TITLE III--IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE

        Subtitle A--Transforming the Health Care Delivery System

 PART I--LINKING PAYMENT TO QUALITY OUTCOMES UNDER THE MEDICARE PROGRAM

SEC. 3001. HOSPITAL VALUE-BASED PURCHASING PROGRAM.

    (a) Program.--
            (1) In general.--Section 1886 of the Social Security Act (42 
        U.S.C. 1395ww), as amended by section 4102(a) of the HITECH Act 
        (Public Law 111-5), is amended by adding at the end the 
        following new subsection:

    ``(o) Hospital Value-Based Purchasing Program.--
            ``(1) Establishment.--
                    ``(A) In general.--Subject to the succeeding 
                provisions of this subsection, the Secretary shall 
                establish a hospital value-based purchasing program (in 
                this subsection referred to as the `Program') under 
                which value-based incentive payments are made in a 
                fiscal year to hospitals that meet the performance 
                standards under paragraph (3) for the performance period 
                for such fiscal year (as established under paragraph 
                (4)).
                    ``(B) Program to begin in fiscal year 2013.--The 
                Program shall apply to payments for discharges occurring 
                on or after October 1, 2012.
                    ``(C) Applicability of program to hospitals.--
                          ``(i) In general.--For purposes of this 
                      subsection, subject to clause (ii), the term 
                      `hospital' means a subsection (d) hospital (as 
                      defined in subsection (d)(1)(B)).
                          ``(ii) Exclusions.--The term `hospital' shall 
                      not include, with respect to a fiscal year, a 
                      hospital--
                                    ``(I) that is subject to the payment 
                                reduction under subsection 
                                (b)(3)(B)(viii)(I) for such fiscal year;
                                    ``(II) for which, during the 
                                performance period for such fiscal year, 
                                the Secretary has cited deficiencies 
                                that pose immediate jeopardy to the 
                                health or safety of patients;
                                    ``(III) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of measures that apply to the 
                                hospital for the performance period for 
                                such fiscal year; or
                                    ``(IV) for which there are not a 
                                minimum number (as determined by the 
                                Secretary) of cases for the measures 
                                that apply to the hospital for the 
                                performance period for such fiscal year.
                          ``(iii) Independent analysis.--For purposes of 
                      determining the minimum numbers under subclauses 
                      (III) and (IV) of clause (ii), the Secretary shall 
                      have conducted an independent analysis of what 
                      numbers are appropriate.
                          ``(iv) Exemption.--In the case of a hospital 
                      that is paid under section 1814(b)(3), the 
                      Secretary may exempt such hospital from the 
                      application of this subsection if the State which 
                      is paid under such section submits an annual 
                      report to the Secretary describing how a similar 
                      program in the State for a participating hospital 
                      or hospitals achieves or surpasses the measured 
                      results in terms of patient health outcomes and 
                      cost savings established under this subsection.
            ``(2) Measures.--
                    ``(A) In general.--The Secretary shall select 
                measures for purposes of the Program. Such measures 
                shall be selected from the measures specified under 
                subsection (b)(3)(B)(viii).
                    ``(B) Requirements.--
                          ``(i) For fiscal year 2013.--For value-based 
                      incentive payments made with respect to discharges 
                      occurring during fiscal year 2013, the Secretary 
                      shall ensure the following:
                                    ``(I) Conditions or procedures.--
                                Measures are selected under subparagraph 
                                (A) that cover at least the following 5 
                                specific conditions or procedures:
                                            ``(aa) Acute myocardial 
                                        infarction (AMI).
                                            ``(bb) Heart failure.
                                            ``(cc) Pneumonia.
                                            ``(dd) Surgeries, as 
                                        measured by the Surgical Care 
                                        Improvement Project (formerly 
                                        referred to as `Surgical 
                                        Infection Prevention' for 
                                        discharges occurring before July 
                                        2006).
                                            ``(ee) Healthcare-associated 
                                        infections, as measured by the 
                                        prevention metrics and targets 
                                        established in the HHS Action 
                                        Plan to Prevent Healthcare-
                                        Associated Infections (or any 
                                        successor plan) of the 
                                        Department of Health and Human 
                                        Services.
                                    ``(II) HCAHPS.--Measures selected 
                                under subparagraph (A) shall be related 
                                to the Hospital Consumer Assessment of 
                                Healthcare Providers and Systems survey 
                                (HCAHPS).
                          ``(ii) Inclusion of efficiency measures.--For 
                      value-based incentive payments made with respect 
                      to discharges occurring during fiscal year 2014 or a 
                      subsequent fiscal year, the Secretary shall ensure 
                      that measures selected under subparagraph (A) 
                      include efficiency measures, including measures of 
                      `Medicare spending per beneficiary'. Such measures 
                      shall be adjusted for factors such as age, sex, 
                      race, severity of illness, and other factors that 
                      the Secretary determines appropriate.
                    ``(C) Limitations.--
                          ``(i) Time requirement for prior reporting and 
                      notice.--The Secretary may not select a measure 
                      under subparagraph (A) for use under the Program 
                      with respect to a performance period for a fiscal 
                      year (as established under paragraph (4)) unless 
                      such measure has been specified under subsection 
                      (b)(3)(B)(viii) and included on the Hospital 
                      Compare Internet website for at least 1 year prior 
                      to the beginning of such performance period.
                          ``(ii) Measure not applicable unless hospital 
                      furnishes services appropriate to the measure.--A 
                      measure selected under subparagraph (A) shall not 
                      apply to a hospital if such hospital does not 
                      furnish services appropriate to such measure.
                    ``(D) Replacing measures.--Subclause (VI) of 
                subsection (b)(3)(B)(viii) shall apply to measures 
                selected under subparagraph (A) in the same manner as 
                such subclause applies to measures selected under such 
                subsection.
            ``(3) Performance standards.--
                    ``(A) Establishment.--The Secretary shall establish 
                performance standards with respect to measures selected 
                under paragraph (2) for a performance period for a 
                fiscal year (as established under paragraph (4)).
                    ``(B) Achievement and improvement.--The performance 
                standards established under subparagraph (A) shall 
                include levels of achievement and improvement.
                    ``(C) Timing.--The Secretary shall establish and 
                announce the performance standards under subparagraph 
                (A) not later than 60 days prior to the beginning of the 
                performance period for the fiscal year involved.
                    ``(D) Considerations in establishing standards.--In 
                establishing performance standards with respect to 
                measures under this paragraph, the Secretary shall take 
                into account appropriate factors, such as--
                          ``(i) practical experience with the measures 
                      involved, including whether a significant 
                      proportion of hospitals failed to meet the 
                      performance standard during previous performance 
                      periods;
                          ``(ii) historical performance standards;
                          ``(iii) improvement rates; and
                          ``(iv) the opportunity for continued 
                      improvement.
            ``(4) Performance period.--For purposes of the Program, the 
        Secretary shall establish the performance period for a fiscal 
        year. Such performance period shall begin and end prior to the 
        beginning of such fiscal year.
            ``(5) Hospital performance score.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall develop a methodology for assessing the
                total performance of each hospital based on performance 
                standards with respect to the measures selected under 
                paragraph (2) for a performance period (as established 
                under paragraph (4)). Using such methodology, the 
                Secretary shall provide for an assessment (in this 
                subsection referred to as the `hospital performance 
                score') for each hospital for each performance period.
                    ``(B) Application.--
                          ``(i) Appropriate distribution.--The Secretary 
                      shall ensure that the application of the 
                      methodology developed under subparagraph (A) 
                      results in an appropriate distribution of value-
                      based incentive payments under paragraph (6) among 
                      hospitals achieving different levels of hospital 
                      performance scores, with hospitals achieving the 
                      highest hospital performance scores receiving the 
                      largest value-based incentive payments.
                          ``(ii) Higher of achievement or improvement.--
                      The methodology developed under subparagraph (A) 
                      shall provide that the hospital performance score 
                      is determined using the higher of its achievement 
                      or improvement score for each measure.
                          ``(iii) Weights.--The methodology developed 
                      under subparagraph (A) shall provide for the 
                      assignment of weights for categories of measures 
                      as the Secretary determines appropriate.
                          ``(iv) No minimum performance standard.--The 
                      Secretary shall not set a minimum performance 
                      standard in determining the hospital performance 
                      score for any hospital.
                          ``(v) Reflection of measures applicable to the 
                      hospital.--The hospital performance score for a 
                      hospital shall reflect the measures that apply to 
                      the hospital.
            ``(6) Calculation of value-based incentive payments.--
                    ``(A) <<NOTE: Determination.>> In general.--In the 
                case of a hospital that the Secretary determines meets 
                (or exceeds) the performance standards under paragraph 
                (3) for the performance period for a fiscal year (as 
                established under paragraph (4)), the Secretary shall 
                increase the base operating DRG payment amount (as 
                defined in paragraph (7)(D)), as determined after 
                application of paragraph (7)(B)(i), for a hospital for 
                each discharge occurring in such fiscal year by the 
                value-based incentive payment amount.
                    ``(B) Value-based incentive payment amount.--The 
                value-based incentive payment amount for each discharge 
                of a hospital in a fiscal year shall be equal to the 
                product of--
                          ``(i) the base operating DRG payment amount 
                      (as defined in paragraph (7)(D)) for the discharge 
                      for the hospital for such fiscal year; and
                          ``(ii) the value-based incentive payment 
                      percentage specified under subparagraph (C) for 
                      the hospital for such fiscal year.
                    ``(C) Value-based incentive payment percentage.--
                          ``(i) In general.--The Secretary shall specify 
                      a value-based incentive payment percentage for a 
                      hospital for a fiscal year.
                          ``(ii) Requirements.--In specifying the value-
                      based incentive payment percentage for each 
                      hospital for a fiscal year under clause (i), the 
                      Secretary shall ensure that--
                                    ``(I) such percentage is based on 
                                the hospital performance score of the 
                                hospital under paragraph (5); and
                                    ``(II) the total amount of value-
                                based incentive payments under this 
                                paragraph to all hospitals in such 
                                fiscal year is equal to the total amount 
                                available for value-based incentive 
                                payments for such fiscal year under 
                                paragraph (7)(A), as estimated by the 
                                Secretary.
            ``(7) Funding for value-based incentive payments.--
                    ``(A) Amount.--The total amount available for value-
                based incentive payments under paragraph (6) for all 
                hospitals for a fiscal year shall be equal to the total 
                amount of reduced payments for all hospitals under 
                subparagraph (B) for such fiscal year, as estimated by 
                the Secretary.
                    ``(B) Adjustment to payments.--
                          ``(i) In general.--The Secretary shall reduce 
                      the base operating DRG payment amount (as defined 
                      in subparagraph (D)) for a hospital for each 
                      discharge in a fiscal year (beginning with fiscal 
                      year 2013) by an amount equal to the applicable 
                      percent (as defined in subparagraph (C)) of the 
                      base operating DRG payment amount for the 
                      discharge for the hospital for such fiscal year. 
                      The Secretary shall make such reductions for all 
                      hospitals in the fiscal year involved, regardless 
                      of whether or not the hospital has been determined 
                      by the Secretary to have earned a value-based 
                      incentive payment under paragraph (6) for such 
                      fiscal year.
                          ``(ii) No effect on other payments.--Payments 
                      described in items (aa) and (bb) of subparagraph 
                      (D)(i)(II) for a hospital shall be determined as 
                      if this subsection had not been enacted.
                    ``(C) Applicable percent defined.--For purposes of 
                subparagraph (B), the term `applicable percent' means--
                          ``(i) with respect to fiscal year 2013, 1.0 
                      percent;
                          ``(ii) with respect to fiscal year 2014, 1.25 
                      percent;
                          ``(iii) with respect to fiscal year 2015, 1.5 
                      percent;
                          ``(iv) with respect to fiscal year 2016, 1.75 
                      percent; and
                          ``(v) with respect to fiscal year 2017 and 
                      succeeding fiscal years, 2 percent.
                    ``(D) Base operating drg payment amount defined.--
                          ``(i) In general.--Except as provided in 
                      clause (ii), in this subsection, the term `base 
                      operating DRG payment amount' means, with respect 
                      to a hospital for a fiscal year--
                                    ``(I) the payment amount that would 
                                otherwise be made under subsection (d) 
                                (determined without

[[Page 124 STAT. 358]]

                                regard to subsection (q)) for a 
                                discharge if this subsection did not 
                                apply; reduced by
                                    ``(II) any portion of such payment 
                                amount that is attributable to--
                                            ``(aa) payments under 
                                        paragraphs (5)(A), (5)(B), 
                                        (5)(F), and (12) of subsection 
                                        (d); and
                                            ``(bb) such other payments 
                                        under subsection (d) determined 
                                        appropriate by the Secretary.
                          ``(ii) Special rules for certain hospitals.--
                                    ``(I) Sole community hospitals and 
                                medicare-dependent, small rural 
                                hospitals.--In the case of a medicare-
                                dependent, small rural hospital (with 
                                respect to discharges occurring during 
                                fiscal year 2012 and 2013) or a sole 
                                community hospital, in applying 
                                subparagraph (A)(i), the payment amount 
                                that would otherwise be made under 
                                subsection (d) shall be determined 
                                without regard to subparagraphs (I) and 
                                (L) of subsection (b)(3) and 
                                subparagraphs (D) and (G) of subsection 
                                (d)(5).
                                    ``(II) Hospitals paid under section 
                                1814.--In the case of a hospital that is 
                                paid under section 1814(b)(3), the term 
                                `base operating DRG payment amount' 
                                means the payment amount under such 
                                section.
            ``(8) Announcement of net result of 
        adjustments. <<NOTE: Deadline.>> --Under the Program, the 
        Secretary shall, not later than 60 days prior to the fiscal year 
        involved, inform each hospital of the adjustments to payments to 
        the hospital for discharges occurring in such fiscal year under 
        paragraphs (6) and (7)(B)(i).
            ``(9) No effect in subsequent fiscal years.--The value-based 
        incentive payment under paragraph (6) and the payment reduction 
        under paragraph (7)(B)(i) shall each apply only with respect to 
        the fiscal year involved, and the Secretary shall not take into 
        account such value-based incentive payment or payment reduction 
        in making payments to a hospital under this section in a 
        subsequent fiscal year.
            ``(10) Public reporting.--
                    ``(A) Hospital specific information.--
                          ``(i) In general.--The Secretary shall make 
                      information available to the public regarding the 
                      performance of individual hospitals under the 
                      Program, including--
                                    ``(I) the performance of the 
                                hospital with respect to each measure 
                                that applies to the hospital;
                                    ``(II) the performance of the 
                                hospital with respect to each condition 
                                or procedure; and
                                    ``(III) the hospital performance 
                                score assessing the total performance of 
                                the hospital.
                          ``(ii) Opportunity to review and submit 
                      corrections.--The Secretary shall ensure that a 
                      hospital has the opportunity to review, and submit 
                      corrections for, the information to be made public 
                      with respect to the hospital under clause (i) 
                      prior to such information being made public.
                          ``(iii) Website.--Such information shall be 
                      posted on the Hospital Compare Internet website in 
                      an easily understandable format.
                    ``(B) Aggregate information.-- <<NOTE: Web 
                posting.>> The Secretary shall periodically post on the 
                Hospital Compare Internet website aggregate information 
                on the Program, including--
                          ``(i) the number of hospitals receiving value-
                      based incentive payments under paragraph (6) and 
                      the range and total amount of such value-based 
                      incentive payments; and
                          ``(ii) the number of hospitals receiving less 
                      than the maximum value-based incentive payment 
                      available to the hospital for the fiscal year 
                      involved and the range and amount of such 
                      payments.
            ``(11) Implementation.--
                    ``(A) Appeals.--The Secretary shall establish a 
                process by which hospitals may appeal the calculation of 
                a hospital's performance assessment with respect to the 
                performance standards established under paragraph (3)(A) 
                and the hospital performance score under paragraph (5). 
                The Secretary shall ensure that such process provides 
                for resolution of such appeals in a timely manner.
                    ``(B) Limitation on review.--Except as provided in 
                subparagraph (A), there shall be no administrative or 
                judicial review under section 1869, section 1878, or 
                otherwise of the following:
                          ``(i) The methodology used to determine the 
                      amount of the value-based incentive payment under 
                      paragraph (6) and the determination of such 
                      amount.
                          ``(ii) The determination of the amount of 
                      funding available for such value-based incentive 
                      payments under paragraph (7)(A) and the payment 
                      reduction under paragraph (7)(B)(i).
                          ``(iii) The establishment of the performance 
                      standards under paragraph (3) and the performance 
                      period under paragraph (4).
                          ``(iv) The measures specified under subsection 
                      (b)(3)(B)(viii) and the measures selected under 
                      paragraph (2).
                          ``(v) The methodology developed under 
                      paragraph (5) that is used to calculate hospital 
                      performance scores and the calculation of such 
                      scores.
                          ``(vi) The validation methodology specified in 
                      subsection (b)(3)(B)(viii)(XI).
                    ``(C) Consultation with small hospitals.--The 
                Secretary shall consult with small rural and urban 
                hospitals on the application of the Program to such 
                hospitals.
            ``(12) Promulgation of regulations.--The Secretary shall 
        promulgate regulations to carry out the Program, including the 
        selection of measures under paragraph (2), the methodology 
        developed under paragraph (5) that is used to calculate hospital 
        performance scores, and the methodology used to determine the 
        amount of value-based incentive payments under paragraph (6).''.
            (2) Amendments for reporting of hospital quality 
        information.--Section 1886(b)(3)(B)(viii) of the Social Security 
        Act (42 U.S.C. 1395ww(b)(3)(B)(viii)) is amended--
                    (A) in subclause (II), by adding at the end the 
                following sentence: ``The Secretary may require 
                hospitals to submit data on measures that are not used 
                for the determination of value-based incentive payments 
                under subsection (o).'';
                    (B) in subclause (V), by striking ``beginning with 
                fiscal year 2008'' and inserting ``for fiscal years 2008 
                through 2012'';
                    (C) in subclause (VII), in the first sentence, by 
                striking ``data submitted'' and inserting ``information 
                regarding measures submitted''; and
                    (D) by adding at the end the following new 
                subclauses:

    ``(VIII) <<NOTE: Effective date.>> Effective for payments beginning 
with fiscal year 2013, with respect to quality measures for outcomes of 
care, the Secretary shall provide for such risk adjustment as the 
Secretary determines to be appropriate to maintain incentives for 
hospitals to treat patients with severe illnesses or conditions.

    ``(IX)(aa) Subject to item (bb), effective for payments beginning 
with fiscal year 2013, each measure specified by the Secretary under 
this clause shall be endorsed by the entity with a contract under 
section 1890(a).
    ``(bb) In the case of a specified area or medical topic determined 
appropriate by the Secretary for which a feasible and practical measure 
has not been endorsed by the entity with a contract under section 
1890(a), the Secretary may specify a measure that is not so endorsed as 
long as due consideration is given to measures that have been endorsed 
or adopted by a consensus organization identified by the Secretary.
    ``(X) To the extent practicable, the Secretary shall, with input 
from consensus organizations and other stakeholders, take steps to 
ensure that the measures specified by the Secretary under this clause 
are coordinated and aligned with quality measures applicable to--
            ``(aa) physicians under section 1848(k); and
            ``(bb) other providers of services and suppliers under this 
        title.

    ``(XI) <<NOTE: Validation process.>> The Secretary shall establish a 
process to validate measures specified under this clause as appropriate. 
Such process shall include the auditing of a number of randomly selected 
hospitals sufficient to ensure validity of the reporting program under 
this clause as a whole and shall provide a hospital with an opportunity 
to appeal the validation of measures reported by such hospital.''.
            (3) Website improvements.--Section 1886(b)(3)(B) of the 
        Social Security Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by 
        section 4102(b) of the HITECH Act (Public Law 111-5), is amended 
        by adding at the end the following new clause:

    ``(x)(I) <<NOTE: Web posting. Reports.>> The Secretary shall develop 
standard Internet website reports tailored to meet the needs of various 
stakeholders such as hospitals, patients, researchers, and policymakers. 
The Secretary shall seek input from such stakeholders in determining the 
type of information that is useful and the formats that best facilitate 
the use of the information.

    ``(II) The Secretary shall modify the Hospital Compare Internet 
website to make the use and navigation of that website readily available 
to individuals accessing it.''.
            (4) GAO study and report.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study on the performance of the
                hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis of the impact of such program on--
                          (i) the quality of care furnished to Medicare 
                      beneficiaries, including diverse Medicare 
                      beneficiary populations (such as diverse in terms 
                      of race, ethnicity, and socioeconomic status);
                          (ii) expenditures under the Medicare program, 
                      including any reduced expenditures under Part A of 
                      title XVIII of such Act that are attributable to 
                      the improvement in the delivery of inpatient 
                      hospital services by reason of such hospital 
                      value-based purchasing program;
                          (iii) the quality performance among safety net 
                      hospitals and any barriers such hospitals face in 
                      meeting the performance standards applicable under 
                      such hospital value-based purchasing program; and
                          (iv) the quality performance among small rural 
                      and small urban hospitals and any barriers such 
                      hospitals face in meeting the performance 
                      standards applicable under such hospital value-
                      based purchasing program.
                    (B) Reports.--
                          (i) Interim report.--Not later than October 1, 
                      2015, the Comptroller General of the United States 
                      shall submit to Congress an interim report 
                      containing the results of the study conducted 
                      under subparagraph (A), together with 
                      recommendations for such legislation and 
                      administrative action as the Comptroller General 
                      determines appropriate.
                          (ii) Final report.--Not later than July 1, 
                      2017, the Comptroller General of the United States 
                      shall submit to Congress a report containing the 
                      results of the study conducted under subparagraph 
                      (A), together with recommendations for such 
                      legislation and administrative action as the 
                      Comptroller General determines appropriate.
            (5) HHS study and report.--
                    (A) Study.--The Secretary of Health and Human 
                Services shall conduct a study on the performance of the 
                hospital value-based purchasing program established 
                under section 1886(o) of the Social Security Act, as 
                added by paragraph (1). Such study shall include an 
                analysis--
                          (i) of ways to improve the hospital value-
                      based purchasing program and ways to address any 
                      unintended consequences that may occur as a result 
                      of such program;
                          (ii) of whether the hospital value-based 
                      purchasing program resulted in lower spending 
                      under the Medicare program under title XVIII of 
                      such Act or other financial savings to hospitals;
                          (iii) the appropriateness of the Medicare 
                      program sharing in any savings generated through 
                      the hospital value-based purchasing program; and
                          (iv) any other area determined appropriate by 
                      the Secretary.
                    (B) Report.--Not later than January 1, 2016, the 
                Secretary of Health and Human Services shall submit to 
                Congress a report containing the results of the study 
                conducted under subparagraph (A), together with 
                recommendations for such legislation and administrative 
                action as the Secretary determines appropriate.

    (b) <<NOTE: 42 USC 1395ww note.>> Value-Based Purchasing 
Demonstration Programs.--
            (1) Value-based purchasing demonstration program for 
        inpatient critical access hospitals.--
                    (A) Establishment.--
                          (i) In general.-- <<NOTE: Deadline.>> Not 
                      later than 2 years after the date of enactment of 
                      this Act, the Secretary of Health and Human 
                      Services (in this subsection referred to as the 
                      ``Secretary'') shall establish a demonstration 
                      program under which the Secretary establishes a 
                      value-based purchasing program under the Medicare 
                      program under title XVIII of the Social Security 
                      Act for critical access hospitals (as defined in 
                      paragraph (1) of section 1861(mm) of such Act (42 
                      U.S.C. 1395x(mm))) with respect to inpatient 
                      critical access hospital services (as defined in 
                      paragraph (2) of such section) in order to test 
                      innovative methods of measuring and rewarding 
                      quality and efficient health care furnished by 
                      such hospitals.
                          (ii) Duration.--The demonstration program 
                      under this paragraph shall be conducted for a 3-
                      year period.
                          (iii) Sites.--The Secretary shall conduct the 
                      demonstration program under this paragraph at an 
                      appropriate number (as determined by the 
                      Secretary) of critical access hospitals. The 
                      Secretary shall ensure that such hospitals are 
                      representative of the spectrum of such hospitals 
                      that participate in the Medicare program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                          (i) recommendations on the establishment of a 
                      permanent value-based purchasing program under the 
                      Medicare program for critical access hospitals 
                      with respect to inpatient critical access hospital 
                      services; and
                          (ii) recommendations for such other 
                      legislation and administrative action as the 
                      Secretary determines appropriate.

[[Page 124 STAT. 363]]

            (2) Value-based purchasing demonstration program for 
        hospitals excluded from hospital value-based purchasing program 
        as a result of insufficient numbers of measures and cases.--
                    (A) Establishment.--
                          (i) In general.-- <<NOTE: Deadline.>> Not 
                      later than 2 years after the date of enactment of 
                      this Act, the Secretary shall establish a 
                      demonstration program under which the Secretary 
                      establishes a value-based purchasing program under 
                      the Medicare program under title XVIII of the 
                      Social Security Act for applicable hospitals (as 
                      defined in clause (ii)) with respect to inpatient 
                      hospital services (as defined in section 1861(b) 
                      of the Social Security Act (42 U.S.C. 1395x(b))) 
                      in order to test innovative methods of measuring 
                      and rewarding quality and efficient health care 
                      furnished by such hospitals.
                          (ii) Applicable hospital defined.--For 
                      purposes of this paragraph, the term ``applicable 
                      hospital'' means a hospital described in subclause 
                      (III) or (IV) of section 1886(o)(1)(C)(ii) of the 
                      Social Security Act, as added by subsection 
                      (a)(1).
                          (iii) Duration.--The demonstration program 
                      under this paragraph shall be conducted for a 3-
                      year period.
                          (iv) Sites.--The Secretary shall conduct the 
                      demonstration program under this paragraph at an 
                      appropriate number (as determined by the 
                      Secretary) of applicable hospitals. The Secretary 
                      shall ensure that such hospitals are 
                      representative of the spectrum of such hospitals 
                      that participate in the Medicare program.
                    (B) Waiver authority.--The Secretary may waive such 
                requirements of titles XI and XVIII of the Social 
                Security Act as may be necessary to carry out the 
                demonstration program under this paragraph.
                    (C) Budget neutrality requirement.--In conducting 
                the demonstration program under this section, the 
                Secretary shall ensure that the aggregate payments made 
                by the Secretary do not exceed the amount which the 
                Secretary would have paid if the demonstration program 
                under this section was not implemented.
                    (D) Report.--Not later than 18 months after the 
                completion of the demonstration program under this 
                paragraph, the Secretary shall submit to Congress a 
                report on the demonstration program together with--
                          (i) recommendations on the establishment of a 
                      permanent value-based purchasing program under the 
                      Medicare program for applicable hospitals with 
                      respect to inpatient hospital services; and
                          (ii) recommendations for such other 
                      legislation and administrative action as the 
                      Secretary determines appropriate.

SEC. 3002. IMPROVEMENTS TO THE PHYSICIAN QUALITY REPORTING SYSTEM.

    (a) Extension.--Section 1848(m) of the Social Security Act (42 
U.S.C. 1395w-4(m)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by striking ``2010'' and inserting ``2014''; 
                and
                    (B) in subparagraph (B)--
                          (i) in clause (i), by striking ``and'' at the 
                      end;
                          (ii) in clause (ii), by striking the period at 
                      the end and inserting a semicolon; and
                          (iii) by adding at the end the following new 
                      clauses:
                          ``(iii) for 2011, 1.0 percent; and
                          ``(iv) for 2012, 2013, and 2014, 0.5 
                      percent.'';
            (2) in paragraph (3)--
                    (A) in subparagraph (A), in the matter preceding 
                clause (i), by inserting ``(or, for purposes of 
                subsection (a)(8), for the quality reporting period for 
                the year)'' after ``reporting period''; and
                    (B) in subparagraph (C)(i), by inserting ``, or, for 
                purposes of subsection (a)(8), for a quality reporting 
                period for the year'' after ``(a)(5), for a reporting 
                period for a year'';
            (3) in paragraph (5)(E)(iv), by striking ``subsection 
        (a)(5)(A)'' and inserting ``paragraphs (5)(A) and (8)(A) of 
        subsection (a)''; and
            (4) in paragraph (6)(C)--
                    (A) in clause (i)(II), by striking ``, 2009, 2010, 
                and 2011'' and inserting ``and subsequent years''; and
                    (B) in clause (iii)--
                          (i) by inserting ``(a)(8)'' after ``(a)(5)''; 
                      and
                          (ii) by striking ``under subparagraph (D)(iii) 
                      of such subsection'' and inserting ``under 
                      subsection (a)(5)(D)(iii) or the quality reporting 
                      period under subsection (a)(8)(D)(iii), 
                      respectively''.

    (b) Incentive Payment Adjustment for Quality Reporting.--Section 
1848(a) of the Social Security Act (42 U.S.C. 1395w-4(a)) is amended by 
adding at the end the following new paragraph:
            ``(8) Incentives for quality reporting.--
                    ``(A) Adjustment.--
                          ``(i) In general.--With respect to covered 
                      professional services furnished by an eligible 
                      professional during 2015 or any subsequent year, 
                      if the eligible professional does not 
                      satisfactorily submit data on quality measures for 
                      covered professional services for the quality 
                      reporting period for the year (as determined under 
                      subsection (m)(3)(A)), the fee schedule amount for 
                      such services furnished by such professional 
                      during the year (including the fee schedule amount 
                      for purposes of determining a payment based on 
                      such amount) shall be equal to the applicable 
                      percent of the fee schedule amount that would 
                      otherwise apply to such services under this 
                      subsection (determined after application of 
                      paragraphs (3), (5), and (7), but without regard 
                      to this paragraph).
                          ``(ii) Applicable percent.--For purposes of 
                      clause (i), the term `applicable percent' means--
                                    ``(I) for 2015, 98.5 percent; and
                                    ``(II) for 2016 and each subsequent 
                                year, 98 percent.
                    ``(B) Application.--
                          ``(i) Physician reporting system rules.--
                      Paragraphs (5), (6), and (8) of subsection (k) 
                      shall apply for purposes of this paragraph in the 
                      same manner as they apply for purposes of such 
                      subsection.
                          ``(ii) Incentive payment validation rules.--
                      Clauses (ii) and (iii) of subsection (m)(5)(D) 
                      shall apply for purposes of this paragraph in a 
                      similar manner as they apply for purposes of such 
                      subsection.
                    ``(C) Definitions.--For purposes of this paragraph:
                          ``(i) Eligible professional; covered 
                      professional services.--The terms `eligible 
                      professional' and `covered professional services' 
                      have the meanings given such terms in subsection 
                      (k)(3).
                          ``(ii) Physician reporting system.--The term 
                      `physician reporting system' means the system 
                      established under subsection (k).
                          ``(iii) Quality reporting period.--The term 
                      `quality reporting period' means, with respect to 
                      a year, a period specified by the Secretary.''.

    (c) Maintenance of Certification Programs.--
            (1) In general.--Section 1848(k)(4) of the Social Security 
        Act (42 U.S.C. 1395w-4(k)(4)) is amended by inserting ``or 
        through a Maintenance of Certification program operated by a 
        specialty body of the American Board of Medical Specialties that 
        meets the criteria for such a registry'' after ``Database)''.
            (2) <<NOTE: 42 USC 1395w-4 note.>> Effective date.--The 
        amendment made by paragraph (1) shall apply for years after 
        2010.

    (d) Integration of Physician Quality Reporting and EHR Reporting.--
Section 1848(m) of the Social Security Act (42 U.S.C. 1395w-4(m)) is 
amended by adding at the end the following new paragraph:
            ``(7) Integration of physician quality reporting and ehr 
        reporting. <<NOTE: Plan.>> --Not later than January 1, 2012, the 
        Secretary shall develop a plan to integrate reporting on quality 
        measures under this subsection with reporting requirements under 
        subsection (o) relating to the meaningful use of electronic 
        health records. Such integration shall consist of the following:
                    ``(A) The selection of measures, the reporting of 
                which would both demonstrate--
                          ``(i) meaningful use of an electronic health 
                      record for purposes of subsection (o); and
                          ``(ii) quality of care furnished to an 
                      individual.
                    ``(B) Such other activities as specified by the 
                Secretary.''.

    (e) Feedback.--Section 1848(m)(5) of the Social Security Act (42 
U.S.C. 1395w-4(m)(5)) is amended by adding at the end the following new 
subparagraph:
                    ``(H) Feedback.--The Secretary shall provide timely 
                feedback to eligible professionals on the performance of 
                the eligible professional with respect to satisfactorily 
                submitting data on quality measures under this 
                subsection.''.

    (f) Appeals.--Such section is further amended--
            (1) in subparagraph (E), by striking ``There shall'' and 
        inserting ``Except as provided in subparagraph (I), there 
        shall''; and
            (2) by adding at the end the following new subparagraph:
                    ``(I) Informal appeals process.-- 
                <<NOTE: Deadline.>> The Secretary shall, by not later 
                than January 1, 2011, establish and have in place an 
                informal process for eligible professionals to seek a 
                review of the determination that an eligible 
                professional did not satisfactorily submit data on 
                quality measures under this subsection.''.

SEC. 3003. IMPROVEMENTS TO THE PHYSICIAN FEEDBACK PROGRAM.

    (a) In General.--Section 1848(n) of the Social Security Act (42 
U.S.C. 1395w-4(n)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                          (i) by striking ``general.--The Secretary'' 
                      and inserting ``general.--
                          ``(i) Establishment.--The Secretary'';
                          (ii) in clause (i), as added by clause (i), by 
                      striking ``the `Program')'' and all that follows 
                      through the period at the end of the second 
                      sentence and inserting ``the `Program').''; and
                          (iii) by adding at the end the following new 
                      clauses:
                          ``(ii) Reports on resources.--The Secretary 
                      shall use claims data under this title (and may 
                      use other data) to provide confidential reports to 
                      physicians (and, as determined appropriate by the 
                      Secretary, to groups of physicians) that measure 
                      the resources involved in furnishing care to 
                      individuals under this title.
                          ``(iii) Inclusion of certain information.--If 
                      determined appropriate by the Secretary, the 
                      Secretary may include information on the quality 
                      of care furnished to individuals under this title 
                      by the physician (or group of physicians) in such 
                      reports.''; and
                    (B) in subparagraph (B), by striking ``subparagraph 
                (A)'' and inserting ``subparagraph (A)(ii)'';
            (2) in paragraph (4)--
                    (A) in the heading, by inserting ``initial'' after 
                ``focus''; and
                    (B) in the matter preceding subparagraph (A), by 
                inserting ``initial'' after ``focus the'';
            (3) in paragraph (6), by adding at the end the following new 
        sentence: ``For adjustments for reports on utilization under 
        paragraph (9), see subparagraph (D) of such paragraph.''; and
            (4) by adding at the end the following new paragraphs:
            ``(9) Reports on utilization.--
                    ``(A) Development of episode grouper.--
                          ``(i) In general.--The Secretary shall develop 
                      an episode grouper that combines separate but 
                      clinically related items and services into an 
                      episode of care for an individual, as appropriate.
                          ``(ii) Timeline for development.--The episode 
                      grouper described in subparagraph (A) shall be 
                      developed by not later than January 1, 2012.
                          ``(iii) Public availability.--The Secretary 
                      shall make the details of the episode grouper 
                      described in subparagraph (A) available to the 
                      public.
                          ``(iv) Endorsement.--The Secretary shall seek 
                      endorsement of the episode grouper described in
                      subparagraph (A) by the entity with a contract 
                      under section 1890(a).
                    ``(B) Reports on utilization.--Effective beginning 
                with 2012, the Secretary shall provide reports to 
                physicians that compare, as determined appropriate by 
                the Secretary, patterns of resource use of the 
                individual physician to such patterns of other 
                physicians.
                    ``(C) Analysis of data.--The Secretary shall, for 
                purposes of preparing reports under this paragraph, 
                establish methodologies as appropriate, such as to--
                          ``(i) attribute episodes of care, in whole or 
                      in part, to physicians;
                          ``(ii) identify appropriate physicians for 
                      purposes of comparison under subparagraph (B); and
                          ``(iii) aggregate episodes of care attributed 
                      to a physician under clause (i) into a composite 
                      measure per individual.
                    ``(D) Data adjustment.--In preparing reports under 
                this paragraph, the Secretary shall make appropriate 
                adjustments, including adjustments--
                          ``(i) to account for differences in 
                      socioeconomic and demographic characteristics, 
                      ethnicity, and health status of individuals (such 
                      as to recognize that less healthy individuals may 
                      require more intensive interventions); and
                          ``(ii) to eliminate the effect of geographic 
                      adjustments in payment rates (as described in 
                      subsection (e)).
                    ``(E) Public availability of methodology.--The 
                Secretary shall make available to the public--
                          ``(i) the methodologies established under 
                      subparagraph (C);
                          ``(ii) information regarding any adjustments 
                      made to data under subparagraph (D); and
                          ``(iii) aggregate reports with respect to 
                      physicians.
                    ``(F) Definition of physician.--In this paragraph:
                          ``(i) In general.--The term `physician' has 
                      the meaning given that term in section 1861(r)(1).
                          ``(ii) Treatment of groups.--Such term 
                      includes, as the Secretary determines appropriate, 
                      a group of physicians.
                    ``(G) Limitations on review.--There shall be no 
                administrative or judicial review under section 1869, 
                section 1878, or otherwise of the establishment of the 
                methodology under subparagraph (C), including the 
                determination of an episode of care under such 
                methodology.
            ``(10) Coordination with other value-based purchasing 
        reforms.--The Secretary shall coordinate the Program with the 
        value-based payment modifier established under subsection (p) 
        and, as the Secretary determines appropriate, other similar 
        provisions of this title.''.

    (b) Conforming Amendment.--Section 1890(b) of the Social Security 
Act (42 U.S.C. 1395aaa(b)) is amended by adding at the end the following 
new paragraph:
            ``(6) Review and endorsement of episode grouper under the 
        physician feedback program.--The entity shall provide for the 
        review and, as appropriate, the endorsement of the
        episode grouper developed by the Secretary under section 
        1848(n)(9)(A). Such review shall be conducted on an expedited 
        basis.''.

SEC. 3004. QUALITY REPORTING FOR LONG-TERM CARE HOSPITALS, INPATIENT 
            REHABILITATION HOSPITALS, AND HOSPICE PROGRAMS.

    (a) Long-term Care Hospitals.--Section 1886(m) of the Social 
Security Act (42 U.S.C. 1395ww(m)), as amended by section 3401(c), is 
amended by adding at the end the following new paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--Under the system described 
                      in paragraph (1), for rate year 2014 and each 
                      subsequent rate year, in the case of a long-term 
                      care hospital that does not submit data to the 
                      Secretary in accordance with subparagraph (C) with 
                      respect to such a rate year, any annual update to 
                      a standard Federal rate for discharges for the 
                      hospital during the rate year, and after 
                      application of paragraph (3), shall be reduced by 
                      2 percentage points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in such annual update 
                      being less than 0.0 for a rate year, and may 
                      result in payment rates under the system described 
                      in paragraph (1) for a rate year being less than 
                      such payment rates for the preceding rate year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the rate year involved and the Secretary shall not take 
                into account such reduction in computing the payment 
                amount under the system described in paragraph (1) for a 
                subsequent rate year.
                    ``(C) Submission of quality data.--For rate year 
                2014 and each subsequent rate year, each long-term care 
                hospital shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).
                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                          ``(iii) Time frame.--Not later than October 1, 
                      2012, the Secretary shall publish the measures 
                      selected under this subparagraph that will be 
                      applicable with respect to rate year 2014.
                    ``(E) Public availability of data 
                submitted. <<NOTE: Procedures.>> --The Secretary shall 
                establish procedures for making data submitted under 
                subparagraph (C) available to the public. 
                Such <<NOTE: Review.>>  procedures shall ensure that a 
                long-term care hospital has the opportunity to review 
                the data that is to be made public with respect to the 
                hospital prior to such data being made 
                public. <<NOTE: Web posting.>> The Secretary shall 
                report quality measures that relate to services 
                furnished in inpatient settings in long-term care 
                hospitals on the Internet website of the Centers for 
                Medicare & Medicaid Services.''.

    (b) Inpatient Rehabilitation Hospitals.--Section 1886(j) of the 
Social Security Act (42 U.S.C. 1395ww(j)) is amended--
            (1) by redesignating paragraph (7) as paragraph (8); and
            (2) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--For purposes of fiscal year 
                      2014 and each subsequent fiscal year, in the case 
                      of a rehabilitation facility that does not submit 
                      data to the Secretary in accordance with 
                      subparagraph (C) with respect to such a fiscal 
                      year, after determining the increase factor 
                      described in paragraph (3)(C), and after 
                      application of paragraph (3)(D), the Secretary 
                      shall reduce such increase factor for payments for 
                      discharges occurring during such fiscal year by 2 
                      percentage points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in the increase factor 
                      described in paragraph (3)(C) being less than 0.0 
                      for a fiscal year, and may result in payment rates 
                      under this subsection for a fiscal year being less 
                      than such payment rates for the preceding fiscal 
                      year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent rate year, each rehabilitation 
                facility shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).
                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or
                      adopted by a consensus organization identified by 
                      the Secretary.
                          ``(iii) Time frame. <<NOTE: Publication.>> --
                      Not later than October 1, 2012, the Secretary 
                      shall publish the measures selected under this 
                      subparagraph that will be applicable with respect 
                      to fiscal year 2014.
                    ``(E) Public availability of data 
                submitted. <<NOTE: Procedures.>> --The Secretary shall 
                establish procedures for making data submitted under 
                subparagraph (C) available to the public. 
                Such <<NOTE: Review.>>  procedures shall ensure that a 
                rehabilitation facility has the opportunity to review 
                the data that is to be made public with respect to the 
                facility prior to such data being made 
                public. <<NOTE: Web posting.>>  The Secretary shall 
                report quality measures that relate to services 
                furnished in inpatient settings in rehabilitation 
                facilities on the Internet website of the Centers for 
                Medicare & Medicaid Services.''.

    (c) Hospice Programs.--Section 1814(i) of the Social Security Act 
(42 U.S.C. 1395f(i)) is amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Quality reporting.--
                    ``(A) Reduction in update for failure to report.--
                          ``(i) In general.--For purposes of fiscal year 
                      2014 and each subsequent fiscal year, in the case 
                      of a hospice program that does not submit data to 
                      the Secretary in accordance with subparagraph (C) 
                      with respect to such a fiscal year, after 
                      determining the market basket percentage increase 
                      under paragraph (1)(C)(ii)(VII) or paragraph 
                      (1)(C)(iii), as applicable, and after application 
                      of paragraph (1)(C)(iv), with respect to the 
                      fiscal year, the Secretary shall reduce such 
                      market basket percentage increase by 2 percentage 
                      points.
                          ``(ii) Special rule.--The application of this 
                      subparagraph may result in the market basket 
                      percentage increase under paragraph 
                      (1)(C)(ii)(VII) or paragraph (1)(C)(iii), as 
                      applicable, being less than 0.0 for a fiscal year, 
                      and may result in payment rates under this 
                      subsection for a fiscal year being less than such 
                      payment rates for the preceding fiscal year.
                    ``(B) Noncumulative application.--Any reduction 
                under subparagraph (A) shall apply only with respect to 
                the fiscal year involved and the Secretary shall not 
                take into account such reduction in computing the 
                payment amount under this subsection for a subsequent 
                fiscal year.
                    ``(C) Submission of quality data.--For fiscal year 
                2014 and each subsequent fiscal year, each hospice 
                program shall submit to the Secretary data on quality 
                measures specified under subparagraph (D). Such data 
                shall be submitted in a form and manner, and at a time, 
                specified by the Secretary for purposes of this 
                subparagraph.
                    ``(D) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under this 
                      subparagraph must have been endorsed by the entity 
                      with a contract under section 1890(a).
                          ``(ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                          ``(iii) Time frame. <<NOTE: Publication.>> --
                      Not later than October 1, 2012, the Secretary 
                      shall publish the measures selected under this 
                      subparagraph that will be applicable with respect 
                      to fiscal year 2014.
                    ``(E) Public availability of data submitted.-- 
                <<NOTE: Procedures.>> The Secretary shall establish 
                procedures for making data submitted under subparagraph 
                (C) available to the public. 
                Such <<NOTE: Review.>> procedures shall ensure that a 
                hospice program has the opportunity to review the data 
                that is to be made public with respect to the hospice 
                program prior to such data being made 
                public. <<NOTE: Web posting.>>  The Secretary shall 
                report quality measures that relate to hospice care 
                provided by hospice programs on the Internet website of 
                the Centers for Medicare & Medicaid Services.''.

SEC. 3005. QUALITY REPORTING FOR PPS-EXEMPT CANCER HOSPITALS.

    Section 1866 of the Social Security Act (42 U.S.C. 1395cc) is 
amended--
            (1) in subsection (a)(1)--
                    (A) in subparagraph (U), by striking ``and'' at the 
                end;
                    (B) in subparagraph (V), by striking the period at 
                the end and inserting ``, and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(W) in the case of a hospital described in section 
                1886(d)(1)(B)(v), to report quality data to the 
                Secretary in accordance with subsection (k).''; and
            (2) by adding at the end the following new subsection:

    ``(k) Quality Reporting by Cancer Hospitals.--
            ``(1) In general.--For purposes of fiscal year 2014 and each 
        subsequent fiscal year, a hospital described in section 
        1886(d)(1)(B)(v) shall submit data to the Secretary in 
        accordance with paragraph (2) with respect to such a fiscal 
        year.
            ``(2) Submission of quality data.--For fiscal year 2014 and 
        each subsequent fiscal year, each hospital described in such 
        section shall submit to the Secretary data on quality measures 
        specified under paragraph (3). Such data shall be submitted in a 
        form and manner, and at a time, specified by the Secretary for 
        purposes of this subparagraph.
            ``(3) Quality measures.--
                    ``(A) In general.--Subject to subparagraph (B), any 
                measure specified by the Secretary under this paragraph 
                must have been endorsed by the entity with a contract 
                under section 1890(a).
                    ``(B) Exception.--In the case of a specified area or 
                medical topic determined appropriate by the Secretary 
                for which a feasible and practical measure has not been
                endorsed by the entity with a contract under section 
                1890(a), the Secretary may specify a measure that is not 
                so endorsed as long as due consideration is given to 
                measures that have been endorsed or adopted by a 
                consensus organization identified by the Secretary.
                    ``(C) Time frame. <<NOTE: Publication.>> --Not later 
                than October 1, 2012, the Secretary shall publish the 
                measures selected under this paragraph that will be 
                applicable with respect to fiscal year 2014.
            ``(4) Public availability of data 
        submitted. <<NOTE: Procedures.>> --The Secretary shall establish 
        procedures for making data submitted under paragraph (4) 
        available to the public. <<NOTE: Review.>> Such procedures shall 
        ensure that a hospital described in section 1886(d)(1)(B)(v) has 
        the opportunity to review the data that is to be made public 
        with respect to the hospital prior to such data being made 
        public. <<NOTE: Web posting.>>  The Secretary shall report 
        quality measures of process, structure, outcome, patients' 
        perspective on care, efficiency, and costs of care that relate 
        to services furnished in such hospitals on the Internet website 
        of the Centers for Medicare & Medicaid Services.''.

SEC. 3006. PLANS FOR A VALUE-BASED PURCHASING PROGRAM FOR SKILLED 
            NURSING FACILITIES AND HOME HEALTH AGENCIES.

    (a) Skilled Nursing Facilities.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall develop 
        a plan to implement a value-based purchasing program for 
        payments under the Medicare program under title XVIII of the 
        Social Security Act for skilled nursing facilities (as defined 
        in section 1819(a) of such Act (42 U.S.C. 1395i-3(a))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by section 
                3014), to the extent feasible and practicable, of all 
                dimensions of quality and efficiency in skilled nursing 
                facilities.
                          (i) In general.--Subject to clause (ii), any 
                      measure specified by the Secretary under 
                      subparagraph (A)(iii) must have been endorsed by 
                      the entity with a contract under section 1890(a).
                          (ii) Exception.--In the case of a specified 
                      area or medical topic determined appropriate by 
                      the Secretary for which a feasible and practical 
                      measure has not been endorsed by the entity with a 
                      contract under section 1890(a), the Secretary may 
                      specify a measure that is not so endorsed as long 
                      as due consideration is given to measures that 
                      have been endorsed or adopted by a consensus 
                      organization identified by the Secretary.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment,
                the size of such payments, and the sources of funding 
                for the value-based bonus payments.
                    (D) Methods for the public disclosure of information 
                on the performance of skilled nursing facilities.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the value-
                based purchasing program described in paragraph (1).
            (4) Report to congress.--Not later than October 1, 2011, the 
        Secretary shall submit to Congress a report containing the plan 
        developed under paragraph (1).

    (b) Home Health Agencies.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall develop 
        a plan to implement a value-based purchasing program for 
        payments under the Medicare program under title XVIII of the 
        Social Security Act for home health agencies (as defined in 
        section 1861(o) of such Act (42 U.S.C. 1395x(o))).
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall consider the following issues:
                    (A) The ongoing development, selection, and 
                modification process for measures (including under 
                section 1890 of the Social Security Act (42 U.S.C. 
                1395aaa) and section 1890A such Act, as added by section 
                3014), to the extent feasible and practicable, of all 
                dimensions of quality and efficiency in home health 
                agencies.
                    (B) The reporting, collection, and validation of 
                quality data.
                    (C) The structure of value-based payment 
                adjustments, including the determination of thresholds 
                or improvements in quality that would substantiate a 
                payment adjustment, the size of such payments, and the 
                sources of funding for the value-based bonus payments.
                    (D) Methods for the public disclosure of information 
                on the performance of home health agencies.
                    (E) Any other issues determined appropriate by the 
                Secretary.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall--
                    (A) consult with relevant affected parties; and
                    (B) consider experience with such demonstrations 
                that the Secretary determines are relevant to the value-
                based purchasing program described in paragraph (1).
            (4) Report to congress.--Not later than October 1, 2011, the 
        Secretary shall submit to Congress a report containing the plan 
        developed under paragraph (1).

SEC. 3007. VALUE-BASED PAYMENT MODIFIER UNDER THE PHYSICIAN FEE 
            SCHEDULE.

    Section 1848 of the Social Security Act (42 U.S.C. 1395w-4) is 
amended--
            (1) in subsection (b)(1), by inserting ``subject to 
        subsection (p),'' after ``1998,''; and
            (2) by adding at the end the following new subsection:

    ``(p) Establishment of Value-based Payment Modifier.--
            ``(1) In general.--The Secretary shall establish a payment 
        modifier that provides for differential payment to a physician 
        or a group of physicians under the fee schedule established 
        under subsection (b) based upon the quality of care furnished 
        compared to cost (as determined under paragraphs (2) and (3), 
        respectively) during a performance period. Such payment modifier 
        shall be separate from the geographic adjustment factors 
        established under subsection (e).
            ``(2) Quality.--
                    ``(A) In general.--For purposes of paragraph (1), 
                quality of care shall be evaluated, to the extent 
                practicable, based on a composite of measures of the 
                quality of care furnished (as established by the 
                Secretary under subparagraph (B)).
                    ``(B) Measures.--
                          ``(i) The Secretary shall establish 
                      appropriate measures of the quality of care 
                      furnished by a physician or group of physicians to 
                      individuals enrolled under this part, such as 
                      measures that reflect health outcomes. Such 
                      measures shall be risk adjusted as determined 
                      appropriate by the Secretary.
                          ``(ii) The Secretary shall seek endorsement of 
                      the measures established under this subparagraph 
                      by the entity with a contract under section 
                      1890(a).
            ``(3) Costs.--For purposes of paragraph (1), costs shall be 
        evaluated, to the extent practicable, based on a composite of 
        appropriate measures of costs established by the Secretary (such 
        as the composite measure under the methodology established under 
        subsection (n)(9)(C)(iii)) that eliminate the effect of 
        geographic adjustments in payment rates (as described in 
        subsection (e)), and take into account risk factors (such as 
        socioeconomic and demographic characteristics, ethnicity, and 
        health status of individuals (such as to recognize that less 
        healthy individuals may require more intensive interventions) 
        and other factors determined appropriate by the Secretary.
            ``(4) Implementation.--
                    ``(A) Publication of measures, dates of 
                implementation, performance period.-- 
                <<NOTE: Deadline.>> Not later than January 1, 2012, the 
                Secretary shall publish the following:
                          ``(i) The measures of quality of care and 
                      costs established under paragraphs (2) and (3), 
                      respectively.
                          ``(ii) The dates for implementation of the 
                      payment modifier (as determined under subparagraph 
                      (B)).
                          ``(iii) The initial performance period (as 
                      specified under subparagraph (B)(ii)).
                    ``(B) Deadlines for implementation.--
                          ``(i) Initial implementation.--Subject to the 
                      preceding provisions of this subparagraph, the 
                      Secretary shall begin implementing the payment 
                      modifier established under this subsection through 
                      the rulemaking process during 2013 for the 
                      physician fee schedule established under 
                      subsection (b).
                          ``(ii) Initial performance period.--
                                    ``(I) In general.--The Secretary 
                                shall specify an initial performance 
                                period for application of
                                the payment modifier established under 
                                this subsection with respect to 2015.
                                    ``(II) Provision of information 
                                during initial performance period.--
                                During the initial performance period, 
                                the Secretary shall, to the extent 
                                practicable, provide information to 
                                physicians and groups of physicians 
                                about the quality of care furnished by 
                                the physician or group of physicians to 
                                individuals enrolled under this part 
                                compared to cost (as determined under 
                                paragraphs (2) and (3), respectively) 
                                with respect to the performance period.
                          ``(iii) Application.--The Secretary shall 
                      apply the payment modifier established under this 
                      subsection for items and services furnished--
                                    ``(I) <<NOTE: Effective date.>>  
                                beginning on January 1, 2015, with 
                                respect to specific physicians and 
                                groups of physicians the Secretary 
                                determines appropriate; and
                                    ``(II) <<NOTE: Deadline.>>  
                                beginning not later than January 1, 
                                2017, with respect to all physicians and 
                                groups of physicians.
                    ``(C) Budget neutrality.--The payment modifier 
                established under this subsection shall be implemented 
                in a budget neutral manner.
            ``(5) Systems-based care.-- <<NOTE: Applicability.>> The 
        Secretary shall, as appropriate, apply the payment modifier 
        established under this subsection in a manner that promotes 
        systems-based care.
            ``(6) Consideration of special circumstances of certain 
        providers.--In applying the payment modifier under this 
        subsection, the Secretary shall, as appropriate, take into 
        account the special circumstances of physicians or groups of 
        physicians in rural areas and other underserved communities.
            ``(7) Application.-- <<NOTE: Time period.>> For purposes of 
        the initial application of the payment modifier established 
        under this subsection during the period beginning on January 1, 
        2015, and ending on December 31, 2016, the term `physician' has 
        the meaning given such term in section 
        1861(r). <<NOTE: Effective date. Determination.>> On or after 
        January 1, 2017, the Secretary may apply this subsection to 
        eligible professionals (as defined in subsection (k)(3)(B)) as 
        the Secretary determines appropriate.
            ``(8) Definitions.--For purposes of this subsection:
                    ``(A) Costs.--The term `costs' means expenditures 
                per individual as determined appropriate by the 
                Secretary. In making the determination under the 
                preceding sentence, the Secretary may take into account 
                the amount of growth in expenditures per individual for 
                a physician compared to the amount of such growth for 
                other physicians.
                    ``(B) Performance period.--The term `performance 
                period' means a period specified by the Secretary.
            ``(9) Coordination with other value-based purchasing 
        reforms.-- <<NOTE: Determination.>> The Secretary shall 
        coordinate the value-based payment modifier established under 
        this subsection with the Physician Feedback Program under 
        subsection (n) and, as the Secretary determines appropriate, 
        other similar provisions of this title.

[[Page 124 STAT. 376]]

            ``(10) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                    ``(A) the establishment of the value-based payment 
                modifier under this subsection;
                    ``(B) the evaluation of quality of care under 
                paragraph (2), including the establishment of 
                appropriate measures of the quality of care under 
                paragraph (2)(B);
                    ``(C) the evaluation of costs under paragraph (3), 
                including the establishment of appropriate measures of 
                costs under such paragraph;
                    ``(D) the dates for implementation of the value-
                based payment modifier;
                    ``(E) the specification of the initial performance 
                period and any other performance period under paragraphs 
                (4)(B)(ii) and (8)(B), respectively;
                    ``(F) the application of the value-based payment 
                modifier under paragraph (7); and
                    ``(G) the determination of costs under paragraph 
                (8)(A).''.

SEC. 3008. PAYMENT ADJUSTMENT FOR CONDITIONS ACQUIRED IN HOSPITALS.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by section 3001, is amended by adding at the end the 
following new subsection:
    ``(p) Adjustment to Hospital Payments for Hospital Acquired 
Conditions.--
            ``(1) In general.--In order to provide an incentive for 
        applicable hospitals to reduce hospital acquired conditions 
        under this title, with respect to discharges from an applicable 
        hospital occurring during fiscal year 2015 or a subsequent 
        fiscal year, the amount of payment under this section or section 
        1814(b)(3), as applicable, for such discharges during the fiscal 
        year shall be equal to 99 percent of the amount of payment that 
        would otherwise apply to such discharges under this section or 
        section 1814(b)(3) (determined after the application of 
        subsections (o) and (q) and section 1814(l)(4) but without 
        regard to this subsection).
            ``(2) Applicable hospitals.--
                    ``(A) <<NOTE: Definition.>> In general.--For 
                purposes of this subsection, the term `applicable 
                hospital' means a subsection (d) hospital that meets the 
                criteria described in subparagraph (B).
                    ``(B) Criteria described.--
                          ``(i) <<NOTE: Determined.>> In general.--The 
                      criteria described in this subparagraph, with 
                      respect to a subsection (d) hospital, is that the 
                      subsection (d) hospital is in the top quartile of 
                      all subsection (d) hospitals, relative to the 
                      national average, of hospital acquired conditions 
                      during the applicable period, as determined by the 
                      Secretary.
                          ``(ii) Risk adjustment.--In carrying out 
                      clause (i), the Secretary shall establish and 
                      apply an appropriate risk adjustment methodology.
                    ``(C) Exemption. <<NOTE: Deadline. Reports.>> --In 
                the case of a hospital that is paid under section 
                1814(b)(3), the Secretary may exempt such hospital from 
                the application of this subsection if the State which is 
                paid under such section submits an
                annual report to the Secretary describing how a similar 
                program in the State for a participating hospital or 
                hospitals achieves or surpasses the measured results in 
                terms of patient health outcomes and cost savings 
                established under this subsection.
            ``(3) <<NOTE: Definition.>>  Hospital acquired conditions.--
        For purposes of this subsection, the term `hospital acquired 
        condition' means a condition identified for purposes of 
        subsection (d)(4)(D)(iv) and any other condition determined 
        appropriate by the Secretary that an individual acquires during 
        a stay in an applicable hospital, as determined by the 
        Secretary.
            ``(4) Applicable period.--In this subsection, the term 
        `applicable period' means, with respect to a fiscal year, a 
        period specified by the Secretary.
            ``(5) Reporting to hospitals.--Prior to fiscal year 2015 and 
        each subsequent fiscal year, the Secretary shall provide 
        confidential reports to applicable hospitals with respect to 
        hospital acquired conditions of the applicable hospital during 
        the applicable period.
            ``(6) Reporting hospital specific information.--
                    ``(A) In general. <<NOTE: Public information.>> --
                The Secretary shall make information available to the 
                public regarding hospital acquired conditions of each 
                applicable hospital.
                    ``(B) Opportunity to review and submit 
                corrections.--The Secretary shall ensure that an 
                applicable hospital has the opportunity to review, and 
                submit corrections for, the information to be made 
                public with respect to the hospital under subparagraph 
                (A) prior to such information being made public.
                    ``(C) Website.--Such information shall be posted on 
                the Hospital Compare Internet website in an easily 
                understandable format.
            ``(7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the following:
                    ``(A) The criteria described in paragraph (2)(A).
                    ``(B) The specification of hospital acquired 
                conditions under paragraph (3).
                    ``(C) The specification of the applicable period 
                under paragraph (4).
                    ``(D) The provision of reports to applicable 
                hospitals under paragraph (5) and the information made 
                available to the public under paragraph (6).''.

    (b) Study and Report on Expansion of Healthcare Acquired Conditions 
Policy to Other Providers.--
            (1) Study.--The Secretary of Health and Human Services shall 
        conduct a study on expanding the healthcare acquired conditions 
        policy under subsection (d)(4)(D) of section 1886 of the Social 
        Security Act (42 U.S.C. 1395ww) to payments made to other 
        facilities under the Medicare program under title XVIII of the 
        Social Security Act, including such payments made to inpatient 
        rehabilitation facilities, long-term care hospitals (as 
        described in subsection(d)(1)(B)(iv) of such section), hospital 
        outpatient departments, and other hospitals excluded from the 
        inpatient prospective payment system under such section, skilled 
        nursing facilities, ambulatory surgical centers, and health 
        clinics. Such study shall include an analysis of
        how such policies could impact quality of patient care, patient 
        safety, and spending under the Medicare program.
            (2) Report.--Not later than January 1, 2012, the Secretary 
        shall submit to Congress a report containing the results of the 
        study conducted under paragraph (1), together with 
        recommendations for such legislation and administrative action 
        as the Secretary determines appropriate.

