199 
son with the relative savings of the pro-
gram. 
‘‘(vii) Impact on access, Medicare 
spending, and beneficiary spending of any 
difference in treatment for diabetic testing 
supplies depending on how such supplies 
are furnished. 
‘‘(viii) Such other topics as the Comp-
troller General determines to be appro-
priate.’’. 
(2) DELAY IN OTHER DEADLINES.— 
(A) PROGRAM ADVISORY AND OVERSIGHT 
COMMITTEE.—Section 1847(c)(5) of the Social 
Security Act (42 U.S.C. 1395w–3(c)(5)) is 
amended by striking ‘‘December 31, 2009’’ and 
inserting ‘‘December 31, 2011’’. 
(B) 
SECRETARIAL
REPORT.—Section 
1847(d) of such Act (42 U.S.C. 1395w–3(d)) is 
amended by striking ‘‘July 1, 2009’’ and insert-
ing ‘‘July 1, 2011’’. 
(C) IG REPORT.—Section 302(e) of the 
Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108– 
173) is amended by striking ‘‘July 1, 2009’’ 
and inserting ‘‘July 1, 2011’’. 
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200 
(3) EVALUATION OF CERTAIN CODE.—The Sec-
retary of Health and Human Services shall evaluate 
the existing Health Care Common Procedure Coding 
System (HCPCS) codes for negative pressure wound 
therapy to ensure accurate reporting and billing for 
items and services under such codes. In carrying out 
such evaluation, the Secretary shall use an existing 
process, administered by the Durable Medical Equip-
ment Medicare Administrative Contractors, for the 
consideration of coding changes and consider all rel-
evant studies and information furnished pursuant to 
such process. 
(d) OTHER PROVISIONS.— 
(1) EXEMPTION FROM COMPETITIVE ACQUISI-
TION FOR CERTAIN OFF-THE-SHELF ORTHOTICS.— 
Section 1847(a) of the Social Security Act (42 
U.S.C. 1395w–3(a)) is amended by adding at the 
end the following new paragraph: 
‘‘(7) EXEMPTION FROM COMPETITIVE ACQUISI-
TION.—The programs under this section shall not 
apply to the following: 
‘‘(A) 
CERTAIN
OFF-THE-SHELF 
ORTHOTICS.—Items and services described in 
paragraph (2)(C) if furnished— 
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201 
‘‘(i) by a physician or other practi-
tioner (as defined by the Secretary) to the 
physician’s or practitioner’s own patients 
as part of the physician’s or practitioner’s 
professional service; or 
‘‘(ii) by a hospital to the hospital’s 
own patients during an admission or on 
the date of discharge. 
‘‘(B) CERTAIN DURABLE MEDICAL EQUIP-
MENT.—Those items and services described in 
paragraph (2)(A)— 
‘‘(i) that are furnished by a hospital 
to the hospital’s own patients during an 
admission or on the date of discharge; and 
‘‘(ii) to which such programs would 
not apply, as specified by the Secretary, if 
furnished by a physician to the physician’s 
own patients as part of the physician’s 
professional service.’’. 
(2) CORRECTION IN FACE-TO-FACE EXAMINA-
TION REQUIREMENT.—Section 1834(a)(1)(E)(ii) of 
such Act (42 U.S.C. 1395m(a)(1)(E)(ii)) is amended 
by striking ‘‘1861(r)(1)’’ and inserting ‘‘1861(r)’’. 
(3) SPECIAL RULE IN CASE OF NATIONAL MAIL- 
ORDER
COMPETITION
FOR
DIABETIC
TESTING 
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STRIPS.—Section 1847(b) of such Act (42 U.S.C. 
1395w–3(b)) is amended— 
(A) by redesignating paragraph (10) as 
paragraph (11); and 
(B) by inserting after paragraph (9) the 
following new paragraph: 
‘‘(10) SPECIAL RULE IN CASE OF COMPETITION 
FOR DIABETIC TESTING STRIPS.— 
‘‘(A) IN GENERAL.—With respect to the 
competitive acquisition program for diabetic 
testing strips conducted after the first round of 
the competitive acquisition programs, if an enti-
ty does not demonstrate to the Secretary that 
its bid covers types of diabetic testing strip 
products that, in the aggregate and taking into 
account volume for the different products, cover 
50 percent (or such higher percentage as the 
Secretary may specify) of all such types of 
products, the Secretary shall reject such bid. 
The volume for such types of products may be 
determined in accordance with such data (which 
may be market based data) as the Secretary 
recognizes. 
‘‘(B) STUDY OF TYPES OF TESTING STRIP 
PRODUCTS.—Before 2011, the Inspector Gen-
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eral of the Department of Health and Human 
Services shall conduct a study to determine the 
types of diabetic testing strip products by vol-
ume that could be used to make determinations 
pursuant to subparagraph (A) for the first com-
petition under the competitive acquisition pro-
gram described in such subparagraph and sub-
mit to the Secretary a report on the results of 
the study. The Inspector General shall also con-
duct such a study and submit such a report be-
fore the Secretary conducts a subsequent com-
petitive acquistion program described in sub-
paragraph (A).’’. 
(4) OTHER CONFORMING AMENDMENTS.—Sec-
tion 1847(b)(11) of such Act, as redesignated by 
paragraph (3), is amended— 
(A) in subparagraph (C), by inserting ‘‘and 
the identification of areas under subsection 
(a)(1)(D)(iii)’’ after ‘‘(a)(1)(A)’’; 
(B) in subparagraph (D), by inserting 
‘‘and implementation of subsection (a)(1)(D)’’ 
after ‘‘(a)(1)(B)’’; 
(C) in subparagraph (E), by striking ‘‘or’’ 
at the end; 
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204 
(D) in subparagraph (F), by striking the 
period at the end and inserting ‘‘; or’’; and 
(E) by adding at the end the following new 
subparagraph: 
‘‘(G) the implementation of the special rule 
described in paragraph (10).’’. 
(5) FUNDING FOR IMPLEMENTATION.—In addi-
tion to funds otherwise available, for purposes of im-
plementing the provisions of, and amendments made 
by, this section, other than the amendment made by 
subsection 
(c)(1) 
and 
other 
than 
section 
1847(a)(1)(E) of the Social Security Act, the Sec-
retary of Health and Human Services shall provide 
for the transfer from the Federal Supplementary 
Medical Insurance Trust Fund established under 
section 1841 of the Social Security Act (42 U.S.C. 
1395t) to the Centers for Medicare & Medicaid Serv-
ices Program Management Account of $20,000,000 
for fiscal year 2008, and $25,000,000 for each of 
fiscal years 2009 through 2012. Amounts trans-
ferred under this paragraph for a fiscal year shall be 
available until expended. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as of June 30, 2008. 
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205 
Subtitle D—Provisions Relating to 
Part C 
SEC. 161. PHASE-OUT OF INDIRECT MEDICAL EDUCATION 
(IME). 
(a) IN GENERAL.—Section 1853(k) of the Social Se-
curity Act (42 U.S.C. 1395w–23(k)) is amended— 
(1) in paragraph (1), in the matter preceding 
subparagraph (A), by striking ‘‘paragraph (2)’’ and 
inserting ‘‘paragraphs (2) and (4)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(4) PHASE-OUT OF THE INDIRECT COSTS OF 
MEDICAL EDUCATION FROM CAPITATION RATES.— 
‘‘(A) IN GENERAL.—After determining the 
applicable amount for an area for a year under 
paragraph (1) (beginning with 2010), the Sec-
retary shall adjust such applicable amount to 
exclude from such applicable amount the phase- 
in percentage (as defined in subparagraph 
(B)(i)) for the year of the Secretary’s estimate 
of the standardized costs for payments under 
section 1886(d)(5)(B) in the area for the year. 
Any adjustment under the preceding sentence 
shall be made prior to the application of para-
graph (2). 
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‘‘(B) PERCENTAGES DEFINED.—For pur-
poses of this paragraph: 
‘‘(i) 
PHASE-IN
PERCENTAGE.—The 
term ‘phase-in percentage’ means, for an 
area for a year, the ratio (expressed as a 
percentage, but in no case greater than 
100 percent) of— 
‘‘(I) the maximum cumulative ad-
justment percentage for the year (as 
defined in clause (ii)); to 
‘‘(II) the standardized IME cost 
percentage (as defined in clause (iii)) 
for the area and year. 
