[House Report 116-691]
[From the U.S. Government Publishing Office]
116th Congress } { Rept. 116-691
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
_______________________________________________________________________
BENEFICIARY EDUCATION TOOLS, TELEHEALTH, AND EXTENDERS REAUTHORIZATION
ACT OF 2019
----------
R E P O R T
of the
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
on
H.R. 3417
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
December 24, 2020.--Ordered to be printed
BENEFICIARY EDUCATION TOOLS, TELEHEALTH, AND EXTENDERS REAUTHORIZATION
ACT OF 2019
116th Congress } { Rept. 116-691
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
BENEFICIARY EDUCATION TOOLS, TELEHEALTH, AND EXTENDERS REAUTHORIZATION
ACT OF 2019
_______
December 24, 2020.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Neal, from the Committee on Ways and Means, submitted the following
R E P O R T
[To accompany H.R. 3417]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 3417) to amend title XVIII of the Social Security
Act to provide for patient improvements and rural and quality
improvements under the Medicare program, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND..........................................11
A. Purpose and Summary................................. 11
B. Background and Need for Legislation................. 12
C. Legislative History................................. 14
II. EXPLANATION OF ACT..............................................15
A. Title I--Patient Improvements....................... 15
Section 101. Beneficiary Enrollment Notification
and Eligibility Simplification..................... 15
Section 103. Medicare Coverage of Certain Mental
Health Telehealth Services......................... 19
Section 104. Requiring Prescription Drug Plan
Sponsors to Include Real-Time Benefit Information
as Part of Such Sponsor's Electronic Prescription
Program under the Medicare Program................. 21
Section 105. Transitional Coverage and Retroactive
Medicare Part D Coverage for Certain Low-Income
Beneficiaries...................................... 23
B. Title II: Rural and Quality Improvements............ 24
Section 201. Medicare GME Treatment of Hospitals
Establishing New Medical Residency Training
Programs after Hosting Medical Resident Rotators
for Short Durations................................ 24
Section. 202. Extension of the Work Geographic
Index Floor under the Medicare Program............. 26
Section 203. Extension of Funding for Quality
Measure Endorsement, Input, and Selection under
Medicare Program................................... 26
Section 204. Improving Measurements under the
Skilled Nursing Facility Value-Based Purchasing
Program under the Medicare Program................. 28
III. VOTES OF THE COMMITTEE..........................................30
IV. BUDGET EFFECTS OF THE BILL......................................31
A. Committee Estimate of Budgetary Effects............. 31
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 31
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 31
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE......36
A. Committee Oversight Findings and Recommendations.... 36
B. Statement of General Performance Goals and
Objectives......................................... 36
C. Information Relating to Unfunded Mandates........... 36
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 36
E. Duplication of Federal Programs..................... 36
F. Hearings............................................ 37
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED...........37
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Beneficiary
Education Tools, Telehealth, and Extenders Reauthorization Act of
2019'' or the ``BETTER Act of 2019''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--PATIENT IMPROVEMENTS
Sec. 101. Beneficiary enrollment notification and eligibility
simplification.
Sec. 102. Extension of funding outreach and assistance for low-income
programs.
Sec. 103. Medicare coverage of certain mental health telehealth
services.
Sec. 104. Requiring prescription drug plan sponsors to include real-
time benefit information as part of such sponsor's electronic
prescription program under the Medicare program.
Sec. 105. Transitional coverage and retroactive Medicare part D
coverage for certain low-income beneficiaries.
TITLE II--RURAL AND QUALITY IMPROVEMENTS
Sec. 201. Medicare GME treatment of hospitals establishing new medical
residency training programs after hosting medical resident rotators for
short durations.
Sec. 202. Extension of the work geographic index floor under the
Medicare program.
Sec. 203. Extension of funding for quality measure endorsement, input,
and selection under Medicare program.
Sec. 204. Improving measurements under the skilled nursing facility
value-based purchasing program under the Medicare program.
TITLE I--PATIENT IMPROVEMENTS
SEC. 101. BENEFICIARY ENROLLMENT NOTIFICATION AND ELIGIBILITY
SIMPLIFICATION.
(a) Eligibility and Enrollment Notices.--
(1) As part of social security account statement for
individuals attaining ages 63 to 65.--Section 1143(a) of the
Social Security Act (42 U.S.C. 1320b-13(a)) is amended by
adding at the end the following new paragraph:
``(4) Medicare Eligibility Information.--
``(A) In general.--In the case of statements provided on or
after the date that is 2 years after the date of the enactment
of this paragraph to individuals who are attaining ages 63, 64,
and 65, the statement shall also include a notice containing
the information described in subparagraph (B).
``(B) Contents of notice.--The notice required under
subparagraph (A) shall include a clear, simple explanation of--
``(i) eligibility for benefits under the Medicare
program under title XVIII, and in particular benefits
under part B of such title;
``(ii) the reasons a late enrollment penalty for
failure to timely enroll could be assessed and how such
late enrollment penalty is calculated, in particular
for benefits under part B;
``(iii) the availability of relief from the late
enrollment penalty and retroactive enrollment under
section 1837(h) (including as such section is applied
under sections 1818(c) and 1818A(c)(3)), with examples
of circumstances under which such relief may be granted
and examples of circumstances under which such relief
would not be granted;
``(iv) coordination of benefits (including primary
and secondary coverage scenarios) pursuant to section
1862(b), in particular for benefits under part B of
such title; and
``(v) information for populations, such as residents
of Puerto Rico and veterans, for whom there are special
considerations with respect to enrollment, eligibility,
and coordination of benefits under title XVIII.
``(C) Development of notice.--
``(i) In general.--The Secretary, in coordination
with the Commissioner of Social Security, and taking
into consideration information collected pursuant to
clause (ii), shall, not later than 12 months after the
last day of the period for the request of information
described in clause (ii), develop the notice to be
provided pursuant to subparagraph (A).