        PART II--NATIONAL STRATEGY TO IMPROVE HEALTH CARE QUALITY

SEC. 3011. NATIONAL STRATEGY.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.) 
is amended by adding at the end the following:

                 ``PART S--HEALTH CARE QUALITY PROGRAMS

  ``Subpart I--National Strategy for Quality Improvement in Health Care

``SEC. 399HH. <<NOTE: 42 USC 280j.>> NATIONAL STRATEGY FOR QUALITY 
            IMPROVEMENT IN HEALTH CARE.

    ``(a) Establishment of National Strategy and Priorities.--
            ``(1) National strategy.--The Secretary, through a 
        transparent collaborative process, shall establish a national 
        strategy to improve the delivery of health care services, 
        patient health outcomes, and population health.
            ``(2) Identification of priorities.--
                    ``(A) In general.--The Secretary shall identify 
                national priorities for improvement in developing the 
                strategy under paragraph (1).
                    ``(B) Requirements.--The Secretary shall ensure that 
                priorities identified under subparagraph (A) will--
                          ``(i) have the greatest potential for 
                      improving the health outcomes, efficiency, and 
                      patient-centeredness of health care for all 
                      populations, including children and vulnerable 
                      populations;
                          ``(ii) identify areas in the delivery of 
                      health care services that have the potential for 
                      rapid improvement in the quality and efficiency of 
                      patient care;
                          ``(iii) address gaps in quality, efficiency, 
                      comparative effectiveness information, and health 
                      outcomes measures and data aggregation techniques;
                          ``(iv) improve Federal payment policy to 
                      emphasize quality and efficiency;
                          ``(v) enhance the use of health care data to 
                      improve quality, efficiency, transparency, and 
                      outcomes;
                          ``(vi) address the health care provided to 
                      patients with high-cost chronic diseases;
                          ``(vii) improve research and dissemination of 
                      strategies and best practices to improve patient 
                      safety and reduce medical errors, preventable 
                      admissions and readmissions, and health care-
                      associated infections;
                          ``(viii) reduce health disparities across 
                      health disparity populations (as defined in 
                      section 485E) and geographic areas; and
                          ``(ix) address other areas as determined 
                      appropriate by the Secretary.
                    ``(C) Considerations.--In identifying priorities 
                under subparagraph (A), the Secretary shall take into 
                consideration the recommendations submitted by the 
                entity with a contract under section 1890(a) of the 
                Social Security Act and other stakeholders.
                    ``(D) Coordination with state agencies.--The 
                Secretary shall collaborate, coordinate, and consult 
                with State agencies responsible for administering the 
                Medicaid program under title XIX of the Social Security 
                Act and the Children's Health Insurance Program under 
                title XXI of such Act with respect to developing and 
                disseminating strategies, goals, models, and timetables 
                that are consistent with the national priorities 
                identified under subparagraph (A).

    ``(b) Strategic Plan.--
            ``(1) In general.--The national strategy shall include a 
        comprehensive strategic plan to achieve the priorities described 
        in subsection (a).
            ``(2) Requirements.--The strategic plan shall include 
        provisions for addressing, at a minimum, the following:
                    ``(A) Coordination among agencies within the 
                Department, which shall include steps to minimize 
                duplication of efforts and utilization of common quality 
                measures, where available. Such common quality measures 
                shall be measures identified by the Secretary under 
                section 1139A or 1139B of the Social Security Act or 
                endorsed under section 1890 of such Act.
                    ``(B) Agency-specific strategic plans to achieve 
                national priorities.
                    ``(C) Establishment of annual benchmarks for each 
                relevant agency to achieve national priorities.
                    ``(D) A process for regular reporting by the 
                agencies to the Secretary on the implementation of the 
                strategic plan.
                    ``(E) Strategies to align public and private payers 
                with regard to quality and patient safety efforts.
                    ``(F) Incorporating quality improvement and 
                measurement in the strategic plan for health information 
                technology required by the American Recovery and 
                Reinvestment Act of 2009 (Public Law 111-5).

    ``(c) Periodic Update of National Strategy.--The Secretary shall 
update the national strategy not less than annually. Any such update 
shall include a review of short- and long-term goals.
    ``(d) Submission and Availability of National Strategy and 
Updates.--
            ``(1) Deadline for initial submission of national 
        strategy.--Not later than January 1, 2011, the Secretary shall 
        submit to the relevant committees of Congress the national 
        strategy described in subsection (a).
            ``(2) Updates.--
                    ``(A) In general.--The Secretary shall submit to the 
                relevant committees of Congress an annual update to the 
                strategy described in paragraph (1).
                    ``(B) Information submitted.--Each update submitted 
                under subparagraph (A) shall include--
                          ``(i) a review of the short- and long-term 
                      goals of the national strategy and any gaps in 
                      such strategy;
                          ``(ii) an analysis of the progress, or lack of 
                      progress, in meeting such goals and any barriers 
                      to such progress;
                          ``(iii) the information reported under section 
                      1139A of the Social Security Act, consistent with 
                      the reporting requirements of such section; and
                          ``(iv) in the case of an update required to be 
                      submitted on or after January 1, 2014, the 
                      information reported under section 1139B(b)(4) of 
                      the Social Security Act, consistent with the 
                      reporting requirements of such section.
                    ``(C) Satisfaction of other reporting 
                requirements.--Compliance with the requirements of 
                clauses (iii) and (iv) of subparagraph (B) shall satisfy 
                the reporting requirements under sections 1139A(a)(6) 
                and 1139B(b)(4), respectively, of the Social Security 
                Act.

    ``(e) Health Care Quality Internet Website.-- 
<<NOTE: Deadline. Public information.>> Not later than January 1, 2011, 
the Secretary shall create an Internet website to make public 
information regarding--
            ``(1) the national priorities for health care quality 
        improvement established under subsection (a)(2);
            ``(2) the agency-specific strategic plans for health care 
        quality described in subsection (b)(2)(B); and
            ``(3) other information, as the Secretary determines to be 
        appropriate.''.

SEC. 3012. <<NOTE: 42 USC 280j note.>> INTERAGENCY WORKING GROUP ON 
            HEALTH CARE QUALITY.

    (a) <<NOTE: President. Establishment.>> In General.--The President 
shall convene a working group to be known as the Interagency Working 
Group on Health Care Quality (referred to in this section as the 
``Working Group'').

    (b) Goals.--The goals of the Working Group shall be to achieve the 
following:
            (1) Collaboration, cooperation, and consultation between 
        Federal departments and agencies with respect to developing and 
        disseminating strategies, goals, models, and timetables that are 
        consistent with the national priorities identified under section 
        399HH(a)(2) of the Public Health Service Act (as added by 
        section 3011).
            (2) Avoidance of inefficient duplication of quality 
        improvement efforts and resources, where practicable, and a 
        streamlined process for quality reporting and compliance 
        requirements.
            (3) Assess alignment of quality efforts in the public sector 
        with private sector initiatives.

    (c) Composition.--
            (1) In general.--The Working Group shall be composed of 
        senior level representatives of--
                    (A) the Department of Health and Human Services;
                    (B) the Centers for Medicare & Medicaid Services;
                    (C) the National Institutes of Health;
                    (D) the Centers for Disease Control and Prevention;
                    (E) the Food and Drug Administration;
                    (F) the Health Resources and Services 
                Administration;
                    (G) the Agency for Healthcare Research and Quality;
                    (H) the Office of the National Coordinator for 
                Health Information Technology;
                    (I) the Substance Abuse and Mental Health Services 
                Administration;
                    (J) the Administration for Children and Families;
                    (K) the Department of Commerce;
                    (L) the Office of Management and Budget;
                    (M) the United States Coast Guard;
                    (N) the Federal Bureau of Prisons;
                    (O) the National Highway Traffic Safety 
                Administration;
                    (P) the Federal Trade Commission;
                    (Q) the Social Security Administration;
                    (R) the Department of Labor;
                    (S) the United States Office of Personnel 
                Management;
                    (T) the Department of Defense;
                    (U) the Department of Education;
                    (V) the Department of Veterans Affairs;
                    (W) the Veterans Health Administration; and
                    (X) any other Federal agencies and departments with 
                activities relating to improving health care quality and 
                safety, as determined by the President.
            (2) Chair and vice-chair.--
                    (A) Chair.--The Working Group shall be chaired by 
                the Secretary of Health and Human Services.
                    (B) Vice chair.--Members of the Working Group, other 
                than the Secretary of Health and Human Services, shall 
                serve as Vice Chair of the Group on a rotating basis, as 
                determined by the Group.

    (d) Report to Congress.-- <<NOTE: Public information. Web 
posting.>> Not later than December 31, 2010, and annually thereafter, 
the Working Group shall submit to the relevant Committees of Congress, 
and make public on an Internet website, a report describing the progress 
and recommendations of the Working Group in meeting the goals described 
in subsection (b).

SEC. 3013. QUALITY MEASURE DEVELOPMENT.

    (a) Public Health Service Act.--Title IX of the Public Health 
Service Act (42 U.S.C. 299 et seq.) is amended--
            (1) by redesignating part D as part E;
            (2) <<NOTE: 42 USC 299c--299c-7.>> by redesignating sections 
        931 through 938 as sections 941 through 948, respectively;
            (3) in section 948(1), as so redesignated, by striking 
        ``931'' and inserting ``941''; and
            (4) by inserting after section 926 the following:

                ``PART D--HEALTH CARE QUALITY IMPROVEMENT

                ``Subpart I--Quality Measure Development

``SEC. 931. <<NOTE: 42 USC 299b-31.>>  QUALITY MEASURE DEVELOPMENT.

    ``(a) Quality Measure.-- <<NOTE: Definition.>> In this subpart, the 
term `quality measure' means a standard for measuring the performance 
and improvement of population health or of health plans, providers of 
services, and other clinicians in the delivery of health care services.
    ``(b) Identification of Quality Measures.--
            ``(1) <<NOTE: Consultation.>> Identification.--The 
        Secretary, in consultation with the Director of the Agency for 
        Healthcare Research and Quality and the Administrator of the 
        Centers for Medicare & Medicaid Services, shall identify, not 
        less often than triennially, gaps where no quality measures 
        exist and existing quality measures that need improvement, 
        updating, or expansion, consistent with the national strategy 
        under section 399HH, to the extent available, for use in Federal 
        health programs. In identifying such gaps and existing quality 
        measures that need improvement, the Secretary shall take into 
        consideration--
                    ``(A) the gaps identified by the entity with a 
                contract under section 1890(a) of the Social Security 
                Act and other stakeholders;
                    ``(B) quality measures identified by the pediatric 
                quality measures program under section 1139A of the 
                Social Security Act; and
                    ``(C) quality measures identified through the 
                Medicaid Quality Measurement Program under section 1139B 
                of the Social Security Act.
            ``(2) Publication.-- <<NOTE: Public information. Web 
        posting. Reports.>> The Secretary shall make available to the 
        public on an Internet website a report on any gaps identified 
        under paragraph (1) and the process used to make such 
        identification.

    ``(c) Grants or Contracts for Quality Measure Development.--
            ``(1) In general.--The Secretary shall award grants, 
        contracts, or intergovernmental agreements to eligible entities 
        for purposes of developing, improving, updating, or expanding 
        quality measures identified under subsection (b).
            ``(2) Prioritization in the development of quality 
        measures.--In awarding grants, contracts, or agreements under 
        this subsection, the Secretary shall give priority to the 
        development of quality measures that allow the assessment of--
                    ``(A) health outcomes and functional status of 
                patients;
                    ``(B) the management and coordination of health care 
                across episodes of care and care transitions for 
                patients across the continuum of providers, health care 
                settings, and health plans;
                    ``(C) the experience, quality, and use of 
                information provided to and used by patients, 
                caregivers, and authorized representatives to inform 
                decisionmaking about treatment options, including the 
                use of shared decisionmaking tools and preference 
                sensitive care (as defined in section 936);
                    ``(D) the meaningful use of health information 
                technology;
                    ``(E) the safety, effectiveness, patient-
                centeredness, appropriateness, and timeliness of care;
                    ``(F) the efficiency of care;
                    ``(G) the equity of health services and health 
                disparities across health disparity populations (as 
                defined in section 485E) and geographic areas;
                    ``(H) patient experience and satisfaction;
                    ``(I) the use of innovative strategies and 
                methodologies identified under section 933; and
                    ``(J) other areas determined appropriate by the 
                Secretary.
            ``(3) Eligible entities.--To be eligible for a grant or 
        contract under this subsection, an entity shall--
                    ``(A) have demonstrated expertise and capacity in 
                the development and evaluation of quality measures;
                    ``(B) have adopted procedures to include in the 
                quality measure development process--
                          ``(i) the views of those providers or payers 
                      whose performance will be assessed by the measure; 
                      and
                          ``(ii) the views of other parties who also 
                      will use the quality measures (such as patients, 
                      consumers, and health care purchasers);
                    ``(C) collaborate with the entity with a contract 
                under section 1890(a) of the Social Security Act and 
                other stakeholders, as practicable, and the Secretary so 
                that quality measures developed by the eligible entity 
                will meet the requirements to be considered for 
                endorsement by the entity with a contract under such 
                section 1890(a);
                    ``(D) have transparent policies regarding governance 
                and conflicts of interest; and
                    ``(E) submit an application to the Secretary at such 
                time and in such manner, as the Secretary may require.
            ``(4) <<NOTE: Requirements.>> Use of funds.--An entity that 
        receives a grant, contract, or agreement under this subsection 
        shall use such award to develop quality measures that meet the 
        following requirements:
                    ``(A) Such measures support measures required to be 
                reported under the Social Security Act, where 
                applicable, and in support of gaps and existing quality 
                measures that need improvement, as described in 
                subsection (b)(1)(A).
                    ``(B) Such measures support measures developed under 
                section 1139A of the Social Security Act and the 
                Medicaid Quality Measurement Program under section 1139B 
                of such Act, where applicable.
                    ``(C) To the extent practicable, data on such 
                quality measures is able to be collected using health 
                information technologies.
                    ``(D) Each quality measure is free of charge to 
                users of such measure.
                    ``(E) Each quality measure is publicly available on 
                an Internet website.

    ``(d) Other Activities by the Secretary.--The Secretary may use 
amounts available under this section to update and test, where 
applicable, quality measures endorsed by the entity with a contract 
under section 1890(a) of the Social Security Act or adopted by the 
Secretary.
    ``(e) Coordination of Grants.--The Secretary shall ensure that 
grants or contracts awarded under this section are coordinated with 
grants and contracts awarded under sections 1139A(5) and 1139B(4)(A) of 
the Social Security Act.''.
    (b) Social Security Act.--Section 1890A of the Social Security Act, 
as added by section 3014(b), is amended by adding at the end the 
following new subsection:
    ``(e) Development of Quality Measures.--The Administrator of the 
Center for Medicare & Medicaid Services shall through contracts develop 
quality measures (as determined appropriate by
the Administrator) for use under this Act. In developing such measures, 
the Administrator shall consult with the Director of the Agency for 
Healthcare Research and Quality.''.
    (c) Funding.--There are authorized to be appropriated to the 
Secretary of Health and Human Services to carry out this section, 
$75,000,000 for each of fiscal years 2010 through 2014. Of the amounts 
appropriated under the preceding sentence in a fiscal year, not less 
than 50 percent of such amounts shall be used pursuant to subsection (e) 
of section 1890A of the Social Security Act, as added by subsection (b), 
with respect to programs under such Act. Amounts appropriated under this 
subsection for a fiscal year shall remain available until expended.

SEC. 3014. QUALITY MEASUREMENT.

    (a) New Duties for Consensus-based Entity.--
            (1) Multi-stakeholder group input.--Section 1890(b) of the 
        Social Security Act (42 U.S.C. 1395aaa(b)), as amended by 
        section 3003, is amended by adding at the end the following new 
        paragraphs:
            ``(7) Convening multi-stakeholder groups.--
                    ``(A) In general.--The entity shall convene multi-
                stakeholder groups to provide input on--
                          ``(i) the selection of quality measures 
                      described in subparagraph (B), from among--
                                    ``(I) such measures that have been 
                                endorsed by the entity; and
                                    ``(II) such measures that have not 
                                been considered for endorsement by such 
                                entity but are used or proposed to be 
                                used by the Secretary for the collection 
                                or reporting of quality measures; and
                          ``(ii) national priorities (as identified 
                      under section 399HH of the Public Health Service 
                      Act) for improvement in population health and in 
                      the delivery of health care services for 
                      consideration under the national strategy 
                      established under section 399HH of the Public 
                      Health Service Act.
                    ``(B) Quality measures.--
                          ``(i) In general.--Subject to clause (ii), the 
                      quality measures described in this subparagraph 
                      are quality measures--
                                    ``(I) for use pursuant to sections 
                                1814(i)(5)(D), 1833(i)(7), 1833(t)(17), 
                                1848(k)(2)(C), 1866(k)(3), 
                                1881(h)(2)(A)(iii), 1886(b)(3)(B)(viii), 
                                1886(j)(7)(D), 1886(m)(5)(D), 
                                1886(o)(2), and 1895(b)(3)(B)(v);
                                    ``(II) for use in reporting 
                                performance information to the public; 
                                and
                                    ``(III) for use in health care 
                                programs other than for use under this 
                                Act.
                          ``(ii) Exclusion.--Data sets (such as the 
                      outcome and assessment information set for home 
                      health services and the minimum data set for 
                      skilled nursing facility services) that are used 
                      for purposes of classification systems used in 
                      establishing payment rates under this title shall 
                      not be quality measures described in this 
                      subparagraph.
                    ``(C) Requirement for transparency in process.--
                          ``(i) In general.--In convening multi-
                      stakeholder groups under subparagraph (A) with 
                      respect to the selection of quality measures, the 
                      entity shall provide for an open and transparent 
                      process for the activities conducted pursuant to 
                      such convening.
                          ``(ii) Selection of organizations 
                      participating in multi-stakeholder groups.--The 
                      process described in clause (i) shall ensure that 
                      the selection of representatives comprising such 
                      groups provides for public nominations for, and 
                      the opportunity for public comment on, such 
                      selection.
                    ``(D) Multi-stakeholder group defined.--In this 
                paragraph, the term `multi-stakeholder group' means, 
                with respect to a quality measure, a voluntary 
                collaborative of organizations representing a broad 
                group of stakeholders interested in or affected by the 
                use of such quality measure.
            ``(8) Transmission of multi-stakeholder input.-- 
        <<NOTE: Deadline.>> Not later than February 1 of each year 
        (beginning with 2012), the entity shall transmit to the 
        Secretary the input of multi-stakeholder groups provided under 
        paragraph (7).''.
            (2) Annual report.--Section 1890(b)(5)(A) of the Social 
        Security Act (42 U.S.C. 1395aaa(b)(5)(A)) is amended--
                    (A) in clause (ii), by striking ``and'' at the end;
                    (B) in clause (iii), by striking the period at the 
                end and inserting a semicolon; and
                    (C) by adding at the end the following new clauses:
                          ``(iv) gaps in endorsed quality measures, 
                      which shall include measures that are within 
                      priority areas identified by the Secretary under 
                      the national strategy established under section 
                      399HH of the Public Health Service Act, and where 
                      quality measures are unavailable or inadequate to 
                      identify or address such gaps;
                          ``(v) areas in which evidence is insufficient 
                      to support endorsement of quality measures in 
                      priority areas identified by the Secretary under 
                      the national strategy established under section 
                      399HH of the Public Health Service Act and where 
                      targeted research may address such gaps; and
                          ``(vi) the matters described in clauses (i) 
                      and (ii) of paragraph (7)(A).''.

    (b) Multi-stakeholder Group Input Into Selection of Quality 
Measures.--Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.) is amended by inserting after section 1890 the following:


                          ``quality measurement


    ``Sec. 1890A.  <<NOTE: Deadlines. 42 USC 1395aaa-1.>> (a) Multi-
stakeholder Group Input Into Selection of Quality Measures.-- 
<<NOTE: Regulations.>> The Secretary shall establish a pre-rulemaking 
process under which the following steps occur with respect to the 
selection of quality measures described in section 1890(b)(7)(B):
            ``(1) Input.--Pursuant to section 1890(b)(7), the entity 
        with a contract under section 1890 shall convene multi-
        stakeholder groups to provide input to the Secretary on the 
        selection of quality measures described in subparagraph (B) of 
        such paragraph.
            ``(2) Public availability of measures considered for 
        selection.--Not later than December 1 of each year (beginning 
        with 2011), the Secretary shall make available to the public a 
        list of quality measures described in section 1890(b)(7)(B) that 
        the Secretary is considering under this title.
            ``(3) Transmission of multi-stakeholder input.--Pursuant to 
        section 1890(b)(8), not later than February 1 of each year 
        (beginning with 2012), the entity shall transmit to the 
        Secretary the input of multi-stakeholder groups described in 
        paragraph (1).
            ``(4) Consideration of multi-stakeholder input.--The 
        Secretary shall take into consideration the input from multi-
        stakeholder groups described in paragraph (1) in selecting 
        quality measures described in section 1890(b)(7)(B) that have 
        been endorsed by the entity with a contract under section 1890 
        and measures that have not been endorsed by such entity.
            ``(5) Rationale for use of quality measures.-- 
        <<NOTE: Federal Register, publication.>> The Secretary shall 
        publish in the Federal Register the rationale for the use of any 
        quality measure described in section 1890(b)(7)(B) that has not 
        been endorsed by the entity with a contract under section 1890.
            ``(6) Assessment of impact.--Not later than March 1, 2012, 
        and at least once every three years thereafter, the Secretary 
        shall--
                    ``(A) conduct an assessment of the quality impact of 
                the use of endorsed measures described in section 
                1890(b)(7)(B); and
                    ``(B) <<NOTE: Public information.>> make such 
                assessment available to the public.

    ``(b) Process for Dissemination of Measures Used by the Secretary.--
            ``(1) In general.--The Secretary shall establish a process 
        for disseminating quality measures used by the Secretary. Such 
        process shall include the following:
                    ``(A) The incorporation of such measures, where 
                applicable, in workforce programs, training curricula, 
                and any other means of dissemination determined 
                appropriate by the Secretary.
                    ``(B) The dissemination of such quality measures 
                through the national strategy developed under section 
                399HH of the Public Health Service Act.
            ``(2) Existing methods.--To the extent practicable, the 
        Secretary shall utilize and expand existing dissemination 
        methods in disseminating quality measures under the process 
        established under paragraph (1).

    ``(c) Review of Quality Measures Used by the Secretary.--
            ``(1) In general.--The Secretary shall--
                    ``(A) periodically (but in no case less often than 
                once every 3 years) review quality measures described in 
                section 1890(b)(7)(B); and
                    ``(B) with respect to each such measure, determine 
                whether to--
                          ``(i) maintain the use of such measure; or
                          ``(ii) phase out such measure.
            ``(2) Considerations.--In conducting the review under 
        paragraph (1), the Secretary shall take steps to--
                    ``(A) seek to avoid duplication of measures used; 
                and
                    ``(B) take into consideration current innovative 
                methodologies and strategies for quality improvement 
                practices in the delivery of health care services that 
                represent best practices for such quality improvement 
                and measures endorsed by the entity with a contract 
                under section 1890 since the previous review by the 
                Secretary.

    ``(d) Rule of Construction.--Nothing in this section shall preclude 
a State from using the quality measures identified under sections 1139A 
and 1139B.''.
    (c) Funding.--For purposes of carrying out the amendments made by 
this section, 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 such proportion as the Secretary determines appropriate, of 
$20,000,000, to the Centers for Medicare & Medicaid Services Program 
Management Account for each of fiscal years 2010 through 2014. Amounts 
transferred under the preceding sentence shall remain available until 
expended.

SEC. 3015. DATA COLLECTION; PUBLIC REPORTING.

    Title III of the Public Health Service Act (42 U.S.C. 241 et seq.), 
as amended by section 3011, is further amended by adding at the end the 
following:

``SEC. 399II. <<NOTE: 42 USC 280j-1.>> COLLECTION AND ANALYSIS OF DATA 
            FOR QUALITY AND RESOURCE USE MEASURES.

    ``(a) In General.--The Secretary shall collect and aggregate 
consistent data on quality and resource use measures from information 
systems used to support health care delivery to implement the public 
reporting of performance information, as described in section 399JJ, and 
may award grants or contracts for this purpose. The Secretary shall 
ensure that such collection, aggregation, and analysis systems span an 
increasingly broad range of patient populations, providers, and 
geographic areas over time.
    ``(b) Grants or Contracts for Data Collection.--
            ``(1) In general.--The Secretary may award grants or 
        contracts to eligible entities to support new, or improve 
        existing, efforts to collect and aggregate quality and resource 
        use measures described under subsection (c).
            ``(2) Eligible entities.--To be eligible for a grant or 
        contract under this subsection, an entity shall--
                    ``(A) be--
                          ``(i) a multi-stakeholder entity that 
                      coordinates the development of methods and 
                      implementation plans for the consistent reporting 
                      of summary quality and cost information;
                          ``(ii) an entity capable of submitting such 
                      summary data for a particular population and 
                      providers, such as a disease registry, regional 
                      collaboration, health plan collaboration, or other 
                      population-wide source; or
                          ``(iii) a Federal Indian Health Service 
                      program or a health program operated by an Indian 
                      tribe (as defined in section 4 of the Indian 
                      Health Care Improvement Act);
                    ``(B) promote the use of the systems that provide 
                data to improve and coordinate patient care;
                    ``(C) support the provision of timely, consistent 
                quality and resource use information to health care 
                providers, and other groups and organizations as 
                appropriate, with an opportunity for providers to 
                correct inaccurate measures; and
                    ``(D) agree to report, as determined by the 
                Secretary, measures on quality and resource use to the 
                public in accordance with the public reporting process 
                established under section 399JJ.

    ``(c) Consistent Data Aggregation.-- <<NOTE: Standards.>> The 
Secretary may award grants or contracts under this section only to 
entities that enable summary data that can be integrated and compared 
across multiple sources. The Secretary shall provide standards for the 
protection of the security and privacy of patient data.

    ``(d) Matching Funds.--The Secretary may not award a grant or 
contract under this section to an entity unless the entity agrees that 
it will make available (directly or through contributions from other 
public or private entities) non-Federal contributions toward the 
activities to be carried out under the grant or contract in an amount 
equal to $1 for each $5 of Federal funds provided under the grant or 
contract. Such non-Federal matching funds may be provided directly or 
through donations from public or private entities and may be in cash or 
in-kind, fairly evaluated, including plant, equipment, or services.
    ``(e) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for fiscal years 2010 through 2014.

``SEC. 399JJ. <<NOTE: 42 USC 280j-2.>> PUBLIC REPORTING OF PERFORMANCE 
            INFORMATION.

    ``(a) Development of Performance Websites.-- <<NOTE: Web 
posting.>> The Secretary shall make available to the public, through 
standardized Internet websites, performance information summarizing data 
on quality measures. Such information shall be tailored to respond to 
the differing needs of hospitals and other institutional health care 
providers, physicians and other clinicians, patients, consumers, 
researchers, policymakers, States, and other stakeholders, as the 
Secretary may specify.

    ``(b) Information on Conditions.--The performance information made 
publicly available on an Internet website, as described in subsection 
(a), shall include information regarding clinical conditions to the 
extent such information is available, and the information shall, where 
appropriate, be provider-specific and sufficiently disaggregated and 
specific to meet the needs of patients with different clinical 
conditions.
    ``(c) Consultation.--
            ``(1) In general.--In carrying out this section, the 
        Secretary shall consult with the entity with a contract under 
        section 1890(a) of the Social Security Act, and other entities, 
        as appropriate, to determine the type of information that is 
        useful to stakeholders and the format that best facilitates use 
        of the reports and of performance reporting Internet websites.
            ``(2) Consultation with stakeholders.--The entity with a 
        contract under section 1890(a) of the Social Security Act shall 
        convene multi-stakeholder groups, as described in such section, 
        to review the design and format of each Internet website made 
        available under subsection (a) and shall transmit
        to the Secretary the views of such multi-stakeholder groups with 
        respect to each such design and format.

    ``(d) Coordination.--Where appropriate, the Secretary shall 
coordinate the manner in which data are presented through Internet 
websites described in subsection (a) and for public reporting of other 
quality measures by the Secretary, including such quality measures under 
title XVIII of the Social Security Act.
    ``(e) Authorization of Appropriations.--To carry out this section, 
there are authorized to be appropriated such sums as may be necessary 
for fiscal years 2010 through 2014.''.

      PART III--ENCOURAGING DEVELOPMENT OF NEW PATIENT CARE MODELS

SEC. 3021. ESTABLISHMENT OF CENTER FOR MEDICARE AND MEDICAID INNOVATION 
            WITHIN CMS.

    (a) In General.--Title XI of the Social Security Act is amended by 
inserting after section 1115 the following new section:


              ``center for medicare and medicaid innovation


    ``Sec. 1115A.  <<NOTE: 42 USC 1315a.>> (a) Center for Medicare and 
Medicaid Innovation Established.--
            ``(1) In general.--There is created within the Centers for 
        Medicare & Medicaid Services a Center for Medicare and Medicaid 
        Innovation (in this section referred to as the `CMI') to carry 
        out the duties described in this section. The purpose of the CMI 
        is to test innovative payment and service delivery models to 
        reduce program expenditures under the applicable titles while 
        preserving or enhancing the quality of care furnished to 
        individuals under such titles. In selecting such models, the 
        Secretary shall give preference to models that also improve the 
        coordination, quality, and efficiency of health care services 
        furnished to applicable individuals defined in paragraph (4)(A).
            ``(2) Deadline.--The Secretary shall ensure that the CMI is 
        carrying out the duties described in this section by not later 
        than January 1, 2011.
            ``(3) Consultation.--In carrying out the duties under this 
        section, the CMI shall consult representatives of relevant 
        Federal agencies, and clinical and analytical experts with 
        expertise in medicine and health care management. The CMI shall 
        use open door forums or other mechanisms to seek input from 
        interested parties.
            ``(4) Definitions.--In this section:
                    ``(A) Applicable individual.--The term `applicable 
                individual' means--
                          ``(i) an individual who is entitled to, or 
                      enrolled for, benefits under part A of title XVIII 
                      or enrolled for benefits under part B of such 
                      title;
                          ``(ii) an individual who is eligible for 
                      medical assistance under title XIX, under a State 
                      plan or waiver; or
                          ``(iii) an individual who meets the criteria 
                      of both clauses (i) and (ii).
                    ``(B) Applicable title.--The term `applicable title' 
                means title XVIII, title XIX, or both.
    ``(b) Testing of Models (Phase I).--
            ``(1) In general.--The CMI shall test payment and service 
        delivery models in accordance with selection criteria under 
        paragraph (2) to determine the effect of applying such models 
        under the applicable title (as defined in subsection (a)(4)(B)) 
        on program expenditures under such titles and the quality of 
        care received by individuals receiving benefits under such 
        title.
            ``(2) Selection of models to be tested.--
                    ``(A) <<NOTE: Determination.>> In general.--The 
                Secretary shall select models to be tested from models 
                where the Secretary determines that there is evidence 
                that the model addresses a defined population for which 
                there are deficits in care leading to poor clinical 
                outcomes or potentially avoidable expenditures. The 
                models selected under the preceding sentence may include 
                the models described in subparagraph (B).
                    ``(B) Opportunities.--The models described in this 
                subparagraph are the following models:
                          ``(i) Promoting broad payment and practice 
                      reform in primary care, including patient-centered 
                      medical home models for high-need applicable 
                      individuals, medical homes that address women's 
                      unique health care needs, and models that 
                      transition primary care practices away from fee-
                      for-service based reimbursement and toward 
                      comprehensive payment or salary-based payment.
                          ``(ii) Contracting directly with groups of 
                      providers of services and suppliers to promote 
                      innovative care delivery models, such as through 
                      risk-based comprehensive payment or salary-based 
                      payment.
                          ``(iii) Utilizing geriatric assessments and 
                      comprehensive care plans to coordinate the care 
                      (including through interdisciplinary teams) of 
                      applicable individuals with multiple chronic 
                      conditions and at least one of the following:
                                    ``(I) An inability to perform 2 or 
                                more activities of daily living.
                                    ``(II) Cognitive impairment, 
                                including dementia.
                          ``(iv) Promote care coordination between 
                      providers of services and suppliers that 
                      transition health care providers away from fee-
                      for-service based reimbursement and toward salary-
                      based payment.
                          ``(v) Supporting care coordination for 
                      chronically-ill applicable individuals at high 
                      risk of hospitalization through a health 
                      information technology-enabled provider network 
                      that includes care coordinators, a chronic disease 
                      registry, and home tele-health technology.
                          ``(vi) Varying payment to physicians who order 
                      advanced diagnostic imaging services (as defined 
                      in section 1834(e)(1)(B)) according to the 
                      physician's adherence to appropriateness criteria 
                      for the ordering of such services, as determined 
                      in consultation with physician specialty groups 
                      and other relevant stakeholders.

[[Page 124 STAT. 391]]

                          ``(vii) Utilizing medication therapy 
                      management services, such as those described in 
                      section 935 of the Public Health Service Act.
                          ``(viii) Establishing community-based health 
                      teams to support small-practice medical homes by 
                      assisting the primary care practitioner in chronic 
                      care management, including patient self-
                      management, activities.
                          ``(ix) Assisting applicable individuals in 
                      making informed health care choices by paying 
                      providers of services and suppliers for using 
                      patient decision-support tools, including tools 
                      that meet the standards developed and identified 
                      under section 936(c)(2)(A) of the Public Health 
                      Service Act, that improve applicable individual 
                      and caregiver understanding of medical treatment 
                      options.
                          ``(x) Allowing States to test and evaluate 
                      fully integrating care for dual eligible 
                      individuals in the State, including the management 
                      and oversight of all funds under the applicable 
                      titles with respect to such individuals.
                          ``(xi) Allowing States to test and evaluate 
                      systems of all-payer payment reform for the 
                      medical care of residents of the State, including 
                      dual eligible individuals.
                          ``(xii) Aligning nationally recognized, 
                      evidence-based guidelines of cancer care with 
                      payment incentives under title XVIII in the areas 
                      of treatment planning and follow-up care planning 
                      for applicable individuals described in clause (i) 
                      or (iii) of subsection (a)(4)(A) with cancer, 
                      including the identification of gaps in applicable 
                      quality measures.
                          ``(xiii) Improving post-acute care through 
                      continuing care hospitals that offer inpatient 
                      rehabilitation, long-term care hospitals, and home 
                      health or skilled nursing care during an inpatient 
                      stay and the 30 days immediately following 
                      discharge.
                          ``(xiv) Funding home health providers who 
                      offer chronic care management services to 
                      applicable individuals in cooperation with 
                      interdisciplinary teams.
                          ``(xv) Promoting improved quality and reduced 
                      cost by developing a collaborative of high-
                      quality, low-cost health care institutions that is 
                      responsible for--
                                    ``(I) developing, documenting, and 
                                disseminating best practices and proven 
                                care methods;
                                    ``(II) implementing such best 
                                practices and proven care methods within 
                                such institutions to demonstrate further 
                                improvements in quality and efficiency; 
                                and
                                    ``(III) providing assistance to 
                                other health care institutions on how 
                                best to employ such best practices and 
                                proven care methods to improve health 
                                care quality and lower costs.
                          ``(xvi) Facilitate inpatient care, including 
                      intensive care, of hospitalized applicable 
                      individuals at their local hospital through the 
                      use of electronic monitoring by specialists, 
                      including intensivists and critical care 
                      specialists, based at integrated health systems.
                          ``(xvii) Promoting greater efficiencies and 
                      timely access to outpatient services (such as 
                      outpatient physical therapy services) through 
                      models that do not require a physician or other 
                      health professional to refer the service or be 
                      involved in establishing the plan of care for the 
                      service, when such service is furnished by a 
                      health professional who has the authority to 
                      furnish the service under existing State law.
                          ``(xviii) Establishing comprehensive payments 
                      to Healthcare Innovation Zones, consisting of 
                      groups of providers that include a teaching 
                      hospital, physicians, and other clinical entities, 
                      that, through their structure, operations, and 
                      joint-activity deliver a full spectrum of 
                      integrated and comprehensive health care services 
                      to applicable individuals while also incorporating 
                      innovative methods for the clinical training of 
                      future health care professionals.
                    ``(C) Additional factors for consideration.--In 
                selecting models for testing under subparagraph (A), the 
                CMI may consider the following additional factors:
                          ``(i) Whether the model includes a regular 
                      process for monitoring and updating patient care 
                      plans in a manner that is consistent with the 
                      needs and preferences of applicable individuals.
                          ``(ii) Whether the model places the applicable 
                      individual, including family members and other 
                      informal caregivers of the applicable individual, 
                      at the center of the care team of the applicable 
                      individual.
                          ``(iii) Whether the model provides for in-
                      person contact with applicable individuals.
                          ``(iv) Whether the model utilizes technology, 
                      such as electronic health records and patient-
                      based remote monitoring systems, to coordinate 
                      care over time and across settings.
                          ``(v) Whether the model provides for the 
                      maintenance of a close relationship between care 
                      coordinators, primary care practitioners, 
                      specialist physicians, community-based 
                      organizations, and other providers of services and 
                      suppliers.
                          ``(vi) Whether the model relies on a team-
                      based approach to interventions, such as 
                      comprehensive care assessments, care planning, and 
                      self-management coaching.
                          ``(vii) Whether, under the model, providers of 
                      services and suppliers are able to share 
                      information with patients, caregivers, and other 
                      providers of services and suppliers on a real time 
                      basis.
            ``(3) Budget neutrality.--
                    ``(A) Initial period.--The Secretary shall not 
                require, as a condition for testing a model under 
                paragraph (1), that the design of such model ensure that 
                such model is budget neutral initially with respect to 
                expenditures under the applicable title.
                    ``(B) <<NOTE: Determination.>> Termination or 
                modification.--The Secretary shall terminate or modify 
                the design and implementation of a model unless the 
                Secretary determines (and the Chief Actuary of the 
                Centers for Medicare & Medicaid Services,
                with respect to program spending under the applicable 
                title, certifies), after testing has begun, that the 
                model is expected to--
                          ``(i) improve the quality of care (as 
                      determined by the Administrator of the Centers for 
                      Medicare & Medicaid Services) without increasing 
                      spending under the applicable title;
                          ``(ii) reduce spending under the applicable 
                      title without reducing the quality of care; or
                          ``(iii) improve the quality of care and reduce 
                      spending.
                Such termination may occur at any time after such 
                testing has begun and before completion of the testing.
            ``(4) Evaluation.--
                    ``(A) In general.--The Secretary shall conduct an 
                evaluation of each model tested under this subsection. 
                Such evaluation shall include an analysis of--
                          ``(i) the quality of care furnished under the 
                      model, including the measurement of patient-level 
                      outcomes and patient-centeredness criteria 
                      determined appropriate by the Secretary; and
                          ``(ii) the changes in spending under the 
                      applicable titles by reason of the model.
                    ``(B) Information.-- <<NOTE: Public 
                information. Determination.>> The Secretary shall make 
                the results of each evaluation under this paragraph 
                available to the public in a timely fashion and may 
                establish requirements for States and other entities 
                participating in the testing of models under this 
                section to collect and report information that the 
                Secretary determines is necessary to monitor and 
                evaluate such models.

    ``(c) <<NOTE: Determination.>> Expansion of Models (Phase II).--
Taking into account the evaluation under subsection (b)(4), the 
Secretary may, through rulemaking, expand (including implementation on a 
nationwide basis) the duration and the scope of a model that is being 
tested under subsection (b) or a demonstration project under section 
1866C, to the extent determined appropriate by the Secretary, if--
            ``(1) the Secretary determines that such expansion is 
        expected to--
                    ``(A) reduce spending under applicable title without 
                reducing the quality of care; or
                    ``(B) improve the quality of care and reduce 
                spending; and
            ``(2) <<NOTE: Certification.>> the Chief Actuary of the 
        Centers for Medicare & Medicaid Services certifies that such 
        expansion would reduce program spending under applicable titles.

    ``(d) Implementation.--
            ``(1) Waiver authority.--The Secretary may waive such 
        requirements of titles XI and XVIII and of sections 1902(a)(1), 
        1902(a)(13), and 1903(m)(2)(A)(iii) as may be necessary solely 
        for purposes of carrying out this section with respect to 
        testing models described in subsection (b).
            ``(2) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of--
                    ``(A) the selection of models for testing or 
                expansion under this section;
                    ``(B) the selection of organizations, sites, or 
                participants to test those models selected;
                    ``(C) the elements, parameters, scope, and duration 
                of such models for testing or dissemination;
                    ``(D) determinations regarding budget neutrality 
                under subsection (b)(3);
                    ``(E) the termination or modification of the design 
                and implementation of a model under subsection 
                (b)(3)(B); and
                    ``(F) determinations about expansion of the duration 
                and scope of a model under subsection (c), including the 
                determination that a model is not expected to meet 
                criteria described in paragraph (1) or (2) of such 
                subsection.
            ``(3) Administration.--Chapter 35 of title 44, United States 
        Code, shall not apply to the testing and evaluation of models or 
        expansion of such models under this section.

    ``(e) Application to CHIP.--The Center may carry out activities 
under this section with respect to title XXI in the same manner as 
provided under this section with respect to the program under the 
applicable titles.
    ``(f) Funding.--
            ``(1) In general.--There are appropriated, from amounts in 
        the Treasury not otherwise appropriated--
                    ``(A) $5,000,000 for the design, implementation, and 
                evaluation of models under subsection (b) for fiscal 
                year 2010;
                    ``(B) $10,000,000,000 for the activities initiated 
                under this section for the period of fiscal years 2011 
                through 2019; and
                    ``(C) the amount described in subparagraph (B) for 
                the activities initiated under this section for each 
                subsequent 10-year fiscal period (beginning with the 10-
                year fiscal period beginning with fiscal year 2020).
        Amounts appropriated under the preceding sentence shall remain 
        available until expended.
            ``(2) Use of certain funds.--Out of amounts appropriated 
        under subparagraphs (B) and (C) of paragraph (1), not less than 
        $25,000,000 shall be made available each such fiscal year to 
        design, implement, and evaluate models under subsection (b).

    ``(g) Report to Congress.--Beginning in 2012, and not less than once 
every other year thereafter, the Secretary shall submit to Congress a 
report on activities under this section. Each such report shall describe 
the models tested under subsection (b), including the number of 
individuals described in subsection (a)(4)(A)(i) and of individuals 
described in subsection (a)(4)(A)(ii) participating in such models and 
payments made under applicable titles for services on behalf of such 
individuals, any models chosen for expansion under subsection (c), and 
the results from evaluations under subsection 
(b)(4). <<NOTE: Determination.>> In addition, each such report shall 
provide such recommendations as the Secretary determines are appropriate 
for legislative action to facilitate the development and expansion of 
successful payment models.''.

    (b) Medicaid Conforming Amendment.--Section 1902(a) of the Social 
Security Act (42 U.S.C. 1396a(a)), as amended by section 8002(b), is 
amended--
            (1) in paragraph (81), by striking ``and'' at the end;
            (2) in paragraph (82), by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (82) the following new 
        paragraph:
            ``(83) provide for implementation of the payment models 
        specified by the Secretary under section 1115A(c) for 
        implementation on a nationwide basis unless the State 
        demonstrates to the satisfaction of the Secretary that 
        implementation would not be administratively feasible or 
        appropriate to the health care delivery system of the State.''.

    (c) Revisions to Health Care Quality Demonstration Program.--
Subsections (b) and (f) of section 1866C of the Social Security Act (42 
U.S.C. 1395cc-3) are amended by striking ``5-year'' each place it 
appears.

SEC. 3022. MEDICARE SHARED SAVINGS PROGRAM.

    Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) is 
amended by adding at the end the following new section:


                        ``shared savings program


    ``Sec. 1899.  <<NOTE: 42 USC 1395jjj.>> (a) Establishment.--
            ``(1) In general.-- <<NOTE: Deadline.>> Not later than 
        January 1, 2012, the Secretary shall establish a shared savings 
        program (in this section referred to as the `program') that 
        promotes accountability for a patient population and coordinates 
        items and services under parts A and B, and encourages 
        investment in infrastructure and redesigned care processes for 
        high quality and efficient service delivery. Under such 
        program--
                    ``(A) groups of providers of services and suppliers 
                meeting criteria specified by the Secretary may work 
                together to manage and coordinate care for Medicare fee-
                for-service beneficiaries through an accountable care 
                organization (referred to in this section as an `ACO'); 
                and
                    ``(B) ACOs that meet quality performance standards 
                established by the Secretary are eligible to receive 
                payments for shared savings under subsection (d)(2).

    ``(b) Eligible ACOs.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, as determined appropriate by the Secretary, the 
        following groups of providers of services and suppliers which 
        have established a mechanism for shared governance are eligible 
        to participate as ACOs under the program under this section:
                    ``(A) ACO professionals in group practice 
                arrangements.
                    ``(B) Networks of individual practices of ACO 
                professionals.
                    ``(C) Partnerships or joint venture arrangements 
                between hospitals and ACO professionals.
                    ``(D) Hospitals employing ACO professionals.
                    ``(E) Such other groups of providers of services and 
                suppliers as the Secretary determines appropriate.
            ``(2) Requirements.--An ACO shall meet the following 
        requirements:
                    ``(A) The ACO shall be willing to become accountable 
                for the quality, cost, and overall care of the Medicare 
                fee-for-service beneficiaries assigned to it.
                    ``(B) <<NOTE: Contracts.>> The ACO shall enter into 
                an agreement with the Secretary to participate in the 
                program for not less than a 3-year period (referred to 
                in this section as the `agreement period').
                    ``(C) The ACO shall have a formal legal structure 
                that would allow the organization to receive and 
                distribute payments for shared savings under subsection 
                (d)(2) to participating providers of services and 
                suppliers.
                    ``(D) The ACO shall include primary care ACO 
                professionals that are sufficient for the number of 
                Medicare fee-for-service beneficiaries assigned to the 
                ACO under subsection (c). At a minimum, the ACO shall 
                have at least 5,000 such beneficiaries assigned to it 
                under subsection (c) in order to be eligible to 
                participate in the ACO program.
                    ``(E) The ACO shall provide the Secretary with such 
                information regarding ACO professionals participating in 
                the ACO as the Secretary determines necessary to support 
                the assignment of Medicare fee-for-service beneficiaries 
                to an ACO, the implementation of quality and other 
                reporting requirements under paragraph (3), and the 
                determination of payments for shared savings under 
                subsection (d)(2).
                    ``(F) The ACO shall have in place a leadership and 
                management structure that includes clinical and 
                administrative systems.
                    ``(G) The ACO shall define processes to promote 
                evidence-based medicine and patient engagement, report 
                on quality and cost measures, and coordinate care, such 
                as through the use of telehealth, remote patient 
                monitoring, and other such enabling technologies.
                    ``(H) The ACO shall demonstrate to the Secretary 
                that it meets patient-centeredness criteria specified by 
                the Secretary, such as the use of patient and caregiver 
                assessments or the use of individualized care plans.
            ``(3) Quality and other reporting requirements.--
                    ``(A) In general.-- <<NOTE: Determinations.>> The 
                Secretary shall determine appropriate measures to assess 
                the quality of care furnished by the ACO, such as 
                measures of--
                          ``(i) clinical processes and outcomes;
                          ``(ii) patient and, where practicable, 
                      caregiver experience of care; and
                          ``(iii) utilization (such as rates of hospital 
                      admissions for ambulatory care sensitive 
                      conditions).
                    ``(B) Reporting requirements.--An ACO shall submit 
                data in a form and manner specified by the Secretary on 
                measures the Secretary determines necessary for the ACO 
                to report in order to evaluate the quality of care 
                furnished by the ACO. Such data may include care 
                transitions across health care settings, including 
                hospital discharge planning and post-hospital discharge 
                follow-up by ACO professionals, as the Secretary 
                determines appropriate.
                    ``(C) Quality performance standards.--The Secretary 
                shall establish quality performance standards to assess 
                the quality of care furnished by ACOs. The Secretary 
                shall seek to improve the quality of care furnished by
                ACOs over time by specifying higher standards, new 
                measures, or both for purposes of assessing such quality 
                of care.
                    ``(D) Other reporting requirements.--The Secretary 
                may, as the Secretary determines appropriate, 
                incorporate reporting requirements and incentive 
                payments related to the physician quality reporting 
                initiative (PQRI) under section 1848, including such 
                requirements and such payments related to electronic 
                prescribing, electronic health records, and other 
                similar initiatives under section 1848, and may use 
                alternative criteria than would otherwise apply under 
                such section for determining whether to make such 
                payments. The incentive payments described in the 
                preceding sentence shall not be taken into consideration 
                when calculating any payments otherwise made under 
                subsection (d).
            ``(4) No duplication in participation in shared savings 
        programs.--A provider of services or supplier that participates 
        in any of the following shall not be eligible to participate in 
        an ACO under this section:
                    ``(A) A model tested or expanded under section 1115A 
                that involves shared savings under this title, or any 
                other program or demonstration project that involves 
                such shared savings.
                    ``(B) The independence at home medical practice 
                pilot program under section 1866E.

    ``(c) Assignment of Medicare Fee-for-service Beneficiaries to 
ACOs.-- <<NOTE: Determination.>> The Secretary shall determine an 
appropriate method to assign Medicare fee-for-service beneficiaries to 
an ACO based on their utilization of primary care services provided 
under this title by an ACO professional described in subsection 
(h)(1)(A).

    ``(d) Payments and Treatment of Savings.--
            ``(1) Payments.--
                    ``(A) In general.--Under the program, subject to 
                paragraph (3), payments shall continue to be made to 
                providers of services and suppliers participating in an 
                ACO under the original Medicare fee-for-service program 
                under parts A and B in the same manner as they would 
                otherwise be made except that a participating ACO is 
                eligible to receive payment for shared savings under 
                paragraph (2) if--
                          ``(i) the ACO meets quality performance 
                      standards established by the Secretary under 
                      subsection (b)(3); and
                          ``(ii) the ACO meets the requirement under 
                      subparagraph (B)(i).
                    ``(B) Savings requirement and benchmark.--
                          ``(i) Determining savings.--In each year of 
                      the agreement period, an ACO shall be eligible to 
                      receive payment for shared savings under paragraph 
                      (2) only if the estimated average per capita 
                      Medicare expenditures under the ACO for Medicare 
                      fee-for-service beneficiaries for parts A and B 
                      services, adjusted for beneficiary 
                      characteristics, is at least the percent specified 
                      by the Secretary below the applicable benchmark 
                      under clause (ii). The Secretary shall determine 
                      the appropriate percent described in the preceding 
                      sentence to account for normal variation in 
                      expenditures under
                      this title, based upon the number of Medicare fee-
                      for-service beneficiaries assigned to an ACO.
                          ``(ii) Establish and update benchmark.--The 
                      Secretary shall estimate a benchmark for each 
                      agreement period for each ACO using the most 
                      recent available 3 years of per-beneficiary 
                      expenditures for parts A and B services for 
                      Medicare fee-for-service beneficiaries assigned to 
                      the ACO. Such benchmark shall be adjusted for 
                      beneficiary characteristics and such other factors 
                      as the Secretary determines appropriate and 
                      updated by the projected absolute amount of growth 
                      in national per capita expenditures for parts A 
                      and B services under the original Medicare fee-
                      for-service program, as estimated by the 
                      Secretary. Such benchmark shall be reset at the 
                      start of each agreement period.
            ``(2) Payments for shared savings.--Subject to performance 
        with respect to the quality performance standards established by 
        the Secretary under subsection (b)(3), if an ACO meets the 
        requirements under paragraph (1), a percent (as determined 
        appropriate by the Secretary) of the difference between such 
        estimated average per capita Medicare expenditures in a year, 
        adjusted for beneficiary characteristics, under the ACO and such 
        benchmark for the ACO may be paid to the ACO as shared savings 
        and the remainder of such difference shall be retained by the 
        program under this title. <<NOTE: Limitations.>> The Secretary 
        shall establish limits on the total amount of shared savings 
        that may be paid to an ACO under this paragraph.
            ``(3) Monitoring avoidance of at-risk patients.--If the 
        Secretary determines that an ACO has taken steps to avoid 
        patients at risk in order to reduce the likelihood of increasing 
        costs to the ACO the Secretary may impose an appropriate 
        sanction on the ACO, including termination from the program.
            ``(4) Termination.--The Secretary may terminate an agreement 
        with an ACO if it does not meet the quality performance 
        standards established by the Secretary under subsection (b)(3).

    ``(e) Administration.--Chapter 35 of title 44, United States Code, 
shall not apply to the program.
    ``(f) Waiver Authority.--The Secretary may waive such requirements 
of sections 1128A and 1128B and title XVIII of this Act as may be 
necessary to carry out the provisions of this section.
    ``(g) Limitations on Review.--There shall be no administrative or 
judicial review under section 1869, section 1878, or otherwise of--
            ``(1) the specification of criteria under subsection 
        (a)(1)(B);
            ``(2) the assessment of the quality of care furnished by an 
        ACO and the establishment of performance standards under 
        subsection (b)(3);
            ``(3) the assignment of Medicare fee-for-service 
        beneficiaries to an ACO under subsection (c);
            ``(4) the determination of whether an ACO is eligible for 
        shared savings under subsection (d)(2) and the amount of such 
        shared savings, including the determination of the estimated 
        average per capita Medicare expenditures under the ACO for 
        Medicare fee-for-service beneficiaries assigned to the ACO and 
        the average benchmark for the ACO under subsection (d)(1)(B);
            ``(5) the percent of shared savings specified by the 
        Secretary under subsection (d)(2) and any limit on the total 
        amount of shared savings established by the Secretary under such 
        subsection; and
            ``(6) the termination of an ACO under subsection (d)(4).

    ``(h) Definitions.--In this section:
            ``(1) ACO professional.--The term `ACO professional' means--
                    ``(A) a physician (as defined in section 
                1861(r)(1)); and
                    ``(B) a practitioner described in section 
                1842(b)(18)(C)(i).
            ``(2) Hospital.--The term `hospital' means a subsection (d) 
        hospital (as defined in section 1886(d)(1)(B)).
            ``(3) Medicare fee-for-service beneficiary.--The term 
        `Medicare fee-for-service beneficiary' means an individual who 
        is enrolled in the original Medicare fee-for-service program 
        under parts A and B and is not enrolled in an MA plan under part 
        C, an eligible organization under section 1876, or a PACE 
        program under section 1894.''.

SEC. 3023. NATIONAL PILOT PROGRAM ON PAYMENT BUNDLING.

    Title XVIII of the Social Security Act, as amended by section 3021, 
is amended by inserting after section 1886C the following new section:


              ``national pilot program on payment bundling


    ``Sec. 1866D.  <<NOTE: 42 USC 1395cc-4.>> (a) Implementation.--
            ``(1) In general.--The Secretary shall establish a pilot 
        program for integrated care during an episode of care provided 
        to an applicable beneficiary around a hospitalization in order 
        to improve the coordination, quality, and efficiency of health 
        care services under this title.
            ``(2) Definitions.--In this section:
                    ``(A) Applicable beneficiary.--The term `applicable 
                beneficiary' means an individual who--
                          ``(i) is entitled to, or enrolled for, 
                      benefits under part A and enrolled for benefits 
                      under part B of such title, but not enrolled under 
                      part C or a PACE program under section 1894; and
                          ``(ii) is admitted to a hospital for an 
                      applicable condition.
                    ``(B) Applicable condition.--The term `applicable 
                condition' means 1 or more of 8 conditions selected by 
                the Secretary. In selecting conditions under the 
                preceding sentence, the Secretary shall take into 
                consideration the following factors:
                          ``(i) Whether the conditions selected include 
                      a mix of chronic and acute conditions.
                          ``(ii) Whether the conditions selected include 
                      a mix of surgical and medical conditions.
                          ``(iii) Whether a condition is one for which 
                      there is evidence of an opportunity for providers 
                      of services and suppliers to improve the quality 
                      of care furnished while reducing total 
                      expenditures under this title.
                          ``(iv) Whether a condition has significant 
                      variation in--
                                    ``(I) the number of readmissions; 
                                and
                                    ``(II) the amount of expenditures 
                                for post-acute care spending under this 
                                title.
                          ``(v) Whether a condition is high-volume and 
                      has high post-acute care expenditures under this 
                      title.
                          ``(vi) Which conditions the Secretary 
                      determines are most amenable to bundling across 
                      the spectrum of care given practice patterns under 
                      this title.
                    ``(C) Applicable services.--The term `applicable 
                services' means the following:
                          ``(i) Acute care inpatient services.
                          ``(ii) Physicians' services delivered in and 
                      outside of an acute care hospital setting.
                          ``(iii) Outpatient hospital services, 
                      including emergency department services.
                          ``(iv) Post-acute care services, including 
                      home health services, skilled nursing services, 
                      inpatient rehabilitation services, and inpatient 
                      hospital services furnished by a long-term care 
                      hospital.
                          ``(v) Other services the Secretary determines 
                      appropriate.
                    ``(D) Episode of care.--
                          ``(i) In general.--Subject to clause (ii), the 
                      term `episode of care' means, with respect to an 
                      applicable condition and an applicable 
                      beneficiary, the period that includes--
                                    ``(I) the 3 days prior to the 
                                admission of the applicable beneficiary 
                                to a hospital for the applicable 
                                condition;
                                    ``(II) the length of stay of the 
                                applicable beneficiary in such hospital; 
                                and
                                    ``(III) the 30 days following the 
                                discharge of the applicable beneficiary 
                                from such hospital.
                          ``(ii) Establishment of period by the 
                      secretary.--The Secretary, as appropriate, may 
                      establish a period (other than the period 
                      described in clause (i)) for an episode of care 
                      under the pilot program.
                    ``(E) Physicians' services.--The term `physicians' 
                services' has the meaning given such term in section 
                1861(q).
                    ``(F) Pilot program.--The term `pilot program' means 
                the pilot program under this section.
                    ``(G) Provider of services.--The term `provider of 
                services' has the meaning given such term in section 
                1861(u).
                    ``(H) Readmission.--The term `readmission' has the 
                meaning given such term in section 1886(q)(5)(E).
                    ``(I) Supplier.--The term `supplier' has the meaning 
                given such term in section 1861(d).
            ``(3) Deadline for implementation.--The Secretary shall 
        establish the pilot program not later than January 1, 2013.

    ``(b) Developmental Phase.--
            ``(1) Determination of patient assessment instrument.--The 
        Secretary shall determine which patient assessment instrument 
        (such as the Continuity Assessment Record and Evaluation (CARE) 
        tool) shall be used under the pilot program to evaluate the 
        applicable condition of an applicable beneficiary for purposes 
        of determining the most
        clinically appropriate site for the provision of post-acute care 
        to the applicable beneficiary.
            ``(2) Development of quality measures for an episode of care 
        and for post-acute care.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Agency for Healthcare Research and Quality and 
                the entity with a contract under section 1890(a) of the 
                Social Security Act, shall develop quality measures for 
                use in the pilot program--
                          ``(i) for episodes of care; and
                          ``(ii) for post-acute care.
                    ``(B) Site-neutral post-acute care quality 
                measures.--Any quality measures developed under 
                subparagraph (A)(ii) shall be site-neutral.
                    ``(C) Coordination with quality measure development 
                and endorsement procedures.--The Secretary shall ensure 
                that the development of quality measures under 
                subparagraph (A) is done in a manner that is consistent 
                with the measures developed and endorsed under section 
                1890 and 1890A that are applicable to all post-acute 
                care settings.

    ``(c) Details.--
            ``(1) Duration.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                pilot program shall be conducted for a period of 5 
                years.
                    ``(B) Extension.-- <<NOTE: Determination.>> The 
                Secretary may extend the duration of the pilot program 
                for providers of services and suppliers participating in 
                the pilot program as of the day before the end of the 5-
                year period described in subparagraph (A), for a period 
                determined appropriate by the Secretary, if the 
                Secretary determines that such extension will result in 
                improving or not reducing the quality of patient care 
                and reducing spending under this title.
            ``(2) Participating providers of services and suppliers.--
                    ``(A) In general.--An entity comprised of providers 
                of services and suppliers, including a hospital, a 
                physician group, a skilled nursing facility, and a home 
                health agency, who are otherwise participating under 
                this title, may submit an application to the Secretary 
                to provide applicable services to applicable individuals 
                under this section.
                    ``(B) Requirements.--The Secretary shall develop 
                requirements for entities to participate in the pilot 
                program under this section. Such requirements shall 
                ensure that applicable beneficiaries have an adequate 
                choice of providers of services and suppliers under the 
                pilot program.
            ``(3) Payment methodology.--
                    ``(A) In general.--
                          ``(i) Establishment of payment methods.--The 
                      Secretary shall develop payment methods for the 
                      pilot program for entities participating in the 
                      pilot program. Such payment methods may include 
                      bundled payments and bids from entities for 
                      episodes of care. The Secretary shall make 
                      payments to the entity for services covered under 
                      this section.
                          ``(ii) No additional program expenditures.--
                      Payments under this section for applicable items 
                      and
                      services under this title (including payment for 
                      services described in subparagraph (B)) for 
                      applicable beneficiaries for a year shall be 
                      established in a manner that does not result in 
                      spending more for such entity for such 
                      beneficiaries than would otherwise be expended for 
                      such entity for such beneficiaries for such year 
                      if the pilot program were not implemented, as 
                      estimated by the Secretary.
                    ``(B) Inclusion of certain services.--A payment 
                methodology tested under the pilot program shall include 
                payment for the furnishing of applicable services and 
                other appropriate services, such as care coordination, 
                medication reconciliation, discharge planning, 
                transitional care services, and other patient-centered 
                activities as determined appropriate by the Secretary.
                    ``(C) Bundled payments.--
                          ``(i) In general.--A bundled payment under the 
                      pilot program shall--
                                    ``(I) be comprehensive, covering the 
                                costs of applicable services and other 
                                appropriate services furnished to an 
                                individual during an episode of care (as 
                                determined by the Secretary); and
                                    ``(II) be made to the entity which 
                                is participating in the pilot program.
                          ``(ii) Requirement for provision of applicable 
                      services and other appropriate services.--
                      Applicable services and other appropriate services 
                      for which payment is made under this subparagraph 
                      shall be furnished or directed by the entity which 
                      is participating in the pilot program.
                    ``(D) Payment for post-acute care services after the 
                episode of care.-- <<NOTE: Procedures.>> The Secretary 
                shall establish procedures, in the case where an 
                applicable beneficiary requires continued post-acute 
                care services after the last day of the episode of care, 
                under which payment for such services shall be made.
            ``(4) Quality measures.--
                    ``(A) In general.--The Secretary shall establish 
                quality measures (including quality measures of process, 
                outcome, and structure) related to care provided by 
                entities participating in the pilot program. Quality 
                measures established under the preceding sentence shall 
                include measures of the following:
                          ``(i) Functional status improvement.
                          ``(ii) Reducing rates of avoidable hospital 
                      readmissions.
                          ``(iii) Rates of discharge to the community.
                          ``(iv) Rates of admission to an emergency room 
                      after a hospitalization.
                          ``(v) Incidence of health care acquired 
                      infections.
                          ``(vi) Efficiency measures.
                          ``(vii) Measures of patient-centeredness of 
                      care.
                          ``(viii) Measures of patient perception of 
                      care.
                          ``(ix) Other measures, including measures of 
                      patient outcomes, determined appropriate by the 
                      Secretary.
                    ``(B) Reporting on quality measures.--
                          ``(i) In general.--A entity shall submit data 
                      to the Secretary on quality measures established 
                      under subparagraph (A) during each year of the 
                      pilot program (in a form and manner, subject to 
                      clause (iii), specified by the Secretary).
                          ``(ii) Submission of data through electronic 
                      health record.--To the extent practicable, the 
                      Secretary shall specify that data on measures be 
                      submitted under clause (i) through the use of an 
                      qualified electronic health record (as defined in 
                      section 3000(13) of the Public Health Service Act 
                      (42 U.S.C. 300jj-11(13)) in a manner specified by 
                      the Secretary.

