254 
SEC. 426. RENAMING OF MEDICARE ADVANTAGE PROGRAM. 
(a) IN GENERAL.—The program under part C of title 
XVIII of the Social Security Act is henceforth to be known 
as the ‘‘Medicare Part C program’’. 
(b) CHANGE IN REFERENCES.— 
(1) AMENDING SOCIAL SECURITY ACT.—The So-
cial Security Act is amended by striking ‘‘Medicare 
Advantage’’, ‘‘MA’’, and ‘‘Medicare+Choice’’ and in-
serting ‘‘Medicare Part C’’ each place it appears, with 
the appropriate, respective typographic formatting, 
including typeface and capitalization. 
(2) ADDITIONAL REFERENCES.—Notwithstanding 
section 201(b) of the Medicare Prescription Drug, Im-
provement, and Modernization Act of 2003 (Public 
Law 108–173), any reference to the program under 
part C of title XVIII of the Social Security Act shall 
be deemed a reference to the ‘‘Medicare Part C’’ pro-
gram and, with respect to such part, any reference to 
‘‘Medicare+Choice’’. ‘‘Medicare Advantage’’, or ‘‘MA’’ 
is deemed a reference to the program under such part. 
Subtitle D—Extension of 
Authorities 
SEC. 431. EXTENSION AND REVISION OF AUTHORITY FOR 
SPECIAL NEEDS PLANS (SNPS). 
(a) EXTENDING RESTRICTION ON ENROLLMENT AU-
THORITY FOR SNPS FOR 3 YEARS.—Subsection (f) of sec-
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255 
tion 1859 of the Social Security Act (42 U.S.C. 1395w– 
28) is amended by striking ‘‘2009’’ and inserting ‘‘2012’’. 
(b) STRUCTURE OF AUTHORITY FOR SNPS.— 
(1) IN
GENERAL.—Such section is further 
amended— 
(A) in subsection (b)(6)(A), by striking all 
that follows ‘‘means’’ and inserting the following: 
‘‘an MA plan— 
‘‘(i) that serves special needs individ-
uals (as defined in subparagraph (B)); 
‘‘(ii) as of January 1, 2009, either— 
‘‘(I) at least 90 percent of the en-
rollees in which are described in sub-
paragraph (B)(i), as determined under 
regulations in effect as of July 1, 2007; 
or 
‘‘(II) at least 90 percent of the en-
rollees in which are described in sub-
paragraph (B)(ii) and are full-benefit 
dual eligible individuals (as defined in 
section 1935(c)(6)) or qualified medi-
care beneficiaries (as defined in section 
1905(p)(1)); and 
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‘‘(iii) as of January 1, 2009, meets the 
applicable requirements of paragraph (2) or 
(3) of subsection (f), as the case may be.’’; 
(B) in subsection (b)(6)(B)(iii), by inserting 
‘‘only for contract years beginning before Janu-
ary 1, 2009,’’ after ‘‘(iii)’’; and 
(C) in subsection (f)— 
(i) by amending the heading to read as 
follows: ‘‘REQUIREMENTS FOR ENROLLMENT 
IN PART C PLANS
FOR SPECIAL NEEDS 
BENEFICIARIES’’; 
(ii) by designating the sentence begin-
ning ‘‘In the case of’’ as paragraph (1) with 
the heading ‘‘REQUIREMENTS FOR ENROLL-
MENT.—’’ and with appropriate indenta-
tion; and 
(iii) by adding at the end the following 
new paragraphs: 
‘‘(2) ADDITIONAL REQUIREMENTS FOR INSTITU-
TIONAL SNPS.—In the case of a specialized MA plan 
for special needs individuals described in subsection 
(b)(6)(A)(ii)(I), the applicable requirements of this 
subsection are as follows: 
‘‘(A) The plan has an agreement with the 
State that includes provisions regarding coopera-
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257 
tion on the coordination of care for such individ-
uals. Such agreement shall include a description 
of the manner that the State Medicaid program 
under title XIX will pay for the costs of services 
for individuals eligible under such title for med-
ical assistance for acute care and long-term care 
services. 