``(ii) Request for information.--Not later than 6
months after the date of the enactment of this
paragraph, the Secretary shall request written
information, including recommendations, from
stakeholders (including the groups described in
subparagraph (D)) on the information to be included in
the notice.
``(iii) Notice improvement.--Beginning 4 years after
the date of enactment of this paragraph, and not less
than once every two years thereafter, the Secretary, in
coordination with the Commissioner of Social Security,
shall--
``(I) review the content of the notice to be
provided under subparagraph (A);
``(II) solicit recommendations on the notice
through a request for information process as
described in clause (ii); and
``(III) update and revise such notice as the
Secretary deems appropriate.
``(D) Groups for consultation.--For purposes of subparagraph
(C)(ii), the groups described in this clause include the
following:
``(i) Individuals who are 60 years of age or older.
``(ii) Veterans.
``(iii) Individuals with disabilities.
``(iv) Individuals with end stage renal disease.
``(v) Low-income individuals and families.
``(vi) Employers (including human resources
professionals).
``(vii) States (including representatives of State-
run Health Insurance Exchanges, Medicaid offices, and
Departments of Insurance).
``(viii) State Health Insurance Assistance Programs.
``(ix) Health insurers.
``(x) Health insurance agents and brokers.
``(xi) Such other groups as specified by the
Secretary.
``(E) Posting of notice on websites.--The Commissioner of
Social Security and the Secretary shall post the notice
required under subparagraph (A) in a prominent location on the
public Internet website of the Social Security Administration
and on the public Internet website of the Centers for Medicare
& Medicaid Services, respectively.
``(F) Reimbursement of costs.--
``(i) In general.--Effective for fiscal years
beginning in the year in which the date of enactment of
this paragraph occurs, the Commissioner of Social
Security and the Secretary shall enter into an
agreement which shall provide funding to cover the
administrative costs of the Commissioner's activities
under this paragraph. Such agreement shall--
``(I) provide funds to the Commissioner for
the full cost of the Social Security
Administration's work related to the
implementation of this paragraph, including any
costs incurred prior to the finalization of
such agreement;
``(II) provide such funding quarterly in
advance of the applicable quarter based on
estimating methodology agreed to by the
Commissioner and the Secretary; and
``(III) require an annual accounting and
reconciliation of the actual costs incurred and
funds provided under this paragraph.
``(ii) Limitation.--In no case shall funds from the
Social Security Administration's Limitation on
Administrative Expenses be used to carry out activities
related to the implementation of this paragraph, except
as the Commissioner determines is necessary in
developing the agreement under clause (i).
``(G) No effect on obligation to mail statements.--Nothing in
this paragraph shall be construed to relieve the Commissioner
of Social Security from any requirement under subsection (c),
including the requirement to mail a statement on an annual
basis to each eligible individual who is not receiving benefits
under title II and for whom a mailing address can be determined
through such methods as the Commissioner determines to be
appropriate.''.
(2) Individuals in medicare waiting period.--Title XI of the
Social Security Act (42 U.S.C. 1301 et seq.) is amended by
inserting after section 1144 the following new section:
``medicare enrollment notification and eligibility notices for
individuals in medicare waiting period
``Notices
``Sec. 1144A. (a)
``(1) In General.--The Commissioner of Social Security shall
distribute the notice to be provided pursuant to section
1143(a)(4), as may be modified under paragraph (2), to
individuals in the 24-month waiting period under section
226(b).
``(2) Authority to Modify Notice.--The Secretary, in
coordination with the Commissioner of Social Security, may
modify the notice to be distributed under paragraph (1) as
necessary to take into account the individuals described in
such paragraph.
``(3) Posting of Notice on Websites.--The Commissioner of
Social Security and the Secretary shall post the notice
required to be distributed under paragraph (1) in a prominent
location on the public Internet website of the Social Security
Administration and on the public Internet website of the
Centers for Medicare & Medicaid Services, respectively.
``Timing
``(b) Beginning not later than 2 years after the date of the
enactment of this section, a notice required under subsection (a)(1)
shall be mailed to an individual no less than two times in accordance
with the following:
``(1) The notice shall be provided to such individual not
later than 3 months prior to the date on which such
individual's enrollment period begins as provided under section
1837.
``(2) The notice shall subsequently be provided to such
individual not later than one month prior to such date.
``Reimbursement of Costs
``(c)
``(1) In General.--Effective for fiscal years beginning in
the year in which the date of enactment of this section occurs,
the Commissioner of Social Security and the Secretary shall
enter into an agreement which shall provide funding to cover
the administrative costs of the Commissioner's activities under
this section. Such agreement shall--
``(A) provide funds to the Commissioner for the full
cost of the Social Security Administration's work
related to the implementation of this section,
including any costs incurred prior to the finalization
of such agreement;
``(B) provide such funding quarterly in advance of
the applicable quarter based on estimating methodology
agreed to by the Commissioner and the Secretary; and
``(C) require an annual accounting and reconciliation
of the actual costs incurred and funds provided under
this section.
``(2) Limitation.--In no case shall funds from the Social
Security Administration's Limitation on Administrative Expenses
be used to carry out activities related to the implementation
of this section, except as the Commissioner determines is
necessary in developing the agreement under paragraph (1).''.