    ``(d) Waiver.--The Secretary may waive such provisions of this title 
and title XI as may be necessary to carry out the pilot program.
    ``(e) Independent Evaluation and Reports on Pilot Program.--
            ``(1) Independent evaluation.--The Secretary shall conduct 
        an independent evaluation of the pilot program, including the 
        extent to which the pilot program has--
                    ``(A) improved quality measures established under 
                subsection (c)(4)(A);
                    ``(B) improved health outcomes;
                    ``(C) improved applicable beneficiary access to 
                care; and
                    ``(D) reduced spending under this title.
            ``(2) Reports.--
                    ``(A) Interim report.--Not later than 2 years after 
                the implementation of the pilot program, the Secretary 
                shall submit to Congress a report on the initial results 
                of the independent evaluation conducted under paragraph 
                (1).
                    ``(B) Final report.--Not later than 3 years after 
                the implementation of the pilot program, the Secretary 
                shall submit to Congress a report on the final results 
                of the independent evaluation conducted under paragraph 
                (1).

    ``(f) Consultation.--The Secretary shall consult with 
representatives of small rural hospitals, including critical access 
hospitals (as defined in section 1861(mm)(1)), regarding their 
participation in the pilot program. Such consultation shall include 
consideration of innovative methods of implementing bundled payments in 
hospitals described in the preceding sentence, taking into consideration 
any difficulties in doing so as a result of the low volume of services 
provided by such hospitals.
    ``(g) Implementation Plan.--
            ``(1) In general.-- <<NOTE: Deadline.>> Not later than 
        January 1, 2016, the Secretary shall submit a plan for the 
        implementation of an expansion of the pilot program if the 
        Secretary determines that such expansion will result in 
        improving or not reducing the quality of patient care and 
        reducing spending under this title.

    ``(h) Administration.--Chapter 35 of title 44, United States Code, 
shall not apply to the selection, testing, and evaluation of models or 
the expansion of such models under this section.''.

SEC. 3024. INDEPENDENCE AT HOME DEMONSTRATION PROGRAM.

    Title XVIII of the Social Security Act is amended by inserting after 
section 1866D, as inserted by section 3023, the following new section:


      ``independence at home medical practice demonstration program


    ``Sec. 1866D.  <<NOTE: 42 USC 1395cc-5.>> (a) Establishment.--
            ``(1) In general.--The Secretary shall conduct a 
        demonstration program (in this section referred to as the 
        `demonstration program') to test a payment incentive and service 
        delivery model that utilizes physician and nurse practitioner 
        directed home-based primary care teams designed to reduce 
        expenditures and improve health outcomes in the provision of 
        items and services under this title to applicable beneficiaries 
        (as defined in subsection (d)).
            ``(2) Requirement.--The demonstration program shall test 
        whether a model described in paragraph (1), which is accountable 
        for providing comprehensive, coordinated, continuous, and 
        accessible care to high-need populations at home and 
        coordinating health care across all treatment settings, results 
        in--
                    ``(A) reducing preventable hospitalizations;
                    ``(B) preventing hospital readmissions;
                    ``(C) reducing emergency room visits;
                    ``(D) improving health outcomes commensurate with 
                the beneficiaries' stage of chronic illness;
                    ``(E) improving the efficiency of care, such as by 
                reducing duplicative diagnostic and laboratory tests;
                    ``(F) reducing the cost of health care services 
                covered under this title; and
                    ``(G) achieving beneficiary and family caregiver 
                satisfaction.

    ``(b) Independence at Home Medical Practice.--
            ``(1) Independence at home medical practice defined.--In 
        this section:
                    ``(A) In general.--The term `independence at home 
                medical practice' means a legal entity that--
                          ``(i) is comprised of an individual physician 
                      or nurse practitioner or group of physicians and 
                      nurse practitioners that provides care as part of 
                      a team that includes physicians, nurses, physician 
                      assistants, pharmacists, and other health and 
                      social services staff as appropriate who have 
                      experience providing home-based primary care to 
                      applicable beneficiaries, make in-home visits, and 
                      are available 24 hours per day, 7 days per week to 
                      carry out plans of care that are tailored to the 
                      individual beneficiary's chronic conditions and 
                      designed to achieve the results in subsection (a);
                          ``(ii) is organized at least in part for the 
                      purpose of providing physicians' services;
                          ``(iii) has documented experience in providing 
                      home-based primary care services to high-cost 
                      chronically ill beneficiaries, as determined 
                      appropriate by the Secretary;
                          ``(iv) furnishes services to at least 200 
                      applicable beneficiaries (as defined in subsection 
                      (d)) during each year of the demonstration 
                      program;
                          ``(v) has entered into an agreement with the 
                      Secretary;
                          ``(vi) uses electronic health information 
                      systems, remote monitoring, and mobile diagnostic 
                      technology; and
                          ``(vii) meets such other criteria as the 
                      Secretary determines to be appropriate to 
                      participate in the demonstration program.
                <<NOTE: Reports. Determination.>> The entity shall 
                report on quality measures (in such form, manner, and 
                frequency as specified by the Secretary, which may be 
                for the group, for providers of services and suppliers, 
                or both) and report to the Secretary (in a form, manner, 
                and frequency as specified by the Secretary) such data 
                as the Secretary determines appropriate to monitor and 
                evaluate the demonstration program.
                    ``(B) Physician.--The term `physician' includes, 
                except as the Secretary may otherwise provide, any 
                individual who furnishes services for which payment may 
                be made as physicians' services and has the medical 
                training or experience to fulfill the physician's role 
                described in subparagraph (A)(i).
            ``(2) Participation of nurse practitioners and physician 
        assistants.--Nothing in this section shall be construed to 
        prevent a nurse practitioner or physician assistant from 
        participating in, or leading, a home-based primary care team as 
        part of an independence at home medical practice if--
                    ``(A) all the requirements of this section are met;
                    ``(B) the nurse practitioner or physician assistant, 
                as the case may be, is acting consistent with State law; 
                and
                    ``(C) the nurse practitioner or physician assistant 
                has the medical training or experience to fulfill the 
                nurse practitioner or physician assistant role described 
                in paragraph (1)(A)(i).
            ``(3) Inclusion of providers and practitioners.--Nothing in 
        this subsection shall be construed as preventing an independence 
        at home medical practice from including a provider of services 
        or a participating practitioner described in section 
        1842(b)(18)(C) that is affiliated with the practice under an 
        arrangement structured so that such provider of services or 
        practitioner participates in the demonstration program and 
        shares in any savings under the demonstration program.
            ``(4) Quality and performance standards.--The Secretary 
        shall develop quality performance standards for independence at 
        home medical practices participating in the demonstration 
        program.

    ``(c) Payment Methodology.--
            ``(1) Establishment of target spending level.--The Secretary 
        shall establish an estimated annual spending target, for the 
        amount the Secretary estimates would have been spent in the 
        absence of the demonstration, for items and services
        covered under parts A and B furnished to applicable 
        beneficiaries for each qualifying independence at home medical 
        practice under this section. Such spending targets shall be 
        determined on a per capita basis. Such spending targets shall 
        include a risk corridor that takes into account normal variation 
        in expenditures for items and services covered under parts A and 
        B furnished to such beneficiaries with the size of the corridor 
        being related to the number of applicable beneficiaries 
        furnished services by each independence at home medical 
        practice. The spending targets may also be adjusted for other 
        factors as the Secretary determines appropriate.
            ``(2) Incentive payments.--Subject to performance on quality 
        measures, a qualifying independence at home medical practice is 
        eligible to receive an incentive payment under this section if 
        actual expenditures for a year for the applicable beneficiaries 
        it enrolls are less than the estimated spending target 
        established under paragraph (1) for such year. An incentive 
        payment for such year shall be equal to a portion (as determined 
        by the Secretary) of the amount by which actual expenditures 
        (including incentive payments under this paragraph) for 
        applicable beneficiaries under parts A and B for such year are 
        estimated to be less than 5 percent less than the estimated 
        spending target for such year, as determined under paragraph 
        (1).

    ``(d) Applicable Beneficiaries.--
            ``(1) Definition.--In this section, the term `applicable 
        beneficiary' means, with respect to a qualifying independence at 
        home medical practice, an individual who the practice has 
        determined--
                    ``(A) is entitled to benefits under part A and 
                enrolled for benefits under part B;
                    ``(B) is not enrolled in a Medicare Advantage plan 
                under part C or a PACE program under section 1894;
                    ``(C) has 2 or more chronic illnesses, such as 
                congestive heart failure, diabetes, other dementias 
                designated by the Secretary, chronic obstructive 
                pulmonary disease, ischemic heart disease, stroke, 
                Alzheimer's Disease and neurodegenerative diseases, and 
                other diseases and conditions designated by the 
                Secretary which result in high costs under this title;
                    ``(D) within the past 12 months has had a 
                nonelective hospital admission;
                    ``(E) within the past 12 months has received acute 
                or subacute rehabilitation services;
                    ``(F) has 2 or more functional dependencies 
                requiring the assistance of another person (such as 
                bathing, dressing, toileting, walking, or feeding); and
                    ``(G) meets such other criteria as the Secretary 
                determines appropriate.
            ``(2) Patient election to participate.-- 
        <<NOTE: Determination.>> The Secretary shall determine an 
        appropriate method of ensuring that applicable beneficiaries 
        have agreed to enroll in an independence at home medical 
        practice under the demonstration program. Enrollment in the 
        demonstration program shall be voluntary.
            ``(3) Beneficiary access to services.--Nothing in this 
        section shall be construed as encouraging physicians or nurse
        practitioners to limit applicable beneficiary access to services 
        covered under this title and applicable beneficiaries shall not 
        be required to relinquish access to any benefit under this title 
        as a condition of receiving services from an independence at 
        home medical practice.

    ``(e) Implementation.--
            ``(1) Starting date.--The demonstration program shall begin 
        no later than January 1, 2012. An agreement with an independence 
        at home medical practice under the demonstration program may 
        cover not more than a 3-year period.
            ``(2) No physician duplication in demonstration 
        participation.--The Secretary shall not pay an independence at 
        home medical practice under this section that participates in 
        section 1899.
            ``(3) No beneficiary duplication in demonstration 
        participation.--The Secretary shall ensure that no applicable 
        beneficiary enrolled in an independence at home medical practice 
        under this section is participating in the programs under 
        section 1899.
            ``(4) Preference.--In approving an independence at home 
        medical practice, the Secretary shall give preference to 
        practices that are--
                    ``(A) located in high-cost areas of the country;
                    ``(B) have experience in furnishing health care 
                services to applicable beneficiaries in the home; and
                    ``(C) use electronic medical records, health 
                information technology, and individualized plans of 
                care.
            ``(5) Limitation on number of practices.--In selecting 
        qualified independence at home medical practices to participate 
        under the demonstration program, the Secretary shall limit the 
        number of such practices so that the number of applicable 
        beneficiaries that may participate in the demonstration program 
        does not exceed 10,000.
            ``(6) Waiver.--The Secretary may waive such provisions of 
        this title and title XI as the Secretary determines necessary in 
        order to implement the demonstration program.
            ``(7) Administration.--Chapter 35 of title 44, United States 
        Code, shall not apply to this section.

    ``(f) Evaluation and Monitoring.--
            ``(1) In general.--The Secretary shall evaluate each 
        independence at home medical practice under the demonstration 
        program to assess whether the practice achieved the results 
        described in subsection (a).
            ``(2) Monitoring applicable beneficiaries.--The Secretary 
        may monitor data on expenditures and quality of services under 
        this title after an applicable beneficiary discontinues 
        receiving services under this title through a qualifying 
        independence at home medical practice.

    ``(g) Reports to Congress.--The Secretary shall conduct an 
independent evaluation of the demonstration program and submit to 
Congress a final report, including best practices under the 
demonstration program. Such report shall include an analysis of the 
demonstration program on coordination of care, expenditures under this 
title, applicable beneficiary access to services, and the quality of 
health care services provided to applicable beneficiaries.
    ``(h) Funding.--For purposes of administering and carrying out the 
demonstration program, other than for payments for items
and services furnished under this title and incentive payments under 
subsection (c), in addition to funds otherwise appropriated, there shall 
be transferred to the Secretary for the Center for Medicare & Medicaid 
Services Program Management Account from the Federal Hospital Insurance 
Trust Fund under section 1817 and the Federal Supplementary Medical 
Insurance Trust Fund under section 1841 (in proportions determined 
appropriate by the Secretary) $5,000,000 for each of fiscal years 2010 
through 2015. Amounts transferred under this subsection for a fiscal 
year shall be available until expended.
    ``(i) Termination.--
            ``(1) Mandatory termination.--The Secretary shall terminate 
        an agreement with an independence at home medical practice if--
                    ``(A) the Secretary estimates or determines that 
                such practice will not receive an incentive payment for 
                the second of 2 consecutive years under the 
                demonstration program; or
                    ``(B) such practice fails to meet quality standards 
                during any year of the demonstration program.
            ``(2) Permissive termination.--The Secretary may terminate 
        an agreement with an independence at home medical practice for 
        such other reasons determined appropriate by the Secretary.''.

SEC. 3025. HOSPITAL READMISSIONS REDUCTION PROGRAM.

    (a) In General.--Section 1886 of the Social Security Act (42 U.S.C. 
1395ww), as amended by sections 3001 and 3008, is amended by adding at 
the end the following new subsection:
    ``(q) Hospital Readmissions Reduction Program.--
            ``(1) In general.--With respect to payment for discharges 
        from an applicable hospital (as defined in paragraph (5)(C)) 
        occurring during a fiscal year beginning on or after October 1, 
        2012, in order to account for excess readmissions in the 
        hospital, the Secretary shall reduce the payments that would 
        otherwise be made to such hospital under subsection (d) (or 
        section 1814(b)(3), as the case may be) for such a discharge by 
        an amount equal to the product of--
                    ``(A) the base operating DRG payment amount (as 
                defined in paragraph (2)) for the discharge; and
                    ``(B) the adjustment factor (described in paragraph 
                (3)(A)) for the hospital for the fiscal year.
            ``(2) Base operating drg payment amount defined.--
                    ``(A) In general.-- <<NOTE: Definition.>> Except as 
                provided in subparagraph (B), in this subsection, the 
                term `base operating DRG payment amount' means, with 
                respect to a hospital for a fiscal year--
                          ``(i) the payment amount that would otherwise 
                      be made under subsection (d) (determined without 
                      regard to subsection (o)) for a discharge if this 
                      subsection did not apply; reduced by
                          ``(ii) any portion of such payment amount that 
                      is attributable to payments under paragraphs 
                      (5)(A), (5)(B), (5)(F), and (12) of subsection 
                      (d).
                    ``(B) Special rules for certain hospitals.--
                          ``(i) Sole community hospitals and medicare-
                      dependent, small rural hospitals.--In the case of
                      a medicare-dependent, small rural hospital (with 
                      respect to discharges occurring during fiscal 
                      years 2012 and 2013) or a sole community hospital, 
                      in applying subparagraph (A)(i), the payment 
                      amount that would otherwise be made under 
                      subsection (d) shall be determined without regard 
                      to subparagraphs (I) and (L) of subsection (b)(3) 
                      and subparagraphs (D) and (G) of subsection 
                      (d)(5).
                          ``(ii) Hospitals paid under section 1814.-- 
                      <<NOTE: Reports. Deadline.>> In the case of a 
                      hospital that is paid under section 1814(b)(3), 
                      the Secretary may exempt such hospitals provided 
                      that States paid under such section submit an 
                      annual report to the Secretary describing how a 
                      similar program in the State for a participating 
                      hospital or hospitals achieves or surpasses the 
                      measured results in terms of patient health 
                      outcomes and cost savings established herein with 
                      respect to this section.
            ``(3) Adjustment factor.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the adjustment factor under this paragraph for an 
                applicable hospital for a fiscal year is equal to the 
                greater of--
                          ``(i) the ratio described in subparagraph (B) 
                      for the hospital for the applicable period (as 
                      defined in paragraph (5)(D)) for such fiscal year; 
                      or
                          ``(ii) the floor adjustment factor specified 
                      in subparagraph (C).
                    ``(B) Ratio.--The ratio described in this 
                subparagraph for a hospital for an applicable period is 
                equal to 1 minus the ratio of--
                          ``(i) the aggregate payments for excess 
                      readmissions (as defined in paragraph (4)(A)) with 
                      respect to an applicable hospital for the 
                      applicable period; and
                          ``(ii) the aggregate payments for all 
                      discharges (as defined in paragraph (4)(B)) with 
                      respect to such applicable hospital for such 
                      applicable period.
                    ``(C) Floor adjustment factor.--For purposes of 
                subparagraph (A), the floor adjustment factor specified 
                in this subparagraph for--
                          ``(i) fiscal year 2013 is 0.99;
                          ``(ii) fiscal year 2014 is 0.98; or
                          ``(iii) fiscal year 2015 and subsequent fiscal 
                      years is 0.97.
            ``(4) Aggregate payments, excess readmission ratio 
        defined.--For purposes of this subsection:
                    ``(A) Aggregate payments for excess readmissions.--
                The term `aggregate payments for excess readmissions' 
                means, for a hospital for an applicable period, the sum, 
                for applicable conditions (as defined in paragraph 
                (5)(A)), of the product, for each applicable condition, 
                of--
                          ``(i) the base operating DRG payment amount 
                      for such hospital for such applicable period for 
                      such condition;
                          ``(ii) the number of admissions for such 
                      condition for such hospital for such applicable 
                      period; and
                          ``(iii) the excess readmissions ratio (as 
                      defined in subparagraph (C)) for such hospital for 
                      such applicable period minus 1.
                    ``(B) Aggregate payments for all discharges.--The 
                term `aggregate payments for all discharges' means, for 
                a hospital for an applicable period, the sum of the base 
                operating DRG payment amounts for all discharges for all 
                conditions from such hospital for such applicable 
                period.
                    ``(C) Excess readmission ratio.--
                          ``(i) In general.--Subject to clause (ii), the 
                      term `excess readmissions ratio' means, with 
                      respect to an applicable condition for a hospital 
                      for an applicable period, the ratio (but not less 
                      than 1.0) of--
                                    ``(I) the risk adjusted readmissions 
                                based on actual readmissions, as 
                                determined consistent with a readmission 
                                measure methodology that has been 
                                endorsed under paragraph (5)(A)(ii)(I), 
                                for an applicable hospital for such 
                                condition with respect to such 
                                applicable period; to
                                    ``(II) the risk adjusted expected 
                                readmissions (as determined consistent 
                                with such a methodology) for such 
                                hospital for such condition with respect 
                                to such applicable period.
                          ``(ii) Exclusion of certain readmissions.--For 
                      purposes of clause (i), with respect to a 
                      hospital, excess readmissions shall not include 
                      readmissions for an applicable condition for which 
                      there are fewer than a minimum number (as 
                      determined by the Secretary) of discharges for 
                      such applicable condition for the applicable 
                      period and such hospital.
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Applicable condition.--The term `applicable 
                condition' means, subject to subparagraph (B), a 
                condition or procedure selected by the Secretary among 
                conditions and procedures for which--
                          ``(i) readmissions (as defined in subparagraph 
                      (E)) that represent conditions or procedures that 
                      are high volume or high expenditures under this 
                      title (or other criteria specified by the 
                      Secretary); and
                          ``(ii) measures of such readmissions--
                                    ``(I) have been endorsed by the 
                                entity with a contract under section 
                                1890(a); and
                                    ``(II) such endorsed measures have 
                                exclusions for readmissions that are 
                                unrelated to the prior discharge (such 
                                as a planned readmission or transfer to 
                                another applicable hospital).
                    ``(B) Expansion of applicable 
                conditions. <<NOTE: Effective date.>> --Beginning with 
                fiscal year 2015, the Secretary shall, to the extent 
                practicable, expand the applicable conditions beyond the 
                3 conditions for which measures have been endorsed as 
                described in subparagraph (A)(ii)(I) as of the date of 
                the enactment of this subsection to the additional 4 
                conditions that have been identified by the Medicare 
                Payment Advisory Commission in its report to Congress in 
                June 2007 and to other conditions and procedures as 
                determined appropriate by the Secretary. In expanding 
                such applicable conditions, the Secretary shall seek the 
                endorsement described in subparagraph (A)(ii)(I) but may 
                apply such measures without such an endorsement in the 
                case of a specified area or medical topic determined 
                appropriate by
                the Secretary for which a feasible and practical measure 
                has not been endorsed by the entity with a contract 
                under section 1890(a) as long as due consideration is 
                given to measures that have been endorsed or adopted by 
                a consensus organization identified by the Secretary.
                    ``(C) Applicable hospital.--The term `applicable 
                hospital' means a subsection (d) hospital or a hospital 
                that is paid under section 1814(b)(3), as the case may 
                be.
                    ``(D) Applicable period.--The term `applicable 
                period' means, with respect to a fiscal year, such 
                period as the Secretary shall specify.
                    ``(E) Readmission.--The term `readmission' means, in 
                the case of an individual who is discharged from an 
                applicable hospital, the admission of the individual to 
                the same or another applicable hospital within a time 
                period specified by the Secretary from the date of such 
                discharge. Insofar as the discharge relates to an 
                applicable condition for which there is an endorsed 
                measure described in subparagraph (A)(ii)(I), such time 
                period (such as 30 days) shall be consistent with the 
                time period specified for such measure.
            ``(6) Reporting hospital specific information.--
                    ``(A) In general.-- <<NOTE: Public 
                information.>> The Secretary shall make information 
                available to the public regarding readmission rates of 
                each subsection (d) hospital under the program.
                    ``(B) Opportunity to review and submit 
                corrections.--The Secretary shall ensure that a 
                subsection (d) hospital has the opportunity to review, 
                and submit corrections for, the information to be made 
                public with respect to the hospital under subparagraph 
                (A) prior to such information being made public.
                    ``(C) Website.--Such information shall be posted on 
                the Hospital Compare Internet website in an easily 
                understandable format.
            ``(7) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the following:
                    ``(A) The determination of base operating DRG 
                payment amounts.
                    ``(B) The methodology for determining the adjustment 
                factor under paragraph (3), including excess 
                readmissions ratio under paragraph (4)(C), aggregate 
                payments for excess readmissions under paragraph (4)(A), 
                and aggregate payments for all discharges under 
                paragraph (4)(B), and applicable periods and applicable 
                conditions under paragraph (5).
                    ``(C) The measures of readmissions as described in 
                paragraph (5)(A)(ii).
            ``(8) Readmission rates for all patients.--
                    ``(A) Calculation of readmission.--The Secretary 
                shall calculate readmission rates for all patients (as 
                defined in subparagraph (D)) for a specified hospital 
                (as defined in subparagraph (D)(ii)) for an applicable 
                condition (as defined in paragraph (5)(B)) and other 
                conditions deemed appropriate by the Secretary for an 
                applicable period (as defined in paragraph (5)(D)) in 
                the same manner as used to calculate such readmission 
                rates for hospitals with
                respect to this title and posted on the CMS Hospital 
                Compare website.
                    ``(B) Posting of hospital specific all patient 
                readmission rates.-- <<NOTE: Web posting.>> The 
                Secretary shall make information on all patient 
                readmission rates calculated under subparagraph (A) 
                available on the CMS Hospital Compare website in a form 
                and manner determined appropriate by the Secretary. The 
                Secretary may also make other information determined 
                appropriate by the Secretary available on such website.
                    ``(C) Hospital submission of all patient data.--
                          ``(i) Except as provided for in clause (ii), 
                      each specified hospital (as defined in 
                      subparagraph (D)(ii)) shall submit to the 
                      Secretary, in a form, manner and time specified by 
                      the Secretary, data and information determined 
                      necessary by the Secretary for the Secretary to 
                      calculate the all patient readmission rates 
                      described in subparagraph (A).
                          ``(ii) Instead of a specified hospital 
                      submitting to the Secretary the data and 
                      information described in clause (i), such data and 
                      information may be submitted to the Secretary, on 
                      behalf of such a specified hospital, by a state or 
                      an entity determined appropriate by the Secretary.
                    ``(D) Definitions.--For purposes of this paragraph:
                          ``(i) The term `all patients' means patients 
                      who are treated on an inpatient basis and 
                      discharged from a specified hospital (as defined 
                      in clause (ii)).
                          ``(ii) The term `specified hospital' means a 
                      subsection (d) hospital, hospitals described in 
                      clauses (i) through (v) of subsection (d)(1)(B) 
                      and, as determined feasible and appropriate by the 
                      Secretary, other hospitals not otherwise described 
                      in this subparagraph.''.

    (b) Quality Improvement.--Part S of title III of the Public Health 
Service Act, as amended by section 3015, is further amended by adding at 
the end the following:

``SEC. 399KK. <<NOTE: 42 USC 280j-3.>> QUALITY IMPROVEMENT PROGRAM FOR 
            HOSPITALS WITH A HIGH SEVERITY ADJUSTED READMISSION RATE.

    ``(a) Establishment.--
            ``(1) In general.-- <<NOTE: Deadline.>> Not later than 2 
        years after the date of enactment of this section, the Secretary 
        shall make available a program for eligible hospitals to improve 
        their readmission rates through the use of patient safety 
        organizations (as defined in section 921(4)).
            ``(2) Eligible hospital defined.--In this subsection, the 
        term `eligible hospital' means a hospital that the Secretary 
        determines has a high rate of risk adjusted readmissions for the 
        conditions described in section 1886(q)(8)(A) of the Social 
        Security Act and has not taken appropriate steps to reduce such 
        readmissions and improve patient safety as evidenced through 
        historically high rates of readmissions, as determined by the 
        Secretary.
            ``(3) Risk adjustment.--The Secretary shall utilize 
        appropriate risk adjustment measures to determine eligible 
        hospitals.

    ``(b) Report to the Secretary.-- <<NOTE: Determination.>> As 
determined appropriate by the Secretary, eligible hospitals and patient 
safety organizations
working with those hospitals shall report to the Secretary on the 
processes employed by the hospital to improve readmission rates and the 
impact of such processes on readmission rates.''.

SEC. 3026. <<NOTE: 42 USC 1395b-1 note.>> COMMUNITY-BASED CARE 
            TRANSITIONS PROGRAM.

    (a) In General.--The Secretary shall establish a Community-Based 
Care Transitions Program under which the Secretary provides funding to 
eligible entities that furnish improved care transition services to 
high-risk Medicare beneficiaries.
    (b) Definitions.--In this section:
            (1) Eligible entity.--The term ``eligible entity'' means the 
        following:
                    (A) A subsection (d) hospital (as defined in section 
                1886(d)(1)(B) of the Social Security Act (42 U.S.C. 
                1395ww(d)(1)(B))) identified by the Secretary as having 
                a high readmission rate, such as under section 1886(q) 
                of the Social Security Act, as added by section 3025.
                    (B) An appropriate community-based organization that 
                provides care transition services under this section 
                across a continuum of care through arrangements with 
                subsection (d) hospitals (as so defined) to furnish the 
                services described in subsection (c)(2)(B)(i) and whose 
                governing body includes sufficient representation of 
                multiple health care stakeholders (including consumers).
            (2) High-risk medicare beneficiary.--The term ``high-risk 
        Medicare beneficiary'' means a Medicare beneficiary who has 
        attained a minimum hierarchical condition category score, as 
        determined by the Secretary, based on a diagnosis of multiple 
        chronic conditions or other risk factors associated with a 
        hospital readmission or substandard transition into post-
        hospitalization care, which may include 1 or more of the 
        following:
                    (A) Cognitive impairment.
                    (B) Depression.
                    (C) A history of multiple readmissions.
                    (D) Any other chronic disease or risk factor as 
                determined by the Secretary.
            (3) Medicare beneficiary.--The term ``Medicare beneficiary'' 
        means an individual who is entitled to benefits under part A of 
        title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) 
        and enrolled under part B of such title, but not enrolled under 
        part C of such title.
            (4) Program.--The term ``program'' means the program 
        conducted under this section.
            (5) Readmission.--The term ``readmission'' has the meaning 
        given such term in section 1886(q)(5)(E) of the Social Security 
        Act, as added by section 3025.
            (6) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.

    (c) Requirements.--
            (1) Duration.--
                    (A) In general.--The program shall be conducted for 
                a 5-year period, beginning January 1, 2011.
                    (B) Expansion.-- 
                <<NOTE: Determination. Certification.>> The Secretary 
                may expand the duration and the scope of the program, to 
                the extent determined appropriate by the Secretary, if 
                the Secretary determines (and the Chief Actuary of the 
                Centers for Medicare & Medicaid Services, with respect 
                to spending under this
                title, certifies) that such expansion would reduce 
                spending under this title without reducing quality.
            (2) Application; participation.--
                    (A) In general.--
                          (i) Application.--An eligible entity seeking 
                      to participate in the program shall submit an 
                      application to the Secretary at such time, in such 
                      manner, and containing such information as the 
                      Secretary may require.
                          (ii) Partnership.--If an eligible entity is a 
                      hospital, such hospital shall enter into a 
                      partnership with a community-based organization to 
                      participate in the program.
                    (B) Intervention proposal.--Subject to subparagraph 
                (C), an application submitted under subparagraph (A)(i) 
                shall include a detailed proposal for at least 1 care 
                transition intervention, which may include the 
                following:
                          (i) Initiating care transition services for a 
                      high-risk Medicare beneficiary not later than 24 
                      hours prior to the discharge of the beneficiary 
                      from the eligible entity.
                          (ii) Arranging timely post-discharge follow-up 
                      services to the high-risk Medicare beneficiary to 
                      provide the beneficiary (and, as appropriate, the 
                      primary caregiver of the beneficiary) with 
                      information regarding responding to symptoms that 
                      may indicate additional health problems or a 
                      deteriorating condition.
                          (iii) Providing the high-risk Medicare 
                      beneficiary (and, as appropriate, the primary 
                      caregiver of the beneficiary) with assistance to 
                      ensure productive and timely interactions between 
                      patients and post-acute and outpatient providers.
                          (iv) Assessing and actively engaging with a 
                      high-risk Medicare beneficiary (and, as 
                      appropriate, the primary caregiver of the 
                      beneficiary) through the provision of self-
                      management support and relevant information that 
                      is specific to the beneficiary's condition.
                          (v) Conducting comprehensive medication review 
                      and management (including, if appropriate, 
                      counseling and self-management support).
                    (C) Limitation.--A care transition intervention 
                proposed under subparagraph (B) may not include payment 
                for services required under the discharge planning 
                process described in section 1861(ee) of the Social 
                Security Act (42 U.S.C. 1395x(ee)).
            (3) Selection.--In selecting eligible entities to 
        participate in the program, the Secretary shall give priority to 
        eligible entities that--
                    (A) participate in a program administered by the 
                Administration on Aging to provide concurrent care 
                transitions interventions with multiple hospitals and 
                practitioners; or
                    (B) provide services to medically underserved 
                populations, small communities, and rural areas.

    (d) Implementation.--Notwithstanding any other provision of law, the 
Secretary may implement the provisions of this section by program 
instruction or otherwise.
    (e) Waiver Authority.--The Secretary may waive such requirements of 
titles XI and XVIII of the Social Security Act as may be necessary to 
carry out the program.
    (f) Funding.--For purposes of carrying out this section, the 
Secretary of Health and Human Services 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 such proportion as the Secretary determines appropriate, of 
$500,000,000, to the Centers for Medicare & Medicaid Services Program 
Management Account for the period of fiscal years 2011 through 2015. 
Amounts transferred under the preceding sentence shall remain available 
until expended.

SEC. 3027. EXTENSION OF GAINSHARING DEMONSTRATION.

    (a) In General.--Subsection (d)(3) of section 5007 of the Deficit 
Reduction Act of 2005 (Public Law 109-171) <<NOTE: 42 USC 1395ww 
note.>> is amended by inserting ``(or September 30, 2011, in the case of 
a demonstration project in operation as of October 1, 2008)'' after 
``December 31, 2009''.

    (b) Funding.--
            (1) In general.--Subsection (f)(1) of such section is 
        amended by inserting ``and for fiscal year 2010, $1,600,000,'' 
        after ``$6,000,000,''.
            (2) Availability.--Subsection (f)(2) of such section is 
        amended by striking ``2010'' and inserting ``2014 or until 
        expended''.

    (c) Reports.--
            (1) Quality improvement and savings.--Subsection (e)(3) of 
        such section is amended by striking ``December 1, 2008'' and 
        inserting ``March 31, 2011''.
            (2) Final report.--Subsection (e)(4) of such section is 
        amended by striking ``May 1, 2010'' and inserting ``March 31, 
        2013''.

        Subtitle B--Improving Medicare for Patients and Providers

PART I--ENSURING BENEFICIARY ACCESS TO PHYSICIAN CARE AND OTHER SERVICES

SEC. 3101. INCREASE IN THE PHYSICIAN PAYMENT UPDATE.

    Section 1848(d) of the Social Security Act (42 U.S.C. 1395w-4(d)) is 
amended by adding at the end the following new paragraph:
            ``(10) Update for 2010.--
                    ``(A) In general.--Subject to paragraphs (7)(B), 
                (8)(B), and (9)(B), in lieu of the update to the single 
                conversion factor established in paragraph (1)(C) that 
                would otherwise apply for 2010, the update to the single 
                conversion factor shall be 0.5 percent.
                    ``(B) No effect on computation of conversion factor 
                for 2011 and subsequent years.--The conversion factor 
                under this subsection shall be computed under paragraph 
                (1)(A) for 2011 and subsequent years as if subparagraph 
                (A) had never applied.''.

SEC. 3102. EXTENSION OF THE WORK GEOGRAPHIC INDEX FLOOR AND REVISIONS TO 
            THE PRACTICE EXPENSE GEOGRAPHIC ADJUSTMENT UNDER THE 
            MEDICARE PHYSICIAN FEE SCHEDULE.

    (a) Extension of Work GPCI Floor.--Section 1848(e)(1)(E) of the 
Social Security Act (42 U.S.C. 1395w-4(e)(1)(E)) is amended by striking 
``before January 1, 2010'' and inserting ``before January 1, 2011''.
    (b) Practice Expense Geographic Adjustment for 2010 and Subsequent 
Years.--Section 1848(e)(1) of the Social Security Act ( <<NOTE: 42 USC 
1395w-4.>> 42 U.S.C. 1395w4(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``and (G)'' and 
        inserting ``(G), and (H)''; and
            (2) by adding at the end the following new subparagraph:
                    ``(H) Practice expense geographic adjustment for 
                2010 and subsequent years.--
                          ``(i) For 2010.--Subject to clause (iii), for 
                      services furnished during 2010, the employee wage 
                      and rent portions of the practice expense 
                      geographic index described in subparagraph (A)(i) 
                      shall reflect \3/4\ of the difference between the 
                      relative costs of employee wages and rents in each 
                      of the different fee schedule areas and the 
                      national average of such employee wages and rents.
                          ``(ii) For 2011.--Subject to clause (iii), for 
                      services furnished during 2011, the employee wage 
                      and rent portions of the practice expense 
                      geographic index described in subparagraph (A)(i) 
                      shall reflect \1/2\ of the difference between the 
                      relative costs of employee wages and rents in each 
                      of the different fee schedule areas and the 
                      national average of such employee wages and rents.
                          ``(iii) Hold harmless.--The practice expense 
                      portion of the geographic adjustment factor 
                      applied in a fee schedule area for services 
                      furnished in 2010 or 2011 shall not, as a result 
                      of the application of clause (i) or (ii), be 
                      reduced below the practice expense portion of the 
                      geographic adjustment factor under subparagraph 
                      (A)(i) (as calculated prior to the application of 
                      such clause (i) or (ii), respectively) for such 
                      area for such year.
                          ``(iv) Analysis.--The Secretary shall analyze 
                      current methods of establishing practice expense 
                      geographic adjustments under subparagraph (A)(i) 
                      and evaluate data that fairly and reliably 
                      establishes distinctions in the costs of operating 
                      a medical practice in the different fee schedule 
                      areas. Such analysis shall include an evaluation 
                      of the following:
                                    ``(I) The feasibility of using 
                                actual data or reliable survey data 
                                developed by medical organizations on 
                                the costs of operating a medical 
                                practice, including office rents and 
                                non-physician staff wages, in different 
                                fee schedule areas.
                                    ``(II) The office expense portion of 
                                the practice expense geographic 
                                adjustment described in subparagraph 
                                (A)(i), including the extent to which
                                types of office expenses are determined 
                                in local markets instead of national 
                                markets.
                                    ``(III) The weights assigned to each 
                                of the categories within the practice 
                                expense geographic adjustment described 
                                in subparagraph (A)(i).
                          ``(v) <<NOTE: Deadline.>> Revision for 2012 
                      and subsequent years.--As a result of the analysis 
                      described in clause (iv), the Secretary shall, not 
                      later than January 1, 2012, make appropriate 
                      adjustments to the practice expense geographic 
                      adjustment described in subparagraph (A)(i) to 
                      ensure accurate geographic adjustments across fee 
                      schedule areas, including--
                                    ``(I) basing the office rents 
                                component and its weight on office 
                                expenses that vary among fee schedule 
                                areas; and
                                    ``(II) considering a representative 
                                range of professional and non-
                                professional personnel employed in a 
                                medical office based on the use of the 
                                American Community Survey data or other 
                                reliable data for wage adjustments.
                      Such adjustments shall be made without regard to 
                      adjustments made pursuant to clauses (i) and (ii) 
                      and shall be made in a budget neutral manner.''.

SEC. 3103. 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, 2009'' and inserting 
``December 31, 2010''.

SEC. 3104. EXTENSION OF PAYMENT FOR TECHNICAL COMPONENT OF CERTAIN 
            PHYSICIAN PATHOLOGY SERVICES.

    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 Modernization Act of 2003 
(42 U.S.C. 1395w-4 note), section 104 of division B of the Tax Relief 
and Health Care Act of 2006 (42 U.S.C. 1395w-4 note), section 104 of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 (Public Law 110-
173), and section 136 of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275), is amended by striking ``and 
2009'' and inserting ``2009, and 2010''.

SEC. 3105. EXTENSION OF AMBULANCE ADD-ONS.

    (a) Ground Ambulance.--Section 1834(l)(13)(A) of the Social Security 
Act (42 U.S.C. 1395m(l)(13)(A)) is amended--
            (1) in the matter preceding clause (i)--
                    (A) by striking ``2007, and for'' and inserting 
                ``2007, for''; and
                    (B) by striking ``2010'' and inserting ``2010, and 
                for such services furnished on or after April 1, 2010, 
                and before January 1, 2011,''; and
            (2) in each of clauses (i) and (ii), by inserting ``, and on 
        or after April 1, 2010, and before January 1, 2011'' after 
        ``January 1, 2010'' each place it appears.

    (b) Air Ambulance.--Section 146(b)(1) of the Medicare Improvements 
for Patients and Providers Act of 2008 <<NOTE: 42 USC 1395m 
note.>> (Public Law
110-275) is amended by striking ``December 31, 2009'' and inserting 
``December 31, 2009, and during the period beginning on April 1, 2010, 
and ending on January 1, 2011''.

    (c) Super Rural Ambulance.--Section 1834(l)(12)(A) of the Social 
Security Act (42 U.S.C. 1395m(l)(12)(A)) is amended by striking ``2010'' 
and inserting ``2010, and on or after April 1, 2010, and before January 
1, 2011''.

SEC. 3106. EXTENSION OF CERTAIN PAYMENT RULES FOR LONG-TERM CARE 
            HOSPITAL SERVICES AND OF MORATORIUM ON THE ESTABLISHMENT OF 
            CERTAIN HOSPITALS AND FACILITIES.

    (a) Extension of Certain Payment Rules.--Section 114(c) of the 
Medicare, Medicaid, and SCHIP Extension Act of 2007 (42 U.S.C. 1395ww 
note), as amended by section 4302(a) of the American Recovery and 
Reinvestment Act (Public Law 111-5), is further amended by striking ``3-
year period'' each place it appears and inserting ``4-year period''.
    (b) Extension of Moratorium.--Section 114(d)(1) of such Act (42 
U.S.C. 1395ww note), in the matter preceding subparagraph (A), is 
amended by striking ``3-year period'' and inserting ``4-year period''.

SEC. 3107. EXTENSION OF PHYSICIAN FEE SCHEDULE MENTAL HEALTH ADD-ON.

    Section 138(a)(1) of the Medicare Improvements for Patients and 
Providers Act of 2008 (Public Law 110-275) <<NOTE: 42 USC 1395w-4 
note.>> is amended by striking ``December 31, 2009'' and inserting 
``December 31, 2010''.

SEC. 3108. PERMITTING PHYSICIAN ASSISTANTS TO ORDER POST-HOSPITAL 
            EXTENDED CARE SERVICES.

    (a) Ordering Post-Hospital Extended Care Services.--
            (1) In general.--Section 1814(a)(2) of the Social Security 
        Act (42 U.S.C. 1395f(a)(2)), in the matter preceding 
        subparagraph (A), is amended by striking ``or clinical nurse 
        specialist'' and inserting ``, a clinical nurse specialist, or a 
        physician assistant (as those terms are defined in section 
        1861(aa)(5))'' after ``nurse practitioner''.
            (2) Conforming amendment.--Section 1814(a) of the Social 
        Security Act (42 U.S.C. 1395f(a)) is amended, in the second 
        sentence, by striking ``or clinical nurse specialist'' and 
        inserting ``clinical nurse specialist, or physician assistant'' 
        after ``nurse practitioner,''.

    (b) <<NOTE: 42 USC 1395f note.>> Effective Date.--The amendments 
made by this section shall apply to items and services furnished on or 
after January 1, 2011.

SEC. 3109. EXEMPTION OF CERTAIN PHARMACIES FROM ACCREDITATION 
            REQUIREMENTS.

    (a) In General.--Section 1834(a)(20) of the Social Security Act (42 
U.S.C. 1395m(a)(20)), as added by section 154(b)(1)(A) of the Medicare 
Improvements for Patients and Providers Act of 2008 (Public Law 100-
275), is amended--
            (1) in subparagraph (F)(i)--
                    (A) by inserting ``and subparagraph (G)'' after 
                ``clause (ii)''; and
                    (B) by inserting ``, except that the Secretary shall 
                not require a pharmacy to have submitted to the 
                Secretary such evidence of accreditation prior to January 1, 
                2011'' before the semicolon at the end; and
            (2) by adding at the end the following new subparagraph:
                    ``(G) Application of accreditation requirement to 
                certain pharmacies.--
                          ``(i) In general.--With respect to items and 
                      services furnished on or after January 1, 2011, in 
                      implementing quality standards under this 
                      paragraph--
                                    ``(I) subject to subclause (II), in 
                                applying such standards and the 
                                accreditation requirement of 
                                subparagraph (F)(i) with respect to 
                                pharmacies described in clause (ii) 
                                furnishing such items and services, such 
                                standards and accreditation requirement 
                                shall not apply to such pharmacies; and
                                    ``(II) the Secretary may apply to 
                                such pharmacies an alternative 
                                accreditation requirement established by 
                                the Secretary if the Secretary 
                                determines such alternative 
                                accreditation requirement is more 
                                appropriate for such pharmacies.
                          ``(ii) <<NOTE: Criteria.>> Pharmacies 
                      described.--A pharmacy described in this clause is 
                      a pharmacy that meets each of the following 
                      criteria:
                                    ``(I) The total billings by the 
                                pharmacy for such items and services 
                                under this title are less than 5 percent 
                                of total pharmacy sales, as determined 
                                based on the average total pharmacy 
                                sales for the previous 3 calendar years, 
                                3 fiscal years, or other yearly period 
                                specified by the Secretary.
                                    ``(II) The pharmacy has been 
                                enrolled under section 1866(j) as a 
                                supplier of durable medical equipment, 
                                prosthetics, orthotics, and supplies, 
                                has been issued (which may include the 
                                renewal of) a provider number for at 
                                least 5 years, and for which a final 
                                adverse action (as defined in section 
                                424.57(a) of title 42, Code of Federal 
                                Regulations) has not been imposed in the 
                                past 5 years.
                                    ``(III) The pharmacy submits to the 
                                Secretary an attestation, in a form and 
                                manner, and at a time, specified by the 
                                Secretary, that the pharmacy meets the 
                                criteria described in subclauses (I) and 
                                (II). Such attestation shall be subject 
                                to section 1001 of title 18, United 
                                States Code.
                                    ``(IV) The pharmacy agrees to submit 
                                materials as requested by the Secretary, 
                                or during the course of an audit 
                                conducted on a random sample of 
                                pharmacies selected annually, to verify 
                                that the pharmacy meets the criteria 
                                described in subclauses (I) and (II). 
                                Materials submitted under the preceding 
                                sentence shall include a certification 
                                by an accountant on behalf of the 
                                pharmacy or the submission of tax 
                                returns filed by the pharmacy during the 
                                relevant periods, as requested by the 
                                Secretary.''.

    (b) <<NOTE: 42 USC 1395m note.>> Administration.--Notwithstanding 
any other provision of law, the Secretary may implement the amendments 
made by subsection (a) by program instruction or otherwise.

    (c) <<NOTE: 42 USC 1395m note.>> Rule of Construction.--Nothing in 
the provisions of or amendments made by this section shall be construed 
as affecting the application of an accreditation requirement for 
pharmacies to qualify for bidding in a competitive acquisition area 
under section 1847 of the Social Security Act (42 U.S.C. 1395w-3).

SEC. 3110. PART B SPECIAL ENROLLMENT PERIOD FOR DISABLED TRICARE 
            BENEFICIARIES.

    (a) In General.--
            (1) In general.--Section 1837 of the Social Security Act (42 
        U.S.C. 1395p) is amended by adding at the end the following new 
        subsection:

    ``(l)(1) In the case of any individual who is a covered beneficiary 
(as defined in section 1072(5) of title 10, United States Code) at the 
time the individual is entitled to part A under section 226(b) or 
section 226A and who is eligible to enroll but who has elected not to 
enroll (or to be deemed enrolled) during the individual's initial 
enrollment period, there shall be a special enrollment period described 
in paragraph (2).
    ``(2) The special enrollment period described in this paragraph, 
with respect to an individual, is the 12-month period beginning on the 
day after the last day of the initial enrollment period of the 
individual or, if later, the 12-month period beginning with the month 
the individual is notified of enrollment under this section.
    ``(3) In the case of an individual who enrolls during the special 
enrollment period provided under paragraph (1), the coverage period 
under this part shall begin on the first day of the month in which the 
individual enrolls, or, at the option of the individual, the first month 
after the end of the individual's initial enrollment period.
    ``(4) An individual may only enroll during the special enrollment 
period provided under paragraph (1) one time during the individual's 
lifetime.
    ``(5) The Secretary shall ensure that the materials relating to 
coverage under this part that are provided to an individual described in 
paragraph (1) prior to the individual's initial enrollment period 
contain information concerning the impact of not enrolling under this 
part, including the impact on health care benefits under the TRICARE 
program under chapter 55 of title 10, United States Code.
    ``(6) The Secretary of Defense shall collaborate with the Secretary 
of Health and Human Services and the Commissioner of Social Security to 
provide for the accurate identification of individuals described in 
paragraph (1). The Secretary of Defense shall provide such individuals 
with notification with respect to this subsection. The Secretary of 
Defense shall collaborate with the Secretary of Health and Human 
Services and the Commissioner of Social Security to ensure appropriate 
follow up pursuant to any notification provided under the preceding 
sentence.''.
            (2) <<NOTE: 42 USC 1395p note.>> Effective date.--The 
        amendment made by paragraph (1) shall apply to elections made 
        with respect to initial enrollment periods that end after the 
        date of the enactment of this Act.

    (b) Waiver of Increase of Premium.--Section 1839(b) of the Social 
Security Act (42 U.S.C. 1395r(b)) is amended by striking ``section 
1837(i)(4)'' and inserting ``subsection (i)(4) or (l) of section 1837''.

SEC. 3111. PAYMENT FOR BONE DENSITY TESTS.

    (a) Payment.--
            (1) In general.--Section 1848 of the Social Security Act (42 
        U.S.C. 1395w-4) is amended--
                    (A) in subsection (b)--
                          (i) in paragraph (4)(B), by inserting ``, and 
                      for 2010 and 2011, dual-energy x-ray 
                      absorptiometry services (as described in paragraph 
                      (6))'' before the period at the end; and
                          (ii) by adding at the end the following new 
                      paragraph:
            ``(6) Treatment of bone mass scans.--For dual-energy x-ray 
        absorptiometry services (identified in 2006 by HCPCS codes 76075 
        and 76077 (and any succeeding codes)) furnished during 2010 and 
        2011, instead of the payment amount that would otherwise be 
        determined under this section for such years, the payment amount 
        shall be equal to 70 percent of the product of--
                    ``(A) the relative value for the service (as 
                determined in subsection (c)(2)) for 2006;
                    ``(B) the conversion factor (established under 
                subsection (d)) for 2006; and
                    ``(C) the geographic adjustment factor (established 
                under subsection (e)(2)) for the service for the fee 
                schedule area for 2010 and 2011, respectively.''; and
                    (B) in subsection (c)(2)(B)(iv)--
                          (i) in subclause (II), by striking ``and'' at 
                      the end;
                          (ii) in subclause (III), by striking the 
                      period at the end and inserting ``; and''; and
                          (iii) by adding at the end the following new 
                      subclause:
                                    ``(IV) subsection (b)(6) shall not 
                                be taken into account in applying clause 
                                (ii)(II) for 2010 or 2011.''.
            (2) <<NOTE: 42 USC 1395w-4 note.>> Implementation.--
        Notwithstanding any other provision of law, the Secretary may 
        implement the amendments made by paragraph (1) by program 
        instruction or otherwise.

    (b) Study and Report by the Institute of Medicine.--
            (1) In general.--The Secretary of Health and Human Services 
        is authorized to enter into an agreement with the Institute of 
        Medicine of the National Academies to conduct a study on the 
        ramifications of Medicare payment reductions for dual-energy x-
        ray absorptiometry (as described in section 1848(b)(6) of the 
        Social Security Act, as added by subsection (a)(1)) during 2007, 
        2008, and 2009 on beneficiary access to bone mass density tests.
            (2) Report.--An agreement entered into under paragraph (1) 
        shall provide for the Institute of Medicine to submit to the 
        Secretary and to Congress a report containing the results of the 
        study conducted under such paragraph.

SEC. 3112. REVISION TO THE MEDICARE IMPROVEMENT FUND.

    Section 1898(b)(1)(A) of the Social Security Act (42 U.S.C. 1395iii) 
is amended by striking ``$22,290,000,000'' and inserting ``$0''.

SEC. 3113. <<NOTE: 42 USC 1395l note.>> TREATMENT OF CERTAIN COMPLEX 
            DIAGNOSTIC LABORATORY TESTS.

    (a) Demonstration Project.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall conduct 
        a demonstration project under part B title XVIII of the Social 
        Security Act under which separate payments are made under such 
        part for complex diagnostic laboratory tests provided to 
        individuals under such part. Under the demonstration project, 
        the Secretary shall establish appropriate payment rates for such 
        tests.
            (2) Covered complex diagnostic laboratory test defined.--In 
        this section, the term ``complex diagnostic laboratory test'' 
        means a diagnostic laboratory test--
                    (A) that is an analysis of gene protein expression, 
                topographic genotyping, or a cancer chemotherapy 
                sensitivity assay;
                    (B) that is determined by the Secretary to be a 
                laboratory test for which there is not an alternative 
                test having equivalent performance characteristics;
                    (C) which is billed using a Health Care Procedure 
                Coding System (HCPCS) code other than a not otherwise 
                classified code under such Coding System;
                    (D) which is approved or cleared by the Food and 
                Drug Administration or is covered under title XVIII of 
                the Social Security Act; and
                    (E) is described in section 1861(s)(3) of the Social 
                Security Act (42 U.S.C. 1395x(s)(3)).
            (3) Separate payment defined.--In this section, the term 
        ``separate payment'' means direct payment to a laboratory 
        (including a hospital-based or independent laboratory) that 
        performs a complex diagnostic laboratory test with respect to a 
        specimen collected from an individual during a period in which 
        the individual is a patient of a hospital if the test is 
        performed after such period of hospitalization and if separate 
        payment would not otherwise be made under title XVIII of the 
        Social Security Act by reason of sections 1862(a)(14) and 
        1866(a)(1)(H)(i) of the such Act (42 U.S.C. 1395y(a)(14); 42 
        U.S.C. 1395cc(a)(1)(H)(i)).

    (b) Duration.--Subject to subsection (c)(2), the Secretary shall 
conduct the demonstration project under this section for the 2-year 
period beginning on July 1, 2011.
    (c) Payments and Limitation.--Payments under the demonstration 
project under this section shall--
            (1) be made from the Federal Supplemental Medical Insurance 
        Trust Fund under section 1841 of the Social Security Act (42 
        U.S.C. 1395t); and
            (2) may not exceed $100,000,000.

    (d) Report.--Not later than 2 years after the completion of the 
demonstration project under this section, the Secretary shall submit to 
Congress a report on the project. Such report shall include--
            (1) an assessment of the impact of the demonstration project 
        on access to care, quality of care, health outcomes, and 
        expenditures under title XVIII of the Social Security Act 
        (including any savings under such title); and
            (2) such recommendations as the Secretary determines 
        appropriate.

    (e) Implementation Funding.--For purposes of administering this 
section (including preparing and submitting the report under subsection 
(d)), the Secretary shall provide for the transfer, from the Federal 
Supplemental Medical Insurance Trust Fund under section 1841 of the 
Social Security Act (42 U.S.C. 1395t), to the Centers for Medicare & 
Medicaid Services Program Management Account, of $5,000,000. Amounts 
transferred under the preceding sentence shall remain available until 
expended.

SEC. 3114. IMPROVED ACCESS FOR CERTIFIED NURSE-MIDWIFE SERVICES.

    Section 1833(a)(1)(K) of the Social Security Act (42 U.S.C. 
1395l(a)(1)(K)) is amended by inserting ``(or 100 percent for services 
furnished on or after January 1, 2011)'' after ``1992, 65 percent''.

                       PART II--RURAL PROTECTIONS

SEC. 3121. EXTENSION OF OUTPATIENT HOLD HARMLESS PROVISION.

    (a) In General.--Section 1833(t)(7)(D)(i) of the Social Security Act 
(42 U.S.C. 1395l(t)(7)(D)(i)) is amended--
            (1) in subclause (II)--
                    (A) in the first sentence, by striking ``2010''and 
                inserting ``2011''; and
                    (B) in the second sentence, by striking ``or 2009'' 
                and inserting ``, 2009, or 2010''; and
            (2) in subclause (III), by striking ``January 1, 2010'' and 
        inserting ``January 1, 2011''.

    (b) Permitting All Sole Community Hospitals To Be Eligible for Hold 
Harmless.--Section 1833(t)(7)(D)(i)(III) of the Social Security Act (42 
U.S.C. 1395l(t)(7)(D)(i)(III)) is amended by adding at the end the 
following new sentence: <<NOTE: Time period. Applicability.>> ``In the 
case of covered OPD services furnished on or after January 1, 2010, and 
before January 1, 2011, the preceding sentence shall be applied without 
regard to the 100-bed limitation.''.

SEC. 3122. <<NOTE: 42 USC 1395l note.>> 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) and section 107 of the Medicare, Medicaid, and SCHIP 
Extension Act of 2007 (42 U.S.C. 1395l note), is amended by inserting 
``or during the 1-year period beginning on July 1, 2010'' before the 
period at the end.

SEC. 3123. <<NOTE: 42 USC 1395ww note.>> EXTENSION OF THE RURAL 
            COMMUNITY HOSPITAL DEMONSTRATION PROGRAM.

    (a) One-year Extension.--Section 410A of the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173; 
117 Stat. 2272) is amended by adding at the end the following new 
subsection:
    ``(g) One-Year Extension of Demonstration Program.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this subsection, the Secretary shall conduct the demonstration
        program under this section for an additional 1-year period (in 
        this section referred to as the `1-year extension period') that 
        begins on the date immediately following the last day of the 
        initial 5-year period under subsection (a)(5).
            ``(2) Expansion of demonstration states.--Notwithstanding 
        subsection (a)(2), during the 1-year extension period, the 
        Secretary shall expand the number of States with low population 
        densities determined by the Secretary under such subsection to 
        20. In determining which States to include in such expansion, 
        the Secretary shall use the same criteria and data that the 
        Secretary used to determine the States under such subsection for 
        purposes of the initial 5-year period.
            ``(3) Increase in maximum number of hospitals participating 
        in the demonstration program.--Notwithstanding subsection 
        (a)(4), during the 1-year extension period, not more than 30 
        rural community hospitals may participate in the demonstration 
        program under this section.
            ``(4) No affect on hospitals in demonstration program on 
        date of enactment.--In the case of a rural community hospital 
        that is participating in the demonstration program under this 
        section as of the last day of the initial 5-year period, the 
        Secretary shall provide for the continued participation of such 
        rural community hospital in the demonstration program during the 
        1-year extension period unless the rural community hospital 
        makes an election, in such form and manner as the Secretary may 
        specify, to discontinue such participation.''.

    (b) Conforming Amendments.--Subsection (a)(5) of section 410A of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(Public Law 108-173; 117 Stat. 2272) is amended by inserting ``(in this 
section referred to as the `initial 5-year period') and, as provided in 
subsection (g), for the 1-year extension period'' after ``5-year 
period''.
    (c) Technical Amendments.--
            (1) Subsection (b) of section 410A of the Medicare 
        Prescription Drug, Improvement, and Modernization Act of 2003 
        (Public Law 108-173; 117 Stat. 2272) is amended--
                    (A) in paragraph (1)(B)(ii), by striking ``2)'' and 
                inserting ``2))''; and
                    (B) in paragraph (2), by inserting ``cost'' before 
                ``reporting period'' the first place such term appears 
                in each of subparagraphs (A) and (B).
            (2) Subsection (f)(1) of section 410A of the Medicare 
        Prescription Drug, Improvement, and Modernization Act of 2003 
        (Public Law 108-173; 117 Stat. 2272) is amended--
                    (A) in subparagraph (A)(ii), by striking ``paragraph 
                (2)'' and inserting ``subparagraph (B)''; and
                    (B) in subparagraph (B), by striking ``paragraph 
                (1)(B)'' and inserting ``subparagraph (A)(ii)''.

SEC. 3124. EXTENSION OF THE MEDICARE-DEPENDENT HOSPITAL (MDH) PROGRAM.

    (a) Extension of Payment Methodology.--Section 1886(d)(5)(G) of the 
Social Security Act (42 U.S.C. 1395ww(d)(5)(G)) is amended--
            (1) in clause (i), by striking ``October 1, 2011'' and 
        inserting ``October 1, 2012''; and
            (2) in clause (ii)(II), by striking ``October 1, 2011'' and 
        inserting ``October 1, 2012''.

    (b) Conforming Amendments.--
            (1) Extension of target amount.--Section 1886(b)(3)(D) of 
        the Social Security Act (42 U.S.C. 1395ww(b)(3)(D)) is amended--
                    (A) in the matter preceding clause (i), by striking 
                ``October 1, 2011'' and inserting ``October 1, 2012''; 
                and
                    (B) in clause (iv), by striking ``through fiscal 
                year 2011'' and inserting ``through fiscal year 2012''.
            (2) Permitting hospitals to decline reclassification.--
        Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of 
        1993 (42 U.S.C. 1395ww note) is amended by striking ``through 
        fiscal year 2011'' and inserting ``through fiscal year 2012''.