‘‘(ii) MAXIMUM CUMULATIVE ADJUST-
MENT PERCENTAGE.—The term ‘maximum 
cumulative adjustment percentage’ means, 
for— 
‘‘(I) 2010, 0.60 percent; and 
‘‘(II) a subsequent year, the max-
imum cumulative adjustment percent-
age for the previous year increased by 
0.60 percentage points. 
‘‘(iii) STANDARDIZED IME COST PER-
CENTAGE.—The term ‘standardized IME 
cost percentage’ means, for an area for a 
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year, the per capita costs for payments 
under section 1886(d)(5)(B) (expressed as 
a percentage of the fee-for-service amount 
specified in subparagraph (C)) for the area 
and the year. 
‘‘(C) 
FEE-FOR-SERVICE
AMOUNT.—The 
fee-for-service amount specified in this subpara-
graph for an area for a year is the amount 
specified under subsection (c)(1)(D) for the 
area and the year.’’. 
(b) EXCLUDING
ADJUSTMENT
FROM
THE
UP-
DATE.—Section 1853(k)(1)(B)(i) of the Social Security 
Act (42 U.S.C. 1395w–23(k)(1)(B)(i)) is amended by 
striking ‘‘paragraph (2)’’ and inserting ‘‘paragraphs (2) 
and (4)’’. 
(c) HOLD HARMLESS FOR PACE PROGRAM PAY-
MENTS.—Section 1894(d) of the Social Security Act (42 
U.S.C. 1395eee(d)) is amended by adding at the end the 
following new paragraph: 
‘‘(3) CAPITATION
RATES
DETERMINED
WITH-
OUT REGARD TO THE PHASE-OUT OF THE INDIRECT 
COSTS OF MEDICAL EDUCATION FROM THE ANNUAL 
MEDICARE ADVANTAGE CAPITATION RATE.—Capita-
tion amounts under this subsection shall be deter-
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mined without regard to the application of section 
1853(k)(4).’’. 
SEC. 162. REVISIONS TO REQUIREMENTS FOR MEDICARE 
ADVANTAGE 
PRIVATE 
FEE-FOR-SERVICE 
PLANS. 
(a) REQUIREMENTS TO ASSURE ACCESS TO NET-
WORK COVERAGE.— 
(1) INDIVIDUAL MARKET.—Section 1852(d) of 
the Social Security Act (42 U.S.C. 1395w–22(d)) is 
amended— 
(A) in paragraph (4), in the second sen-
tence, by striking ‘‘The Secretary’’ and insert-
ing ‘‘Subject to paragraph (5), the Secretary’’; 
and 
(B) by adding at the end the following new 
paragraph: 
‘‘(5) 
REQUIREMENT
OF
CERTAIN
NON-
EMPLOYER
MEDICARE
ADVANTAGE
PRIVATE
FEE- 
FOR-SERVICE PLANS TO USE CONTRACTS WITH PRO-
VIDERS.— 
‘‘(A) IN GENERAL.—For plan year 2011 
and subsequent plan years, in the case of a 
Medicare Advantage private fee-for-service plan 
not described in paragraph (1) or (2) of section 
1857(i) operating in a network area (as defined 
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209 
in subparagraph (B)), the plan shall meet the 
access standards under paragraph (4) in that 
area only through entering into written con-
tracts as provided for under subparagraph (B) 
of such paragraph and not, in whole or in part, 
through the establishment of payment rates 
meeting the requirements under subparagraph 
(A) of such paragraph. 
‘‘(B) NETWORK AREA DEFINED.—For pur-
poses of subparagraph (A), the term ‘network 
area’ means, for a plan year, an area which the 
Secretary identifies (in the Secretary’s an-
nouncement of the proposed payment rates for 
the 
previous 
plan 
year 
under 
section 
1853(b)(1)(B)) as having at least 2 network- 
based plans (as defined in subparagraph (C)) 
with enrollment under this part as of the first 
day of the year in which such announcement is 
made. 
‘‘(C) NETWORK-BASED PLAN DEFINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
subparagraph (B), the term ‘network- 
based plan’ means— 
‘‘(I) except as provided in clause 
(ii), a Medicare Advantage plan that 
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210 
is a coordinated care plan described in 
section 1851(a)(2)(A)(i); 
‘‘(II) a network-based MSA plan; 
and 
‘‘(III) a reasonable cost reim-
bursement plan under section 1876. 
‘‘(ii) EXCLUSION
OF
NON-NETWORK 
REGIONAL
PPOS.—The term ‘network- 
based plan’ shall not include an MA re-
gional plan that, with respect to the area, 
meets access adequacy standards under 
this part substantially through the author-
ity of section 422.112(a)(1)(ii) of title 42, 
Code of Federal Regulations, rather than 
through written contracts.’’. 
(2) EMPLOYER PLANS.—Section 1852(d) of the 
Social Security Act (42 U.S.C. 1395w–22(d)), as 
amended by paragraph (1), is amended— 
(A) in paragraph (4), in the second sen-
tence, by striking ‘‘paragraph (5)’’ and insert-
ing ‘‘paragraphs (5) and (6)’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(6) REQUIREMENT OF ALL EMPLOYER MEDI-
CARE ADVANTAGE PRIVATE FEE-FOR-SERVICE PLANS 
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211 
TO
USE
CONTRACTS
WITH
PROVIDERS.—For plan 
year 2011 and subsequent plan years, in the case of 
a Medicare Advantage private fee-for-service plan 
that is described in paragraph (1) or (2) of section 
1857(i), the plan shall meet the access standards 
under paragraph (4) only through entering into writ-
ten contracts as provided for under subparagraph 
(B) of such paragraph and not, in whole or in part, 
through the establishment of payment rates meeting 
the requirements under subparagraph (A) of such 
paragraph.’’. 
(3) ACCESS REQUIREMENTS.— 
(A) IN GENERAL.—Section 1852(d)(4)(B) 
of the Social Security Act (42 U.S.C. 1395w– 
22(d)(4)(B)) is amended by striking ‘‘a suffi-
cient number’’ through ‘‘terms of the plan’’ and 
inserting ‘‘a sufficient number and range of 
providers within such category to meet the ac-
cess standards in subparagraphs (A) through 
(E) of paragraph (1)’’. 
(B) EFFECTIVE
DATE.—The amendment 
made by subparagraph (A) shall apply to plan 
year 2010 and subsequent plan years. 
(b) CLARIFICATION REGARDING UTILIZATION.—Sec-
tion 1859(b)(2) of the Social Security Act (42 U.S.C. 
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212 
1395w–28(b)(2)) is amended by adding at the end the fol-
lowing flush sentence: 
‘‘Nothing in subparagraph (B) shall be construed to 
preclude a plan from varying rates for such a pro-
vider based on the specialty of the provider, the loca-
tion of the provider, or other factors related to such 
provider that are not related to utilization, or to pre-
clude a plan from increasing rates for such a pro-
vider based on increased utilization of specified pre-
ventive or screening services.’’. 
SEC. 163. REVISIONS TO QUALITY IMPROVEMENT PRO-
GRAMS. 
(a) REQUIREMENT
FOR MA PRIVATE FEE-FOR- 
SERVICE AND MSA PLANS TO HAVE A QUALITY IM-
PROVEMENT PROGRAM.—Section 1852(e)(1) of the Social 
Security Act (42 U.S.C. 1395w–22(e)(1)) is amended by 
striking ‘‘(other than an MA private fee-for-service plan 
or an MSA plan)’’. 
(b) DATA COLLECTION REQUIREMENTS FOR MA RE-
GIONAL PLANS, MA PRIVATE FEE-FOR-SERVICE PLANS, 
AND MSA PLANS.—Section 1852(e)(3)(A) of the Social 
Security Act (42 U.S.C. 1395w–22(e)(3)(A)) is amend-
ed— 
(1) in clause (i), by adding at the end the fol-
lowing new sentence: ‘‘With respect to MA private 
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213 
fee-for-service plans and MSA plans, the require-
ments under the preceding sentence may not exceed 
the requirements under this subparagraph with re-
spect to MA local plans that are preferred provider 
organization plans, except that, for plan year 2010, 
the limitation under clause (iii) shall not apply and 
such requirements shall apply only with respect to 
administrative claims data.’’ 