‘‘(B) The plan has a contract with long- 
term care facilities and other providers in the 
area sufficient to provide care for enrollees de-
scribed in subsection (b)(6)(B)(i). 
‘‘(C) The plan reports to the Secretary in-
formation on additional quality measures speci-
fied 
by 
the 
Secretary 
under 
section 
1852(e)(3)(D)(iv)(I) for such plans. 
‘‘(3) ADDITIONAL
REQUIREMENTS
FOR
DUAL 
SNPS.—In the case of a specialized MA plan for spe-
cial 
needs 
individuals 
described 
in 
subsection 
(b)(6)(A)(ii)(II), the applicable requirements of this 
subsection are as follows: 
‘‘(A) The plan has an agreement with the 
State Medicaid agency that— 
‘‘(i) includes provisions regarding co-
operation on the coordination of the financ-
ing of care for such individuals; 
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258 
‘‘(ii) includes a description of the man-
ner that the State Medicaid program under 
title XIX will pay for the costs of cost-shar-
ing and supplemental services for individ-
uals enrolled in the plan eligible under such 
title for medical assistance for acute and 
long-term care services; and 
‘‘(iii) effective January 1, 2011, pro-
vides for capitation payments to cover costs 
of supplemental benefits for individuals de-
scribed in subsection (b)(6)(A)(ii)(II). 
‘‘(B) The out-of-pocket costs for services 
under parts A and B that are charged to enroll-
ees may not exceed the out-of-pocket costs for 
same services permitted for such individuals 
under title XIX. 
‘‘(C) The plan reports to the Secretary in-
formation on additional quality measures speci-
fied 
by 
the 
Secretary 
under 
section 
1852(e)(3)(D)(iv)(II) for such plans.’’. 
(2) QUALITY STANDARDS AND QUALITY REPORT-
ING.—Section 1852(e)(3) of such Act (42 U.S.C. 
1395w–22(e)(3) is amended— 
(A) in subparagraph (A)(i), by adding at 
the end the following: ‘‘In the case of a special-
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259 
ized Medicare Part C plan for special needs in-
dividuals described in paragraph (2) or (3) of 
section 1859(f), the organization shall provide 
for the reporting on quality measures developed 
for the plan under subparagraph (D)(iii).’’; and 
(B) in subparagraph (D), as added by sec-
tion 422(a)(1), by adding at the end the fol-
lowing new clause: 
‘‘(iii) SPECIFICATION OF ADDITIONAL 
QUALITY MEASUREMENTS FOR SPECIALIZED 
PART
C
PLANS.—For implementation for 
plan years beginning not later than Janu-
ary 1, 2010, the Secretary shall develop new 
quality measures appropriate to meeting the 
needs of— 
‘‘(I) beneficiaries enrolled in spe-
cialized Medicare Part C plans for spe-
cial needs individuals (described in 
section 1859(b)(6)(A)(ii)(I)) that serve 
predominantly individuals who are 
dual-eligible individuals eligible for 
medical assistance under title XIX by 
measuring the special needs for care of 
individuals who are both Medicare and 
Medicaid beneficiaries; and 
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‘‘(II) beneficiaries enrolled in spe-
cialized Medicare Part C plans for spe-
cial needs individuals (described in 
section 1859(b)(6)(A)(ii)(II)) that serve 
predominantly institutionalized indi-
viduals by measuring the special needs 
for care of individuals who are a resi-
dent in long-term care institution.’’. 
(3) 
EFFECTIVE
DATE; 
GRANDFATHER.—The 
amendments made by paragraph (1) shall take effect 
for enrollments occurring on or after January 1, 
2009, and shall not apply— 
(A) to plans with a contract with a State 
Medicaid agency to operate an integrated Med-
icaid-Medicare program, that had been approved 
by Centers for Medicare & Medicaid Services on 
January 1, 2004; and 
(B) to plans that are operational as of the 
date of the enactment of this Act as approved 
Medicare demonstration projects and that pro-
vide services predominantly to individuals with 
end-stage renal disease. 
