Medicare Prescription Drug, Improvement, and Modernization Act of 2003
PL 108-173 (H.R.1), enacted 12/08/2003

121 STAT. 2492 
PUBLIC LAW 110–173—DEC. 29, 2007 
Public Law 110–173 
110th Congress 
An Act 
To amend titles XVIII, XIX, and XXI of the Social Security Act to extend provisions 
under the Medicare, Medicaid, and SCHIP programs, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) IN GENERAL.—This Act may be cited as the ‘‘Medicare, 
Medicaid, and SCHIP Extension Act of 2007’’. 
(b) TABLE OF CONTENTS.—The table of contents of this Act 
is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—MEDICARE 
Sec. 101. Increase in physician payment update; extension of the physician quality 
reporting system. 
Sec. 102. Extension of Medicare incentive payment program for physician scarcity 
areas. 
Sec. 103. Extension of floor on work geographic adjustment under the Medicare 
physician fee schedule. 
Sec. 104. Extension of treatment of certain physician pathology services under 
Medicare. 
Sec. 105. Extension of exceptions process for Medicare therapy caps. 
Sec. 106. Extension of payment rule for brachytherapy; extension to therapeutic 
radiopharmaceuticals. 
Sec. 107. Extension of Medicare reasonable costs payments for certain clinical diag-
nostic laboratory tests furnished to hospital patients in certain rural 
areas. 
Sec. 108. Extension of authority of specialized Medicare Advantage plans for spe-
cial needs individuals to restrict enrollment. 
Sec. 109. Extension of deadline for application of limitation on extension or renewal 
of Medicare reasonable cost contract plans. 
Sec. 110. Adjustment to the Medicare Advantage stabilization fund. 
Sec. 111. Medicare secondary payor. 
Sec. 112. Payment for part B drugs. 
Sec. 113. Payment rate for certain diagnostic laboratory tests. 
Sec. 114. Long-term care hospitals. 
Sec. 115. Payment for inpatient rehabilitation facility (IRF) services. 
Sec. 116. Extension of accommodation of physicians ordered to active duty in the 
Armed Services. 
Sec. 117. Treatment of certain hospitals. 
Sec. 118. Additional Funding for State Health Insurance Assistance Programs, 
Area Agencies on Aging, and Aging and Disability Resource Centers. 
TITLE II—MEDICAID AND SCHIP 
Sec. 201. Extending SCHIP funding through March 31, 2009. 
Sec. 202. Extension of transitional medical assistance (TMA) and abstinence edu-
cation program. 
Sec. 203. Extension of qualifying individual (QI) program. 
Sec. 204. Medicaid DSH extension. 
Sec. 205. Improving data collection. 
Sec. 206. Moratorium on certain payment restrictions. 
42 USC 1305 
note. 
Medicare, 
Medicaid, and 
SCHIP Extension 
Act of 2007. 
Dec. 29, 2007 
[S. 2499] 
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121 STAT. 2493 
PUBLIC LAW 110–173—DEC. 29, 2007 
TITLE III—MISCELLANEOUS 
Sec. 301. Medicare Payment Advisory Commission status. 
Sec. 302. Special Diabetes Programs for Type I Diabetes and Indians. 
TITLE I—MEDICARE 
SEC. 101. INCREASE IN PHYSICIAN PAYMENT UPDATE; EXTENSION OF 
THE PHYSICIAN QUALITY REPORTING SYSTEM. 
(a) INCREASE IN PHYSICIAN PAYMENT UPDATE.— 
(1) IN GENERAL.—Section 1848(d) of the Social Security 
Act (42 U.S.C. 1395w–4(d)) is amended— 
(A) in paragraph (4)(B), by striking ‘‘and paragraphs 
(5) and (6)’’ and inserting ‘‘and the succeeding paragraphs 
of this subsection’’; and 
(B) by adding at the end the following new paragraph: 
‘‘(8) UPDATE FOR A PORTION OF 2008.— 
‘‘(A) IN GENERAL.—Subject to paragraph (7)(B), in lieu 
of the update to the single conversion factor established 
in paragraph (1)(C) that would otherwise apply for 2008, 
for the period beginning on January 1, 2008, and ending 
on June 30, 2008, the update to the single conversion 
factor shall be 0.5 percent. 
‘‘(B) NO
EFFECT
ON
COMPUTATION
OF
CONVERSION 
FACTOR FOR THE REMAINING PORTION OF 2008 AND 2009.— 
The conversion factor under this subsection shall be com-
puted under paragraph (1)(A) for the period beginning on 
July 1, 2008, and ending on December 31, 2008, and for 
2009 and subsequent years as if subparagraph (A) had 
never applied.’’. 
(2) REVISION OF THE PHYSICIAN ASSISTANCE AND QUALITY 
INITIATIVE FUND.— 
(A) REVISION.—Section 1848(l)(2) of the Social Security 
Act (42 U.S.C. 1395w–4(l)(2)) is amended— 
(i) by striking subparagraph (A) and inserting the 
following: 
‘‘(A) AMOUNT AVAILABLE.— 
‘‘(i) IN GENERAL.—Subject to clause (ii), there shall 
be available to the Fund the following amounts: 
‘‘(I) For expenditures during 2008, an amount 
equal to $150,500,000. 
‘‘(II) For expenditures during 2009, an amount 
equal to $24,500,000. 
‘‘(III) For expenditures during 2013, an 
amount equal to $4,960,000,000. 
‘‘(ii) LIMITATIONS ON EXPENDITURES.— 
‘‘(I) 2008.—The amount available for expendi-
tures during 2008 shall be reduced as provided 
by subparagraph (A) of section 225(c)(1) and sec-
tion 524 of the Departments of Labor, Health and 
Human Services, and Education, and Related 
Agencies Appropriations Act, 2008 (division G of 
the Consolidated Appropriations Act, 2008). 
‘‘(II) 2009.—The amount available for expendi-
tures during 2009 shall be reduced as provided 
by subparagraph (B) of such section 225(c)(1). 
‘‘(III) 
2013.—The 
amount 
available 
for 
expenditures during 2013 shall only be available 
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121 STAT. 2494 
PUBLIC LAW 110–173—DEC. 29, 2007 
for an adjustment to the update of the conversion 
factor under subsection (d) for that year.’’; and 
(ii) in subparagraph (B), by striking ‘‘entire amount 
specified in the first sentence of subparagraph (A)’’ 
and all that follows and inserting the following: ‘‘entire 
amount available for expenditures, after application 
of subparagraph (A)(ii), during— 
‘‘(i) 2008 for payment with respect to physicians’ 
services furnished during 2008; 
‘‘(ii) 2009 for payment with respect to physicians’ 
services furnished during 2009; and 
‘‘(iii) 2013 for payment with respect to physicians’ 
services furnished during 2013.’’. 
(B) EFFECTIVE DATE.— 
(i) IN GENERAL.—Subject to clause (ii), the amend-
ments made by subparagraph (A) shall take effect on 
the date of the enactment of this Act. 
(ii) 
SPECIAL
RULE
FOR
COORDINATION
WITH 
CONSOLIDATED APPROPRIATIONS ACT, 2008.—If the date 
of the enactment of the Consolidated Appropriations 
Act, 2008, occurs on or after the date described in 
clause (i), the amendments made by subparagraph (A) 
shall be deemed to be made on the day after the 
effective date of sections 225(c)(1) and 524 of the 
Departments of Labor, Health and Human Services, 
and Education, and Related Agencies Appropriations 
Act, 2008 (division G of the Consolidated Appropria-
tions Act, 2008). 
(C) TRANSFER
OF
FUNDS
TO
PART
B
TRUST
FUND.— 
Amounts that would have been available to the Physician 
Assistance and Quality Initiative Fund under section 
1848(l)(2) of the Social Security Act (42 U.S.C. 1395w– 
4(l)(2)) for payment with respect to physicians’ services 
furnished prior to January 1, 2013, but for the amendments 
made by subparagraph (A), shall be deposited into, and 
made available for expenditures from, the Federal Supple-
mentary Medical Insurance Trust Fund under section 1841 
of such Act (42 U.S.C. 1395t). 
(b) 
EXTENSION
OF
THE
PHYSICIAN
QUALITY
REPORTING 
SYSTEM.— 
(1) SYSTEM.—Section 1848(k)(2)(B) of the Social Security 
Act (42 U.S.C. 1395w–4(k)(2)(B)) is amended— 
(A) in the heading, by inserting ‘‘AND 2009’’ after ‘‘2008’’; 
(B) in clause (i), by inserting ‘‘and 2009’’ after ‘‘2008’’; 
and 
(C) in each of clauses (ii) and (iii)— 
(i) by striking ‘‘, 2007’’ and inserting ‘‘of each of 
2007 and 2008’’; and 
(ii) by inserting ‘‘or 2009, as applicable’’ after 
‘‘2008’’. 
(2) REPORTING.—Section 101(c) of division B of the Tax 
Relief and Health Care Act of 2006 (42 U.S.C. 1395w–4 note) 
is amended— 
(A) in the heading, by inserting ‘‘AND 2008’’ after 
‘‘2007’’; 
(B) in paragraph (5), by adding at the end the following: 
42 USC 1395w–4 
note. 