(2) by striking clause (ii); and 
(3) in clause (iii)— 
(A) in the heading— 
(i) by inserting ‘‘LOCAL’’ after ‘‘TO’’; 
and 
(ii) by inserting ‘‘AND MA REGIONAL 
PLANS’’ after ‘‘ORGANIZATIONS’’; and 
(B) by inserting ‘‘and to MA regional 
plans’’ after ‘‘organization plans’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2010. 
SEC. 164. REVISIONS RELATING TO SPECIALIZED MEDI-
CARE 
ADVANTAGE 
PLANS 
FOR 
SPECIAL 
NEEDS INDIVIDUALS. 
(a) EXTENSION OF AUTHORITY TO RESTRICT EN-
ROLLMENT.—Section 1859(f) of the Social Security Act 
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214 
(42 U.S.C. 1395w–28(f)), as amended by section 108(a) 
of the Medicare, Medicaid, and SCHIP Extension Act of 
2007 (Public Law 110–173) is amended by striking 
‘‘2010’’ and inserting ‘‘2011’’. 
(b) MORATORIUM ON AUTHORITY TO DESIGNATE 
OTHER PLANS AS SPECIALIZED MA PLANS.—During the 
period beginning on January 1, 2010, and ending on De-
cember 31, 2010, the Secretary of Health and Human 
Services may not exercise the authority provided under 
section 231(d) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (42 U.S.C. 
1395w–21 note) to designate other plans as specialized 
MA plans for special needs individuals. 
(c) REQUIREMENTS FOR ENROLLMENT.— 
(1) IN GENERAL.—Section 1859 of the Social 
Security Act (42 U.S.C. 1395w–28) is amended— 
(A) in subsection (b)(6)(A), by inserting 
‘‘and that, as of January 1, 2010, meets the 
applicable requirements of paragraph (2), (3), 
or (4) of subsection (f), as the case may be’’ be-
fore the period at the end; and 
(B) in subsection (f)— 
(i) by amending the heading to read 
as follows: ‘‘REQUIREMENTS REGARDING 
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215 
ENROLLMENT IN SPECIALIZED MA PLANS 
FOR SPECIAL NEEDS INDIVIDUALS’’; 
(ii) by designating the sentence begin-
ning ‘‘In the case of’’ as paragraph (1) 
with the heading ‘‘REQUIREMENTS
FOR 
ENROLLMENT.—’’ and with appropriate in-
dentation; and 
(iii) by adding at the end the fol-
lowing new paragraphs: 
‘‘(2) ADDITIONAL REQUIREMENTS FOR INSTI-
TUTIONAL SNPS.—In the case of a specialized MA 
plan for special needs individuals described in sub-
section (b)(6)(B)(i), the applicable requirements de-
scribed in this paragraph are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individuals 
described 
in 
subsection 
(b)(6)(B)(i). In the case of an individual who is 
living in the community but requires an institu-
tional level of care, such individual shall not be 
considered a special needs individual described 
in subsection (b)(6)(B)(i) unless the determina-
tion that the individual requires an institutional 
level of care was made— 
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216 
‘‘(i) using a State assessment tool of 
the State in which the individual resides; 
and 
‘‘(ii) by an entity other than the orga-
nization offering the plan. 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5). 
‘‘(3) ADDITIONAL
REQUIREMENTS
FOR
DUAL 
SNPS.—In the case of a specialized MA plan for spe-
cial needs individuals described in subsection 
(b)(6)(B)(ii), the applicable requirements described 
in this paragraph are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individuals 
described 
in 
subsection 
(b)(6)(B)(ii). 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5). 
‘‘(C) The plan provides each prospective 
enrollee, prior to enrollment, with a comprehen-
sive written statement (using standardized con-
tent and format established by the Secretary) 
that describes— 
‘‘(i) the benefits and cost-sharing pro-
tections that the individual is entitled to 
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217 
under the State Medicaid program under 
title XIX; and 
‘‘(ii) which of such benefits and cost- 
sharing protections are covered under the 
plan. 
Such statement shall be included with any de-
scription of benefits offered by the plan. 
‘‘(D) The plan has a contract with the 
State Medicaid agency to provide benefits, or 
arrange for benefits to be provided, for which 
such individual is entitled to receive as medical 
assistance under title XIX. Such benefits may 
include long-term care services consistent with 
State policy. 
‘‘(4) ADDITIONAL REQUIREMENTS FOR SEVERE 
OR DISABLING CHRONIC CONDITION SNPS.—In the 
case of a specialized MA plan for special needs indi-
viduals described in subsection (b)(6)(B)(iii), the ap-
plicable requirements described in this paragraph 
are as follows: 
‘‘(A) Each individual that enrolls in the 
plan on or after January 1, 2010, is a special 
needs 
individual 
described 
in 
subsection 
(b)(6)(B)(iii). 
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218 
‘‘(B) The plan meets the requirements de-
scribed in paragraph (5).’’. 
(2) AUTHORITY TO OPERATE BUT NO SERVICE 
AREA EXPANSION FOR DUAL SNPS THAT DO NOT 
MEET
CERTAIN
REQUIREMENTS.—Notwithstanding 
subsection (f) of section 1859 of the Social Security 
Act (42 U.S.C. 1395w–28), during the period begin-
ning on January 1, 2010, and ending on December 
31, 2010, in the case of a specialized Medicare Ad-
vantage plan for special needs individuals described 
in subsection (b)(6)(B)(ii) of such section, as 
amended by this section, that does not meet the re-
quirement described in subsection (f)(3)(D) of such 
section, the Secretary of Health and Human Serv-
ices— 
(A) shall permit such plan to be offered 
under part C of title XVIII of such Act; and 
(B) shall not permit an expansion of the 
service area of the plan under such part C. 
(3) RESOURCES FOR STATE MEDICAID AGEN-
CIES.—The Secretary of Health and Human Serv-
ices shall provide for the designation of appropriate 
staff and resources that can address State inquiries 
with respect to the coordination of State and Fed-
eral policies for specialized MA plans for special 
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needs 
individuals 
described 
in 
section 
1859(b)(6)(B)(ii) of the Social Security Act (42 
U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this 
section. 
(4) NO REQUIREMENT FOR CONTRACT.—Noth-
ing in the provisions of, or amendments made by, 
this subsection shall require a State to enter into a 
contract with a Medicare Advantage organization 
with respect to a specialized MA plan for special 
needs 
individuals 
described 
in 
section 
1859(b)(6)(B)(ii) of the Social Security Act (42 
U.S.C. 1395w–28(b)(6)(B)(ii)), as amended by this 
section. 
(d) CARE MANAGEMENT REQUIREMENTS FOR ALL 
SNPS.— 
(1) REQUIREMENTS.—Section 1859(f) of the 
Social Security Act (42 U.S.C. 1395w–28(f)), as 
amended by subsection (c)(1), is amended by adding 
at the end the following new paragraph: 
‘‘(5) CARE MANAGEMENT REQUIREMENTS FOR 
ALL
SNPS.—The requirements described in this 
paragraph are that the organization offering a spe-
cialized MA plan for special needs individuals de-
scribed in subsection (b)(6)(B)(i)— 
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‘‘(A) have in place an evidenced-based 
model of care with appropriate networks of pro-
viders and specialists; and 
‘‘(B) with respect to each individual en-
rolled in the plan— 
‘‘(i) conduct an initial assessment and 
an annual reassessment of the individual’s 
physical, 
psychosocial, 
and 
functional 
needs; 
‘‘(ii) develop a plan, in consultation 
with the individual as feasible, that identi-
fies goals and objectives, including measur-
able outcomes as well as specific services 
and benefits to be provided; and 
‘‘(iii) use an interdisciplinary team in 
the management of care.’’. 
