tion drug plan or the MA organization offering 
the MA–PD plan uses a formulary, which is on 
the formulary of the prescription drug plan or 
MA–PD plan that the applicable beneficiary is 
enrolled in; 
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•AMDT. NO. 2786 
‘‘(ii) if the PDP sponsor of the prescrip-
tion drug plan or the MA organization offering 
the MA–PD plan does not use a formulary, for 
which benefits are available under the prescrip-
tion drug plan or MA–PD plan that the appli-
cable beneficiary is enrolled in; or 
‘‘(iii) is provided through an exception or 
appeal. 
‘‘(3) APPLICABLE
NUMBER
OF
CALENDAR 
DAYS.—The term ‘applicable number of calendar 
days’ means— 
‘‘(A) with respect to claims for reimburse-
ment submitted electronically, 14 days; and 
‘‘(B) with respect to claims for reimburse-
ment submitted otherwise, 30 days. 
‘‘(4) DISCOUNTED PRICE.— 
‘‘(A) IN GENERAL.—The term ‘discounted 
price’ means 50 percent of the negotiated price 
of the applicable drug of a manufacturer. 
‘‘(B) CLARIFICATION.—Nothing in this 
section shall be construed as affecting the re-
sponsibility of an applicable beneficiary for pay-
ment of a dispensing fee for an applicable drug. 
‘‘(C) 
SPECIAL
CASE
FOR
CERTAIN 
CLAIMS.—In the case where the entire amount 
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•AMDT. NO. 2786 
of the negotiated price of an individual claim 
for an applicable drug with respect to an appli-
cable beneficiary does not fall at or above the 
initial coverage limit under section 1860D- 
2(b)(3) and below the annual out-of-pocket 
threshold specified in section 1860D-2(b)(4)(B) 
for the year, the manufacturer of the applicable 
drug shall provide the discounted price under 
this section on only the portion of the nego-
tiated price of the applicable drug that falls at 
or above such initial coverage limit and below 
such annual out-of-pocket threshold. 
‘‘(5) MANUFACTURER.—The term ‘manufac-
turer’ means any entity which is engaged in the pro-
duction, preparation, propagation, compounding, 
conversion, or processing of prescription drug prod-
ucts, either directly or indirectly by extraction from 
substances of natural origin, or independently by 
means of chemical synthesis, or by a combination of 
extraction and chemical synthesis. Such term does 
not include a wholesale distributor of drugs or a re-
tail pharmacy licensed under State law. 
‘‘(6) NEGOTIATED
PRICE.—The term ‘nego-
tiated price’ has the meaning given such term in sec-
tion 423.100 of title 42, Code of Federal Regula-
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•AMDT. NO. 2786 
tions (as in effect on the date of enactment of this 
section), except that such negotiated price shall not 
include any dispensing fee for the applicable drug. 
‘‘(7) QUALIFIED RETIREE PRESCRIPTION DRUG 
PLAN.—The term ‘qualified retiree prescription drug 
plan’ has the meaning given such term in section 
1860D–22(a)(2).’’. 
(c) INCLUSION IN INCURRED COSTS.— 
(1) IN
GENERAL.—Section 1860D–2(b)(4) of 
the Social Security Act (42 U.S.C. 1395w– 
102(b)(4)) is amended— 
(A) in subparagraph (C), in the matter 
preceding clause (i), by striking ‘‘In applying’’ 
and inserting ‘‘Except as provided in subpara-
graph (E), in applying’’; and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(E) INCLUSION OF COSTS OF APPLICABLE 
DRUGS UNDER MEDICARE COVERAGE GAP DIS-
COUNT
PROGRAM.—In applying subparagraph 
(A), incurred costs shall include the negotiated 
price (as defined in paragraph (6) of section 
1860D–14A(g)) of an applicable drug (as de-
fined in paragraph (2) of such section) of a 
manufacturer that is furnished to an applicable 
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•AMDT. NO. 2786 
beneficiary (as defined in paragraph (1) of such 
section) under the Medicare coverage gap dis-
count program under section 1860D–14A, re-
gardless of whether part of such costs were paid 
by a manufacturer under such program.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to costs incurred on or 
after July 1, 2010. 
(d) CONFORMING AMENDMENT PERMITTING PRE-
SCRIPTION DRUG DISCOUNTS.— 
(1) IN GENERAL.—Section 1128B(b)(3) of the 
Social Security Act (42 U.S.C. 1320a–7b(b)(3)) is 
amended— 
(A) by striking ‘‘and’’ at the end of sub-
paragraph (G); 
(B) in the subparagraph (H) added by sec-
tion 237(d) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 
(Public Law 108–173; 117 Stat. 2213)— 
(i) by moving such subparagraph 2 
ems to the left; and 
(ii) by striking the period at the end 
and inserting a semicolon; 
(C) in the subparagraph (H) added by sec-
tion 431(a) of such Act (117 Stat. 2287)— 
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•AMDT. NO. 2786 
(i) by redesignating such subpara-
graph as subparagraph (I); 
(ii) by moving such subparagraph 2 
ems to the left; and 
(iii) by striking the period at the end 
and inserting ‘‘; and’’; and 
(D) by adding at the end the following new 
subparagraph: 
‘‘(J) a discount in the price of an applica-
ble drug (as defined in paragraph (2) of section 
1860D–14A(g)) of a manufacturer that is fur-
nished to an applicable beneficiary (as defined 
in paragraph (1) of such section) under the 
Medicare coverage gap discount program under 
section 1860D–14A.’’. 
(2) CONFORMING AMENDMENT TO DEFINITION 
OF
BEST
PRICE
UNDER
MEDICAID.—Section 
1927(c)(1)(C)(i)(VI) of the Social Security Act (42 
U.S.C. 1396r–8(c)(1)(C)(i)(VI)) is amended by in-
serting ‘‘, or any discounts provided by manufactur-
ers under the Medicare coverage gap discount pro-
gram under section 1860D–14A’’ before the period 
at the end. 
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•AMDT. NO. 2786 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to drugs dispensed on 
or after July 1, 2010. 
SEC. 3302. IMPROVEMENT IN DETERMINATION OF MEDI-
CARE PART D LOW-INCOME BENCHMARK 
PREMIUM. 
(a) IN GENERAL.—Section 1860D–14(b)(2)(B)(iii) 
of the Social Security Act (42 U.S.C. 1395w– 
114(b)(2)(B)(iii)) is amended by inserting ‘‘, determined 
without regard to any reduction in such premium as a re-
sult of any beneficiary rebate under section 1854(b)(1)(C) 
or bonus payment under section 1853(n)’’ before the pe-
riod at the end. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to premiums for months begin-
ning on or after January 1, 2011. 
SEC. 3303. VOLUNTARY DE MINIMIS POLICY FOR SUBSIDY 
ELIGIBLE INDIVIDUALS UNDER PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS. 
(a) IN GENERAL.—Section 1860D–14(a) of the So-
cial Security Act (42 U.S.C. 1395w–114(a)) is amended 
by adding at the end the following new paragraph: 
‘‘(5) WAIVER OF DE MINIMIS PREMIUMS.—The 
Secretary shall, under procedures established by the 
Secretary, permit a prescription drug plan or an 
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•AMDT. NO. 2786 
MA–PD plan to waive the monthly beneficiary pre-
mium for a subsidy eligible individual if the amount 
of such premium is de minimis. If such premium is 
waived under the plan, the Secretary shall not reas-
sign subsidy eligible individuals enrolled in the plan 
to other plans based on the fact that the monthly 
beneficiary premium under the plan was greater 
than the low-income benchmark premium amount.’’. 
(b) AUTHORIZING
THE SECRETARY
TO AUTO-EN-
ROLL SUBSIDY ELIGIBLE INDIVIDUALS IN PLANS THAT 
WAIVE DE MINIMIS PREMIUMS.—Section 1860D–1(b)(1) 
of the Social Security Act (42 U.S.C. 1395w–101(b)(1)) 
is amended— 
(1) in subparagraph (C), by inserting ‘‘except 
as provided in subparagraph (D),’’ after ‘‘shall in-
clude,’’ 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(D) SPECIAL
RULE
FOR
PLANS
THAT 
WAIVE
DE
MINIMIS
PREMIUMS.—The process 
established under subparagraph (A) may in-
clude, in the case of a part D eligible individual 
who is a subsidy eligible individual (as defined 
in section 1860D–14(a)(3)) who has failed to 
enroll in a prescription drug plan or an MA–PD 
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•AMDT. NO. 2786 
plan, for the enrollment in a prescription drug 
plan or MA–PD plan that has waived the 
monthly beneficiary premium for such subsidy 
eligible 
individual 
under 
section 
1860D– 
14(a)(5). If there is more than one such plan 
available, the Secretary shall enroll such an in-
dividual under the preceding sentence on a ran-
dom basis among all such plans in the PDP re-
gion. Nothing in the previous sentence shall 
prevent such an individual from declining or 
changing such enrollment.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this subsection shall apply to premiums for months, and 
enrollments for plan years, beginning on or after January 
1, 2011. 
SEC. 3304. SPECIAL RULE FOR WIDOWS AND WIDOWERS RE-
GARDING ELIGIBILITY FOR LOW-INCOME AS-
SISTANCE. 