(b) Beneficiary Enrollment Simplification.--
(1) Effective date of coverage.--Section 1838(a) of the
Social Security Act (42 U.S.C. 1395q(a)) is amended--
(A) by amending paragraph (2) to read as follows:
``(2)(A) in the case of an individual who enrolls pursuant to
subsection (d) of section 1837 before the month in which he
first satisfies paragraph (1) or (2) of section 1836, the first
day of such month,
``(B) in the case of an individual who first satisfies such
paragraph in a month beginning before January 2021 and who
enrolls pursuant to such subsection (d)--
``(i) in such month in which he first satisfies such
paragraph, the first day of the month following the
month in which he so enrolls,
``(ii) in the month following such month in which he
first satisfies such paragraph, the first day of the
second month following the month in which he so
enrolls, or
``(iii) more than one month following such month in
which he satisfies such paragraph, the first day of the
third month following the month in which he so enrolls,
``(C) in the case of an individual who first satisfies such
paragraph in a month beginning on or after January 1, 2021, and
who enrolls pursuant to such subsection (d) in such month in
which he first satisfies such paragraph or in any subsequent
month of his initial enrollment period, the first day of the
month following the month in which he so enrolls, or
``(D) in the case of an individual who enrolls pursuant to
subsection (e) of section 1837 in a month beginning--
``(i) before January 1, 2021, the July 1 following
the month in which he so enrolls, or
``(ii) on or after January 1, 2021, the first day of
the month following the month in which he so enrolls,
or''; and
(B) by amending paragraph (3) to read as follows:
``(3) in the case of an individual who is deemed to have
enrolled--
``(A) on or before the last day of the third month of
his initial enrollment period, the first day of the
month in which he first meets the applicable
requirements of section 1836 or July 1, 1973, whichever
is later, or
``(B) on or after the first day of the fourth month
of his initial enrollment period, and where such month
begins--
``(i) before January 1, 2021, as prescribed
under subparagraphs (B)(i), (B)(ii), (B)(iii),
and (D) of paragraph (2), or
``(ii) on or after January 1, 2021, as
prescribed under paragraph (2)(C).''.
(2) Special enrollment periods for exceptional
circumstances.--
(A) Enrollment.--Section 1837 of the Social Security
Act (42 U.S.C. 1395p) is amended by adding at the end
the following new subsection:
``(m) Beginning January 1, 2021, the Secretary may establish special
enrollment periods in the case of individuals who meet such exceptional
conditions as the Secretary may provide, such as individuals who reside
in an area with an emergency or disaster as determined by the
Secretary.''.
(B) Coverage period.--Section 1838 of the Social
Security Act (42 U.S.C. 1395q) is amended by adding at
the end the following new subsection:
``(g) Notwithstanding subsection (a), in the case of an individual
who enrolls during a special enrollment period pursuant to section
1837(m), the coverage period shall begin on a date the Secretary
provides in a manner consistent (to the extent practicable) with
protecting continuity of health benefit coverage.''.
(C) Conforming amendment.--Section 1839(b) of the
Social Security Act (42 U.S.C. 1395r(b)) is amended, in
the first sentence, by striking ``or (l)'' and
inserting ``, (l), or (m)''.
(3) Technical correction.--Section 1839(b) of the Social
Security Act (42 U.S.C. 1395r(b)) is amended by adding at the
end the following new sentence: ``For purposes of determining
any increase under this subsection for individuals whose
enrollment occurs on or after January 1, 2021, the second
sentence of this subsection shall be applied by substituting
`close of the month' for `close of the enrollment period' each
place it appears.''.
(4) Report.--Not later than January 1, 2021, the Secretary of
Health and Human Services shall submit to the Committee on Ways
and Means and Committee on Energy and Commerce of the House of
Representatives and the Committee on Finance and Special
Committee on Aging of the Senate a report including
recommendations on how to align existing Medicare enrollment
periods under title XVIII of the Social Security Act, including
the general enrollment period under part B of such title and
the annual election period under the Medicare Advantage program
under part C of such title and under the prescription drug
program under part D of such title. Such recommendations shall
be consistent with the goals of maximizing coverage continuity
and choice and easing beneficiary transition.
SEC. 102. EXTENSION OF 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), as amended
by section 3306 of the Patient Protection and Affordable Care Act
(Public Law 111-148), section 610 of the American Taxpayer Relief Act
of 2012 (Public Law 112-240), section 1110 of the Pathway for SGR
Reform Act of 2013 (Public Law 113-67), section 110 of the Protecting
Access to Medicare Act of 2014 (Public Law 113-93), section 208 of the
Medicare Access and CHIP Reauthorization Act of 2015 (Public Law 114-
10), and section 50207 of the Bipartisan Budget Act of 2018 (Public Law
115-123), is amended--
(1) in clause (vii), by striking ``and'' at the end;
(2) in clause (viii), by striking ``and'' at the end;
(3) in clause (ix), by striking the period at the end and
inserting ``; and''; and
(4) by inserting after clause (ix) the following new clause:
``(x) for each of fiscal years 2020 through
2022, of $15,000,000.''.
(b) Additional Funding for Area Agencies on Aging.--Subsection
(b)(1)(B) of such section 119, as so amended, is amended--
(1) in clause (vii), by striking ``and'' at the end;
(2) in clause (viii), by striking ``and'' at the end;
(3) in clause (ix), by striking the period at the end and
inserting ``; and''; and
(4) by inserting after clause (ix) the following new clause:
``(x) for each of fiscal years 2020 through
2022, of $15,000,000.''.
(c) Additional Funding for Aging and Disability Resource Centers.--
Subsection (c)(1)(B) of such section 119, as so amended, is amended--
(1) in clause (vii), by striking ``and'' at the end;
(2) in clause (viii), by striking ``and'' at the end;
(3) in clause (ix), by striking the period at the end and
inserting ``; and''; and
(4) by inserting after clause (ix) the following new clause:
``(x) for each of fiscal years 2020 through
2022, of $5,000,000.''.
(d) Additional Funding for Contract With the National Center for
Benefits and Outreach Enrollment.--Subsection (d)(2) of such section
119, as so amended, is amended--
(1) in clause (vii), by striking ``and'' at the end;
(2) in clause (viii), by striking ``and'' at the end;
(3) in clause (ix), by striking the period at the end and
inserting ``; and''; and
(4) by inserting after clause (ix) the following new clause:
``(x) for each of fiscal years 2020 through
2022, of $15,000,000.''.
SEC. 103. MEDICARE COVERAGE OF CERTAIN MENTAL HEALTH TELEHEALTH
SERVICES.