(2) REVIEW
TO
ENSURE
COMPLIANCE
WITH 
CARE
MANAGEMENT
REQUIREMENTS.—Section 
1857(d) of the Social Security Act (42 U.S.C. 
1395w–27(d)) is amended by adding at the end the 
following new paragraph: 
‘‘(6) REVIEW TO ENSURE COMPLIANCE WITH 
CARE MANAGEMENT REQUIREMENTS FOR SPECIAL-
IZED
MEDICARE
ADVANTAGE
PLANS
FOR
SPECIAL 
NEEDS INDIVIDUALS.—In conjunction with the peri-
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odic audit of a specialized Medicare Advantage plan 
for special needs individuals under paragraph (1), 
the Secretary shall conduct a review to ensure that 
such organization offering the plan meets the re-
quirements described in section 1859(f)(5).’’. 
(e) CLARIFICATION OF THE DEFINITION OF A SE-
VERE OR DISABLING CHRONIC CONDITIONS SPECIALIZED 
NEEDS INDIVIDUAL.— 
(1) IN GENERAL.—Section 1859(b)(6)(B)(iii) of 
the Social Security Act (42 U.S.C. 1395w– 
28(b)(6)(B)(iii)) is amended by inserting ‘‘who have 
one or more comorbid and medically complex chronic 
conditions that are substantially disabling or life 
threatening, have a high risk of hospitalization or 
other significant adverse health outcomes, and re-
quire specialized delivery systems across domains of 
care’’ before the period at the end. 
(2) PANEL.—The Secretary of Health and 
Human Services shall convene a panel of clinical ad-
visors to determine the conditions that meet the def-
inition of severe and disabling chronic conditions 
under section 1859(b)(6)(B)(iii) of the Social Secu-
rity Act (42 U.S.C. 1395w–28(b)(6)(B)(iii)), as 
amended by paragraph (1). The panel shall include 
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the Director of the Agency for Healthcare Research 
and Quality (or the Director’s designee). 
(f) SPECIAL REQUIREMENTS REGARDING QUALITY 
REPORTING FOR SPECIALIZED MA PLANS FOR SPECIAL 
NEEDS INDIVIDUALS.— 
(1) IN GENERAL.—Section 1852(e)(3)(A) of the 
Social Security Act (42 U.S.C. 1395w–22(e)(3)(A)), 
as amended by section 163, is amended by inserting 
after clause (i) the following new clause: 
‘‘(ii) SPECIAL
REQUIREMENTS
FOR 
SPECIALIZED
MA
PLANS
FOR
SPECIAL 
NEEDS INDIVIDUALS.—In addition to the 
data required to be collected, analyzed, and 
reported under clause (i) and notwith-
standing the limitations under subpara-
graph (B), as part of the quality improve-
ment program under paragraph (1), each 
MA organization offering a specialized 
Medicare Advantage plan for special needs 
individuals shall provide for the collection, 
analysis, and reporting of data that per-
mits the measurement of health outcomes 
and other indices of quality with respect to 
the requirements described in paragraphs 
(2) through (5) of subsection (f). Such 
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data may be based on claims data and 
shall be at the plan level.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on a date specified 
by the Secretary of Health and Human Services (but 
in no case later than January 1, 2010), and shall 
apply to all specialized Medicare Advantage plans 
for special needs individuals regardless of when the 
plan first entered the Medicare Advantage program 
under part C of title XVIII of the Social Security 
Act. 
(g) EFFECTIVE
DATE
AND
APPLICATION.—The 
amendments made by subsections (c)(1), (d), and (e)(1) 
shall apply to plan years beginning on or after January 
1, 2010, and shall apply to all specialized Medicare Advan-
tage plans for special needs individuals regardless of when 
the plan first entered the Medicare Advantage program 
under part C of title XVIII of the Social Security Act. 
(h) NO
AFFECT
ON
MEDICAID
BENEFITS
FOR 
DUALS.—Nothing in the provisions of, or amendments 
made by, this section shall affect the benefits available 
under the Medicaid program under title XIX of the Social 
Security Act for special needs individuals described in sec-
tion 1859(b)(6)(B)(ii) of such Act (42 U.S.C. 1395w– 
28(b)(6)(B)(ii)). 
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SEC. 165. LIMITATION ON OUT-OF-POCKET COSTS FOR 
DUAL ELIGIBLES AND QUALIFIED MEDICARE 
BENEFICIARIES ENROLLED IN A SPECIAL-
IZED MEDICARE ADVANTAGE PLAN FOR SPE-
CIAL NEEDS INDIVIDUALS. 
(a) IN GENERAL.—Section 1852(a) of the Social Se-
curity Act (42 U.S.C. 1395w–22(a)) is amended by adding 
at the end the following new paragraph: 
‘‘(7) LIMITATION ON COST-SHARING FOR DUAL 
ELIGIBLES
AND
QUALIFIED
MEDICARE
BENE-
FICIARIES.—In the case of an individual who is a 
full-benefit dual eligible individual (as defined in sec-
tion 1935(c)(6)) or a qualified Medicare beneficiary 
(as defined in section 1905(p)(1)) and who is en-
rolled in a specialized Medicare Advantage plan for 
special needs individuals described in section 
1859(b)(6)(B)(ii), the plan may not impose cost- 
sharing that exceeds the amount of cost-sharing that 
would be permitted with respect to the individual 
under title XIX if the individual were not enrolled 
in such plan.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to plan years beginning on or 
after January 1, 2010. 
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SEC. 166. ADJUSTMENT TO THE MEDICARE ADVANTAGE 
STABILIZATION FUND. 
Section 1858(e)(2)(A)(i) of the Social Security Act 
(42 U.S.C. 1395w–27a(e)(2)(A)(i)), as amended by sec-
tion 110 of the Medicare, Medicaid, and SCHIP Extension 
Act of 2007 (Public Law 110–173), is amended— 
(1) by striking ‘‘2013’’ and inserting ‘‘2014’’; 
and 
(2) by striking ‘‘$1,790,000,000’’ and inserting 
‘‘$1’’. 
SEC. 167. ACCESS TO MEDICARE REASONABLE COST CON-
TRACT PLANS. 
(a) EXTENSION
OF
REASONABLE
COST
CON-
TRACTS.—Section 1876(h)(5)(C)(ii) of the Social Security 
Act (42 U.S.C. 1395mm(h)(5)(C)(ii)), as amended by sec-
tion 109 of the Medicare, Medicaid, and SCHIP Extension 
Act of 2007 (Public Law 110–173), is amended by strik-
ing ‘‘January 1, 2009’’ and inserting ‘‘January 1, 2010’’ 
in the matter preceding subclause (I). 
(b) REQUIREMENT FOR AT LEAST TWO MEDICARE 
ADVANTAGE ORGANIZATIONS TO BE OFFERING A PLAN 
IN AN AREA FOR THE PROHIBITION TO BE APPLICA-
BLE.—Subclauses (I) and (II) of section 1876(h)(5)(C)(ii) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395mm(h)(5)(C)(ii)) are each amended by inserting ‘‘, 
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226 
provided that all such plans are not offered by the same 
Medicare Advantage organization’’ after ‘‘clause (iii)’’. 
(c) REVISION OF REQUIREMENTS FOR A PLAN THAT 
ARE USED TO DETERMINE IF PROHIBITION IS APPLICA-
BLE.— 
(1) IN GENERAL.—Section 1876(h)(5)(C)(iii)(I) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395mm(h)(5)(C)(iii)(I)) is amended by inserting 
‘‘that are not in another Metropolitan Statistical 
Area with a population of more than 250,000’’ after 
‘‘such Metropolitan Statistical Area’’. 
(2) 
CLARIFICATION.—Section 
1876(h)(5)(C)(iii)(I) of the Social Security Act (42 
U.S.C. 1395mm(h)(5)(C)(iii)(I)) is amended by add-
ing at the end the following new sentence: ‘‘If the 
service area includes a portion in more than 1 Met-
ropolitan Statistical Area with a population of more 
than 250,000, the minimum enrollment determina-
tion under the preceding sentence shall be made 
with respect to each such Metropolitan Statistical 
Area (and such applicable contiguous counties to 
such Metropolitan Statistical Area).’’. 