SEC. 3125. TEMPORARY IMPROVEMENTS TO THE MEDICARE INPATIENT HOSPITAL 
            PAYMENT ADJUSTMENT FOR LOW-VOLUME HOSPITALS.

    Section 1886(d)(12) of the Social Security Act (42 U.S.C. 
1395ww(d)(12)) is amended--
            (1) in subparagraph (A), by inserting ``or (D)'' after 
        ``subparagraph (B)'';
            (2) in subparagraph (B), in the matter preceding clause (i), 
        by striking ``The Secretary'' and inserting ``For discharges 
        occurring in fiscal years 2005 through 2010 and for discharges 
        occurring in fiscal year 2013 and subsequent fiscal years, the 
        Secretary'';
            (3) in subparagraph (C)(i)--
                    (A) by inserting ``(or, with respect to fiscal years 
                2011 and 2012, 15 road miles)'' after ``25 road miles''; 
                and
                    (B) by inserting ``(or, with respect to fiscal years 
                2011 and 2012, 1,500 discharges of individuals entitled 
                to, or enrolled for, benefits under part A)'' after 
                ``800 discharges''; and
            (4) by adding at the end the following new subparagraph:
                    ``(D) Temporary applicable percentage increase.--For 
                discharges occurring in fiscal years 2011 and 2012, the 
                Secretary shall determine an applicable percentage 
                increase for purposes of subparagraph (A) using a 
                continuous linear sliding scale ranging from 25 percent 
                for low-volume hospitals with 200 or fewer discharges of 
                individuals entitled to, or enrolled for, benefits under 
                part A in the fiscal year to 0 percent for low-volume 
                hospitals with greater than 1,500 discharges of such 
                individuals in the fiscal year.''.

SEC. 3126. IMPROVEMENTS TO THE DEMONSTRATION PROJECT ON COMMUNITY HEALTH 
            INTEGRATION MODELS IN CERTAIN RURAL COUNTIES.

    (a) Removal of Limitation on Number of Eligible Counties Selected.--
Subsection (d)(3) of section 123 of the Medicare Improvements for 
Patients and Providers Act of 2008 (42 U.S.C. 1395i-4 note) is amended 
by striking ``not more than 6''.
    (b) Removal of References to Rural Health Clinic Services and 
Inclusion of Physicians' Services in Scope of Demonstration Project.--
Such section 123 is amended--
            (1) in subsection (d)(4)(B)(i)(3), by striking subclause 
        (III); and
            (2) in subsection (j)--
                    (A) in paragraph (8), by striking subparagraph (B) 
                and inserting the following:
                    ``(B) Physicians' services (as defined in section 
                1861(q) of the Social Security Act (42 U.S.C. 
                1395x(q)).'';
                    (B) by striking paragraph (9); and
                    (C) by redesignating paragraph (10) as paragraph 
                (9).

SEC. 3127. MEDPAC STUDY ON ADEQUACY OF MEDICARE PAYMENTS FOR HEALTH CARE 
            PROVIDERS SERVING IN RURAL AREAS.

    (a) Study.--The Medicare Payment Advisory Commission shall conduct a 
study on the adequacy of payments for items and services furnished by 
providers of services and suppliers in rural areas under the Medicare 
program under title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.). Such study shall include an analysis of--
            (1) any adjustments in payments to providers of services and 
        suppliers that furnish items and services in rural areas;
            (2) access by Medicare beneficiaries to items and services 
        in rural areas;
            (3) the adequacy of payments to providers of services and 
        suppliers that furnish items and services in rural areas; and
            (4) the quality of care furnished in rural areas.

    (b) Report.--Not later than January 1, 2011, the Medicare Payment 
Advisory Commission shall submit to Congress a report containing the 
results of the study conducted under subsection (a). Such report shall 
include recommendations on appropriate modifications to any adjustments 
in payments to providers of services and suppliers that furnish items 
and services in rural areas, together with recommendations for such 
legislation and administrative action as the Medicare Payment Advisory 
Commission determines appropriate.

SEC. 3128. TECHNICAL CORRECTION RELATED TO CRITICAL ACCESS HOSPITAL 
            SERVICES.

    (a) In General.--Subsections (g)(2)(A) and (l)(8) of section 1834 of 
the Social Security Act (42 U.S.C. 1395m) are each amended by inserting 
``101 percent of'' before ``the reasonable costs''.
    (b) <<NOTE: 42 USC 1395m note.>> Effective Date.--The amendments 
made by subsection (a) shall take effect as if included in the enactment 
of section 405(a) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2266).

SEC. 3129. EXTENSION OF AND REVISIONS TO MEDICARE RURAL HOSPITAL 
            FLEXIBILITY PROGRAM.

    (a) Authorization.--Section 1820(j) of the Social Security Act (42 
U.S.C. 1395i-4(j)) is amended--
            (1) by striking ``2010, and for'' and inserting ``2010, 
        for''; and
            (2) by inserting ``and for making grants to all States under 
        subsection (g), such sums as may be necessary in each of fiscal 
        years 2011 and 2012, to remain available until expended'' before 
        the period at the end.

    (b) Use of Funds.--Section 1820(g)(3) of the Social Security Act (42 
U.S.C. 1395i-4(g)(3)) is amended--
            (1) in subparagraph (A), by inserting ``and to assist such 
        hospitals in participating in delivery system reforms under the 
        provisions of and amendments made by the Patient Protection and 
        Affordable Care Act, such as value-based purchasing programs, 
        accountable care organizations under section 1899, the National 
        pilot program on payment bundling under section 1866D, and other 
        delivery system reform programs determined appropriate by the 
        Secretary'' before the period at the end; and
            (2) in subparagraph (E)--
                    (A) by striking ``, and to offset'' and inserting 
                ``, to offset''; and
                    (B) by inserting ``and to participate in delivery 
                system reforms under the provisions of and amendments 
                made by the Patient Protection and Affordable Care Act, 
                such as value-based purchasing programs, accountable 
                care organizations under section 1899, the National 
                pilot program on payment bundling under section 1866D, 
                and other delivery system reform programs determined 
                appropriate by the Secretary'' before the period at the 
                end.

    (c) <<NOTE: 42 USC 1395i-4 note.>> Effective Date.--The amendments 
made by this section shall apply to grants made on or after January 1, 
2010.

                  PART III--IMPROVING PAYMENT ACCURACY

SEC. 3131. PAYMENT ADJUSTMENTS FOR HOME HEALTH CARE.

    (a) Rebasing Home Health Prospective Payment Amount.--
            (1) In general.--Section 1895(b)(3)(A) of the Social 
        Security Act (42 U.S.C. 1395fff(b)(3)(A)) is amended--
                    (A) in clause (i)(III), by striking ``For periods'' 
                and inserting ``Subject to clause (iii), for periods''; 
                and
                    (B) by adding at the end the following new clause:
                          ``(iii) Adjustment for 2013 and subsequent 
                      years.--
                                    ``(I) In general.--Subject to 
                                subclause (II), for 2013 and subsequent 
                                years, the amount (or amounts) that 
                                would otherwise be applicable under 
                                clause (i)(III) shall be adjusted by a 
                                percentage determined appropriate by the 
                                Secretary to reflect such factors as 
                                changes in the number of visits in an 
                                episode, the mix of services in an 
                                episode, the level of intensity of 
                                services in an episode, the average cost 
                                of providing care per episode, and other 
                                factors that the Secretary considers to 
                                be relevant. In conducting the analysis 
                                under the preceding sentence, the 
                                Secretary may consider differences 
                                between hospital-based and freestanding 
                                agencies, between for-profit and 
                                nonprofit agencies, and between the 
                                resource costs of urban and rural 
                                agencies. Such adjustment shall be made 
                                before the update under subparagraph (B) 
                                is applied for the year.
                                    ``(II) Transition.--The Secretary 
                                shall provide for a 4-year phase-in (in 
                                equal increments) of the adjustment 
                                under subclause (I), with such 
                                adjustment being fully implemented for 
                                2016. During each year of such phase-in, 
                                the amount of any
                                adjustment under subclause (I) for the 
                                year may not exceed 3.5 percent of the 
                                amount (or amounts) applicable under 
                                clause (i)(III) as of the date of 
                                enactment of the Patient Protection and 
                                Affordable Care Act.''.
            (2) MedPAC study and report.--
                    (A) Study.--The Medicare Payment Advisory Commission 
                shall conduct a study on the implementation of the 
                amendments made by paragraph (1). Such study shall 
                include an analysis of the impact of such amendments 
                on--
                          (i) access to care;
                          (ii) quality outcomes;
                          (iii) the number of home health agencies; and
                          (iv) rural agencies, urban agencies, for-
                      profit agencies, and nonprofit agencies.
                    (B) Report.--Not later than January 1, 2015, the 
                Medicare Payment Advisory Commission shall submit to 
                Congress a report on the study conducted under 
                subparagraph (A), together with recommendations for such 
                legislation and administrative action as the Commission 
                determines appropriate.

    (b) Program-specific Outlier Cap.--Section 1895(b) of the Social 
Security Act (42 U.S.C. 1395fff(b)) is amended--
            (1) in paragraph (3)(C), by striking ``the aggregate'' and 
        all that follows through the period at the end and inserting ``5 
        percent of the total payments estimated to be made based on the 
        prospective payment system under this subsection for the 
        period.''; and
            (2) in paragraph (5)--
                    (A) by striking ``Outliers.--The Secretary'' and 
                inserting the following: ``Outliers.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary'';
                    (B) in subparagraph (A), as added by subparagraph 
                (A), by striking ``5 percent'' and inserting ``2.5 
                percent''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(B) Program specific outlier cap.--The estimated 
                total amount of additional payments or payment 
                adjustments made under subparagraph (A) with respect to 
                a home health agency for a year (beginning with 2011) 
                may not exceed an amount equal to 10 percent of the 
                estimated total amount of payments made under this 
                section (without regard to this paragraph) with respect 
                to the home health agency for the year.''.

    (c) Application of the Medicare Rural Home Health Add-on Policy.--
Section 421 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2283), as 
amended by section 5201(b) of the Deficit Reduction Act of 2005 (Public 
Law 109-171; 120 Stat. 46), <<NOTE: 42 USC 1395fff note.>>  is amended--
            (1) in the section heading, by striking ``one-year'' and 
        inserting ``temporary''; and
            (2) in subsection (a)--
                    (A) by striking ``, and episodes'' and inserting ``, 
                episodes'';
                    (B) by inserting ``and episodes and visits ending on 
                or after April 1, 2010, and before January 1, 2016,'' 
                after ``January 1, 2007,''; and
                    (C) by inserting ``(or, in the case of episodes and 
                visits ending on or after April 1, 2010, and before 
                January 1, 2016, 3 percent)'' before the period at the 
                end.

    (d) <<NOTE: 42 USC 1395fff note.>> Study and Report on the 
Development of Home Health Payment Reforms in Order To Ensure Access to 
Care and Quality Services.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall conduct 
        a study to evaluate the costs and quality of care among 
        efficient home health agencies relative to other such agencies 
        in providing ongoing access to care and in treating Medicare 
        beneficiaries with varying severity levels of illness. Such 
        study shall include an analysis of the following:
                    (A) Methods to revise the home health prospective 
                payment system under section 1895 of the Social Security 
                Act (42 U.S.C. 1395fff) to more accurately account for 
                the costs related to patient severity of illness or to 
                improving beneficiary access to care, including--
                          (i) payment adjustments for services that may 
                      be under- or over-valued;
                          (ii) necessary changes to reflect the resource 
                      use relative to providing home health services to 
                      low-income Medicare beneficiaries or Medicare 
                      beneficiaries living in medically underserved 
                      areas;
                          (iii) ways the outlier payment may be improved 
                      to more accurately reflect the cost of treating 
                      Medicare beneficiaries with high severity levels 
                      of illness;
                          (iv) the role of quality of care incentives 
                      and penalties in driving provider and patient 
                      behavior;
                          (v) improvements in the application of a wage 
                      index; and
                          (vi) other areas determined appropriate by the 
                      Secretary.
                    (B) The validity and reliability of responses on the 
                OASIS instrument with particular emphasis on questions 
                that relate to higher payment under the home health 
                prospective payment system and higher outcome scores 
                under Home Care Compare.
                    (C) Additional research or payment revisions under 
                the home health prospective payment system that may be 
                necessary to set the payment rates for home health 
                services based on costs of high-quality and efficient 
                home health agencies or to improve Medicare beneficiary 
                access to care.
                    (D) A timetable for implementation of any 
                appropriate changes based on the analysis of the matters 
                described in subparagraphs (A), (B), and (C).
                    (E) Other areas determined appropriate by the 
                Secretary.
            (2) Considerations.--In conducting the study under paragraph 
        (1), the Secretary shall consider whether certain factors
        should be used to measure patient severity of illness and access 
        to care, such as--
                    (A) population density and relative patient access 
                to care;
                    (B) variations in service costs for providing care 
                to individuals who are dually eligible under the 
                Medicare and Medicaid programs;
                    (C) the presence of severe or chronic diseases, as 
                evidenced by multiple, discontinuous home health 
                episodes;
                    (D) poverty status, as evidenced by the receipt of 
                Supplemental Security Income under title XVI of the 
                Social Security Act;
                    (E) the absence of caregivers;
                    (F) language barriers;
                    (G) atypical transportation costs;
                    (H) security costs; and
                    (I) other factors determined appropriate by the 
                Secretary.
            (3) Report.--Not later than March 1, 2011, the Secretary 
        shall submit to Congress a report on the study conducted under 
        paragraph (1), together with recommendations for such 
        legislation and administrative action as the Secretary 
        determines appropriate.
            (4) Consultations.--In conducting the study under paragraph 
        (1) and preparing the report under paragraph (3), the Secretary 
        shall consult with--
                    (A) stakeholders representing home health agencies;
                    (B) groups representing Medicare beneficiaries;
                    (C) the Medicare Payment Advisory Commission;
                    (D) the Inspector General of the Department of 
                Health and Human Services; and
                    (E) the Comptroller General of the United States.

SEC. 3132. HOSPICE REFORM.

    (a) Hospice Care Payment Reforms.--
            (1) In general.--Section 1814(i) of the Social Security Act 
        (42 U.S.C. 1395f(i)), as amended by section 3004(c), is 
        amended--
                    (A) by redesignating paragraph (6) as paragraph (7); 
                and
                    (B) by inserting after paragraph (5) the following 
                new paragraph:
            ``(6)(A) <<NOTE: Data and information collection.>> The 
        Secretary shall collect additional data and information as the 
        Secretary determines appropriate to revise payments for hospice 
        care under this subsection pursuant to subparagraph (D) and for 
        other purposes as determined appropriate by the 
        Secretary. <<NOTE: Deadline.>> The Secretary shall begin to 
        collect such data by not later than January 1, 2011.
            ``(B) The additional data and information to be collected 
        under subparagraph (A) may include data and information on--
                    ``(i) charges and payments;
                    ``(ii) the number of days of hospice care which are 
                attributable to individuals who are entitled to, or 
                enrolled for, benefits under part A; and
                    ``(iii) with respect to each type of service 
                included in hospice care--
                          ``(I) the number of days of hospice care 
                      attributable to the type of service;
                          ``(II) the cost of the type of service; and
                          ``(III) the amount of payment for the type of 
                      service;
                    ``(iv) charitable contributions and other revenue of 
                the hospice program;
                    ``(v) the number of hospice visits;
                    ``(vi) the type of practitioner providing the visit; 
                and
                    ``(vii) the length of the visit and other basic 
                information with respect to the visit.
            ``(C) The Secretary may collect the additional data and 
        information under subparagraph (A) on cost reports, claims, or 
        other mechanisms as the Secretary determines to be appropriate.
            ``(D)(i) <<NOTE: Deadline. Regulation.>> Notwithstanding the 
        preceding paragraphs of this subsection, not earlier than 
        October 1, 2013, the Secretary shall, by regulation, implement 
        revisions to the methodology for determining the payment rates 
        for routine home care and other services included in hospice 
        care under this part, as the Secretary determines to be 
        appropriate. Such revisions may be based on an analysis of data 
        and information collected under subparagraph (A). Such revisions 
        may include adjustments to per diem payments that reflect 
        changes in resource intensity in providing such care and 
        services during the course of the entire episode of hospice 
        care.
            ``(ii) Revisions in payment implemented pursuant to clause 
        (i) shall result in the same estimated amount of aggregate 
        expenditures under this title for hospice care furnished in the 
        fiscal year in which such revisions in payment are implemented 
        as would have been made under this title for such care in such 
        fiscal year if such revisions had not been implemented.
            ``(E) The Secretary shall consult with hospice programs and 
        the Medicare Payment Advisory Commission regarding the 
        additional data and information to be collected under 
        subparagraph (A) and the payment revisions under subparagraph 
        (D).''.
            (2) Conforming amendments.--Section 1814(i)(1)(C) of the 
        Social Security Act (42 U.S.C. 1395f(i)(1)(C)) is amended--
                    (A) in clause (ii)--
                          (i) in the matter preceding subclause (I), by 
                      inserting ``(before the first fiscal year in which 
                      the payment revisions described in paragraph 
                      (6)(D) are implemented)'' after ``subsequent 
                      fiscal year''; and
                          (ii) in subclause (VII), by inserting 
                      ``(before the first fiscal year in which the 
                      payment revisions described in paragraph (6)(D) 
                      are implemented), subject to clause (iv),'' after 
                      ``subsequent fiscal year''; and
                    (B) by adding at the end the following new clause:
                          ``(iii) With respect to routine home care and 
                      other services included in hospice care furnished 
                      during fiscal years subsequent to the first fiscal 
                      year in which payment revisions described in 
                      paragraph (6)(D) are implemented, the payment 
                      rates for such care and services shall be the 
                      payment rates in effect under this clause during 
                      the preceding fiscal year increased by, subject to 
                      clause (iv), the market basket percentage increase
                      (as defined in section 1886(b)(3)(B)(iii)) for the 
                      fiscal year.''.

    (b) Adoption of MedPAC Hospice Program Eligibility Recertification 
Recommendations.--Section 1814(a)(7) of the Social Security Act (42 
U.S.C. 1395f(a)(7)) is amended--
            (1) in subparagraph (B), by striking ``and'' at the end; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) on and after January 1, 2011--
                          ``(i) a hospice physician or nurse 
                      practitioner has a face-to-face encounter with the 
                      individual to determine continued eligibility of 
                      the individual for hospice care prior to the 
                      180th-day recertification and each subsequent 
                      recertification under subparagraph (A)(ii) and 
                      attests that such visit took place (in accordance 
                      with procedures established by the Secretary); and
                          ``(ii) in the case of hospice care provided an 
                      individual for more than 180 days by a hospice 
                      program for which the number of such cases for 
                      such program comprises more than a percent 
                      (specified by the Secretary) of the total number 
                      of such cases for all programs under this title, 
                      the hospice care provided to such individual is 
                      medically reviewed (in accordance with procedures 
                      established by the Secretary); and''.

SEC. 3133. IMPROVEMENT TO MEDICARE DISPROPORTIONATE SHARE HOSPITAL (DSH) 
            PAYMENTS.

    Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as 
amended by sections 3001, 3008, and 3025, is amended--
            (1) in subsection (d)(5)(F)(i), by striking ``For'' and 
        inserting ``Subject to subsection (r), for''; and
            (2) by adding at the end the following new subsection:

    ``(r) Adjustments to Medicare DSH Payments.--
            ``(1) Empirically justified dsh payments.--For fiscal year 
        2015 and each subsequent fiscal year, instead of the amount of 
        disproportionate share hospital payment that would otherwise be 
        made under subsection (d)(5)(F) to a subsection (d) hospital for 
        the fiscal year, the Secretary shall pay to the subsection (d) 
        hospital 25 percent of such amount (which represents the 
        empirically justified amount for such payment, as determined by 
        the Medicare Payment Advisory Commission in its March 2007 
        Report to the Congress).
            ``(2) Additional payment.--In addition to the payment made 
        to a subsection (d) hospital under paragraph (1), for fiscal 
        year 2015 and each subsequent fiscal year, the Secretary shall 
        pay to such subsection (d) hospitals an additional amount equal 
        to the product of the following factors:
                    ``(A) Factor one.--A factor equal to the difference 
                between--
                          ``(i) the aggregate amount of payments that 
                      would be made to subsection (d) hospitals under 
                      subsection (d)(5)(F) if this subsection did not 
                      apply for such fiscal year (as estimated by the 
                      Secretary); and
                          ``(ii) the aggregate amount of payments that 
                      are made to subsection (d) hospitals under 
                      paragraph (1) for such fiscal year (as so 
                      estimated).
                    ``(B) Factor two.--
                          ``(i) Fiscal years 2015, 2016, and 2017.--For 
                      each of fiscal years 2015, 2016, and 2017, a 
                      factor equal to 1 minus the percent change 
                      (divided by 100) in the percent of individuals 
                      under the age of 65 who are uninsured, as 
                      determined by comparing the percent of such 
                      individuals--
                                    ``(I) who are uninsured in 2012, the 
                                last year before coverage expansion 
                                under the Patient Protection and 
                                Affordable Care Act (as calculated by 
                                the Secretary based on the most recent 
                                estimates available from the Director of 
                                the Congressional Budget Office before a 
                                vote in either House on such Act that, 
                                if determined in the affirmative, would 
                                clear such Act for enrollment); and
                                    ``(II) who are uninsured in the most 
                                recent period for which data is 
                                available (as so calculated).
                          ``(ii) 2018 and subsequent years.--For fiscal 
                      year 2018 and each subsequent fiscal year, a 
                      factor equal to 1 minus the percent change 
                      (divided by 100) in the percent of individuals who 
                      are uninsured, as determined by comparing the 
                      percent of individuals--
                                    ``(I) who are uninsured in 2012 (as 
                                estimated by the Secretary, based on 
                                data from the Census Bureau or other 
                                sources the Secretary determines 
                                appropriate, and certified by the Chief 
                                Actuary of the Centers for Medicare & 
                                Medicaid Services); and
                                    ``(II) who are uninsured in the most 
                                recent period for which data is 
                                available (as so estimated and 
                                certified).
                    ``(C) Factor three.--A factor equal to the percent, 
                for each subsection (d) hospital, that represents the 
                quotient of--
                          ``(i) the amount of uncompensated care for 
                      such hospital for a period selected by the 
                      Secretary (as estimated by the Secretary, based on 
                      appropriate data (including, in the case where the 
                      Secretary determines that alternative data is 
                      available which is a better proxy for the costs of 
                      subsection (d) hospitals for treating the 
                      uninsured, the use of such alternative data)); and
                          ``(ii) the aggregate amount of uncompensated 
                      care for all subsection (d) hospitals that receive 
                      a payment under this subsection for such period 
                      (as so estimated, based on such data).
            ``(3) Limitations on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the following:
                    ``(A) Any estimate of the Secretary for purposes of 
                determining the factors described in paragraph (2).
                    ``(B) Any period selected by the Secretary for such 
                purposes.''.

SEC. 3134. MISVALUED CODES UNDER THE PHYSICIAN FEE SCHEDULE.

    (a) In General.--Section 1848(c)(2) of the Social Security Act (42 
U.S.C. 1395w-4(c)(2)) is amended by adding at the end the following new 
subparagraphs:
                    ``(K) Potentially misvalued codes.--
                          ``(i) In general.--The Secretary shall--
                                    ``(I) periodically identify services 
                                as being potentially misvalued using 
                                criteria specified in clause (ii); and
                                    ``(II) review and make appropriate 
                                adjustments to the relative values 
                                established under this paragraph for 
                                services identified as being potentially 
                                misvalued under subclause (I).
                          ``(ii) Identification of potentially misvalued 
                      codes.--For purposes of identifying potentially 
                      misvalued services pursuant to clause (i)(I), the 
                      Secretary shall examine (as the Secretary 
                      determines to be appropriate) codes (and families 
                      of codes as appropriate) for which there has been 
                      the fastest growth; codes (and families of codes 
                      as appropriate) that have experienced substantial 
                      changes in practice expenses; codes for new 
                      technologies or services within an appropriate 
                      period (such as 3 years) after the relative values 
                      are initially established for such codes; multiple 
                      codes that are frequently billed in conjunction 
                      with furnishing a single service; codes with low 
                      relative values, particularly those that are often 
                      billed multiple times for a single treatment; 
                      codes which have not been subject to review since 
                      the implementation of the RBRVS (the so-called 
                      `Harvard-valued codes'); and such other codes 
                      determined to be appropriate by the Secretary.
                          ``(iii) Review and adjustments.--
                                    ``(I) The Secretary may use existing 
                                processes to receive recommendations on 
                                the review and appropriate adjustment of 
                                potentially misvalued services described 
                                in clause (i)(II).
                                    ``(II) The Secretary may conduct 
                                surveys, other data collection 
                                activities, studies, or other analyses 
                                as the Secretary determines to be 
                                appropriate to facilitate the review and 
                                appropriate adjustment described in 
                                clause (i)(II).
                                    ``(III) The Secretary may use 
                                analytic contractors to identify and 
                                analyze services identified under clause 
                                (i)(I), conduct surveys or collect data, 
                                and make recommendations on the review 
                                and appropriate adjustment of services 
                                described in clause (i)(II).
                                    ``(IV) The Secretary may coordinate 
                                the review and appropriate adjustment 
                                described in clause (i)(II) with the 
                                periodic review described in 
                                subparagraph (B).
                                    ``(V) As part of the review and 
                                adjustment described in clause (i)(II), 
                                including with respect to codes with low 
                                relative values described in clause 
                                (ii), the Secretary may make appropriate 
                                coding revisions (including using 
                                existing processes
                                for consideration of coding changes) 
                                which may include consolidation of 
                                individual services into bundled codes 
                                for payment under the fee schedule under 
                                subsection (b).
                                    ``(VI) The provisions of 
                                subparagraph (B)(ii)(II) shall apply to 
                                adjustments to relative value units made 
                                pursuant to this subparagraph in the 
                                same manner as such provisions apply to 
                                adjustments under subparagraph 
                                (B)(ii)(II).
                    ``(L) Validating relative value units.--
                          ``(i) In general.--The Secretary shall 
                      establish a process to validate relative value 
                      units under the fee schedule under subsection (b).
                          ``(ii) Components and elements of work.--The 
                      process described in clause (i) may include 
                      validation of work elements (such as time, mental 
                      effort and professional judgment, technical skill 
                      and physical effort, and stress due to risk) 
                      involved with furnishing a service and may include 
                      validation of the pre-, post-, and intra-service 
                      components of work.
                          ``(iii) Scope of codes.--The validation of 
                      work relative value units shall include a sampling 
                      of codes for services that is the same as the 
                      codes listed under subparagraph (K)(ii).
                          ``(iv) Methods.--The Secretary may conduct the 
                      validation under this subparagraph using methods 
                      described in subclauses (I) through (V) of 
                      subparagraph (K)(iii) as the Secretary determines 
                      to be appropriate.
                          ``(v) Adjustments.--The Secretary shall make 
                      appropriate adjustments to the work relative value 
                      units under the fee schedule under subsection (b). 
                      The provisions of subparagraph (B)(ii)(II) shall 
                      apply to adjustments to relative value units made 
                      pursuant to this subparagraph in the same manner 
                      as such provisions apply to adjustments under 
                      subparagraph (B)(ii)(II).''.

    (b) <<NOTE: 42 USC 1395w-4 note.>> Implementation.--
            (1) Administration.--
                    (A) Chapter 35 of title 44, United States Code and 
                the provisions of the Federal Advisory Committee Act (5 
                U.S.C. App.) shall not apply to this section or the 
                amendment made by this section.
                    (B) Notwithstanding any other provision of law, the 
                Secretary may implement subparagraphs (K) and (L) of 
                1848(c)(2) of the Social Security Act, as added by 
                subsection (a), by program instruction or otherwise.
                    (C) Section 4505(d) of the Balanced Budget Act of 
                1997 <<NOTE: Repeal.>>  is repealed.
                    (D) Except for provisions related to confidentiality 
                of information, the provisions of the Federal 
                Acquisition Regulation shall not apply to this section 
                or the amendment made by this section.
            (2) Focusing cms resources on potentially overvalued 
        codes. <<NOTE: Repeal.>> --Section 1868(a) of the Social 
        Security Act (42 U.S.C. 1395ee(a)) is repealed.

SEC. 3135. MODIFICATION OF EQUIPMENT UTILIZATION FACTOR FOR ADVANCED 
            IMAGING SERVICES.

    (a) Adjustment in Practice Expense To Reflect Higher Presumed 
Utilization.--Section 1848 of the Social Security Act (42 U.S.C. 1395w-
4) is amended--
            (1) in subsection (b)(4)--
                    (A) in subparagraph (B), by striking ``subparagraph 
                (A)'' and inserting ``this paragraph''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(C) <<NOTE: Time periods.>> Adjustment in practice 
                expense to reflect higher presumed utilization.--
                Consistent with the methodology for computing the number 
                of practice expense relative value units under 
                subsection (c)(2)(C)(ii) with respect to advanced 
                diagnostic imaging services (as defined in section 
                1834(e)(1)(B)) furnished on or after January 1, 2010, 
                the Secretary shall adjust such number of units so it 
                reflects--
                          ``(i) in the case of services furnished on or 
                      after January 1, 2010, and before January 1, 2013, 
                      a 65 percent (rather than 50 percent) presumed 
                      rate of utilization of imaging equipment;
                          ``(ii) in the case of services furnished on or 
                      after January 1, 2013, and before January 1, 2014, 
                      a 70 percent (rather than 50 percent) presumed 
                      rate of utilization of imaging equipment; and
                          ``(iii) in the case of services furnished on 
                      or after January 1, 2014, a 75 percent (rather 
                      than 50 percent) presumed rate of utilization of 
                      imaging equipment.''; and
            (2) in subsection (c)(2)(B)(v), by adding at the end the 
        following new subclauses:
                                    ``(III) Change in presumed 
                                utilization level of certain advanced 
                                diagnostic imaging services for 2010 
                                through 2012.--Effective for fee 
                                schedules established beginning with 
                                2010 and ending with 2012, reduced 
                                expenditures attributable to the 
                                presumed rate of utilization of imaging 
                                equipment of 65 percent under subsection 
                                (b)(4)(C)(i) instead of a presumed rate 
                                of utilization of such equipment of 50 
                                percent.
                                    ``(IV) Change in presumed 
                                utilization level of certain advanced 
                                diagnostic imaging services for 2013.--
                                Effective for fee schedules established 
                                for 2013, reduced expenditures 
                                attributable to the presumed rate of 
                                utilization of imaging equipment of 70 
                                percent under subsection (b)(4)(C)(ii) 
                                instead of a presumed rate of 
                                utilization of such equipment of 50 
                                percent.
                                    ``(V) Change in presumed utilization 
                                level of certain advanced diagnostic 
                                imaging services for 2014 and subsequent 
                                years.--Effective for fee schedules 
                                established beginning with 2014, reduced 
                                expenditures attributable to the 
                                presumed rate of utilization of imaging equipment 
                                of 75 percent under subsection 
                                (b)(4)(C)(iii) instead of a presumed 
                                rate of utilization of such equipment of 
                                50 percent.''.

    (b) Adjustment in Technical Component ``discount'' on Single-session 
Imaging to Consecutive Body Parts.--Section 1848 of the Social Security 
Act (42 U.S.C. 1395w-4), as amended by subsection (a), is amended--
            (1) in subsection (b)(4), by adding at the end the following 
        new subparagraph:
                    ``(D) Adjustment in technical component discount on 
                single-session imaging involving consecutive body 
                parts.--For services furnished on or after July 1, 2010, 
                the Secretary shall increase the reduction in payments 
                attributable to the multiple procedure payment reduction 
                applicable to the technical component for imaging under 
                the final rule published by the Secretary in the Federal 
                Register on November 21, 2005 (part 405 of title 42, 
                Code of Federal Regulations) from 25 percent to 50 
                percent.''; and
            (2) in subsection (c)(2)(B)(v), by adding at the end the 
        following new subclause:
                                    ``(VI) Additional reduced payment 
                                for multiple imaging procedures.--
                                Effective for fee schedules established 
                                beginning with 2010 (but not applied for 
                                services furnished prior to July 1, 
                                2010), reduced expenditures attributable 
                                to the increase in the multiple 
                                procedure payment reduction from 25 to 
                                50 percent (as described in subsection 
                                (b)(4)(D)).''.

    (c) Analysis by the Chief Actuary of the Centers for Medicare & 
Medicaid Services. <<NOTE: Deadline. Public information. Time 
period.>> --Not later than January 1, 2013, the Chief Actuary of the 
Centers for Medicare & Medicaid Services shall make publicly available 
an analysis of whether, for the period of 2010 through 2019, the 
cumulative expenditure reductions under title XVIII of the Social 
Security Act that are attributable to the adjustments under the 
amendments made by this section are projected to exceed $3,000,000,000.

    (a) In General.--Section 1834(a)(7)(A) of the Social Security Act 
(42 U.S.C. 1395m(a)(7)(A)) is amended--
            (1) in clause (i)--
                    (A) in subclause (II), by inserting ``subclause 
                (III) and'' after ``Subject to''; and
                    (B) by adding at the end the following new 
                subclause:
                                    ``(III) Special rule for power-
                                driven wheelchairs.--For purposes of 
                                payment for power-driven wheelchairs, 
                                subclause (II) shall be applied by 
                                substituting `15 percent' and `6 
                                percent' for `10 percent' and `7.5 
                                percent', respectively.''; and
            (2) in clause (iii)--
                    (A) in the heading, by inserting ``complex, 
                rehabilitative'' before ``power-driven''; and
                    (B) by inserting ``complex, rehabilitative'' before 
                ``power-driven''.
    (b) Technical Amendment.--Section 1834(a)(7)(C)(ii)(II) of the 
Social Security Act (42 U.S.C. 1395m(a)(7)(C)(ii)(II)) is amended by 
striking ``(A)(ii) or''.
    (c) <<NOTE: 42 USC 1395m note.>> Effective Date.--
            (1) <<NOTE: Applicability.>> In general.--Subject to 
        paragraph (2), the amendments made by subsection (a) shall take 
        effect on January 1, 2011, and shall apply to power-driven 
        wheelchairs furnished on or after such date.
            (2) Application to competitive bidding.--The amendments made 
        by subsection (a) shall not apply to payment made for items and 
        services furnished pursuant to contracts entered into under 
        section 1847 of the Social Security Act (42 U.S.C. 1395w-3) 
        prior to January 1, 2011, pursuant to the implementation of 
        subsection (a)(1)(B)(i)(I) of such section 1847.

SEC. 3137. HOSPITAL WAGE INDEX IMPROVEMENT.

    (a) Extension of Section 508 Hospital Reclassifications.--
            (1) In general.--Subsection (a) of section 106 of division B 
        of the Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395 
        note), as amended by section 117 of the Medicare, Medicaid, and 
        SCHIP Extension Act of 2007 (Public Law 110-173) and section 124 
        of the Medicare Improvements for Patients and Providers Act of 
        2008 (Public Law 110-275), <<NOTE: 42 USC 1395ww note.>>  is 
        amended by striking ``September 30, 2009'' and inserting 
        ``September 30, 2010''.
            (2) <<NOTE: 42 USC 1395ww note.>> Use of particular wage 
        index in fiscal year 2010.--For purposes of implementation of 
        the amendment made by this subsection during fiscal year 2010, 
        the Secretary shall use the hospital wage index that was 
        promulgated by the Secretary in the Federal Register on August 
        27, 2009 (74 Fed. Reg. 43754), and any subsequent corrections.

    (b) <<NOTE: 42 USC 1395ww note.>> Plan for Reforming the Medicare 
Hospital Wage Index System.--
            (1) In general. <<NOTE: Deadline. Reports.>> --Not later 
        than December 31, 2011, the Secretary of Health and Human 
        Services (in this section referred to as the ``Secretary'') 
        shall submit to Congress a report that includes a plan to reform 
        the hospital wage index system under section 1886 of the Social 
        Security Act.
            (2) Details.--In developing the plan under paragraph (1), 
        the Secretary shall take into account the goals for reforming 
        such system set forth in the Medicare Payment Advisory 
        Commission June 2007 report entitled ``Report to Congress: 
        Promoting Greater Efficiency in Medicare'', including 
        establishing a new hospital compensation index system that--
                    (A) uses Bureau of Labor Statistics data, or other 
                data or methodologies, to calculate relative wages for 
                each geographic area involved;
                    (B) minimizes wage index adjustments between and 
                within metropolitan statistical areas and statewide 
                rural areas;
                    (C) includes methods to minimize the volatility of 
                wage index adjustments that result from implementation 
                of policy, while maintaining budget neutrality in 
                applying such adjustments;
                    (D) takes into account the effect that 
                implementation of the system would have on health care 
                providers and on each region of the country;
                    (E) addresses issues related to occupational mix, 
                such as staffing practices and ratios, and any evidence 
                on the effect on quality of care or patient safety as a 
                result of the implementation of the system; and
                    (F) provides for a transition.
            (3) Consultation.--In developing the plan under paragraph 
        (1), the Secretary shall consult with relevant affected parties.

    (c) Use of Particular Criteria for Determining 
Reclassifications. <<NOTE: Effective date.>> --Notwithstanding any other 
provision of law, in making decisions on applications for 
reclassification of a subsection (d) hospital (as defined in paragraph 
(1)(B) of section 1886(d) of the Social Security Act (42 U.S.C. 
1395ww(d)) for the purposes described in paragraph (10)(D)(v) of such 
section for fiscal year 2011 and each subsequent fiscal year (until the 
first fiscal year beginning on or after the date that is 1 year after 
the Secretary of Health and Human Services submits the report to 
Congress under subsection (b)), the Geographic Classification Review 
Board established under paragraph (10) of such section shall use the 
average hourly wage comparison criteria used in making such decisions as 
of September 30, 2008. The preceding sentence shall be effected in a 
budget neutral manner.

SEC. 3138. TREATMENT OF CERTAIN CANCER HOSPITALS.

    Section 1833(t) of the Social Security Act (42 U.S.C. 1395l(t)) is 
amended by adding at the end the following new paragraph:
            ``(18) Authorization of adjustment for cancer hospitals.--
                    ``(A) Study.--The Secretary shall conduct a study to 
                determine if, under the system under this subsection, 
                costs incurred by hospitals described in section 
                1886(d)(1)(B)(v) with respect to ambulatory payment 
                classification groups exceed those costs incurred by 
                other hospitals furnishing services under this 
                subsection (as determined appropriate by the Secretary). 
                In conducting the study under this subparagraph, the 
                Secretary shall take into consideration the cost of 
                drugs and biologicals incurred by such hospitals.
                    ``(B) Authorization of adjustment.--Insofar as the 
                Secretary determines under subparagraph (A) that costs 
                incurred by hospitals described in section 
                1886(d)(1)(B)(v) exceed those costs incurred by other 
                hospitals furnishing services under this subsection, the 
                Secretary shall provide for an appropriate adjustment 
                under paragraph (2)(E) to reflect those higher costs 
                effective for services furnished on or after January 1, 
                2011.''.

SEC. 3139. PAYMENT FOR BIOSIMILAR BIOLOGICAL PRODUCTS.

    (a) In General.--Section 1847A of the Social Security Act (42 U.S.C. 
1395w-3a) is amended--
            (1) in subsection (b)--
                    (A) in paragraph (1)--
                          (i) in subparagraph (A), by striking ``or'' at 
                      the end;
                          (ii) in subparagraph (B), by striking the 
                      period at the end and inserting ``; or''; and
                          (iii) by adding at the end the following new 
                      subparagraph:
                    ``(C) in the case of a biosimilar biological product 
                (as defined in subsection (c)(6)(H)), the amount 
                determined under paragraph (8).''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(8) Biosimilar biological product.--The amount specified 
        in this paragraph for a biosimilar biological product described 
        in paragraph (1)(C) is the sum of--
                    ``(A) the average sales price as determined using 
                the methodology described under paragraph (6) applied to 
                a biosimilar biological product for all National Drug 
                Codes assigned to such product in the same manner as 
                such paragraph is applied to drugs described in such 
                paragraph; and
                    ``(B) 6 percent of the amount determined under 
                paragraph (4) for the reference biological product (as 
                defined in subsection (c)(6)(I)).''; and
            (2) in subsection (c)(6), by adding at the end the following 
        new subparagraph:
                    ``(H) Biosimilar biological product.--The term 
                `biosimilar biological product' means a biological 
                product approved under an abbreviated application for a 
                license of a biological product that relies in part on 
                data or information in an application for another 
                biological product licensed under section 351 of the 
                Public Health Service Act.
                    ``(I) Reference biological product.--The term 
                `reference biological product' means the biological 
                product licensed under such section 351 that is referred 
                to in the application described in subparagraph (H) of 
                the biosimilar biological product.''.

    (b) <<NOTE: Applicability. 42 USC 1395w-3a note.>> Effective Date.--
The amendments made by subsection (a) shall apply to payments for 
biosimilar biological products beginning with the first day of the 
second calendar quarter after enactment of legislation providing for a 
biosimilar pathway (as determined by the Secretary).

SEC. 3140. <<NOTE: 42 USC 1395d note.>> MEDICARE HOSPICE CONCURRENT CARE 
            DEMONSTRATION PROGRAM.

    (a) Establishment.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall 
        establish a Medicare Hospice Concurrent Care demonstration 
        program at participating hospice programs under which Medicare 
        beneficiaries are furnished, during the same period, hospice 
        care and any other items or services covered under title XVIII 
        of the Social Security Act (42 U.S.C. 1395 et seq.) from funds 
        otherwise paid under such title to such hospice programs.
            (2) Duration.--The demonstration program under this section 
        shall be conducted for a 3-year period.
            (3) Sites.--The Secretary shall select not more than 15 
        hospice programs at which the demonstration program under this 
        section shall be conducted. Such hospice programs shall be 
        located in urban and rural areas.

    (b) Independent Evaluation and Reports.--
            (1) Independent evaluation.--The Secretary shall provide for 
        the conduct of an independent evaluation of the demonstration 
        program under this section. Such independent evaluation shall 
        determine whether the demonstration program
        has improved patient care, quality of life, and cost-
        effectiveness for Medicare beneficiaries participating in the 
        demonstration program.
            (2) Reports.--The Secretary shall submit to Congress a 
        report containing the results of the evaluation conducted under 
        paragraph (1), together with such recommendations as the 
        Secretary determines appropriate.

    (c) Budget Neutrality.--With respect to the 3-year period of the 
demonstration program under this section, the Secretary shall ensure 
that the aggregate expenditures under title XVIII for such period shall 
not exceed the aggregate expenditures that would have been expended 
under such title if the demonstration program under this section had not 
been implemented.

SEC. 3141. <<NOTE: 42 USC 1395ww note.>> APPLICATION OF BUDGET 
            NEUTRALITY ON A NATIONAL BASIS IN THE CALCULATION OF THE 
            MEDICARE HOSPITAL WAGE INDEX FLOOR.

    In the case of discharges occurring on or after October 1, 2010, for 
purposes of applying section 4410 of the Balanced Budget Act of 1997 (42 
U.S.C. 1395ww note) and paragraph (h)(4) of section 412.64 of title 42, 
Code of Federal Regulations, the Secretary of Health and Human Services 
shall administer subsection (b) of such section 4410 and paragraph (e) 
of such section 412.64 in the same manner as the Secretary administered 
such subsection (b) and paragraph (e) for discharges occurring during 
fiscal year 2008 (through a uniform, national adjustment to the area 
wage index).

SEC. 3142. HHS STUDY ON URBAN MEDICARE-DEPENDENT HOSPITALS.

    (a) Study.--
            (1) In general.--The Secretary of Health and Human Services 
        (in this section referred to as the ``Secretary'') shall conduct 
        a study on the need for an additional payment for urban 
        Medicare-dependent hospitals for inpatient hospital services 
        under section 1886 of the Social Security Act (42 U.S.C. 
        1395ww). Such study shall include an analysis of--
                    (A) the Medicare inpatient margins of urban 
                Medicare-dependent hospitals, as compared to other 
                hospitals which receive 1 or more additional payments or 
                adjustments under such section (including those payments 
                or adjustments described in paragraph (2)(A)); and
                    (B) whether payments to medicare-dependent, small 
                rural hospitals under subsection (d)(5)(G) of such 
                section should be applied to urban Medicare-dependent 
                hospitals.
            (2) Urban medicare-dependent hospital defined.--For purposes 
        of this section, the term ``urban Medicare-dependent hospital'' 
        means a subsection (d) hospital (as defined in subsection 
        (d)(1)(B) of such section) that--
                    (A) does not receive any additional payment or 
                adjustment under such section, such as payments for 
                indirect medical education costs under subsection 
                (d)(5)(B) of such section, disproportionate share 
                payments under subsection (d)(5)(A) of such section, 
                payments to a rural referral center under subsection 
                (d)(5)(C) of such section, payments to a critical access 
                hospital under section 1814(l) of such Act (42 U.S.C. 
                1395f(l)), payments to a sole community hospital under 
                subsection (d)(5)(D) of such section 1886, or payments 
                to a medicare-dependent, small rural hospital under 
                subsection (d)(5)(G) of such section 1886; and
                    (B) for which more than 60 percent of its inpatient 
                days or discharges during 2 of the 3 most recently 
                audited cost reporting periods for which the Secretary 
                has a settled cost report were attributable to 
                inpatients entitled to benefits under part A of title 
                XVIII of such Act.

    (b) Report.--Not later than 9 months after the date of enactment of 
this Act, the Secretary shall submit to Congress a report containing the 
results of the study conducted under subsection (a), together with 
recommendations for such legislation and administrative action as the 
Secretary determines appropriate.

SEC. 3143. <<NOTE: 42 USC 1395d note.>> PROTECTING HOME HEALTH BENEFITS.

    Nothing in the provisions of, or amendments made by, this Act shall 
result in the reduction of guaranteed home health benefits under title 
XVIII of the Social Security Act.

                Subtitle C--Provisions Relating to Part C

SEC. 3201. MEDICARE ADVANTAGE PAYMENT.

    (a) MA Benchmark Based on Plan's Competitive Bids.--
            (1) In general.--Section 1853(j) of the Social Security Act 
        (42 U.S.C. 1395w-23(j)) is amended--
                    (A) by striking ``Amounts.--For purposes'' and 
                inserting ``Amounts.--
            ``(1) In general.--For purposes'';
                    (B) by redesignating paragraphs (1) and (2) as 
                subparagraphs (A) and (B), respectively, and indenting 
                the subparagraphs appropriately;
                    (C) in subparagraph (A), as redesignated by 
                subparagraph (B)--
                          (i) by redesignating subparagraphs (A) and (B) 
                      as clauses (i) and (ii), respectively, and 
                      indenting the clauses appropriately; and
                          (ii) in clause (i), as redesignated by clause 
                      (i), by striking ``an amount equal to'' and all 
                      that follows through the end and inserting ``an 
                      amount equal to--
                                    ``(I) for years before 2007, \1/12\ 
                                of the annual MA capitation rate under 
                                section 1853(c)(1) for the area for the 
                                year, adjusted as appropriate for the 
                                purpose of risk adjustment;
                                    ``(II) for 2007 through 2011, \1/12\ 
                                of the applicable amount determined 
                                under subsection (k)(1) for the area for 
                                the year;
                                    ``(III) for 2012, the sum of--
                                            ``(aa) \2/3\ of the quotient 
                                        of--
                                                ``(AA) the applicable 
                                            amount determined under 
                                            subsection (k)(1) for the 
                                            area for the year; and
                                                ``(BB) 12; and
                                            ``(bb) \1/3\ of the MA 
                                        competitive benchmark amount 
                                        (determined under paragraph (2)) 
                                        for the area for the month;
                                    ``(IV) for 2013, the sum of--
                                            ``(aa) \1/3\ of the quotient 
                                        of--
                                                ``(AA) the applicable 
                                            amount determined under 
                                            subsection (k)(1) for the 
                                            area for the year; and
                                                ``(BB) 12; and
                                            ``(bb) \2/3\ of the MA 
                                        competitive benchmark amount (as 
                                        so determined) for the area for 
                                        the month;
                                    ``(V) for 2014, the MA competitive 
                                benchmark amount for the area for a 
                                month in 2013 (as so determined), 
                                increased by the national per capita MA 
                                growth percentage, described in 
                                subsection (c)(6) for 2014, but not 
                                taking into account any adjustment under 
                                subparagraph (C) of such subsection for 
                                a year before 2004; and
                                    ``(VI) for 2015 and each subsequent 
                                year, the MA competitive benchmark 
                                amount (as so determined) for the area 
                                for the month; or'';
                          (iii) in clause (ii), as redesignated by 
                      clause (i), by striking ``subparagraph (A)'' and 
                      inserting ``clause (i)'';
                    (D) by adding at the end the following new 
                paragraphs:
            ``(2) Computation of ma competitive benchmark amount.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                paragraph (3), for months in each year (beginning with 
                2012) for each MA payment area the Secretary shall 
                compute an MA competitive benchmark amount equal to the 
                weighted average of the unadjusted MA statutory non-drug 
                monthly bid amount (as defined in section 1854(b)(2)(E)) 
                for each MA plan in the area, with the weight for each 
                plan being equal to the average number of beneficiaries 
                enrolled under such plan in the reference month (as 
                defined in section 1858(f)(4), except that, in applying 
                such definition for purposes of this paragraph, `to 
                compute the MA competitive benchmark amount under 
                section 1853(j)(2)' shall be substituted for `to compute 
                the percentage specified in subparagraph (A) and other 
                relevant percentages under this part').
                    ``(B) Weighting rules.--
                          ``(i) Single plan rule.--In the case of an MA 
                      payment area in which only a single MA plan is 
                      being offered, the weight under subparagraph (A) 
                      shall be equal to 1.
                          ``(ii) Use of simple average among multiple 
                      plans if no plans offered in previous year.--In 
                      the case of an MA payment area in which no MA plan 
                      was offered in the previous year and more than 1 
                      MA plan is offered in the current year, the 
                      Secretary shall use a simple average of the 
                      unadjusted MA statutory non-drug monthly bid 
                      amount (as so defined) for purposes of computing 
                      the MA competitive benchmark amount under 
                      subparagraph (A).
            ``(3) Cap on ma competitive benchmark amount.--In no case 
        shall the MA competitive benchmark amount for an area for a 
        month in a year be greater than the applicable amount
        that would (but for the application of this subsection) be 
        determined under subsection (k)(1) for the area for the month in 
        the year.''; and
                    (E) in subsection (k)(2)(B)(ii)(III), by striking 
                ``(j)(1)(A)'' and inserting ``(j)(1)(A)(i)''.
            (2) Conforming amendments.--
                    (A) Section 1853(k)(2) of the Social Security Act 
                (42 U.S.C. 1395w-23(k)(2)) is amended--
                          (i) in subparagraph (A), by striking ``through 
                      2010'' and inserting ``and subsequent years''; and
                          (ii) in subparagraph (C)--
                                    (I) in clause (iii), by striking 
                                ``and'' at the end;
                                    (II) in clause (iv), by striking the 
                                period at the end and inserting ``; 
                                and''; and
                                    (III) by adding at the end the 
                                following new clause:
                          ``(v) for 2011 and subsequent years, 0.00.''.
                    (B) Section 1854(b) of the Social Security Act (42 
                U.S.C. 1395w-24(b)) is amended--
                          (i) in paragraph (3)(B)(i), by striking 
                      ``1853(j)(1)'' and inserting ``1853(j)(1)(A)''; 
                      and
                          (ii) in paragraph (4)(B)(i), by striking 
                      ``1853(j)(2)'' and inserting ``1853(j)(1)(B)''.
                    (C) Section 1858(f) of the Social Security 
                Act <<NOTE: 42 USC 1395w-27a.>> (42 U.S.C. 1395w-27(f)) 
                is amended--
                          (i) in paragraph (1), by striking 
                      ``1853(j)(2)'' and inserting ``1853(j)(1)(B)''; 
                      and
                          (ii) in paragraph (3)(A), by striking 
                      ``1853(j)(1)(A)'' and inserting 
                      ``1853(j)(1)(A)(i)''.
                    (D) Section 1860C-1(d)(1)(A) of the Social Security 
                Act (42 U.S.C. 1395w-29(d)(1)(A)) is amended by striking 
                ``1853(j)(1)(A)'' and inserting ``1853(j)(1)(A)(i)''.

    (b) Reduction of National Per Capita Growth Percentage for 2011.--
Section 1853(c)(6) of the Social Security Act (42 U.S.C. 1395w-23(c)(6)) 
is amended--
            (1) in clause (v), by striking ``and'' at the end;
            (2) in clause (vi)--
                    (A) by striking ``for a year after 2002'' and 
                inserting ``for 2003 through 2010''; and
                    (B) by striking the period at the end and inserting 
                a comma; and
                    (C) by adding at the end the following new clauses:
                          ``(vii) for 2011, 3 percentage points; and
                          ``(viii) for a year after 2011, 0 percentage 
                      points.''.

    (c) Enhancement of Beneficiary Rebates.--Section 1854(b)(1)(C)(i) of 
the Social Security Act (42 U.S.C. 1395w-24(b)(1)(C)(i)) is amended by 
inserting ``(or 100 percent in the case of plan years beginning on or 
after January 1, 2014)'' after ``75 percent''.
    (d) Bidding Rules.--
            (1) Requirements for information 
        submitted. <<NOTE: Certification.>> --Section 1854(a)(6)(A) of 
        the Social Security Act (42 U.S.C. 1395w-24(a)(6)(A)) is 
        amended, in the flush matter following clause (v), by adding at 
        the end the following sentence: ``Information to be submitted 
        under this paragraph shall be certified by a qualified member of 
        the American Academy of Actuaries
        and shall meet actuarial guidelines and rules established by the 
        Secretary under subparagraph (B)(v).''.
            (2) Establishment of actuarial guidelines.--Section 
        1854(a)(6)(B) of the Social Security Act (42 U.S.C. 1395w-
        24(a)(6)(B)) is amended--
                    (A) in clause (i), by striking ``(iii) and (iv)'' 
                and inserting ``(iii), (iv), and (v)''; and
                    (B) by adding at the end the following new clause:
                          ``(v) Establishment of actuarial guidelines.--
                                    ``(I) In general.--In order to 
                                establish fair MA competitive benchmarks 
                                under section 1853(j)(1)(A)(i), the 
                                Secretary, acting through the Chief 
                                Actuary of the Centers for Medicare & 
                                Medicaid Services (in this clause 
                                referred to as the `Chief Actuary'), 
                                shall establish--
                                            ``(aa) actuarial guidelines 
                                        for the submission of bid 
                                        information under this 
                                        paragraph; and
                                            ``(bb) bidding rules that 
                                        are appropriate to ensure 
                                        accurate bids and fair 
                                        competition among MA plans.
                                    ``(II) Denial of bid amounts.--The 
                                Secretary shall deny monthly bid amounts 
                                submitted under subparagraph (A) that do 
                                not meet the actuarial guidelines and 
                                rules established under subclause (I).
                                    ``(III) Refusal to accept certain 
                                bids due to misrepresentations and 
                                failures to adequately meet 
                                requirements. <<NOTE: Determinations. Rep
                                orts.>> --In the case where the 
                                Secretary determines that information 
                                submitted by an MA organization under 
                                subparagraph (A) contains consistent 
                                misrepresentations and failures to 
                                adequately meet requirements of the 
                                organization, the Secretary may refuse 
                                to accept any additional such bid 
                                amounts from the organization for the 
                                plan year and the Chief Actuary shall, 
                                if the Chief Actuary determines that the 
                                actuaries of the organization were 
                                complicit in those misrepresentations 
                                and failures, report those actuaries to 
                                the Actuarial Board for Counseling and 
                                Discipline.''.
            (3) <<NOTE: 42 USC 1395w-24 note.>> Effective date.--The 
        amendments made by this subsection shall apply to bid amounts 
        submitted on or after January 1, 2012.

    (e) MA Local Plan Service Areas.--
            (1) In general.--Section 1853(d) of the Social Security Act 
        (42 U.S.C. 1395w-23(d)) is amended--
                    (A) in the subsection heading, by striking ``MA 
                Region'' and inserting ``MA Region; MA Local Plan 
                Service Area'';
                    (B) in paragraph (1), by striking subparagraph (A) 
                and inserting the following:
                    ``(A) with respect to an MA local plan--
                          ``(i) for years before 2012, an MA local area 
                      (as defined in paragraph (2)); and
                          ``(ii) for 2012 and succeeding years, a 
                      service area that is an entire urban or rural 
                      area, as applicable (as described in paragraph 
                      (5)); and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(5) MA local plan service area.--For 2012 and succeeding 
        years, the service area for an MA local plan shall be an entire 
        urban or rural area in each State as follows:
                    ``(A) Urban areas.--
                          ``(i) In general.--Subject to clause (ii) and 
                      subparagraphs (C) and (D), the service area for an 
                      MA local plan in an urban area shall be the Core 
                      Based Statistical Area (in this paragraph referred 
                      to as a `CBSA') or, if applicable, a conceptually 
                      similar alternative classification, as defined by 
                      the Director of the Office of Management and 
                      Budget.
                          ``(ii) CBSA covering more than one state.--In 
                      the case of a CBSA (or alternative classification) 
                      that covers more than one State, the Secretary 
                      shall divide the CBSA (or alternative 
                      classification) into separate service areas with 
                      respect to each State covered by the CBSA (or 
                      alternative classification).
                    ``(B) Rural areas.--Subject to subparagraphs (C) and 
                (D), the service area for an MA local plan in a rural 
                area shall be a county that does not qualify for 
                inclusion in a CBSA (or alternative classification), as 
                defined by the Director of the Office of Management and 
                Budget.
                    ``(C) Refinements to service areas.--For 2015 and 
                succeeding years, in order to reflect actual patterns of 
                health care service utilization, the Secretary may 
                adjust the boundaries of service areas for MA local 
                plans in urban areas and rural areas under subparagraphs 
                (A) and (B), respectively, but may only do so based on 
                recent analyses of actual patterns of care.
                    ``(D) Additional authority to make limited 
                exceptions to service area requirements for ma local 
                plans.--The Secretary may, in addition to any 
                adjustments under subparagraph (C), make limited 
                exceptions to service area requirements otherwise 
                applicable under this part for MA local plans that have 
                in effect (as of the date of enactment of the Patient 
                Protection and Affordable Care Act)--
                          ``(i) agreements with another MA organization 
                      or MA plan that preclude the offering of benefits 
                      throughout an entire service area; or
                          ``(ii) limitations in their structural 
                      capacity to support adequate networks throughout 
                      an entire service area as a result of the delivery 
                      system model of the MA local plan.''.
            (2) Conforming amendments.--
                    (A) In general.--
                          (i) Section 1851(b)(1) of the Social Security 
                      Act (42 U.S.C. 1395w-21(b)(1)) is amended by 
                      striking subparagraph (C).
                          (ii) Section 1853(b)(1)(B)(i) of such Act (42 
                      U.S.C. 1395w-23(b)(1)(B)(i))--
                                    (I) in the matter preceding 
                                subclause (I), by striking ``MA payment 
                                area'' and inserting ``MA local area (as 
                                defined in subsection (d)(2))''; and
                                    (II) in subclause (I), by striking 
                                ``MA payment area'' and inserting ``MA 
                                local area (as so defined)''.
                          (iii) Section 1853(b)(4) of such Act (42 
                      U.S.C. 1395w-23(b)(4)) is amended by striking 
                      ``Medicare Advantage payment area'' and inserting 
                      ``MA local area (as so defined)''.
                          (iv) Section 1853(c)(1) of such Act (42 U.S.C. 
                      1395w-23(c)(1)) is amended--
                                    (I) in the matter preceding 
                                subparagraph (A), by striking ``a 
                                Medicare Advantage payment area that 
                                is''; and
                                    (II) in subparagraph (D)(i), by 
                                striking ``MA payment area'' and 
                                inserting ``MA local area (as defined in 
                                subsection (d)(2))''.
                          (v) Section 1854 of such Act (42 U.S.C. 1395w-
                      24) is amended by striking subsection (h).
                    (B) <<NOTE: 42 USC 1395w-21 note.>> Effective 
                date.--The amendments made by this paragraph shall take 
                effect on January 1, 2012.