(4) TRANSITION FOR NON-QUALIFYING SNPS.— 
(A) RESTRICTIONS
IN
2008
FOR
CHRONIC 
CARE SNPS.—In the case of a specialized MA 
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261 
plan for special needs individuals (as defined in 
section 1859(b)(6)(A) of the Social Security Act 
(42 U.S.C. 1395w–28(b)(6)(A)) that, as of De-
cember 31, 2007, is not described in either sub-
clause (I) or subclause (II) of clause (ii) of such 
section, as amended by paragraph (1), then as of 
January 1, 2008— 
(i) the plan may not be offered unless 
it was offered before such date; 
(ii) no new members may be enrolled 
with the plan; and 
(iii) there may be no expansion of the 
service area of such plan. 
(B) TRANSITION OF ENROLLEES.—The Sec-
retary of Health and Human Services shall pro-
vide for an orderly transition of those specialized 
MA plans for special needs individuals (as de-
fined in section 1859(b)(6)(A) of the Social Secu-
rity Act (42 U.S.C. 1395w–28(b)(6)(A)), as of 
the date of the enactment of this Act), and their 
enrollees, that no longer qualify as such plans 
under such section, as amended by this sub-
section. 
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262 
SEC. 432. EXTENSION AND REVISION OF AUTHORITY FOR 
MEDICARE REASONABLE COST CONTRACTS. 
(a) EXTENSION FOR 3 YEARS OF PERIOD REASONABLE 
COST PLANS CAN REMAIN
IN
THE MARKET.—Section 
1876(h)(5)(C)(ii) of the Social Security Act (42 U.S.C. 
1395mm(h)(5)(C)(ii)) is amended, in the matter preceding 
subclause (I), by striking ‘‘January 1, 2008’’ and inserting 
‘‘January 1, 2011’’. 
(b) APPLICATION OF CERTAIN MEDICARE ADVANTAGE 
REQUIREMENTS TO COST CONTRACTS EXTENDED OR RE-
NEWED AFTER ENACTMENT.—Section 1876(h) of such Act 
(42 U.S.C. 1395mm(h)), as amended by subsection (a), is 
amended— 
(1) by redesignating paragraph (5) as para-
graph (6); and 
(2) by inserting after paragraph (4) the fol-
lowing new paragraph: 
‘‘(5)(A) Any reasonable cost reimbursement con-
tract with an eligible organization under this sub-
section that is extended or renewed on or after the 
date of enactment of the Children’s Health and Medi-
care Protection Act of 2007 shall provide that the pro-
visions of the Medicare Part C program described in 
subparagraph (B) shall apply to such organization 
and such contract in a substantially similar manner 
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263 
as such provisions apply to Medicare Part C organi-
zations and Medicare Part C plans under part C. 
‘‘(B) The provisions described in this subpara-
graph are as follows: 
‘‘(i) Section 1851(h) (relating to the ap-
proval of marketing material and application 
forms). 
‘‘(ii) Section 1852(e) (relating to the re-
quirement of having an ongoing quality im-
provement program and treatment of accredita-
tion in the same manner as such provisions 
apply to Medicare Part C local plans that are 
preferred provider organization plans). 
‘‘(iii) Section 1852(f) (relating to grievance 
mechanisms). 
‘‘(iv) Section 1852(g) (relating to coverage 
determinations, reconsiderations, and appeals). 
‘‘(v) Section 1852(j)(4) (relating to limita-
tions on physician incentive plans). 
‘‘(vi) Section 1854(c) (relating to the re-
quirement of uniform premiums among individ-
uals enrolled in the plan). 
‘‘(vii) Section 1854(g) (relating to restric-
tions on imposition of premium taxes with re-
spect to payments to organizations). 