42 USC 1395w–4 
note. 
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121 STAT. 2495 
PUBLIC LAW 110–173—DEC. 29, 2007 
‘‘(F) EXTENSION.—For 2008 and 2009, paragraph (3) 
shall not apply, and the Secretary shall establish alter-
native criteria for satisfactorily reporting under paragraph 
(2) and alternative reporting periods under paragraph 
(6)(C) for reporting groups of measures under paragraph 
(2)(B) of section 1848(k) of the Social Security Act (42 
U.S.C. 1395w–4(k)) and for reporting using the method 
specified in paragraph (4) of such section.’’; and 
(C) in paragraph (6), by striking subparagraph (C) 
and inserting the following new subparagraph: 
‘‘(C) REPORTING PERIOD.—The term ‘reporting period’ 
means— 
‘‘(i) for 2007, the period beginning on July 1, 2007, 
and ending on December 31, 2007; and 
‘‘(ii) for 2008, all of 2008.’’. 
(c) IMPLEMENTATION.—For purposes of carrying out the provi-
sions of, and amendments made by subsections (a) and (b), in 
addition to any amounts otherwise provided in this title, there 
are appropriated to the Centers for Medicare & Medicaid Services 
Program Management Account, out of any money in the Treasury 
not otherwise appropriated, $25,000,000 for the period of fiscal 
years 2008 and 2009. 
SEC. 102. EXTENSION OF MEDICARE INCENTIVE PAYMENT PROGRAM 
FOR PHYSICIAN SCARCITY AREAS. 
Section 1833(u) of the Social Security Act (42 U.S.C. 1395l(u)) 
is amended— 
(1) in paragraph (1), by striking ‘‘before January 1, 2008’’ 
and inserting ‘‘before July 1, 2008’’; and 
(2) in paragraph (4)— 
(A) by redesignating subparagraph (D) as subpara-
graph (E); and 
(B) by inserting after subparagraph (C) the following 
new subparagraph: 
‘‘(D) SPECIAL RULE.—With respect to physicians’ serv-
ices furnished on or after January 1, 2008, and before 
July 1, 2008, for purposes of this subsection, the Secretary 
shall use the primary care scarcity counties and the spe-
cialty care scarcity counties (as identified under the pre-
ceding provisions of this paragraph) that the Secretary 
was using under this subsection with respect to physicians’ 
services furnished on December 31, 2007.’’. 
SEC. 103. EXTENSION OF FLOOR ON WORK GEOGRAPHIC ADJUSTMENT 
UNDER THE MEDICARE PHYSICIAN FEE SCHEDULE. 
Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 
1395w–4(e)(1)(E)), as amended by section 102 of division B of the 
Tax Relief and Health Care Act of 2006, is amended by striking 
‘‘before January 1, 2008’’ and inserting ‘‘before July 1, 2008’’. 
SEC. 104. EXTENSION OF TREATMENT OF CERTAIN PHYSICIAN 
PATHOLOGY SERVICES UNDER MEDICARE. 
Section 542(c) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (as enacted into law by 
section 1(a)(6) of Public Law 106–554), as amended by section 
732 of the Medicare Prescription Drug, Improvement, and Mod-
ernization Act of 2003 (42 U.S.C. 1395w–4 note) and section 104 
of division B of the Tax Relief and Health Care Act of 2006 (42 
Appropriation 
authorization. 
Criteria. 
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121 STAT. 2496 
PUBLIC LAW 110–173—DEC. 29, 2007 
U.S.C. 1395w–4 note), is amended by striking ‘‘and 2007’’ and 
inserting ‘‘2007, and the first 6 months of 2008’’. 
SEC. 105. EXTENSION OF EXCEPTIONS PROCESS FOR MEDICARE 
THERAPY CAPS. 
Section 1833(g)(5) of the Social Security Act (42 U.S.C. 
1395l(g)(5)) is amended by striking ‘‘December 31, 2007’’ and 
inserting ‘‘June 30, 2008’’. 
SEC. 106. EXTENSION OF PAYMENT RULE FOR BRACHYTHERAPY; 
EXTENSION TO THERAPEUTIC RADIOPHARMACEUTICALS. 
(a) EXTENSION OF PAYMENT RULE FOR BRACHYTHERAPY.—Sec-
tion 1833(t)(16)(C) of the Social Security Act (42 U.S.C. 
1395l(t)(16)(C)), as amended by section 107(a) of division B of the 
Tax Relief and Health Care Act of 2006, is amended by striking 
‘‘January 1, 2008’’ and inserting ‘‘July 1, 2008’’. 
(b) PAYMENT FOR THERAPEUTIC RADIOPHARMACEUTICALS.—Sec-
tion 1833(t)(16)(C) of the Social Security Act (42 U.S.C. 
1395l(t)(16)(C)), as amended by subsection (a), is amended— 
(1) in the heading, by inserting ‘‘AND THERAPEUTIC RADIO-
PHARMACEUTICALS’’ before ‘‘AT CHARGES’’; 
(2) in the first sentence— 
(A) by inserting ‘‘and for therapeutic radiopharma-
ceuticals furnished on or after January 1, 2008, and before 
July 1, 2008,’’ after ‘‘July 1, 2008,’’; 
(B) by inserting ‘‘or therapeutic radiopharmaceutical’’ 
after ‘‘the device’’; and 
(C) by inserting ‘‘or therapeutic radiopharmaceutical’’ 
after ‘‘each device’’; and 
(3) in the second sentence, by inserting ‘‘or therapeutic 
radiopharmaceuticals’’ after ‘‘such devices’’. 
SEC. 107. EXTENSION OF MEDICARE REASONABLE COSTS PAYMENTS 
FOR CERTAIN CLINICAL DIAGNOSTIC LABORATORY TESTS 
FURNISHED TO HOSPITAL PATIENTS IN CERTAIN RURAL 
AREAS. 
Section 416(b) of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (42 U.S.C. 1395l–4), as amended 
by section 105 of division B of the Tax Relief and Health Care 
Act of 2006 (42 U.S.C. 1395l note), is amended by striking ‘‘the 
3-year period beginning on July 1, 2004’’ and inserting ‘‘the period 
beginning on July 1, 2004, and ending on June 30, 2008’’. 
SEC. 108. EXTENSION OF AUTHORITY OF SPECIALIZED MEDICARE 
ADVANTAGE PLANS FOR SPECIAL NEEDS INDIVIDUALS TO 
RESTRICT ENROLLMENT. 
(a) EXTENSION OF AUTHORITY TO RESTRICT ENROLLMENT.—Sec-
tion 1859(f) of the Social Security Act (42 U.S.C. 1395w–28(f)) 
is amended by striking ‘‘2009’’ and inserting ‘‘2010’’. 
(b) MORATORIUM.— 
(1) AUTHORITY TO DESIGNATE OTHER PLANS AS SPECIALIZED 
MA PLANS.—During the period beginning on January 1, 2008, 
and ending on December 31, 2009, the Secretary of Health 
and Human Services shall not exercise the authority provided 
under section 231(d) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (42 U.S.C. 
1395w–21 note) to designate other plans as specialized MA 
plans for special needs individuals under part C of title XVIII 
42 USC 
1395w–21 note. 
42 USC 1395l 
note. 
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121 STAT. 2497 
PUBLIC LAW 110–173—DEC. 29, 2007 
of the Social Security Act. The preceding sentence shall not 
apply to plans designated as specialized MA plans for special 
needs individuals under such authority prior to January 1, 
2008. 
(2) ENROLLMENT IN NEW PLANS.—During the period begin-
ning on January 1, 2008, and ending on December 31, 2009, 
the Secretary of Health and Human Services shall not permit 
enrollment of any individual residing in an area in a specialized 
Medicare Advantage plan for special needs individuals under 
part C of title XVIII of the Social Security Act to take effect 
unless that specialized Medicare Advantage plan for special 
needs individuals was available for enrollment for individuals 
residing in that area on January 1, 2008. 
SEC. 109. EXTENSION OF DEADLINE FOR APPLICATION OF LIMITATION 
ON EXTENSION OR RENEWAL OF MEDICARE REASONABLE 
COST CONTRACT PLANS. 
Section 1876(h)(5)(C)(ii) of the Social Security Act (42 U.S.C. 
1395mm(h)(5)(C)(ii)), in the matter preceding subclause (I), is 
amended by striking ‘‘January 1, 2008’’ and inserting ‘‘January 
1, 2009’’. 
SEC. 110. ADJUSTMENT TO THE MEDICARE ADVANTAGE STABILIZA-
TION 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 section 3 of Public Law 110– 
48, is amended by striking ‘‘the Fund’’ and all that follows and 
inserting ‘‘the Fund during 2013, $1,790,000,000.’’ 
SEC. 111. MEDICARE SECONDARY PAYOR. 