(a) IN GENERAL.—Section 1860D–14(a)(3)(B) of 
the Social Security Act (42 U.S.C. 1395w–114(a)(3)(B)) 
is amended by adding at the end the following new clause: 
‘‘(vi) SPECIAL
RULE
FOR
WIDOWS 
AND
WIDOWERS.—Notwithstanding 
the 
preceding provisions of this subparagraph, 
in the case of an individual whose spouse 
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•AMDT. NO. 2786 
dies during the effective period for a deter-
mination or redetermination that has been 
made under this subparagraph, such effec-
tive period shall be extended through the 
date that is 1 year after the date on which 
the 
determination 
or 
redetermination 
would (but for the application of this 
clause) otherwise cease to be effective.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect on January 1, 2011. 
SEC. 3305. IMPROVED INFORMATION FOR SUBSIDY ELIGI-
BLE 
INDIVIDUALS 
REASSIGNED 
TO 
PRE-
SCRIPTION DRUG PLANS AND MA–PD PLANS. 
Section 1860D–14 of the Social Security Act (42 
U.S.C. 1395w–114) is amended— 
(1) by redesignating subsection (d) as sub-
section (e); and 
(2) by inserting after subsection (c) the fol-
lowing new subsection: 
‘‘(d) FACILITATION OF REASSIGNMENTS.—Beginning 
not later than January 1, 2011, the Secretary shall, in 
the case of a subsidy eligible individual who is enrolled 
in one prescription drug plan and is subsequently reas-
signed by the Secretary to a new prescription drug plan, 
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•AMDT. NO. 2786 
provide the individual, within 30 days of such reassign-
ment, with— 
‘‘(1) information on formulary differences be-
tween the individual’s former plan and the plan to 
which the individual is reassigned with respect to the 
individual’s drug regimens; and 
‘‘(2) a description of the individual’s right to 
request a coverage determination, exception, or re-
consideration under section 1860D–4(g), bring an 
appeal under section 1860D–4(h), or resolve a griev-
ance under section 1860D–4(f).’’. 
SEC. 3306. FUNDING OUTREACH AND ASSISTANCE FOR 
LOW-INCOME PROGRAMS. 
(a) ADDITIONAL FUNDING FOR STATE HEALTH IN-
SURANCE PROGRAMS.—Subsection (a)(1)(B) of section 
119 of the Medicare Improvements for Patients and Pro-
viders Act of 2008 (42 U.S.C. 1395b–3 note) is amended 
by striking ‘‘(42 U.S.C. 1395w–23(f))’’ and all that fol-
lows through the period at the end and inserting ‘‘(42 
U.S.C. 1395w–23(f)), to the Centers for Medicare & Med-
icaid Services Program Management Account— 
‘‘(i) 
for 
fiscal 
year 
2009, 
of 
$7,500,000; and 
‘‘(ii) for the period of fiscal years 
2010 through 2012, of $15,000,000. 
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•AMDT. NO. 2786 
Amounts appropriated under this subparagraph 
shall remain available until expended.’’. 
(b) ADDITIONAL FUNDING FOR AREA AGENCIES ON 
AGING.—Subsection (b)(1)(B) of such section 119 is 
amended by striking ‘‘(42 U.S.C. 1395w–23(f))’’ and all 
that follows through the period at the end and inserting 
‘‘(42 U.S.C. 1395w–23(f)), to the Administration on 
Aging— 
‘‘(i) 
for 
fiscal 
year 
2009, 
of 
$7,500,000; and 
‘‘(ii) for the period of fiscal years 
2010 through 2012, of $15,000,000. 
Amounts appropriated under this subparagraph 
shall remain available until expended.’’. 
(c) ADDITIONAL FUNDING
FOR AGING
AND DIS-
ABILITY RESOURCE CENTERS.—Subsection (c)(1)(B) of 
such section 119 is amended by striking ‘‘(42 U.S.C. 
1395w–23(f))’’ and all that follows through the period at 
the end and inserting ‘‘(42 U.S.C. 1395w–23(f)), to the 
Administration on Aging— 
‘‘(i) 
for 
fiscal 
year 
2009, 
of 
$5,000,000; and 
‘‘(ii) for the period of fiscal years 
2010 through 2012, of $10,000,000. 
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•AMDT. NO. 2786 
Amounts appropriated under this subparagraph 
shall remain available until expended.’’. 
(d) ADDITIONAL FUNDING
FOR CONTRACT WITH 
THE NATIONAL CENTER FOR BENEFITS AND OUTREACH 
ENROLLMENT.—Subsection (d)(2) of such section 119 is 
amended by striking ‘‘(42 U.S.C. 1395w–23(f))’’ and all 
that follows through the period at the end and inserting 
‘‘(42 U.S.C. 1395w–23(f)), to the Administration on 
Aging— 
‘‘(i) 
for 
fiscal 
year 
2009, 
of 
$5,000,000; and 
‘‘(ii) for the period of fiscal years 
2010 through 2012, of $5,000,000. 
Amounts appropriated under this subparagraph 
shall remain available until expended.’’. 
(e) SECRETARIAL AUTHORITY TO ENLIST SUPPORT 
IN CONDUCTING CERTAIN OUTREACH ACTIVITIES.—Such 
section 119 is amended by adding at the end the following 
new subsection: 
‘‘(g) SECRETARIAL AUTHORITY TO ENLIST SUPPORT 
IN CONDUCTING CERTAIN OUTREACH ACTIVITIES.—The 
Secretary may request that an entity awarded a grant 
under this section support the conduct of outreach activi-
ties aimed at preventing disease and promoting wellness. 
Notwithstanding any other provision of this section, an en-
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•AMDT. NO. 2786 
tity may use a grant awarded under this subsection to sup-
port the conduct of activities described in the preceding 
sentence.’’. 
SEC. 3307. IMPROVING FORMULARY REQUIREMENTS FOR 
PRESCRIPTION DRUG PLANS AND MA–PD 
PLANS WITH RESPECT TO CERTAIN CAT-
EGORIES OR CLASSES OF DRUGS. 
(a) IMPROVING FORMULARY REQUIREMENTS.—Sec-
tion 1860D–4(b)(3)(G) of the Social Security Act is 
amended to read as follows: 
‘‘(G) REQUIRED INCLUSION OF DRUGS IN 
CERTAIN CATEGORIES AND CLASSES.— 
‘‘(i) FORMULARY REQUIREMENTS.— 
‘‘(I) IN
GENERAL.—Subject to 
subclause (II), a PDP sponsor offer-
ing a prescription drug plan shall be 
required to include all covered part D 
drugs in the categories and classes 
identified by the Secretary under 
clause (ii)(I). 
‘‘(II) EXCEPTIONS.—The Sec-
retary may establish exceptions that 
permit a PDP sponsor offering a pre-
scription drug plan to exclude from its 
formulary a particular covered part D 
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951 
•AMDT. NO. 2786 
drug in a category or class that is 
otherwise required to be included in 
the formulary under subclause (I) (or 
to otherwise limit access to such a 
drug, including through prior author-
ization or utilization management). 
‘‘(ii) IDENTIFICATION
OF
DRUGS
IN 
CERTAIN CATEGORIES AND CLASSES.— 
‘‘(I) IN
GENERAL.—Subject to 
clause (iv), the Secretary shall iden-
tify, as appropriate, categories and 
classes of drugs for which the Sec-
retary determines are of clinical con-
cern. 
‘‘(II) CRITERIA.—The Secretary 
shall use criteria established by the 
Secretary in making any determina-
tion under subclause (I). 
‘‘(iii) IMPLEMENTATION.—The Sec-
retary shall establish the criteria under 
clause (ii)(II) and any exceptions under 
clause (i)(II) through the promulgation of 
a regulation which includes a public notice 
and comment period. 
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952 
•AMDT. NO. 2786 
‘‘(iv) REQUIREMENT
FOR
CERTAIN 
CATEGORIES
AND
CLASSES
UNTIL
CRI-
TERIA ESTABLISHED.—Until such time as 
the Secretary establishes the criteria under 
clause (ii)(II) the following categories and 
classes of drugs shall be identified under 
clause (ii)(I): 
‘‘(I) Anticonvulsants. 
‘‘(II) Antidepressants. 
‘‘(III) Antineoplastics. 
‘‘(IV) Antipsychotics. 
‘‘(V) Antiretrovirals. 
‘‘(VI) Immunosuppressants for 
the treatment of transplant rejec-
tion.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan year 2011 and subsequent 
plan years. 
SEC. 3308. REDUCING PART D PREMIUM SUBSIDY FOR 
HIGH-INCOME BENEFICIARIES. 
(a) INCOME-RELATED INCREASE IN PART D PRE-
MIUM.— 
(1) IN GENERAL.—Section 1860D–13(a) of the 
Social Security Act (42 U.S.C. 1395w–113(a)) is 
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953 
•AMDT. NO. 2786 
amended by adding at the end the following new 
paragraph: 
‘‘(7) INCREASE IN BASE BENEFICIARY PREMIUM 
BASED ON INCOME.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual whose modified adjusted gross income 
exceeds the threshold amount applicable under 
paragraph (2) of section 1839(i) (including ap-
plication of paragraph (5) of such section) for 
the calendar year, the monthly amount of the 
beneficiary premium applicable under this sec-
tion for a month after December 2010 shall be 
increased by the monthly adjustment amount 
specified in subparagraph (B). 