(d) GAO STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the 
United States shall conduct a study of the reasons 
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(if any) why reasonable cost contracts under section 
1876(h) of the Social Security Act (42 U.S.C. 
1395mm(h)) are unable to become Medicare Advan-
tage plans under part C of title XVIII of such Act. 
(2) REPORT.—Not later than December 31, 
2009, the Comptroller General of the United States 
shall submit to Congress a report containing the re-
sults of the study conducted under paragraph (1), 
together with recommendations for such legislation 
and administrative action as the Comptroller Gen-
eral determines appropriate. 
SEC. 168. MEDPAC STUDY AND REPORT ON QUALITY MEAS-
URES. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission shall conduct a study on how comparable meas-
ures of performance and patient experience can be col-
lected and reported by 2011 for the Medicare Advantage 
program under part C of title XVIII of the Social Security 
Act and the original Medicare fee-for-service program 
under parts A and B of such title. Such study shall ad-
dress technical issues, such as data requirements, in addi-
tion to issues relating to appropriate quality benchmarks 
that— 
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(1) compare the quality of care Medicare bene-
ficiaries receive across Medicare Advantage plans; 
and 
(2) compare the quality of care Medicare bene-
ficiaries receive under Medicare Advantage plans 
and under the original Medicare fee-for-service pro-
gram. 
(b) REPORT.—Not later than March 31, 2010, the 
Medicare Payment Advisory Commission shall submit to 
Congress a report containing the results of the study con-
ducted under subsection (a), together with recommenda-
tions for such legislation and administrative action as the 
Medicare Payment Advisory Commission determines ap-
propriate. 
SEC. 169. MEDPAC STUDY AND REPORT ON MEDICARE AD-
VANTAGE PAYMENTS. 
(a) STUDY.—The Medicare Payment Advisory Com-
mission (in this section referred to as the ‘‘Commission’’) 
shall conduct a study of the following: 
(1) The correlation between— 
(A) the costs that Medicare Advantage or-
ganizations with respect to Medicare Advantage 
plans incur in providing coverage under the 
plan for items and services covered under the 
original Medicare fee-for-service program under 
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parts A and B of title XVIII of the Social Secu-
rity Act, as reflected in plan bids; and 
(B) county-level spending under such origi-
nal Medicare fee-for-service program on a per 
capita basis, as calculated by the Chief Actuary 
of the Centers for Medicare & Medicaid Serv-
ices. 
The study with respect to the issue described in the 
preceding sentence shall include differences in cor-
relation statistics by plan type and geographic area. 
(2) Based on these results of the study with re-
spect to the issue described in paragraph (1), and 
other data the Commission determines appro-
priate— 
(A) alternate approaches to payment with 
respect to a Medicare beneficiary enrolled in a 
Medicare Advantage plan other than through 
county-level payment area equivalents. 
(B) the accuracy and completeness of 
county-level estimates of per capita spending 
under such original Medicare fee-for-service 
program (including counties in Puerto Rico), as 
used to determine the annual Medicare Advan-
tage capitation rate under section 1853 of the 
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Social Security Act (42 U.S.C. 1395w–23), and 
whether such estimates include— 
(i) expenditures with respect to Medi-
care beneficiaries at facilities of the De-
partment of Veterans Affairs; and 
(ii) all appropriate administrative ex-
penses, including claims processing. 
(3) Ways to improve the accuracy and com-
pleteness of county-level estimates of per capita 
spending described in paragraph (2)(B). 
(b) REPORT.—Not later than March 31, 2010, the 
Commission shall submit to Congress a report containing 
the results of the study conducted under subsection (a), 
together with recommendations for such legislation and 
administrative action as the Commission determines ap-
propriate. 
Subtitle E—Provisions Relating to 
Part D 
PART I—IMPROVING PHARMACY ACCESS 
SEC. 171. PROMPT PAYMENT BY PRESCRIPTION DRUG 
PLANS AND MA–PD PLANS UNDER PART D. 
(a) PROMPT PAYMENT
BY PRESCRIPTION DRUG 
PLANS.—Section 1860D–12(b) of the Social Security Act 
(42 U.S.C. 1395w–112(b)) is amended by adding at the 
end the following new paragraph: 
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‘‘(4) PROMPT PAYMENT OF CLEAN CLAIMS.— 
‘‘(A) PROMPT PAYMENT.— 
‘‘(i) IN GENERAL.—Each contract en-
tered into with a PDP sponsor under this 
part with respect to a prescription drug 
plan offered by such sponsor shall provide 
that payment shall be issued, mailed, or 
otherwise transmitted with respect to all 
clean claims submitted by pharmacies 
(other than pharmacies that dispense 
drugs by mail order only or are located in, 
or contract with, a long-term care facility) 
under this part within the applicable num-
ber of calendar days after the date on 
which the claim is received. 
‘‘(ii) CLEAN CLAIM DEFINED.—In this 
paragraph, the term ‘clean claim’ means a 
claim that has no defect or impropriety 
(including any lack of any required sub-
stantiating documentation) or particular 
circumstance requiring special treatment 
that prevents timely payment from being 
made on the claim under this part. 
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232 
‘‘(iii) DATE OF RECEIPT OF CLAIM.— 
In this paragraph, a claim is considered to 
have been received— 
‘‘(I) with respect to claims sub-
mitted electronically, on the date on 
which the claim is transferred; and 
‘‘(II) with respect to claims sub-
mitted otherwise, on the 5th day after 
the postmark date of the claim or the 
date specified in the time stamp of the 
transmission. 
‘‘(B) APPLICABLE NUMBER OF CALENDAR 
DAYS DEFINED.—In this paragraph, the term 
‘applicable number of calendar days’ means— 
‘‘(i) with respect to claims submitted 
electronically, 14 days; and 
‘‘(ii) with respect to claims submitted 
otherwise, 30 days. 
‘‘(C) INTEREST PAYMENT.— 
‘‘(i) IN GENERAL.—Subject to clause 
(ii), if payment is not issued, mailed, or 
otherwise transmitted within the applicable 
number of calendar days (as defined in 
subparagraph (B)) after a clean claim is 
received, the PDP sponsor shall pay inter-
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233 
est to the pharmacy that submitted the 
claim at a rate equal to the weighted aver-
age of interest on 3-month marketable 
Treasury securities determined for such 
period, increased by 0.1 percentage point 
for the period beginning on the day after 
the required payment date and ending on 
the date on which payment is made (as de-
termined under subparagraph (D)(iv)). In-
terest amounts paid under this subpara-
graph shall not be counted against the ad-
ministrative costs of a prescription drug 
plan or treated as allowable risk corridor 
costs under section 1860D–15(e). 
‘‘(ii) AUTHORITY NOT TO CHARGE IN-
TEREST.—The Secretary may provide that 
a PDP sponsor is not charged interest 
under clause (i) in the case where there 
are exigent circumstances, including nat-
ural disasters and other unique and unex-
pected events, that prevent the timely proc-
essing of claims. 
‘‘(D) PROCEDURES INVOLVING CLAIMS.— 
‘‘(i) CLAIM DEEMED TO BE CLEAN.— 
A claim is deemed to be a clean claim if 
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the PDP sponsor involved does not provide 
notice to the claimant of any deficiency in 
the claim— 
‘‘(I) with respect to claims sub-
mitted electronically, within 10 days 
after the date on which the claim is 
received; and 
‘‘(II) with respect to claims sub-
mitted otherwise, within 15 days after 
the date on which the claim is re-
ceived. 
‘‘(ii) CLAIM DETERMINED TO NOT BE 
A CLEAN CLAIM.— 
‘‘(I) IN
GENERAL.—If a PDP 
sponsor determines that a submitted 
claim is not a clean claim, the PDP 
sponsor shall, not later than the end 
of the period described in clause (i), 
notify the claimant of such determina-
tion. Such notification shall specify all 
defects or improprieties in the claim 
and shall list all additional informa-
tion or documents necessary for the 
proper processing and payment of the 
claim. 