(a) IN GENERAL.—Section 1862(b) of the Social Security Act 
(42 U.S.C. 1395y(b)) is amended by adding at the end the following 
new paragraphs: 
‘‘(7) REQUIRED
SUBMISSION
OF
INFORMATION
BY
GROUP 
HEALTH PLANS.— 
‘‘(A) REQUIREMENT.—On and after the first day of the 
first calendar quarter beginning after the date that is 1 
year after the date of the enactment of this paragraph, 
an entity serving as an insurer or third party administrator 
for a group health plan, as defined in paragraph (1)(A)(v), 
and, in the case of a group health plan that is self-insured 
and self-administered, a plan administrator or fiduciary, 
shall— 
‘‘(i) secure from the plan sponsor and plan partici-
pants such information as the Secretary shall specify 
for the purpose of identifying situations where the 
group health plan is or has been a primary plan to 
the program under this title; and 
‘‘(ii) submit such information to the Secretary in 
a form and manner (including frequency) specified by 
the Secretary. 
‘‘(B) ENFORCEMENT.— 
‘‘(i) IN GENERAL.—An entity, a plan administrator, 
or a fiduciary described in subparagraph (A) that fails 
to comply with the requirements under such subpara-
graph shall be subject to a civil money penalty of 
Penalties. 
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121 STAT. 2498 
PUBLIC LAW 110–173—DEC. 29, 2007 
$1,000 for each day of noncompliance for each indi-
vidual for which the information under such subpara-
graph should have been submitted. The provisions of 
subsections (e) and (k) of section 1128A shall apply 
to a civil money penalty under the previous sentence 
in the same manner as such provisions apply to a 
penalty or proceeding under section 1128A(a). A civil 
money penalty under this clause shall be in addition 
to any other penalties prescribed by law and in addition 
to any Medicare secondary payer claim under this title 
with respect to an individual. 
‘‘(ii) 
DEPOSIT
OF
AMOUNTS
COLLECTED.—Any 
amounts collected pursuant to clause (i) shall be depos-
ited in the Federal Hospital Insurance Trust Fund 
under section 1817. 
‘‘(C) SHARING OF INFORMATION.—Notwithstanding any 
other provision of law, under terms and conditions estab-
lished by the Secretary, the Secretary— 
‘‘(i) shall share information on entitlement under 
Part A and enrollment under Part B under this title 
with entities, plan administrators, and fiduciaries 
described in subparagraph (A); 
‘‘(ii) may share the entitlement and enrollment 
information described in clause (i) with entities and 
persons not described in such clause; and 
‘‘(iii) may share information collected under this 
paragraph as necessary for purposes of the proper 
coordination of benefits. 
‘‘(D) IMPLEMENTATION.—Notwithstanding any other 
provision of law, the Secretary may implement this para-
graph by program instruction or otherwise. 
‘‘(8) REQUIRED
SUBMISSION
OF
INFORMATION
BY
OR
ON 
BEHALF OF LIABILITY INSURANCE (INCLUDING SELF-INSURANCE), 
NO FAULT INSURANCE, AND WORKERS’ COMPENSATION LAWS AND 
PLANS.— 
‘‘(A) REQUIREMENT.—On and after the first day of the 
first calendar quarter beginning after the date that is 18 
months after the date of the enactment of this paragraph, 
an applicable plan shall— 
‘‘(i) determine whether a claimant (including an 
individual whose claim is unresolved) is entitled to 
benefits under the program under this title on any 
basis; and 
‘‘(ii) if the claimant is determined to be so entitled, 
submit the information described in subparagraph (B) 
with respect to the claimant to the Secretary in a 
form and manner (including frequency) specified by 
the Secretary. 
‘‘(B) 
REQUIRED
INFORMATION.—The 
information 
described in this subparagraph is— 
‘‘(i) the identity of the claimant for which the deter-
mination under subparagraph (A) was made; and 
‘‘(ii) such other information as the Secretary shall 
specify in order to enable the Secretary to make an 
appropriate determination concerning coordination of 
benefits, including any applicable recovery claim. 
Applicability. 
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121 STAT. 2499 
PUBLIC LAW 110–173—DEC. 29, 2007 
‘‘(C) TIMING.—Information shall be submitted under 
subparagraph (A)(ii) within a time specified by the Sec-
retary after the claim is resolved through a settlement, 
judgment, award, or other payment (regardless of whether 
or not there is a determination or admission of liability). 
‘‘(D) CLAIMANT.—For purposes of subparagraph (A), 
the term ‘claimant’ includes— 
‘‘(i) an individual filing a claim directly against 
the applicable plan; and 
‘‘(ii) an individual filing a claim against an indi-
vidual or entity insured or covered by the applicable 
plan. 
‘‘(E) ENFORCEMENT.— 
‘‘(i) IN
GENERAL.—An applicable plan that fails 
to comply with the requirements under subparagraph 
(A) with respect to any claimant shall be subject to 
a civil money penalty of $1,000 for each day of non-
compliance with respect to each claimant. The provi-
sions of subsections (e) and (k) of section 1128A shall 
apply to a civil money penalty under the previous 
sentence in the same manner as such provisions apply 
to a penalty or proceeding under section 1128A(a). 
A civil money penalty under this clause shall be in 
addition to any other penalties prescribed by law and 
in addition to any Medicare secondary payer claim 
under this title with respect to an individual. 
‘‘(ii) 
DEPOSIT
OF
AMOUNTS
COLLECTED.—Any 
amounts collected pursuant to clause (i) shall be depos-
ited in the Federal Hospital Insurance Trust Fund. 
‘‘(F) APPLICABLE PLAN.—In this paragraph, the term 
‘applicable plan’ means the following laws, plans, or other 
arrangements, including the fiduciary or administrator for 
such law, plan, or arrangement: 
‘‘(i) Liability insurance (including self-insurance). 
‘‘(ii) No fault insurance. 
‘‘(iii) Workers’ compensation laws or plans. 
‘‘(G) SHARING OF INFORMATION.—The Secretary may 
share information collected under this paragraph as nec-
essary for purposes of the proper coordination of benefits. 
‘‘(H) IMPLEMENTATION.—Notwithstanding any other 
provision of law, the Secretary may implement this para-
graph by program instruction or otherwise.’’. 
(b) RULE OF CONSTRUCTION.—Nothing in the amendments made 
by this section shall be construed to limit the authority of the 
Secretary of Health and Human Services to collect information 
to carry out Medicare secondary payer provisions under title XVIII 
of the Social Security Act, including under parts C and D of such 
title. 
(c) IMPLEMENTATION.—For purposes of implementing para-
graphs (7) and (8) of section 1862(b) of the Social Security Act, 
as added by subsection (a), to ensure appropriate payments under 
title XVIII of such Act, the Secretary of Health and Human Services 
shall provide for the transfer, from the Federal Hospital Insurance 
Trust Fund established under section 1817 of the Social Security 
Act (42 U.S.C. 1395i) and the Federal Supplementary Medical Insur-
ance Trust Fund established under section 1841 of such Act (42 
U.S.C. 1395t), in such proportions as the Secretary determines 
Appropriation 
authorization. 
42 USC 1395y 
note. 
Applicability. 
Penalties. 
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121 STAT. 2500 
PUBLIC LAW 110–173—DEC. 29, 2007 
appropriate, of $35,000,000 to the Centers for Medicare & Medicaid 
Services Program Management Account for the period of fiscal 
years 2008, 2009, and 2010. 
SEC. 112. PAYMENT FOR PART B DRUGS. 
(a) APPLICATION OF ALTERNATIVE VOLUME WEIGHTING IN COM-
PUTATION OF ASP.—Section 1847A(b) of the Social Security Act 
(42 U.S.C. 1395w–3a(b)) is amended— 
(1) in paragraph (1)(A), by inserting ‘‘for a multiple source 
drug furnished before April 1, 2008, or 106 percent of the 
amount determined under paragraph (6) for a multiple source 
drug furnished on or after April 1, 2008’’ after ‘‘paragraph 
(3)’’; 
(2) in each of subparagraphs (A) and (B) of paragraph 
(4), by inserting ‘‘for single source drugs and biologicals fur-
nished before April 1, 2008, and using the methodology applied 
under paragraph (6) for single source drugs and biologicals 
furnished on or after April 1, 2008,’’ after ‘‘paragraph (3)’’; 
and 
(3) by adding at the end the following new paragraph: 
‘‘(6) USE OF VOLUME-WEIGHTED AVERAGE SALES PRICES IN 
CALCULATION OF AVERAGE SALES PRICE.— 
‘‘(A) IN
GENERAL.—For all drug products included 
within the same multiple source drug billing and payment 
code, the amount specified in this paragraph is the volume- 
weighted average of the average sales prices reported under 
section 1927(b)(3)(A)(iii) determined by— 
‘‘(i) computing the sum of the products (for each 
National Drug Code assigned to such drug products) 
of— 
‘‘(I) the manufacturer’s average sales price (as 
defined in subsection (c)), determined by the Sec-
retary without dividing such price by the total 
number of billing units for the National Drug Code 
for the billing and payment code; and 
‘‘(II) the total number of units specified under 
paragraph (2) sold; and 
‘‘(ii) dividing the sum determined under clause 
(i) by the sum of the products (for each National Drug 
Code assigned to such drug products) of— 
‘‘(I) the total number of units specified under 
paragraph (2) sold; and 
‘‘(II) the total number of billing units for the 
National Drug Code for the billing and payment 
code. 