‘‘(B) MONTHLY ADJUSTMENT AMOUNT.— 
The monthly adjustment amount specified in 
this subparagraph for an individual for a month 
in a year is equal to the product of— 
‘‘(i) the quotient obtained by divid-
ing— 
‘‘(I) the applicable percentage de-
termined under paragraph (3)(C) of 
section 1839(i) (including application 
of paragraph (5) of such section) for 
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954 
•AMDT. NO. 2786 
the individual for the calendar year 
reduced by 25.5 percent; by 
‘‘(II) 25.5 percent; and 
‘‘(ii) the base beneficiary premium (as 
computed under paragraph (2)). 
‘‘(C) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of this paragraph, the 
term ‘modified adjusted gross income’ has the 
meaning given such term in subparagraph (A) 
of section 1839(i)(4), determined for the tax-
able year applicable under subparagraphs (B) 
and (C) of such section. 
‘‘(D) DETERMINATION BY COMMISSIONER 
OF
SOCIAL
SECURITY.—The Commissioner of 
Social Security shall make any determination 
necessary to carry out the income-related in-
crease in the base beneficiary premium under 
this paragraph. 
‘‘(E) PROCEDURES TO ASSURE CORRECT 
INCOME-RELATED
INCREASE
IN
BASE
BENE-
FICIARY PREMIUM.— 
‘‘(i) DISCLOSURE
OF
BASE
BENE-
FICIARY
PREMIUM.—Not later than Sep-
tember 15 of each year beginning with 
2010, the Secretary shall disclose to the 
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955 
•AMDT. NO. 2786 
Commissioner 
of 
Social 
Security 
the 
amount of the base beneficiary premium 
(as computed under paragraph (2)) for the 
purpose of carrying out the income-related 
increase in the base beneficiary premium 
under this paragraph with respect to the 
following year. 
‘‘(ii) ADDITIONAL DISCLOSURE.—Not 
later than October 15 of each year begin-
ning with 2010, the Secretary shall dis-
close to the Commissioner of Social Secu-
rity the following information for the pur-
pose of carrying out the income-related in-
crease in the base beneficiary premium 
under this paragraph with respect to the 
following year: 
‘‘(I) The modified adjusted gross 
income threshold applicable under 
paragraph (2) of section 1839(i) (in-
cluding application of paragraph (5) 
of such section). 
‘‘(II) The applicable percentage 
determined under paragraph (3)(C) of 
section 1839(i) (including application 
of paragraph (5) of such section). 
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956 
•AMDT. NO. 2786 
‘‘(III) The monthly adjustment 
amount specified in subparagraph 
(B). 
‘‘(IV) Any other information the 
Commissioner of Social Security de-
termines necessary to carry out the 
income-related increase in the base 
beneficiary premium under this para-
graph. 
‘‘(F) RULE OF CONSTRUCTION.—The for-
mula used to determine the monthly adjustment 
amount specified under subparagraph (B) shall 
only be used for the purpose of determining 
such monthly adjustment amount under such 
subparagraph.’’. 
(2) COLLECTION
OF
MONTHLY
ADJUSTMENT 
AMOUNT.—Section 1860D–13(c) of the Social Secu-
rity Act (42 U.S.C. 1395w–113(c)) is amended— 
(A) in paragraph (1), by striking ‘‘(2) and 
(3)’’ and inserting ‘‘(2), (3), and (4)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) COLLECTION OF MONTHLY ADJUSTMENT 
AMOUNT.— 
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957 
•AMDT. NO. 2786 
‘‘(A) IN GENERAL.—Notwithstanding any 
provision 
of 
this 
subsection 
or 
section 
1854(d)(2), subject to subparagraph (B), the 
amount of the income-related increase in the 
base beneficiary premium for an individual for 
a month (as determined under subsection 
(a)(7)) shall be paid through withholding from 
benefit payments in the manner provided under 
section 1840. 
‘‘(B) AGREEMENTS.—In the case where 
the monthly benefit payments of an individual 
that are withheld under subparagraph (A) are 
insufficient to pay the amount described in such 
subparagraph, the Commissioner of Social Se-
curity shall enter into agreements with the Sec-
retary, the Director of the Office of Personnel 
Management, and the Railroad Retirement 
Board as necessary in order to allow other 
agencies to collect the amount described in sub-
paragraph (A) that was not withheld under 
such subparagraph.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) MEDICARE.—Section 1860D–13(a)(1) of 
the Social Security Act (42 U.S.C. 1395w– 
113(a)(1)) is amended— 
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958 
•AMDT. NO. 2786 
(A) by redesignating subparagraph (F) as 
subparagraph (G); 
(B) in subparagraph (G), as redesignated 
by subparagraph (A), by striking ‘‘(D) and 
(E)’’ and inserting ‘‘(D), (E), and (F)’’; and 
(C) by inserting after subparagraph (E) 
the following new subparagraph: 
‘‘(F) INCREASE BASED ON INCOME.—The 
monthly beneficiary premium shall be increased 
pursuant to paragraph (7).’’. 
(2) 
INTERNAL
REVENUE
CODE.—Section 
6103(l)(20) of the Internal Revenue Code of 1986 
(relating to disclosure of return information to carry 
out Medicare part B premium subsidy adjustment) 
is amended— 
(A) in the heading, by inserting ‘‘AND 
PART
D
BASE
BENEFICIARY
PREMIUM
IN-
CREASE’’ after ‘‘PART B PREMIUM SUBSIDY AD-
JUSTMENT’’; 
(B) in subparagraph (A)— 
(i) in the matter preceding clause (i), 
by inserting ‘‘or increase under section 
1860D–13(a)(7)’’ after ‘‘1839(i)’’; and 
(ii) in clause (vii), by inserting after 
‘‘subsection (i) of such section’’ the fol-
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959 
•AMDT. NO. 2786 
lowing: ‘‘or increase under section 1860D– 
13(a)(7) of such Act’’; and 
(C) in subparagraph (B)— 
(i) by striking ‘‘Return information’’ 
and inserting the following: 
‘‘(i) IN
GENERAL.—Return informa-
tion’’; 
(ii) by inserting ‘‘or increase under 
such section 1860D–13(a)(7)’’ before the 
period at the end; 
(iii) as amended by clause (i), by in-
serting ‘‘or for the purpose of resolving 
taxpayer appeals with respect to any such 
premium adjustment or increase’’ before 
the period at the end; and 
(iv) by adding at the end the following 
new clause: 
‘‘(ii) DISCLOSURE
TO
OTHER
AGEN-
CIES.—Officers, employees, and contrac-
tors of the Social Security Administration 
may disclose— 
‘‘(I) the taxpayer identity infor-
mation and the amount of the pre-
mium subsidy adjustment or premium 
increase with respect to a taxpayer de-
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960 
•AMDT. NO. 2786 
scribed in subparagraph (A) to offi-
cers, employees, and contractors of 
the Centers for Medicare and Med-
icaid Services, to the extent that such 
disclosure is necessary for the collec-
tion of the premium subsidy amount 
or the increased premium amount, 
‘‘(II) the taxpayer identity infor-
mation and the amount of the pre-
mium subsidy adjustment or the in-
creased premium amount with respect 
to a taxpayer described in subpara-
graph (A) to officers and employees of 
the Office of Personnel Management 
and the Railroad Retirement Board, 
to the extent that such disclosure is 
necessary for the collection of the pre-
mium subsidy amount or the in-
creased premium amount, 
‘‘(III) return information with re-
spect to a taxpayer described in sub-
paragraph (A) to officers and employ-
ees of the Department of Health and 
Human Services to the extent nec-
essary to resolve administrative ap-
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•AMDT. NO. 2786 
peals of such premium subsidy adjust-
ment or increased premium, and 
‘‘(IV) return information with re-
spect to a taxpayer described in sub-
paragraph (A) to officers and employ-
ees of the Department of Justice for 
use in judicial proceedings to the ex-
tent necessary to carry out the pur-
poses described in clause (i).’’. 
SEC. 3309. ELIMINATION OF COST SHARING FOR CERTAIN 
DUAL ELIGIBLE INDIVIDUALS. 
Section 1860D–14(a)(1)(D)(i) of the Social Security 
Act (42 U.S.C. 1395w–114(a)(1)(D)(i)) is amended by in-
serting ‘‘or, effective on a date specified by the Secretary 
(but in no case earlier than January 1, 2012), who would 
be such an institutionalized individual or couple, if the 
full-benefit dual eligible individual were not receiving serv-
ices under a home and community-based waiver authorized 
for a State under section 1115 or subsection (c) or (d) 
of section 1915 or under a State plan amendment under 
subsection (i) of such section or services provided through 
enrollment in a medicaid managed care organization with 
a contract under section 1903(m) or under section 1932’’ 
after ‘‘1902(q)(1)(B))’’. 
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•AMDT. NO. 2786 
SEC. 3310. REDUCING WASTEFUL DISPENSING OF OUT-
PATIENT PRESCRIPTION DRUGS IN LONG- 
TERM CARE FACILITIES UNDER PRESCRIP-
TION DRUG PLANS AND MA–PD PLANS. 