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264 
‘‘(viii) Section 1856(b)(3) (relating to rela-
tion to State laws). 
‘‘(ix) The provisions of part C relating to 
timelines for contract renewal and beneficiary 
notification.’’. 
TITLE V—PROVISIONS RELATING 
TO MEDICARE PART A 
SEC. 501. INPATIENT HOSPITAL PAYMENT UPDATES. 
(a) FOR ACUTE HOSPITALS.—Clause (i) of section 
1886(b)(3)(B) of the Social Security Act (42 U.S.C. 
1395ww(b)(3)(B)) is amended— 
(1) in subclause (XIX), by striking ‘‘and’’; 
(2) by redesignating subclause (XX) as subclause 
(XXII); and 
(3) by inserting after subclause (XIX) the fol-
lowing new subclauses: 
‘‘(XX) for fiscal year 2007, subject to clause 
(viii), the market basket percentage increase for hos-
pitals in all areas, 
‘‘(XXI) for fiscal year 2008, subject to clause 
(viii), the market basket percentage increase minus 
0.25 percentage point for hospitals in all areas, and’’. 
(b) FOR OTHER HOSPITALS.—Clause (ii) of such sec-
tion is amended— 
(1) in subclause (VII) by striking ‘‘and’’; 
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(2) by redesignating subclause (VIII) as sub-
clause (X); and 
(3) by inserting after subclause (VII) the fol-
lowing new subclauses: 
‘‘(VIII) fiscal years 2003 through 2007, is the 
market basket percentage increase, 
‘‘(IX) fiscal year 2008, is the market basket per-
centage increase minus 0.25 percentage point, and’’. 
(c) DELAYED EFFECTIVE DATE.— 
(1) ACUTE CARE HOSPITALS.—The amendments 
made by subsection (a) shall not apply to discharges 
occurring before January 1, 2008. 
(2) OTHER HOSPITALS.—The amendments made 
by subsection (b) shall be applied, only with respect 
to cost reporting periods beginning during fiscal year 
2008 and not with respect to the computation for any 
succeeding cost reporting period, by substituting 
‘‘0.1875 percentage point’’ for ‘‘0.25 percentage 
point’’. 
SEC. 502. PAYMENT FOR INPATIENT REHABILITATION FA-
CILITY (IRF) SERVICES. 
(a) PAYMENT UPDATE.— 
(1) IN GENERAL.—Section 1886(j)(3)(C) of the 
Social Security Act (42 U.S.C. 1395ww(j)(3)(C)) is 
amended by adding at the end the following: ‘‘The in-
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266 
crease factor to be applied under this subparagraph 
for fiscal year 2008 shall be 1 percent.’’ 
(2) DELAYED
EFFECTIVE
DATE.—The amend-
ment made by paragraph (1) shall not apply to pay-
ment units occurring before January 1, 2008. 
(b) INPATIENT REHABILITATION FACILITY CLASSI-
FICATION CRITERIA.— 
(1) IN GENERAL.—Section 5005 of the Deficit 
Reduction Act of 2005 (Public Law 109–171) is 
amended— 
(A) in subsection (a), by striking ‘‘apply the 
applicable percent specified in subsection (b)’’ 
and inserting ‘‘require a compliance rate that is 
no greater than the 60 percent compliance rate 
that became effective for cost reporting periods 
beginning on or after July 1, 2006,’’; and 
(B) by amending subsection (b) to read as 
follows: 
‘‘(b) CONTINUED USE OF COMORBIDITIES.—For por-
tions of cost reporting periods occurring on or after the date 
of the enactment of the Children’s Health and Medicare Pro-
tection Act of 2007, the Secretary shall include patients 
with comorbidities as described in section 412.23(b)(2)(i) 
of title 42, Code of Federal Regulations (as in effect as of 
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January 1, 2007), in the inpatient population that counts 
towards the percent specified in subsection (a).’’. 
(2) EFFECTIVE DATE.—The amendment made by 
paragraph (1)(A) shall apply to portions of cost re-
porting periods beginning on or after the date of the 
enactment of this Act. 