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‘‘(II) 
DETERMINATION
AFTER 
SUBMISSION
OF
ADDITIONAL
INFOR-
MATION.—A claim is deemed to be a 
clean claim under this paragraph if 
the PDP sponsor involved does not 
provide notice to the claimant of any 
defect or impropriety in the claim 
within 10 days of the date on which 
additional 
information 
is 
received 
under subclause (I). 
‘‘(iii) OBLIGATION TO PAY.—A claim 
submitted to a PDP sponsor that is not 
paid or contested by the sponsor within the 
applicable number of days (as defined in 
subparagraph (B)) after the date on which 
the claim is received shall be deemed to be 
a clean claim and shall be paid by the 
PDP sponsor in accordance with subpara-
graph (A). 
‘‘(iv) DATE OF PAYMENT OF CLAIM.— 
Payment of a clean claim under such sub-
paragraph is considered to have been made 
on the date on which— 
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‘‘(I) with respect to claims paid 
electronically, the payment is trans-
ferred; and 
‘‘(II) with respect to claims paid 
otherwise, the payment is submitted 
to the United States Postal Service or 
common carrier for delivery. 
‘‘(E) 
ELECTRONIC
TRANSFER
OF 
FUNDS.—A PDP sponsor shall pay all clean 
claims submitted electronically by electronic 
transfer of funds if the pharmacy so requests or 
has so requested previously. In the case where 
such payment is made electronically, remittance 
may be made by the PDP sponsor electronically 
as well. 
‘‘(F) PROTECTING THE RIGHTS OF CLAIM-
ANTS.— 
‘‘(i) IN
GENERAL.—Nothing in this 
paragraph shall be construed to prohibit or 
limit a claim or action not covered by the 
subject matter of this section that any in-
dividual or organization has against a pro-
vider or a PDP sponsor. 
‘‘(ii) ANTI-RETALIATION.—Consistent 
with applicable Federal or State law, a 
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237 
PDP sponsor shall not retaliate against an 
individual or provider for exercising a right 
of action under this subparagraph. 
‘‘(G) RULE OF CONSTRUCTION.—A deter-
mination under this paragraph that a claim 
submitted by a pharmacy is a clean claim shall 
not be construed as a positive determination re-
garding eligibility for payment under this title, 
nor is it an indication of government approval 
of, or acquiescence regarding, the claim sub-
mitted. The determination shall not relieve any 
party of civil or criminal liability with respect to 
the claim, nor does it offer a defense to any ad-
ministrative, civil, or criminal action with re-
spect to the claim.’’. 
(b) PROMPT PAYMENT BY MA–PD PLANS.—Section 
1857(f) of the Social Security Act (42 U.S.C. 1395w–27) 
is amended by adding at the end the following new para-
graph: 
‘‘(3) INCORPORATION
OF
CERTAIN
PRESCRIP-
TION DRUG PLAN CONTRACT REQUIREMENTS.—The 
following provisions shall apply to contracts with a 
Medicare Advantage organization offering an MA– 
PD plan in the same manner as they apply to con-
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238 
tracts with a PDP sponsor offering a prescription 
drug plan under part D: 
‘‘(A) PROMPT PAYMENT.—Section 1860D– 
12(b)(4).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2010. 
SEC. 172. REGULAR UPDATE OF PRESCRIPTION DRUG 
PRICING STANDARD. 
(a) 
REQUIREMENT
FOR
PRESCRIPTION
DRUG 
PLANS.—Section 1860D–12(b) of the Social Security Act 
(42 U.S.C. 1395w–112(b)), as amended by section 
171(a)(1), is amended by adding at the end the following 
new paragraph: 
‘‘(5) REGULAR
UPDATE
OF
PRESCRIPTION 
DRUG PRICING STANDARD.—If the PDP sponsor of 
a prescription drug plan uses a standard for reim-
bursement of pharmacies based on the cost of a 
drug, each contract entered into with such sponsor 
under this part with respect to the plan shall provide 
that the sponsor shall update such standard not less 
frequently than once every 7 days, beginning with an 
initial update on January 1 of each year, to accu-
rately reflect the market price of acquiring the 
drug.’’. 
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239 
(b) REQUIREMENT
FOR MA–PD PLANS.—Section 
1857(f)(3) of the Social Security Act, as amended by sec-
tion 171(a)(2), is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(B) REGULAR UPDATE OF PRESCRIPTION 
DRUG
PRICING
STANDARD.—Section 1860D– 
12(b)(6).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning on or after 
January 1, 2009. 
PART II—OTHER PROVISIONS 
SEC. 
175. 
INCLUSION 
OF 
BARBITURATES 
AND 
BENZODIAZEPINES 
AS 
COVERED 
PART 
D 
DRUGS. 
(a) IN GENERAL.—Section 1860D–2(e)(2)(A) of the 
Social Security Act (42 U.S.C. 1395w–102(e)(2)(A)) is 
amended by inserting after ‘‘agents),’’ the following ‘‘other 
than subparagraph (I) of such section (relating to barbitu-
rates) if the barbiturate is used in the treatment of epi-
lepsy, cancer, or a chronic mental health disorder, and 
other than subparagraph (J) of such section (relating to 
benzodiazepines),’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to prescriptions dispensed on or 
after January 1, 2013. 
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SEC. 176. FORMULARY REQUIREMENTS WITH RESPECT TO 
CERTAIN 
CATEGORIES 
OR 
CLASSES 
OF 
DRUGS. 
Section 1860D–4(b)(3) of the Social Security Act (42 
U.S.C. 1395w–104(b)(3)) is amended— 
(1) in subparagraph (C)(i), by striking ‘‘The 
formulary’’ and inserting ‘‘Subject to subparagraph 
(G), the formulary’’; and 
(2) by inserting after subparagraph (F) the fol-
lowing new subparagraph: 
‘‘(G) REQUIRED INCLUSION OF DRUGS IN 
CERTAIN CATEGORIES AND CLASSES.— 
‘‘(i) IDENTIFICATION
OF
DRUGS
IN 
CERTAIN CATEGORIES AND CLASSES.—Be-
ginning with plan year 2010, the Secretary 
shall identify, as appropriate, categories 
and classes of drugs for which both of the 
following criteria are met: 
‘‘(I) Restricted access to drugs in 
the category or class would have 
major or life threatening clinical con-
sequences for individuals who have a 
disease or disorder treated by the 
drugs in such category or class. 
‘‘(II) There is significant clinical 
need for such individuals to have ac-
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cess to multiple drugs within a cat-
egory or class due to unique chemical 
actions and pharmacological effects of 
the drugs within the category or class, 
such as drugs used in the treatment 
of cancer. 
‘‘(ii) FORMULARY
REQUIREMENTS.— 
Subject to clause (iii), PDP sponsors offer-
ing prescription drug plans shall be re-
quired to include all covered part D drugs 
in the categories and classes identified by 
the Secretary under clause (i). 
‘‘(iii) EXCEPTIONS.—The Secretary 
may establish exceptions that permits a 
PDP sponsor of a prescription drug plan 
to exclude from its formulary a particular 
covered part D drug in a category or class 
that is otherwise required to be included in 
the formulary under clause (ii) (or to oth-
erwise limit access to such a drug, includ-
ing through prior authorization or utiliza-
tion management). Any exceptions estab-
lished under the preceding sentence shall 
be provided under a process that— 
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‘‘(I) ensures that any exception 
to such requirement is based upon sci-
entific evidence and medical standards 
of practice (and, in the case of 
antiretroviral medications, is con-
sistent with the Department of Health 
and Human Services Guidelines for 
the Use of Antiretroviral Agents in 
HIV-1-Infected Adults and Adoles-
cents); and 
‘‘(II) includes a public notice and 
comment period.’’. 
Subtitle F—Other Provisions 
SEC. 181. USE OF PART D DATA. 
Section 1860D–12(b)(3)(D) of the Social Security 
Act (42 U.S.C. 1395w–112(b)(3)(D)) is amended by add-
ing at the end the following sentence: ‘‘Notwithstanding 
any other provision of law, information provided to the 
Secretary under the application of section 1857(e)(1) to 
contracts under this section under the preceding sen-
tence— 
‘‘(i) may be used for the purposes of 
carrying out this part, improving public 
health through research on the utilization, 
safety, effectiveness, quality, and efficiency 
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of health care services (as the Secretary 
determines appropriate); and 
‘‘(ii) shall be made available to Con-
gressional support agencies (in accordance 
with their obligations to support Congress 
as set out in their authorizing statutes) for 
the purposes of conducting Congressional 
oversight, 
monitoring, 
making 
rec-
ommendations, and analysis of the pro-
gram under this title.’’. 