‘‘(B) BILLING UNIT DEFINED.—For purposes of this sub-
section, the term ‘billing unit’ means the identifiable 
quantity associated with a billing and payment code, as 
established by the Secretary.’’. 
(b) TREATMENT OF CERTAIN DRUGS.—Section 1847A(b) of the 
Social Security Act (42 U.S.C. 1395w–3a(b)), as amended by sub-
section (a), is amended— 
(1) in paragraph (1), by inserting ‘‘paragraph (7) and’’ after 
‘‘Subject to’’; and 
(2) by adding at the end the following new paragraph: 
‘‘(7) SPECIAL RULE.—Beginning with April 1, 2008, the pay-
ment amount for— 
Effective date. 
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121 STAT. 2501 
PUBLIC LAW 110–173—DEC. 29, 2007 
‘‘(A) each single source drug or biological described 
in section 1842(o)(1)(G) that is treated as a multiple source 
drug because of the application of subsection (c)(6)(C)(ii) 
is the lower of— 
‘‘(i) the payment amount that would be determined 
for such drug or biological applying such subsection; 
or 
‘‘(ii) the payment amount that would have been 
determined for such drug or biological if such sub-
section were not applied; and 
‘‘(B) a multiple source drug described in section 
1842(o)(1)(G) (excluding a drug or biological that is treated 
as a multiple source drug because of the application of 
such subsection) is the lower of— 
‘‘(i) the payment amount that would be determined 
for such drug or biological taking into account the 
application of such subsection; or 
‘‘(ii) the payment amount that would have been 
determined for such drug or biological if such sub-
section were not applied.’’. 
SEC. 113. PAYMENT RATE FOR CERTAIN DIAGNOSTIC LABORATORY 
TESTS. 
Section 1833(h) of the Social Security Act (42 U.S.C. 1395l(h)) 
is amended by adding at the end the following new paragraph: 
‘‘(9) Notwithstanding any other provision in this part, in the 
case of any diagnostic laboratory test for HbA1c that is labeled 
by the Food and Drug Administration for home use and is furnished 
on or after April 1, 2008, the payment rate for such test shall 
be the payment rate established under this part for a glycated 
hemoglobin test (identified as of October 1, 2007, by HCPCS code 
83036 (and any succeeding codes)).’’. 
SEC. 114. LONG-TERM CARE HOSPITALS. 
(a) DEFINITION OF LONG-TERM CARE HOSPITAL.—Section 1861 
of the Social Security Act (42 U.S.C. 1395x) is amended by adding 
at the end the following new subsection: 
‘‘Long-Term Care Hospital 
‘‘(ccc) The term ‘long-term care hospital’ means a hospital 
which— 
‘‘(1) is primarily engaged in providing inpatient services, 
by or under the supervision of a physician, to Medicare bene-
ficiaries whose medically complex conditions require a long 
hospital stay and programs of care provided by a long-term 
care hospital; 
‘‘(2) has an average inpatient length of stay (as determined 
by the Secretary) of greater than 25 days, or meets the require-
ments of clause (II) of section 1886(d)(1)(B)(iv); 
‘‘(3) satisfies the requirements of subsection (e); and 
‘‘(4) meets the following facility criteria: 
‘‘(A) the institution has a patient review process, docu-
mented in the patient medical record, that screens patients 
prior to admission for appropriateness of admission to a 
long-term care hospital, validates within 48 hours of admis-
sion that patients meet admission criteria for long-term 
care hospitals, regularly evaluates patients throughout 
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121 STAT. 2502 
PUBLIC LAW 110–173—DEC. 29, 2007 
their stay for continuation of care in a long-term care 
hospital, and assesses the available discharge options when 
patients no longer meet such continued stay criteria; 
‘‘(B) the institution has active physician involvement 
with patients during their treatment through an organized 
medical staff, physician-directed treatment with physician 
on-site availability on a daily basis to review patient 
progress, and consulting physicians on call and capable 
of being at the patient’s side within a moderate period 
of time, as determined by the Secretary; and 
‘‘(C) the institution has interdisciplinary team treat-
ment for patients, requiring interdisciplinary teams of 
health care professionals, including physicians, to prepare 
and carry out an individualized treatment plan for each 
patient.’’. 
(b) STUDY AND REPORT ON LONG-TERM CARE HOSPITAL FACILITY 
AND PATIENT CRITERIA.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services (in this section referred to as the ‘‘Secretary’’) shall 
conduct a study on the establishment of national long-term 
care hospital facility and patient criteria for purposes of deter-
mining medical necessity, appropriateness of admission, and 
continued stay at, and discharge from, long-term care hospitals. 
(2) REPORT.—Not later than 18 months after the date of 
the enactment of this Act, the Secretary shall submit to Con-
gress a report on the study conducted under paragraph (1), 
together with recommendations for such legislation and 
administrative actions, including timelines for implementation 
of patient criteria or other actions, as the Secretary determines 
appropriate. 
(3) CONSIDERATIONS.—In conducting the study and pre-
paring the report under this subsection, the Secretary shall 
consider— 
(A) recommendations contained in a report to Congress 
by the Medicare Payment Advisory Commission in June 
2004 for long-term care hospital-specific facility and patient 
criteria to ensure that patients admitted to long-term care 
hospitals are medically complex and appropriate to receive 
long-term care hospital services; and 
(B) ongoing work by the Secretary to evaluate and 
determine the feasibility of such recommendations. 
(c) PAYMENT FOR LONG-TERM CARE HOSPITAL SERVICES.— 
(1) NO APPLICATION OF 25 PERCENT PATIENT THRESHOLD 
PAYMENT ADJUSTMENT TO FREESTANDING AND GRANDFATHERED 
LTCHS.—The Secretary shall not apply, for cost reporting 
periods beginning on or after the date of the enactment of 
this Act for a 3-year period— 
(A) section 412.536 of title 42, Code of Federal Regula-
tions, or any similar provision, to freestanding long-term 
care hospitals; and 
(B) such section or section 412.534 of title 42, Code 
of Federal Regulations, or any similar provisions, to a 
long-term care hospital identified by the amendment made 
by section 4417(a) of the Balanced Budget Act of 1997 
(Public Law 105–33). 
(2) PAYMENT FOR HOSPITALS-WITHIN-HOSPITALS.— 
42 USC 1395ww 
note. 
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121 STAT. 2503 
PUBLIC LAW 110–173—DEC. 29, 2007 
(A) IN GENERAL.—Payment to an applicable long-term 
care hospital or satellite facility which is located in a rural 
area or which is co-located with an urban single or MSA 
dominant hospital under paragraphs (d)(1), (e)(1), and (e)(4) 
of section 412.534 of title 42, Code of Federal Regulations, 
shall not be subject to any payment adjustment under 
such section if no more than 75 percent of the hospital’s 
Medicare discharges (other than discharges described in 
paragraph (d)(2) or (e)(3) of such section) are admitted 
from a co-located hospital. 
(B) CO-LOCATED LONG-TERM CARE HOSPITALS AND SAT-
ELLITE FACILITIES.— 
(i) IN GENERAL.—Payment to an applicable long- 
term care hospital or satellite facility which is co- 
located with another hospital shall not be subject to 
any payment adjustment under section 412.534 of title 
42, Code of Federal Regulations, if no more than 50 
percent of the hospital’s Medicare discharges (other 
than discharges described in paragraph (c)(3) of such 
section) are admitted from a co-located hospital. 
(ii) APPLICABLE LONG-TERM CARE HOSPITAL OR SAT-
ELLITE FACILITY DEFINED.—In this paragraph, the term 
‘‘applicable long-term care hospital or satellite facility’’ 
means a hospital or satellite facility that is subject 
to the transition rules under section 412.534(g) of title 
42, Code of Federal Regulations. 
(C) EFFECTIVE DATE.—Subparagraphs (A) and (B) shall 
apply to cost reporting periods beginning on or after the 
date of the enactment of this Act for a 3-year period. 
(3) NO APPLICATION OF VERY SHORT-STAY OUTLIER POLICY.— 
The Secretary shall not apply, for the 3-year period beginning 
on the date of the enactment of this Act, the amendments 
finalized on May 11, 2007 (72 Federal Register 26904, 26992) 
made to the short-stay outlier payment provision for long- 
term care hospitals contained in section 412.529(c)(3)(i) of title 
42, Code of Federal Regulations, or any similar provision. 
(4) NO APPLICATION OF ONE-TIME ADJUSTMENT TO STANDARD 
AMOUNT.—The Secretary shall not, for the 3-year period begin-
ning on the date of the enactment of this Act, make the one- 
time prospective adjustment to long-term care hospital prospec-
tive payment rates provided for in section 412.523(d)(3) of title 
42, Code of Federal Regulations, or any similar provision. 