    (f) Performance Bonuses.--
            (1) MA plans.--
                    (A) In general.--Section 1853 of the Social Security 
                Act (42 U.S.C. 1395w-23) is amended by adding at the end 
                the following new subsection:

    ``(n) Performance Bonuses.--
            ``(1) Care coordination and management performance bonus.--
                    ``(A) In general. <<NOTE: Effective 
                date. Payments.>> --For years beginning with 2014, 
                subject to subparagraph (B), in the case of an MA plan 
                that conducts 1 or more programs described in 
                subparagraph (C) with respect to the year, the Secretary 
                shall, in addition to any other payment provided under 
                this part, make monthly payments, with respect to 
                coverage of an individual under this part, to the MA 
                plan in an amount equal to the product of--
                          ``(i) 0.5 percent of the national monthly per 
                      capita cost for expenditures for individuals 
                      enrolled under the original medicare fee-for-
                      service program for the year; and
                          ``(ii) the total number of programs described 
                      in clauses (i) through (ix) of subparagraph (C) 
                      that the Secretary determines the plan is 
                      conducting for the year under such subparagraph.
                    ``(B) Limitation.--In no case may the total amount 
                of payment with respect to a year under subparagraph (A) 
                be greater than 2 percent of the national monthly per 
                capita cost for expenditures for individuals enrolled 
                under the original medicare fee-for-service program for 
                the year, as determined prior to the application of risk 
                adjustment under paragraph (4).
                    ``(C) Programs described.--The following programs 
                are described in this paragraph:
                          ``(i) Care management programs that--
                                    ``(I) target individuals with 1 or 
                                more chronic conditions;
                                    ``(II) identify gaps in care; and
                                    ``(III) facilitate improved care by 
                                using additional resources like nurses, 
                                nurse practitioners, and physician 
                                assistants.
                          ``(ii) Programs that focus on patient 
                      education and self-management of health 
                      conditions, including interventions that--
                                    ``(I) help manage chronic 
                                conditions;
                                    ``(II) reduce declines in health 
                                status; and
                                    ``(III) foster patient and provider 
                                collaboration.
                          ``(iii) Transitional care interventions that 
                      focus on care provided around a hospital inpatient 
                      episode, including programs that target post-
                      discharge patient care in order to reduce 
                      unnecessary health complications and readmissions.
                          ``(iv) Patient safety programs, including 
                      provisions for hospital-based patient safety 
                      programs in contracts that the Medicare Advantage 
                      organization offering the MA plan has with 
                      hospitals.
                          ``(v) Financial policies that promote 
                      systematic coordination of care by primary care 
                      physicians across the full spectrum of specialties 
                      and sites of care, such as medical homes, 
                      capitation arrangements, or pay-for-performance 
                      programs.
                          ``(vi) Programs that address, identify, and 
                      ameliorate health care disparities among principal 
                      at-risk subpopulations.
                          ``(vii) Medication therapy management programs 
                      that are more extensive than is required under 
                      section 1860D-4(c) (as determined by the 
                      Secretary).
                          ``(viii) Health information technology 
                      programs, including clinical decision support and 
                      other tools to facilitate data collection and 
                      ensure patient-centered, appropriate care.
                          ``(ix) Such other care management and 
                      coordination programs as the Secretary determines 
                      appropriate.
                    ``(D) Conduct of program in urban and rural areas.--
                An MA plan may conduct a program described in 
                subparagraph (C) in a manner appropriate for an urban or 
                rural area, as applicable.
                    ``(E) Reporting of data.--Each Medicare Advantage 
                organization shall provide to the Secretary the 
                information needed to determine whether they are 
                eligible for a care coordination and management 
                performance bonus at a time and in a manner specified by 
                the Secretary.
                    ``(F) Periodic auditing. <<NOTE: Deadline.>> --The 
                Secretary shall provide for the annual auditing of 
                programs described in subparagraph (C) for which an MA 
                plan receives a care coordination and management 
                performance bonus under this paragraph. The Comptroller 
                General shall monitor auditing activities conducted 
                under this subparagraph.
            ``(2) Quality performance bonuses.--
                    ``(A) Quality bonus. <<NOTE: Effective 
                date. Payments.>> --For years beginning with 2014, the 
                Secretary shall, in addition to any other payment 
                provided under this part, make monthly payments, with 
                respect to coverage of an individual under this part, to 
                an MA plan that achieves at least a 3 star rating (or
                comparable rating) on a rating system described in 
                subparagraph (C) in an amount equal to--
                          ``(i) in the case of a plan that achieves a 3 
                      star rating (or comparable rating) on such system 
                      2 percent of the national monthly per capita cost 
                      for expenditures for individuals enrolled under 
                      the original medicare fee-for-service program for 
                      the year; and
                          ``(ii) in the case of a plan that achieves a 4 
                      or 5 star rating (or comparable rating on such 
                      system, 4 percent of such national monthly per 
                      capita cost for the year.
                    ``(B) Improved quality bonus. <<NOTE: Effective 
                date. Payments.>> --For years beginning with 2014, in 
                the case of an MA plan that does not receive a quality 
                bonus under subparagraph (A) and is an improved quality 
                MA plan with respect to the year (as identified by the 
                Secretary), the Secretary shall, in addition to any 
                other payment provided under this part, make monthly 
                payments, with respect to coverage of an individual 
                under this part, to the MA plan in an amount equal to 1 
                percent of such national monthly per capita cost for the 
                year.
                    ``(C) Use of rating system.--For purposes of 
                subparagraph (A), a rating system described in this 
                paragraph is--
                          ``(i) a rating system that uses up to 5 stars 
                      to rate clinical quality and enrollee satisfaction 
                      and performance at the Medicare Advantage contract 
                      or MA plan level; or
                          ``(ii) such other system established by the 
                      Secretary that provides for the determination of a 
                      comparable quality performance rating to the 
                      rating system described in clause (i).
                    ``(D) Data used in determining score.--
                          ``(i) In general.--The rating of an MA plan 
                      under the rating system described in subparagraph 
                      (C) with respect to a year shall be based on based 
                      on the most recent data available.
                          ``(ii) Plans that fail to report data.--An MA 
                      plan which does not report data that enables the 
                      Secretary to rate the plan for purposes of 
                      subparagraph (A) or identify the plan for purposes 
                      of subparagraph (B) shall be counted, for purposes 
                      of such rating or identification, as having the 
                      lowest plan performance rating and the lowest 
                      percentage improvement, respectively.
            ``(3) Quality bonus for new and low enrollment ma plans.--
                    ``(A) New ma plans. <<NOTE: Effective 
                date. Payments.>> --For years beginning with 2014, in 
                the case of an MA plan that first submits a bid under 
                section 1854(a)(1)(A) for 2012 or a subsequent year, 
                only receives enrollments made during the coverage 
                election periods described in section 1851(e), and is 
                not able to receive a bonus under subparagraph (A) or 
                (B) of paragraph (2) for the year, the Secretary shall, 
                in addition to any other payment provided under this 
                part, make monthly payments, with respect to coverage of 
                an individual under this part, to the MA plan in an 
                amount equal to 2 percent of national monthly per capita 
                cost for expenditures for
                individuals enrolled under the original medicare fee-
                for-service program for the year. In its fourth year of 
                operation, the MA plan shall be paid in the same manner 
                as other MA plans with comparable enrollment.
                    ``(B) Low enrollment plans. <<NOTE: Effective 
                date. Determination.>> --For years beginning with 2014, 
                in the case of an MA plan that has low enrollment (as 
                defined by the Secretary) and would not otherwise be 
                able to receive a bonus under subparagraph (A) or (B) of 
                paragraph (2) or subparagraph (A) of this paragraph for 
                the year (referred to in this subparagraph as a `low 
                enrollment plan'), the Secretary shall use a regional or 
                local mean of the rating of all MA plans in the region 
                or local area, as determined appropriate by the 
                Secretary, on measures used to determine whether MA 
                plans are eligible for a quality or an improved quality 
                bonus, as applicable, to determine whether the low 
                enrollment plan is eligible for a bonus under such a 
                subparagraph.
            ``(4) Risk adjustment.--The Secretary shall risk adjust a 
        performance bonus under this subsection in the same manner as 
        the Secretary risk adjusts beneficiary rebates described in 
        section 1854(b)(1)(C).
            ``(5) Notification.--The Secretary, in the annual 
        announcement required under subsection (b)(1)(B) for 2014 and 
        each succeeding year, shall notify the Medicare Advantage 
        organization of any performance bonus (including a care 
        coordination and management performance bonus under paragraph 
        (1), a quality performance bonus under paragraph (2), and a 
        quality bonus for new and low enrollment plans under paragraph 
        (3)) that the organization will receive under this subsection 
        with respect to the year. <<NOTE: Web posting.>> The Secretary 
        shall provide for the publication of the information described 
        in the previous sentence on the Internet website of the Centers 
        for Medicare & Medicaid Services.''
                    (B) Conforming amendment.--Section 1853(a)(1)(B) of 
                the Social Security Act (42 U.S.C. 1395w-23(a)(1)(B)) is 
                amended--
                          (i) in clause (i), by inserting ``and any 
                      performance bonus under subsection (n)'' before 
                      the period at the end; and
                          (ii) in clause (ii), by striking ``(G)'' and 
                      inserting ``(G), plus the amount (if any) of any 
                      performance bonus under subsection (n)''.
            (2) Application of performance bonuses to ma regional 
        plans.--Section 1858 of the Social Security Act (42 U.S.C. 
        1395w-27a) is amended--
                    (A) in subsection (f)(1), by striking ``subsection 
                (e)'' and inserting ``subsections (e) and (i)''; and
                    (B) by adding at the end the following new 
                subsection:

    ``(i) Application of Performance Bonuses to MA Regional 
Plans. <<NOTE: Effective date.>> --For years beginning with 2014, the 
Secretary shall apply the performance bonuses under section 1853(n) 
(relating to bonuses for care coordination and management, quality 
performance, and new and low enrollment MA plans) to MA regional plans 
in a similar manner as such performance bonuses apply to MA plans under 
such subsection.''.

    (g) Grandfathering Supplemental Benefits for Current Enrollees After 
Implementation of Competitive Bidding.--

Section 1853 of the Social Security Act (42 U.S.C. 1395w-23), as amended 
by subsection (f), is amended by adding at the end the following new 
subsection:
    ``(o) Grandfathering Supplemental Benefits for Current Enrolles 
After Implementation of Competitive Bidding.--
            ``(1) Identification of areas.--The Secretary shall identify 
        MA local areas in which, with respect to 2009, average bids 
        submitted by an MA organization under section 1854(a) for MA 
        local plans in the area are not greater than 75 percent of the 
        adjusted average per capita cost for the year involved, 
        determined under section 1876(a)(4), for the area for 
        individuals who are not enrolled in an MA plan under this part 
        for the year, but adjusted to exclude costs attributable to 
        payments under section 1848(o), 1886(n), and 1886(h).
            ``(2) Election to provide rebates to grandfathered 
        enrollees.--
                    ``(A) In general. <<NOTE: Effective date.>> --For 
                years beginning with 2012, each Medicare Advantage 
                organization offering an MA local plan in an area 
                identified by the Secretary under paragraph (1) may 
                elect to provide rebates to grandfathered enrollees 
                under section 1854(b)(1)(C). In the case where an MA 
                organization makes such an election, the monthly per 
                capita dollar amount of such rebates shall not exceed 
                the applicable amount for the year (as defined in 
                subparagraph (B)).
                    ``(B) Applicable amount. <<NOTE: Definition.>> --For 
                purposes of this subsection, the term `applicable 
                amount' means--
                          ``(i) for 2012, the monthly per capita dollar 
                      amount of such rebates provided to enrollees under 
                      the MA local plan with respect to 2011; and
                          ``(ii) for a subsequent year, 95 percent of 
                      the amount determined under this subparagraph for 
                      the preceding year.
            ``(3) Special rules for plans in identified 
        areas. <<NOTE: Applicability.>> --Notwithstanding any other 
        provision of this part, the following shall apply with respect 
        to each Medicare Advantage organization offering an MA local 
        plan in an area identified by the Secretary under paragraph (1) 
        that makes an election described in paragraph (2):
                    ``(A) Payments.--The amount of the monthly payment 
                under this section to the Medicare Advantage 
                organization, with respect to coverage of a 
                grandfathered enrollee under this part in the area for a 
                month, shall be equal to--
                          ``(i) for 2012 and 2013, the sum of--
                                    ``(I) the bid amount under section 
                                1854(a) for the MA local plan; and
                                    ``(II) the applicable amount (as 
                                defined in paragraph (2)(B)) for the MA 
                                local plan for the year.
                          ``(ii) for 2014 and subsequent years, the sum 
                      of--
                                    ``(I) the MA competitive benchmark 
                                amount under subsection (j)(1)(A)(i) for 
                                the area for the month, adjusted, only 
                                to the extent the Secretary determines 
                                necessary, to account for induced 
                                utilization as a result of rebates 
                                provided to grandfathered enrollees 
                                (except that such adjustment shall not 
                                exceed 0.5 percent of such MA 
                                competitive benchmark amount); and
                                    ``(II) the applicable amount (as so 
                                defined) for the MA local plan for the 
                                year.
                    ``(B) Requirement to submit bids under competitive 
                bidding.--The Medicare Advantage organization shall 
                submit a single bid amount under section 1854(a) for the 
                MA local plan. The Medicare Advantage organization shall 
                remove from such bid amount any effects of induced 
                demand for care that may result from the higher rebates 
                available to grandfathered enrollees under this 
                subsection.
                    ``(C) Nonapplication of bonus payments and any other 
                rebates.--The Medicare Advantage organization offering 
                the MA local plan shall not be eligible for any bonus 
                payment under subsection (n) or any rebate under this 
                part (other than as provided under this subsection) with 
                respect to grandfathered enrollees.
                    ``(D) Nonapplication of uniform bid and premium 
                amounts to grandfathered enrollees.--Section 1854(c) 
                shall not apply with respect to the MA local plan.
                    ``(E) Nonapplication of limitation on application of 
                plan rebates toward payment of part b premium.--
                Notwithstanding clause (iii) of section 1854(b)(1)(C), 
                in the case of a grandfathered enrollee, a rebate under 
                such section may be used for the purpose described in 
                clause (ii)(III) of such section.
                    ``(F) Risk adjustment.--The Secretary shall risk 
                adjust rebates to grandfathered enrollees under this 
                subsection in the same manner as the Secretary risk 
                adjusts beneficiary rebates described in section 
                1854(b)(1)(C).
            ``(4) Definition of grandfathered enrollee.--In this 
        subsection, the term `grandfathered enrollee' means an 
        individual who is enrolled (effective as of the date of 
        enactment of this subsection) in an MA local plan in an area 
        that is identified by the Secretary under paragraph (1).''.

    (h) Transitional Extra Benefits.--Section 1853 of the Social 
Security Act (42 U.S.C. 1395w-23), as amended by subsections (f) and 
(g), is amended by adding at the end the following new subsection:
    ``(p) Transitional Extra Benefits.--
            ``(1) In general. <<NOTE: Effective date.>> --For years 
        beginning with 2012, the Secretary shall provide transitional 
        rebates under section 1854(b)(1)(C) for the provision of extra 
        benefits (as specified by the Secretary) to enrollees described 
        in paragraph (2).
            ``(2) Enrollees described.--An enrollee described in this 
        paragraph is an individual who--
                    ``(A) enrolls in an MA local plan in an applicable 
                area; and
                    ``(B) experiences a significant reduction in extra 
                benefits described in clause (ii) of section 
                1854(b)(1)(C) as a result of competitive bidding under 
                this part (as determined by the Secretary).
            ``(3) Applicable areas. <<NOTE: Definition.>> --In this 
        subsection, the term `applicable area' means the following:
                    ``(A) The 2 largest metropolitan statistical areas, 
                if the Secretary determines that the total amount of 
                such extra benefits for each enrollee for the month in 
                those areas is greater than $100.
                    ``(B) A county where--
                          ``(i) the MA area-specific non-drug monthly 
                      benchmark amount for a month in 2011 is equal to 
                      the legacy urban floor amount (as described in 
                      subsection (c)(1)(B)(iii)), as determined by the 
                      Secretary for the area for 2011;
                          ``(ii) the percentage of Medicare Advantage 
                      eligible beneficiaries in the county who are 
                      enrolled in an MA plan for 2009 is greater than 30 
                      percent (as determined by the Secretary); and
                          ``(iii) average bids submitted by an MA 
                      organization under section 1854(a) for MA local 
                      plans in the county for 2011 are not greater than 
                      the adjusted average per capita cost for the year 
                      involved, determined under section 1876(a)(4), for 
                      the county for individuals who are not enrolled in 
                      an MA plan under this part for the year, but 
                      adjusted to exclude costs attributable to payments 
                      under section 1848(o), 1886(n), and 1886(h).
                    ``(C) If the Secretary determines appropriate, a 
                county contiguous to an area or county described in 
                subparagraph (A) or (B), respectively.
            ``(4) Review of plan bids.--In the case of a bid submitted 
        by an MA organization under section 1854(a) for an MA local plan 
        in an applicable area, the Secretary shall review such bid in 
        order to ensure that extra benefits (as specified by the 
        Secretary) are provided to enrollees described in paragraph (2).
            ``(5) Funding. <<NOTE: Determination.>> --The Secretary 
        shall provide for the transfer from the Federal Hospital 
        Insurance Trust Fund under section 1817 and the Federal 
        Supplementary Medical Insurance Trust Fund established under 
        section 1841, in such proportion as the Secretary determines 
        appropriate, of an amount not to exceed $5,000,000,000 for the 
        period of fiscal years 2012 through 2019 for the purpose of 
        providing transitional rebates under section 1854(b)(1)(C) for 
        the provision of extra benefits under this subsection.''.

    (i) Nonapplication of Competitive Bidding and Related Provisions and 
Clarification of MA Payment Area for PACE Programs.--
            (1) Nonapplication of competitive bidding and related 
        provisions for pace programs.--Section 1894 of the Social 
        Security Act (42 U.S.C. 1395eee) is amended--
                    (A) by redesignating subsections (h) and (i) as 
                subsections (i) and (j), respectively;
                    (B) by inserting after subsection (g) the following 
                new subsection:

    ``(h) Nonapplication of Competitive Bidding and Related Provisions 
Under Part C.--With respect to a PACE program under this section, the 
following provisions (and regulations relating to such provisions) shall 
not apply:
            ``(1) Section 1853(j)(1)(A)(i), relating to MA area-specific 
        non-drug monthly benchmark amount being based on competitive 
        bids.
            ``(2) Section 1853(d)(5), relating to the establishment of 
        MA local plan service areas.
            ``(3) Section 1853(n), relating to the payment of 
        performance bonuses.
            ``(4) Section 1853(o), relating to grandfathering 
        supplemental benefits for current enrollees after implementation 
        of competitive bidding.
            ``(5) Section 1853(p), relating to transitional extra 
        benefits.''.
            (2) Special rule for ma payment area for pace programs.--
        Section 1853(d) of the Social Security Act (42 U.S.C. 1395w-
        23(d)), as amended by subsection (e), is amended by adding at 
        the end the following new paragraph:
            ``(6) Special rule for ma payment area for pace 
        programs. <<NOTE: Effective date.>> --For years beginning with 
        2012, in the case of a PACE program under section 1894, the MA 
        payment area shall be the MA local area (as defined in paragraph 
        (2)).''.

SEC. 3202. BENEFIT PROTECTION AND SIMPLIFICATION.

    (a) Limitation on Variation of Cost Sharing for Certain Benefits.--
            (1) In general.--Section 1852(a)(1)(B) of the Social 
        Security Act (42 U.S.C. 1395w-22(a)(1)(B)) is amended--
                    (A) in clause (i), by inserting ``, subject to 
                clause (iii),'' after ``and B or''; and
                    (B) by adding at the end the following new clauses:
                          ``(iii) Limitation on variation of cost 
                      sharing for certain benefits.--Subject to clause 
                      (v), cost-sharing for services described in clause 
                      (iv) shall not exceed the cost-sharing required 
                      for those services under parts A and B.
                          ``(iv) Services described.--The following 
                      services are described in this clause:
                                    ``(I) Chemotherapy administration 
                                services.
                                    ``(II) Renal dialysis services (as 
                                defined in section 1881(b)(14)(B)).
                                    ``(III) Skilled nursing care.
                                    ``(IV) Such other services that the 
                                Secretary determines appropriate 
                                (including services that the Secretary 
                                determines require a high level of 
                                predictability and transparency for 
                                beneficiaries).
                          ``(v) Exception.--In the case of services 
                      described in clause (iv) for which there is no 
                      cost-sharing required under parts A and B, cost-
                      sharing may be required for those services in 
                      accordance with clause (i).''.
            (2) <<NOTE: 42 USC 1395w-22 note.>> Effective date.--The 
        amendments made by this subsection shall apply to plan years 
        beginning on or after January 1, 2011.

    (b) Application of Rebates, Performance Bonuses, and Premiums.--
            (1) Application of rebates.--Section 1854(b)(1)(C) of the 
        Social Security Act (42 U.S.C. 1395w-24(b)(1)(C)) is amended--
                    (A) in clause (ii), by striking ``rebate.--A 
                rebate'' and inserting ``rebate for plan years before 
                2012.--For plan years before 2012, a rebate'';
                    (B) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v); and
                    (C) by inserting after clause (ii) the following new 
                clause:
                          ``(iii) Form of rebate for plan year 2012 and 
                      subsequent plan years. <<NOTE: Effective 
                      date.>> --For plan years beginning on or after 
                      January 1, 2012, a rebate required under

[[Page 124 STAT. 455]]

                      this subparagraph may not be used for the purpose 
                      described in clause (ii)(III) and shall be 
                      provided through the application of the amount of 
                      the rebate in the following priority order:
                                    ``(I) First, to use the most 
                                significant share to meaningfully reduce 
                                cost-sharing otherwise applicable for 
                                benefits under the original medicare 
                                fee-for-service program under parts A 
                                and B and for qualified prescription 
                                drug coverage under part D, including 
                                the reduction of any deductibles, 
                                copayments, and maximum limitations on 
                                out-of-pocket expenses otherwise 
                                applicable. <<NOTE: Applicability.>> Any 
                                reduction of maximum limitations on out-
                                of-pocket expenses under the preceding 
                                sentence shall apply to all benefits 
                                under the original medicare fee-for-
                                service program option. The Secretary 
                                may provide guidance on meaningfully 
                                reducing cost-sharing under this 
                                subclause, except that such guidance may 
                                not require a particular amount of cost-
                                sharing or reduction in cost-sharing.
                                    ``(II) Second, to use the next most 
                                significant share to meaningfully 
                                provide coverage of preventive and 
                                wellness health care benefits (as 
                                defined by the Secretary) which are not 
                                benefits under the original medicare 
                                fee-for-service program, such as smoking 
                                cessation, a free flu shot, and an 
                                annual physical examination.
                                    ``(III) Third, to use the remaining 
                                share to meaningfully provide coverage 
                                of other health care benefits which are 
                                not benefits under the original medicare 
                                fee-for-service program, such as eye 
                                examinations and dental coverage, and 
                                are not benefits described in subclause 
                                (II).''.
            (2) Application of performance bonuses.--Section 1853(n) of 
        the Social Security Act, as added by section 3201(f), is amended 
        by adding at the end the following new paragraph:
            ``(6) <<NOTE: Effective date.>> Application of performance 
        bonuses.--For plan years beginning on or after January 1, 2014, 
        any performance bonus paid to an MA plan under this subsection 
        shall be used for the purposes, and in the priority order, 
        described in subclauses (I) through (III) of section 
        1854(b)(1)(C)(iii).''.
            (3) Application of ma monthly supplementary beneficiary 
        premium.--Section 1854(b)(2)(C) of the Social Security Act (42 
        U.S.C. 1395w-24(b)(2)(C)) is amended--
                    (A) by striking ``Premium.--The term'' and inserting 
                ``premium.--
                          ``(i) In general.--The term''; and
                    (B) by adding at the end the following new clause:
                          ``(ii) Application of ma monthly supplementary 
                      beneficiary premium. <<NOTE: Effective date.>> --
                      For plan years beginning on or after January 1, 
                      2012, any MA monthly supplementary beneficiary 
                      premium charged to an individual enrolled in an MA 
                      plan shall be used for the purposes, and in the 
                      priority order, described in subclauses (I) 
                      through (III) of paragraph (1)(C)(iii).''.

[[Page 124 STAT. 456]]

SEC. 3203. APPLICATION OF CODING INTENSITY ADJUSTMENT DURING MA PAYMENT 
            TRANSITION.

    Section 1853(a)(1)(C) of the Social Security Act (42 U.S.C. 1395w-
23(a)(1)(C)) is amended by adding at the end the following new clause:
                          ``(iii) Application of coding intensity 
                      adjustment for 2011 and subsequent years.--
                                    ``(I) Requirement to apply in 2011 
                                through 2013.--In order to ensure 
                                payment accuracy, the Secretary shall 
                                conduct an analysis of the differences 
                                described in clause (ii)(I). The 
                                Secretary shall ensure that the results 
                                of such analysis are incorporated into 
                                the risk scores for 2011, 2012, and 
                                2013.
                                    ``(II) Authority to apply in 2014 
                                and subsequent years.--The Secretary 
                                may, as appropriate, incorporate the 
                                results of such analysis into the risk 
                                scores for 2014 and subsequent years.''.

SEC. 3204. SIMPLIFICATION OF ANNUAL BENEFICIARY ELECTION PERIODS.

    (a) Annual 45-day Period for Disenrollment From MA Plans To Elect To 
Receive Benefits Under the Original Medicare Fee-for-service Program.--
            (1) In general.--Section 1851(e)(2)(C) of the Social 
        Security Act <<NOTE: 42 USC 1395w-21.>> (42 U.S.C. 1395w-
        1(e)(2)(C)) is amended to read as follows:
                    ``(C) Annual 45-day period for disenrollment from ma 
                plans to elect to receive benefits under the original 
                medicare fee-for-service program. <<NOTE: Effective 
                date.>> --Subject to subparagraph (D), at any time 
                during the first 45 days of a year (beginning with 
                2011), an individual who is enrolled in a Medicare 
                Advantage plan may change the election under subsection 
                (a)(1), but only with respect to coverage under the 
                original medicare fee-for-service program under parts A 
                and B, and may elect qualified prescription drug 
                coverage in accordance with section 1860D-1.''.
            (2) <<NOTE: 42 USC 1395w-21 note.>> Effective date.--The 
        amendment made by paragraph (1) shall apply with respect to 2011 
        and succeeding years.

    (b) Timing of the Annual, Coordinated Election Period Under Parts C 
and D.--Section 1851(e)(3)(B) of the Social Security Act <<NOTE: 42 
USC 1395w-21.>> (42 U.S.C. 1395w-1(e)(3)(B)) is amended--
            (1) in clause (iii), by striking ``and'' at the end;
            (2) in clause (iv)--
                    (A) by striking ``and succeeding years'' and 
                inserting ``, 2008, 2009, and 2010''; and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (3) by adding at the end the following new clause:
                          ``(v) with respect to 2012 and succeeding 
                      years, the period beginning on October 15 and 
                      ending on December 7 of the year before such 
                      year.''.

[[Page 124 STAT. 457]]

SEC. 3205. EXTENSION FOR SPECIALIZED MA PLANS FOR SPECIAL NEEDS 
            INDIVIDUALS.

    (a) Extension of SNP Authority.--Section 1859(f)(1) of the Social 
Security Act (42 U.S.C. 1395w-28(f)(1)), as amended by section 164(a) of 
the Medicare Improvements for Patients and Providers Act of 2008 (Public 
Law 110-275), is amended by striking ``2011'' and inserting ``2014''.
    (b) Authority To Apply Frailty Adjustment Under PACE Payment 
Rules.--Section 1853(a)(1)(B) of the Social Security Act (42 U.S.C. 
1395w-23(a)(1)(B)) is amended by adding at the end the following new 
clause:
                          ``(iv) Authority to apply frailty adjustment 
                      under pace payment rules for certain specialized 
                      ma plans for special needs individuals.--
                                    ``(I) In general.--Notwithstanding 
                                the preceding provisions of this 
                                paragraph, for plan year 2011 and 
                                subsequent plan years, in the case of a 
                                plan described in subclause (II), the 
                                Secretary may apply the payment rules 
                                under section 1894(d) (other than 
                                paragraph (3) of such section) rather 
                                than the payment rules that would 
                                otherwise apply under this part, but 
                                only to the extent necessary to reflect 
                                the costs of treating high 
                                concentrations of frail individuals.
                                    ``(II) Plan described.--A plan 
                                described in this subclause is a 
                                specialized MA plan for special needs 
                                individuals described in section 
                                1859(b)(6)(B)(ii) that is fully 
                                integrated with capitated contracts with 
                                States for Medicaid benefits, including 
                                long-term care, and that have similar 
                                average levels of frailty (as determined 
                                by the Secretary) as the PACE 
                                program.''.

    (c) Transition and Exception Regarding Restriction on Enrollment.--
Section 1859(f) of the Social Security Act (42 U.S.C. 1395w-28(f)) is 
amended by adding at the end the following new paragraph:
            ``(6) Transition and exception regarding restriction on 
        enrollment.--
                    ``(A) In general. <<NOTE: Procedures.>> --Subject to 
                subparagraph (C), the Secretary shall establish 
                procedures for the transition of applicable individuals 
                to--
                          ``(i) a Medicare Advantage plan that is not a 
                      specialized MA plan for special needs individuals 
                      (as defined in subsection (b)(6)); or
                          ``(ii) the original medicare fee-for-service 
                      program under parts A and B.
                    ``(B) Applicable 
                individuals. <<NOTE: Definition.>> --For purposes of 
                clause (i), the term `applicable individual' means an 
                individual who--
                          ``(i) is enrolled under a specialized MA plan 
                      for special needs individuals (as defined in 
                      subsection (b)(6)); and
                          ``(ii) is not within the 1 or more of the 
                      classes of special needs individuals to which 
                      enrollment under the plan is restricted to.
                    ``(C) Exception.--The Secretary shall provide for an 
                exception to the transition described in subparagraph 
                (A)

[[Page 124 STAT. 458]]

                for a limited period of time for individuals enrolled 
                under a specialized MA plan for special needs 
                individuals described in subsection (b)(6)(B)(ii) who 
                are no longer eligible for medical assistance under 
                title XIX.
                    ``(D) Timeline for initial 
                transition. <<NOTE: Deadline.>> --The Secretary shall 
                ensure that applicable individuals enrolled in a 
                specialized MA plan for special needs individuals (as 
                defined in subsection (b)(6)) prior to January 1, 2010, 
                are transitioned to a plan or the program described in 
                subparagraph (A) by not later than January 1, 2013.''.

    (d) Temporary Extension of Authority To Operate but No Service Area 
Expansion for Dual Special Needs Plans That Do Not Meet Certain 
Requirements.--Section 164(c)(2) of the Medicare Improvements for 
Patients and Providers Act of 2008 (Public Law 110-275) <<NOTE: 42 
USC 1395w-28 note.>>  is amended by striking ``December 31, 2010'' and 
inserting ``December 31, 2012''.

    (e) Authority To Require Special Needs Plans Be NCQA Approved.--
Section 1859(f) of the Social Security Act (42 U.S.C. 1395w-28(f)), as 
amended by subsections (a) and (c), is amended--
            (1) in paragraph (2), by adding at the end the following new 
        subparagraph:
                    ``(C) If applicable, the plan meets the requirement 
                described in paragraph (7).'';
            (2) in paragraph (3), by adding at the end the following new 
        subparagraph:
                    ``(E) If applicable, the plan meets the requirement 
                described in paragraph (7).'';
            (3) in paragraph (4), by adding at the end the following new 
        subparagraph:
                    ``(C) If applicable, the plan meets the requirement 
                described in paragraph (7).''; and
            (4) by adding at the end the following new paragraph:
            ``(7) Authority to require special needs plans be ncqa 
        approved. <<NOTE: Standards.>> --For 2012 and subsequent years, 
        the Secretary shall require that a Medicare Advantage 
        organization offering a specialized MA plan for special needs 
        individuals be approved by the National Committee for Quality 
        Assurance (based on standards established by the Secretary).''.

    (f) Risk Adjustment.--Section 1853(a)(1)(C) of the Social Security 
Act <<NOTE: 42 USC 1395w-23.>> (42 U.S.C. 1395i-23(a)(1)(C)) is amended 
by adding at the end the following new clause:
                          ``(iii) Improvements to risk adjustment for 
                      special needs individuals with chronic health 
                      conditions.--
                                    ``(I) In general.--For 2011 and 
                                subsequent years, for purposes of the 
                                adjustment under clause (i) with respect 
                                to individuals described in subclause 
                                (II), the Secretary shall use a risk 
                                score that reflects the known underlying 
                                risk profile and chronic health status 
                                of similar individuals. Such risk score 
                                shall be used instead of the default 
                                risk score for new enrollees in Medicare 
                                Advantage plans that are not specialized 
                                MA plans for special needs individuals 
                                (as defined in section 1859(b)(6)).
                                    ``(II) Individuals described.--An 
                                individual described in this subclause 
                                is a special needs individual described 
                                in subsection (b)(6)(B)(iii) who

[[Page 124 STAT. 459]]

                                enrolls in a specialized MA plan for 
                                special needs individuals on or after 
                                January 1, 2011.
                                    ``(III) Evaluation.--For 2011 and 
                                periodically thereafter, the Secretary 
                                shall evaluate and revise the risk 
                                adjustment system under this 
                                subparagraph in order to, as accurately 
                                as possible, account for higher medical 
                                and care coordination costs associated 
                                with frailty, individuals with multiple, 
                                comorbid chronic conditions, and 
                                individuals with a diagnosis of mental 
                                illness, and also to account for costs 
                                that may be associated with higher 
                                concentrations of beneficiaries with 
                                those conditions.
                                    ``(IV) Publication of evaluation and 
                                revisions.--The Secretary shall publish, 
                                as part of an announcement under 
                                subsection (b), a description of any 
                                evaluation conducted under subclause 
                                (III) during the preceding year and any 
                                revisions made under such subclause as a 
                                result of such evaluation.''.

    (g) Technical Correction.--Section 1859(f)(5) of the Social Security 
Act (42 U.S.C. 1395w-28(f)(5)) is amended, in the matter preceding 
subparagraph (A), by striking ``described in subsection (b)(6)(B)(i)''.

SEC. 3206. EXTENSION OF REASONABLE COST CONTRACTS.

    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, 2010'' and inserting ``January 1, 2013''.

SEC. 3207. <<NOTE: 42 USC 1395w-27 note.>> TECHNICAL CORRECTION TO MA 
            PRIVATE FEE-FOR-SERVICE PLANS.

     <<NOTE: Applicability.>> For plan year 2011 and subsequent plan 
years, to the extent that the Secretary of Health and Human Services is 
applying the 2008 service area extension waiver policy (as modified in 
the April 11, 2008, Centers for Medicare & Medicaid Services' memorandum 
with the subject ``2009 Employer Group Waiver-Modification of the 2008 
Service Area Extension Waiver Granted to Certain MA Local Coordinated 
Care Plans'') to Medicare Advantage coordinated care plans, the 
Secretary shall extend the application of such waiver policy to 
employers who contract directly with the Secretary as a Medicare 
Advantage private fee-for-service plan under section 1857(i)(2) of the 
Social Security Act (42 U.S.C. 1395w-27(i)(2)) and that had enrollment 
as of October 1, 2009.

SEC. 3208. MAKING SENIOR HOUSING FACILITY DEMONSTRATION PERMANENT.

    (a) In General.--Section 1859 of the Social Security Act (42 U.S.C. 
1395w-28) is amended by adding at the end the following new subsection:
    ``(g) Special Rules for Senior Housing Facility Plans.--
            ``(1) In general.--In the case of a Medicare Advantage 
        senior housing facility plan described in paragraph (2), 
        notwithstanding any other provision of this part to the contrary 
        and in accordance with regulations of the Secretary, the service 
        area of such plan may be limited to a senior housing facility in 
        a geographic area.

[[Page 124 STAT. 460]]

            ``(2) Medicare advantage senior housing facility plan 
        described.--For purposes of this subsection, a Medicare 
        Advantage senior housing facility plan is a Medicare Advantage 
        plan that--
                    ``(A) restricts enrollment of individuals under this 
                part to individuals who reside in a continuing care 
                retirement community (as defined in section 
                1852(l)(4)(B));
                    ``(B) provides primary care services onsite and has 
                a ratio of accessible physicians to beneficiaries that 
                the Secretary determines is adequate;
                    ``(C) provides transportation services for 
                beneficiaries to specialty providers outside of the 
                facility; and
                    ``(D) has participated (as of December 31, 2009) in 
                a demonstration project established by the Secretary 
                under which such a plan was offered for not less than 1 
                year.''.

    (b) Effective Date. <<NOTE: 42 USC 1395w-28 note.>> --The amendment 
made by this section shall take effect on January 1, 2010, and shall 
apply to plan years beginning on or after such date.

SEC. 3209. AUTHORITY TO DENY PLAN BIDS.

    (a) In General.--Section 1854(a)(5) of the Social Security Act (42 
U.S.C. 1395w-24(a)(5)) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Rejection of bids.--
                          ``(i) In general.--Nothing in this section 
                      shall be construed as requiring the Secretary to 
                      accept any or every bid submitted by an MA 
                      organization under this subsection.
                          ``(ii) Authority to deny bids that propose 
                      significant increases in cost sharing or decreases 
                      in benefits.--The Secretary may deny a bid 
                      submitted by an MA organization for an MA plan if 
                      it proposes significant increases in cost sharing 
                      or decreases in benefits offered under the 
                      plan.''.

    (b) Application Under Part D.--Section 1860D-11(d) of such Act (42 
U.S.C. 1395w-111(d)) is amended by adding at the end the following new 
paragraph:
            ``(3) Rejection of bids. <<NOTE: Applicability.>> --
        Paragraph (5)(C) of section 1854(a) shall apply with respect to 
        bids submitted by a PDP sponsor under subsection (b) in the same 
        manner as such paragraph applies to bids submitted by an MA 
        organization under such section 1854(a).''.

    (c) <<NOTE: 42 USC 1395w-24 note.>> Effective Date.--The amendments 
made by this section shall apply to bids submitted for contract years 
beginning on or after January 1, 2011.

SEC. 3210. DEVELOPMENT OF NEW STANDARDS FOR CERTAIN MEDIGAP PLANS.

    (a) In General.--Section 1882 of the Social Security Act (42 U.S.C. 
1395ss) is amended by adding at the end the following new subsection:
    ``(y) Development of New Standards for Certain Medicare Supplemental 
Policies.--
            ``(1) In general.--The Secretary shall request the National 
        Association of Insurance Commissioners to review and revise the 
        standards for benefit packages described in paragraph (2) under 
        subsection (p)(1), to otherwise update standards to include 
        requirements for nominal cost sharing to encourage

[[Page 124 STAT. 461]]

        the use of appropriate physicians' services under part B. Such 
        revisions shall be based on evidence published in peer-reviewed 
        journals or current examples used by integrated delivery systems 
        and made consistent with the rules applicable under subsection 
        (p)(1)(E) with the reference to the `1991 NAIC Model Regulation' 
        deemed a reference to the NAIC Model Regulation as published in 
        the Federal Register on December 4, 1998, and as subsequently 
        updated by the National Association of Insurance Commissioners 
        to reflect previous changes in law and the reference to `date of 
        enactment of this subsection' deemed a reference to the date of 
        enactment of the Patient Protection and Affordable Care 
        Act. <<NOTE: Effective date.>> To the extent practicable, such 
        revision shall provide for the implementation of revised 
        standards for benefit packages as of January 1, 2015.
            ``(2) Benefit packages described.--The benefit packages 
        described in this paragraph are benefit packages classified as 
        `C' and `F'.''.

    (b) Conforming Amendment.--Section 1882(o)(1) of the Social Security 
Act (42 U.S.C. 1395ss(o)(1)) is amended by striking ``, and (w)'' and 
inserting ``(w), and (y)''.

Subtitle D--Medicare Part D Improvements for Prescription Drug Plans and 
                               MA-PD Plans

SEC. 3301. MEDICARE COVERAGE GAP DISCOUNT PROGRAM.

    (a) Condition for Coverage of Drugs Under Part D.--Part D of Title 
XVIII of the Social Security Act (42 U.S.C. 1395w-101 et seq.), is 
amended by adding at the end the following new section:


            ``condition for coverage of drugs under this part


    ``Sec. 1860D-43. <<NOTE: Contracts. 42 USC 1395w-153.>>  (a) In 
General.--In order for coverage to be available under this part for 
covered part D drugs (as defined in section 1860D-2(e)) of a 
manufacturer, the manufacturer must--
            ``(1) participate in the Medicare coverage gap discount 
        program under section 1860D-14A;
            ``(2) have entered into and have in effect an agreement 
        described in subsection (b) of such section with the Secretary; 
        and
            ``(3) have entered into and have in effect, under terms and 
        conditions specified by the Secretary, a contract with a third 
        party that the Secretary has entered into a contract with under 
        subsection (d)(3) of such section.

    ``(b) Effective Date.--Subsection (a) shall apply to covered part D 
drugs dispensed under this part on or after July 1, 2010.
    ``(c) Authorizing Coverage for Drugs Not Covered Under Agreements.--
Subsection (a) shall not apply to the dispensing of a covered part D 
drug if--
            ``(1) <<NOTE: Determination.>> the Secretary has made a 
        determination that the availability of the drug is essential to 
        the health of beneficiaries under this part; or

[[Page 124 STAT. 462]]

            ``(2) <<NOTE: Determination. Time period.>> the Secretary 
        determines that in the period beginning on July 1, 2010, and 
        ending on December 31, 2010, there were extenuating 
        circumstances.

    ``(d) Definition of Manufacturer.--In this section, the term 
`manufacturer' has the meaning given such term in section 1860D-
14A(g)(5).''.
    (b) Medicare Coverage Gap Discount Program.--Part D of title XVIII 
of the Social Security Act (42 U.S.C. 1395w-101) is amended by inserting 
after section 1860D-14 the following new section:


                ``medicare coverage gap discount program


    ``Sec. 1860D-14A.  <<NOTE: Deadlines. 42 USC 1395w-114a.>> (a) 
Establishment.--The Secretary shall establish a Medicare coverage gap 
discount program (in this section referred to as the `program') by not 
later than July 1, 2010. <<NOTE: Contracts.>> Under the program, the 
Secretary shall enter into agreements described in subsection (b) with 
manufacturers and provide for the performance of the duties described in 
subsection (c)(1). The Secretary shall establish a model agreement for 
use under the program by not later than April 1, 2010, in consultation 
with manufacturers, and allow for comment on such model agreement.

    ``(b) Terms of Agreement.--
            ``(1) In general.--
                    ``(A) Agreement.--An agreement under this section 
                shall require the manufacturer to provide applicable 
                beneficiaries access to discounted prices for applicable 
                drugs of the manufacturer.
                    ``(B) Provision of discounted prices at the point-
                of-sale.--Except as provided in subsection 
                (c)(1)(A)(iii), such discounted prices shall be provided 
                to the applicable beneficiary at the pharmacy or by the 
                mail order service at the point-of-sale of an applicable 
                drug.
                    ``(C) <<NOTE: Deadlines.>>  Timing of agreement.--
                          ``(i) Special rule for 2010 and 2011.--In 
                      order for an agreement with a manufacturer to be 
                      in effect under this section with respect to the 
                      period beginning on July 1, 2010, and ending on 
                      December 31, 2011, the manufacturer shall enter 
                      into such agreement not later than May 1, 2010.
                          ``(ii) 2012 and subsequent years.--In order 
                      for an agreement with a manufacturer to be in 
                      effect under this section with respect to plan 
                      year 2012 or a subsequent plan year, the 
                      manufacturer shall enter into such agreement (or 
                      such agreement shall be renewed under paragraph 
                      (4)(A)) not later than January 30 of the preceding 
                      year.
            ``(2) Provision of appropriate 
        data. <<NOTE: Determination.>> --Each manufacturer with an 
        agreement in effect under this section shall collect and have 
        available appropriate data, as determined by the Secretary, to 
        ensure that it can demonstrate to the Secretary compliance with 
        the requirements under the program.
            ``(3) Compliance with requirements for administration of 
        program.--Each manufacturer with an agreement in effect under 
        this section shall comply with requirements imposed by the 
        Secretary or a third party with a contract under subsection 
        (d)(3), as applicable, for purposes of administering the

[[Page 124 STAT. 463]]

        program, including any determination under clause (i) of 
        subsection (c)(1)(A) or procedures established under such 
        subsection (c)(1)(A).
            ``(4) Length of agreement.--
                    ``(A) In general. <<NOTE: Time period.>> --An 
                agreement under this section shall be effective for an 
                initial period of not less than 18 months and shall be 
                automatically renewed for a period of not less than 1 
                year unless terminated under subparagraph (B).
                    ``(B) Termination.--
                          ``(i) By the secretary.--The Secretary may 
                      provide for termination of an agreement under this 
                      section for a knowing and willful violation of the 
                      requirements of the agreement or other good cause 
                      shown. <<NOTE: Notice.>> Such termination shall 
                      not be effective earlier than 30 days after the 
                      date of notice to the manufacturer of such 
                      termination. The Secretary shall provide, upon 
                      request, a manufacturer with a hearing concerning 
                      such a termination, and such hearing shall take 
                      place prior to the effective date of the 
                      termination with sufficient time for such 
                      effective date to be repealed if the Secretary 
                      determines appropriate.
                          ``(ii) By a manufacturer.--A manufacturer may 
                      terminate an agreement under this section for any 
                      reason. Any such termination shall be effective, 
                      with respect to a plan year--
                                    ``(I) if the termination occurs 
                                before January 30 of a plan year, as of 
                                the day after the end of the plan year; 
                                and
                                    ``(II) if the termination occurs on 
                                or after January 30 of a plan year, as 
                                of the day after the end of the 
                                succeeding plan year.
                          ``(iii) Effectiveness of termination.--Any 
                      termination under this subparagraph shall not 
                      affect discounts for applicable drugs of the 
                      manufacturer that are due under the agreement 
                      before the effective date of its termination.
                          ``(iv) Notice to third 
                      party. <<NOTE: Deadline.>> --The Secretary shall 
                      provide notice of such termination to a third 
                      party with a contract under subsection (d)(3) 
                      within not less than 30 days before the effective 
                      date of such termination.

    ``(c) Duties Described and Special Rule for Supplemental Benefits.--
            ``(1) Duties described.--The duties described in this 
        subsection are the following:
                    ``(A) Administration of 
                program. <<NOTE: Procedures.>> --Administering the 
                program, including--
                          ``(i) <<NOTE: Determination.>> the 
                      determination of the amount of the discounted 
                      price of an applicable drug of a manufacturer;
                          ``(ii) except as provided in clause (iii), the 
                      establishment of procedures under which discounted 
                      prices are provided to applicable beneficiaries at 
                      pharmacies or by mail order service at the point-
                      of-sale of an applicable drug;
                          ``(iii) in the case where, during the period 
                      beginning on July 1, 2010, and ending on December 
                      31, 2011,

[[Page 124 STAT. 464]]

                      it is not practicable to provide such discounted 
                      prices at the point-of-sale (as described in 
                      clause (ii)), the establishment of procedures to 
                      provide such discounted prices as soon as 
                      practicable after the point-of-sale;
                          ``(iv) the establishment of procedures to 
                      ensure that, not later than the applicable number 
                      of calendar days after the dispensing of an 
                      applicable drug by a pharmacy or mail order 
                      service, the pharmacy or mail order service is 
                      reimbursed for an amount equal to the difference 
                      between--
                                    ``(I) the negotiated price of the 
                                applicable drug; and
                                    ``(II) the discounted price of the 
                                applicable drug;
                          ``(v) the establishment of procedures to 
                      ensure that the discounted price for an applicable 
                      drug under this section is applied before any 
                      coverage or financial assistance under other 
                      health benefit plans or programs that provide 
                      coverage or financial assistance for the purchase 
                      or provision of prescription drug coverage on 
                      behalf of applicable beneficiaries as the 
                      Secretary may specify;
                          ``(vi) the establishment of procedures to 
                      implement the special rule for supplemental 
                      benefits under paragraph (2); and
                          ``(vii) providing a reasonable dispute 
                      resolution mechanism to resolve disagreements 
                      between manufacturers, applicable beneficiaries, 
                      and the third party with a contract under 
                      subsection (d)(3).
                    ``(B) Monitoring compliance.--
                          ``(i) In general.--The Secretary shall monitor 
                      compliance by a manufacturer with the terms of an 
                      agreement under this section.
                          ``(ii) Notification.--If a third party with a 
                      contract under subsection (d)(3) determines that 
                      the manufacturer is not in compliance with such 
                      agreement, the third party shall notify the 
                      Secretary of such noncompliance for appropriate 
                      enforcement under subsection (e).
                    ``(C) Collection of data from prescription drug 
                plans and ma-pd plans.--The Secretary may collect 
                appropriate data from prescription drug plans and MA-PD 
                plans in a timeframe that allows for discounted prices 
                to be provided for applicable drugs under this section.
            ``(2) Special rule for supplemental benefits.--For plan year 
        2010 and each subsequent plan year, in the case where an 
        applicable beneficiary has supplemental benefits with respect to 
        applicable drugs under the prescription drug plan or MA-PD plan 
        that the applicable beneficiary is enrolled in, the applicable 
        beneficiary shall not be provided a discounted price for an 
        applicable drug under this section until after such supplemental 
        benefits have been applied with respect to the applicable drug.

    ``(d) Administration.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall provide for the implementation of this section, including 
        the performance of the duties described in subsection (c)(1).

[[Page 124 STAT. 465]]

            ``(2) Limitation.--
                    ``(A) In general.--Subject to subparagraph (B), in 
                providing for such implementation, the Secretary shall 
                not receive or distribute any funds of a manufacturer 
                under the program.
                    ``(B) Exception. <<NOTE: Time 
                period. Determination.>> --The limitation under 
                subparagraph (A) shall not apply to the Secretary with 
                respect to drugs dispensed during the period beginning 
                on July 1, 2010, and ending on December 31, 2010, but 
                only if the Secretary determines that the exception to 
                such limitation under this subparagraph is necessary in 
                order for the Secretary to begin implementation of this 
                section and provide applicable beneficiaries timely 
                access to discounted prices during such period.
            ``(3) Contract with third parties.--The Secretary shall 
        enter into a contract with 1 or more third parties to administer 
        the requirements established by the Secretary in order to carry 
        out this section. At a minimum, the contract with a third party 
        under the preceding sentence shall require that the third 
        party--
                    ``(A) receive and transmit information between the 
                Secretary, manufacturers, and other individuals or 
                entities the Secretary determines appropriate;
                    ``(B) receive, distribute, or facilitate the 
                distribution of funds of manufacturers to appropriate 
                individuals or entities in order to meet the obligations 
                of manufacturers under agreements under this section;
                    ``(C) provide adequate and timely information to 
                manufacturers, consistent with the agreement with the 
                manufacturer under this section, as necessary for the 
                manufacturer to fulfill its obligations under this 
                section; and
                    ``(D) permit manufacturers to conduct periodic 
                audits, directly or through contracts, of the data and 
                information used by the third party to determine 
                discounts for applicable drugs of the manufacturer under 
                the program.
            ``(4) Performance requirements.--The Secretary shall 
        establish performance requirements for a third party with a 
        contract under paragraph (3) and safeguards to protect the 
        independence and integrity of the activities carried out by the 
        third party under the program under this section.
            ``(5) Implementation.--The Secretary may implement the 
        program under this section by program instruction or otherwise.
            ``(6) Administration.--Chapter 35 of title 44, United States 
        Code, shall not apply to the program under this section.

    ``(e) Enforcement.--
            ``(1) Audits.--Each manufacturer with an agreement in effect 
        under this section shall be subject to periodic audit by the 
        Secretary.
            ``(2) Civil money penalty.--
                    ``(A) In general. <<NOTE: Determination.>> --The 
                Secretary shall impose a civil money penalty on a 
                manufacturer that fails to provide applicable 
                beneficiaries discounts for applicable drugs of the 
                manufacturer in accordance with such agreement for each 
                such failure in an amount the Secretary determines is 
                commensurate with the sum of--

[[Page 124 STAT. 466]]

                          ``(i) the amount that the manufacturer would 
                      have paid with respect to such discounts under the 
                      agreement, which will then be used to pay the 
                      discounts which the manufacturer had failed to 
                      provide; and
                          ``(ii) 25 percent of such amount.
                    ``(B) Application.--The provisions of section 1128A 
                (other than subsections (a) and (b)) shall apply to a 
                civil money penalty under this paragraph in the same 
                manner as such provisions apply to a penalty or 
                proceeding under section 1128A(a).

    ``(f) Clarification Regarding Availability of Other Covered Part D 
Drugs.--Nothing in this section shall prevent an applicable beneficiary 
from purchasing a covered part D drug that is not an applicable drug 
(including a generic drug or a drug that is not on the formulary of the 
prescription drug plan or MA-PD plan that the applicable beneficiary is 
enrolled in).
    ``(g) Definitions.--In this section:
            ``(1) Applicable beneficiary.--The term `applicable 
        beneficiary' means an individual who, on the date of dispensing 
        an applicable drug--
                    ``(A) is enrolled in a prescription drug plan or an 
                MA-PD plan;
                    ``(B) is not enrolled in a qualified retiree 
                prescription drug plan;
                    ``(C) is not entitled to an income-related subsidy 
                under section 1860D-14(a);
                    ``(D) is not subject to a reduction in premium 
                subsidy under section 1839(i); and
                    ``(E) who--
                          ``(i) has reached or exceeded the initial 
                      coverage limit under section 1860D-2(b)(3) during 
                      the year; and
                          ``(ii) has not incurred costs for covered part 
                      D drugs in the year equal to the annual out-of-
                      pocket threshold specified in section 1860D-
                      2(b)(4)(B).
            ``(2) Applicable drug.--The term `applicable drug' means, 
        with respect to an applicable beneficiary, a covered part D 
        drug--
                    ``(A) approved under a new drug application under 
                section 505(b) of the Federal Food, Drug, and Cosmetic 
                Act or, in the case of a biologic product, licensed 
                under section 351 of the Public Health Service Act 
                (other than a product licensed under subsection (k) of 
                such section 351); and
                    ``(B)(i) if the PDP sponsor of the prescription drug 
                plan or the MA organization offering the MA-PD plan uses 
                a formulary, which is on the formulary of the 
                prescription drug plan or MA-PD plan that the applicable 
                beneficiary is enrolled in;
                    ``(ii) if the PDP sponsor of the prescription drug 
                plan or the MA organization offering the MA-PD plan does 
                not use a formulary, for which benefits are available 
                under the prescription drug plan or MA-PD plan that the 
                applicable beneficiary is enrolled in; or
                    ``(iii) is provided through an exception or appeal.
            ``(3) Applicable number of calendar days.--The term 
        `applicable number of calendar days' means--

[[Page 124 STAT. 467]]

                    ``(A) with respect to claims for reimbursement 
                submitted electronically, 14 days; and
                    ``(B) with respect to claims for reimbursement 
                submitted otherwise, 30 days.
            ``(4) Discounted price.--
                    ``(A) In general.--The term `discounted price' means 
                50 percent of the negotiated price of the applicable 
                drug of a manufacturer.
                    ``(B) Clarification.--Nothing in this section shall 
                be construed as affecting the responsibility of an 
                applicable beneficiary for payment of a dispensing fee 
                for an applicable drug.
                    ``(C) Special case for certain claims.--In the case 
                where the entire amount of the negotiated price of an 
                individual claim for an applicable drug with respect to 
                an applicable beneficiary does not fall at or above the 
                initial coverage limit under section 1860D-2(b)(3) and 
                below the annual out-of-pocket threshold specified in 
                section 1860D-2(b)(4)(B) for the year, the manufacturer 
                of the applicable drug shall provide the discounted 
                price under this section on only the portion of the 
                negotiated price of the applicable drug that falls at or 
                above such initial coverage limit and below such annual 
                out-of-pocket threshold.
            ``(5) Manufacturer.--The term `manufacturer' means any 
        entity which is engaged in the production, preparation, 
        propagation, compounding, conversion, or processing of 
        prescription drug products, either directly or indirectly by 
        extraction from substances of natural origin, or independently 
        by means of chemical synthesis, or by a combination of 
        extraction and chemical synthesis. Such term does not include a 
        wholesale distributor of drugs or a retail pharmacy licensed 
        under State law.
            ``(6) Negotiated price.--The term `negotiated price' has the 
        meaning given such term in section 423.100 of title 42, Code of 
        Federal Regulations (as in effect on the date of enactment of 
        this section), except that such negotiated price shall not 
        include any dispensing fee for the applicable drug.
            ``(7) Qualified retiree prescription drug plan.--The term 
        `qualified retiree prescription drug plan' has the meaning given 
        such term in section 1860D-22(a)(2).''.

    (c) Inclusion in Incurred Costs.--
            (1) In general.--Section 1860D-2(b)(4) of the Social 
        Security Act (42 U.S.C. 1395w-102(b)(4)) is amended--
                    (A) in subparagraph (C), in the matter preceding 
                clause (i), by striking ``In applying'' and inserting 
                ``Except as provided in subparagraph (E), in applying''; 
                and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(E) Inclusion of costs of applicable drugs under 
                medicare coverage gap discount program.--In applying 
                subparagraph (A), incurred costs shall include the 
                negotiated price (as defined in paragraph (6) of section 
                1860D-14A(g)) of an applicable drug (as defined in 
                paragraph (2) of such section) of a manufacturer that is 
                furnished to an applicable beneficiary (as defined in 
                paragraph (1) of such section) under the Medicare 
                coverage gap discount

[[Page 124 STAT. 468]]

                program under section 1860D-14A, regardless of whether 
                part of such costs were paid by a manufacturer under 
                such program.''.
            (2) Effective date. <<NOTE: 42 USC 1395w-102 note.>> --The 
        amendments made by this subsection shall apply to costs incurred 
        on or after July 1, 2010.

    (d) Conforming Amendment Permitting Prescription Drug Discounts.--
            (1) In general.--Section 1128B(b)(3) of the Social Security 
        Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (G);
                    (B) in the subparagraph (H) added by section 237(d) 
                of the Medicare Prescription Drug, Improvement, and 
                Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
                2213)--
                          (i) by moving such subparagraph 2 ems to the 
                      left; and
                          (ii) by striking the period at the end and 
                      inserting a semicolon;
                    (C) in the subparagraph (H) added by section 431(a) 
                of such Act (117 Stat. 2287)--
                          (i) by redesignating such subparagraph as 
                      subparagraph (I);
                          (ii) by moving such subparagraph 2 ems to the 
                      left; and
                          (iii) by striking the period at the end and 
                      inserting ``; and''; and
                    (D) by adding at the end the following new 
                subparagraph:
                    ``(J) a discount in the price of an applicable drug 
                (as defined in paragraph (2) of section 1860D-14A(g)) of 
                a manufacturer that is furnished to an applicable 
                beneficiary (as defined in paragraph (1) of such 
                section) under the Medicare coverage gap discount 
                program under section 1860D-14A.''.
            (2) Conforming amendment to definition of best price under 
        medicaid.--Section 1927(c)(1)(C)(i)(VI) of the Social Security 
        Act (42 U.S.C. 1396r-8(c)(1)(C)(i)(VI)) is amended by inserting 
        ``, or any discounts provided by manufacturers under the 
        Medicare coverage gap discount program under section 1860D-14A'' 
        before the period at the end.
            (3) <<NOTE: 42 USC 1320a-76 note.>> Effective date.--The 
        amendments made by this subsection shall apply to drugs 
        dispensed on or after July 1, 2010.

SEC. 3302. IMPROVEMENT IN DETERMINATION OF MEDICARE PART D LOW-INCOME 
            BENCHMARK PREMIUM.

    (a) In General.--Section 1860D-14(b)(2)(B)(iii) of the Social 
Security Act (42 U.S.C. 1395w-114(b)(2)(B)(iii)) is amended by inserting 
``, determined without regard to any reduction in such premium as a 
result of any beneficiary rebate under section 1854(b)(1)(C) or bonus 
payment under section 1853(n)'' before the period at the end.
    (b) <<NOTE: 42 USC 1395w-114 note.>> Effective Date.--The amendment 
made by subsection (a) shall apply to premiums for months beginning on 
or after January 1, 2011.

[[Page 124 STAT. 469]]

SEC. 3303. VOLUNTARY DE MINIMIS POLICY FOR SUBSIDY ELIGIBLE INDIVIDUALS 
            UNDER PRESCRIPTION DRUG PLANS AND MA-PD PLANS.

    (a) In General.--Section 1860D-14(a) of the Social Security Act (42 
U.S.C. 1395w-114(a)) is amended by adding at the end the following new 
paragraph:
            ``(5) Waiver of de minimis 
        premiums. <<NOTE: Procedures.>> --The Secretary shall, under 
        procedures established by the Secretary, permit a prescription 
        drug plan or an MA-PD plan to waive the monthly beneficiary 
        premium for a subsidy eligible individual if the amount of such 
        premium is de minimis. If such premium is waived under the plan, 
        the Secretary shall not reassign subsidy eligible individuals 
        enrolled in the plan to other plans based on the fact that the 
        monthly beneficiary premium under the plan was greater than the 
        low-income benchmark premium amount.''.

    (b) Authorizing the Secretary To Auto-enroll Subsidy Eligible 
Individuals in Plans That Waive De Minimis Premiums.--Section 1860D-
1(b)(1) of the Social Security Act (42 U.S.C. 1395w-101(b)(1)) is 
amended--
            (1) in subparagraph (C), by inserting ``except as provided 
        in subparagraph (D),'' after ``shall include,''
            (2) by adding at the end the following new subparagraph:
                    ``(D) Special rule for plans that waive de minimis 
                premiums.--The process established under subparagraph 
                (A) may include, in the case of a part D eligible 
                individual who is a subsidy eligible individual (as 
                defined in section 1860D-14(a)(3)) who has failed to 
                enroll in a prescription drug plan or an MA-PD plan, for 
                the enrollment in a prescription drug plan or MA-PD plan 
                that has waived the monthly beneficiary premium for such 
                subsidy eligible individual under section 1860D-
                14(a)(5). If there is more than one such plan available, 
                the Secretary shall enroll such an individual under the 
                preceding sentence on a random basis among all such 
                plans in the PDP region. Nothing in the previous 
                sentence shall prevent such an individual from declining 
                or changing such enrollment.''.

    (c) <<NOTE: 42 USC 1395w-101 note.>> Effective Date.--The amendments 
made by this subsection shall apply to premiums for months, and 
enrollments for plan years, beginning on or after January 1, 2011.

SEC. 3304. SPECIAL RULE FOR WIDOWS AND WIDOWERS REGARDING ELIGIBILITY 
            FOR LOW-INCOME ASSISTANCE.