(a) IN GENERAL.—Section 1860D–4(c) of the Social 
Security Act (42 U.S.C. 1395w–104(c)) is amended by 
adding at the end the following new paragraph: 
‘‘(3) REDUCING
WASTEFUL
DISPENSING
OF 
OUTPATIENT PRESCRIPTION DRUGS IN LONG-TERM 
CARE FACILITIES.—The Secretary shall require PDP 
sponsors of prescription drug plans to utilize spe-
cific, uniform dispensing techniques, as determined 
by the Secretary, in consultation with relevant stake-
holders (including representatives of nursing facili-
ties, residents of nursing facilities, pharmacists, the 
pharmacy industry (including retail and long-term 
care pharmacy), prescription drug plans, MA–PD 
plans, and any other stakeholders the Secretary de-
termines appropriate), such as weekly, daily, or 
automated dose dispensing, when dispensing covered 
part D drugs to enrollees who reside in a long-term 
care facility in order to reduce waste associated with 
30-day fills.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to plan years beginning on or 
after January 1, 2012. 
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•AMDT. NO. 2786 
SEC. 3311. IMPROVED MEDICARE PRESCRIPTION DRUG 
PLAN AND MA–PD PLAN COMPLAINT SYSTEM. 
(a) IN GENERAL.—The Secretary shall develop and 
maintain a complaint system, that is widely known and 
easy to use, to collect and maintain information on MA– 
PD plan and prescription drug plan complaints that are 
received (including by telephone, letter, e-mail, or any 
other means) by the Secretary (including by a regional of-
fice of the Department of Health and Human Services, 
the Medicare Beneficiary Ombudsman, a subcontractor, a 
carrier, a fiscal intermediary, and a Medicare administra-
tive contractor under section 1874A of the Social Security 
Act (42 U.S.C. 1395kk)) through the date on which the 
complaint is resolved. The system shall be able to report 
and initiate appropriate interventions and monitoring 
based on substantial complaints and to guide quality im-
provement. 
(b) MODEL ELECTRONIC COMPLAINT FORM.—The 
Secretary shall develop a model electronic complaint form 
to be used for reporting plan complaints under the system. 
Such form shall be prominently displayed on the front 
page of the Medicare.gov Internet website and on the 
Internet website of the Medicare Beneficiary Ombudsman. 
(c) ANNUAL REPORTS BY THE SECRETARY.—The 
Secretary shall submit to Congress annual reports on the 
system. Such reports shall include an analysis of the num-
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•AMDT. NO. 2786 
ber and types of complaints reported in the system, geo-
graphic variations in such complaints, the timeliness of 
agency or plan responses to such complaints, and the reso-
lution of such complaints. 
(d) DEFINITIONS.—In this section: 
(1) MA–PD PLAN.—The term ‘‘MA–PD plan’’ 
has the meaning given such term in section 1860D– 
41(a)(9) of such Act (42 U.S.C. 1395w–151(a)(9)). 
(2) PRESCRIPTION
DRUG
PLAN.—The term 
‘‘prescription drug plan’’ has the meaning given 
such term in section 1860D–41(a)(14) of such Act 
(42 U.S.C. 1395w–151(a)(14)). 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of Health and Human Services. 
(4) SYSTEM.—The term ‘‘system’’ means the 
plan complaint system developed and maintained 
under subsection (a). 
SEC. 3312. UNIFORM EXCEPTIONS AND APPEALS PROCESS 
FOR PRESCRIPTION DRUG PLANS AND MA–PD 
PLANS. 
(a) IN GENERAL.—Section 1860D–4(b)(3) of the So-
cial Security Act (42 U.S.C. 1395w–104(b)(3)) is amend-
ed by adding at the end the following new subparagraph: 
‘‘(H) USE OF SINGLE, UNIFORM EXCEP-
TIONS
AND
APPEALS
PROCESS.—Notwith-
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•AMDT. NO. 2786 
standing any other provision of this part, each 
PDP sponsor of a prescription drug plan 
shall— 
‘‘(i) use a single, uniform exceptions 
and appeals process (including, to the ex-
tent the Secretary determines feasible, a 
single, uniform model form for use under 
such process) with respect to the deter-
mination of prescription drug coverage for 
an enrollee under the plan; and 
‘‘(ii) provide instant access to such 
process by enrollees through a toll-free 
telephone 
number 
and 
an 
Internet 
website.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to exceptions and appeals on 
or after January 1, 2012. 
SEC. 3313. OFFICE OF THE INSPECTOR GENERAL STUDIES 
AND REPORTS. 
(a) STUDY
AND ANNUAL REPORT
ON PART D 
FORMULARIES’ INCLUSION OF DRUGS COMMONLY USED 
BY DUAL ELIGIBLES.— 
(1) STUDY.—The Inspector General of the De-
partment of Health and Human Services shall con-
duct a study of the extent to which formularies used 
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•AMDT. NO. 2786 
by prescription drug plans and MA–PD plans under 
part D include drugs commonly used by full-benefit 
dual eligible individuals (as defined in section 
1935(c)(6) of the Social Security Act (42 U.S.C. 
1396u–5(c)(6))). 
(2) ANNUAL REPORTS.—Not later than July 1 
of each year (beginning with 2011), the Inspector 
General shall submit to Congress a report on the 
study conducted under paragraph (1), together with 
such recommendations as the Inspector General de-
termines appropriate. 
(b) STUDY AND REPORT ON PRESCRIPTION DRUG 
PRICES UNDER MEDICARE PART D AND MEDICAID.— 
(1) STUDY.— 
(A) IN GENERAL.—The Inspector General 
of the Department of Health and Human Serv-
ices shall conduct a study on prices for covered 
part D drugs under the Medicare prescription 
drug program under part D of title XVIII of 
the Social Security Act and for covered out-
patient drugs under title XIX. Such study shall 
include the following: 
(i) A comparison, with respect to the 
200 most frequently dispensed covered 
part D drugs under such program and cov-
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•AMDT. NO. 2786 
ered outpatient drugs under such title (as 
determined by the Inspector General based 
on volume and expenditures), of— 
(I) the prices paid for covered 
part D drugs by PDP sponsors of 
prescription drug plans and Medicare 
Advantage organizations offering MA– 
PD plans; and 
(II) the prices paid for covered 
outpatient drugs by a State plan 
under title XIX. 
(ii) An assessment of— 
(I) the financial impact of any 
discrepancies in such prices on the 
Federal Government; and 
(II) the financial impact of any 
such discrepancies on enrollees under 
part D or individuals eligible for med-
ical assistance under a State plan 
under title XIX. 
(B) PRICE.—For purposes of subpara-
graph (A), the price of a covered part D drug 
or a covered outpatient drug shall include any 
rebate or discount under such program or such 
title, respectively, including any negotiated price 
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•AMDT. NO. 2786 
concession 
described 
in 
section 
1860D– 
2(d)(1)(B) of the Social Security Act (42 
U.S.C. 1395w–102(d)(1)(B)) or rebate under 
an agreement under section 1927 of the Social 
Security Act (42 U.S.C. 1396r–8). 
(C) AUTHORITY
TO
COLLECT
ANY
NEC-
ESSARY
INFORMATION.—Notwithstanding any 
other provision of law, the Inspector General of 
the Department of Health and Human Services 
shall be able to collect any information related 
to the prices of covered part D drugs under 
such program and covered outpatient drugs 
under such title XIX necessary to carry out the 
comparison under subparagraph (A). 
(2) REPORT.— 
(A) IN GENERAL.—Not later than October 
1, 2011, subject to subparagraph (B), the In-
spector General shall submit to Congress a re-
port containing the results of the study con-
ducted under paragraph (1), together with rec-
ommendations for such legislation and adminis-
trative action as the Inspector General deter-
mines appropriate. 
(B) LIMITATION
ON
INFORMATION
CON-
TAINED
IN
REPORT.—The report submitted 
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•AMDT. NO. 2786 
under subparagraph (A) shall not include any 
information that the Inspector General deter-
mines is proprietary or is likely to negatively 
impact the ability of a PDP sponsor or a State 
plan under title XIX to negotiate prices for cov-
ered part D drugs or covered outpatient drugs, 
respectively. 
(3) DEFINITIONS.—In this section: 
(A) COVERED PART D DRUG.—The term 
‘‘covered part D drug’’ has the meaning given 
such term in section 1860D–2(e) of the Social 
Security Act (42 U.S.C. 1395w–102(e)). 
(B) COVERED
OUTPATIENT
DRUG.—The 
term ‘‘covered outpatient drug’’ has the mean-
ing given such term in section 1927(k) of such 
Act (42 U.S.C. 1396r(k)). 
(C) MA–PD PLAN.—The term ‘‘MA–PD 
plan’’ has the meaning given such term in sec-
tion 1860D–41(a)(9) of such Act (42 U.S.C. 
1395w–151(a)(9)). 
(D) MEDICARE
ADVANTAGE
ORGANIZA-
TION.—The term ‘‘Medicare Advantage organi-
zation’’ has the meaning given such term in 
section 1859(a)(1) of such Act (42 U.S.C. 
1395w–28)(a)(1)). 
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•AMDT. NO. 2786 
(E) PDP SPONSOR.—The term ‘‘PDP 
sponsor’’ has the meaning given such term in 
section 1860D–41(a)(13) of such Act (42 
U.S.C. 1395w–151(a)(13)). 
(F) 
PRESCRIPTION
DRUG
PLAN.—The 
term ‘‘prescription drug plan’’ has the meaning 
given such term in section 1860D–41(a)(14) of 
such Act (42 U.S.C. 1395w–151(a)(14)). 
SEC. 3314. INCLUDING COSTS INCURRED BY AIDS DRUG AS-
SISTANCE PROGRAMS AND INDIAN HEALTH 
SERVICE 
IN 
PROVIDING 
PRESCRIPTION 
DRUGS TOWARD THE ANNUAL OUT-OF-POCK-
ET THRESHOLD UNDER PART D. 