(d) MORATORIUM ON THE ESTABLISHMENT OF LONG-TERM CARE 
HOSPITALS, LONG-TERM CARE SATELLITE FACILITIES AND ON THE 
INCREASE OF LONG-TERM CARE HOSPITAL BEDS IN EXISTING LONG- 
TERM CARE HOSPITALS OR SATELLITE FACILITIES.— 
(1) IN GENERAL.—During the 3-year period beginning on 
the date of the enactment of this Act, the Secretary shall 
impose a moratorium for purposes of the Medicare program 
under title XVIII of the Social Security Act— 
(A) subject to paragraph (2), on the establishment and 
classification of a long-term care hospital or satellite 
facility, other than an existing long-term care hospital or 
facility; and 
(B) subject to paragraph (3), on an increase of long- 
term care hospital beds in existing long-term care hospitals 
or satellite facilities. 
42 USC 1395ww 
note. 
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121 STAT. 2504 
PUBLIC LAW 110–173—DEC. 29, 2007 
(2) EXCEPTION FOR CERTAIN LONG-TERM CARE HOSPITALS.— 
The moratorium under paragraph (1)(A) shall not apply to 
a long-term care hospital that as of the date of the enactment 
of this Act— 
(A) began its qualifying period for payment as a long- 
term care hospital under section 412.23(e) of title 42, Code 
of Federal Regulations, on or before the date of the enact-
ment of this Act; 
(B) has a binding written agreement with an outside, 
unrelated party for the actual construction, renovation, 
lease, or demolition for a long-term care hospital, and has 
expended, before the date of the enactment of this Act, 
at least 10 percent of the estimated cost of the project 
(or, if less, $2,500,000); or 
(C) has obtained an approved certificate of need in 
a State where one is required on or before the date of 
the enactment of this Act. 
(3) EXCEPTION FOR BED INCREASES DURING MORATORIUM.— 
(A) IN
GENERAL.—Subject to subparagraph (B), the 
moratorium under paragraph (1)(B) shall not apply to an 
increase in beds in an existing hospital or satellite facility 
if the hospital or facility— 
(i) is located in a State where there is only one 
other long-term care hospital; and 
(ii) requests an increase in beds following the clo-
sure or the decrease in the number of beds of another 
long-term care hospital in the State. 
(B) NO EFFECT ON CERTAIN LIMITATION.—The exception 
under subparagraph (A) shall not effect the limitation on 
increasing beds under sections 412.22(h)(3) and 412.22(f) 
of title 42, Code of Federal Regulations. 
(4) EXISTING HOSPITAL OR SATELLITE FACILITY DEFINED.— 
For purposes of this subsection, the term ‘‘existing’’ means, 
with respect to a hospital or satellite facility, a hospital or 
satellite facility that received payment under the provisions 
of subpart O of part 412 of title 42, Code of Federal Regulations, 
as of the date of the enactment of this Act. 
(5) JUDICIAL REVIEW.—There shall be no administrative 
or judicial review under section 1869 of the Social Security 
Act (42 U.S.C. 1395ff), section 1878 of such Act (42 U.S.C. 
1395oo), or otherwise, of the application of this subsection by 
the Secretary. 
(e) LONG-TERM CARE HOSPITAL PAYMENT UPDATE.— 
(1) IN GENERAL.—Section 1886 of the Social Security Act 
(42 U.S.C. 1395ww) is amended by adding at the end the 
following new subsection: 
‘‘(m) PROSPECTIVE
PAYMENT
FOR
LONG-TERM
CARE
HOS-
PITALS.— 
‘‘(1) REFERENCE TO ESTABLISHMENT AND IMPLEMENTATION 
OF SYSTEM.—For provisions related to the establishment and 
implementation of a prospective payment system for payments 
under this title for inpatient hospital services furnished by 
a long-term care hospital described in subsection (d)(1)(B)(iv), 
see section 123 of the Medicare, Medicaid, and SCHIP Balanced 
Budget Refinement Act of 1999 and section 307(b) of the Medi-
care, Medicaid, and SCHIP Benefits Improvement and Protec-
tion Act of 2000. 
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121 STAT. 2505 
PUBLIC LAW 110–173—DEC. 29, 2007 
‘‘(2) UPDATE FOR RATE YEAR 2008.—In implementing the 
system described in paragraph (1) for discharges occurring 
during the rate year ending in 2008 for a hospital, the base 
rate for such discharges for the hospital shall be the same 
as the base rate for discharges for the hospital occurring during 
the rate year ending in 2007.’’. 
(2) DELAYED EFFECTIVE DATE.—Subsection (m)(2) of section 
1886 of the Social Security Act, as added by paragraph (1), 
shall not apply to discharges occurring on or after July 1, 
2007, and before April 1, 2008. 
(f) EXPANDED REVIEW OF MEDICAL NECESSITY.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services shall provide, under contracts with one or more appro-
priate fiscal intermediaries or medicare administrative contrac-
tors under section 1874A(a)(4)(G) of the Social Security Act 
(42 U.S.C. 1395kk–1(a)(4)(G)), for reviews of the medical neces-
sity of admissions to long-term care hospitals (described in 
section 1886(d)(1)(B)(iv) of such Act) and continued stay at 
such hospitals, of individuals entitled to, or enrolled for, benefits 
under part A of title XVIII of such Act consistent with this 
subsection. Such reviews shall be made for discharges occurring 
on or after October 1, 2007. 
(2) REVIEW METHODOLOGY.—The medical necessity reviews 
under paragraph (1) shall be conducted on an annual basis 
in accordance with rules specified by the Secretary. Such 
reviews shall— 
(A) provide for a statistically valid and representative 
sample of admissions of such individuals sufficient to pro-
vide results at a 95 percent confidence interval; and 
(B) guarantee that at least 75 percent of overpayments 
received by long-term care hospitals for medically unneces-
sary admissions and continued stays of individuals in long- 
term care hospitals will be identified and recovered and 
that related days of care will not be counted toward the 
length 
of 
stay 
requirement 
contained 
in 
section 
1886(d)(1)(B)(iv) of the Social Security Act (42 U.S.C. 
1395ww(d)(1)(B)(iv)). 
(3) CONTINUATION OF REVIEWS.—Under contracts under this 
subsection, the Secretary shall establish an error rate with 
respect to such reviews that could require further review of 
the medical necessity of admissions and continued stay in the 
hospital involved and other actions as determined by the Sec-
retary. 
(4) TERMINATION OF REQUIRED REVIEWS.— 
(A) IN GENERAL.—Subject to subparagraph (B), the pre-
vious provisions of this subsection shall cease to apply 
for discharges occurring on or after October 1, 2010. 
(B) CONTINUATION.—As of the date specified in 
subparagraph (A), the Secretary shall determine whether 
to continue to guarantee, through continued medical review 
and sampling under this paragraph, recovery of at least 
75 percent of overpayments received by long-term care 
hospitals due to medically unnecessary admissions and 
continued stays. 
(5) FUNDING.—The costs to fiscal intermediaries or medi-
care administrative contractors conducting the medical neces-
sity reviews under paragraph (1) shall be funded from the 
Contracts. 
Contracts. 
42 USC 1395ww 
note. 
42 USC 1395ww 
note. 
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121 STAT. 2506 
PUBLIC LAW 110–173—DEC. 29, 2007 
aggregate overpayments recouped by the Secretary of Health 
and Human Services from long-term care hospitals due to medi-
cally unnecessary admissions and continued stays. The Sec-
retary may use an amount not in excess of 40 percent of 
the overpayments recouped under this paragraph to compensate 
the fiscal intermediaries or Medicare administrative contractors 
for the costs of services performed. 
(g) IMPLEMENTATION.—For purposes of carrying out the provi-
sions of, and amendments made by, this title, in addition to any 
amounts otherwise provided in this title, there are appropriated 
to the Centers for Medicare & Medicaid Services Program Manage-
ment Account, out of any money in the Treasury not otherwise 
appropriated, $35,000,000 for the period of fiscal years 2008 and 
2009. 
SEC. 115. PAYMENT FOR INPATIENT REHABILITATION FACILITY (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 increase factor to be applied under 
this subparagraph for each of fiscal years 2008 and 2009 shall 
be 0 percent.’’. 
(2) DELAYED EFFECTIVE DATE.—The amendment made by 
paragraph (1) shall not apply to payment units occurring before 
April 1, 2008. 
(b) INPATIENT REHABILITATION FACILITY CLASSIFICATION CRI-
TERIA.— 
(1) IN
GENERAL.—Section 5005 of the Deficit Reduction 
Act of 2005 (Public Law 109–171; 42 U.S.C. 1395ww note) 
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 cost reporting 
periods beginning on or after July 1, 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 January 1, 2007), in the inpatient population that counts 
toward the percent specified in subsection (a).’’. 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1)(A) shall apply for cost reporting periods beginning on or 
after July 1, 2007. 
(c) RECOMMENDATIONS FOR CLASSIFYING INPATIENT REHABILITA-
TION HOSPITALS AND UNITS.— 
(1) REPORT TO CONGRESS.—Not later than 18 months after 
the date of the enactment of this Act, the Secretary of Health 
and Human Services, in consultation with physicians (including 
geriatricians and physiatrists), administrators of inpatient 
rehabilitation, acute care hospitals, skilled nursing facilities, 
and other settings providing rehabilitation services, Medicare 
beneficiaries, 
trade 
organizations 
representing 
inpatient 
rehabilitation hospitals and units and skilled nursing facilities, 
and the Medicare Payment Advisory Commission, shall submit 
42 USC 1395ww 
note. 