Section 1834(m) of the Social Security Act (42 U.S.C. 1395m(m)) is
amended--
(1) in paragraph (2)(B)(i), by striking ``and paragraph
(6)(C)'' and inserting ``, paragraph (6)(C), and paragraph
(8)(C)'';
(2) in paragraph (4)(C)(i), by striking ``and (7)'' and
inserting ``(7), and (8)'';
(3) in paragraph (4)(F)(i), by inserting ``services
identified by CPT codes 90832, 90834, and 90837 (and as
subsequently modified by the Secretary),'' before ``and any
additional service'';
(4) in paragraph (6)(A), by striking ``paragraph (4)(C)'' and
inserting ``paragraph (4)(C)(i)'';
(5) in paragraph (7), by striking ``The geographic
requirements'' and inserting ``Subject to paragraph (8)(D), the
geographic requirements''; and
(6) by adding at the end the following new paragraph:
``(8) Treatment of mental health telehealth services.--
``(A) Non-application of originating site
requirements.--The requirements described in paragraph
(4)(C)(i) shall not apply with respect to telehealth
services furnished on or after January 1, 2021, that
are mental health telehealth services. Nothing in the
previous sentence shall waive any applicable State law
requirements.
``(B) Inclusion of certain sites.--With respect to
telehealth services described in subparagraph (A), the
term `originating site' shall include the home of the
eligible telehealth individual at which the individual
is located at the time the service is furnished via a
telecommunications system.
``(C) No originating site facility fee.--No facility
fee shall be paid under paragraph (2)(B) to an
originating site with respect to a telehealth service
described in subparagraph (A) if the originating site
does not otherwise meet the requirements for an
originating site under paragraph (4)(C).
``(D) Face-to-face initial assessment;
reassessments.--Payment may not be made for mental
health telehealth services under this paragraph (if
such payment would not otherwise be allowed under this
subsection without application of this paragraph or
paragraph (7)) furnished to an eligible telehealth
individual unless--
``(i) within the 6-month period prior to the
provision of such mental health telehealth
services, the individual receives a face-to-
face clinical assessment, without the use of
telehealth, by a physician described in
subparagraph (F)(i) or a practitioner described
in subparagraph (F)(ii) of the needs of such
individual for such services; and
``(ii) the individual receives a reassessment
(at a frequency specified by the Secretary) by
a physician so described or a practitioner so
described of the needs of such individual for
such services.
``(E) Mental health telehealth services defined.--For
purposes of this paragraph, the term `mental health
telehealth service' means services identified by CPT
codes 90832, 90834, and 90837 (and as subsequently
modified by the Secretary).
``(F) Physician and practitioner described.--For
purposes of subparagraph (D):
``(i) Physician.--A physician described in
this clause is a physician, as defined in
section 1861(r)(1).
``(ii) Practitioner.--A practitioner
described in this clause is a practitioner
described in any of clauses (i), (iv), or (v)
of section 1842(b)(18)(C).''.
SEC. 104. REQUIRING PRESCRIPTION DRUG PLAN SPONSORS TO INCLUDE REAL-
TIME BENEFIT INFORMATION AS PART OF SUCH SPONSOR'S
ELECTRONIC PRESCRIPTION PROGRAM UNDER THE MEDICARE
PROGRAM.
Section 1860D-4(e)(2) of the Social Security Act (42 U.S.C. 1395w-
104(e)(2)) is amended--
(1) in subparagraph (D), by striking ``To the extent'' and
inserting ``Except as provided in subparagraph (F), to the
extent''; and
(2) by adding at the end the following new subparagraph:
``(F) Real-time benefit information.--
``(i) In general.--Not later than January 1,
2021, the program shall implement real-time
benefit tools that are capable of integrating
with a prescribing health care professional's
electronic prescribing or electronic health
record system for the transmission of formulary
and benefit information in real time to
prescribing health care professionals. With
respect to a covered part D drug, such tools
shall be capable of transmitting such
information specific to an individual enrolled
in a prescription drug plan. Such information
shall include the following:
``(I) A list of any clinically-
appropriate alternatives to such drug
included in the formulary of such plan.
``(II) Cost-sharing information for
such drug and such alternatives,
including a description of any variance
in cost sharing based on the pharmacy
dispensing such drug or such
alternatives.
``(III) Information relating to
whether such drug is included in the
formulary of such plan and any prior
authorization or other utilization
management requirements applicable to
such drug and such alternatives so
included.
``(ii) Electronic transmission.--The
provisions of subclauses (I) and (II) of clause
(ii) of subparagraph (E) shall apply to an
electronic transmission described in clause (i)
in the same manner as such provisions apply
with respect to an electronic transmission
described in clause (i) of such subparagraph.
``(iii) Special rule for 2021.--The program
shall be deemed to be in compliance with clause
(i) for 2021 if the program complies with the
provisions of section 423.160(b)(7) of title
42, Code of Federal Regulations (or a successor
regulation), for such year.''.
SEC. 105. TRANSITIONAL COVERAGE AND RETROACTIVE MEDICARE PART D
COVERAGE FOR CERTAIN LOW-INCOME BENEFICIARIES.
Section 1860D-14 of the Social Security Act (42 U.S.C. 1395w-114) is
amended--
(1) by redesignating subsection (e) as subsection (f); and
(2) by adding after subsection (d) the following new
subsection:
``(e) Limited Income Newly Eligible Transition Program.--
``(1) In general.--Beginning not later than January 1, 2021,
the Secretary shall carry out a program to provide transitional
coverage for covered part D drugs for LI NET eligible
individuals in accordance with this subsection.
``(2) LI net eligible individual defined.--For purposes of
this subsection, the term `LI NET eligible individual' means a
part D eligible individual who--
``(A) meets the requirements of clauses (ii) and
(iii) of subsection (a)(3)(A); and
``(B) has not yet enrolled in a prescription drug
plan or an MA-PD plan, or, who has so enrolled, but
with respect to whom coverage under such plan has not
yet taken effect.