(a) IN GENERAL.—Section 1860D–2(b)(4)(C) of the 
Social Security Act (42 U.S.C. 1395w–102(b)(4)(C)) is 
amended— 
(1) in clause (i), by striking ‘‘and’’ at the end; 
(2) in clause (ii)— 
(A) by striking ‘‘such costs shall be treated 
as incurred only if’’ and inserting ‘‘subject to 
clause (iii), such costs shall be treated as in-
curred only if’’; 
(B) by striking ‘‘, under section 1860D– 
14, or under a State Pharmaceutical Assistance 
Program’’; and 
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•AMDT. NO. 2786 
(C) by striking the period at the end and 
inserting ‘‘; and’’; and 
(3) by inserting after clause (ii) the following 
new clause: 
‘‘(iii) such costs shall be treated as in-
curred and shall not be considered to be 
reimbursed under clause (ii) if such costs 
are borne or paid— 
‘‘(I) under section 1860D–14; 
‘‘(II) under a State Pharma-
ceutical Assistance Program; 
‘‘(III) by the Indian Health Serv-
ice, an Indian tribe or tribal organiza-
tion, or an urban Indian organization 
(as defined in section 4 of the Indian 
Health Care Improvement Act); or 
‘‘(IV) under an AIDS Drug As-
sistance Program under part B of 
title XXVI of the Public Health Serv-
ice Act.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to costs incurred on or after 
January 1, 2011. 
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•AMDT. NO. 2786 
SEC. 3315. IMMEDIATE REDUCTION IN COVERAGE GAP IN 
2010. 
Section 1860D–2(b) of the Social Security Act (42 
U.S.C. 1395w–102(b)) is amended— 
(1) in paragraph (3)(A), by striking ‘‘paragraph 
(4)’’ and inserting ‘‘paragraphs (4) and (7)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(7) INCREASE IN INITIAL COVERAGE LIMIT IN 
2010.— 
‘‘(A) IN GENERAL.—For the plan year be-
ginning on January 1, 2010, the initial cov-
erage limit described in paragraph (3)(B) other-
wise applicable shall be increased by $500. 
‘‘(B) APPLICATION.—In applying subpara-
graph (A)— 
‘‘(i) except as otherwise provided in 
this subparagraph, there shall be no 
change in the premiums, bids, or any other 
parameters under this part or part C; 
‘‘(ii) costs that would be treated as in-
curred costs for purposes of applying para-
graph (4) but for the application of sub-
paragraph (A) shall continue to be treated 
as incurred costs; 
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•AMDT. NO. 2786 
‘‘(iii) the Secretary shall establish pro-
cedures, which may include a reconciliation 
process, to fully reimburse PDP sponsors 
with respect to prescription drug plans and 
MA organizations with respect to MA–PD 
plans for the reduction in beneficiary cost 
sharing associated with the application of 
subparagraph (A); 
‘‘(iv) the Secretary shall develop an 
estimate of the additional increased costs 
attributable to the application of this para-
graph for increased drug utilization and fi-
nancing and administrative costs and shall 
use such estimate to adjust payments to 
PDP sponsors with respect to prescription 
drug plans under this part and MA organi-
zations with respect to MA–PD plans 
under part C; and 
‘‘(v) the Secretary shall establish pro-
cedures for retroactive reimbursement of 
part D eligible individuals who are covered 
under such a plan for costs which are in-
curred before the date of initial implemen-
tation of subparagraph (A) and which 
would be reimbursed under such a plan if 
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•AMDT. NO. 2786 
such implementation occurred as of Janu-
ary 1, 2010. 
‘‘(C) 
NO
EFFECT
ON
SUBSEQUENT 
YEARS.—The increase under subparagraph (A) 
shall only apply with respect to the plan year 
beginning on January 1, 2010, and the initial 
coverage limit for plan years beginning on or 
after January 1, 2011, shall be determined as 
if subparagraph (A) had never applied.’’. 
Subtitle E—Ensuring Medicare 
Sustainability 
SEC. 3401. REVISION OF CERTAIN MARKET BASKET UP-
DATES AND INCORPORATION OF PRODUC-
TIVITY IMPROVEMENTS INTO MARKET BAS-
KET UPDATES THAT DO NOT ALREADY IN-
CORPORATE SUCH IMPROVEMENTS. 
(a) 
INPATIENT
ACUTE
HOSPITALS.—Section 
1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)), as amended by section 3001(a)(3), is 
further amended— 
(1) in clause (i)(XX), by striking ‘‘clause (viii)’’ 
and inserting ‘‘clauses (viii), (ix), (xi), and (xii)’’; 
(2) in the first sentence of clause (viii), by in-
serting ‘‘of such applicable percentage increase (de-
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•AMDT. NO. 2786 
termined without regard to clause (ix), (xi), or 
(xii))’’ after ‘‘one-quarter’’; 
(3) in the first sentence of clause (ix)(I), by in-
serting ‘‘(determined without regard to clause (viii), 
(xi), or (xii))’’ after ‘‘clause (i)’’ the second time it 
appears; and 
(4) by adding at the end the following new 
clauses: 
‘‘(xi)(I) For 2012 and each subsequent fiscal year, 
after determining the applicable percentage increase de-
scribed in clause (i) and after application of clauses (viii) 
and (ix), such percentage increase shall be reduced by the 
productivity adjustment described in subclause (II). 
‘‘(II) The productivity adjustment described in this 
subclause, with respect to a percentage, factor, or update 
for a fiscal year, year, cost reporting period, or other an-
nual period, is a productivity adjustment equal to the 10- 
year moving average of changes in annual economy-wide 
private nonfarm business multi-factor productivity (as 
projected by the Secretary for the 10-year period ending 
with the applicable fiscal year, year, cost reporting period, 
or other annual period). 
‘‘(III) The application of subclause (I) may result in 
the applicable percentage increase described in clause (i) 
being less than 0.0 for a fiscal year, and may result in 
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•AMDT. NO. 2786 
payment rates under this section for a fiscal year being 
less than such payment rates for the preceding fiscal year. 
‘‘(xii) After determining the applicable percentage in-
crease described in clause (i), and after application of 
clauses (viii), (ix), and (xi), the Secretary shall reduce 
such applicable percentage increase— 
‘‘(I) for each of fiscal years 2010 and 2011, by 
0.25 percentage point; and 
‘‘(II) subject to clause (xiii), for each of fiscal 
years 2012 through 2019, by 0.2 percentage point. 
The application of this clause may result in the applicable 
percentage increase described in clause (i) being less than 
0.0 for a fiscal year, and may result in payment rates 
under this section for a fiscal year being less than such 
payment rates for the preceding fiscal year. 
‘‘(xiii) Clause (xii) shall be applied with respect to 
any of fiscal years 2014 through 2019 by substituting ‘0.0 
percentage points’ for ‘0.2 percentage point’, if for such 
fiscal year— 
‘‘(I) the excess (if any) of— 
‘‘(aa) the total percentage of the non-elder-
ly insured population for the preceding fiscal 
year (based on the most recent estimates avail-
able from the Director of the Congressional 
Budget Office before a vote in either House on 
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•AMDT. NO. 2786 
the Patient Protection and Affordable Care Act 
that, if determined in the affirmative, would 
clear such Act for enrollment); over 
‘‘(bb) the total percentage of the non-elder-
ly insured population for such preceding fiscal 
year (as estimated by the Secretary); exceeds 
‘‘(II) 5 percentage points.’’. 
(b) 
SKILLED
NURSING
FACILITIES.—Section 
1888(e)(5)(B) of the Social Security Act (42 U.S.C. 
1395yy(e)(5)(B)) is amended— 
(1) by striking ‘‘PERCENTAGE.—The term’’ and 
inserting ‘‘PERCENTAGE.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), the term’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(ii) ADJUSTMENT.—For fiscal year 
2012 and each subsequent fiscal year, 
after determining the percentage described 
in clause (i), the Secretary shall reduce 
such percentage by the productivity adjust-
ment 
described 
in 
section 
1886(b)(3)(B)(xi)(II). The application of 
the preceding sentence may result in such 
percentage being less than 0.0 for a fiscal 
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•AMDT. NO. 2786 
year, and may result in payment rates 
under this subsection for a fiscal year 
being less than such payment rates for the 
preceding fiscal year.’’. 
(c) LONG-TERM CARE HOSPITALS.—Section 1886(m) 
of the Social Security Act (42 U.S.C. 1395ww(m)) is 
amended by adding at the end the following new para-
graphs: 
‘‘(3) IMPLEMENTATION
FOR
RATE
YEAR
2010 
AND SUBSEQUENT YEARS.— 
‘‘(A) IN GENERAL.—In implementing the 
system described in paragraph (1) for rate year 
2010 and each subsequent rate year, any an-
nual update to a standard Federal rate for dis-
charges for the hospital during the rate year, 
shall be reduced— 
‘‘(i) for rate year 2012 and each sub-
sequent rate year, by the productivity ad-
justment 
described 
in 
section 
1886(b)(3)(B)(xi)(II); and 
‘‘(ii) for each of rate years 2010 
through 2019, by the other adjustment de-
scribed in paragraph (4). 