SEC. 182. REVISION OF DEFINITION OF MEDICALLY AC-
CEPTED INDICATION FOR DRUGS. 
(a) REVISION
OF
DEFINITION
FOR
PART
D 
DRUGS.— 
(1) IN
GENERAL.—Section 1860D–2(e)(1) of 
the Social Security Act (42 U.S.C. 1395w– 
102(e)(1)) is amended, in the matter following sub-
paragraph (B)— 
(A) by striking ‘‘(as defined in section 
1927(k)(6))’’ and inserting ‘‘(as defined in 
paragraph (4))’’; and 
(B) by adding at the end the following new 
paragraph: 
‘‘(4) MEDICALLY
ACCEPTED
INDICATION
DE-
FINED.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘medically accepted indica-
tion’ has the meaning given that term— 
‘‘(i) in the case of a covered part D 
drug 
used 
in 
an 
anticancer 
chemotherapeutic 
regimen, 
in 
section 
1861(t)(2)(B), except that in applying 
such section— 
‘‘(I) ‘prescription drug plan or 
MA–PD plan’ shall be substituted for 
‘carrier’ each place it appears; and 
‘‘(II) subject to subparagraph 
(B), the compendia described in sec-
tion 1927(g)(1)(B)(i)(III) shall be in-
cluded in the list of compendia de-
scribed 
in 
clause 
(ii)(I) 
section 
1861(t)(2)(B); and 
‘‘(ii) in the case of any other covered 
part D drug, in section 1927(k)(6). 
‘‘(B) CONFLICT
OF
INTEREST.—On and 
after January 1, 2010, subparagraph (A)(i)(II) 
shall not apply unless the compendia described 
in section 1927(g)(1)(B)(i)(III) meets the re-
quirement in the third sentence of section 
1861(t)(2)(B). 
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‘‘(C) UPDATE.—For purposes of applying 
subparagraph (A)(ii), the Secretary shall revise 
the list of compendia described in section 
1927(g)(1)(B)(i) as is appropriate for identi-
fying medically accepted indications for drugs. 
Any such revision shall be done in a manner 
consistent with the process for revising com-
pendia under section 1861(t)(2)(B).’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to plan years begin-
ning on or after January 1, 2009. 
(b) 
CONFLICTS
OF
INTEREST.—Section 
1861(t)(2)(B) of the Social Security Act (42 U.S.C. 
1395x(t)(2)(B)) is amended by adding at the end the fol-
lowing new sentence: ‘‘On and after January 1, 2010, no 
compendia may be included on the list of compendia under 
this subparagraph unless the compendia has a publicly 
transparent process for evaluating therapies and for iden-
tifying potential conflicts of interests.’’. 
SEC. 183. CONTRACT WITH A CONSENSUS-BASED ENTITY 
REGARDING PERFORMANCE MEASUREMENT. 
(a) CONTRACT.— 
(1) IN GENERAL.—Part E of title XVIII of the 
Social Security Act (42 U.S.C. 1395x et seq.) is 
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amended by inserting after section 1889 the fol-
lowing new section: 
‘‘CONTRACT WITH A CONSENSUS-BASED ENTITY 
REGARDING PERFORMANCE MEASUREMENT 
‘‘SEC. 1890. (a) CONTRACT.— 
‘‘(1) IN GENERAL.—For purposes of activities 
conducted under this Act, the Secretary shall iden-
tify and have in effect a contract with a consensus- 
based entity, such as the National Quality Forum, 
that meets the requirements described in subsection 
(c). Such contract shall provide that the entity will 
perform the duties described in subsection (b). 
‘‘(2) TIMING FOR FIRST CONTRACT.—As soon 
as practicable after the date of the enactment of this 
subsection, the Secretary shall enter into the first 
contract under paragraph (1). 
‘‘(3) PERIOD OF CONTRACT.—A contract under 
paragraph (1) shall be for a period of 4 years (ex-
cept as may be renewed after a subsequent bidding 
process). 
‘‘(4) COMPETITIVE PROCEDURES.—Competitive 
procedures (as defined in section 4(5) of the Office 
of Federal Procurement Policy Act (41 U.S.C. 
403(5))) shall be used to enter into a contract under 
paragraph (1). 
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‘‘(b) DUTIES.—The duties described in this sub-
section are the following: 
‘‘(1) PRIORITY SETTING PROCESS.—The entity 
shall synthesize evidence and convene key stake-
holders to make recommendations, with respect to 
activities conducted under this Act, on an integrated 
national strategy and priorities for health care per-
formance measurement in all applicable settings. In 
making such recommendations, the entity shall— 
‘‘(A) ensure that priority is given to meas-
ures— 
‘‘(i) that address the health care pro-
vided to patients with prevalent, high-cost 
chronic diseases; 
‘‘(ii) with the greatest potential for 
improving the quality, efficiency, and pa-
tient-centeredness of health care; and 
‘‘(iii) that may be implemented rap-
idly due to existing evidence, standards of 
care, or other reasons; and 
‘‘(B) take into account measures that— 
‘‘(i) may assist consumers and pa-
tients in making informed health care deci-
sions; 
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‘‘(ii) address health disparities across 
groups and areas; and 
‘‘(iii) address the continuum of care a 
patient receives, including services fur-
nished by multiple health care providers or 
practitioners and across multiple settings. 
‘‘(2) ENDORSEMENT OF MEASURES.—The enti-
ty shall provide for the endorsement of standardized 
health care performance measures. The endorsement 
process under the preceding sentence shall consider 
whether a measure— 
‘‘(A) is evidence-based, reliable, valid, 
verifiable, relevant to enhanced health out-
comes, actionable at the caregiver level, feasible 
to collect and report, and responsive to vari-
ations in patient characteristics, such as health 
status, language capabilities, race or ethnicity, 
and income level; and 
‘‘(B) is consistent across types of health 
care providers, including hospitals and physi-
cians. 
‘‘(3) MAINTENANCE OF MEASURES.—The entity 
shall establish and implement a process to ensure 
that measures endorsed under paragraph (2) are up-
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dated (or retired if obsolete) as new evidence is de-
veloped. 
‘‘(4) PROMOTION
OF
THE
DEVELOPMENT
OF 
ELECTRONIC HEALTH RECORDS.—The entity shall 
promote the development and use of electronic 
health records that contain the functionality for 
automated collection, aggregation, and transmission 
of performance measurement information. 
‘‘(5) ANNUAL REPORT TO CONGRESS AND THE 
SECRETARY; SECRETARIAL PUBLICATION AND COM-
MENT.— 
‘‘(A) ANNUAL REPORT.—By not later than 
March 1 of each year (beginning with 2009), 
the entity shall submit to Congress and the Sec-
retary a report containing a description of— 
‘‘(i) the implementation of quality 
measurement initiatives under this Act and 
the coordination of such initiatives with 
quality initiatives implemented by other 
payers; 
‘‘(ii) 
the 
recommendations 
made 
under paragraph (1); and 
‘‘(iii) the performance by the entity of 
the duties required under the contract en-
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tered into with the Secretary under sub-
section (a). 
‘‘(B) SECRETARIAL REVIEW AND PUBLICA-
TION OF ANNUAL REPORT.—Not later than 6 
months after receiving a report under subpara-
graph (A) for a year, the Secretary shall— 
‘‘(i) review such report; and 
‘‘(ii) publish such report in the Fed-
eral Register, together with any comments 
of the Secretary on such report. 
‘‘(c) REQUIREMENTS
DESCRIBED.—The require-
ments described in this subsection are the following: 
‘‘(1) PRIVATE NONPROFIT.—The entity is a pri-
vate nonprofit entity governed by a board. 