``(3) Transitional coverage.--For purposes of this
subsection, the term `transitional coverage' means with respect
to an LI NET eligible individual--
``(A) immediate access to covered part D drugs at the
point of sale during the period that begins on the
first day of the month such individual is determined to
meet the requirements of clauses (ii) and (iii) of
subsection (a)(3)(A) and ends on the date that coverage
under a prescription drug plan or MA-PD plan takes
effect with respect to such individual; and
``(B) in the case of an LI NET eligible individual
who is a full-benefit dual eligible individual (as
defined in section 1935(c)(6)) or a recipient of
supplemental security income benefits under title XVI,
retroactive coverage (in the form of reimbursement of
the amounts that would have been paid under this part
had such individual been enrolled in a prescription
drug plan or MA-PD plan) of covered part D drugs
purchased by such individual during the period that
begins on the date that is the later of--
``(i) the date that such individual was first
eligible for a low-income subsidy under this
part; or
``(ii) the date that is 36 months prior to
the date such individual enrolls in a
prescription drug plan or MA-PD plan,
and ends on the date that coverage under such plan
takes effect.
``(4) Program administration.--
``(A) Single point of contact.--The Secretary shall,
to the extent feasible, administer the program under
this subsection through a contract with a single
program administrator.
``(B) Benefit design.--The Secretary shall ensure
that the transitional coverage provided to LI NET
eligible individuals under this subsection--
``(i) provides access to all covered part D
drugs under an open formulary;
``(ii) permits all pharmacies determined by
the Secretary to be in good standing to process
claims under the program;
``(iii) is consistent with such requirements
as the Secretary considers necessary to improve
patient safety and ensure appropriate
dispensing of medication; and
``(iv) meets such other requirements as the
Secretary may establish.
``(5) Relationship to other provisions of this title; waiver
authority.--
``(A) In general.--The following provisions shall not
apply with respect to the program under this
subsection:
``(i) Paragraphs (1) and (3)(B) of section
1860D-4(a) (relating to dissemination of
general information; availability of
information on changes in formulary through the
internet).
``(ii) Subparagraphs (A) and (B) of section
1860D-4(b)(3) (relating to requirements on
development and application of formularies;
formulary development).
``(iii) Paragraphs (1)(C) and (2) of section
1860D-4(c) (relating to medication therapy
management program).
``(B) Waiver authority.--The Secretary may waive such
other requirements of title XI and this title as may be
necessary to carry out the purposes of the program
established under this subsection.''.
TITLE II--RURAL AND QUALITY IMPROVEMENTS
SEC. 201. MEDICARE GME TREATMENT OF HOSPITALS ESTABLISHING NEW MEDICAL
RESIDENCY TRAINING PROGRAMS AFTER HOSTING MEDICAL
RESIDENT ROTATORS FOR SHORT DURATIONS.
(a) Redetermination of Approved FTE Resident Amount.--Section
1886(h)(2)(F) of the Social Security Act (42 U.S.C. 1395ww(h)(2)(F)) is
amended--
(1) by inserting ``(i)'' before ``In the case of''; and
(2) by adding at the end the following:
``(ii) In applying this subparagraph in the case of a
hospital that trains residents and has not entered into
a GME affiliation agreement (as defined by the
Secretary for purposes of paragraph (4)(H)(ii)), on or
after the date of the enactment of this clause, the
Secretary shall not establish an FTE resident amount
until such time as the Secretary determines that the
hospital has trained at least 1.0 full-time-equivalent
resident in an approved medical residency training
program in a cost reporting period.
``(iii) In applying this subparagraph for cost
reporting periods beginning on or after the date of
enactment of this clause, in the case of a hospital
that, as of such date of enactment, has an approved FTE
resident amount based on the training in an approved
medical residency program or programs of--
``(I) less than 1.0 full-time-equivalent
resident in any cost reporting period beginning
before October 1, 1997, as determined by the
Secretary; or
``(II) no more than 3.0 full-time-equivalent
residents in any cost reporting period
beginning on or after October 1, 1997, and
before the date of the enactment of this
clause, as determined by the Secretary,
in lieu of such FTE resident amount the Secretary
shall, in accordance with the methodology described in
section 413.77(e) of title 42 of the Code of Federal
Regulations (or any successor regulation), establish a
new FTE resident amount if the hospital trains at least
1.0 full-time-equivalent resident (in the case of a
hospital described in subclause (I)) or more than 3.0
full-time-equivalent residents (in the case of a
hospital described in subclause (II)) in a cost
reporting period beginning on or after such date of
enactment and before the date that is 5 years after
such date of enactment.
``(iv) For purposes of carrying out this subparagraph
for cost reporting periods beginning on or after the
date of the enactment of this clause, a hospital shall
report full-time-equivalent residents on its cost
report for a cost reporting period if the hospital
trains at least 1.0 full-time-equivalent residents in
an approved medical residency training program or
programs in such period.
``(v) As appropriate, the Secretary may consider
information from any cost reporting period necessary to
establish a new FTE resident amount as described in
clause (iii).''.
(b) Redetermination of FTE Resident Limitation.--Section
1886(h)(4)(H)(i) of the Social Security Act (42 U.S.C.
1395ww(h)(4)(H)(i)) is amended--
(1) by inserting ``(I)'' before ``The Secretary''; and
(2) by adding at the end the following:
``(II) In applying this clause in the case of
a hospital that, on or after the date of the
enactment of this subclause, begins training
residents in a new approved medical residency
training program or programs (as defined by the
Secretary), the Secretary shall not determine a
limitation applicable to the hospital under
subparagraph (F) until such time as the
Secretary determines that the hospital has
trained at least 1.0 full-time-equivalent
resident in such new approved medical residency
training program or programs in a cost
reporting period.