(c) PAYMENT
FOR CERTAIN MEDICAL CONDITIONS 
TREATED IN INPATIENT REHABILITATION FACILITIES.— 
(1) IN GENERAL.—Section 1886(j) of the Social 
Security Act (42 U.S.C. 1395ww(j)) is amended— 
(A) by redesignating paragraph (7) as 
paragraph (8); 
(B) by inserting after paragraph (6) the fol-
lowing new paragraph: 
‘‘(7) SPECIAL PAYMENT RULE FOR CERTAIN MED-
ICAL CONDITIONS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (H), in the case of discharges occurring on 
or after October 1, 2008, in lieu of the standard-
ized payment amount (as determined pursuant 
to the preceding provisions of this subsection) 
that would otherwise be applicable under this 
subsection, the Secretary shall substitute, for 
payment units with respect to an applicable 
medical condition (as defined in subparagraph 
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(G)(i)) that is treated in an inpatient rehabilita-
tion facility, the modified standardized payment 
amount determined under subparagraph (B). 
‘‘(B) MODIFIED
STANDARDIZED
PAYMENT 
AMOUNT.—The modified standardized payment 
amount for an applicable medical condition 
shall be based on the amount determined under 
subparagraph (C) for such condition, as adjusted 
under subparagraphs (D), (E), and (F). 
‘‘(C) AMOUNT DETERMINED.— 
‘‘(i) IN GENERAL.—The amount deter-
mined under this subparagraph for an ap-
plicable medical condition shall be based on 
the sum of the following: 
‘‘(I) An amount equal to the aver-
age per stay skilled nursing facility 
payment rate for the applicable med-
ical condition (as determined under 
clause (ii)). 
‘‘(II) An amount equal to 25 per-
cent of the difference between the over-
head costs (as defined in subparagraph 
(G)(ii)) component of the average in-
patient rehabilitation facility per stay 
payment amount for the applicable 
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269 
medical 
condition 
(as 
determined 
under the preceding paragraphs of this 
subsection) and the overhead costs com-
ponent of the average per stay skilled 
nursing facility payment rate for such 
condition (as determined under clause 
(ii)). 
‘‘(III) An amount equal to 33 per-
cent of the difference between the pa-
tient care costs (as defined in subpara-
graph (G)(iii)) component of the aver-
age inpatient rehabilitation facility 
per stay payment amount for the ap-
plicable medical condition (as deter-
mined under the preceding paragraphs 
of this subsection) and the patient care 
costs component of the average per stay 
skilled nursing facility payment rate 
for such condition (as determined 
under clause (ii)). 
‘‘(ii) DETERMINATION
OF
AVERAGE 
PER STAY SKILLED NURSING FACILITY PAY-
MENT RATE.—For purposes of clause (i), the 
Secretary shall convert skilled nursing facil-
ity payment rates for applicable medical 
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conditions, as determined under section 
1888(e), to average per stay skilled nursing 
facility payment rates for each such condi-
tion. 
‘‘(D) ADJUSTMENTS.—The Secretary shall 
adjust the amount determined under subpara-
graph (C) for an applicable medical condition 
using the adjustments to the prospective payment 
rates for inpatient rehabilitation facilities de-
scribed in paragraphs (2), (3), (4), and (6). 
‘‘(E) UPDATE FOR INFLATION.—Except in 
the case of a fiscal year for which the Secretary 
rebases the amounts determined under subpara-
graph (C) for applicable medical conditions pur-
suant to subparagraph (F), the Secretary shall 
annually update the amounts determined under 
subparagraph (C) for each applicable medical 
condition by the increase factor for inpatient re-
habilitation facilities (as described in paragraph 
(3)(C)). 
‘‘(F) REBASING.—The Secretary shall peri-
odically (but in no case less than once every 5 
years) rebase the amounts determined under sub-
paragraph (C) for applicable medical conditions 
using the methodology described in such subpara-
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