‘‘(B) SPECIAL RULE.—The application of 
this paragraph may result in such annual up-
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•AMDT. NO. 2786 
date being less than 0.0 for a rate year, and 
may result in payment rates under the system 
described in paragraph (1) for a rate year being 
less than such payment rates for the preceding 
rate year. 
‘‘(4) OTHER ADJUSTMENT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (3)(A)(ii), the other adjustment described 
in this paragraph is— 
‘‘(i) for each of rate years 2010 and 
2011, 0.25 percentage point; and 
‘‘(ii) subject to subparagraph (B), for 
each of rate years 2012 through 2019, 0.2 
percentage point. 
‘‘(B) REDUCTION
OF
OTHER
ADJUST-
MENT.—Subparagraph (A)(ii) shall be applied 
with respect to any of rate years 2014 through 
2019 by substituting ‘0.0 percentage points’ for 
‘0.2 percentage point’, if for such rate year— 
‘‘(i) the excess (if any) of— 
‘‘(I) the total percentage of the 
non-elderly insured population for the 
preceding rate year (based on the 
most recent estimates available from 
the Director of the Congressional 
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•AMDT. NO. 2786 
Budget Office before a vote in either 
House on the Patient Protection and 
Affordable Care Act that, if deter-
mined in the affirmative, would clear 
such Act for enrollment); over 
‘‘(II) the total percentage of the 
non-elderly insured population for 
such preceding rate year (as estimated 
by the Secretary); exceeds 
‘‘(ii) 5 percentage points.’’. 
(d) INPATIENT REHABILITATION FACILITIES.—Sec-
tion 1886(j)(3) of the Social Security Act (42 U.S.C. 
1395ww(j)(3)) is amended— 
(1) in subparagraph (C)— 
(A) by striking ‘‘FACTOR.—For purposes’’ 
and inserting ‘‘FACTOR.— 
‘‘(i) IN GENERAL.—For purposes’’; 
(B) by inserting ‘‘subject to clause (ii)’’ be-
fore the period at the end of the first sentence 
of clause (i), as added by paragraph (1); and 
(C) by adding at the end the following new 
clause: 
‘‘(ii) PRODUCTIVITY AND OTHER AD-
JUSTMENT.—After establishing the in-
crease factor described in clause (i) for a 
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•AMDT. NO. 2786 
fiscal year, the Secretary shall reduce such 
increase factor— 
‘‘(I) for fiscal year 2012 and 
each subsequent fiscal year, by the 
productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II); and 
‘‘(II) for each of fiscal years 
2010 through 2019, by the other ad-
justment described in subparagraph 
(D). 
The application of this clause may result in 
the increase factor under this subpara-
graph being less than 0.0 for a fiscal year, 
and may result in payment rates under 
this subsection for a fiscal year being less 
than such payment rates for the preceding 
fiscal year.’’; and 
(2) by adding at the end the following new sub-
paragraph: 
‘‘(D) OTHER ADJUSTMENT.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (C)(ii)(II), the other adjust-
ment described in this subparagraph is— 
‘‘(I) for each of fiscal years 2010 
and 2011, 0.25 percentage point; and 
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•AMDT. NO. 2786 
‘‘(II) subject to clause (ii), for 
each of fiscal years 2012 through 
2019, 0.2 percentage point. 
‘‘(ii) REDUCTION OF OTHER ADJUST-
MENT.—Clause (i)(II) shall be applied with 
respect to any of fiscal years 2014 through 
2019 by substituting ‘0.0 percentage 
points’ for ‘0.2 percentage point’, if for 
such fiscal year— 
‘‘(I) the excess (if any) of— 
‘‘(aa) the total percentage of 
the non-elderly insured popu-
lation for the preceding fiscal 
year (based on the most recent 
estimates available from the Di-
rector 
of 
the 
Congressional 
Budget Office before a vote in ei-
ther House on the Patient Pro-
tection and Affordable Care Act 
that, if determined in the affirm-
ative, would clear such Act for 
enrollment); over 
‘‘(bb) the total percentage of 
the non-elderly insured popu-
lation for such preceding fiscal 
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•AMDT. NO. 2786 
year (as estimated by the Sec-
retary); exceeds 
‘‘(II) 5 percentage points.’’. 
(e) 
HOME
HEALTH
AGENCIES.—Section 
1895(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395fff(b)(3)(B)) is amended— 
(1) in clause (ii)(V), by striking ‘‘clause (v)’’ 
and inserting ‘‘clauses (v) and (vi)’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(vi) 
ADJUSTMENTS.—After 
deter-
mining the home health market basket per-
centage increase under clause (iii), and 
after application of clause (v), the Sec-
retary shall reduce such percentage— 
‘‘(I) for 2015 and each subse-
quent year, by the productivity adjust-
ment 
described 
in 
section 
1886(b)(3)(B)(xi)(II); and 
‘‘(II) for each of 2011 and 2012, 
by 1 percentage point. 
The application of this clause may result in 
the home health market basket percentage 
increase under clause (iii) being less than 
0.0 for a year, and may result in payment 
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•AMDT. NO. 2786 
rates under the system under this sub-
section for a year being less than such pay-
ment rates for the preceding year.’’. 
(f) PSYCHIATRIC HOSPITALS.—Section 1886 of the 
Social Security Act, as amended by sections 3001, 3008, 
3025, and 3133, is amended by adding at the end the fol-
lowing new subsection: 
‘‘(s) PROSPECTIVE
PAYMENT
FOR
PSYCHIATRIC 
HOSPITALS.— 
‘‘(1) REFERENCE TO ESTABLISHMENT AND IM-
PLEMENTATION OF SYSTEM.—For provisions related 
to the establishment and implementation of a pro-
spective payment system for payments under this 
title for inpatient hospital services furnished by psy-
chiatric hospitals (as described in clause (i) of sub-
section (d)(1)(B)) and psychiatric units (as de-
scribed in the matter following clause (v) of such 
subsection), see section 124 of the Medicare, Med-
icaid, and SCHIP Balanced Budget Refinement Act 
of 1999. 
‘‘(2) IMPLEMENTATION FOR RATE YEAR BEGIN-
NING IN 2010 AND SUBSEQUENT RATE YEARS.— 
‘‘(A) IN GENERAL.—In implementing the 
system described in paragraph (1) for the rate 
year beginning in 2010 and any subsequent 
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•AMDT. NO. 2786 
rate year, any update to a base rate for days 
during the rate year for a psychiatric hospital 
or unit, respectively, shall be reduced— 
‘‘(i) for the rate year beginning in 
2012 and each subsequent rate year, by 
the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II); and 
‘‘(ii) for each of the rate years begin-
ning in 2010 through 2019, by the other 
adjustment described in paragraph (3). 
‘‘(B) SPECIAL RULE.—The application of 
this paragraph may result in such update being 
less than 0.0 for a rate year, and may result in 
payment rates under the system described in 
paragraph (1) for a rate year being less than 
such payment rates for the preceding rate year. 
‘‘(3) OTHER ADJUSTMENT.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (2)(A)(ii), the other adjustment described 
in this paragraph is— 
‘‘(i) for each of the rate years begin-
ning in 2010 and 2011, 0.25 percentage 
point; and 
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•AMDT. NO. 2786 
‘‘(ii) subject to subparagraph (B), for 
each of the rate years beginning in 2012 
through 2019, 0.2 percentage point. 
‘‘(B) REDUCTION
OF
OTHER
ADJUST-
MENT.—Subparagraph (A)(ii) shall be applied 
with respect to any of rate years 2014 through 
2019 by substituting ‘0.0 percentage points’ for 
‘0.2 percentage point’, if for such rate year— 
‘‘(i) the excess (if any) of— 
‘‘(I) the total percentage of the 
non-elderly insured population for the 
preceding rate year (based on the 
most recent estimates available from 
the Director of the Congressional 
Budget Office before a vote in either 
House on the Patient Protection and 
Affordable Care Act that, if deter-
mined in the affirmative, would clear 
such Act for enrollment); over 
‘‘(II) the total percentage of the 
non-elderly insured population for 
such preceding rate year (as estimated 
by the Secretary); exceeds 
‘‘(ii) 5 percentage points.’’. 
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•AMDT. NO. 2786 
(g) HOSPICE CARE.—Section 1814(i)(1)(C) of the 
Social Security Act (42 U.S.C. 1395f(i)(1)(C)), as amend-
ed by section 3132, is amended by adding at the end the 
following new clauses: 
‘‘(iv) After determining the market basket percentage 
increase under clause (ii)(VII) or (iii), as applicable, with 
respect to fiscal year 2013 and each subsequent fiscal 
year, the Secretary shall reduce such percentage— 
‘‘(I) for 2013 and each subsequent fiscal year, 
by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II); and 
‘‘(II) subject to clause (v), for each of fiscal 
years 2013 through 2019, by 0.5 percentage point. 
The application of this clause may result in the market 
basket percentage increase under clause (ii)(VII) or (iii), 
as applicable, being less than 0.0 for a fiscal year, and 
may result in payment rates under this subsection for a 
fiscal year being less than such payment rates for the pre-
ceding fiscal year. 