``(III) In applying this clause in the case
of a hospital that, as of the date of the
enactment of this subclause, has a limitation
under subparagraph (F), based on a cost
reporting period beginning before October 1,
1997, of less than 1.0 full-time-equivalent
resident, the Secretary shall adjust the
limitation in the manner applicable to a new
approved medical residency training program if
the Secretary determines the hospital begins
training at least 1.0 full-time-equivalent
residents in a program year beginning on or
after such date of enactment and before the
date that is 5 years after such date of
enactment.
``(IV) In applying this clause in the case of
a hospital that, as of the date of the
enactment of this subclause, has a limitation
under subparagraph (F), based on a cost
reporting period beginning on or after October
1, 1997, and before such date of enactment, of
no more than 3.0 full-time-equivalent
residents, the Secretary shall adjust the
limitation in the manner applicable to a new
approved medical residency training program if
the Secretary determines the hospital begins
training more than 3.0 full-time-equivalent
residents in a program year beginning on or
after such date of enactment and before the
date that is 5 years after such date of
enactment.
``(V) An adjustment to the limitation
applicable to a hospital made pursuant to
subclause (III) or (IV) shall be made in a
manner consistent with the methodology, as
appropriate, in section 413.79(e) of title 42,
Code of Federal Regulations (or any successor
regulation). As appropriate, the Secretary may
consider information from any cost reporting
periods necessary to make such an adjustment to
the limitation.''.
(c) Technical and Conforming Amendments.--Section 1886 of the Social
Security Act (42 U.S.C. 1395ww) is amended--
(1) in subsection (d)(5)(B)(viii), by striking ``subsection
(h)(4)(H)'' and inserting ``paragraphs (2)(F)(iv) and (4)(H) of
subsection (h)''; and
(2) in subsection (h)--
(A) in paragraph (4)(H)(iv), by striking ``an rural
area'' and inserting ``a rural area''; and
(B) in paragraph (7)(E), by striking ``under this''
and all that follows through the period at the end and
inserting the following: ``under this paragraph,
paragraph (8), clause (i), (ii), (iii), or (v) of
paragraph (2)(F), or clause (i) or (vi) of paragraph
(4)(H).''.
(d) Effective Date.--The amendments made by this section shall apply
to payment under section 1886 of the Social Security Act (42 U.S.C.
1395ww) for cost reporting periods beginning on or after the date of
the enactment of this Act.
SEC. 202. EXTENSION OF THE WORK GEOGRAPHIC INDEX FLOOR UNDER THE
MEDICARE PROGRAM.
Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(E)) is amended by striking ``2020'' and inserting ``2023''.
SEC. 203. EXTENSION OF FUNDING FOR QUALITY MEASURE ENDORSEMENT, INPUT,
AND SELECTION UNDER MEDICARE PROGRAM.
(a) In General.--Section 1890(d)(2) of the Social Security Act (42
U.S.C. 1395aaa(d)(2)) is amended--
(1) by striking ``and $7,500,000'' and inserting
``$7,500,000''; and
(2) by striking ``and 2019.'' and inserting ``and 2019, and
$30,000,000 for each of fiscal years 2020 through 2022.''.
(b) Input for Removal of Measures.--Section 1890(b) of the Social
Security Act (42 U.S.C. 1395aaa(b)) is amended by inserting after
paragraph (3) the following:
``(4) Removal of measures.--The entity may provide input to
the Secretary on quality and efficiency measures described in
paragraph (7)(B) that could be considered for removal.''.
(c) Prioritization of Measure Endorsement.--Section 1890(b) of the
Social Security Act (42 U.S.C. 1395aaa(b)) is amended by adding at the
end the following:
``(9) Prioritization of measure endorsement.--The entity--
``(A) during the period beginning on the date of the
enactment of this paragraph and ending on December 31,
2023, shall prioritize the endorsement of measures
relating to maternal morbidity and mortality by the
entity with a contract under subsection (a) in
connection with endorsement of measures described in
paragraph (2); and
``(B) on and after January 1, 2024, may prioritize
the endorsement of such measures by such entity.''.
SEC. 204. IMPROVING MEASUREMENTS UNDER THE SKILLED NURSING FACILITY
VALUE-BASED PURCHASING PROGRAM UNDER THE MEDICARE
PROGRAM.
(a) In General.--Section 1888(h) of the Social Security Act (42
U.S.C. 1395yy(h)) is amended--
(1) in paragraph (1), by adding at the end the following new
subparagraph:
``(C) Exclusions.--With respect to payments for
services furnished on or after October 1, 2021, this
subsection shall not apply to a facility for which
there are not a minimum number (as determined by the
Secretary) of--
``(i) cases for the measures that apply to
the facility for the performance period for the
applicable fiscal year; or
``(ii) measures that apply to the facility
for the performance period for the applicable
fiscal year.'';
(2) in paragraph (2)(A)--
(A) by striking ``The Secretary shall apply'' and
inserting ``The Secretary--
``(i) shall apply'';
(B) by striking the period at the end and inserting
``; and''; and
(C) by adding at the end the following:
``(ii) may, with respect to payments for
services furnished on or after October 1, 2022,
apply additional measures determined
appropriate by the Secretary, which may include
measures of functional status, patient safety,
care coordination, or patient experience.
Subject to the succeeding sentence, in the case that
the Secretary applies additional measures under clause
(ii), the Secretary shall consider and apply, as
appropriate, quality measures specified under section
1899B(c)(1). In no case may the Secretary apply more
than 10 measures under this subparagraph.'';
(3) in subparagraph (A) of each of paragraphs (3) and (4), by
striking ``measure'' and inserting ``measures''; and
(4) by adding at the end the following new paragraph:
``(12) Validation.--
``(A) In general.--The Secretary shall apply to the
measures applied under this subsection and the data
submitted under subsection (e)(6) a process to validate
such measures and data, as appropriate, which may be
similar to the process specified in section
1886(b)(3)(B)(viii)(XI) for validating inpatient
hospital measures.