    (a) In General.--Section 1860D-14(a)(3)(B) of the Social Security 
Act (42 U.S.C. 1395w-114(a)(3)(B)) is amended by adding at the end the 
following new clause:
                          ``(vi) Special rule for widows and widowers.--
                      Notwithstanding the preceding provisions of this 
                      subparagraph, in the case of an individual whose 
                      spouse dies during the effective period for a 
                      determination or redetermination that has been 
                      made under this subparagraph, such effective 
                      period shall be extended through the date that is 
                      1 year after the date on which the determination 
                      or redetermination would (but for the application 
                      of this clause) otherwise cease to be 
                      effective.''.

[[Page 124 STAT. 470]]

    (b) <<NOTE: 42 USC 1395w-114 note.>> Effective Date.--The amendment 
made by subsection (a) shall take effect on January 1, 2011.

SEC. 3305. IMPROVED INFORMATION FOR SUBSIDY ELIGIBLE INDIVIDUALS 
            REASSIGNED TO PRESCRIPTION DRUG PLANS AND MA-PD PLANS.

    Section 1860D-14 of the Social Security Act (42 U.S.C. 1395w-114) is 
amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following new 
        subsection:

    ``(d) Facilitation of Reassignments. <<NOTE: Deadlines.>> --
Beginning not later than January 1, 2011, the Secretary shall, in the 
case of a subsidy eligible individual who is enrolled in one 
prescription drug plan and is subsequently reassigned by the Secretary 
to a new prescription drug plan, provide the individual, within 30 days 
of such reassignment, with--
            ``(1) information on formulary differences between the 
        individual's former plan and the plan to which the individual is 
        reassigned with respect to the individual's drug regimens; and
            ``(2) a description of the individual's right to request a 
        coverage determination, exception, or reconsideration under 
        section 1860D-4(g), bring an appeal under section 1860D-4(h), or 
        resolve a grievance under section 1860D-4(f).''.

SEC. 3306. FUNDING OUTREACH AND ASSISTANCE FOR LOW-INCOME PROGRAMS.

    (a) Additional Funding for State Health Insurance Programs.--
Subsection (a)(1)(B) of section 119 of the Medicare Improvements for 
Patients and Providers Act of 2008 (42 U.S.C. 1395b-3 note) is amended 
by striking ``(42 U.S.C. 1395w-23(f))'' and all that follows through the 
period at the end and inserting ``(42 U.S.C. 1395w-23(f)), to the 
Centers for Medicare & Medicaid Services Program Management Account--
                          ``(i) for fiscal year 2009, of $7,500,000; and
                          ``(ii) for the period of fiscal years 2010 
                      through 2012, of $15,000,000.
                Amounts appropriated under this subparagraph shall 
                remain available until expended.''.

    (b) Additional Funding for Area Agencies on Aging.--Subsection 
(b)(1)(B) of such section 119 is amended by striking ``(42 U.S.C. 1395w-
23(f))'' and all that follows through the period at the end and 
inserting ``(42 U.S.C. 1395w-23(f)), to the Administration on Aging--
                          ``(i) for fiscal year 2009, of $7,500,000; and
                          ``(ii) for the period of fiscal years 2010 
                      through 2012, of $15,000,000.
                Amounts appropriated under this subparagraph shall 
                remain available until expended.''.

    (c) Additional Funding for Aging and Disability Resource Centers.--
Subsection (c)(1)(B) of such section 119 is amended by striking ``(42 
U.S.C. 1395w-23(f))'' and all that follows through the period at the end 
and inserting ``(42 U.S.C. 1395w-23(f)), to the Administration on 
Aging--
                          ``(i) for fiscal year 2009, of $5,000,000; and
                          ``(ii) for the period of fiscal years 2010 
                      through 2012, of $10,000,000.

[[Page 124 STAT. 471]]

                Amounts appropriated under this subparagraph shall 
                remain available until expended.''.

    (d) Additional Funding for Contract With the National Center for 
Benefits and Outreach Enrollment.--Subsection (d)(2) of such section 119 
is amended by striking ``(42 U.S.C. 1395w-23(f))'' and all that follows 
through the period at the end and inserting ``(42 U.S.C. 1395w-23(f)), 
to the Administration on Aging--
                          ``(i) for fiscal year 2009, of $5,000,000; and
                          ``(ii) for the period of fiscal years 2010 
                      through 2012, of $5,000,000.
                Amounts appropriated under this subparagraph shall 
                remain available until expended.''.

    (e) Secretarial Authority To Enlist Support in Conducting Certain 
Outreach Activities.--Such section 119 is amended by adding at the end 
the following new subsection:
    ``(g) Secretarial Authority To Enlist Support in Conducting Certain 
Outreach Activities.--The Secretary may request that an entity awarded a 
grant under this section support the conduct of outreach activities 
aimed at preventing disease and promoting wellness. Notwithstanding any 
other provision of this section, an entity may use a grant awarded under 
this subsection to support the conduct of activities described in the 
preceding sentence.''.

SEC. 3307. IMPROVING FORMULARY REQUIREMENTS FOR PRESCRIPTION DRUG PLANS 
            AND MA-PD PLANS WITH RESPECT TO CERTAIN CATEGORIES OR 
            CLASSES OF DRUGS.

    (a) Improving Formulary Requirements.--Section 1860D-
4(b)(3)(G) <<NOTE: 42 USC 1395w-104.>> of the Social Security Act is 
amended to read as follows:
                    ``(G) Required inclusion of drugs in certain 
                categories and classes.--
                          ``(i) Formulary requirements.--
                                    ``(I) In general.--Subject to 
                                subclause (II), a PDP sponsor offering a 
                                prescription drug plan shall be required 
                                to include all covered part D drugs in 
                                the categories and classes identified by 
                                the Secretary under clause (ii)(I).
                                    ``(II) Exceptions.--The Secretary 
                                may establish exceptions that permit a 
                                PDP sponsor offering a prescription drug 
                                plan to exclude from its formulary a 
                                particular covered part D drug in a 
                                category or class that is otherwise 
                                required to be included in the formulary 
                                under subclause (I) (or to otherwise 
                                limit access to such a drug, including 
                                through prior authorization or 
                                utilization management).
                          ``(ii) Identification of drugs in certain 
                      categories and classes.--
                                    ``(I) In general.--Subject to clause 
                                (iv), the Secretary shall identify, as 
                                appropriate, categories and classes of 
                                drugs for which the Secretary determines 
                                are of clinical concern.
                                    ``(II) Criteria.--The Secretary 
                                shall use criteria established by the 
                                Secretary in making any determination 
                                under subclause (I).

[[Page 124 STAT. 472]]

                          ``(iii) <<NOTE: Regulations. Public 
                      information.>>  Implementation.--The Secretary 
                      shall establish the criteria under clause (ii)(II) 
                      and any exceptions under clause (i)(II) through 
                      the promulgation of a regulation which includes a 
                      public notice and comment period.
                          ``(iv) Requirement for certain categories and 
                      classes until criteria established.--Until such 
                      time as the Secretary establishes the criteria 
                      under clause (ii)(II) the following categories and 
                      classes of drugs shall be identified under clause 
                      (ii)(I):
                                    ``(I) Anticonvulsants.
                                    ``(II) Antidepressants.
                                    ``(III) Antineoplastics.
                                    ``(IV) Antipsychotics.
                                    ``(V) Antiretrovirals.
                                    ``(VI) Immunosuppressants for the 
                                treatment of transplant rejection.''.

    (b) <<NOTE: 42 USC 1395w-104 note.>> Effective Date.--The amendments 
made by this section shall apply to plan year 2011 and subsequent plan 
years.

SEC. 3308. REDUCING PART D PREMIUM SUBSIDY FOR HIGH-INCOME 
            BENEFICIARIES.

    (a) Income-Related Increase in Part D Premium.--
            (1) In general.--Section 1860D-13(a) of the Social Security 
        Act (42 U.S.C. 1395w-113(a)) is amended by adding at the end the 
        following new paragraph:
            ``(7) Increase in base beneficiary premium based on 
        income.--
                    ``(A) In general.--In the case of an individual 
                whose modified adjusted gross income exceeds the 
                threshold amount applicable under paragraph (2) of 
                section 1839(i) (including application of paragraph (5) 
                of such section) for the calendar year, the monthly 
                amount of the beneficiary premium applicable under this 
                section for a month after December 2010 shall be 
                increased by the monthly adjustment amount specified in 
                subparagraph (B).
                    ``(B) Monthly adjustment amount.--The monthly 
                adjustment amount specified in this subparagraph for an 
                individual for a month in a year is equal to the product 
                of--
                          ``(i) the quotient obtained by dividing--
                                    ``(I) the applicable percentage 
                                determined under paragraph (3)(C) of 
                                section 1839(i) (including application 
                                of paragraph (5) of such section) for 
                                the individual for the calendar year 
                                reduced by 25.5 percent; by
                                    ``(II) 25.5 percent; and
                          ``(ii) the base beneficiary premium (as 
                      computed under paragraph (2)).
                    ``(C) Modified adjusted gross income.--For purposes 
                of this paragraph, the term `modified adjusted gross 
                income' has the meaning given such term in subparagraph 
                (A) of section 1839(i)(4), determined for the taxable 
                year applicable under subparagraphs (B) and (C) of such 
                section.
                    ``(D) Determination by commissioner of social 
                security.--The Commissioner of Social Security shall 
                make any determination necessary to carry out the 
                income-

[[Page 124 STAT. 473]]

                related increase in the base beneficiary premium under 
                this paragraph.
                    ``(E) <<NOTE: Deadlines.>> Procedures to assure 
                correct income-related increase in base beneficiary 
                premium.--
                          ``(i) Disclosure of base beneficiary 
                      premium.--Not later than September 15 of each year 
                      beginning with 2010, the Secretary shall disclose 
                      to the Commissioner of Social Security the amount 
                      of the base beneficiary premium (as computed under 
                      paragraph (2)) for the purpose of carrying out the 
                      income-related increase in the base beneficiary 
                      premium under this paragraph with respect to the 
                      following year.
                          ``(ii) Additional disclosure.--Not later than 
                      October 15 of each year beginning with 2010, the 
                      Secretary shall disclose to the Commissioner of 
                      Social Security the following information for the 
                      purpose of carrying out the income-related 
                      increase in the base beneficiary premium under 
                      this paragraph with respect to the following year:
                                    ``(I) The modified adjusted gross 
                                income threshold applicable under 
                                paragraph (2) of section 1839(i) 
                                (including application of paragraph (5) 
                                of such section).
                                    ``(II) The applicable percentage 
                                determined under paragraph (3)(C) of 
                                section 1839(i) (including application 
                                of paragraph (5) of such section).
                                    ``(III) The monthly adjustment 
                                amount specified in subparagraph (B).
                                    ``(IV) Any other information the 
                                Commissioner of Social Security 
                                determines necessary to carry out the 
                                income-related increase in the base 
                                beneficiary premium under this 
                                paragraph.
                    ``(F) Rule of construction.--The formula used to 
                determine the monthly adjustment amount specified under 
                subparagraph (B) shall only be used for the purpose of 
                determining such monthly adjustment amount under such 
                subparagraph.''.
            (2) Collection of monthly adjustment amount.--Section 1860D-
        13(c) of the Social Security Act (42 U.S.C. 1395w-113(c)) is 
        amended--
                    (A) in paragraph (1), by striking ``(2) and (3)'' 
                and inserting ``(2), (3), and (4)''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Collection of monthly adjustment amount.--
                    ``(A) In general.--Notwithstanding any provision of 
                this subsection or section 1854(d)(2), subject to 
                subparagraph (B), the amount of the income-related 
                increase in the base beneficiary premium for an 
                individual for a month (as determined under subsection 
                (a)(7)) shall be paid through withholding from benefit 
                payments in the manner provided under section 1840.
                    ``(B) Agreements.--In the case where the monthly 
                benefit payments of an individual that are withheld 
                under subparagraph (A) are insufficient to pay the 
                amount described in such subparagraph, the Commissioner 
                of Social Security shall enter into agreements with the 
                Secretary, the Director of the Office of Personnel 
                Management,

[[Page 124 STAT. 474]]

                and the Railroad Retirement Board as necessary in order 
                to allow other agencies to collect the amount described 
                in subparagraph (A) that was not withheld under such 
                subparagraph.''.

    (b) Conforming Amendments.--
            (1) Medicare.--Section 1860D-13(a)(1) of the Social Security 
        Act (42 U.S.C. 1395w-113(a)(1)) is amended--
                    (A) by redesignating subparagraph (F) as 
                subparagraph (G);
                    (B) in subparagraph (G), as redesignated by 
                subparagraph (A), by striking ``(D) and (E)'' and 
                inserting ``(D), (E), and (F)''; and
                    (C) by inserting after subparagraph (E) the 
                following new subparagraph:
                    ``(F) Increase based on income.--The monthly 
                beneficiary premium shall be increased pursuant to 
                paragraph (7).''.
            (2) <<NOTE: 26 USC 6103.>> Internal revenue code.--Section 
        6103(l)(20) of the Internal Revenue Code of 1986 (relating to 
        disclosure of return information to carry out Medicare part B 
        premium subsidy adjustment) is amended--
                    (A) in the heading, by inserting ``and part d base 
                beneficiary premium increase'' after ``part b premium 
                subsidy adjustment'';
                    (B) in subparagraph (A)--
                          (i) in the matter preceding clause (i), by 
                      inserting ``or increase under section 1860D-
                      13(a)(7)'' after ``1839(i)''; and
                          (ii) in clause (vii), by inserting after 
                      ``subsection (i) of such section'' the following: 
                      ``or increase under section 1860D-13(a)(7) of such 
                      Act''; and
                    (C) in subparagraph (B)--
                          (i) by striking ``Return information'' and 
                      inserting the following:
                          ``(i) In general.--Return information'';
                          (ii) by inserting ``or increase under such 
                      section 1860D-13(a)(7)'' before the period at the 
                      end;
                          (iii) as amended by clause (i), by inserting 
                      ``or for the purpose of resolving taxpayer appeals 
                      with respect to any such premium adjustment or 
                      increase'' before the period at the end; and
                          (iv) by adding at the end the following new 
                      clause:
                          ``(ii) Disclosure to other agencies.--
                      Officers, employees, and contractors of the Social 
                      Security Administration may disclose--
                                    ``(I) the taxpayer identity 
                                information and the amount of the 
                                premium subsidy adjustment or premium 
                                increase with respect to a taxpayer 
                                described in subparagraph (A) to 
                                officers, employees, and contractors of 
                                the Centers for Medicare and Medicaid 
                                Services, to the extent that such 
                                disclosure is necessary for the 
                                collection of the premium subsidy amount 
                                or the increased premium amount,
                                    ``(II) the taxpayer identity 
                                information and the amount of the 
                                premium subsidy adjustment or the 
                                increased premium amount with respect to

[[Page 124 STAT. 475]]

                                a taxpayer described in subparagraph (A) 
                                to officers and employees of the Office 
                                of Personnel Management and the Railroad 
                                Retirement Board, to the extent that 
                                such disclosure is necessary for the 
                                collection of the premium subsidy amount 
                                or the increased premium amount,
                                    ``(III) return information with 
                                respect to a taxpayer described in 
                                subparagraph (A) to officers and 
                                employees of the Department of Health 
                                and Human Services to the extent 
                                necessary to resolve administrative 
                                appeals of such premium subsidy 
                                adjustment or increased premium, and
                                    ``(IV) return information with 
                                respect to a taxpayer described in 
                                subparagraph (A) to officers and 
                                employees of the Department of Justice 
                                for use in judicial proceedings to the 
                                extent necessary to carry out the 
                                purposes described in clause (i).''.

SEC. 3309. ELIMINATION OF COST SHARING FOR CERTAIN DUAL ELIGIBLE 
            INDIVIDUALS.

    Section 1860D-14(a)(1)(D)(i) of the Social Security Act (42 U.S.C. 
1395w-114(a)(1)(D)(i)) is amended by inserting ``or, effective on a date 
specified by the Secretary (but in no case earlier than January 1, 
2012), who would be such an institutionalized individual or couple, if 
the full-benefit dual eligible individual were not receiving services 
under a home and community-based waiver authorized for a State under 
section 1115 or subsection (c) or (d) of section 1915 or under a State 
plan amendment under subsection (i) of such section or services provided 
through enrollment in a medicaid managed care organization with a 
contract under section 1903(m) or under section 1932'' after 
``1902(q)(1)(B))''.

SEC. 3310. REDUCING WASTEFUL DISPENSING OF OUTPATIENT PRESCRIPTION DRUGS 
            IN LONG-TERM CARE FACILITIES UNDER PRESCRIPTION DRUG PLANS 
            AND MA-PD PLANS.

    (a) In General.--Section 1860D-4(c) of the Social Security Act (42 
U.S.C. 1395w-104(c)) is amended by adding at the end the following new 
paragraph:
            ``(3) Reducing wasteful dispensing of outpatient 
        prescription drugs in long-term care facilities.--The Secretary 
        shall require PDP sponsors of prescription drug plans to utilize 
        specific, uniform dispensing techniques, as determined by the 
        Secretary, in consultation with relevant stakeholders (including 
        representatives of nursing facilities, residents of nursing 
        facilities, pharmacists, the pharmacy industry (including retail 
        and long-term care pharmacy), prescription drug plans, MA-PD 
        plans, and any other stakeholders the Secretary determines 
        appropriate), such as weekly, daily, or automated dose 
        dispensing, when dispensing covered part D drugs to enrollees 
        who reside in a long-term care facility in order to reduce waste 
        associated with 30-day fills.''.

    (b) <<NOTE: 42 USC 1395w-104 note.>>  Effective Date.--The amendment 
made by subsection (a) shall apply to plan years beginning on or after 
January 1, 2012.

SEC. 3311. <<NOTE: 42 USC 1395w-154.>> IMPROVED MEDICARE PRESCRIPTION 
            DRUG PLAN AND MA-PD PLAN COMPLAINT SYSTEM.

    (a) In General.--The Secretary shall develop and maintain a 
complaint system, that is widely known and easy to use, to

[[Page 124 STAT. 476]]

collect and maintain information on MA-PD plan and prescription drug 
plan complaints that are received (including by telephone, letter, e-
mail, or any other means) by the Secretary (including by a regional 
office of the Department of Health and Human Services, the Medicare 
Beneficiary Ombudsman, a subcontractor, a carrier, a fiscal 
intermediary, and a Medicare administrative contractor under section 
1874A of the Social Security Act (42 U.S.C. 1395kk)) through the date on 
which the complaint is resolved. The system shall be able to report and 
initiate appropriate interventions and monitoring based on substantial 
complaints and to guide quality improvement.
    (b) Model Electronic Complaint Form.--The Secretary shall develop a 
model electronic complaint form to be used for reporting plan complaints 
under the system. Such form shall be prominently displayed on the front 
page of the Medicare.gov Internet website and on the Internet website of 
the Medicare Beneficiary Ombudsman.
    (c) Annual Reports by the Secretary.--The Secretary shall submit to 
Congress annual reports on the system. Such reports shall include an 
analysis of the number and types of complaints reported in the system, 
geographic variations in such complaints, the timeliness of agency or 
plan responses to such complaints, and the resolution of such 
complaints.
    (d) Definitions.--In this section:
            (1) MA-PD plan.--The term ``MA-PD plan'' has the meaning 
        given such term in section 1860D-41(a)(9) of such Act (42 U.S.C. 
        1395w-151(a)(9)).
            (2) Prescription drug plan.--The term ``prescription drug 
        plan'' has the meaning given such term in section 1860D-
        41(a)(14) of such Act (42 U.S.C. 1395w-151(a)(14)).
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of Health and Human Services.
            (4) System.--The term ``system'' means the plan complaint 
        system developed and maintained under subsection (a).

SEC. 3312. UNIFORM EXCEPTIONS AND APPEALS PROCESS FOR PRESCRIPTION DRUG 
            PLANS AND MA-PD PLANS.

    (a) In General.--Section 1860D-4(b)(3) of the Social Security Act 
(42 U.S.C. 1395w-104(b)(3)) is amended by adding at the end the 
following new subparagraph:
                    ``(H) Use of single, uniform exceptions and appeals 
                process.--Notwithstanding any other provision of this 
                part, each PDP sponsor of a prescription drug plan 
                shall--
                          ``(i) use a single, uniform exceptions and 
                      appeals process (including, to the extent the 
                      Secretary determines feasible, a single, uniform 
                      model form for use under such process) with 
                      respect to the determination of prescription drug 
                      coverage for an enrollee under the plan; and
                          ``(ii) provide instant access to such process 
                      by enrollees through a toll-free telephone number 
                      and an Internet website.''.

    (b) <<NOTE: 42 USC 1395w-104 note.>> Effective Date.--The amendment 
made by subsection (a) shall apply to exceptions and appeals on or after 
January 1, 2012.

[[Page 124 STAT. 477]]

SEC. 3313. <<NOTE: 42 USC 1395w-101 note.>> OFFICE OF THE INSPECTOR 
            GENERAL STUDIES AND REPORTS.

    (a) Study and Annual Report on Part D Formularies' Inclusion of 
Drugs Commonly Used by Dual Eligibles.--
            (1) Study.--The Inspector General of the Department of 
        Health and Human Services shall conduct a study of the extent to 
        which formularies used by prescription drug plans and MA-PD 
        plans under part D include drugs commonly used by full-benefit 
        dual eligible individuals (as defined in section 1935(c)(6) of 
        the Social Security Act (42 U.S.C. 1396u-5(c)(6))).
            (2) Annual reports.--Not later than July 1 of each year 
        (beginning with 2011), the Inspector General shall submit to 
        Congress a report on the study conducted under paragraph (1), 
        together with such recommendations as the Inspector General 
        determines appropriate.

    (b) Study and Report on Prescription Drug Prices Under Medicare Part 
D and Medicaid.--
            (1) Study.--
                    (A) In general.--The Inspector General of the 
                Department of Health and Human Services shall conduct a 
                study on prices for covered part D drugs under the 
                Medicare prescription drug program under part D of title 
                XVIII of the Social Security Act and for covered 
                outpatient drugs under title XIX. Such study shall 
                include the following:
                          (i) A comparison, with respect to the 200 most 
                      frequently dispensed covered part D drugs under 
                      such program and covered outpatient drugs under 
                      such title (as determined by the Inspector General 
                      based on volume and expenditures), of--
                                    (I) the prices paid for covered part 
                                D drugs by PDP sponsors of prescription 
                                drug plans and Medicare Advantage 
                                organizations offering MA-PD plans; and
                                    (II) the prices paid for covered 
                                outpatient drugs by a State plan under 
                                title XIX.
                          (ii) An assessment of--
                                    (I) the financial impact of any 
                                discrepancies in such prices on the 
                                Federal Government; and
                                    (II) the financial impact of any 
                                such discrepancies on enrollees under 
                                part D or individuals eligible for 
                                medical assistance under a State plan 
                                under title XIX.
                    (B) Price.--For purposes of subparagraph (A), the 
                price of a covered part D drug or a covered outpatient 
                drug shall include any rebate or discount under such 
                program or such title, respectively, including any 
                negotiated price concession described in section 1860D-
                2(d)(1)(B) of the Social Security Act (42 U.S.C. 1395w-
                102(d)(1)(B)) or rebate under an agreement under section 
                1927 of the Social Security Act (42 U.S.C. 1396r-8).
                    (C) Authority to collect any necessary 
                information.--Notwithstanding any other provision of 
                law, the Inspector General of the Department of Health 
                and Human Services shall be able to collect any 
                information related to the prices of covered part D 
                drugs under such program

[[Page 124 STAT. 478]]

                and covered outpatient drugs under such title XIX 
                necessary to carry out the comparison under subparagraph 
                (A).
            (2) Report.--
                    (A) In general.--Not later than October 1, 2011, 
                subject to subparagraph (B), the Inspector General shall 
                submit to Congress a report containing the results of 
                the study conducted under paragraph (1), together with 
                recommendations for such legislation and administrative 
                action as the Inspector General determines appropriate.
                    (B) Limitation on information contained in report.--
                The report submitted under subparagraph (A) shall not 
                include any information that the Inspector General 
                determines is proprietary or is likely to negatively 
                impact the ability of a PDP sponsor or a State plan 
                under title XIX to negotiate prices for covered part D 
                drugs or covered outpatient drugs, respectively.
            (3) Definitions.--In this section:
                    (A) Covered part d drug.--The term ``covered part D 
                drug'' has the meaning given such term in section 1860D-
                2(e) of the Social Security Act (42 U.S.C. 1395w-
                102(e)).
                    (B) Covered outpatient drug.--The term ``covered 
                outpatient drug'' has the meaning given such term in 
                section 1927(k) of such Act (42 U.S.C. 1396r(k)).
                    (C) MA-PD plan.--The term ``MA-PD plan'' has the 
                meaning given such term in section 1860D-41(a)(9) of 
                such Act (42 U.S.C. 1395w-151(a)(9)).
                    (D) Medicare advantage organization.--The term 
                ``Medicare Advantage organization'' has the meaning 
                given such term in section 1859(a)(1) of such Act (42 
                U.S.C. 1395w-28)(a)(1)).
                    (E) PDP sponsor.--The term ``PDP sponsor'' has the 
                meaning given such term in section 1860D-41(a)(13) of 
                such Act (42 U.S.C. 1395w-151(a)(13)).
                    (F) Prescription drug plan.--The term ``prescription 
                drug plan'' has the meaning given such term in section 
                1860D-41(a)(14) of such Act (42 U.S.C. 1395w-
                151(a)(14)).

SEC. 3314. INCLUDING COSTS INCURRED BY AIDS DRUG ASSISTANCE PROGRAMS AND 
            INDIAN HEALTH SERVICE IN PROVIDING PRESCRIPTION DRUGS TOWARD 
            THE ANNUAL OUT-OF-POCKET THRESHOLD UNDER PART D.

    (a) In General.--Section 1860D-2(b)(4)(C) of the Social Security Act 
(42 U.S.C. 1395w-102(b)(4)(C)) is amended--
            (1) in clause (i), by striking ``and'' at the end;
            (2) in clause (ii)--
                    (A) by striking ``such costs shall be treated as 
                incurred only if'' and inserting ``subject to clause 
                (iii), such costs shall be treated as incurred only 
                if'';
                    (B) by striking ``, under section 1860D-14, or under 
                a State Pharmaceutical Assistance Program''; and
                    (C) by striking the period at the end and inserting 
                ``; and''; and
            (3) by inserting after clause (ii) the following new clause:
                          ``(iii) such costs shall be treated as 
                      incurred and shall not be considered to be 
                      reimbursed under clause (ii) if such costs are 
                      borne or paid--

[[Page 124 STAT. 479]]

                                    ``(I) under section 1860D-14;
                                    ``(II) under a State Pharmaceutical 
                                Assistance Program;
                                    ``(III) by the Indian Health 
                                Service, an Indian tribe or tribal 
                                organization, or an urban Indian 
                                organization (as defined in section 4 of 
                                the Indian Health Care Improvement Act); 
                                or
                                    ``(IV) under an AIDS Drug Assistance 
                                Program under part B of title XXVI of 
                                the Public Health Service Act.''.

    (b) <<NOTE: 42 USC 1395w-102 note.>> Effective Date.--The amendments 
made by subsection (a) shall apply to costs incurred on or after January 
1, 2011.

SEC. 3315. IMMEDIATE REDUCTION IN COVERAGE GAP IN 2010.

    Section 1860D-2(b) of the Social Security Act (42 U.S.C. 1395w-
102(b)) is amended--
            (1) in paragraph (3)(A), by striking ``paragraph (4)'' and 
        inserting ``paragraphs (4) and (7)''; and
            (2) by adding at the end the following new paragraph:
            ``(7) Increase in initial coverage limit in 2010.--
                    ``(A) <<NOTE: Effective date.>>  In general.--For 
                the plan year beginning on January 1, 2010, the initial 
                coverage limit described in paragraph (3)(B) otherwise 
                applicable shall be increased by $500.
                    ``(B) Application.--In applying subparagraph (A)--
                          ``(i) except as otherwise provided in this 
                      subparagraph, there shall be no change in the 
                      premiums, bids, or any other parameters under this 
                      part or part C;
                          ``(ii) costs that would be treated as incurred 
                      costs for purposes of applying paragraph (4) but 
                      for the application of subparagraph (A) shall 
                      continue to be treated as incurred costs;
                          ``(iii) <<NOTE: Procedures.>> the Secretary 
                      shall establish procedures, which may include a 
                      reconciliation process, to fully reimburse PDP 
                      sponsors with respect to prescription drug plans 
                      and MA organizations with respect to MA-PD plans 
                      for the reduction in beneficiary cost sharing 
                      associated with the application of subparagraph 
                      (A);
                          ``(iv) the Secretary shall develop an estimate 
                      of the additional increased costs attributable to 
                      the application of this paragraph for increased 
                      drug utilization and financing and administrative 
                      costs and shall use such estimate to adjust 
                      payments to PDP sponsors with respect to 
                      prescription drug plans under this part and MA 
                      organizations with respect to MA-PD plans under 
                      part C; and
                          ``(v) <<NOTE: Procedures.>>  the Secretary 
                      shall establish procedures for retroactive 
                      reimbursement of part D eligible individuals who 
                      are covered under such a plan for costs which are 
                      incurred before the date of initial implementation 
                      of subparagraph (A) and which would be reimbursed 
                      under such a plan if such implementation occurred 
                      as of January 1, 2010.
                    ``(C) <<NOTE: Applicability. Time periods.>> No 
                effect on subsequent years.--The increase under 
                subparagraph (A) shall only apply with respect to the 
                plan year beginning on January 1, 2010, and the initial 
                coverage limit for plan years beginning on or after 
                January

[[Page 124 STAT. 480]]

                1, 2011, shall be determined as if subparagraph (A) had 
                never applied.''.

              Subtitle E--Ensuring Medicare Sustainability

SEC. 3401. REVISION OF CERTAIN MARKET BASKET UPDATES AND INCORPORATION 
            OF PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET UPDATES THAT 
            DO NOT ALREADY INCORPORATE SUCH IMPROVEMENTS.

    (a) Inpatient Acute Hospitals.--Section 1886(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395ww(b)(3)(B)), as amended by section 
3001(a)(3), is further amended--
            (1) in clause (i)(XX), by striking ``clause (viii)'' and 
        inserting ``clauses (viii), (ix), (xi), and (xii)'';
            (2) in the first sentence of clause (viii), by inserting 
        ``of such applicable percentage increase (determined without 
        regard to clause (ix), (xi), or (xii))'' after ``one-quarter'';
            (3) in the first sentence of clause (ix)(I), by inserting 
        ``(determined without regard to clause (viii), (xi), or (xii))'' 
        after ``clause (i)'' the second time it appears; and
            (4) by adding at the end the following new clauses:

    ``(xi)(I) For 2012 and each subsequent fiscal year, after 
determining the applicable percentage increase described in clause (i) 
and after application of clauses (viii) and (ix), such percentage 
increase shall be reduced by the productivity adjustment described in 
subclause (II).
    ``(II) The productivity adjustment described in this subclause, with 
respect to a percentage, factor, or update for a fiscal year, year, cost 
reporting period, or other annual period, is a productivity adjustment 
equal to the 10-year moving average of changes in annual economy-wide 
private nonfarm business multi-factor productivity (as projected by the 
Secretary for the 10-year period ending with the applicable fiscal year, 
year, cost reporting period, or other annual period).
    ``(III) The application of subclause (I) may result in the 
applicable percentage increase described in clause (i) being less than 
0.0 for a fiscal year, and may result in payment rates under this 
section for a fiscal year being less than such payment rates for the 
preceding fiscal year.
    ``(xii) After determining the applicable percentage increase 
described in clause (i), and after application of clauses (viii), (ix), 
and (xi), the Secretary shall reduce such applicable percentage 
increase--
            ``(I) for each of fiscal years 2010 and 2011, by 0.25 
        percentage point; and
            ``(II) subject to clause (xiii), for each of fiscal years 
        2012 through 2019, by 0.2 percentage point.

The application of this clause may result in the applicable percentage 
increase described in clause (i) being less than 0.0 for a fiscal year, 
and may result in payment rates under this section for a fiscal year 
being less than such payment rates for the preceding fiscal year.
    ``(xiii) <<NOTE: Applicability.>> Clause (xii) shall be applied with 
respect to any of fiscal years 2014 through 2019 by substituting `0.0 
percentage points' for `0.2 percentage point', if for such fiscal year--

[[Page 124 STAT. 481]]

            ``(I) the excess (if any) of--
                    ``(aa) the total percentage of the non-elderly 
                insured population for the preceding fiscal year (based 
                on the most recent estimates available from the Director 
                of the Congressional Budget Office before a vote in 
                either House on the Patient Protection and Affordable 
                Care Act that, if determined in the affirmative, would 
                clear such Act for enrollment); over
                    ``(bb) the total percentage of the non-elderly 
                insured population for such preceding fiscal year (as 
                estimated by the Secretary); exceeds
            ``(II) 5 percentage points.''.

    (b) Skilled Nursing Facilities.--Section 1888(e)(5)(B) of the Social 
Security Act (42 U.S.C. 1395yy(e)(5)(B)) is amended--
            (1) by striking ``percentage.--The term'' and inserting 
        ``percentage.--
                          ``(i) In general.--Subject to clause (ii), the 
                      term''; and
            (2) by adding at the end the following new clause:
                          ``(ii) Adjustment.--For fiscal year 2012 and 
                      each subsequent fiscal year, after determining the 
                      percentage described in clause (i), the Secretary 
                      shall reduce such percentage by the productivity 
                      adjustment described in section 
                      1886(b)(3)(B)(xi)(II). The application of the 
                      preceding sentence may result in such percentage 
                      being less than 0.0 for a fiscal year, and may 
                      result in payment rates under this subsection for 
                      a fiscal year being less than such payment rates 
                      for the preceding fiscal year.''.

    (c) Long-term Care Hospitals.--Section 1886(m) of the Social 
Security Act (42 U.S.C. 1395ww(m)) is amended by adding at the end the 
following new paragraphs:
            ``(3) Implementation for rate year 2010 and subsequent 
        years.--
                    ``(A) In general.--In implementing the system 
                described in paragraph (1) for rate year 2010 and each 
                subsequent rate year, any annual update to a standard 
                Federal rate for discharges for the hospital during the 
                rate year, shall be reduced--
                          ``(i) for rate year 2012 and each subsequent 
                      rate year, by the productivity adjustment 
                      described in section 1886(b)(3)(B)(xi)(II); and
                          ``(ii) for each of rate years 2010 through 
                      2019, by the other adjustment described in 
                      paragraph (4).
                    ``(B) Special rule.--The application of this 
                paragraph may result in such annual update being less 
                than 0.0 for a rate year, and may result in payment 
                rates under the system described in paragraph (1) for a 
                rate year being less than such payment rates for the 
                preceding rate year.
            ``(4) Other adjustment.--
                    ``(A) In general.--For purposes of paragraph 
                (3)(A)(ii), the other adjustment described in this 
                paragraph is--
                          ``(i) for each of rate years 2010 and 2011, 
                      0.25 percentage point; and
                          ``(ii) subject to subparagraph (B), for each 
                      of rate years 2012 through 2019, 0.2 percentage 
                      point.

[[Page 124 STAT. 482]]

                    ``(B) Reduction of other adjustment.--Subparagraph 
                (A)(ii) shall be applied with respect to any of rate 
                years 2014 through 2019 by substituting `0.0 percentage 
                points' for `0.2 percentage point', if for such rate 
                year--
                          ``(i) the excess (if any) of--
                                    ``(I) the total percentage of the 
                                non-elderly insured population for the 
                                preceding rate year (based on the most 
                                recent estimates available from the 
                                Director of the Congressional Budget 
                                Office before a vote in either House on 
                                the Patient Protection and Affordable 
                                Care Act that, if determined in the 
                                affirmative, would clear such Act for 
                                enrollment); over
                                    ``(II) the total percentage of the 
                                non-elderly insured population for such 
                                preceding rate year (as estimated by the 
                                Secretary); exceeds
                          ``(ii) 5 percentage points.''.

    (d) Inpatient Rehabilitation Facilities.--Section 1886(j)(3) of the 
Social Security Act (42 U.S.C. 1395ww(j)(3)) is amended--
            (1) in subparagraph (C)--
                    (A) by striking ``factor.--For purposes'' and 
                inserting ``factor.--
                          ``(i) In general.--For purposes'';
                    (B) by inserting ``subject to clause (ii)'' before 
                the period at the end of the first sentence of clause 
                (i), as added by paragraph (1); and
                    (C) by adding at the end the following new clause:
                          ``(ii) Productivity and other adjustment.--
                      After establishing the increase factor described 
                      in clause (i) for a fiscal year, the Secretary 
                      shall reduce such increase factor--
                                    ``(I) for fiscal year 2012 and each 
                                subsequent fiscal year, by the 
                                productivity adjustment described in 
                                section 1886(b)(3)(B)(xi)(II); and
                                    ``(II) for each of fiscal years 2010 
                                through 2019, by the other adjustment 
                                described in subparagraph (D).
                      The application of this clause may result in the 
                      increase factor under this subparagraph being less 
                      than 0.0 for a fiscal year, and may result in 
                      payment rates under this subsection for a fiscal 
                      year being less than such payment rates for the 
                      preceding fiscal year.''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) Other adjustment.--
                          ``(i) In general.--For purposes of 
                      subparagraph (C)(ii)(II), the other adjustment 
                      described in this subparagraph is--
                                    ``(I) for each of fiscal years 2010 
                                and 2011, 0.25 percentage point; and
                                    ``(II) subject to clause (ii), for 
                                each of fiscal years 2012 through 2019, 
                                0.2 percentage point.
                          ``(ii) <<NOTE: Applicability.>>  Reduction of 
                      other adjustment.--Clause (i)(II) shall be applied 
                      with respect to any of fiscal years 2014 through 
                      2019 by substituting `0.0 percentage points' for 
                      `0.2 percentage point', if for such fiscal year--

[[Page 124 STAT. 483]]

                                    ``(I) the excess (if any) of--
                                            ``(aa) the total percentage 
                                        of the non-elderly insured 
                                        population for the preceding 
                                        fiscal year (based on the most 
                                        recent estimates available from 
                                        the Director of the 
                                        Congressional Budget Office 
                                        before a vote in either House on 
                                        the Patient Protection and 
                                        Affordable Care Act that, if 
                                        determined in the affirmative, 
                                        would clear such Act for 
                                        enrollment); over
                                            ``(bb) the total percentage 
                                        of the non-elderly insured 
                                        population for such preceding 
                                        fiscal year (as estimated by the 
                                        Secretary); exceeds
                                    ``(II) 5 percentage points.''.

    (e) Home Health Agencies.--Section 1895(b)(3)(B) of the Social 
Security Act (42 U.S.C. 1395fff(b)(3)(B)) is amended--
            (1) in clause (ii)(V), by striking ``clause (v)'' and 
        inserting ``clauses (v) and (vi)''; and
            (2) by adding at the end the following new clause:
                          ``(vi) Adjustments.--After determining the 
                      home health market basket percentage increase 
                      under clause (iii), and after application of 
                      clause (v), the Secretary shall reduce such 
                      percentage--
                                    ``(I) for 2015 and each subsequent 
                                year, by the productivity adjustment 
                                described in section 
                                1886(b)(3)(B)(xi)(II); and
                                    ``(II) for each of 2011 and 2012, by 
                                1 percentage point.
                      The application of this clause may result in the 
                      home health market basket percentage increase 
                      under clause (iii) being less than 0.0 for a year, 
                      and may result in payment rates under the system 
                      under this subsection for a year being less than 
                      such payment rates for the preceding year.''.

    (f) Psychiatric Hospitals.--Section 1886 of the Social Security 
Act, <<NOTE: 42 USC 1395ww.>>  as amended by sections 3001, 3008, 3025, 
and 3133, is amended by adding at the end the following new subsection:

    ``(s) Prospective Payment for Psychiatric Hospitals.--
            ``(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 
        psychiatric hospitals (as described in clause (i) of subsection 
        (d)(1)(B)) and psychiatric units (as described in the matter 
        following clause (v) of such subsection), see section 124 of the 
        Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
        1999.
            ``(2) Implementation for rate year beginning in 2010 and 
        subsequent rate years.--
                    ``(A) In general.--In implementing the system 
                described in paragraph (1) for the rate year beginning 
                in 2010 and any subsequent rate year, any update to a 
                base rate for days during the rate year for a 
                psychiatric hospital or unit, respectively, shall be 
                reduced--

[[Page 124 STAT. 484]]

                          ``(i) for the rate year beginning in 2012 and 
                      each subsequent rate year, by the productivity 
                      adjustment described in section 
                      1886(b)(3)(B)(xi)(II); and
                          ``(ii) for each of the rate years beginning in 
                      2010 through 2019, by the other adjustment 
                      described in paragraph (3).
                    ``(B) Special rule.--The application of this 
                paragraph may result in such update being less than 0.0 
                for a rate year, and may result in payment rates under 
                the system described in paragraph (1) for a rate year 
                being less than such payment rates for the preceding 
                rate year.
            ``(3) Other adjustment.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(A)(ii), the other adjustment described in this 
                paragraph is--
                          ``(i) for each of the rate years beginning in 
                      2010 and 2011, 0.25 percentage point; and
                          ``(ii) subject to subparagraph (B), for each 
                      of the rate years beginning in 2012 through 2019, 
                      0.2 percentage point.
                    ``(B) Reduction of other adjustment.--Subparagraph 
                (A)(ii) shall be applied with respect to any of rate 
                years 2014 through 2019 by substituting `0.0 percentage 
                points' for `0.2 percentage point', if for such rate 
                year--
                          ``(i) the excess (if any) of--
                                    ``(I) the total percentage of the 
                                non-elderly insured population for the 
                                preceding rate year (based on the most 
                                recent estimates available from the 
                                Director of the Congressional Budget 
                                Office before a vote in either House on 
                                the Patient Protection and Affordable 
                                Care Act that, if determined in the 
                                affirmative, would clear such Act for 
                                enrollment); over
                                    ``(II) the total percentage of the 
                                non-elderly insured population for such 
                                preceding rate year (as estimated by the 
                                Secretary); exceeds
                          ``(ii) 5 percentage points.''.

    (g) Hospice Care.--Section 1814(i)(1)(C) of the Social Security Act 
(42 U.S.C. 1395f(i)(1)(C)), as amended by section 3132, is amended by 
adding at the end the following new clauses:
    ``(iv) After determining the market basket percentage increase under 
clause (ii)(VII) or (iii), as applicable, with respect to fiscal year 
2013 and each subsequent fiscal year, the Secretary shall reduce such 
percentage--
            ``(I) for 2013 and each subsequent fiscal year, by the 
        productivity adjustment described in section 
        1886(b)(3)(B)(xi)(II); and
            ``(II) subject to clause (v), for each of fiscal years 2013 
        through 2019, by 0.5 percentage point.

The application of this clause may result in the market basket 
percentage increase under clause (ii)(VII) or (iii), as applicable, 
being less than 0.0 for a fiscal year, and may result in payment rates 
under this subsection for a fiscal year being less than such payment 
rates for the preceding fiscal year.
    ``(v) <<NOTE: Applicability.>> Clause (iv)(II) shall be applied with 
respect to any of fiscal years 2014 through 2019 by substituting `0.0 
percentage points' for `0.5 percentage point', if for such fiscal year--
            ``(I) the excess (if any) of--

[[Page 124 STAT. 485]]

                    ``(aa) the total percentage of the non-elderly 
                insured population for the preceding fiscal year (based 
                on the most recent estimates available from the Director 
                of the Congressional Budget Office before a vote in 
                either House on the Patient Protection and Affordable 
                Care Act that, if determined in the affirmative, would 
                clear such Act for enrollment); over
                    ``(bb) the total percentage of the non-elderly 
                insured population for such preceding fiscal year (as 
                estimated by the Secretary); exceeds
            ``(II) 5 percentage points.''.

    (h) Dialysis.--Section 1881(b)(14)(F) of the Social Security Act (42 
U.S.C. 1395rr(b)(14)(F)) is amended--
            (1) in clause (i)--
                    (A) by inserting ``(I)'' after ``(F)(i)''
                    (B) in subclause (I), as inserted by subparagraph 
                (A)--
                          (i) by striking ``clause (ii)'' and inserting 
                      ``subclause (II) and clause (ii)''; and
                          (ii) by striking ``minus 1.0 percentage 
                      point''; and
                    (C) by adding at the end the following new 
                subclause:

    ``(II) For 2012 and each subsequent year, after determining the 
increase factor described in subclause (I), the Secretary shall reduce 
such increase factor by the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II). The application of the preceding sentence may 
result in such increase factor being less than 0.0 for a year, and may 
result in payment rates under the payment system under this paragraph 
for a year being less than such payment rates for the preceding year.''; 
and
            (2) in clause (ii)(II)--
                    (A) by striking ``The'' and inserting ``Subject to 
                clause (i)(II), the''; and
                    (B) by striking ``clause (i) minus 1.0 percentage 
                point'' and inserting ``clause (i)(I)''.

    (i) Outpatient Hospitals.--Section 1833(t)(3) of the Social Security 
Act (42 U.S.C. 1395l(t)(3)) is amended--
            (1) in subparagraph (C)(iv), by inserting ``and subparagraph 
        (F) of this paragraph'' after ``(17)''; and
            (2) by adding at the end the following new subparagraphs:
                    ``(F) Productivity and other adjustment.--After 
                determining the OPD fee schedule increase factor under 
                subparagraph (C)(iv), the Secretary shall reduce such 
                increase factor--
                          ``(i) for 2012 and subsequent years, by the 
                      productivity adjustment described in section 
                      1886(b)(3)(B)(xi)(II); and
                          ``(ii) for each of 2010 through 2019, by the 
                      adjustment described in subparagraph (G).
                The application of this subparagraph may result in the 
                increase factor under subparagraph (C)(iv) being less 
                than 0.0 for a year, and may result in payment rates 
                under the payment system under this subsection for a 
                year being less than such payment rates for the 
                preceding year.
                    ``(G) Other adjustment.--
                          ``(i) Adjustment.--For purposes of 
                      subparagraph (F)(ii), the adjustment described in 
                      this subparagraph is--

[[Page 124 STAT. 486]]

                                    ``(I) for each of 2010 and 2011, 
                                0.25 percentage point; and
                                    ``(II) subject to clause (ii), for 
                                each of 2012 through 2019, 0.2 
                                percentage point.
                          ``(ii) Reduction of other adjustment.--Clause 
                      (i)(II) shall be applied with respect to any of 
                      2014 through 2019 by substituting `0.0 percentage 
                      points' for `0.2 percentage point', if for such 
                      year--
                                    ``(I) the excess (if any) of--
                                            ``(aa) the total percentage 
                                        of the non-elderly insured 
                                        population for the preceding 
                                        year (based on the most recent 
                                        estimates available from the 
                                        Director of the Congressional 
                                        Budget Office before a vote in 
                                        either House on the Patient 
                                        Protection and Affordable Care 
                                        Act that, if determined in the 
                                        affirmative, would clear such 
                                        Act for enrollment); over
                                            ``(bb) the total percentage 
                                        of the non-elderly insured 
                                        population for such preceding 
                                        year (as estimated by the 
                                        Secretary); exceeds
                                    ``(II) 5 percentage points.''.

    (j) Ambulance Services.--Section 1834(l)(3) of the Social Security 
Act (42 U.S.C. 1395m(l)(3)) is amended--
            (1) in subparagraph (A), by striking ``and'' at the end;
            (2) in subparagraph (B)--
                    (A) by inserting ``, subject to subparagraph (C) and 
                the succeeding sentence of this paragraph,'' after 
                ``increased''; and
                    (B) by striking the period at the end and inserting 
                ``; and'';
            (3) by adding at the end the following new subparagraph:
                    ``(C) for 2011 and each subsequent year, after 
                determining the percentage increase under subparagraph 
                (B) for the year, reduce such percentage increase by the 
                productivity adjustment described in section 
                1886(b)(3)(B)(xi)(II).''; and
            (4) by adding at the end the following flush sentence:
        ``The application of subparagraph (C) may result in the 
        percentage increase under subparagraph (B) being less than 0.0 
        for a year, and may result in payment rates under the fee 
        schedule under this subsection for a year being less than such 
        payment rates for the preceding year.''.

    (k) Ambulatory Surgical Center Services.--Section 1833(i)(2)(D) of 
the Social Security Act (42 U.S.C. 1395l(i)(2)(D)) is amended--
            (1) by redesignating clause (v) as clause (vi); and
            (2) by inserting after clause (iv) the following new clause:
                          ``(v) In implementing the system described in 
                      clause (i) for 2011 and each subsequent year, any 
                      annual update under such system for the year, 
                      after application of clause (iv), shall be reduced 
                      by the productivity adjustment described in 
                      section 1886(b)(3)(B)(xi)(II). The application of 
                      the preceding sentence may result in such update 
                      being less than 0.0 for a year, and may result in 
                      payment rates under the system described in clause 
                      (i) for a year being less than such payment rates 
                      for the preceding year.''.

[[Page 124 STAT. 487]]

    (l) Laboratory Services.--Section 1833(h)(2)(A) of the Social 
Security Act (42 U.S.C. 1395l(h)(2)(A)) is amended--
            (1) in clause (i)--
                    (A) by inserting ``, subject to clause (iv),'' after 
                ``year) by''; and
                    (B) by striking ``through 2013'' and inserting ``and 
                2010''; and
            (2) by adding at the end the following new clause:
                          ``(iv) After determining the adjustment to the 
                      fee schedules under clause (i), the Secretary 
                      shall reduce such adjustment--
                                    ``(I) for 2011 and each subsequent 
                                year, by the productivity adjustment 
                                described in section 
                                1886(b)(3)(B)(xi)(II); and
                                    ``(II) for each of 2011 through 
                                2015, by 1.75 percentage points.
                      Subclause (I) shall not apply in a year where the 
                      adjustment to the fee schedules determined under 
                      clause (i) is 0.0 or a percentage decrease for a 
                      year. The application of the productivity 
                      adjustment under subclause (I) shall not result in 
                      an adjustment to the fee schedules under clause 
                      (i) being less than 0.0 for a year. The 
                      application of subclause (II) may result in an 
                      adjustment to the fee schedules under clause (i) 
                      being less than 0.0 for a year, and may result in 
                      payment rates for a year being less than such 
                      payment rates for the preceding year.''.

    (m) Certain Durable Medical Equipment.--Section 1834(a)(14) of the 
Social Security Act (42 U.S.C. 1395m(a)(14)) is amended--
            (1) in subparagraph (K)--
                    (A) by striking ``2011, 2012, and 2013,''; and
                    (B) by inserting ``and'' after the semicolon at the 
                end;
            (2) by striking subparagraphs (L) and (M) and inserting the 
        following new subparagraph:
                    ``(L) for 2011 and each subsequent year--
                          ``(i) the percentage increase in the consumer 
                      price index for all urban consumers (United States 
                      city average) for the 12-month period ending with 
                      June of the previous year, reduced by--
                          ``(ii) the productivity adjustment described 
                      in section 1886(b)(3)(B)(xi)(II).''; and
            (3) by adding at the end the following flush sentence:
        ``The application of subparagraph (L)(ii) may result in the 
        covered item update under this paragraph being less than 0.0 for 
        a year, and may result in payment rates under this subsection 
        for a year being less than such payment rates for the preceding 
        year.''.

    (n) Prosthetic Devices, Orthotics, and Prosthetics.--Section 
1834(h)(4) of the Social Security Act (42 U.S.C. 1395m(h)(4)) is 
amended--
            (1) in subparagraph (A)--
                    (A) in clause (ix), by striking ``and'' at the end;
                    (B) in clause (x)--
                          (i) by striking ``a subsequent year'' and 
                      inserting ``for each of 2007 through 2010''; and

[[Page 124 STAT. 488]]

                          (ii) by inserting ``and'' after the semicolon 
                      at the end;
                    (C) by adding at the end the following new clause:
                          ``(xi) for 2011 and each subsequent year--
                                    ``(I) the percentage increase in the 
                                consumer price index for all urban 
                                consumers (United States city average) 
                                for the 12-month period ending with June 
                                of the previous year, reduced by--
                                    ``(II) the productivity adjustment 
                                described in section 
                                1886(b)(3)(B)(xi)(II).''; and
                    (D) by adding at the end the following flush 
                sentence:
        ``The application of subparagraph (A)(xi)(II) may result in the 
        applicable percentage increase under subparagraph (A) being less 
        than 0.0 for a year, and may result in payment rates under this 
        subsection for a year being less than such payment rates for the 
        preceding year.''.

    (o) Other Items.--Section 1842(s)(1) of the Social Security Act (42 
U.S.C. 1395u(s)(1)) is amended--
            (1) in the first sentence, by striking ``Subject to'' and 
        inserting ``(A) Subject to'';
            (2) by striking the second sentence and inserting the 
        following new subparagraph:
                    ``(B) Any fee schedule established under this 
                paragraph for such item or service shall be updated--
                          ``(i) for years before 2011--
                                    ``(I) subject to subclause (II), by 
                                the percentage increase in the consumer 
                                price index for all urban consumers 
                                (United States city average) for the 12-
                                month period ending with June of the 
                                preceding year; and
                                    ``(II) for items and services 
                                described in paragraph (2)(D) for 2009, 
                                section 1834(a)(14)(J) shall apply under 
                                this paragraph instead of the percentage 
                                increase otherwise applicable; and
                          ``(ii) for 2011 and subsequent years--
                                    ``(I) the percentage increase in the 
                                consumer price index for all urban 
                                consumers (United States city average) 
                                for the 12-month period ending with June 
                                of the previous year, reduced by--
                                    ``(II) the productivity adjustment 
                                described in section 
                                1886(b)(3)(B)(xi)(II).''; and
            (3) by adding at the end the following flush sentence:
        ``The application of subparagraph (B)(ii)(II) may result in the 
        update under this paragraph being less than 0.0 for a year, and 
        may result in payment rates under any fee schedule established 
        under this paragraph for a year being less than such payment 
        rates for the preceding year.''.

    (p) <<NOTE: 42 USC 1395ww note.>> No Application Prior to April 1, 
2010.--Notwithstanding the preceding provisions of this section, the 
amendments made by subsections (a), (c), and (d) shall not apply to 
discharges occurring before April 1, 2010.

SEC. 3402. TEMPORARY ADJUSTMENT TO THE CALCULATION OF PART B PREMIUMS.

    Section 1839(i) of the Social Security Act (42 U.S.C. 1395r(i)) is 
amended--

[[Page 124 STAT. 489]]

            (1) in paragraph (2), in the matter preceding subparagraph 
        (A), by inserting ``subject to paragraph (6),'' after 
        ``subsection,'';
            (2) in paragraph (3)(A)(i), by striking ``The applicable'' 
        and inserting ``Subject to paragraph (6), the applicable'';
            (3) by redesignating paragraph (6) as paragraph (7); and
            (4) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) <<NOTE: Time period.>> Temporary adjustment to income 
        thresholds.--Notwithstanding any other provision of this 
        subsection, during the period beginning on January 1, 2011, and 
        ending on December 31, 2019--
                    ``(A) the threshold amount otherwise applicable 
                under paragraph (2) shall be equal to such amount for 
                2010; and
                    ``(B) the dollar amounts otherwise applicable under 
                paragraph (3)(C)(i) shall be equal to such dollar 
                amounts for 2010.''.

SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD.

    (a) Board.--
            (1) In general.--Title XVIII of the Social Security Act (42 
        U.S.C. 1395 et seq.), as amended by section 3022, is amended by 
        adding at the end the following new section:


                  ``independent medicare advisory board


    ``Sec. 1899A.  <<NOTE: 42 USC 1395kkk.>> (a) Establishment.--There 
is established an independent board to be known as the `Independent 
Medicare Advisory Board'.

    ``(b) Purpose.--It is the purpose of this section to, in accordance 
with the following provisions of this section, reduce the per capita 
rate of growth in Medicare spending--
            ``(1) by requiring the Chief Actuary of the Centers for 
        Medicare & Medicaid Services to determine in each year to which 
        this section applies (in this section referred to as `a 
        determination year') the projected per capita growth rate under 
        Medicare for the second year following the determination year 
        (in this section referred to as `an implementation year');
            ``(2) if the projection for the implementation year exceeds 
        the target growth rate for that year, by requiring the Board to 
        develop and submit during the first year following the 
        determination year (in this section referred to as `a proposal 
        year') a proposal containing recommendations to reduce the 
        Medicare per capita growth rate to the extent required by this 
        section; and
            ``(3) by requiring the Secretary to implement such proposals 
        unless Congress enacts legislation pursuant to this section.