‘‘(v) Clause (iv)(II) shall be applied with respect to 
any of fiscal years 2014 through 2019 by substituting ‘0.0 
percentage points’ for ‘0.5 percentage point’, if for such 
fiscal year— 
‘‘(I) the excess (if any) of— 
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•AMDT. NO. 2786 
‘‘(aa) the total percentage of the non-elder-
ly insured population for the preceding fiscal 
year (based on the most recent estimates avail-
able from the Director of the Congressional 
Budget Office before a vote in either House on 
the Patient Protection and Affordable Care Act 
that, if determined in the affirmative, would 
clear such Act for enrollment); over 
‘‘(bb) the total percentage of the non-elder-
ly insured population for such preceding fiscal 
year (as estimated by the Secretary); exceeds 
‘‘(II) 5 percentage points.’’. 
(h) DIALYSIS.—Section 1881(b)(14)(F) of the Social 
Security Act (42 U.S.C. 1395rr(b)(14)(F)) is amended— 
(1) in clause (i)— 
(A) by inserting ‘‘(I)’’ after ‘‘(F)(i)’’ 
(B) in subclause (I), as inserted by sub-
paragraph (A)— 
(i) by striking ‘‘clause (ii)’’ and in-
serting ‘‘subclause (II) and clause (ii)’’; 
and 
(ii) by striking ‘‘minus 1.0 percentage 
point’’; and 
(C) by adding at the end the following new 
subclause: 
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•AMDT. NO. 2786 
‘‘(II) For 2012 and each subsequent year, after de-
termining the increase factor described in subclause (I), 
the Secretary shall reduce such increase factor by the pro-
ductivity 
adjustment 
described 
in 
section 
1886(b)(3)(B)(xi)(II). The application of the preceding 
sentence may result in such increase factor being less than 
0.0 for a year, and may result in payment rates under 
the payment system under this paragraph for a year being 
less than such payment rates for the preceding year.’’; and 
(2) in clause (ii)(II)— 
(A) by striking ‘‘The’’ and inserting ‘‘Sub-
ject to clause (i)(II), the’’; and 
(B) by striking ‘‘clause (i) minus 1.0 per-
centage point’’ and inserting ‘‘clause (i)(I)’’. 
(i) OUTPATIENT HOSPITALS.—Section 1833(t)(3) of 
the Social Security Act (42 U.S.C. 1395l(t)(3)) is amend-
ed— 
(1) in subparagraph (C)(iv), by inserting ‘‘and 
subparagraph (F) of this paragraph’’ after ‘‘(17)’’; 
and 
(2) by adding at the end the following new sub-
paragraphs: 
‘‘(F) PRODUCTIVITY AND OTHER ADJUST-
MENT.—After determining the OPD fee sched-
ule increase factor under subparagraph (C)(iv), 
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•AMDT. NO. 2786 
the Secretary shall reduce such increase fac-
tor— 
‘‘(i) for 2012 and subsequent years, 
by the productivity adjustment described in 
section 1886(b)(3)(B)(xi)(II); and 
‘‘(ii) for each of 2010 through 2019, 
by the adjustment described in subpara-
graph (G). 
The application of this subparagraph may re-
sult in the increase factor under subparagraph 
(C)(iv) being less than 0.0 for a year, and may 
result in payment rates under the payment sys-
tem under this subsection for a year being less 
than such payment rates for the preceding year. 
‘‘(G) OTHER ADJUSTMENT.— 
‘‘(i) ADJUSTMENT.—For purposes of 
subparagraph (F)(ii), the adjustment de-
scribed in this subparagraph is— 
‘‘(I) for each of 2010 and 2011, 
0.25 percentage point; and 
‘‘(II) subject to clause (ii), for 
each of 2012 through 2019, 0.2 per-
centage point. 
‘‘(ii) REDUCTION OF OTHER ADJUST-
MENT.—Clause (i)(II) shall be applied with 
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991 
•AMDT. NO. 2786 
respect to any of 2014 through 2019 by 
substituting ‘0.0 percentage points’ for ‘0.2 
percentage point’, if for such year— 
‘‘(I) the excess (if any) of— 
‘‘(aa) the total percentage of 
the non-elderly insured popu-
lation for the preceding year 
(based on the most recent esti-
mates available from the Director 
of the Congressional Budget Of-
fice before a vote in either House 
on the Patient Protection and Af-
fordable Care Act that, if deter-
mined in the affirmative, would 
clear such Act for enrollment); 
over 
‘‘(bb) the total percentage of 
the non-elderly insured popu-
lation for such preceding year (as 
estimated by the Secretary); ex-
ceeds 
‘‘(II) 5 percentage points.’’. 
(j) AMBULANCE SERVICES.—Section 1834(l)(3) of 
the Social Security Act (42 U.S.C. 1395m(l)(3)) is amend-
ed— 
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992 
•AMDT. NO. 2786 
(1) in subparagraph (A), by striking ‘‘and’’ at 
the end; 
(2) in subparagraph (B)— 
(A) by inserting ‘‘, subject to subpara-
graph (C) and the succeeding sentence of this 
paragraph,’’ after ‘‘increased’’; and 
(B) by striking the period at the end and 
inserting ‘‘; and’’; 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(C) for 2011 and each subsequent year, 
after determining the percentage increase under 
subparagraph (B) for the year, reduce such per-
centage increase by the productivity adjustment 
described in section 1886(b)(3)(B)(xi)(II).’’; 
and 
(4) by adding at the end the following flush 
sentence: 
‘‘The application of subparagraph (C) may result in 
the percentage increase under subparagraph (B) 
being less than 0.0 for a year, and may result in 
payment rates under the fee schedule under this 
subsection for a year being less than such payment 
rates for the preceding year.’’. 
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993 
•AMDT. NO. 2786 
(k) AMBULATORY SURGICAL CENTER SERVICES.— 
Section 1833(i)(2)(D) of the Social Security Act (42 
U.S.C. 1395l(i)(2)(D)) is amended— 
(1) by redesignating clause (v) as clause (vi); 
and 
(2) by inserting after clause (iv) the following 
new clause: 
‘‘(v) In implementing the system de-
scribed in clause (i) for 2011 and each 
subsequent year, any annual update under 
such system for the year, after application 
of clause (iv), shall be reduced by the pro-
ductivity adjustment described in section 
1886(b)(3)(B)(xi)(II). The application of 
the preceding sentence may result in such 
update being less than 0.0 for a year, and 
may result in payment rates under the sys-
tem described in clause (i) for a year being 
less than such payment rates for the pre-
ceding year.’’. 
(l) LABORATORY SERVICES.—Section 1833(h)(2)(A) 
of the Social Security Act (42 U.S.C. 1395l(h)(2)(A)) is 
amended— 
(1) in clause (i)— 
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994 
•AMDT. NO. 2786 
(A) by inserting ‘‘, subject to clause (iv),’’ 
after ‘‘year) by’’; and 
(B) by striking ‘‘through 2013’’ and in-
serting ‘‘and 2010’’; and 
(2) by adding at the end the following new 
clause: 
‘‘(iv) After determining the adjust-
ment to the fee schedules under clause (i), 
the Secretary shall reduce such adjust-
ment— 
‘‘(I) for 2011 and each subse-
quent year, by the productivity adjust-
ment 
described 
in 
section 
1886(b)(3)(B)(xi)(II); and 
‘‘(II) for each of 2011 through 
2015, by 1.75 percentage points. 
Subclause (I) shall not apply in a year 
where the adjustment to the fee schedules 
determined under clause (i) is 0.0 or a per-
centage decrease for a year. The applica-
tion of the productivity adjustment under 
subclause (I) shall not result in an adjust-
ment to the fee schedules under clause (i) 
being less than 0.0 for a year. The applica-
tion of subclause (II) may result in an ad-
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995 
•AMDT. NO. 2786 
justment to the fee schedules under clause 
(i) being less than 0.0 for a year, and may 
result in payment rates for a year being 
less than such payment rates for the pre-
ceding year.’’. 
(m) CERTAIN DURABLE MEDICAL EQUIPMENT.— 
Section 1834(a)(14) of the Social Security Act (42 U.S.C. 
1395m(a)(14)) is amended— 
(1) in subparagraph (K)— 
(A) by striking ‘‘2011, 2012, and 2013,’’; 
and 
(B) by inserting ‘‘and’’ after the semicolon 
at the end; 
(2) by striking subparagraphs (L) and (M) and 
inserting the following new subparagraph: 
‘‘(L) for 2011 and each subsequent year— 
‘‘(i) the percentage increase in the 
consumer price index for all urban con-
sumers (United States city average) for 
the 12-month period ending with June of 
the previous year, reduced by— 
‘‘(ii) the productivity adjustment de-
scribed in section 1886(b)(3)(B)(xi)(II).’’; 
and 
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996 
•AMDT. NO. 2786 
(3) by adding at the end the following flush 
sentence: 
‘‘The application of subparagraph (L)(ii) may result 
in the covered item update under this paragraph 
being less than 0.0 for a year, and may result in 
payment rates under this subsection for a year being 
less than such payment rates for the preceding 
year.’’. 