``(B) Funding.--For purposes of carrying out this
paragraph, the Secretary shall provide for the
transfer, from the Federal Hospital Insurance Trust
Fund established under section 1817, of $5,000,000 to
the Centers for Medicare & Medicaid Services Program
Management Account for each of fiscal years 2022
through 2024.''.
(b) Report by MedPAC.--Not later than March 15, 2021, the Medicare
Payment Advisory Commission shall submit to Congress a report on
establishing a prototype value-based payment program under a unified
prospective payment system for post-acute care services under the
Medicare program under title XVIII of the Social Security Act (42
U.S.C. 1395 et seq.). Such report--
(1) shall--
(A) consider design elements such as--
(i) measures that are important to the
Medicare program and to beneficiaries under
such program;
(ii) methodologies for scoring provider
performance and effects on payment; and
(iii) other elements determined appropriate
by the Commission; and
(B) analyze the effects of implementing such
prototype program; and
(2) may--
(A) discuss the possible effects, with respect to the
Medicare program, on program spending, post-acute care
providers, patient outcomes, and other effects
determined appropriate by the Commission; and
(B) include recommendations with respect to such
prototype program, as determined appropriate by the
Commission, to Congress and the Secretary of Health and
Human Services.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 3417, the ``Beneficiary Education Tools,
Telehealth, and Extenders Reauthorization (BETTER) Act of
2019,'' as amended and ordered reported by the Committee on
Ways and Means on June 26, 2019, simplifies and improves
Medicare enrollment, enhances access to care, and improves
quality. It also extends four expiring Medicare provisions. The
BETTER Act includes provisions from nine bipartisan bills in
the 116th Congress that improve outreach, communication, and
access to Medicare services. It also includes provisions aimed
at improving quality measurement, physician payment, and
physician training.
This bill was introduced by Ways and Means Chairman Richard
E. Neal (D-MA) and Ranking Member Kevin Brady (R-TX). Section
101 is based on H.R. 2477, the Beneficiary Enrollment
Notification and Eligibility Simplification (BENES) Act of
2019, introduced by Representatives Raul Ruiz (D-CA), Jackie
Walorski (R-IN), Brad Schneider (D-IL), and Gus Bilirakis (R-
FL). Section 102 is based on H.R. 3421, the Fair Choices for
Medicare Beneficiaries Act of 2019, introduced by
Representatives Jimmy Gomez and (D-CA), Vern Buchanan (R-FL),
and Debbie Dingell (D-MI). Section 103 is based on H.R. 1301,
the Mental Health Telemedicine Act, introduced by
Representatives Suzan DelBene (D-WA), Tom Reed (R-NY), Adrian
Smith (R-NE), Terri Sewell (D-AL), Mike Kelly (R-PA), David
Schweikert (R-AZ), and Jackie Walorski. Section 104 is based on
H.R. 3408, the Shop Rx Act of 2019, introduced by
Representatives Jodey Arrington (R-TX) and Pete Olson (R-TX),
and H.R. 3415, the Real Time Beneficiary Drug Cost Bill,
introduced by Representatives Elissa Slotkin (D-MI). Section
105 is based on H.R. 3029, the Improving Low-Income Access to
Prescription Drugs Act, introduced by Representatives Pete
Olson (R-TX), John Lewis (D-GA), Nanette Diaz Barragan (D-CA),
and Kenny Marchant (R-TX).
Section 201 is based on H.R. 3425, the Advancing Medical
Resident Training in Community Hospitals Act of 2019,
introduced by Representatives Ron Kind (D-WI) and George
Holding (R-NC). Section 202 is based on H.R. 3302, the Keeping
Physicians Serving Patients Act of 2019, introduced by
Representatives Abby Finkenauer (D-IA), Adrian Smith (R-NE),
Ron Kind (D-WI), Terri Sewell (D-AL), and Darin LaHood (R-IL).
Section 203 is based on H.R. 3430, To amend title XVIII of the
Social Security Act to extend funding for quality measure
endorsement, input, and selection under the Medicare program,
introduced by Representatives Judy Chu (D-CA) and David
Schweikert (R-AZ). Section 204 is based on H.R. 3406, which
amends title XVIII of the Social Security Act to improve
measurements under the skilled nursing facility value-based
purchasing program under the Medicare program, introduced by
Ways and Means Chairman Richard E. Neal (D-MA) and Ranking
Member Kevin Brady (R-TX).
B. Background and Need for Legislation
H.R. 3417 extends four Medicare provisions set to expire at
the end of fiscal or calendar year 2019. The bill additionally
makes important changes for individuals suffering from mental
health and substance use disorders, individuals residing in
rural areas, Medicare beneficiaries, and health care providers.
Expanded coverage for mental health services. According to
the Substance Abuse and Mental Health Services Administration
(SAMHSA), as of 2016 more than 75 percent of all U.S. counties
were considered mental health shortage areas, and half of all
U.S. counties had no mental health professional.\1\ In 2016, 85
percent of Medicare beneficiaries using telehealth services had
a mental health diagnosis and those diagnoses lead to higher
medical costs.\2\ H.R 3417 improves access to mental health
services across the board by expanding access to mental health
counseling sessions. Under the BETTER Act, beneficiaries in
rural and urban areas will be able to access 30-, 45-, and 60-
minute mental health telehealth counseling sessions. This is
particularly valuable to beneficiaries who spend part of the
year in a different location and need to remain in contact with
a therapist or other provider and to beneficiaries who may be
of limited mobility and cannot make weekly trips for in-person
sessions.
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\1\Rural Behavioral Health: Telehealth Challenges and
Opportunities, 9:2 Substance Abuse and Mental Health Services Admin. at
4 (2016), https://store.samhsa.gov/sites/default/files/d7/priv/sma16-
4989.pdf.
\2\Information on Medicare Telehealth, Ctrs. for Medicare &
Medicaid Servs. At 2 (Nov. 15, 2018), https://www.cms.gov/About-CMS/
Agency-Information/OMH/Downloads/Information-on-Medicare-Telehealth-
Report.pdf.