42 USC 1395ww 
note. 
Appropriation 
authorization. 
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121 STAT. 2507 
PUBLIC LAW 110–173—DEC. 29, 2007 
to the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate a 
report that includes the following: 
(A) An analysis of Medicare beneficiaries’ access to 
medically necessary rehabilitation services, including the 
potential effect of the 75 percent rule (as defined in para-
graph (2)) on access to care. 
(B) An analysis of alternatives or refinements to the 
75 percent rule policy for determining criteria for inpatient 
rehabilitation hospital and unit designation under the 
Medicare program, including alternative criteria which 
would consider a patient’s functional status, diagnosis, co- 
morbidities, and other relevant factors. 
(C) An analysis of the conditions for which individuals 
are commonly admitted to inpatient rehabilitation hospitals 
that are not included as a condition described in section 
412.23(b)(2)(iii) of title 42, Code of Federal Regulations, 
to determine the appropriate setting of care, and any vari-
ation in patient outcomes and costs, across settings of 
care, for treatment of such conditions. 
(2) 75 PERCENT RULE DEFINED.—For purposes of this sub-
section, the term ‘‘75 percent rule’’ means the requirement 
of section 412.23(b)(2) of title 42, Code of Federal Regulations, 
that 75 percent of the patients of a rehabilitation hospital 
or converted rehabilitation unit are in 1 or more of 13 listed 
treatment categories. 
SEC. 116. EXTENSION OF ACCOMMODATION OF PHYSICIANS ORDERED 
TO ACTIVE DUTY IN THE ARMED SERVICES. 
Section 1842(b)(6)(D)(iii) of the Social Security Act (42 U.S.C. 
1395u(b)(6)(D)(iii)), as amended by Public Law 110–54 (121 Stat. 
551) is amended by striking ‘‘January 1, 2008’’ and inserting ‘‘July 
1, 2008’’. 
SEC. 117. TREATMENT OF CERTAIN HOSPITALS. 
(a) EXTENDING CERTAIN MEDICARE HOSPITAL WAGE INDEX 
RECLASSIFICATIONS THROUGH FISCAL YEAR 2008.— 
(1) IN GENERAL.—Section 106(a) of division B of the Tax 
Relief and Health Care Act of 2006 (42 U.S.C. 1395 note) 
is amended by striking ‘‘September 30, 2007’’ and inserting 
‘‘September 30, 2008’’. 
(2) SPECIAL EXCEPTION RECLASSIFICATIONS.—The Secretary 
of Health and Human Services shall extend for discharges 
occurring through September 30, 2008, the special exception 
reclassifications 
made 
under 
the 
authority 
of 
section 
1886(d)(5)(I)(i) 
of 
the 
Social 
Security 
Act 
(42 
U.S.C. 
1395ww(d)(5)(I)(i)) and contained in the final rule promulgated 
by the Secretary in the Federal Register on August 11, 2004 
(69 Fed. Reg. 49105, 49107). 
(3) USE
OF
PARTICULAR
WAGE
INDEX.—For purposes of 
implementation of this subsection, the Secretary shall use the 
hospital wage index that was promulgated by the Secretary 
in the Federal Register on October 10, 2007 (72 Fed. Reg. 
57634), and any subsequent corrections. 
(b) DISREGARDING SECTION 508 HOSPITAL RECLASSIFICATIONS 
FOR PURPOSES OF GROUP RECLASSIFICATIONS.—Section 508 of the 
Medicare Prescription Drug, Improvement, and Modernization Act 
42 USC 1395ww 
note. 
42 USC 1395ww 
note. 
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121 STAT. 2508 
PUBLIC LAW 110–173—DEC. 29, 2007 
of 2003 (Public Law 108–173, 42 U.S.C. 1395ww note) is amended 
by adding at the end the following new subsection: 
‘‘(g) DISREGARDING HOSPITAL RECLASSIFICATIONS FOR PURPOSES 
OF GROUP RECLASSIFICATIONS.—For purposes of the reclassification 
of a group of hospitals in a geographic area under section 1886(d) 
of the Social Security Act for purposes of discharges occurring 
during fiscal year 2008, a hospital reclassified under this section 
(including any such reclassification which is extended under section 
106(a) of the Medicare Improvements and Extension Act of 2006) 
shall not be taken into account and shall not prevent the other 
hospitals in such area from continuing such a group for such pur-
pose.’’. 
(c) CORRECTION OF APPLICATION OF WAGE INDEX DURING TAX 
RELIEF AND HEALTH CARE ACT EXTENSION.—In the case of a sub-
section (d) hospital (as defined for purposes of section 1886 of 
the Social Security Act (42 U.S.C. 1395ww)) with respect to which— 
(1) a reclassification of its wage index for purposes of 
such section was extended for the period beginning on April 
1, 2007, and ending on September 30, 2007, pursuant to sub-
section (a) of section 106 of division B of the Tax Relief and 
Health Care Act of 2006 (42 U.S.C. 1395 note); and 
(2) the wage index applicable for such hospital during 
such period was lower than the wage index applicable for 
such hospital during the period beginning on October 1, 2006, 
and ending on March 31, 2007, 
the Secretary shall apply the higher wage index that was applicable 
for such hospital during the period beginning on October 1, 2006, 
and ending on March 31, 2007, for the entire fiscal year 2007. 
If the Secretary determines that the application of the preceding 
sentence to a hospital will result in a hospital being owed additional 
reimbursement, the Secretary shall make such payments within 
90 days after the settlement of the applicable cost report. 
SEC. 118. ADDITIONAL FUNDING FOR STATE HEALTH INSURANCE 
ASSISTANCE PROGRAMS, AREA AGENCIES ON AGING, AND 
AGING AND DISABILITY RESOURCE CENTERS. 
(a) STATE HEALTH INSURANCE ASSISTANCE PROGRAMS.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services shall use amounts made available under paragraph 
(2) to make grants to States for State health insurance assist-
ance programs receiving assistance under section 4360 of the 
Omnibus Budget Reconciliation Act of 1990. 
(2) FUNDING.—For purposes of making grants under this 
subsection, the Secretary shall provide for the transfer, from 
the Federal Hospital Insurance Trust Fund under section 1817 
of the Social Security Act (42 U.S.C. 1395i) and the Federal 
Supplementary Medical Insurance Trust Fund under section 
1841 of such Act (42 U.S.C. 1395t), in the same proportion 
as the Secretary determines under section 1853(f) of such Act 
(42 U.S.C. 1395w–23(f)), of $15,000,000 to the Centers for Medi-
care & Medicaid Services Program Management Account for 
fiscal year 2008. 
(b) AREA AGENCIES
ON AGING
AND AGING
AND DISABILITY 
RESOURCE CENTERS.— 
(1) IN
GENERAL.—The Secretary of Health and Human 
Services shall use amounts made available under paragraph 
(2) to make grants— 
Grants. 
Deadline. 
42 USC 1395ww 
note. 
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121 STAT. 2509 
PUBLIC LAW 110–173—DEC. 29, 2007 
(A) to States for area agencies on aging (as defined 
in section 102 of the Older Americans Act of 1965 (42 
U.S.C. 3002)); and 
(B) to Aging and Disability Resource Centers under 
the Aging and Disability Resource Center grant program. 
(2) FUNDING.—For purposes of making grants under this 
subsection, the Secretary shall provide for the transfer, from 
the Federal Hospital Insurance Trust Fund under section 1817 
of the Social Security Act (42 U.S.C. 1395i) and the Federal 
Supplementary Medical Insurance Trust Fund under section 
1841 of such Act (42 U.S.C. 1395t), in the same proportion 
as the Secretary determines under section 1853(f) of such Act 
(42 U.S.C. 1395w–23(f)), of $5,000,000 to the Centers for Medi-
care & Medicaid Services Program Management Account for 
the period of fiscal years 2008 through 2009. 
TITLE II—MEDICAID AND SCHIP 
SEC. 201. EXTENDING SCHIP FUNDING THROUGH MARCH 31, 2009. 
(a) THROUGH THE SECOND QUARTER OF FISCAL YEAR 2009.— 
(1) IN GENERAL.—Section 2104 of the Social Security Act 
(42 U.S.C. 1397dd) is amended— 
(A) in subsection (a)— 
(i) by striking ‘‘and’’ at the end of paragraph (9); 
(ii) by striking the period at the end of paragraph 
(10) and inserting ‘‘; and’’; and 
(iii) by adding at the end the following new para-
graph: 
‘‘(11) 
for 
each 
of 
fiscal 
years 
2008 
and 
2009, 
$5,000,000,000.’’; and 
(B) in subsection (c)(4)(B), by striking ‘‘for fiscal year 
2007’’ and inserting ‘‘for each of fiscal years 2007 through 
2009’’. 