    ``(c) Board Proposals.--
            ``(1) Development.--
                    ``(A) In general.--The Board shall develop detailed 
                and specific proposals related to the Medicare program 
                in accordance with the succeeding provisions of this 
                section.
                    ``(B) Advisory reports.--Beginning January 15, 2014, 
                the Board may develop and submit to Congress advisory 
                reports on matters related to the Medicare program, 
                regardless of whether or not the Board submitted a 
                proposal for such year. Such a report may, for years 
                prior to 2020,

[[Page 124 STAT. 490]]

                include recommendations regarding improvements to 
                payment systems for providers of services and suppliers 
                who are not otherwise subject to the scope of the 
                Board's recommendations in a proposal under this 
                section. Any advisory report submitted under this 
                subparagraph shall not be subject to the rules for 
                congressional consideration under subsection (d).
            ``(2) Proposals.--
                    ``(A) Requirements.--Each proposal submitted under 
                this section in a proposal year shall meet each of the 
                following requirements:
                          ``(i) If the Chief Actuary of the Centers for 
                      Medicare & Medicaid Services has made a 
                      determination under paragraph (7)(A) in the 
                      determination year, the proposal shall include 
                      recommendations so that the proposal as a whole 
                      (after taking into account recommendations under 
                      clause (v)) will result in a net reduction in 
                      total Medicare program spending in the 
                      implementation year that is at least equal to the 
                      applicable savings target established under 
                      paragraph (7)(B) for such implementation year. In 
                      determining whether a proposal meets the 
                      requirement of the preceding sentence, reductions 
                      in Medicare program spending during the 3-month 
                      period immediately preceding the implementation 
                      year shall be counted to the extent that such 
                      reductions are a result of the implementation of 
                      recommendations contained in the proposal for a 
                      change in the payment rate for an item or service 
                      that was effective during such period pursuant to 
                      subsection (e)(2)(A).
                          ``(ii) The proposal shall not include any 
                      recommendation to ration health care, raise 
                      revenues or Medicare beneficiary premiums under 
                      section 1818, 1818A, or 1839, increase Medicare 
                      beneficiary cost-sharing (including deductibles, 
                      coinsurance, and copayments), or otherwise 
                      restrict benefits or modify eligibility criteria.
                          ``(iii) In the case of proposals submitted 
                      prior to December 31, 2018, the proposal shall not 
                      include any recommendation that would reduce 
                      payment rates for items and services furnished, 
                      prior to December 31, 2019, by providers of 
                      services (as defined in section 1861(u)) and 
                      suppliers (as defined in section 1861(d)) 
                      scheduled, pursuant to the amendments made by 
                      section 3401 of the Patient Protection and 
                      Affordable Care Act, to receive a reduction to the 
                      inflationary payment updates of such providers of 
                      services and suppliers in excess of a reduction 
                      due to productivity in a year in which such 
                      recommendations would take effect.
                          ``(iv) As appropriate, the proposal shall 
                      include recommendations to reduce Medicare 
                      payments under parts C and D, such as reductions 
                      in direct subsidy payments to Medicare Advantage 
                      and prescription drug plans specified under 
                      paragraph (1) and (2) of section 1860D-15(a) that 
                      are related to administrative expenses (including 
                      profits) for basic coverage, denying high bids or 
                      removing high bids for prescription drug

[[Page 124 STAT. 491]]

                      coverage from the calculation of the national 
                      average monthly bid amount under section 1860D-
                      13(a)(4), and reductions in payments to Medicare 
                      Advantage plans under clauses (i) and (ii) of 
                      section 1853(a)(1)(B) that are related to 
                      administrative expenses (including profits) and 
                      performance bonuses for Medicare Advantage plans 
                      under section 1853(n). Any such recommendation 
                      shall not affect the base beneficiary premium 
                      percentage specified under 1860D-13(a).
                          ``(v) The proposal shall include 
                      recommendations with respect to administrative 
                      funding for the Secretary to carry out the 
                      recommendations contained in the proposal.
                          ``(vi) The proposal shall only include 
                      recommendations related to the Medicare program.
                    ``(B) Additional considerations.--In developing and 
                submitting each proposal under this section in a 
                proposal year, the Board shall, to the extent feasible--
                          ``(i) give priority to recommendations that 
                      extend Medicare solvency;
                          ``(ii) include recommendations that--
                                    ``(I) improve the health care 
                                delivery system and health outcomes, 
                                including by promoting integrated care, 
                                care coordination, prevention and 
                                wellness, and quality and efficiency 
                                improvement; and
                                    ``(II) protect and improve Medicare 
                                beneficiaries' access to necessary and 
                                evidence-based items and services, 
                                including in rural and frontier areas;
                          ``(iii) include recommendations that target 
                      reductions in Medicare program spending to sources 
                      of excess cost growth;
                          ``(iv) consider the effects on Medicare 
                      beneficiaries of changes in payments to providers 
                      of services (as defined in section 1861(u)) and 
                      suppliers (as defined in section 1861(d));
                          ``(v) consider the effects of the 
                      recommendations on providers of services and 
                      suppliers with actual or projected negative cost 
                      margins or payment updates; and
                          ``(vi) consider the unique needs of Medicare 
                      beneficiaries who are dually eligible for Medicare 
                      and the Medicaid program under title XIX.
                    ``(C) No increase in total medicare program 
                spending.--Each proposal submitted under this section 
                shall be designed in such a manner that implementation 
                of the recommendations contained in the proposal would 
                not be expected to result, over the 10-year period 
                starting with the implementation year, in any increase 
                in the total amount of net Medicare program spending 
                relative to the total amount of net Medicare program 
                spending that would have occurred absent such 
                implementation.
                    ``(D) Consultation with 
                medpac. <<NOTE: Submission.>> --The Board shall submit a 
                draft copy of each proposal to be submitted under this 
                section to the Medicare Payment Advisory Commission 
                established under section 1805 for its 
                review. <<NOTE: Deadline.>> The Board

[[Page 124 STAT. 492]]

                shall submit such draft copy by not later than September 
                1 of the determination year.
                    ``(E) Review and comment by the 
                secretary. <<NOTE: Submission. Deadlines.>> --The Board 
                shall submit a draft copy of each proposal to be 
                submitted to Congress under this section to the 
                Secretary for the Secretary's review and comment. The 
                Board shall submit such draft copy by not later than 
                September 1 of the determination 
                year. <<NOTE: Reports.>>  Not later than March 1 of the 
                submission year, the Secretary shall submit a report to 
                Congress on the results of such review, unless the 
                Secretary submits a proposal under paragraph (5)(A) in 
                that year.
                    ``(F) Consultations.--In carrying out its duties 
                under this section, the Board shall engage in regular 
                consultations with the Medicaid and CHIP Payment and 
                Access Commission under section 1900.
            ``(3) Transmission of board proposal to president.--
                    ``(A) In general.--
                          ``(i) In general. <<NOTE: Deadline.>> --Except 
                      as provided in clause (ii) and subsection 
                      (f)(3)(B), the Board shall transmit a proposal 
                      under this section to the President on January 15 
                      of each year (beginning with 2014).
                          ``(ii) Exception.--The Board shall not submit 
                      a proposal under clause (i) in a proposal year if 
                      the year is--
                                    ``(I) a year for which the Chief 
                                Actuary of the Centers for Medicare & 
                                Medicaid Services makes a determination 
                                in the determination year under 
                                paragraph (6)(A) that the growth rate 
                                described in clause (i) of such 
                                paragraph does not exceed the growth 
                                rate described in clause (ii) of such 
                                paragraph;
                                    ``(II) a year in which the Chief 
                                Actuary of the Centers for Medicare & 
                                Medicaid Services makes a determination 
                                in the determination year that the 
                                projected percentage increase (if any) 
                                for the medical care expenditure 
                                category of the Consumer Price Index for 
                                All Urban Consumers (United States city 
                                average) for the implementation year is 
                                less than the projected percentage 
                                increase (if any) in the Consumer Price 
                                Index for All Urban Consumers (all 
                                items; United States city average) for 
                                such implementation year; or
                                    ``(III) for proposal year 2019 and 
                                subsequent proposal years, a year in 
                                which the Chief Actuary of the Centers 
                                for Medicare & Medicaid Services makes a 
                                determination in the determination year 
                                that the growth rate described in 
                                paragraph (8) exceeds the growth rate 
                                described in paragraph (6)(A)(i).
                          ``(iii) Start-up period.--The Board may not 
                      submit a proposal under clause (i) prior to 
                      January 15, 2014.
                    ``(B) Required information.--Each proposal submitted 
                by the Board under subparagraph (A)(i) shall include--
                          ``(i) the recommendations described in 
                      paragraph (2)(A)(i);

[[Page 124 STAT. 493]]

                          ``(ii) an explanation of each recommendation 
                      contained in the proposal and the reasons for 
                      including such recommendation;
                          ``(iii) an actuarial opinion by the Chief 
                      Actuary of the Centers for Medicare & Medicaid 
                      Services certifying that the proposal meets the 
                      requirements of subparagraphs (A)(i) and (C) of 
                      paragraph (2);
                          ``(iv) a legislative proposal that implements 
                      the recommendations; and
                          ``(v) other information determined appropriate 
                      by the Board.
            ``(4) Presidential submission to congress.--Upon receiving a 
        proposal from the Board under paragraph (3)(A)(i) or the 
        Secretary under paragraph (5), the President shall immediately 
        submit such proposal to Congress.
            ``(5) Contingent secretarial development of proposal.--If, 
        with respect to a proposal year, the Board is required, to but 
        fails, to submit a proposal to the President by the deadline 
        applicable under paragraph (3)(A)(i), the Secretary shall 
        develop a detailed and specific proposal that satisfies the 
        requirements of subparagraphs (A) and (C) (and, to the extent 
        feasible, subparagraph (B)) of paragraph (2) and contains the 
        information required paragraph 
        (3)(B)). <<NOTE: Deadline. Transmission.>>  By not later than 
        January 25 of the year, the Secretary shall transmit--
                    ``(A) such proposal to the President; and
                    ``(B) a copy of such proposal to the Medicare 
                Payment Advisory Commission for its review.
            ``(6) Per capita growth rate projections by chief actuary.--
                    ``(A) In 
                general. <<NOTE: Deadlines. Determination.>> --Subject 
                to subsection (f)(3)(A), not later than April 30, 2013, 
                and annually thereafter, the Chief Actuary of the 
                Centers for Medicare & Medicaid Services shall determine 
                in each such year whether--
                          ``(i) the projected Medicare per capita growth 
                      rate for the implementation year (as determined 
                      under subparagraph (B)); exceeds
                          ``(ii) the projected Medicare per capita 
                      target growth rate for the implementation year (as 
                      determined under subparagraph (C)).
                    ``(B) Medicare per capita growth rate.--
                          ``(i) In general.--For purposes of this 
                      section, the Medicare per capita growth rate for 
                      an implementation year shall be calculated as the 
                      projected 5-year average (ending with such year) 
                      of the growth in Medicare program spending per 
                      unduplicated enrollee.
                          ``(ii) Requirement.--The projection under 
                      clause (i) shall--
                                    ``(I) to the extent that there is 
                                projected to be a negative update to the 
                                single conversion factor applicable to 
                                payments for physicians' services under 
                                section 1848(d) furnished in the 
                                proposal year or the implementation 
                                year, assume that such update for such 
                                services is 0 percent rather than the 
                                negative percent that would otherwise 
                                apply; and

[[Page 124 STAT. 494]]

                                    ``(II) take into account any 
                                delivery system reforms or other payment 
                                changes that have been enacted or 
                                published in final rules but not yet 
                                implemented as of the making of such 
                                calculation.
                    ``(C) Medicare per capita target growth rate.--For 
                purposes of this section, the Medicare per capita target 
                growth rate for an implementation year shall be 
                calculated as the projected 5-year average (ending with 
                such year) percentage increase in--
                          ``(i) with respect to a determination year 
                      that is prior to 2018, the average of the 
                      projected percentage increase (if any) in--
                                    ``(I) the Consumer Price Index for 
                                All Urban Consumers (all items; United 
                                States city average); and
                                    ``(II) the medical care expenditure 
                                category of the Consumer Price Index for 
                                All Urban Consumers (United States city 
                                average); and
                          ``(ii) with respect to a determination year 
                      that is after 2017, the nominal gross domestic 
                      product per capita plus 1.0 percentage point.
            ``(7) Savings requirement.--
                    ``(A) In general.--If, with respect to a 
                determination year, the Chief Actuary of the Centers for 
                Medicare & Medicaid Services makes a determination under 
                paragraph (6)(A) that the growth rate described in 
                clause (i) of such paragraph exceeds the growth rate 
                described in clause (ii) of such paragraph, the Chief 
                Actuary shall establish an applicable savings target for 
                the implementation year.
                    ``(B) Applicable savings target.--For purposes of 
                this section, the applicable savings target for an 
                implementation year shall be an amount equal to the 
                product of--
                          ``(i) the total amount of projected Medicare 
                      program spending for the proposal year; and
                          ``(ii) the applicable percent for the 
                      implementation year.
                    ``(C) Applicable percent.--For purposes of 
                subparagraph (B), the applicable percent for an 
                implementation year is the lesser of--
                          ``(i) in the case of--
                                    ``(I) implementation year 2015, 0.5 
                                percent;
                                    ``(II) implementation year 2016, 1.0 
                                percent;
                                    ``(III) implementation year 2017, 
                                1.25 percent; and
                                    ``(IV) implementation year 2018 or 
                                any subsequent implementation year, 1.5 
                                percent; and
                          ``(ii) the projected excess for the 
                      implementation year (expressed as a percent) 
                      determined under subparagraph (A).
            ``(8) Per capita rate of growth in national health 
        expenditures. <<NOTE: Effective date.>> --In each determination 
        year (beginning in 2018), the Chief Actuary of the Centers for 
        Medicare & Medicaid Services shall project the per capita rate 
        of growth in national health expenditures for the implementation 
        year. Such rate of growth for an implementation year shall be 
        calculated as the projected 5-year average (ending with such 
        year) percentage increase in national health care expenditures.

[[Page 124 STAT. 495]]

    ``(d) Congressional Consideration.--
            ``(1) <<NOTE: Proposal.>> Introduction.--
                    ``(A) In general.--On the day on which a proposal is 
                submitted by the President to the House of 
                Representatives and the Senate under subsection (c)(4), 
                the legislative proposal (described in subsection 
                (c)(3)(B)(iv)) contained in the proposal shall be 
                introduced (by request) in the Senate by the majority 
                leader of the Senate or by Members of the Senate 
                designated by the majority leader of the Senate and 
                shall be introduced (by request) in the House by the 
                majority leader of the House or by Members of the House 
                designated by the majority leader of the House.
                    ``(B) Not in session.--If either House is not in 
                session on the day on which such legislative proposal is 
                submitted, the legislative proposal shall be introduced 
                in that House, as provided in subparagraph (A), on the 
                first day thereafter on which that House is in session.
                    ``(C) <<NOTE: Deadline.>>  Any member.--If the 
                legislative proposal is not introduced in either House 
                within 5 days on which that House is in session after 
                the day on which the legislative proposal is submitted, 
                then any Member of that House may introduce the 
                legislative proposal.
                    ``(D) Referral.--The legislation introduced under 
                this paragraph shall be referred by the Presiding 
                Officers of the respective Houses to the Committee on 
                Finance in the Senate and to the Committee on Energy and 
                Commerce and the Committee on Ways and Means in the 
                House of Representatives.
            ``(2) Committee consideration of proposal.--
                    ``(A) Reporting bill.--Not later than April 1 of any 
                proposal year in which a proposal is submitted by the 
                President to Congress under this section, the Committee 
                on Ways and Means and the Committee on Energy and 
                Commerce of the House of Representatives and the 
                Committee on Finance of the Senate may report the bill 
                referred to the Committee under paragraph (1)(D) with 
                committee amendments related to the Medicare program.
                    ``(B) Calculations.--In determining whether a 
                committee amendment meets the requirement of 
                subparagraph (A), the reductions in Medicare program 
                spending during the 3-month period immediately preceding 
                the implementation year shall be counted to the extent 
                that such reductions are a result of the implementation 
                provisions in the committee amendment for a change in 
                the payment rate for an item or service that was 
                effective during such period pursuant to such amendment.
                    ``(C) Committee jurisdiction.--Notwithstanding rule 
                XV of the Standing Rules of the Senate, a committee 
                amendment described in subparagraph (A) may include 
                matter not within the jurisdiction of the Committee on 
                Finance if that matter is relevant to a proposal 
                contained in the bill submitted under subsection (c)(3).
                    ``(D) Discharge.--If, with respect to the House 
                involved, the committee has not reported the bill by the 
                date required by subparagraph (A), the committee shall 
                be discharged from further consideration of the 
                proposal.

[[Page 124 STAT. 496]]

            ``(3) Limitation on changes to the board recommendations.--
                    ``(A) In general.--It shall not be in order in the 
                Senate or the House of Representatives to consider any 
                bill, resolution, or amendment, pursuant to this 
                subsection or conference report thereon, that fails to 
                satisfy the requirements of subparagraphs (A)(i) and (C) 
                of subsection (c)(2).
                    ``(B) Limitation on changes to the board 
                recommendations in other legislation.--It shall not be 
                in order in the Senate or the House of Representatives 
                to consider any bill, resolution, amendment, or 
                conference report (other than pursuant to this section) 
                that would repeal or otherwise change the 
                recommendations of the Board if that change would fail 
                to satisfy the requirements of subparagraphs (A)(i) and 
                (C) of subsection (c)(2).
                    ``(C) Limitation on changes to this subsection.--It 
                shall not be in order in the Senate or the House of 
                Representatives to consider any bill, resolution, 
                amendment, or conference report that would repeal or 
                otherwise change this subsection.
                    ``(D) Waiver.--This paragraph may be waived or 
                suspended in the Senate only by the affirmative vote of 
                three-fifths of the Members, duly chosen and sworn.
                    ``(E) Appeals.--An affirmative vote of three-fifths 
                of the Members of the Senate, duly chosen and sworn, 
                shall be required in the Senate to sustain an appeal of 
                the ruling of the Chair on a point of order raised under 
                this paragraph.
            ``(4) Expedited procedure.--
                    ``(A) Consideration.--A motion to proceed to the 
                consideration of the bill in the Senate is not 
                debatable.
                    ``(B) Amendment.--
                          ``(i) Time limitation.--Debate in the Senate 
                      on any amendment to a bill under this section 
                      shall be limited to 1 hour, to be equally divided 
                      between, and controlled by, the mover and the 
                      manager of the bill, and debate on any amendment 
                      to an amendment, debatable motion, or appeal shall 
                      be limited to 30 minutes, to be equally divided 
                      between, and controlled by, the mover and the 
                      manager of the bill, except that in the event the 
                      manager of the bill is in favor of any such 
                      amendment, motion, or appeal, the time in 
                      opposition thereto shall be controlled by the 
                      minority leader or such leader's designee.
                          ``(ii) Germane.--No amendment that is not 
                      germane to the provisions of such bill shall be 
                      received.
                          ``(iii) Additional time.--The leaders, or 
                      either of them, may, from the time under their 
                      control on the passage of the bill, allot 
                      additional time to any Senator during the 
                      consideration of any amendment, debatable motion, 
                      or appeal.
                          ``(iv) Amendment not in order.--It shall not 
                      be in order to consider an amendment that would 
                      cause the bill to result in a net reduction in 
                      total Medicare program spending in the 
                      implementation year that is less than the 
                      applicable savings target established

[[Page 124 STAT. 497]]

                      under subsection (c)(7)(B) for such implementation 
                      year.
                          ``(v) Waiver and appeals.--This paragraph may 
                      be waived or suspended in the Senate only by the 
                      affirmative vote of three-fifths of the Members, 
                      duly chosen and sworn. An affirmative vote of 
                      three-fifths of the Members of the Senate, duly 
                      chosen and sworn, shall be required in the Senate 
                      to sustain an appeal of the ruling of the Chair on 
                      a point of order raised under this section.
                    ``(C) Consideration by the other house.--
                          ``(i) In general.--The expedited procedures 
                      provided in this subsection for the consideration 
                      of a bill introduced pursuant to paragraph (1) 
                      shall not apply to such a bill that is received by 
                      one House from the other House if such a bill was 
                      not introduced in the receiving House.
                          ``(ii) Before 
                      passage. <<NOTE: Applicability.>> --If a bill that 
                      is introduced pursuant to paragraph (1) is 
                      received by one House from the other House, after 
                      introduction but before disposition of such a bill 
                      in the receiving House, then the following shall 
                      apply:
                                    ``(I) The receiving House shall 
                                consider the bill introduced in that 
                                House through all stages of 
                                consideration up to, but not including, 
                                passage.
                                    ``(II) The question on passage shall 
                                be put on the bill of the other House as 
                                amended by the language of the receiving 
                                House.
                          ``(iii) After passage.--If a bill introduced 
                      pursuant to paragraph (1) is received by one House 
                      from the other House, after such a bill is passed 
                      by the receiving House, then the vote on passage 
                      of the bill that originates in the receiving House 
                      shall be considered to be the vote on passage of 
                      the bill received from the other House as amended 
                      by the language of the receiving House.
                          ``(iv) Disposition.--Upon disposition of a 
                      bill introduced pursuant to paragraph (1) that is 
                      received by one House from the other House, it 
                      shall no longer be in order to consider the bill 
                      that originates in the receiving House.
                          ``(v) Limitation. <<NOTE: Applicability.>> --
                      Clauses (ii), (iii), and (iv) shall apply only to 
                      a bill received by one House from the other House 
                      if the bill--
                                    ``(I) is related only to the program 
                                under this title; and
                                    ``(II) satisfies the requirements of 
                                subparagraphs (A)(i) and (C) of 
                                subsection (c)(2).
                    ``(D) Senate limits on debate.--
                          ``(i) In general.--In the Senate, 
                      consideration of the bill and on all debatable 
                      motions and appeals in connection therewith shall 
                      not exceed a total of 30 hours, which shall be 
                      divided equally between the majority and minority 
                      leaders or their designees.
                          ``(ii) Motion to further limit debate.--A 
                      motion to further limit debate on the bill is in 
                      order and is not debatable.

[[Page 124 STAT. 498]]

                          ``(iii) Motion or appeal.--Any debatable 
                      motion or appeal is debatable for not to exceed 1 
                      hour, to be divided equally between those favoring 
                      and those opposing the motion or appeal.
                          ``(iv) Final disposition.--After 30 hours of 
                      consideration, the Senate shall proceed, without 
                      any further debate on any question, to vote on the 
                      final disposition thereof to the exclusion of all 
                      amendments not then pending before the Senate at 
                      that time and to the exclusion of all motions, 
                      except a motion to table, or to reconsider and one 
                      quorum call on demand to establish the presence of 
                      a quorum (and motions required to establish a 
                      quorum) immediately before the final vote begins.
                    ``(E) Consideration in conference.--
                          ``(i) In general.--Consideration in the Senate 
                      and the House of Representatives on the conference 
                      report or any messages between Houses shall be 
                      limited to 10 hours, equally divided and 
                      controlled by the majority and minority leaders of 
                      the Senate or their designees and the Speaker of 
                      the House of Representatives and the minority 
                      leader of the House of Representatives or their 
                      designees.
                          ``(ii) Time limitation.--Debate in the Senate 
                      on any amendment under this subparagraph shall be 
                      limited to 1 hour, to be equally divided between, 
                      and controlled by, the mover and the manager of 
                      the bill, and debate on any amendment to an 
                      amendment, debatable motion, or appeal shall be 
                      limited to 30 minutes, to be equally divided 
                      between, and controlled by, the mover and the 
                      manager of the bill, except that in the event the 
                      manager of the bill is in favor of any such 
                      amendment, motion, or appeal, the time in 
                      opposition thereto shall be controlled by the 
                      minority leader or such leader's designee.
                          ``(iii) Final disposition.--After 10 hours of 
                      consideration, the Senate shall proceed, without 
                      any further debate on any question, to vote on the 
                      final disposition thereof to the exclusion of all 
                      motions not then pending before the Senate at that 
                      time or necessary to resolve the differences 
                      between the Houses and to the exclusion of all 
                      other motions, except a motion to table, or to 
                      reconsider and one quorum call on demand to 
                      establish the presence of a quorum (and motions 
                      required to establish a quorum) immediately before 
                      the final vote begins.
                          ``(iv) Limitation. <<NOTE: Applicability.>> --
                      Clauses (i) through (iii) shall only apply to a 
                      conference report, message or the amendments 
                      thereto if the conference report, message, or an 
                      amendment thereto--
                                    ``(I) is related only to the program 
                                under this title; and
                                    ``(II) satisfies the requirements of 
                                subparagraphs (A)(i) and (C) of 
                                subsection (c)(2).
                    ``(F) Veto.--If the President vetoes the bill debate 
                on a veto message in the Senate under this subsection 
                shall

[[Page 124 STAT. 499]]

                be 1 hour equally divided between the majority and 
                minority leaders or their designees.
            ``(5) Rules of the senate and house of representatives.--
        This subsection and subsection (f)(2) are enacted by Congress--
                    ``(A) as an exercise of the rulemaking power of the 
                Senate and the House of Representatives, respectively, 
                and is deemed to be part of the rules of each House, 
                respectively, but applicable only with respect to the 
                procedure to be followed in that House in the case of 
                bill under this section, and it supersedes other rules 
                only to the extent that it is inconsistent with such 
                rules; and
                    ``(B) with full recognition of the constitutional 
                right of either House to change the rules (so far as 
                they relate to the procedure of that House) at any time, 
                in the same manner, and to the same extent as in the 
                case of any other rule of that House.

    ``(e) Implementation of Proposal.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, the Secretary shall, except as provided in paragraph (3), 
        implement the recommendations contained in a proposal submitted 
        by the President to Congress pursuant to this section on August 
        15 of the year in which the proposal is so submitted.
            ``(2) Application.--
                    ``(A) In general.--A recommendation described in 
                paragraph (1) shall apply as follows:
                          ``(i) In the case of a recommendation that is 
                      a change in the payment rate for an item or 
                      service under Medicare in which payment rates 
                      change on a fiscal year basis (or a cost reporting 
                      period basis that relates to a fiscal year), on a 
                      calendar year basis (or a cost reporting period 
                      basis that relates to a calendar year), or on a 
                      rate year basis (or a cost reporting period basis 
                      that relates to a rate year), such recommendation 
                      shall apply to items and services furnished on the 
                      first day of the first fiscal year, calendar year, 
                      or rate year (as the case may be) that begins 
                      after such August 15.
                          ``(ii) In the case of a recommendation 
                      relating to payments to plans under parts C and D, 
                      such recommendation shall apply to plan years 
                      beginning on the first day of the first calendar 
                      year that begins after such August 15.
                          ``(iii) In the case of any other 
                      recommendation, such recommendation shall be 
                      addressed in the regular regulatory process 
                      timeframe and shall apply as soon as practicable.
                    ``(B) Interim final rulemaking.--The Secretary may 
                use interim final rulemaking to implement any 
                recommendation described in paragraph (1).
            ``(3) Exception.--The Secretary shall not be required to 
        implement the recommendations contained in a proposal submitted 
        in a proposal year by the President to Congress pursuant to this 
        section if--
                    ``(A) prior to August 15 of the proposal year, 
                Federal legislation is enacted that includes the 
                following provision: `This Act supercedes the 
                recommendations of the Board

[[Page 124 STAT. 500]]

                contained in the proposal submitted, in the year which 
                includes the date of enactment of this Act, to Congress 
                under section 1899A of the Social Security Act.'; and
                    ``(B) <<NOTE: Deadline.>> in the case of 
                implementation year 2020 and subsequent implementation 
                years, a joint resolution described in subsection (f)(1) 
                is enacted not later than August 15, 2017.
            ``(4) No affect on authority to implement certain 
        provisions.--Nothing in paragraph (3) shall be construed to 
        affect the authority of the Secretary to implement any 
        recommendation contained in a proposal or advisory report under 
        this section to the extent that the Secretary otherwise has the 
        authority to implement such recommendation administratively.
            ``(5) Limitation on review.--There shall be no 
        administrative or judicial review under section 1869, section 
        1878, or otherwise of the implementation by the Secretary under 
        this subsection of the recommendations contained in a proposal.

    ``(f) Joint Resolution Required To Discontinue the Board.--
            ``(1) In general. <<NOTE: Definition.>> --For purposes of 
        subsection (e)(3)(B), a joint resolution described in this 
        paragraph means only a joint resolution--
                    ``(A) that is introduced in 2017 by not later than 
                February 1 of such year;
                    ``(B) which does not have a preamble;
                    ``(C) the title of which is as follows: `Joint 
                resolution approving the discontinuation of the process 
                for consideration and automatic implementation of the 
                annual proposal of the Independent Medicare Advisory 
                Board under section 1899A of the Social Security Act'; 
                and
                    ``(D) the matter after the resolving clause of which 
                is as follows: `That Congress approves the 
                discontinuation of the process for consideration and 
                automatic implementation of the annual proposal of the 
                Independent Medicare Advisory Board under section 1899A 
                of the Social Security Act.'.
            ``(2) Procedure.--
                    ``(A) Referral.--A joint resolution described in 
                paragraph (1) shall be referred to the Committee on Ways 
                and Means and the Committee on Energy and Commerce of 
                the House of Representatives and the Committee on 
                Finance of the Senate.
                    ``(B) Discharge. <<NOTE: Deadline. Petition.>> --In 
                the Senate, if the committee to which is referred a 
                joint resolution described in paragraph (1) has not 
                reported such joint resolution (or an identical joint 
                resolution) at the end of 20 days after the joint 
                resolution described in paragraph (1) is introduced, 
                such committee may be discharged from further 
                consideration of such joint resolution upon a petition 
                supported in writing by 30 Members of the Senate, and 
                such joint resolution shall be placed on the calendar.
                    ``(C) Consideration.--
                          ``(i) In general.--In the Senate, when the 
                      committee to which a joint resolution is referred 
                      has reported, or when a committee is discharged 
                      (under subparagraph (C)) from further 
                      consideration of a joint

[[Page 124 STAT. 501]]

                      resolution described in paragraph (1), it is at 
                      any time thereafter in order (even though a 
                      previous motion to the same effect has been 
                      disagreed to) for a motion to proceed to the 
                      consideration of the joint resolution to be made, 
                      and all points of order against the joint 
                      resolution (and against consideration of the joint 
                      resolution) are waived, except for points of order 
                      under the Congressional Budget act of 1974 or 
                      under budget resolutions pursuant to that Act. The 
                      motion is not debatable. A motion to reconsider 
                      the vote by which the motion is agreed to or 
                      disagreed to shall not be in order. If a motion to 
                      proceed to the consideration of the joint 
                      resolution is agreed to, the joint resolution 
                      shall remain the unfinished business of the Senate 
                      until disposed of.
                          ``(ii) Debate limitation.--In the Senate, 
                      consideration of the joint resolution, and on all 
                      debatable motions and appeals in connection 
                      therewith, shall be limited to not more than 10 
                      hours, which shall be divided equally between the 
                      majority leader and the minority leader, or their 
                      designees. A motion further to limit debate is in 
                      order and not debatable. An amendment to, or a 
                      motion to postpone, or a motion to proceed to the 
                      consideration of other business, or a motion to 
                      recommit the joint resolution is not in order.
                          ``(iii) Passage.--In the Senate, immediately 
                      following the conclusion of the debate on a joint 
                      resolution described in paragraph (1), and a 
                      single quorum call at the conclusion of the debate 
                      if requested in accordance with the rules of the 
                      Senate, the vote on passage of the joint 
                      resolution shall occur.
                          ``(iv) Appeals.--Appeals from the decisions of 
                      the Chair relating to the application of the rules 
                      of the Senate to the procedure relating to a joint 
                      resolution described in paragraph (1) shall be 
                      decided without debate.
                    ``(D) Other house acts 
                first. <<NOTE: Applicability.>> --If, before the passage 
                by 1 House of a joint resolution of that House described 
                in paragraph (1), that House receives from the other 
                House a joint resolution described in paragraph (1), 
                then the following procedures shall apply:
                          ``(i) The joint resolution of the other House 
                      shall not be referred to a committee.
                          ``(ii) With respect to a joint resolution 
                      described in paragraph (1) of the House receiving 
                      the joint resolution--
                                    ``(I) the procedure in that House 
                                shall be the same as if no joint 
                                resolution had been received from the 
                                other House; but
                                    ``(II) the vote on final passage 
                                shall be on the joint resolution of the 
                                other House.
                    ``(E) Excluded days.--For purposes of determining 
                the period specified in subparagraph (B), there shall be 
                excluded any days either House of Congress is adjourned 
                for more than 3 days during a session of Congress.

[[Page 124 STAT. 502]]

                    ``(F) Majority required for adoption.--A joint 
                resolution considered under this subsection shall 
                require an affirmative vote of three-fifths of the 
                Members, duly chosen and sworn, for adoption.
            ``(3) <<NOTE: Deadlines.>>  Termination.--If a joint 
        resolution described in paragraph (1) is enacted not later than 
        August 15, 2017--
                    ``(A) the Chief Actuary of the Medicare & Medicaid 
                Services shall not--
                          ``(i) make any determinations under subsection 
                      (c)(6) after May 1, 2017; or
                          ``(ii) provide any opinion pursuant to 
                      subsection (c)(3)(B)(iii) after January 16, 2018;
                    ``(B) the Board shall not submit any proposals or 
                advisory reports to Congress under this section after 
                January 16, 2018; and
                    ``(C) the Board and the consumer advisory council 
                under subsection (k) shall terminate on August 16, 2018.

    ``(g) Board Membership; Terms of Office; Chairperson; Removal.--
            ``(1) Membership.--
                    ``(A) <<NOTE: President. Appointments.>> In 
                general.--The Board shall be composed of--
                          ``(i) 15 members appointed by the President, 
                      by and with the advice and consent of the Senate; 
                      and
                          ``(ii) the Secretary, the Administrator of the 
                      Center for Medicare & Medicaid Services, and the 
                      Administrator of the Health Resources and Services 
                      Administration, all of whom shall serve ex officio 
                      as nonvoting members of the Board.
                    ``(B) Qualifications.--
                          ``(i) In general.--The appointed membership of 
                      the Board shall include individuals with national 
                      recognition for their expertise in health finance 
                      and economics, actuarial science, health facility 
                      management, health plans and integrated delivery 
                      systems, reimbursement of health facilities, 
                      allopathic and osteopathic physicians, and other 
                      providers of health services, and other related 
                      fields, who provide a mix of different 
                      professionals, broad geographic representation, 
                      and a balance between urban and rural 
                      representatives.
                          ``(ii) Inclusion.--The appointed membership of 
                      the Board shall include (but not be limited to) 
                      physicians and other health professionals, experts 
                      in the area of pharmaco-economics or prescription 
                      drug benefit programs, employers, third-party 
                      payers, individuals skilled in the conduct and 
                      interpretation of biomedical, health services, and 
                      health economics research and expertise in 
                      outcomes and effectiveness research and technology 
                      assessment. Such membership shall also include 
                      representatives of consumers and the elderly.
                          ``(iii) Majority nonproviders.--Individuals 
                      who are directly involved in the provision or 
                      management of the delivery of items and services 
                      covered under this title shall not constitute a 
                      majority of the appointed membership of the Board.
                    ``(C) Ethical disclosure. <<NOTE: President. Public 
                information.>> --The President shall establish a system 
                for public disclosure by appointed members

[[Page 124 STAT. 503]]

                of the Board of financial and other potential conflicts 
                of interest relating to such members. Appointed members 
                of the Board shall be treated as officers in the 
                executive branch for purposes of applying title I of the 
                Ethics in Government Act of 1978 (Public Law 95-521).
                    ``(D) Conflicts of interest.--No individual may 
                serve as an appointed member if that individual engages 
                in any other business, vocation, or employment.
                    ``(E) Consultation with 
                congress. <<NOTE: President.>> --In selecting 
                individuals for nominations for appointments to the 
                Board, the President shall consult with--
                          ``(i) the majority leader of the Senate 
                      concerning the appointment of 3 members;
                          ``(ii) the Speaker of the House of 
                      Representatives concerning the appointment of 3 
                      members;
                          ``(iii) the minority leader of the Senate 
                      concerning the appointment of 3 members; and
                          ``(iv) the minority leader of the House of 
                      Representatives concerning the appointment of 3 
                      members.
            ``(2) Term of office.--Each appointed member shall hold 
        office for a term of 6 years except that--
                    ``(A) a member may not serve more than 2 full 
                consecutive terms (but may be reappointed to 2 full 
                consecutive terms after being appointed to fill a 
                vacancy on the Board);
                    ``(B) a member appointed to fill a vacancy occurring 
                prior to the expiration of the term for which that 
                member's predecessor was appointed shall be appointed 
                for the remainder of such term;
                    ``(C) a member may continue to serve after the 
                expiration of the member's term until a successor has 
                taken office; and
                    ``(D) of the members first appointed under this 
                section, 5 shall be appointed for a term of 1 year, 5 
                shall be appointed for a term of 3 years, and 5 shall be 
                appointed for a term of 6 years, the term of each to be 
                designated by the President at the time of nomination.
            ``(3) Chairperson.--
                    ``(A) In 
                general. <<NOTE: Appointment. President.>> --The 
                Chairperson shall be appointed by the President, by and 
                with the advice and consent of the Senate, from among 
                the members of the Board.
                    ``(B) Duties.--The Chairperson shall be the 
                principal executive officer of the Board, and shall 
                exercise all of the executive and administrative 
                functions of the Board, including functions of the Board 
                with respect to--
                          ``(i) the appointment and supervision of 
                      personnel employed by the Board;
                          ``(ii) the distribution of business among 
                      personnel appointed and supervised by the 
                      Chairperson and among administrative units of the 
                      Board; and
                          ``(iii) the use and expenditure of funds.
                    ``(C) Governance.--In carrying out any of the 
                functions under subparagraph (B), the Chairperson shall 
                be governed by the general policies established by the 
                Board and by the decisions, findings, and determinations 
                the Board shall by law be authorized to make.

[[Page 124 STAT. 504]]

                    ``(D) Requests for appropriations.--Requests or 
                estimates for regular, supplemental, or deficiency 
                appropriations on behalf of the Board may not be 
                submitted by the Chairperson without the prior approval 
                of a majority vote of the Board.
            ``(4) Removal.--Any appointed member may be removed by the 
        President for neglect of duty or malfeasance in office, but for 
        no other cause.

    ``(h) Vacancies; Quorum; Seal; Vice Chairperson; Voting on 
Reports.--
            ``(1) Vacancies.--No vacancy on the Board shall impair the 
        right of the remaining members to exercise all the powers of the 
        Board.
            ``(2) Quorum.--A majority of the appointed members of the 
        Board shall constitute a quorum for the transaction of business, 
        but a lesser number of members may hold hearings.
            ``(3) Seal.--The Board shall have an official seal, of which 
        judicial notice shall be taken.
            ``(4) Vice chairperson. <<NOTE: Deadline.>> --The Board 
        shall annually elect a Vice Chairperson to act in the absence or 
        disability of the Chairperson or in case of a vacancy in the 
        office of the Chairperson.
            ``(5) Voting on proposals.--Any proposal of the Board must 
        be approved by the majority of appointed members present.

    ``(i) Powers of the Board.--
            ``(1) Hearings.--The Board may hold such hearings, sit and 
        act at such times and places, take such testimony, and receive 
        such evidence as the Board considers advisable to carry out this 
        section.
            ``(2) Authority to inform research priorities for data 
        collection.--The Board may advise the Secretary on priorities 
        for health services research, particularly as such priorities 
        pertain to necessary changes and issues regarding payment 
        reforms under Medicare.
            ``(3) Obtaining official data.--The Board may secure 
        directly from any department or agency of the United States 
        information necessary to enable it to carry out this section. 
        Upon request of the Chairperson, the head of that department or 
        agency shall furnish that information to the Board on an agreed 
        upon schedule.
            ``(4) Postal services.--The Board may use the United States 
        mails in the same manner and under the same conditions as other 
        departments and agencies of the Federal Government.
            ``(5) Gifts.--The Board may accept, use, and dispose of 
        gifts or donations of services or property.
            ``(6) Offices.--The Board shall maintain a principal office 
        and such field offices as it determines necessary, and may meet 
        and exercise any of its powers at any other place.

    ``(j) Personnel Matters.--
            ``(1) Compensation of members and chairperson.--Each 
        appointed member, other than the Chairperson, shall be 
        compensated at a rate equal to the annual rate of basic pay 
        prescribed for level III of the Executive Schedule under section 
        5315 of title 5, United States Code. The Chairperson shall be 
        compensated at a rate equal to the daily equivalent of the 
        annual rate of basic pay prescribed for level II of the

[[Page 124 STAT. 505]]

        Executive Schedule under section 5315 of title 5, United States 
        Code.
            ``(2) Travel expenses.--The appointed members shall be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies under 
        subchapter I of chapter 57 of title 5, United States Code, while 
        away from their homes or regular places of business in the 
        performance of services for the Board.
            ``(3) Staff.--
                    ``(A) In general.--The Chairperson may, without 
                regard to the civil service laws and regulations, 
                appoint and terminate an executive director and such 
                other additional personnel as may be necessary to enable 
                the Board to perform its duties. The employment of an 
                executive director shall be subject to confirmation by 
                the Board.
                    ``(B) Compensation.--The Chairperson may fix the 
                compensation of the executive director and other 
                personnel without regard to chapter 51 and subchapter 
                III of chapter 53 of title 5, United States Code, 
                relating to classification of positions and General 
                Schedule pay rates, except that the rate of pay for the 
                executive director and other personnel may not exceed 
                the rate payable for level V of the Executive Schedule 
                under section 5316 of such title.
            ``(4) Detail of government employees.--Any Federal 
        Government employee may be detailed to the Board without 
        reimbursement, and such detail shall be without interruption or 
        loss of civil service status or privilege.
            ``(5) Procurement of temporary and intermittent services.--
        The Chairperson may procure temporary and intermittent services 
        under section 3109(b) of title 5, United States Code, at rates 
        for individuals which do not exceed the daily equivalent of the 
        annual rate of basic pay prescribed for level V of the Executive 
        Schedule under section 5316 of such title.

    ``(k) Consumer Advisory Council.--
            ``(1) In general. <<NOTE: Establishment.>> --There is 
        established a consumer advisory council to advise the Board on 
        the impact of payment policies under this title on consumers.
            ``(2) Membership.--
                    ``(A) Number and appointment.--The consumer advisory 
                council shall be composed of 10 consumer representatives 
                appointed by the Comptroller General of the United 
                States, 1 from among each of the 10 regions established 
                by the Secretary as of the date of enactment of this 
                section.
                    ``(B) Qualifications.--The membership of the council 
                shall represent the interests of consumers and 
                particular communities.
            ``(3) Duties. <<NOTE: Deadlines.>> --The consumer advisory 
        council shall, subject to the call of the Board, meet not less 
        frequently than 2 times each year in the District of Columbia.
            ``(4) Open meetings.--Meetings of the consumer advisory 
        council shall be open to the public.
            ``(5) Election of officers.--Members of the consumer 
        advisory council shall elect their own officers.
            ``(6) Application of faca.--The Federal Advisory Committee 
        Act (5 U.S.C. App.) shall apply to the consumer advisory council 
        except that section 14 of such Act shall not apply.

[[Page 124 STAT. 506]]

    ``(l) Definitions.--In this section:
            ``(1) Board; chairperson; member.--The terms `Board', 
        `Chairperson', and `Member' mean the Independent Medicare 
        Advisory Board established under subsection (a) and the 
        Chairperson and any Member thereof, respectively.
            ``(2) Medicare.--The term `Medicare' means the program 
        established under this title, including parts A, B, C, and D.
            ``(3) Medicare beneficiary.--The term `Medicare beneficiary' 
        means an individual who is entitled to, or enrolled for, 
        benefits under part A or enrolled for benefits under part B.
            ``(4) Medicare program spending.--The term `Medicare program 
        spending' means program spending under parts A, B, and D net of 
        premiums.

    ``(m) Funding.--
            ``(1) In general.--There are appropriated to the Board to 
        carry out its duties and functions--
                    ``(A) for fiscal year 2012, $15,000,000; and
                    ``(B) for each subsequent fiscal year, the amount 
                appropriated under this paragraph for the previous 
                fiscal year increased by the annual percentage increase 
                in the Consumer Price Index for All Urban Consumers (all 
                items; United States city average) as of June of the 
                previous fiscal year.
            ``(2) From trust funds.--Sixty percent of amounts 
        appropriated under paragraph (1) shall be derived by transfer 
        from the Federal Hospital Insurance Trust Fund under section 
        1817 and 40 percent of amounts appropriated under such paragraph 
        shall be derived by transfer from the Federal Supplementary 
        Medical Insurance Trust Fund under section 1841.''.
            (2) Lobbying cooling-off period for members of the 
        independent medicare advisory board.--Section 207(c) of title 
        18, United States Code, is amended by inserting at the end the 
        following:
            ``(3) Members of the independent medicare advisory board.--
                    ``(A) In general. <<NOTE: Applicability.>> --
                Paragraph (1) shall apply to a member of the Independent 
                Medicare Advisory Board under section 1899A.
                    ``(B) Agencies and congress.--For purposes of 
                paragraph (1), the agency in which the individual 
                described in subparagraph (A) served shall be considered 
                to be the Independent Medicare Advisory Board, the 
                Department of Health and Human Services, and the 
                relevant committees of jurisdiction of Congress, 
                including the Committee on Ways and Means and the 
                Committee on Energy and Commerce of the House of 
                Representatives and the Committee on Finance of the 
                Senate.''.

    (b) <<NOTE: 42 USC 1395kkk-1.>> GAO Study and Report on 
Determination and Implementation of Payment and Coverage Policies Under 
the Medicare Program.--
            (1) Initial study and report.--
                    (A) Study.--The Comptroller General of the United 
                States (in this section referred to as the ``Comptroller 
                General'') shall conduct a study on changes to payment 
                policies, methodologies, and rates and coverage policies 
                and methodologies under the Medicare program under title 
                XVIII

[[Page 124 STAT. 507]]

                of the Social Security Act as a result of the 
                recommendations contained in the proposals made by the 
                Independent Medicare Advisory Board under section 1899A 
                of such Act (as added by subsection (a)), including an 
                analysis of the effect of such recommendations on--
                          (i) Medicare beneficiary access to providers 
                      and items and services;
                          (ii) the affordability of Medicare premiums 
                      and cost-sharing (including deductibles, 
                      coinsurance, and copayments);
                          (iii) the potential impact of changes on other 
                      government or private-sector purchasers and payers 
                      of care; and
                          (iv) quality of patient care, including 
                      patient experience, outcomes, and other measures 
                      of care.
                    (B) Report.--Not later than July 1, 2015, the 
                Comptroller General shall submit to Congress a report 
                containing the results of the study conducted under 
                subparagraph (A), together with recommendations for such 
                legislation and administrative action as the Comptroller 
                General determines appropriate.
            (2) Subsequent studies and reports.--The Comptroller General 
        shall periodically conduct such additional studies and submit 
        reports to Congress on changes to Medicare payments policies, 
        methodologies, and rates and coverage policies and methodologies 
        as the Comptroller General determines appropriate, in 
        consultation with the Committee on Ways and Means and the 
        Committee on Energy and Commerce of the House of Representatives 
        and the Committee on Finance of the Senate.

    (c) Conforming Amendments.--Section 1805(b) of the Social Security 
Act (42 U.S.C. 1395b-6(b)) is amended--
            (1) by redesignating paragraphs (4) through (8) as 
        paragraphs (5) through (9), respectively; and
            (2) by inserting after paragraph (3) the following:
            ``(4) Review and comment on the independent medicare 
        advisory board or secretarial proposal. <<NOTE: Deadline.>> --If 
        the Independent Medicare Advisory Board (as established under 
        subsection (a) of section 1899A) or the Secretary submits a 
        proposal to the Commission under such section in a year, the 
        Commission shall review the proposal and, not later than March 1 
        of that year, submit to the Committee on Ways and Means and the 
        Committee on Energy and Commerce of the House of Representatives 
        and the Committee on Finance of the Senate written comments on 
        such proposal. Such comments may include such recommendations as 
        the Commission deems appropriate.''.

              Subtitle F--Health Care Quality Improvements

SEC. 3501. HEALTH CARE DELIVERY SYSTEM RESEARCH; QUALITY IMPROVEMENT 
            TECHNICAL ASSISTANCE.

    Part D of title IX of the Public Health Service Act, as amended by 
section 3013, is further amended by adding at the end the following:

[[Page 124 STAT. 508]]

         ``Subpart II--Health Care Quality Improvement Programs

``SEC. 933. <<NOTE: 42 USC 299b-33.>> HEALTH CARE DELIVERY SYSTEM 
            RESEARCH.

    ``(a) Purpose.--The purposes of this section are to--
            ``(1) enable the Director to identify, develop, evaluate, 
        disseminate, and provide training in innovative methodologies 
        and strategies for quality improvement practices in the delivery 
        of health care services that represent best practices (referred 
        to as `best practices') in health care quality, safety, and 
        value; and
            ``(2) ensure that the Director is accountable for 
        implementing a model to pursue such research in a collaborative 
        manner with other related Federal agencies.

    ``(b) General Functions of the Center.--The Center for Quality 
Improvement and Patient Safety of the Agency for Healthcare Research and 
Quality (referred to in this section as the `Center'), or any other 
relevant agency or department designated by the Director, shall--
            ``(1) carry out its functions using research from a variety 
        of disciplines, which may include epidemiology, health services, 
        sociology, psychology, human factors engineering, biostatistics, 
        health economics, clinical research, and health informatics;
            ``(2) conduct or support activities consistent with the 
        purposes described in subsection (a), and for--
                    ``(A) best practices for quality improvement 
                practices in the delivery of health care services; and
                    ``(B) that include changes in processes of care and 
                the redesign of systems used by providers that will 
                reliably result in intended health outcomes, improve 
                patient safety, and reduce medical errors (such as skill 
                development for health care providers in team-based 
                health care delivery and rapid cycle process 
                improvement) and facilitate adoption of improved 
                workflow;
            ``(3) identify health care providers, including health care 
        systems, single institutions, and individual providers, that--
                    ``(A) deliver consistently high-quality, efficient 
                health care services (as determined by the Secretary); 
                and
                    ``(B) employ best practices that are adaptable and 
                scalable to diverse health care settings or effective in 
                improving care across diverse settings;
            ``(4) assess research, evidence, and knowledge about what 
        strategies and methodologies are most effective in improving 
        health care delivery;
            ``(5) find ways to translate such information rapidly and 
        effectively into practice, and document the sustainability of 
        those improvements;
            ``(6) create strategies for quality improvement through the 
        development of tools, methodologies, and interventions that can 
        successfully reduce variations in the delivery of health care;
            ``(7) identify, measure, and improve organizational, human, 
        or other causative factors, including those related to the 
        culture and system design of a health care organization, that 
        contribute to the success and sustainability of specific quality 
        improvement and patient safety strategies;

[[Page 124 STAT. 509]]

            ``(8) provide for the development of best practices in the 
        delivery of health care services that--
                    ``(A) have a high likelihood of success, based on 
                structured review of empirical evidence;
                    ``(B) are specified with sufficient detail of the 
                individual processes, steps, training, skills, and 
                knowledge required for implementation and incorporation 
                into workflow of health care practitioners in a variety 
                of settings;
                    ``(C) are designed to be readily adapted by health 
                care providers in a variety of settings; and
                    ``(D) where applicable, assist health care providers 
                in working with other health care providers across the 
                continuum of care and in engaging patients and their 
                families in improving the care and patient health 
                outcomes;
            ``(9) provide for the funding of the activities of 
        organizations with recognized expertise and excellence in 
        improving the delivery of health care services, including 
        children's health care, by involving multiple disciplines, 
        managers of health care entities, broad development and 
        training, patients, caregivers and families, and frontline 
        health care workers, including activities for the examination of 
        strategies to share best quality improvement practices and to 
        promote excellence in the delivery of health care services; and
            ``(10) build capacity at the State and community level to 
        lead quality and safety efforts through education, training, and 
        mentoring programs to carry out the activities under paragraphs 
        (1) through (9).

    ``(c) Research Functions of Center.--
            ``(1) In general.--The Center shall support, such as through 
        a contract or other mechanism, research on health care delivery 
        system improvement and the development of tools to facilitate 
        adoption of best practices that improve the quality, safety, and 
        efficiency of health care delivery services. Such support may 
        include establishing a Quality Improvement Network Research 
        Program for the purpose of testing, scaling, and disseminating 
        of interventions to improve quality and efficiency in health 
        care. Recipients of funding under the Program may include 
        national, State, multi-State, or multi-site quality improvement 
        networks.
            ``(2) Research requirements.--The research conducted 
        pursuant to paragraph (1) shall--
                    ``(A) address the priorities identified by the 
                Secretary in the national strategic plan established 
                under section 399HH;
                    ``(B) identify areas in which evidence is 
                insufficient to identify strategies and methodologies, 
                taking into consideration areas of insufficient evidence 
                identified by the entity with a contract under section 
                1890(a) of the Social Security Act in the report 
                required under section 399JJ;
                    ``(C) address concerns identified by health care 
                institutions and providers and communicated through the 
                Center pursuant to subsection (d);
                    ``(D) reduce preventable morbidity, mortality, and 
                associated costs of morbidity and mortality by building 
                capacity for patient safety research;
                    ``(E) support the discovery of processes for the 
                reliable, safe, efficient, and responsive delivery of 
                health care, taking

[[Page 124 STAT. 510]]

                into account discoveries from clinical research and 
                comparative effectiveness research;
                    ``(F) allow communication of research findings and 
                translate evidence into practice recommendations that 
                are adaptable to a variety of settings, and which, as 
                soon as practicable after the establishment of the 
                Center, shall include--
                          ``(i) the implementation of a national 
                      application of Intensive Care Unit improvement 
                      projects relating to the adult (including 
                      geriatric), pediatric, and neonatal patient 
                      populations;
                          ``(ii) practical methods for addressing health 
                      care associated infections, including Methicillin-
                      Resistant Staphylococcus Aureus and Vancomycin-
                      Resistant Entercoccus infections and other 
                      emerging infections; and
                          ``(iii) practical methods for reducing 
                      preventable hospital admissions and readmissions;
                    ``(G) expand demonstration projects for improving 
                the quality of children's health care and the use of 
                health information technology, such as through Pediatric 
                Quality Improvement Collaboratives and Learning 
                Networks, consistent with provisions of section 1139A of 
                the Social Security Act for assessing and improving 
                quality, where applicable;
                    ``(H) identify and mitigate hazards by--
                          ``(i) analyzing events reported to patient 
                      safety reporting systems and patient safety 
                      organizations; and
                          ``(ii) using the results of such analyses to 
                      develop scientific methods of response to such 
                      events;
                    ``(I) include the conduct of systematic reviews of 
                existing practices that improve the quality, safety, and 
                efficiency of health care delivery, as well as new 
                research on improving such practices; and
                    ``(J) include the examination of how to measure and 
                evaluate the progress of quality and patient safety 
                activities.

    ``(d) Dissemination of Research Findings.--
            ``(1) Public availability.--The Director shall make the 
        research findings of the Center available to the public through 
        multiple media and appropriate formats to reflect the varying 
        needs of health care providers and consumers and diverse levels 
        of health literacy.
            ``(2) Linkage to health information technology.--The 
        Secretary shall ensure that research findings and results 
        generated by the Center are shared with the Office of the 
        National Coordinator of Health Information Technology and used 
        to inform the activities of the health information technology 
        extension program under section 3012, as well as any relevant 
        standards, certification criteria, or implementation 
        specifications.

    ``(e) Prioritization. <<NOTE: List.>> --The Director shall identify 
and regularly update a list of processes or systems on which to focus 
research and dissemination activities of the Center, taking into 
account--
            ``(1) the cost to Federal health programs;
            ``(2) consumer assessment of health care experience;

[[Page 124 STAT. 511]]

            ``(3) provider assessment of such processes or systems and 
        opportunities to minimize distress and injury to the health care 
        workforce;
            ``(4) the potential impact of such processes or systems on 
        health status and function of patients, including vulnerable 
        populations including children;
            ``(5) the areas of insufficient evidence identified under 
        subsection (c)(2)(B); and
            ``(6) the evolution of meaningful use of health information 
        technology, as defined in section 3000.

    ``(f) Coordination.--The Center shall coordinate its activities with 
activities conducted by the Center for Medicare and Medicaid Innovation 
established under section 1115A of the Social Security Act.
    ``(g) Funding.--There is authorized to be appropriated to carry out 
this section $20,000,000 for fiscal years 2010 through 2014.

``SEC. 934. <<NOTE: Grants. Contracts. 42 USC 299b-34.>>  QUALITY 
            IMPROVEMENT TECHNICAL ASSISTANCE AND IMPLEMENTATION.

    ``(a) In General.--The Director, through the Center for Quality 
Improvement and Patient Safety of the Agency for Healthcare Research and 
Quality (referred to in this section as the `Center'), shall award--
            ``(1) technical assistance grants or contracts to eligible 
        entities to provide technical support to institutions that 
        deliver health care and health care providers (including rural 
        and urban providers of services and suppliers with limited 
        infrastructure and financial resources to implement and support 
        quality improvement activities, providers of services and 
        suppliers with poor performance scores, and providers of 
        services and suppliers for which there are disparities in care 
        among subgroups of patients) so that such institutions and 
        providers understand, adapt, and implement the models and 
        practices identified in the research conducted by the Center, 
        including the Quality Improvement Networks Research Program; and
            ``(2) implementation grants or contracts to eligible 
        entities to implement the models and practices described under 
        paragraph (1).

    ``(b) Eligible Entities.--
            ``(1) Technical assistance award.--To be eligible to receive 
        a technical assistance grant or contract under subsection 
        (a)(1), an entity--
                    ``(A) may be a health care provider, health care 
                provider association, professional society, health care 
                worker organization, Indian health organization, quality 
                improvement organization, patient safety organization, 
                local quality improvement collaborative, the Joint 
                Commission, academic health center, university, 
                physician-based research network, primary care extension 
                program established under section 399W, a Federal Indian 
                Health Service program or a health program operated by 
                an Indian tribe (as defined in section 4 of the Indian 
                Health Care Improvement Act), or any other entity 
                identified by the Secretary; and
                    ``(B) shall have demonstrated expertise in providing 
                information and technical support and assistance to 
                health care providers regarding quality improvement.

[[Page 124 STAT. 512]]

            ``(2) Implementation award.--To be eligible to receive an 
        implementation grant or contract under subsection (a)(2), an 
        entity--
                    ``(A) may be a hospital or other health care 
                provider or consortium or providers, as determined by 
                the Secretary; and
                    ``(B) shall have demonstrated expertise in providing 
                information and technical support and assistance to 
                health care providers regarding quality improvement.

    ``(c) Application.--
            ``(1) Technical assistance award.--To receive a technical 
        assistance grant or contract under subsection (a)(1), an 
        eligible entity shall submit an application to the Secretary at 
        such time, in such manner, and containing--
                    ``(A) a plan for a sustainable business model that 
                may include a system of--
                          ``(i) charging fees to institutions and 
                      providers that receive technical support from the 
                      entity; and
                          ``(ii) reducing or eliminating such fees for 
                      such institutions and providers that serve low-
                      income populations; and
                    ``(B) such other information as the Director may 
                require.
            ``(2) Implementation award.--To receive a grant or contract 
        under subsection (a)(2), an eligible entity shall submit an 
        application to the Secretary at such time, in such manner, and 
        containing--
                    ``(A) a plan for implementation of a model or 
                practice identified in the research conducted by the 
                Center including--
                          ``(i) financial cost, staffing requirements, 
                      and timeline for implementation; and
                          ``(ii) pre- and projected post-implementation 
                      quality measure performance data in targeted 
                      improvement areas identified by the Secretary; and
                    ``(B) such other information as the Director may 
                require.

    ``(d) Matching Funds.--The Director may not award a grant or 
contract under this section to an entity unless the entity agrees that 
it will make available (directly or through contributions from other 
public or private entities) non-Federal contributions toward the 
activities to be carried out under the grant or contract in an amount 
equal to $1 for each $5 of Federal funds provided under the grant or 
contract. Such non-Federal matching funds may be provided directly or 
through donations from public or private entities and may be in cash or 
in-kind, fairly evaluated, including plant, equipment, or services.
    ``(e) Evaluation.--
            ``(1) In general.--The Director shall evaluate the 
        performance of each entity that receives a grant or contract 
        under this section. The evaluation of an entity shall include a 
        study of--
                    ``(A) the success of such entity in achieving the 
                implementation, by the health care institutions and 
                providers assisted by such entity, of the models and 
                practices identified in the research conducted by the 
                Center under section 933;

[[Page 124 STAT. 513]]

                    ``(B) the perception of the health care institutions 
                and providers assisted by such entity regarding the 
                value of the entity; and
                    ``(C) where practicable, better patient health 
                outcomes and lower cost resulting from the assistance 
                provided by such entity.
            ``(2) Effect of evaluation. <<NOTE: Determination.>> --Based 
        on the outcome of the evaluation of the entity under paragraph 
        (1), the Director shall determine whether to renew a grant or 
        contract with such entity under this section.

    ``(f) Coordination.--The entities that receive a grant or contract 
under this section shall coordinate with health information technology 
regional extension centers under section 3012(c) and the primary care 
extension program established under section 399W regarding the 
dissemination of quality improvement, system delivery reform, and best 
practices information.''.

SEC. 3502. <<NOTE: Grants. Contracts. 42 USC 256a-1.>> ESTABLISHING 
            COMMUNITY HEALTH TEAMS TO SUPPORT THE PATIENT-CENTERED 
            MEDICAL HOME.

    (a) In General.--The Secretary of Health and Human Services 
(referred to in this section as the ``Secretary'') shall establish a 
program to provide grants to or enter into contracts with eligible 
entities to establish community-based interdisciplinary, 
interprofessional teams (referred to in this section as ``health 
teams'') to support primary care practices, including obstetrics and 
gynecology practices, within the hospital service areas served by the 
eligible entities. Grants or contracts shall be used to--
            (1) establish health teams to provide support services to 
        primary care providers; and
            (2) provide capitated payments to primary care providers as 
        determined by the Secretary.

    (b) Eligible Entities.--To be eligible to receive a grant or 
contract under subsection (a), an entity shall--
            (1)(A) be a State or State-designated entity; or
            (B) be an Indian tribe or tribal organization, as defined in 
        section 4 of the Indian Health Care Improvement Act;
            (2) <<NOTE: Plans. Deadline.>> submit a plan for achieving 
        long-term financial sustainability within 3 years;
            (3) <<NOTE: Plans.>> submit a plan for incorporating 
        prevention initiatives and patient education and care management 
        resources into the delivery of health care that is integrated 
        with community-based prevention and treatment resources, where 
        available;
            (4) ensure that the health team established by the entity 
        includes an interdisciplinary, interprofessional team of health 
        care providers, as determined by the Secretary; such team may 
        include medical specialists, nurses, pharmacists, nutritionists, 
        dieticians, social workers, behavioral and mental health 
        providers (including substance use disorder prevention and 
        treatment providers), doctors of chiropractic, licensed 
        complementary and alternative medicine practitioners, and 
        physicians' assistants;
            (5) agree to provide services to eligible individuals with 
        chronic conditions, as described in section 1945 of the Social 
        Security Act (as added by section 2703), in accordance with the 
        payment methodology established under subsection (c) of such 
        section; and

[[Page 124 STAT. 514]]

            (6) submit to the Secretary an application at such time, in 
        such manner, and containing such information as the Secretary 
        may require.

    (c) Requirements for Health Teams.--A health team established 
pursuant to a grant or contract under subsection (a) shall--
            (1) establish contractual agreements with primary care 
        providers to provide support services;
            (2) support patient-centered medical homes, defined as a 
        mode of care that includes--
                    (A) personal physicians;
                    (B) whole person orientation;
                    (C) coordinated and integrated care;
                    (D) safe and high-quality care through evidence-
                informed medicine, appropriate use of health information 
                technology, and continuous quality improvements;
                    (E) expanded access to care; and
                    (F) payment that recognizes added value from 
                additional components of patient-centered care;
            (3) collaborate with local primary care providers and 
        existing State and community based resources to coordinate 
        disease prevention, chronic disease management, transitioning 
        between health care providers and settings and case management 
        for patients, including children, with priority given to those 
        amenable to prevention and with chronic diseases or conditions 
        identified by the Secretary;
            (4) <<NOTE: Plans.>> in collaboration with local health care 
        providers, develop and implement interdisciplinary, 
        interprofessional care plans that integrate clinical and 
        community preventive and health promotion services for patients, 
        including children, with a priority given to those amenable to 
        prevention and with chronic diseases or conditions identified by 
        the Secretary;
            (5) incorporate health care providers, patients, caregivers, 
        and authorized representatives in program design and oversight;
            (6) provide support necessary for local primary care 
        providers to--
                    (A) coordinate and provide access to high-quality 
                health care services;
                    (B) coordinate and provide access to preventive and 
                health promotion services;
                    (C) provide access to appropriate specialty care and 
                inpatient services;
                    (D) provide quality-driven, cost-effective, 
                culturally appropriate, and patient- and family-centered 
                health care;
                    (E) provide access to pharmacist-delivered 
                medication management services, including medication 
                reconciliation;
                    (F) provide coordination of the appropriate use of 
                complementary and alternative (CAM) services to those 
                who request such services;
                    (G) promote effective strategies for treatment 
                planning, monitoring health outcomes and resource use, 
                sharing information, treatment decision support, and 
                organizing care to avoid duplication of service and 
                other medical management approaches intended to improve 
                quality and value of health care services;
                    (H) provide local access to the continuum of health 
                care services in the most appropriate setting, including

[[Page 124 STAT. 515]]

                access to individuals that implement the care plans of 
                patients and coordinate care, such as integrative health 
                care practitioners;
                    (I) collect and report data that permits evaluation 
                of the success of the collaborative effort on patient 
                outcomes, including collection of data on patient 
                experience of care, and identification of areas for 
                improvement; and
                    (J) establish a coordinated system of early 
                identification and referral for children at risk for 
                developmental or behavioral problems such as through the 
                use of infolines, health information technology, or 
                other means as determined by the Secretary;
            (7) provide 24-hour care management and support during 
        transitions in care settings including--
                    (A) a transitional care program that provides onsite 
                visits from the care coordinator, assists with the 
                development of discharge plans and medication 
                reconciliation upon admission to and discharge from the 
                hospitals, nursing home, or other institution setting;
                    (B) discharge planning and counseling support to 
                providers, patients, caregivers, and authorized 
                representatives;
                    (C) assuring that post-discharge care plans include 
                medication management, as appropriate;
                    (D) referrals for mental and behavioral health 
                services, which may include the use of infolines; and
                    (E) transitional health care needs from adolescence 
                to adulthood;
            (8) serve as a liaison to community prevention and treatment 
        programs;
            (9) demonstrate a capacity to implement and maintain health 
        information technology that meets the requirements of certified 
        EHR technology (as defined in section 3000 of the Public Health 
        Service Act (42 U.S.C. 300jj)) to facilitate coordination among 
        members of the applicable care team and affiliated primary care 
        practices; and
            (10) <<NOTE: Reports.>>  where applicable, report to the 
        Secretary information on quality measures used under section 
        399JJ of the Public Health Service Act.

