On March 23, 2010, President Obama signed into law a comprehensive health care reform bill, the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ). The Act contains numerous provisions affecting Medicare payments, payment rules, covered benefits, and the delivery of care. The U.S. House of Representatives also passed an amendment in the nature of a substitute to H.R. 4872 , the Health Care and Education Affordability Reconciliation Act of 2010, on March 21, 2010. The Reconciliation bill would amend PPACA and would make changes to a number of Medicare-related provisions in that Act. The Reconciliation bill includes two titles. The first title contains provisions related to health care and revenues. Subtitle B of Title I contains provisions that would modify provisions in the PPACA related to Medicare fee-for-service, Medicare Advantage, and Medicare outpatient prescription drug programs. Subtitle D contains provisions related to reducing waste, fraud and abuse in Medicare. Subtitle E contains revenue related provisions including a provision that would make changes to the Medicare tax provision in PPACA. The second title includes amendments to the Higher Education Act of 1965, which authorizes most of the federal programs involving postsecondary education. On March 20, 2010, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued cost estimates of the PPACA as amended by the Reconciliation bill. Their analyses provide estimates of the direct spending and revenue effects of the combined bills. CBO estimated that total mandatory annual expenditures for Medicare prior to PPACA would grow from $501 billion in 2009 to $943 billion in 2019. Cumulative spending for the years 2010 to 2019 was expected to exceed $7 trillion. CBO estimates that the provisions in the PPACA as amended by the Reconciliation bill that would affect the Medicare, Medicaid, Children's Health Insurance and other federal programs would reduce direct spending by $511 billion over the FY2010-FY2019 period. Medicare (absent interaction effects) accounts for approximately $390 billion of the reduction. Total Medicare reductions in direct spending over the 10-year period are estimated to be about $460 billion, but these reductions would be offset by Medicare payment increases of close to $70 billion. The estimated Medicare savings from the PPACA as amended by the Reconciliation bill are about $10 billion less than the estimated Medicare savings of $400 billion for PPACA alone. The differences in projected Medicare savings are primarily due to changes that led to reductions in cost savings estimates for provisions related to disproportionate share hospitals and the Independent Payment Advisory Board together with cost increases associated with closing the coverage gap in the outpatient prescription drug benefit. A portion of the projected cost increases is offset by increases in savings estimates of provisions related to the Medicare Advantage program, productivity adjustments for certain inpatient services, and advanced imaging services. Changes by the Reconciliation bill to the Medicare tax provision in PPACA are estimated to raise an additional $123 billion above the $87 billion raised in PPACA, for a total of $210 billion in added revenue over 10 years. The Medicare provisions in Subtitles B, D and E of Title I in the Reconciliation bill would make modifications to certain Medicare provisions in PPACA, as well as add several new provisions. Below are summaries of how the Reconciliation bill, H.R. 4872 , would change, or add to, Medicare-related provisions in PPACA together with descriptions of applicable law in effect prior to the enactment of PPACA. Provisions in the PPACA (Sec. 3133 as modified by Sec. 10316) reduce the amount of disproportionate share hospital (DSH) payments that are provided to hospitals by 75% (which represents an empirically justified amount) starting in FY2015. Hospitals are to receive additional payments based on a formula that incorporates certain factors including the reduction in their DSH funds, the percentage change in the uninsured under-65 population, and the relative share of uncompensated care provided by the hospital. The Reconciliation bill (Sec. 1104) would implement the DSH changes in FY2014 and modify one of the factors in the formula (regarding the change in the uninsured under-65 population) used to distribute the additional DSH payments. Specifically, under the PPACA provision, from FY2015 through FY2018, hospital payments will reflect the difference in the percentage change in the uninsured under-65 population from 2013 to the most recent period minus 1.5 percentage points; in subsequent years, the payments would be based on the percentage difference in the uninsured (without the subtraction). Under reconciliation language, the percentage subtraction would be 0.1 percentage points in FY2014, and 0.2 percentage points in FY2015 through FY2019. According to CBO's