(2) AVAILABILITY
OF
EXTENDED
FUNDING.—Funds made 
available from any allotment made from funds appropriated 
under subsection (a)(11) or (c)(4)(B) of section 2104 of the 
Social Security Act (42 U.S.C. 1397dd) for fiscal year 2008 
or 2009 shall not be available for child health assistance for 
items and services furnished after March 31, 2009, or, if earlier, 
the date of the enactment of an Act that provides funding 
for fiscal years 2008 and 2009, and for one or more subsequent 
fiscal years for the State Children’s Health Insurance Program 
under title XXI of the Social Security Act. 
(3) END
OF
FUNDING
UNDER
CONTINUING
RESOLUTION.— 
Section 136(a)(2) of Public Law 110–92 is amended by striking 
‘‘after the termination date’’ and all that follows and inserting 
‘‘after the date of the enactment of the Medicare, Medicaid, 
and SCHIP Extension Act of 2007.’’. 
(4) CLARIFICATION OF APPLICATION OF FUNDING UNDER CON-
TINUING RESOLUTION.—Section 107 of Public Law 110–92 shall 
apply with respect to expenditures made pursuant to section 
136(a)(1) of such Public Law. 
(b) EXTENSION OF TREATMENT OF QUALIFYING STATES; RULES 
ON REDISTRIBUTION OF UNSPENT FISCAL YEAR 2005 ALLOTMENTS 
MADE PERMANENT.— 
Ante, p. 994. 
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121 STAT. 2510 
PUBLIC LAW 110–173—DEC. 29, 2007 
(1) IN GENERAL.—Section 2105(g)(1)(A) of the Social Secu-
rity Act (42 U.S.C. 1397ee(g)(1)(A)), as amended by subsection 
(d) of section 136 of Public Law 110–92, is amended by striking 
‘‘or 2008’’ and inserting ‘‘2008, or 2009’’. 
(2) APPLICABILITY.—The amendment made by paragraph 
(1) shall be in effect through March 31, 2009. 
(3) CERTAIN RULES MADE PERMANENT.—Subsection (e) of 
section 136 of Public Law 110–92 is repealed. 
(c) 
ADDITIONAL
ALLOTMENTS
TO
ELIMINATE
REMAINING 
FUNDING SHORTFALLS THROUGH MARCH 31, 2009.— 
(1) IN GENERAL.—Section 2104 of the Social Security Act 
(42 U.S.C. 1397dd) is amended by adding at the end the fol-
lowing new subsections: 
‘‘(j) ADDITIONAL ALLOTMENTS TO ELIMINATE FUNDING SHORT-
FALLS FOR FISCAL YEAR 2008.— 
‘‘(1) APPROPRIATION; ALLOTMENT AUTHORITY.—For the pur-
pose of providing additional allotments described in subpara-
graphs (A) and (B) of paragraph (3), there is appropriated, 
out of any money in the Treasury not otherwise appropriated, 
such sums as may be necessary, not to exceed $1,600,000,000 
for fiscal year 2008. 
‘‘(2) SHORTFALL STATES DESCRIBED.—For purposes of para-
graph (3), a shortfall State described in this paragraph is 
a State with a State child health plan approved under this 
title for which the Secretary estimates, on the basis of the 
most recent data available to the Secretary as of November 
30, 2007, that the Federal share amount of the projected 
expenditures under such plan for such State for fiscal year 
2008 will exceed the sum of— 
‘‘(A) the amount of the State’s allotments for each 
of fiscal years 2006 and 2007 that will not be expended 
by the end of fiscal year 2007; 
‘‘(B) the amount, if any, that is to be redistributed 
to the State during fiscal year 2008 in accordance with 
subsection (i); and 
‘‘(C) the amount of the State’s allotment for fiscal year 
2008. 
‘‘(3) ALLOTMENTS.—In addition to the allotments provided 
under subsections (b) and (c), subject to paragraph (4), of the 
amount available for the additional allotments under paragraph 
(1) for fiscal year 2008, the Secretary shall allot— 
‘‘(A) to each shortfall State described in paragraph 
(2) not described in subparagraph (B), such amount as 
the Secretary determines will eliminate the estimated 
shortfall described in such paragraph for the State; and 
‘‘(B) to each commonwealth or territory described in 
subsection (c)(3), an amount equal to the percentage speci-
fied in subsection (c)(2) for the commonwealth or territory 
multiplied by 1.05 percent of the sum of the amounts 
determined for each shortfall State under subparagraph 
(A). 
‘‘(4) PRORATION RULE.—If the amounts available for addi-
tional allotments under paragraph (1) are less than the total 
of the amounts determined under subparagraphs (A) and (B) 
of paragraph (3), the amounts computed under such subpara-
graphs shall be reduced proportionally. 
Ante, p. 994. 
42 USC 1397ee 
note. 
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121 STAT. 2511 
PUBLIC LAW 110–173—DEC. 29, 2007 
‘‘(5) RETROSPECTIVE
ADJUSTMENT.—The Secretary may 
adjust the estimates and determinations made to carry out 
this subsection as necessary on the basis of the amounts 
reported by States not later than November 30, 2008, on CMS 
Form 64 or CMS Form 21, as the case may be, and as approved 
by the Secretary. 
‘‘(6) ONE-YEAR AVAILABILITY; NO REDISTRIBUTION OF UNEX-
PENDED
ADDITIONAL
ALLOTMENTS.—Notwithstanding 
sub-
sections (e) and (f), amounts allotted to a State pursuant to 
this subsection for fiscal year 2008, subject to paragraph (5), 
shall only remain available for expenditure by the State through 
September 30, 2008. Any amounts of such allotments that 
remain unexpended as of such date shall not be subject to 
redistribution under subsection (f). 
‘‘(k) REDISTRIBUTION
OF UNUSED FISCAL YEAR 2006 ALLOT-
MENTS TO STATES WITH ESTIMATED FUNDING SHORTFALLS DURING 
THE FIRST 2 QUARTERS OF FISCAL YEAR 2009.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection (f) and sub-
ject to paragraphs (3) and (4), with respect to months beginning 
during the first 2 quarters of fiscal year 2009, the Secretary 
shall provide for a redistribution under such subsection from 
the allotments for fiscal year 2006 under subsection (b) that 
are not expended by the end of fiscal year 2008, to a fiscal 
year 2009 shortfall State described in paragraph (2), such 
amount as the Secretary determines will eliminate the esti-
mated shortfall described in such paragraph for such State 
for the month. 
‘‘(2) FISCAL
YEAR
2009
SHORTFALL
STATE
DESCRIBED.—A 
fiscal year 2009 shortfall State described in this paragraph 
is a State with a State child health plan approved under 
this title for which the Secretary estimates, on a monthly 
basis using the most recent data available to the Secretary 
as of such month, that the Federal share amount of the pro-
jected expenditures under such plan for such State for the 
first 2 quarters of fiscal year 2009 will exceed the sum of— 
‘‘(A) the amount of the State’s allotments for each 
of fiscal years 2007 and 2008 that was not expended by 
the end of fiscal year 2008; and 
‘‘(B) the amount of the State’s allotment for fiscal year 
2009. 
‘‘(3) FUNDS REDISTRIBUTED IN THE ORDER IN WHICH STATES 
REALIZE
FUNDING
SHORTFALLS.—The Secretary shall redis-
tribute the amounts available for redistribution under para-
graph (1) to fiscal year 2009 shortfall States described in para-
graph (2) in the order in which such States realize monthly 
funding shortfalls under this title for fiscal year 2009. The 
Secretary shall only make redistributions under this subsection 
to the extent that there are unexpended fiscal year 2006 allot-
ments under subsection (b) available for such redistributions. 
‘‘(4) PRORATION RULE.—If the amounts available for redis-
tribution under paragraph (1) are less than the total amounts 
of the estimated shortfalls determined for the month under 
that paragraph, the amount computed under such paragraph 
for each fiscal year 2009 shortfall State for the month shall 
be reduced proportionally. 
‘‘(5) RETROSPECTIVE
ADJUSTMENT.—The Secretary may 
adjust the estimates and determinations made to carry out 
Deadline. 
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121 STAT. 2512 
PUBLIC LAW 110–173—DEC. 29, 2007 
this subsection as necessary on the basis of the amounts 
reported by States not later than May 31, 2009, on CMS Form 
64 or CMS Form 21, as the case may be, and as approved 
by the Secretary. 
‘‘(6) AVAILABILITY; NO FURTHER REDISTRIBUTION.—Notwith-
standing subsections (e) and (f), amounts redistributed to a 
State pursuant to this subsection for the first 2 quarters of 
fiscal year 2009 shall only remain available for expenditure 
by the State through March 31, 2009, and any amounts of 
such redistributions that remain unexpended as of such date, 
shall not be subject to redistribution under subsection (f). 
‘‘(l) ADDITIONAL ALLOTMENTS TO ELIMINATE FUNDING SHORT-
FALLS FOR THE FIRST 2 QUARTERS OF FISCAL YEAR 2009.— 
‘‘(1) APPROPRIATION; ALLOTMENT AUTHORITY.—For the pur-
pose of providing additional allotments described in subpara-
graphs (A) and (B) of paragraph (3), there is appropriated, 
out of any money in the Treasury not otherwise appropriated, 
such sums as may be necessary, not to exceed $275,000,000 
for the first 2 quarters of fiscal year 2009. 