‘‘(2) BOARD
MEMBERSHIP.—The members of 
the board of the entity include— 
‘‘(A) representatives of health plans and 
health care providers and practitioners or rep-
resentatives of groups representing such health 
plans and health care providers and practi-
tioners; 
‘‘(B) health care consumers or representa-
tives of groups representing health care con-
sumers; and 
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‘‘(C) representatives of purchasers and em-
ployers or representatives of groups rep-
resenting purchasers or employers. 
‘‘(3) ENTITY MEMBERSHIP.—The membership 
of the entity includes persons who have experience 
with— 
‘‘(A) urban health care issues; 
‘‘(B) safety net health care issues; 
‘‘(C) rural and frontier health care issues; 
and 
‘‘(D) health care quality and safety issues. 
‘‘(4) OPEN AND TRANSPARENT.—With respect 
to matters related to the contract with the Secretary 
under subsection (a), the entity conducts its business 
in an open and transparent manner and provides the 
opportunity for public comment on its activities. 
‘‘(5) VOLUNTARY CONSENSUS STANDARDS SET-
TING ORGANIZATION.—The entity operates as a vol-
untary consensus standards setting organization as 
defined for purposes of section 12(d) of the National 
Technology Transfer and Advancement Act of 1995 
(Public Law 104–113) and Office of Management 
and Budget Revised Circular A–119 (published in 
the Federal Register on February 10, 1998). 
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‘‘(6) EXPERIENCE.—The entity has at least 4 
years of experience in establishing national con-
sensus standards. 
‘‘(7) MEMBERSHIP
FEES.—If the entity re-
quires a membership fee for participation in the 
functions of the entity, such fees shall be reasonable 
and adjusted based on the capacity of the potential 
member to pay the fee. In no case shall membership 
fees pose a barrier to the participation of individuals 
or groups with low or nominal resources to partici-
pate in the functions of the entity. 
‘‘(d) FUNDING.—For purposes of carrying out this 
section, the Secretary shall provide for the transfer, from 
the Federal Hospital Insurance Trust Fund under section 
1817 and the Federal Supplementary Medical Insurance 
Trust Fund under section 1841 (in such proportion as the 
Secretary determines appropriate), of $10,000,000 to the 
Centers for Medicare & Medicaid Services Program Man-
agement Account for each of fiscal years 2009 through 
2012.’’. 
(2) SENSE OF THE SENATE.—It is the Sense of 
the Senate that the selection by the Secretary of 
Health and Human Services of an entity to contract 
with under section 1890(a) of the Social Security 
Act, as added by paragraph (1), should not be con-
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strued as diminishing the significant contributions of 
the Boards of Medicine, the quality alliances, and 
other clinical and technical experts to efforts to 
measure and improve the quality of health care serv-
ices. 
(b) GAO STUDY AND REPORTS ON THE PERFORM-
ANCE AND COSTS OF THE CONSENSUS-BASED ENTITY 
UNDER THE CONTRACT.— 
(1) IN GENERAL.—The Comptroller General of 
the United States shall conduct a study on— 
(A) the performance of the entity with a 
contract with the Secretary of Health and 
Human Services under section 1890(a) of the 
Social Security Act, as added by subsection (a), 
of its duties under such contract; and 
(B) the costs incurred by such entity in 
performing such duties. 
(2) REPORTS.—Not later than 18 months and 
36 months after the effective date of the first con-
tract entered into under such section 1890(a), the 
Comptroller General of the United States shall sub-
mit to Congress a report containing the results of 
the study conducted under paragraph (1), together 
with recommendations for such legislation and ad-
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ministrative action as the Comptroller General deter-
mines appropriate. 
SEC. 184. COST-SHARING FOR CLINICAL TRIALS. 
Section 1833 of the Social Security Act (42 U.S.C. 
1395l), as amended by section 151(a), is amended by add-
ing at the end the following new subsection: 
‘‘(w) METHODS OF PAYMENT.—The Secretary may 
develop alternative methods of payment for items and 
services provided under clinical trials and comparative ef-
fectiveness studies sponsored or supported by an agency 
of the Department of Health and Human Services, as de-
termined by the Secretary, to those that would otherwise 
apply under this section, to the extent such alternative 
methods are necessary to preserve the scientific validity 
of such trials or studies, such as in the case where mask-
ing the identity of interventions from patients and inves-
tigators is necessary to comply with the particular trial 
or study design.’’. 
SEC. 185. ADDRESSING HEALTH CARE DISPARITIES. 
Title XVIII of the Social Security Act (42 U.S.C. 
1395 et seq.) is amended by inserting after section 1808 
the following new section: 
‘‘ADDRESSING HEALTH CARE DISPARITIES 
‘‘SEC. 1809. (a) EVALUATING DATA COLLECTION 
APPROACHES.—The Secretary shall evaluate approaches 
for the collection of data under this title, to be performed 
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in conjunction with existing quality reporting require-
ments and programs under this title, that allow for the 
ongoing, accurate, and timely collection and evaluation of 
data on disparities in health care services and performance 
on the basis of race, ethnicity, and gender. In conducting 
such evaluation, the Secretary shall consider the following 
objectives: 
‘‘(1) Protecting patient privacy. 
‘‘(2) Minimizing the administrative burdens of 
data collection and reporting on providers and health 
plans participating under this title. 
‘‘(3) Improving Medicare program data on race, 
ethnicity, and gender. 
‘‘(b) REPORTS TO CONGRESS.— 
‘‘(1) REPORT ON EVALUATION.—Not later than 
18 months after the date of the enactment of this 
section, the Secretary shall submit to Congress a re-
port on the evaluation conducted under subsection 
(a). Such report shall, taking into consideration the 
results of such evaluation— 
‘‘(A) identify approaches (including defin-
ing methodologies) for identifying and collecting 
and evaluating data on health care disparities 
on the basis of race, ethnicity, and gender for 
the original Medicare fee-for-service program 
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under parts A and B, the Medicare Advantage 
program under part C, and the Medicare pre-
scription drug program under part D; and 
‘‘(B) include recommendations on the most 
effective strategies and approaches to reporting 
HEDIS quality measures as required under sec-
tion 1852(e)(3) and other nationally recognized 
quality performance measures, as appropriate, 
on the basis of race, ethnicity, and gender. 
‘‘(2) REPORTS ON DATA ANALYSES.—Not later 
than 4 years after the date of the enactment of this 
section, and 4 years thereafter, the Secretary shall 
submit to Congress a report that includes rec-
ommendations for improving the identification of 
health care disparities for Medicare beneficiaries 
based on analyses of the data collected under sub-
section (c). 
‘‘(c) IMPLEMENTING EFFECTIVE APPROACHES.—Not 
later than 24 months after the date of the enactment of 
this section, the Secretary shall implement the approaches 
identified in the report submitted under subsection (b)(1) 
for the ongoing, accurate, and timely collection and eval-
uation of data on health care disparities on the basis of 
race, ethnicity, and gender.’’. 
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Social Security Act (42 U.S.C. 1395i) and the Federal 
Supplementary Medical Insurance Trust Fund under sec-
tion 1841 of such Act (42 U.S.C. 1395t), in the same pro-
portion as the Secretary determines under section 1853(f) 
of such Act (42 U.S.C. 1395w–23(f)), of $140,000,000 
to the Centers for Medicare & Medicaid Services Program 
Management Account for the period of fiscal years 2009 
through 2013. 
SEC. 189. INCLUSION OF MEDICARE PROVIDERS AND SUP-
PLIERS IN FEDERAL PAYMENT LEVY AND AD-
MINISTRATIVE OFFSET PROGRAM. 
(a) IN GENERAL.—Section 1874 of the Social Secu-
rity Act (42 U.S.C. 1395kk) is amended by adding at the 
end the following new subsection: 
‘‘(d) INCLUSION OF MEDICARE PROVIDER AND SUP-
PLIER PAYMENTS
IN FEDERAL PAYMENT LEVY PRO-
GRAM.— 
‘‘(1) IN GENERAL.—The Centers for Medicare 
& Medicaid Services shall take all necessary steps to 
participate in the Federal Payment Levy Program 
under section 6331(h) of the Internal Revenue Code 
of 1986 as soon as possible and shall ensure that— 
‘‘(A) at least 50 percent of all payments 
under parts A and B are processed through 
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