estimate, the Reconciliation bill would incr ease DSH spending by $3 billion over 10 years— the score for the combined bills is -$22.2 billion for FY2010-FY2019 compared to a score of - $25 billion for PPACA alone. Provisions in the PPACA (Sec. 3401 as modified by Sec. 10319) implement a full productivity adjustment for inpatient and outpatient hospital services (IPPS and OPPS respectively), inpatient psychiatric facilities (IPFs), inpatient rehabilitation (IRFs), and long term care hospital (LTCHs) services (and other providers) beginning in FY2012. The update factors for Medicare providers and suppliers will also be subject to additional adjustments. The Reconciliation bill (Sec. 1105) would revise the additional adjustments to the market basket (MB) updates for the IPPS, OPPS, IPF, IRF and LTCH payment systems. Instead of reducing the MB updates by 0.2 percentage points each year from 2014 through 2019 depending upon the level of the insured nonelderly population in relationship to the estimated level of insured, the MB would be reduced by 0.3 percentage points in FY2014, by 0.2 percentage points in FY2015 and FY2016, and by 0.75 percentage points in FY2017 through FY2019 . CB O estimates that this change would decrease Medicare spending by $9.9 billion over 10 years— from a score of - $146.7 billion over FY2010-FY2019 for the PPACA to - $156.6 billion for PPACA and H.R. 4872 combined . Physicians are generally prohibited from referring Medicare patients for certain services to facilities in which they (or their immediate family members) have an ownership or investment interest. However, among other exceptions, this prohibition does not apply to physicians with ownership or investment interests in a whole hospital. Provisions in the PPACA (Sec. 6001 as modified by Sec. 10601) exempt only those physician-owned hospitals meeting certain requirements from the self-referral prohibition beginning no later than 18 months after the date of enactment. Specifically, hospitals that have physician ownership and a provider agreement in operation on August 1, 2010, and that met other specified requirements will be exempt from this self-referral ban. The Reconciliation bill (Sec. 1106) would change the target date to December 31, 2010, along with certain conforming changes. The PPACA provisions also establish a process to allow certain physician-owned hospitals to expand in a limited fashion. The reconciliation provision would allow grandfathered physician-owned hospitals that are not the only hospital in their county that treat the highest percentage of Medicaid patients in their county to expand . CBO estimates that this change would increase Medicare spending by $0.1 billion over 10 year s — from a score of -$0.5 billion for the PPACA for FY2010-FY2019 to - $ 0.5 billion for the PPACA and H.R. 4872 combined . The Reconciliation bill as modified by the manager's amendment (Sec. 1109) would provide $400 million for two years (FY2011 and FY2012) to increase Medicare's payments to acute care hospitals in low-cost counties. The qualifying hospitals are located in counties ranked in the lowest quartile of adjusted Medicare Part A and B spending (adjusted by age, sex, and race). Additional payments to each qualifying hospital would be in proportion to its Medicare inpatient hospital payments relative to Medicare inpatient hospital payments for all qualifying hospitals. CBO e stimates that this provision would increase Medicare spending by a total of $400 million from FY2011 through FY2012 . The 2010 final rule for payments to providers under the Medicare fee schedule as published in the Federal Register on November 25, 2009, uses an assumption that advanced imaging equipment (such as MRIs) is being used 90% of the time (up from 50% in prior years), following a MedPAC recommendation based on studies that surveyed the actual use of the equipment. Section 3135 of the PPACA changes the utilization rate assumption for calculating the payment for advanced imaging equipment from 50% to 65% for 2010 through 2012. The rate will be further increased to 70% for services provided in 2013 and 75% for services provided in 2014. Sec. 1107 of the Reconciliation bill would set the utilization rate at 75% in 2011 and in subsequent years. CBO estimates that th is change to Section 3135 would increase cost savings by $1.2 billion over 10 years— from -$1.1 billion over 10 years for PPACA to -$2.3 billion over 10  years for PPACA and H.R. 4872 combined. The Medicare physician fee schedule is adjusted geographically for three factors to reflect differences in the cost of resources needed to produce physician services: physician work, practice expense, and medical malpractice insurance. The geographic adjustments are indices—known as Geographic Practice Cost Indices (GPCIs)—that reflect how each area compares to the national average in a "market basket" of goods. A value of 1.00 represents an average across all areas.