(n) PROSTHETIC DEVICES, ORTHOTICS, AND PROS-
THETICS.—Section 1834(h)(4) of the Social Security Act 
(42 U.S.C. 1395m(h)(4)) is amended— 
(1) in subparagraph (A)— 
(A) in clause (ix), by striking ‘‘and’’ at the 
end; 
(B) in clause (x)— 
(i) by striking ‘‘a subsequent year’’ 
and inserting ‘‘for each of 2007 through 
2010’’; and 
(ii) by inserting ‘‘and’’ after the semi-
colon at the end; 
(C) by adding at the end the following new 
clause: 
‘‘(xi) for 2011 and each subsequent 
year— 
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997 
•AMDT. NO. 2786 
‘‘(I) the percentage increase in 
the consumer price index for all urban 
consumers (United States city aver-
age) for the 12-month period ending 
with June of the previous year, re-
duced by— 
‘‘(II) the productivity adjustment 
described 
in 
section 
1886(b)(3)(B)(xi)(II).’’; and 
(D) by adding at the end the following 
flush sentence: 
‘‘The application of subparagraph (A)(xi)(II) may 
result in the applicable percentage increase under 
subparagraph (A) being less than 0.0 for a year, and 
may result in payment rates under this subsection 
for a year being less than such payment rates for 
the preceding year.’’. 
(o) OTHER ITEMS.—Section 1842(s)(1) of the Social 
Security Act (42 U.S.C. 1395u(s)(1)) is amended— 
(1) in the first sentence, by striking ‘‘Subject 
to’’ and inserting ‘‘(A) Subject to’’; 
(2) by striking the second sentence and insert-
ing the following new subparagraph: 
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998 
•AMDT. NO. 2786 
‘‘(B) Any fee schedule established under 
this paragraph for such item or service shall be 
updated— 
‘‘(i) for years before 2011— 
‘‘(I) subject to subclause (II), by 
the percentage increase in the con-
sumer price index for all urban con-
sumers (United States city average) 
for the 12-month period ending with 
June of the preceding year; and 
‘‘(II) for items and services de-
scribed in paragraph (2)(D) for 2009, 
section 1834(a)(14)(J) shall apply 
under this paragraph instead of the 
percentage increase otherwise applica-
ble; and 
‘‘(ii) for 2011 and subsequent years— 
‘‘(I) the percentage increase in 
the consumer price index for all urban 
consumers (United States city aver-
age) for the 12-month period ending 
with June of the previous year, re-
duced by— 
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999 
•AMDT. NO. 2786 
‘‘(II) the productivity adjustment 
described 
in 
section 
1886(b)(3)(B)(xi)(II).’’; and 
(3) by adding at the end the following flush 
sentence: 
‘‘The application of subparagraph (B)(ii)(II) may re-
sult in the update under this paragraph being less 
than 0.0 for a year, and may result in payment rates 
under any fee schedule established under this para-
graph for a year being less than such payment rates 
for the preceding year.’’. 
(p) NO APPLICATION PRIOR TO APRIL 1, 2010.— 
Notwithstanding the preceding provisions of this section, 
the amendments made by subsections (a), (c), and (d) 
shall not apply to discharges occurring before April 1, 
2010. 
SEC. 3402. TEMPORARY ADJUSTMENT TO THE CALCULA-
TION OF PART B PREMIUMS. 
Section 1839(i) of the Social Security Act (42 U.S.C. 
1395r(i)) is amended— 
(1) in paragraph (2), in the matter preceding 
subparagraph (A), by inserting ‘‘subject to para-
graph (6),’’ after ‘‘subsection,’’; 
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1000 
•AMDT. NO. 2786 
(2) in paragraph (3)(A)(i), by striking ‘‘The ap-
plicable’’ and inserting ‘‘Subject to paragraph (6), 
the applicable’’; 
(3) by redesignating paragraph (6) as para-
graph (7); and 
(4) by inserting after paragraph (5) the fol-
lowing new paragraph: 
‘‘(6) TEMPORARY
ADJUSTMENT
TO
INCOME 
THRESHOLDS.—Notwithstanding any other provision 
of this subsection, during the period beginning on 
January 1, 2011, and ending on December 31, 
2019— 
‘‘(A) the threshold amount otherwise appli-
cable under paragraph (2) shall be equal to 
such amount for 2010; and 
‘‘(B) the dollar amounts otherwise applica-
ble under paragraph (3)(C)(i) shall be equal to 
such dollar amounts for 2010.’’. 
SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD. 
(a) BOARD.— 
(1) IN GENERAL.—Title XVIII of the Social Se-
curity Act (42 U.S.C. 1395 et seq.), as amended by 
section 3022, is amended by adding at the end the 
following new section: 
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1001 
•AMDT. NO. 2786 
‘‘INDEPENDENT MEDICARE ADVISORY BOARD 
‘‘SEC. 1899A. (a) ESTABLISHMENT.—There is estab-
lished an independent board to be known as the ‘Inde-
pendent Medicare Advisory Board’. 
‘‘(b) PURPOSE.—It is the purpose of this section to, 
in accordance with the following provisions of this section, 
reduce the per capita rate of growth in Medicare spend-
ing— 
‘‘(1) by requiring the Chief Actuary of the Cen-
ters for Medicare & Medicaid Services to determine 
in each year to which this section applies (in this 
section referred to as ‘a determination year’) the 
projected per capita growth rate under Medicare for 
the second year following the determination year (in 
this section referred to as ‘an implementation year’); 
‘‘(2) if the projection for the implementation 
year exceeds the target growth rate for that year, by 
requiring the Board to develop and submit during 
the first year following the determination year (in 
this section referred to as ‘a proposal year’) a pro-
posal containing recommendations to reduce the 
Medicare per capita growth rate to the extent re-
quired by this section; and 
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1008 
•AMDT. NO. 2786 
amount of net Medicare program spending that 
would have occurred absent such implementa-
tion. 
‘‘(D) CONSULTATION WITH MEDPAC.—The 
Board shall submit a draft copy of each pro-
posal to be submitted under this section to the 
Medicare Payment Advisory Commission estab-
lished under section 1805 for its review. The 
Board shall submit such draft copy by not later 
than September 1 of the determination year. 
‘‘(E) REVIEW AND COMMENT BY THE SEC-
RETARY.—The Board shall submit a draft copy 
of each proposal to be submitted to Congress 
under this section to the Secretary for the Sec-
retary’s review and comment. The Board shall 
submit such draft copy by not later than Sep-
tember 1 of the determination year. Not later 
than March 1 of the submission year, the Sec-
retary shall submit a report to Congress on the 
results of such review, unless the Secretary sub-
mits a proposal under paragraph (5)(A) in that 
year. 
‘‘(F) CONSULTATIONS.—In carrying out 
its duties under this section, the Board shall 
engage in regular consultations with the Med-
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1015 
•AMDT. NO. 2786 
‘‘(ii) with respect to a determination 
year that is after 2017, the nominal gross 
domestic product per capita plus 1.0 per-
centage point. 
‘‘(7) SAVINGS REQUIREMENT.— 
‘‘(A) IN GENERAL.—If, with respect to a 
determination year, the Chief Actuary of the 
Centers for Medicare & Medicaid Services 
makes a determination under paragraph (6)(A) 
that the growth rate described in clause (i) of 
such paragraph exceeds the growth rate de-
scribed in clause (ii) of such paragraph, the 
Chief Actuary shall establish an applicable sav-
ings target for the implementation year. 
‘‘(B) APPLICABLE SAVINGS TARGET.—For 
purposes of this section, the applicable savings 
target for an implementation year shall be an 
amount equal to the product of— 
‘‘(i) the total amount of projected 
Medicare program spending for the pro-
posal year; and 
‘‘(ii) the applicable percent for the im-
plementation year. 
‘‘(C) APPLICABLE
PERCENT.—For pur-
poses of subparagraph (B), the applicable per-
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1016 
•AMDT. NO. 2786 
cent for an implementation year is the lesser 
of— 
‘‘(i) in the case of— 
‘‘(I) implementation year 2015, 
0.5 percent; 
‘‘(II) implementation year 2016, 
1.0 percent; 
‘‘(III) implementation year 2017, 
1.25 percent; and 
‘‘(IV) implementation year 2018 
or any subsequent implementation 
year, 1.5 percent; and 
‘‘(ii) the projected excess for the im-
plementation year (expressed as a percent) 
determined under subparagraph (A). 
‘‘(8) PER
CAPITA
RATE
OF
GROWTH
IN
NA-
TIONAL
HEALTH
EXPENDITURES.—In each deter-
mination year (beginning in 2018), the Chief Actu-
ary of the Centers for Medicare & Medicaid Services 
shall project the per capita rate of growth in na-
tional health expenditures for the implementation 
year. Such rate of growth for an implementation 
year shall be calculated as the projected 5-year aver-
age (ending with such year) percentage increase in 
national health care expenditures. 
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1017 
•AMDT. NO. 2786 
‘‘(d) CONGRESSIONAL CONSIDERATION.— 
‘‘(1) INTRODUCTION.— 
‘‘(A) IN GENERAL.—On the day on which 
a proposal is submitted by the President to the 
House of Representatives and the Senate under 
subsection (c)(4), the legislative proposal (de-
scribed in subsection (c)(3)(B)(iv)) contained in 
the proposal shall be introduced (by request) in 
the Senate by the majority leader of the Senate 
or by Members of the Senate designated by the 
majority leader of the Senate and shall be in-
troduced (by request) in the House by the ma-
jority leader of the House or by Members of the 
House designated by the majority leader of the 
House. 
‘‘(B) NOT IN SESSION.—If either House is 
not in session on the day on which such legisla-
tive proposal is submitted, the legislative pro-
posal shall be introduced in that House, as pro-
vided in subparagraph (A), on the first day 
thereafter on which that House is in session. 
‘‘(C) ANY MEMBER.—If the legislative pro-
posal is not introduced in either House within 
5 days on which that House is in session after 
the day on which the legislative proposal is sub-
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