    (d) Requirement for Primary Care Providers.--A provider who 
contracts with a care team shall--
            (1) <<NOTE: Plans.>> provide a care plan to the care team 
        for each patient participant;
            (2) <<NOTE: Records.>> provide access to participant health 
        records; and
            (3) meet regularly with the care team to ensure integration 
        of care.

    (e) Reporting to Secretary.--An entity that receives a grant or 
contract under subsection (a) shall submit to the Secretary a report 
that describes and evaluates, as requested by the Secretary, the 
activities carried out by the entity under subsection (c).
    (f) Definition of Primary Care.--In this section, the term ``primary 
care'' means the provision of integrated, accessible health care 
services by clinicians who are accountable for addressing a large 
majority of personal health care needs, developing a sustained 
partnership with patients, and practicing in the context of family and 
community.

[[Page 124 STAT. 516]]

SEC. 3503. MEDICATION MANAGEMENT SERVICES IN TREATMENT OF CHRONIC 
            DISEASE.

    Title IX of the Public Health Service Act (42 U.S.C. 299 et seq.), 
as amended by section 3501, is further amended by inserting after 
section 934 the following:

``SEC. 935. <<NOTE: 42 USC 299b-35.>> GRANTS OR CONTRACTS TO IMPLEMENT 
            MEDICATION MANAGEMENT SERVICES IN TREATMENT OF CHRONIC 
            DISEASES.

    ``(a) In General.--The Secretary, acting through the Patient Safety 
Research Center established in section 933 (referred to in this section 
as the `Center'), shall establish a program to provide grants or 
contracts to eligible entities to implement medication management 
(referred to in this section as `MTM') services provided by licensed 
pharmacists, as a collaborative, multidisciplinary, inter-professional 
approach to the treatment of chronic diseases for targeted individuals, 
to improve the quality of care and reduce overall cost in the treatment 
of such diseases. <<NOTE: Deadline.>> The Secretary shall commence the 
program under this section not later than May 1, 2010.

    ``(b) <<NOTE: Plans.>> Eligible Entities.--To be eligible to receive 
a grant or contract under subsection (a), an entity shall--
            ``(1) provide a setting appropriate for MTM services, as 
        recommended by the experts described in subsection (e);
            ``(2) submit to the Secretary a plan for achieving long-term 
        financial sustainability;
            ``(3) where applicable, submit a plan for coordinating MTM 
        services through local community health teams established in 
        section 3502 of the Patient Protection and Affordable Care Act 
        or in collaboration with primary care extension programs 
        established in section 399W;
            ``(4) submit a plan for meeting the requirements under 
        subsection (c); and
            ``(5) submit to the Secretary such other information as the 
        Secretary may require.

    ``(c) MTM Services to Targeted Individuals.--The MTM services 
provided with the assistance of a grant or contract awarded under 
subsection (a) shall, as allowed by State law including applicable 
collaborative pharmacy practice agreements, include--
            ``(1) performing or obtaining necessary assessments of the 
        health and functional status of each patient receiving such MTM 
        services;
            ``(2) formulating a medication treatment plan according to 
        therapeutic goals agreed upon by the prescriber and the patient 
        or caregiver or authorized representative of the patient;
            ``(3) selecting, initiating, modifying, recommending changes 
        to, or administering medication therapy;
            ``(4) monitoring, which may include access to, ordering, or 
        performing laboratory assessments, and evaluating the response 
        of the patient to therapy, including safety and effectiveness;
            ``(5) performing an initial comprehensive medication review 
        to identify, resolve, and prevent medication-related problems, 
        including adverse drug events, quarterly targeted medication 
        reviews for ongoing monitoring, and additional followup 
        interventions on a schedule developed collaboratively with the 
        prescriber;

[[Page 124 STAT. 517]]

            ``(6) documenting the care delivered and communicating 
        essential information about such care, including a summary of 
        the medication review, and the recommendations of the pharmacist 
        to other appropriate health care providers of the patient in a 
        timely fashion;
            ``(7) providing education and training designed to enhance 
        the understanding and appropriate use of the medications by the 
        patient, caregiver, and other authorized representative;
            ``(8) providing information, support services, and resources 
        and strategies designed to enhance patient adherence with 
        therapeutic regimens;
            ``(9) coordinating and integrating MTM services within the 
        broader health care management services provided to the patient; 
        and
            ``(10) such other patient care services allowed under 
        pharmacist scopes of practice in use in other Federal programs 
        that have implemented MTM services.

    ``(d) Targeted Individuals.--MTM services provided by licensed 
pharmacists under a grant or contract awarded under subsection (a) shall 
be offered to targeted individuals who--
            ``(1) take 4 or more prescribed medications (including over-
        the-counter medications and dietary supplements);
            ``(2) take any `high risk' medications;
            ``(3) have 2 or more chronic diseases, as identified by the 
        Secretary; or
            ``(4) have undergone a transition of care, or other factors, 
        as determined by the Secretary, that are likely to create a high 
        risk of medication-related problems.

    ``(e) Consultation With Experts.--In designing and implementing MTM 
services provided under grants or contracts awarded under subsection 
(a), the Secretary shall consult with Federal, State, private, public-
private, and academic entities, pharmacy and pharmacist organizations, 
health care organizations, consumer advocates, chronic disease groups, 
and other stakeholders involved with the research, dissemination, and 
implementation of pharmacist-delivered MTM services, as the Secretary 
determines appropriate. <<NOTE: Determination.>> The Secretary, in 
collaboration with this group, shall determine whether it is possible to 
incorporate rapid cycle process improvement concepts in use in other 
Federal programs that have implemented MTM services.

    ``(f) Reporting to the Secretary.--An entity that receives a grant 
or contract under subsection (a) shall submit to the Secretary a report 
that describes and evaluates, as requested by the Secretary, the 
activities carried out under subsection (c), including quality measures 
endorsed by the entity with a contract under section 1890 of the Social 
Security Act, as determined by the Secretary.
    ``(g) Evaluation and Report.--The Secretary shall submit to the 
relevant committees of Congress a report which shall--
            ``(1) assess the clinical effectiveness of pharmacist-
        provided services under the MTM services program, as compared to 
        usual care, including an evaluation of whether enrollees 
        maintained better health with fewer hospitalizations and 
        emergency room visits than similar patients not enrolled in the 
        program;
            ``(2) assess changes in overall health care resource use by 
        targeted individuals;

[[Page 124 STAT. 518]]

            ``(3) assess patient and prescriber satisfaction with MTM 
        services;
            ``(4) assess the impact of patient-cost sharing requirements 
        on medication adherence and recommendations for modifications;
            ``(5) identify and evaluate other factors that may impact 
        clinical and economic outcomes, including demographic 
        characteristics, clinical characteristics, and health services 
        use of the patient, as well as characteristics of the regimen, 
        pharmacy benefit, and MTM services provided; and
            ``(6) evaluate the extent to which participating pharmacists 
        who maintain a dispensing role have a conflict of interest in 
        the provision of MTM services, and if such conflict is found, 
        provide recommendations on how such a conflict might be 
        appropriately addressed.

    ``(h) Grants or Contracts To Fund Development of Performance 
Measures.--The Secretary may, through the quality measure development 
program under section 931 of the Public Health Service Act, award grants 
or contracts to eligible entities for the purpose of funding the 
development of performance measures that assess the use and 
effectiveness of medication therapy management services.''.

SEC. 3504. DESIGN AND IMPLEMENTATION OF REGIONALIZED SYSTEMS FOR 
            EMERGENCY CARE.

    (a) In General.--Title XII of the Public Health Service Act (42 
U.S.C. 300d et seq.) is amended--
            (1) <<NOTE: 42 USC 300d-5.>>  in section 1203--
                    (A) in the section heading, by inserting ``for 
                trauma systems'' after ``grants''; and
                    (B) in subsection (a), by striking ``Administrator 
                of the Health Resources and Services Administration'' 
                and inserting ``Assistant Secretary for Preparedness and 
                Response'';
            (2) by inserting after section 1203 the following:

``SEC. 1204. <<NOTE: Contracts. 42 USC 300d-6.>> COMPETITIVE GRANTS FOR 
            REGIONALIZED SYSTEMS FOR EMERGENCY CARE RESPONSE.

    ``(a) In General.--The Secretary, acting through the Assistant 
Secretary for Preparedness and Response, shall award not fewer than 4 
multiyear contracts or competitive grants to eligible entities to 
support pilot projects that design, implement, and evaluate innovative 
models of regionalized, comprehensive, and accountable emergency care 
and trauma systems.
    ``(b) <<NOTE: Definitions.>>  Eligible Entity; Region.--In this 
section:
            ``(1) Eligible entity.--The term `eligible entity' means--
                    ``(A) a State or a partnership of 1 or more States 
                and 1 or more local governments; or
                    ``(B) an Indian tribe (as defined in section 4 of 
                the Indian Health Care Improvement Act) or a partnership 
                of 1 or more Indian tribes.
            ``(2) Region.--The term `region' means an area within a 
        State, an area that lies within multiple States, or a similar 
        area (such as a multicounty area), as determined by the 
        Secretary.
            ``(3) Emergency services.--The term `emergency services' 
        includes acute, prehospital, and trauma care.

[[Page 124 STAT. 519]]

    ``(c) Pilot Projects.--The Secretary shall award a contract or grant 
under subsection (a) to an eligible entity that proposes a pilot project 
to design, implement, and evaluate an emergency medical and trauma 
system that--
            ``(1) coordinates with public health and safety services, 
        emergency medical services, medical facilities, trauma centers, 
        and other entities in a region to develop an approach to 
        emergency medical and trauma system access throughout the 
        region, including 9-1-1 Public Safety Answering Points and 
        emergency medical dispatch;
            ``(2) includes a mechanism, such as a regional medical 
        direction or transport communications system, that operates 
        throughout the region to ensure that the patient is taken to the 
        medically appropriate facility (whether an initial facility or a 
        higher-level facility) in a timely fashion;
            ``(3) allows for the tracking of prehospital and hospital 
        resources, including inpatient bed capacity, emergency 
        department capacity, trauma center capacity, on-call specialist 
        coverage, ambulance diversion status, and the coordination of 
        such tracking with regional communications and hospital 
        destination decisions; and
            ``(4) includes a consistent region-wide prehospital, 
        hospital, and interfacility data management system that--
                    ``(A) submits data to the National EMS Information 
                System, the National Trauma Data Bank, and others;
                    ``(B) reports data to appropriate Federal and State 
                databanks and registries; and
                    ``(C) contains information sufficient to evaluate 
                key elements of prehospital care, hospital destination 
                decisions, including initial hospital and interfacility 
                decisions, and relevant health outcomes of hospital 
                care.

    ``(d) Application.--
            ``(1) In general.--An eligible entity that seeks a contract 
        or grant described in subsection (a) shall submit to the 
        Secretary an application at such time and in such manner as the 
        Secretary may require.
            ``(2) Application information.--Each application shall 
        include--
                    ``(A) an assurance from the eligible entity that the 
                proposed system--
                          ``(i) has been coordinated with the applicable 
                      State Office of Emergency Medical Services (or 
                      equivalent State office);
                          ``(ii) includes consistent indirect and direct 
                      medical oversight of prehospital, hospital, and 
                      interfacility transport throughout the region;
                          ``(iii) coordinates prehospital treatment and 
                      triage, hospital destination, and interfacility 
                      transport throughout the region;
                          ``(iv) includes a categorization or 
                      designation system for special medical facilities 
                      throughout the region that is integrated with 
                      transport and destination protocols;
                          ``(v) includes a regional medical direction, 
                      patient tracking, and resource allocation system 
                      that supports day-to-day emergency care and surge 
                      capacity and is

[[Page 124 STAT. 520]]

                      integrated with other components of the national 
                      and State emergency preparedness system; and
                          ``(vi) addresses pediatric concerns related to 
                      integration, planning, preparedness, and 
                      coordination of emergency medical services for 
                      infants, children and adolescents; and
                    ``(B) such other information as the Secretary may 
                require.

    ``(e) Requirement of Matching Funds.--
            ``(1) In general.--The Secretary may not make a grant under 
        this section unless the State (or consortia of States) involved 
        agrees, with respect to the costs to be incurred by the State 
        (or consortia) in carrying out the purpose for which such grant 
        was made, to make available non-Federal contributions (in cash 
        or in kind under paragraph (2)) toward such costs in an amount 
        equal to not less than $1 for each $3 of Federal funds provided 
        in the grant. Such contributions may be made directly or through 
        donations from public or private entities.
            ``(2) Non-federal contributions.--Non-Federal contributions 
        required in paragraph (1) may be in cash or in kind, fairly 
        evaluated, including equipment or services (and excluding 
        indirect or overhead costs). Amounts provided by the Federal 
        Government, or services assisted or subsidized to any 
        significant extent by the Federal Government, may not be 
        included in determining the amount of such non-Federal 
        contributions.

    ``(f) Priority.--The Secretary shall give priority for the award of 
the contracts or grants described in subsection (a) to any eligible 
entity that serves a population in a medically underserved area (as 
defined in section 330(b)(3)).
    ``(g) Report.--Not later than 90 days after the completion of a 
pilot project under subsection (a), the recipient of such contract or 
grant described in shall submit to the Secretary a report containing the 
results of an evaluation of the program, including an identification 
of--
            ``(1) the impact of the regional, accountable emergency care 
        and trauma system on patient health outcomes for various 
        critical care categories, such as trauma, stroke, cardiac 
        emergencies, neurological emergencies, and pediatric 
        emergencies;
            ``(2) the system characteristics that contribute to the 
        effectiveness and efficiency of the program (or lack thereof);
            ``(3) methods of assuring the long-term financial 
        sustainability of the emergency care and trauma system;
            ``(4) the State and local legislation necessary to implement 
        and to maintain the system;
            ``(5) the barriers to developing regionalized, accountable 
        emergency care and trauma systems, as well as the methods to 
        overcome such barriers; and
            ``(6) recommendations on the utilization of available 
        funding for future regionalization efforts.

    ``(h) Dissemination of Findings.--The <<NOTE: Public 
information.>> Secretary shall, as appropriate, disseminate to the 
public and to the appropriate Committees of the Congress, the 
information contained in a report made under subsection (g).''; and
            (3) in <<NOTE: 42 USC 300d-32.>> section 1232--
                    (A) in subsection (a), by striking ``appropriated'' 
                and all that follows through the period at the end and 
                inserting

[[Page 124 STAT. 521]]

                ``appropriated $24,000,000 for each of fiscal years 2010 
                through 2014.''; and
                    (B) by inserting after subsection (c) the following:

    ``(d) Authority.--For <<NOTE: Effective date.>> the purpose of 
carrying out parts A through C, beginning on the date of enactment of 
the Patient Protection and Affordable Care Act, the Secretary shall 
transfer authority in administering grants and related authorities under 
such parts from the Administrator of the Health Resources and Services 
Administration to the Assistant Secretary for Preparedness and 
Response.''.

    (b) Support for Emergency Medicine Research.--Part H of title IV of 
the Public Health Service Act (42 U.S.C. 289 et seq.) is amended by 
inserting after the section 498C the following:

``SEC. 498D. <<NOTE: 42 USC 289g-4.>> SUPPORT FOR EMERGENCY MEDICINE 
            RESEARCH.

    ``(a) Emergency Medical Research.--The Secretary shall support 
Federal programs administered by the National Institutes of Health, the 
Agency for Healthcare Research and Quality, the Health Resources and 
Services Administration, the Centers for Disease Control and Prevention, 
and other agencies involved in improving the emergency care system to 
expand and accelerate research in emergency medical care systems and 
emergency medicine, including--
            ``(1) the basic science of emergency medicine;
            ``(2) the model of service delivery and the components of 
        such models that contribute to enhanced patient health outcomes;
            ``(3) the translation of basic scientific research into 
        improved practice; and
            ``(4) the development of timely and efficient delivery of 
        health services.

    ``(b) Pediatric Emergency Medical Research.--The Secretary shall 
support Federal programs administered by the National Institutes of 
Health, the Agency for Healthcare Research and Quality, the Health 
Resources and Services Administration, the Centers for Disease Control 
and Prevention, and other agencies to coordinate and expand research in 
pediatric emergency medical care systems and pediatric emergency 
medicine, including--
            ``(1) an examination of the gaps and opportunities in 
        pediatric emergency care research and a strategy for the optimal 
        organization and funding of such research;
            ``(2) the role of pediatric emergency services as an 
        integrated component of the overall health system;
            ``(3) system-wide pediatric emergency care planning, 
        preparedness, coordination, and funding;
            ``(4) pediatric training in professional education; and
            ``(5) research in pediatric emergency care, specifically on 
        the efficacy, safety, and health outcomes of medications used 
        for infants, children, and adolescents in emergency care 
        settings in order to improve patient safety.

    ``(c) Impact Research.--The Secretary shall support research to 
determine the estimated economic impact of, and savings that result 
from, the implementation of coordinated emergency care systems.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section such sums as may be necessary for 
each of fiscal years 2010 through 2014.''.

[[Page 124 STAT. 522]]

SEC. 3505. TRAUMA CARE CENTERS AND SERVICE AVAILABILITY.

    (a) Trauma Care Centers.--
            (1) Grants for trauma care centers.--Section 1241 of the 
        Public Health Service Act (42 U.S.C. 300d-41) is amended by 
        striking subsections (a) and (b) and inserting the following:

    ``(a) In General.--The Secretary shall establish 3 programs to award 
grants to qualified public, nonprofit Indian Health Service, Indian 
tribal, and urban Indian trauma centers--
            ``(1) to assist in defraying substantial uncompensated care 
        costs;
            ``(2) to further the core missions of such trauma centers, 
        including by addressing costs associated with patient 
        stabilization and transfer, trauma education and outreach, 
        coordination with local and regional trauma systems, essential 
        personnel and other fixed costs, and expenses associated with 
        employee and non-employee physician services; and
            ``(3) to provide emergency relief to ensure the continued 
        and future availability of trauma services.

    ``(b) Minimum Qualifications of Trauma Centers.--
            ``(1) Participation in trauma care system operating under 
        certain professional guidelines.--Except as provided in 
        paragraph (2), the Secretary may not award a grant to a trauma 
        center under subsection (a) unless the trauma center is a 
        participant in a trauma system that substantially complies with 
        section 1213.
            ``(2) Exemption.--Paragraph (1) shall not apply to trauma 
        centers that are located in States with no existing trauma care 
        system.
            ``(3) Qualification for substantial uncompensated care 
        costs.--The Secretary shall award substantial uncompensated care 
        grants under subsection (a)(1) only to trauma centers meeting at 
        least 1 of the criteria in 1 of the following 3 categories:
                    ``(A) Category a.--The criteria for category A are 
                as follows:
                          ``(i) At least 40 percent of the visits in the 
                      emergency department of the hospital in which the 
                      trauma center is located were charity or self-pay 
                      patients.
                          ``(ii) At least 50 percent of the visits in 
                      such emergency department were Medicaid (under 
                      title XIX of the Social Security Act (42 U.S.C. 
                      1396 et seq.)) and charity and self-pay patients 
                      combined.
                    ``(B) Category b.--The criteria for category B are 
                as follows:
                          ``(i) At least 35 percent of the visits in the 
                      emergency department were charity or self-pay 
                      patients.
                          ``(ii) At least 50 percent of the visits in 
                      the emergency department were Medicaid and charity 
                      and self-pay patients combined.
                    ``(C) Category c.--The criteria for category C are 
                as follows:
                          ``(i) At least 20 percent of the visits in the 
                      emergency department were charity or self-pay 
                      patients.
                          ``(ii) At least 30 percent of the visits in 
                      the emergency department were Medicaid and charity 
                      and self-pay patients combined.

[[Page 124 STAT. 523]]

            ``(4) Trauma centers in 1115 waiver states.--Notwithstanding 
        paragraph (3), the Secretary may award a substantial 
        uncompensated care grant to a trauma center under subsection 
        (a)(1) if the trauma center qualifies for funds under a Low 
        Income Pool or Safety Net Care Pool established through a waiver 
        approved under section 1115 of the Social Security Act (42 
        U.S.C. 1315).
            ``(5) Designation.--The Secretary may not award a grant to a 
        trauma center unless such trauma center is verified by the 
        American College of Surgeons or designated by an equivalent 
        State or local agency.

    ``(c) Additional Requirements.--The Secretary may not award a grant 
to a trauma center under subsection (a)(1) unless such trauma center--
            ``(1) submits <<NOTE: Plans.>> to the Secretary a plan 
        satisfactory to the Secretary that demonstrates a continued 
        commitment to serving trauma patients regardless of their 
        ability to pay; and
            ``(2) has policies in place to assist patients who cannot 
        pay for part or all of the care they receive, including a 
        sliding fee scale, and to ensure fair billing and collection 
        practices.''.
            (2) Considerations in making grants.--Section 1242 of the 
        Public Health Service Act (42 U.S.C. 300d-42) is amended by 
        striking subsections (a) and (b) and inserting the following:

    ``(a) Substantial Uncompensated Care Awards.--
            ``(1) In general.--The Secretary shall establish an award 
        basis for each eligible trauma center for grants under section 
        1241(a)(1) according to the percentage described in paragraph 
        (2), subject to the requirements of section 1241(b)(3).
            ``(2) Percentages.--The applicable percentages are as 
        follows:
                    ``(A) With respect to a category A trauma center, 
                100 percent of the uncompensated care costs.
                    ``(B) With respect to a category B trauma center, 
                not more than 75 percent of the uncompensated care 
                costs.
                    ``(C) With respect to a category C trauma center, 
                not more than 50 percent of the uncompensated care 
                costs.

    ``(b) Core Mission Awards.--
            ``(1) In general.--In awarding grants under section 
        1241(a)(2), the Secretary shall--
                    ``(A) reserve 25 percent of the amount allocated for 
                core mission awards for Level III and Level IV trauma 
                centers; and
                    ``(B) reserve 25 percent of the amount allocated for 
                core mission awards for large urban Level I and II 
                trauma centers--
                          ``(i) that have at least 1 graduate medical 
                      education fellowship in trauma or trauma related 
                      specialties for which demand is exceeding supply;
                          ``(ii) for which--
                                    ``(I) annual uncompensated care 
                                costs exceed $10,000,000; or
                                    ``(II) at least 20 percent of 
                                emergency department visits are charity 
                                or self-pay or Medicaid patients; and
                          ``(iii) that are not eligible for substantial 
                      uncompensated care awards under section 
                      1241(a)(1).

[[Page 124 STAT. 524]]

    ``(c) Emergency Awards.--In awarding grants under section 
1241(a)(3), the Secretary shall--
            ``(1) give preference to any application submitted by a 
        trauma center that provides trauma care in a geographic area in 
        which the availability of trauma care has significantly 
        decreased or will significantly decrease if the center is forced 
        to close or downgrade service or growth in demand for trauma 
        services exceeds capacity; and
            ``(2) reallocate any emergency awards funds not obligated 
        due to insufficient, or a lack of qualified, applications to the 
        significant uncompensated care award program.''.
            (3) Certain agreements.--Section 1243 of the Public Health 
        Service Act (42 U.S.C. 300d-43) is amended by striking 
        subsections (a), (b), and (c) and inserting the following:

    ``(a) Maintenance of Financial Support.--The Secretary may require a 
trauma center receiving a grant under section 1241(a) to maintain access 
to trauma services at comparable levels to the prior year during the 
grant period.
    ``(b) Trauma Care Registry.--The Secretary may require the trauma 
center receiving a grant under section 1241(a) to provide data to a 
national and centralized registry of trauma cases, in accordance with 
guidelines developed by the American College of Surgeons, and as the 
Secretary may otherwise require.''.
            (4) General provisions.--Section 1244 of the Public Health 
        Service Act (42 U.S.C. 300d-44) is amended by striking 
        subsections (a), (b), and (c) and inserting the following:

    ``(a) Application.--The Secretary may not award a grant to a trauma 
center under section 1241(a) unless such center submits an application 
for the grant to the Secretary and the application is in such form, is 
made in such manner, and contains such agreements, assurances, and 
information as the Secretary determines to be necessary to carry out 
this part.
    ``(b) Limitation on Duration of Support.--The period <<NOTE: Waiver 
authority.>> during which a trauma center receives payments under a 
grant under section 1241(a)(3) shall be for 3 fiscal years, except that 
the Secretary may waive such requirement for a center and authorize such 
center to receive such payments for 1 additional fiscal year.

    ``(c) Limitation on Amount of Grant.--Notwithstanding section 
1242(a), a grant under section 1241 may not be made in an amount 
exceeding $2,000,000 for each fiscal year.
    ``(d) Eligibility.--Except as provided in section 
1242(b)(1)(B)(iii), acquisition of, or eligibility for, a grant under 
section 1241(a) shall not preclude a trauma center from being eligible 
for other grants described in such section.
    ``(e) Funding Distribution.--Of the total amount appropriated for a 
fiscal year under section 1245, 70 percent shall be used for substantial 
uncompensated care awards under section 1241(a)(1), 20 percent shall be 
used for core mission awards under section 1241(a)(2), and 10 percent 
shall be used for emergency awards under section 1241(a)(3).
    ``(f) Minimum Allowance.--Notwithstanding subsection (e), if the 
amount appropriated for a fiscal year under section 1245 is less than 
$25,000,000, all available funding for such fiscal year shall be used 
for substantial uncompensated care awards under section 1241(a)(1).
    ``(g) Substantial Uncompensated Care Award Distribution and 
Proportional Share.--Notwithstanding section 1242(a), of

[[Page 124 STAT. 525]]

the amount appropriated for substantial uncompensated care grants for a 
fiscal year, the Secretary shall--
            ``(1) make available--
                    ``(A) 50 percent of such funds for category A trauma 
                center grantees;
                    ``(B) 35 percent of such funds for category B trauma 
                center grantees; and
                    ``(C) 15 percent of such funds for category C trauma 
                center grantees; and
            ``(2) provide available funds within each category in a 
        manner proportional to the award basis specified in section 
        1242(a)(2) to each eligible trauma center.

    ``(h) Report.--Beginning 2 years after the date of enactment of the 
Patient Protection and Affordable Care Act, and every 2 years 
thereafter, the Secretary shall biennially report to Congress regarding 
the status of the grants made under section 1241 and on the overall 
financial stability of trauma centers.''.
            (5) Authorization of appropriations.--Section 1245 of the 
        Public Health Service Act (42 U.S.C. 300d-45) is amended to read 
        as follows:

``SEC. 1245. <<NOTE: 42 USC 300d-45.>> AUTHORIZATION OF APPROPRIATIONS.

    ``For the purpose of carrying out this part, there are authorized to 
be appropriated $100,000,000 for fiscal year 2009, and such sums as may 
be necessary for each of fiscal years 2010 through 2015. Such 
authorization of appropriations is in addition to any other 
authorization of appropriations or amounts that are available for such 
purpose.''.
            (6) Definition.--Part D of title XII of the Public Health 
        Service Act (42 U.S.C. 300d-41 et seq.) is amended by adding at 
        the end the following:

``SEC. 1246. <<NOTE: 42 USC 300d-46.>> DEFINITION.

    ``In this part, the term `uncompensated care costs' means 
unreimbursed costs from serving self-pay, charity, or Medicaid patients, 
without regard to payment under section 1923 of the Social Security Act, 
all of which are attributable to emergency care and trauma care, 
including costs related to subsequent inpatient admissions to the 
hospital.''.
    (b) Trauma Service Availability.--Title XII of the Public Health 
Service Act (42 U.S.C. 300d et seq.) is amended by adding at the end the 
following:

                  ``PART H--TRAUMA SERVICE AVAILABILITY

``SEC. 1281. <<NOTE: 42 USC 300d-81.>> GRANTS TO STATES.

    ``(a) Establishment.--To promote universal access to trauma care 
services provided by trauma centers and trauma-related physician 
specialties, the Secretary shall provide funding to States to enable 
such States to award grants to eligible entities for the purposes 
described in this section.
    ``(b) Awarding of Grants by States.--Each State may award grants to 
eligible entities within the State for the purposes described in 
subparagraph (d).
    ``(c) Eligibility.--
            ``(1) In general.--To be eligible to receive a grant under 
        subsection (b) an entity shall--
                    ``(A) be--

[[Page 124 STAT. 526]]

                          ``(i) a public or nonprofit trauma center or 
                      consortium thereof that meets that requirements of 
                      paragraphs (1), (2), and (5) of section 1241(b);
                          ``(ii) a safety net public or nonprofit trauma 
                      center that meets the requirements of paragraphs 
                      (1) through (5) of section 1241(b); or
                          ``(iii) a hospital in an underserved area (as 
                      defined by the State) that seeks to establish new 
                      trauma services; and
                    ``(B) submit to the State an application at such 
                time, in such manner, and containing such information as 
                the State may require.
            ``(2) Limitation.--A State shall use at least 40 percent of 
        the amount available to the State under this part for a fiscal 
        year to award grants to safety net trauma centers described in 
        paragraph (1)(A)(ii).

    ``(d) Use of Funds.--The recipient of a grant under subsection (b) 
shall carry out 1 or more of the following activities consistent with 
subsection (b):
            ``(1) Providing trauma centers with funding to support 
        physician compensation in trauma-related physician specialties 
        where shortages exist in the region involved, with priority 
        provided to safety net trauma centers described in subsection 
        (c)(1)(A)(ii).
            ``(2) Providing for individual safety net trauma center 
        fiscal stability and costs related to having service that is 
        available 24 hours a day, 7 days a week, with priority provided 
        to safety net trauma centers described in subsection 
        (c)(1)(A)(ii) located in urban, border, and rural areas.
            ``(3) Reducing trauma center overcrowding at specific trauma 
        centers related to throughput of trauma patients.
            ``(4) Establishing new trauma services in underserved areas 
        as defined by the State.
            ``(5) Enhancing collaboration between trauma centers and 
        other hospitals and emergency medical services personnel related 
        to trauma service availability.
            ``(6) Making capital improvements to enhance access and 
        expedite trauma care, including providing helipads and 
        associated safety infrastructure.
            ``(7) Enhancing trauma surge capacity at specific trauma 
        centers.
            ``(8) Ensuring expedient receipt of trauma patients 
        transported by ground or air to the appropriate trauma center.
            ``(9) Enhancing interstate trauma center collaboration.

    ``(e) Limitation.--
            ``(1) In general.--A State may use not more than 20 percent 
        of the amount available to the State under this part for a 
        fiscal year for administrative costs associated with awarding 
        grants and related costs.
            ``(2) Maintenance of effort.--The Secretary may not provide 
        funding to a State under this part unless the State agrees that 
        such funds will be used to supplement and not supplant State 
        funding otherwise available for the activities and costs 
        described in this part.

    ``(f) Distribution of Funds.--The <<NOTE: Applicability.>> following 
shall apply with respect to grants provided in this part:

[[Page 124 STAT. 527]]

            ``(1) Less than $10,000,000.--If the amount of 
        appropriations for this part in a fiscal year is less than 
        $10,000,000, the Secretary shall divide such funding evenly 
        among only those States that have 1 or more trauma centers 
        eligible for funding under section 1241(b)(3)(A).
            ``(2) Less than $20,000,000.--If the amount of 
        appropriations in a fiscal year is less than $20,000,000, the 
        Secretary shall divide such funding evenly among only those 
        States that have 1 or more trauma centers eligible for funding 
        under subparagraphs (A) and (B) of section 1241(b)(3).
            ``(3) Less than $30,000,000.--If the amount of 
        appropriations for this part in a fiscal year is less than 
        $30,000,000, the Secretary shall divide such funding evenly 
        among only those States that have 1 or more trauma centers 
        eligible for funding under section 1241(b)(3).
            ``(4) $30,000,000 or more.--If the amount of appropriations 
        for this part in a fiscal year is $30,000,000 or more, the 
        Secretary shall divide such funding evenly among all States.

``SEC. 1282. <<NOTE: 42 USC 300d-82.>> AUTHORIZATION OF APPROPRIATIONS.

    ``For the purpose of carrying out this part, there is authorized to 
be appropriated $100,000,000 for each of fiscal years 2010 through 
2015.''.

SEC. 3506. PROGRAM TO FACILITATE SHARED DECISIONMAKING.

    Part D of title IX of the Public Health Service Act, as amended by 
section 3503, is further amended by adding at the end the following:

``SEC. 936. <<NOTE: 42 USC 299b-36.>> PROGRAM TO FACILITATE SHARED 
            DECISIONMAKING.

    ``(a) Purpose.--The purpose of this section is to facilitate 
collaborative processes between patients, caregivers or authorized 
representatives, and clinicians that engages the patient, caregiver or 
authorized representative in decisionmaking, provides patients, 
caregivers or authorized representatives with information about trade-
offs among treatment options, and facilitates the incorporation of 
patient preferences and values into the medical plan.
    ``(b) Definitions.--In this section:
            ``(1) Patient decision aid.--The term `patient decision aid' 
        means an educational tool that helps patients, caregivers or 
        authorized representatives understand and communicate their 
        beliefs and preferences related to their treatment options, and 
        to decide with their health care provider what treatments are 
        best for them based on their treatment options, scientific 
        evidence, circumstances, beliefs, and preferences.
            ``(2) Preference sensitive care.--The term `preference 
        sensitive care' means medical care for which the clinical 
        evidence does not clearly support one treatment option such that 
        the appropriate course of treatment depends on the values of the 
        patient or the preferences of the patient, caregivers or 
        authorized representatives regarding the benefits, harms and 
        scientific evidence for each treatment option, the use of such 
        care should depend on the informed patient choice among 
        clinically appropriate treatment options.

    ``(c) Establishment of Independent Standards for Patient Decision 
Aids for Preference Sensitive Care.--
            ``(1) Contract with entity to establish standards and 
        certify patient decision aids.--

[[Page 124 STAT. 528]]

                    ``(A) In general.--For purposes of supporting 
                consensus-based standards for patient decision aids for 
                preference sensitive care and a certification process 
                for patient decision aids for use in the Federal health 
                programs and by other interested parties, the Secretary 
                shall have in effect a contract with the entity with a 
                contract under section 1890 of the Social Security Act. 
                Such contract shall provide that the entity perform the 
                duties described in paragraph (2).
                    ``(B) Timing for first contract.--As soon as 
                practicable after the date of the enactment of this 
                section, the Secretary shall enter into the first 
                contract under subparagraph (A).
                    ``(C) Period of contract.--A contract under 
                subparagraph (A) shall be for a period of 18 months 
                (except such contract may be renewed after a subsequent 
                bidding process).
            ``(2) Duties.--The following duties are described in this 
        paragraph:
                    ``(A) Develop and identify standards for patient 
                decision aids.--The entity shall synthesize evidence and 
                convene a broad range of experts and key stakeholders to 
                develop and identify consensus-based standards to 
                evaluate patient decision aids for preference sensitive 
                care.
                    ``(B) Endorse patient decision aids.--The entity 
                shall review patient decision aids and develop a 
                certification process whether patient decision aids meet 
                the standards developed and identified under 
                subparagraph (A). The entity shall give priority to the 
                review and certification of patient decision aids for 
                preference sensitive care.

    ``(d) Program <<NOTE: Grants. Contracts.>> To Develop, Update and 
Patient Decision Aids To Assist Health Care Providers and Patients.--
            ``(1) In general.--The Secretary, acting through the 
        Director, and in coordination with heads of other relevant 
        agencies, such as the Director of the Centers for Disease 
        Control and Prevention and the Director of the National 
        Institutes of Health, shall establish a program to award grants 
        or contracts--
                    ``(A) to develop, update, and produce patient 
                decision aids for preference sensitive care to assist 
                health care providers in educating patients, caregivers, 
                and authorized representatives concerning the relative 
                safety, relative effectiveness (including possible 
                health outcomes and impact on functional status), and 
                relative cost of treatment or, where appropriate, 
                palliative care options;
                    ``(B) to test such materials to ensure such 
                materials are balanced and evidence based in aiding 
                health care providers and patients, caregivers, and 
                authorized representatives to make informed decisions 
                about patient care and can be easily incorporated into a 
                broad array of practice settings; and
                    ``(C) to educate providers on the use of such 
                materials, including through academic curricula.
            ``(2) Requirements for patient decision aids.--Patient 
        decision aids developed and produced pursuant to a grant or 
        contract under paragraph (1)--

[[Page 124 STAT. 529]]

                    ``(A) shall be designed to engage patients, 
                caregivers, and authorized representatives in informed 
                decisionmaking with health care providers;
                    ``(B) shall present up-to-date clinical evidence 
                about the risks and benefits of treatment options in a 
                form and manner that is age-appropriate and can be 
                adapted for patients, caregivers, and authorized 
                representatives from a variety of cultural and 
                educational backgrounds to reflect the varying needs of 
                consumers and diverse levels of health literacy;
                    ``(C) shall, where appropriate, explain why there is 
                a lack of evidence to support one treatment option over 
                another; and
                    ``(D) shall address health care decisions across the 
                age span, including those affecting vulnerable 
                populations including children.
            ``(3) Distribution.--The Director shall ensure that patient 
        decision aids produced with grants or contracts under this 
        section are available to the public.
            ``(4) Nonduplication of efforts.--The Director shall ensure 
        that the activities under this section of the Agency and other 
        agencies, including the Centers for Disease Control and 
        Prevention and the National Institutes of Health, are free of 
        unnecessary duplication of effort.

    ``(e) Grants To Support Shared Decisionmaking Implementation.--
            ``(1) In general.--The Secretary shall establish a program 
        to provide for the phased-in development, implementation, and 
        evaluation of shared decisionmaking using patient decision aids 
        to meet the objective of improving the understanding of patients 
        of their medical treatment options.
            ``(2) Shared decisionmaking resource centers.--
                    ``(A) In general.--The Secretary shall provide 
                grants for the establishment and support of Shared 
                Decisionmaking Resource Centers (referred to in this 
                subsection as `Centers') to provide technical assistance 
                to providers and to develop and disseminate best 
                practices and other information to support and 
                accelerate adoption, implementation, and effective use 
                of patient decision aids and shared decisionmaking by 
                providers.
                    ``(B) Objectives.--The objective of a Center is to 
                enhance and promote the adoption of patient decision 
                aids and shared decisionmaking through--
                          ``(i) providing assistance to eligible 
                      providers with the implementation and effective 
                      use of, and training on, patient decision aids; 
                      and
                          ``(ii) the dissemination of best practices and 
                      research on the implementation and effective use 
                      of patient decision aids.
            ``(3) Shared decisionmaking participation grants.--
                    ``(A) In general.--The Secretary shall provide 
                grants to health care providers for the development and 
                implementation of shared decisionmaking techniques and 
                to assess the use of such techniques.
                    ``(B) Preference.--In order to facilitate the use of 
                best practices, the Secretary shall provide a preference 
                in making grants under this subsection to health care

[[Page 124 STAT. 530]]

                providers who participate in training by Shared 
                Decisionmaking Resource Centers or comparable training.
                    ``(C) Limitation.--Funds under this paragraph shall 
                not be used to purchase or implement use of patient 
                decision aids other than those certified under the 
                process identified in subsection (c).
            ``(4) Guidance.--The Secretary may issue guidance to 
        eligible grantees under this subsection on the use of patient 
        decision aids.

    ``(f) Funding.--For purposes of carrying out this section there are 
authorized to be appropriated such sums as may be necessary for fiscal 
year 2010 and each subsequent fiscal year.''.

SEC. 3507. PRESENTATION <<NOTE: 21 USC 352 note.>> OF PRESCRIPTION DRUG 
            BENEFIT AND RISK INFORMATION.

    (a) In General.--The <<NOTE: Determination.>> Secretary of Health 
and Human Services (referred to in this section as the ``Secretary''), 
acting through the Commissioner of Food and Drugs, shall determine 
whether the addition of quantitative summaries of the benefits and risks 
of prescription drugs in a standardized format (such as a table or drug 
facts box) to the promotional labeling or print advertising of such 
drugs would improve health care decisionmaking by clinicians and 
patients and consumers.

    (b) Review and Consultation.--In making the determination under 
subsection (a), the Secretary shall review all available scientific 
evidence and research on decisionmaking and social and cognitive 
psychology and consult with drug manufacturers, clinicians, patients and 
consumers, experts in health literacy, representatives of racial and 
ethnic minorities, and experts in women's and pediatric health.
    (c) Report.--Not later than 1 year after the date of enactment of 
this Act, the Secretary shall submit to Congress a report that 
provides--
            (1) the determination by the Secretary under subsection (a); 
        and
            (2) the reasoning and analysis underlying that 
        determination.

    (d) Authority.--If the <<NOTE: Deadline. Regulations.>> Secretary 
determines under subsection (a) that the addition of quantitative 
summaries of the benefits and risks of prescription drugs in a 
standardized format (such as a table or drug facts box) to the 
promotional labeling or print advertising of such drugs would improve 
health care decisionmaking by clinicians and patients and consumers, 
then the Secretary, not later than 3 years after the date of submission 
of the report under subsection (c), shall promulgate proposed 
regulations as necessary to implement such format.

    (e) Clarification.--Nothing in this section shall be construed to 
restrict the existing authorities of the Secretary with respect to 
benefit and risk information.

SEC. 3508. DEMONSTRATION <<NOTE: 42 USC 294j.>> PROGRAM TO INTEGRATE 
            QUALITY IMPROVEMENT AND PATIENT SAFETY TRAINING INTO 
            CLINICAL EDUCATION OF HEALTH PROFESSIONALS.

    (a) In General.--The Secretary may award grants to eligible entities 
or consortia under this section to carry out demonstration projects to 
develop and implement academic curricula that integrates quality 
improvement and patient safety in the clinical

[[Page 124 STAT. 531]]

education of health professionals. Such awards shall be made on a 
competitive basis and pursuant to peer review.
    (b) Eligibility.--To be eligible to receive a grant under subsection 
(a), an entity or consortium shall--
            (1) submit to the Secretary an application at such time, in 
        such manner, and containing such information as the Secretary 
        may require;
            (2) be or include--
                    (A) a health professions school;
                    (B) a school of public health;
                    (C) a school of social work;
                    (D) a school of nursing;
                    (E) a school of pharmacy;
                    (F) an institution with a graduate medical education 
                program; or
                    (G) a school of health care administration;
            (3) collaborate in the development of curricula described in 
        subsection (a) with an organization that accredits such school 
        or institution;
            (4) provide for the collection of data regarding the 
        effectiveness of the demonstration project; and
            (5) provide matching funds in accordance with subsection 
        (c).

    (c) Matching Funds.--
            (1) In general.--The Secretary may award a grant to an 
        entity or consortium under this section only if the entity or 
        consortium agrees to make available non-Federal contributions 
        toward the costs of the program to be funded under the grant in 
        an amount that is not less than $1 for each $5 of Federal funds 
        provided under the grant.
            (2) Determination of amount contributed.--Non-Federal 
        contributions under paragraph (1) may be in cash or in-kind, 
        fairly evaluated, including equipment or services. Amounts 
        provided by the Federal Government, or services assisted or 
        subsidized to any significant extent by the Federal Government, 
        may not be included in determining the amount of such 
        contributions.

    (d) Evaluation.--The <<NOTE: Publication. Public 
information.>> Secretary shall take such action as may be necessary to 
evaluate the projects funded under this section and publish, make 
publicly available, and disseminate the results of such evaluations on 
as wide a basis as is practicable.

    (e) Reports.--Not later than 2 years after the date of enactment of 
this section, and annually thereafter, the Secretary shall submit to the 
Committee on Health, Education, Labor, and Pensions and the Committee on 
Finance of the Senate and the Committee on Energy and Commerce and the 
Committee on Ways and Means of the House of Representatives a report 
that--
            (1) describes the specific projects supported under this 
        section; and
            (2) contains recommendations for Congress based on the 
        evaluation conducted under subsection (d).

SEC. 3509. IMPROVING WOMEN'S HEALTH.

    (a) Health and Human Services Office on Women's Health.--

[[Page 124 STAT. 532]]

            (1) Establishment.--Part A of title II of the Public Health 
        Service Act (42 U.S.C. 202 et seq.) is amended by adding at the 
        end the following:

``SEC. 229. HEALTH <<NOTE: 42 USC 237a.>> AND HUMAN SERVICES OFFICE ON 
            WOMEN'S HEALTH.

    ``(a) Establishment of Office.--There is established within the 
Office of the Secretary, an Office on Women's Health (referred to in 
this section as the `Office'). The Office shall be headed by a Deputy 
Assistant Secretary for Women's Health who may report to the Secretary.
    ``(b) Duties.--The Secretary, acting through the Office, with 
respect to the health concerns of women, shall--
            ``(1) establish short-range and long-range goals and 
        objectives within the Department of Health and Human Services 
        and, as relevant and appropriate, coordinate with other 
        appropriate offices on activities within the Department that 
        relate to disease prevention, health promotion, service 
        delivery, research, and public and health care professional 
        education, for issues of particular concern to women throughout 
        their lifespan;
            ``(2) provide expert advice and consultation to the 
        Secretary concerning scientific, legal, ethical, and policy 
        issues relating to women's health;
            ``(3) monitor the Department of Health and Human Services' 
        offices, agencies, and regional activities regarding women's 
        health and identify needs regarding the coordination of 
        activities, including intramural and extramural 
        multidisciplinary activities;
            ``(4) establish a Department of Health and Human Services 
        Coordinating Committee on Women's Health, which shall be chaired 
        by the Deputy Assistant Secretary for Women's Health and 
        composed of senior level representatives from each of the 
        agencies and offices of the Department of Health and Human 
        Services;
            ``(5) establish <<NOTE: Establishment.>> a National Women's 
        Health Information Center to--
                    ``(A) facilitate the exchange of information 
                regarding matters relating to health information, health 
                promotion, preventive health services, research 
                advances, and education in the appropriate use of health 
                care;
                    ``(B) facilitate access to such information;
                    ``(C) assist in the analysis of issues and problems 
                relating to the matters described in this paragraph; and
                    ``(D) provide technical assistance with respect to 
                the exchange of information (including facilitating the 
                development of materials for such technical assistance);
            ``(6) coordinate efforts to promote women's health programs 
        and policies with the private sector; and
            ``(7) through publications and any other means appropriate, 
        provide for the exchange of information between the Office and 
        recipients of grants, contracts, and agreements under subsection 
        (c), and between the Office and health professionals and the 
        general public.

    ``(c) Grants and Contracts Regarding Duties.--

[[Page 124 STAT. 533]]

            ``(1) Authority.--In carrying out subsection (b), the 
        Secretary may make grants to, and enter into cooperative 
        agreements, contracts, and interagency agreements with, public 
        and private entities, agencies, and organizations.
            ``(2) Evaluation and dissemination.--The Secretary shall 
        directly or through contracts with public and private entities, 
        agencies, and organizations, provide for evaluations of projects 
        carried out with financial assistance provided under paragraph 
        (1) and for the dissemination of information developed as a 
        result of such projects.

    ``(d) Reports.--Not later than 1 year after the date of enactment of 
this section, and every second year thereafter, the Secretary shall 
prepare and submit to the appropriate committees of Congress a report 
describing the activities carried out under this section during the 
period for which the report is being prepared.
    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated such sums as 
may be necessary for each of the fiscal years 2010 through 2014.''.
            (2) Transfer of functions.--There <<NOTE: 42 USC 237a 
        note.>> are transferred to the Office on Women's Health 
        (established under section 229 of the Public Health Service Act, 
        as added by this section), all functions exercised by the Office 
        on Women's Health of the Public Health Service prior to the date 
        of enactment of this section, including all personnel and 
        compensation authority, all delegation and assignment authority, 
        and all remaining appropriations. All orders, determinations, 
        rules, regulations, permits, agreements, grants, contracts, 
        certificates, licenses, registrations, privileges, and other 
        administrative actions that--
                    (A) have been issued, made, granted, or allowed to 
                become effective by the President, any Federal agency or 
                official thereof, or by a court of competent 
                jurisdiction, in the performance of functions 
                transferred under this paragraph; and
                    (B) are in effect at the time this section takes 
                effect, or were final before the date of enactment of 
                this section and are to become effective on or after 
                such date,
        shall continue in effect according to their terms until 
        modified, terminated, superseded, set aside, or revoked in 
        accordance with law by the President, the Secretary, or other 
        authorized official, a court of competent jurisdiction, or by 
        operation of law.

    (b) Centers for Disease Control and Prevention Office of Women's 
Health.--Part A of title III of the Public Health Service Act (42 U.S.C. 
241 et seq.) is amended by adding at the end the following:

``SEC. 310A. CENTERS <<NOTE: 42 USC 242s.>> FOR DISEASE CONTROL AND 
            PREVENTION OFFICE OF WOMEN'S HEALTH.

    ``(a) Establishment.--There is established within the Office of the 
Director of the Centers for Disease Control and Prevention, an office to 
be known as the Office of Women's Health (referred to in this section as 
the `Office'). The Office shall be headed by a director who shall be 
appointed by the Director of such Centers.
    ``(b) Purpose.--The Director of the Office shall--

[[Page 124 STAT. 534]]

            ``(1) report to the Director of the Centers for Disease 
        Control and Prevention on the current level of the Centers' 
        activity regarding women's health conditions across, where 
        appropriate, age, biological, and sociocultural contexts, in all 
        aspects of the Centers' work, including prevention programs, 
        public and professional education, services, and treatment;
            ``(2) establish short-range and long-range goals and 
        objectives within the Centers for women's health and, as 
        relevant and appropriate, coordinate with other appropriate 
        offices on activities within the Centers that relate to 
        prevention, research, education and training, service delivery, 
        and policy development, for issues of particular concern to 
        women;
            ``(3) identify projects in women's health that should be 
        conducted or supported by the Centers;
            ``(4) consult with health professionals, nongovernmental 
        organizations, consumer organizations, women's health 
        professionals, and other individuals and groups, as appropriate, 
        on the policy of the Centers with regard to women; and
            ``(5) serve as a member of the Department of Health and 
        Human Services Coordinating Committee on Women's Health 
        (established under section 229(b)(4)).

    ``(c) Definition.--As used in this section, the term `women's health 
conditions', with respect to women of all age, ethnic, and racial 
groups, means diseases, disorders, and conditions--
            ``(1) unique to, significantly more serious for, or 
        significantly more prevalent in women; and
            ``(2) for which the factors of medical risk or type of 
        medical intervention are different for women, or for which there 
        is reasonable evidence that indicates that such factors or types 
        may be different for women.

    ``(d) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated such sums as 
may be necessary for each of the fiscal years 2010 through 2014.''.
    (c) Office of Women's Health Research.--Section 486(a) of the Public 
Health Service Act (42 U.S.C. 287d(a)) is amended by inserting ``and who 
shall report directly to the Director'' before the period at the end 
thereof.
    (d) Substance Abuse and Mental Health Services Administration.--
Section 501(f) of the Public Health Service Act (42 U.S.C. 290aa(f)) is 
amended--
            (1) in paragraph (1), by inserting ``who shall report 
        directly to the Administrator'' before the period;
            (2) by redesignating paragraph (4) as paragraph (5); and
            (3) by inserting after paragraph (3), the following:
            ``(4) Office.--Nothing in this subsection shall be construed 
        to preclude the Secretary from establishing within the Substance 
        Abuse and Mental Health Administration an Office of Women's 
        Health.''.

    (e) Agency for Healthcare Research and Quality Activities Regarding 
Women's Health.--Part <<NOTE: 42 USC 299b-25, 299b-26.>> C of title IX 
of the Public Health Service Act (42 U.S.C. 299c et seq.) is amended--
            (1) by redesignating sections 925 and 926 as sections 926 
        and 927, respectively; and
            (2) by inserting after section 924 the following:

[[Page 124 STAT. 535]]

``SEC. 925. <<NOTE: 42 USC 299b-24a.>> ACTIVITIES REGARDING WOMEN'S 
            HEALTH.

    ``(a) Establishment.--There is established within the Office of the 
Director, an Office of Women's Health and Gender-Based Research 
(referred to in this section as the `Office'). The Office shall be 
headed by a director who shall be appointed by the Director of 
Healthcare and Research Quality.
    ``(b) Purpose.--The official designated under subsection (a) shall--
            ``(1) report to the Director on the current Agency level of 
        activity regarding women's health, across, where appropriate, 
        age, biological, and sociocultural contexts, in all aspects of 
        Agency work, including the development of evidence reports and 
        clinical practice protocols and the conduct of research into 
        patient outcomes, delivery of health care services, quality of 
        care, and access to health care;
            ``(2) establish short-range and long-range goals and 
        objectives within the Agency for research important to women's 
        health and, as relevant and appropriate, coordinate with other 
        appropriate offices on activities within the Agency that relate 
        to health services and medical effectiveness research, for 
        issues of particular concern to women;
            ``(3) identify projects in women's health that should be 
        conducted or supported by the Agency;
            ``(4) consult with health professionals, nongovernmental 
        organizations, consumer organizations, women's health 
        professionals, and other individuals and groups, as appropriate, 
        on Agency policy with regard to women; and
            ``(5) serve as a member of the Department of Health and 
        Human Services Coordinating Committee on Women's Health 
        (established under section 229(b)(4)).''.

    ``(c) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated such sums as 
may be necessary for each of the fiscal years 2010 through 2014.''.
    (f) Health Resources and Services Administration Office of Women's 
Health.--Title VII of the Social Security Act (42 U.S.C. 901 et seq.) is 
amended by adding at the end the following:

``SEC. 713. OFFICE <<NOTE: 42 USC 914.>> OF WOMEN'S HEALTH.

    ``(a) Establishment.--The Secretary shall establish within the 
Office of the Administrator of the Health Resources and Services 
Administration, an office to be known as the Office of Women's Health. 
The Office shall be headed by a director who shall be appointed by the 
Administrator.
    ``(b) Purpose.--The Director of the Office shall--
            ``(1) report to the Administrator on the current 
        Administration level of activity regarding women's health 
        across, where appropriate, age, biological, and sociocultural 
        contexts;
            ``(2) establish short-range and long-range goals and 
        objectives within the Health Resources and Services 
        Administration for women's health and, as relevant and 
        appropriate, coordinate with other appropriate offices on 
        activities within the Administration that relate to health care 
        provider training, health service delivery, research, and 
        demonstration projects, for issues of particular concern to 
        women;
            ``(3) identify projects in women's health that should be 
        conducted or supported by the bureaus of the Administration;

[[Page 124 STAT. 536]]

            ``(4) consult with health professionals, nongovernmental 
        organizations, consumer organizations, women's health 
        professionals, and other individuals and groups, as appropriate, 
        on Administration policy with regard to women; and
            ``(5) serve as a member of the Department of Health and 
        Human Services Coordinating Committee on Women's Health 
        (established under section 229(b)(4) of the Public Health 
        Service Act).

    ``(c) Continued Administration of Existing Programs.--The Director 
of the Office shall assume the authority for the development, 
implementation, administration, and evaluation of any projects carried 
out through the Health Resources and Services Administration relating to 
women's health on the date of enactment of this section.
    ``(d) Definitions.--For purposes of this section:
            ``(1) Administration.--The term `Administration' means the 
        Health Resources and Services Administration.
            ``(2) Administrator.--The term `Administrator' means the 
        Administrator of the Health Resources and Services 
        Administration.
            ``(3) Office.--The term `Office' means the Office of Women's 
        Health established under this section in the Administration.

    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated such sums as 
may be necessary for each of the fiscal years 2010 through 2014.''.
    (g) Food and Drug Administration Office of Women's Health.--Chapter 
X of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 391 et seq.) is 
amended by adding at the end the following:

``SEC. 1011. OFFICE <<NOTE: 21 USC 399b.>> OF WOMEN'S HEALTH.

    ``(a) Establishment.--There is established within the Office of the 
Commissioner, an office to be known as the Office of Women's Health 
(referred to in this section as the `Office'). The Office shall be 
headed by a director who shall be appointed by the Commissioner of Food 
and Drugs.
    ``(b) Purpose.--The Director of the Office shall--
            ``(1) report to the Commissioner of Food and Drugs on 
        current Food and Drug Administration (referred to in this 
        section as the `Administration') levels of activity regarding 
        women's participation in clinical trials and the analysis of 
        data by sex in the testing of drugs, medical devices, and 
        biological products across, where appropriate, age, biological, 
        and sociocultural contexts;
            ``(2) establish short-range and long-range goals and 
        objectives within the Administration for issues of particular 
        concern to women's health within the jurisdiction of the 
        Administration, including, where relevant and appropriate, 
        adequate inclusion of women and analysis of data by sex in 
        Administration protocols and policies;
            ``(3) provide information to women and health care providers 
        on those areas in which differences between men and women exist;
            ``(4) consult with pharmaceutical, biologics, and device 
        manufacturers, health professionals with expertise in women's

[[Page 124 STAT. 537]]

        issues, consumer organizations, and women's health professionals 
        on Administration policy with regard to women;
            ``(5) make annual estimates of funds needed to monitor 
        clinical trials and analysis of data by sex in accordance with 
        needs that are identified; and
            ``(6) serve as a member of the Department of Health and 
        Human Services Coordinating Committee on Women's Health 
        (established under section 229(b)(4) of the Public Health 
        Service Act).

    ``(c) Authorization of Appropriations.--For the purpose of carrying 
out this section, there are authorized to be appropriated such sums as 
may be necessary for each of the fiscal years 2010 through 2014.''.
    (h) No New Regulatory <<NOTE: 42 USC 237a note.>> Authority.--
Nothing in this section and the amendments made by this section may be 
construed as establishing regulatory authority or modifying any existing 
regulatory authority.

    (i) Limitation on <<NOTE: 42 USC 237a note.>> Termination.--
Notwithstanding any other provision of law, a Federal office of women's 
health (including the Office of Research on Women's Health of the 
National Institutes of Health) or Federal appointive position with 
primary responsibility over women's health issues (including the 
Associate Administrator for Women's Services under the Substance Abuse 
and Mental Health Services Administration) that is in existence on the 
date of enactment of this section shall not be terminated, reorganized, 
or have any of it's powers or duties transferred unless such 
termination, reorganization, or transfer is approved by Congress through 
the adoption of a concurrent resolution of approval.

    (j) Rule of <<NOTE: 42 USC 237a note.>> Construction.--Nothing in 
this section (or the amendments made by this section) shall be construed 
to limit the authority of the Secretary of Health and Human Services 
with respect to women's health, or with respect to activities carried 
out through the Department of Health and Human Services on the date of 
enactment of this section.

SEC. 3510. PATIENT NAVIGATOR PROGRAM.

    Section 340A of the Public Health Service Act (42 U.S.C. 256a) is 
amended--
            (1) by striking subsection (d)(3) and inserting the 
        following:
            ``(3) Limitations on grant period.--In carrying out this 
        section, the Secretary shall ensure that the total period of a 
        grant does not exceed 4 years.'';
            (2) in subsection (e), by adding at the end the following:
            ``(3) Minimum core proficiencies.--The Secretary shall not 
        award a grant to an entity under this section unless such entity 
        provides assurances that patient navigators recruited, assigned, 
        trained, or employed using grant funds meet minimum core 
        proficiencies, as defined by the entity that submits the 
        application, that are tailored for the main focus or 
        intervention of the navigator involved.''; and
            (3) in subsection (m)--
                    (A) in paragraph (1), by striking ``and $3,500,000 
                for fiscal year 2010.'' and inserting ``$3,500,000 for 
                fiscal year 2010, and such sums as may be necessary for 
                each of fiscal years 2011 through 2015.''; and
                    (B) in paragraph (2), by striking ``2010'' and 
                inserting ``2015''.

[[Page 124 STAT. 538]]

SEC. 3511. AUTHORIZATION OF APPROPRIATIONS.

    Except where otherwise provided in this subtitle (or an amendment 
made by this subtitle), there is authorized to be appropriated such sums 
as may be necessary to carry out this subtitle (and such amendments made 
by this subtitle).

    Subtitle G--Protecting and Improving Guaranteed Medicare Benefits

SEC. 3601. PROTECTING <<NOTE: 42 USC 1395 note.>> AND IMPROVING 
            GUARANTEED MEDICARE BENEFITS.

    (a) Protecting Guaranteed Medicare Benefits.--Nothing in the 
provisions of, or amendments made by, this Act shall result in a 
reduction of guaranteed benefits under title XVIII of the Social 
Security Act.
    (b) Ensuring That Medicare Savings Benefit the Medicare Program and 
Medicare Beneficiaries.--Savings generated for the Medicare program 
under title XVIII of the Social Security Act under the provisions of, 
and amendments made by, this Act shall extend the solvency of the 
Medicare trust funds, reduce Medicare premiums and other cost-sharing 
for beneficiaries, and improve or expand guaranteed Medicare benefits 
and protect access to Medicare providers.

SEC. 3602. NO <<NOTE: 42 USC 1395w-21 note.>> CUTS IN GUARANTEED 
            BENEFITS.

    Nothing in this Act shall result in the reduction or elimination of 
any benefits guaranteed by law to participants in Medicare Advantage 
plans.