‘‘(2) SHORTFALL STATES DESCRIBED.—For purposes of para-
graph (3), a shortfall State described in this paragraph is 
a State with a State child health plan approved under this 
title for which the Secretary estimates, on the basis of the 
most recent data available to the Secretary, that the Federal 
share amount of the projected expenditures under such plan 
for such State for the first 2 quarters of fiscal year 2009 
will exceed the sum of— 
‘‘(A) the amount of the State’s allotments for each 
of fiscal years 2007 and 2008 that will not be expended 
by the end of fiscal year 2008; 
‘‘(B) the amount, if any, that is to be redistributed 
to the State during fiscal year 2009 in accordance with 
subsection (k); and 
‘‘(C) the amount of the State’s allotment for fiscal year 
2009. 
‘‘(3) ALLOTMENTS.—In addition to the allotments provided 
under subsections (b) and (c), subject to paragraph (4), of the 
amount available for the additional allotments under paragraph 
(1) for the first 2 quarters of fiscal year 2009, the Secretary 
shall allot— 
‘‘(A) to each shortfall State described in paragraph 
(2) not described in subparagraph (B) such amount as 
the Secretary determines will eliminate the estimated 
shortfall described in such paragraph for the State; and 
‘‘(B) to each commonwealth or territory described in 
subsection (c)(3), an amount equal to the percentage speci-
fied in subsection (c)(2) for the commonwealth or territory 
multiplied by 1.05 percent of the sum of the amounts 
determined for each shortfall State under subparagraph 
(A). 
‘‘(4) PRORATION RULE.—If the amounts available for addi-
tional allotments under paragraph (1) are less than the total 
of the amounts determined under subparagraphs (A) and (B) 
of paragraph (3), the amounts computed under such subpara-
graphs shall be reduced proportionally. 
‘‘(5) RETROSPECTIVE
ADJUSTMENT.—The Secretary may 
adjust the estimates and determinations made to carry out 
Deadline. 
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121 STAT. 2513 
PUBLIC LAW 110–173—DEC. 29, 2007 
this subsection as necessary on the basis of the amounts 
reported by States not later than May 31, 2009, on CMS Form 
64 or CMS Form 21, as the case may be, and as approved 
by the Secretary. 
‘‘(6) AVAILABILITY; NO
REDISTRIBUTION
OF
UNEXPENDED 
ADDITIONAL ALLOTMENTS.—Notwithstanding subsections (e) and 
(f), amounts allotted to a State pursuant to this subsection 
for fiscal year 2009, subject to paragraph (5), shall only remain 
available for expenditure by the State through March 31, 2009. 
Any amounts of such allotments that remain unexpended as 
of such date shall not be subject to redistribution under sub-
section (f).’’. 
SEC. 202. EXTENSION OF TRANSITIONAL MEDICAL ASSISTANCE (TMA) 
AND ABSTINENCE EDUCATION PROGRAM. 
Section 401 of division B of the Tax Relief and Health Care 
Act of 2006 (Public Law 109–432, 120 Stat. 2994), as amended 
by section 1 of Public Law 110–48 (121 Stat. 244) and section 
2 of the TMA, Abstinence, Education, and QI Programs Extension 
Act of 2007 (Public Law 110–90, 121 Stat. 984), is amended— 
(1) by striking ‘‘December 31, 2007’’ and inserting ‘‘June 
30, 2008’’; and 
(2) by striking ‘‘first quarter’’ and inserting ‘‘third quarter’’ 
each place it appears. 
SEC. 203. EXTENSION OF QUALIFYING INDIVIDUAL (QI) PROGRAM. 
(a) EXTENSION.—Section 1902(a)(10)(E)(iv) of the Social Security 
Act (42 U.S.C. 1396a(a)(10)(E)(iv)) is amended by striking 
‘‘December 2007’’ and inserting ‘‘June 2008’’. 
(b) EXTENDING TOTAL AMOUNT AVAILABLE FOR ALLOCATION.— 
Section 1933(g)(2) of the Social Security Act (42 U.S.C. 1396u– 
3(g)(2)) is amended— 
(1) in subparagraph (G), by striking ‘‘and’’ at the end; 
(2) in subparagraph (H), by striking the period at the 
end and inserting ‘‘; and’’; and 
(3) by adding at the end the following new subparagraph: 
‘‘(I) for the period that begins on January 1, 2008, 
and ends on June 30, 2008, the total allocation amount 
is $200,000,000.’’. 
SEC. 204. MEDICAID DSH EXTENSION. 
Section 1923(f)(6) of the Social Security Act (42 U.S.C. 1396r– 
4(f)(6)) is amended— 
(1) in the heading, by inserting ‘‘AND PORTIONS OF FISCAL 
YEAR 2008’’ after ‘‘FISCAL YEAR 2007’’; and 
(2) in subparagraph (A)— 
(A) in clause (i), by adding at the end (after and below 
subclause (II)) the following: 
‘‘Only with respect to fiscal year 2008 for the period 
ending on June 30, 2008, the DSH allotment for Ten-
nessee for such portion of the fiscal year, notwith-
standing such table or terms, shall be 3⁄4 of the amount 
specified in the previous sentence for fiscal year 2007.’’; 
(B) in clause (ii)— 
(i) by inserting ‘‘or for a period in fiscal year 2008 
described in clause (i)’’ after ‘‘fiscal year 2007’’; and 
(ii) by inserting ‘‘or period’’ after ‘‘such fiscal year’’; 
and 
Tennessee. 
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121 STAT. 2514 
PUBLIC LAW 110–173—DEC. 29, 2007 
(C) in clause (iv)— 
(i) in the heading, by inserting ‘‘AND FISCAL YEAR 
2008’’ after ‘‘FISCAL YEAR 2007’’; 
(ii) in subclause (I)— 
(I) by inserting ‘‘or for a period in fiscal year 
2008 described in clause (i)’’ after ‘‘fiscal year 
2007’’; and 
(II) by inserting ‘‘or period’’ after ‘‘for such 
fiscal year’’; and 
(iii) in subclause (II)— 
(I) by inserting ‘‘or for a period in fiscal year 
2008 described in clause (i)’’ after ‘‘fiscal year 
2007’’; and 
(II) by inserting ‘‘or period’’ after ‘‘such fiscal 
year’’ each place it appears; and 
(3) in subparagraph (B)(i), by adding at the end the fol-
lowing: ‘‘Only with respect to fiscal year 2008 for the period 
ending on June 30, 2008, the DSH allotment for Hawaii for 
such portion of the fiscal year, notwithstanding the table set 
forth in paragraph (2), shall be $7,500,000.’’. 
SEC. 205. IMPROVING DATA COLLECTION. 
Section 2109(b)(2) of the Social Security Act (42 U.S.C. 
1397ii(b)(2)) is amended by inserting before the period at the end 
the following ‘‘(except that only with respect to fiscal year 2008, 
there are appropriated $20,000,000 for the purpose of carrying 
out this subsection, to remain available until expended)’’. 
SEC. 206. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS. 
Notwithstanding any other provision of law, the Secretary of 
Health and Human Services shall not, prior to June 30, 2008, 
take any action (through promulgation of regulation, issuance of 
regulatory guidance, use of Federal payment audit procedures, or 
other administrative action, policy, or practice, including a Medical 
Assistance Manual transmittal or letter to State Medicaid directors) 
to impose any restrictions relating to coverage or payment under 
title XIX of the Social Security Act for rehabilitation services or 
school-based administration and school-based transportation if such 
restrictions are more restrictive in any aspect than those applied 
to such areas as of July 1, 2007. 
TITLE III—MISCELLANEOUS 
SEC. 301. MEDICARE PAYMENT ADVISORY COMMISSION STATUS. 
Section 1805(a) of the Social Security Act (42 U.S.C. 1395b– 
6(a)) is amended by inserting ‘‘as an agency of Congress’’ after 
‘‘established’’. 
SEC. 302. SPECIAL DIABETES PROGRAMS FOR TYPE I DIABETES AND 
INDIANS. 
(a) SPECIAL DIABETES PROGRAMS FOR TYPE I DIABETES.—Sec-
tion 330B(b)(2)(C) of the Public Health Service Act (42 U.S.C. 254c– 
2(b)(2)(C)) is amended by striking ‘‘2008’’ and inserting ‘‘2009’’. 
Hawaii. 
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121 STAT. 2515 
PUBLIC LAW 110–173—DEC. 29, 2007 
LEGISLATIVE HISTORY—S. 2499: 
CONGRESSIONAL RECORD, Vol. 153 (2007): 
Dec. 18, considered and passed Senate. 
Dec. 19, considered and passed House. 
(b) SPECIAL
DIABETES
PROGRAMS
FOR
INDIANS.—Section 
330C(c)(2)(C) of the Public Health Service Act (42 U.S.C. 254c– 
3(c)(2)(C)) is amended by striking ‘‘2008’’ and inserting ‘‘2009’’. 
Approved December 29, 2007. 
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