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Additional funding for enrollment and outreach to connect
Medicare beneficiaries with needed coverage. H.R. 3417 provides
funding for various beneficiary education organizations. The
legislation extends funding for the State Health Insurance
Assistance Program (SHIP), Beneficiary Enrollment Counselors
(BEC), Area Agencies on Aging (AAA), and Aging and Disability
Resource Centers (ADRC) for three years, increasing overall
funding to $50 million annually. These organizations play a
critical role for Medicare beneficiaries. For example, SHIPs
provide information and counseling to beneficiaries through
local offices, community outreach programs, and toll-free
telephone services. This insurance counseling is free for
Medicare beneficiaries, their families, and their caregivers.
During the April 2017-March 2018 grant year, SHIPs provided
one-on-one counseling and support for almost three million
Medicare-eligible individuals and their families, including
more than 440,000 people with disabilities. SHIPs also provided
outreach and education to more than 3.5 million people across
the country. Section 50207 of the Bipartisan Budget Act of 2018
extended funding for SHIPs until the end of FY 2019.\3\
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\3\Bipartisan Budget Act of 2018 (P.L. 115-123): Brief Summary of
Division E-The Advancing Chronic Care, Extenders, and Social Services
(ACCESS) Act, Cong. Research Serv. At table 1, CRS-4 (Mar. 9, 2018),
https://fas.org/sgp/crs/misc/R45126.pdf.
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The BETTER Act also makes critical improvements to the pre-
Medicare enrollment process both for individuals approaching
age 65 and those qualifying for Medicare due to disability.
These individuals would receive additional and improved advance
notice to ensure they understand basic Medicare enrollment
rules. These changes will help ensure fewer beneficiaries are
subject to a late enrollment penalty due to confusion around
timing of enrollment.
Improved information and coverage to ensure that Medicare
beneficiaries get the right care at the right time. H.R. 3417
improves affordability by making permanent the Medicare Limited
Income Newly Eligible Transition (LI NET) Program, which
provides coverage under Medicare Part D for low-income
beneficiaries when they first enroll to ensure they can quickly
access needed medications, including retroactive payment for
medicines already purchased. According to the FY2020 HHS Budget
in Brief, the ``. . . current demonstration, which runs through
the end of 2019, has shown the proposed approach to both save
money and be less disruptive to beneficiaries.''\4\
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\4\Putting America's Health First: FY 2020 President's Budget for
HHS, Dept. Health & Human Servs. at 17 (2019), https://www.hhs.gov/
sites/default/files/fy-2020-budget-in-brief.pdf.
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The BETTER Act also requires Medicare Part D plans to use a
``real-time benefit tool'' so that Medicare beneficiaries will
know the cost of a prescription drug and its alternatives when
their physician is writing the prescription at their medical
visit. Beneficiaries will also be able to get real-time
information on out-of-pocket costs at other nearby pharmacies.
Such information is critical in helping both physicians and
patients understand the price of their drugs before they get to
the pharmacy counter and have fewer options.
Investment in quality to improve outcomes for Medicare
beneficiaries. The BETTER Act includes improvements in the
Skilled Nursing Facility Value-Based Purchasing Program (SNF
VBP), which today only evaluates the care provided in these
facilities based on a single readmission measure. Under H.R.
3417, Medicare will be able to improve measurement of value and
drive quality by adding up to 10 measures, such as those
included in the Improving Medicare Post-Acute Care
Transformation (IMPACT) Act of 2014\5\ or those related to
inappropriate use of antipsychotics, sepsis, bedsores and other
common quality issues that affect Medicare beneficiaries.
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\5\Improving Medicare Post-Acute Care Transformation (PACT) Act of
2014, Pub. Law No. 113-185 (Oct. 6, 2014), https://www.congress.gov/
113/plaws/publ185/PLAW-113publ185.pdf.
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Under the BETTER Act, the National Quality Forum (NQF), the
consensus-based entity that assesses, improves, and endorses
quality measures, will receive $30 million for each of the next
three fiscal years for all work related to quality measurement
in the Medicare program. NQF publishes annual reports with
recommendations to the Secretary for selection of quality
measures in February of each year. Section 50206 of the
Balanced Budget Act (BBA) of 2018 transferred $7.5 million from
the Hospital Insurance and Supplementary Medical Insurance
Trust Funds for each of Fiscal Years (FYs) 2018 and 2019 to
support NQF's work. Funding for NQF expires at the end of FY
2019. Congress is still waiting to receive a report from the
Government Accountability Office (GAO) on NQF activities and
funding, as required under Section 50206 of the Balanced Budget
Act (BBA) of 2018.
C. Legislative History
Background
H.R. 3417 was introduced on June 21, 2019 and was referred
to the Committee on Ways and Means and additionally the
Committee on Energy and Commerce.
Committee hearings
On June 4, 2019, the Committee on Ways and Means held a
full committee Member Day hearing to discuss the range of
issues, concerns, and proposals among on-committee and off-
committee members. During that hearing, Representatives Terri
Sewell (D-AL), Adrian Smith (R-NE), Devin Nunes (R-CA), Donna
Shalala (D-FL), Abigail Spanberger (D-VA), Anthony Brindisi (D-
NY), Elissa Slotkin, Ben McAdams (D-UT), and TJ Cox (D-CA),
discussed the need for beneficiary improvements in the Medicare
program and technical barriers preventing rural hospitals from
starting graduate medical education (GME) programs, the need
for policies that improve drug pricing transparency (including
a real-time benefit tool), the importance of making permanent a
Centers for Medicare & Medicaid Services (CMS) demonstration
that protects low-income Medicare beneficiaries in the Part D
drug program, the need for an extension of funding for NQF, and
the importance of increasing access to telehealth in Medicare.
Committee action
The Committee on Ways and Means marked up H.R. 3417, the
``Beneficiary Education Tools, Telehealth, and Extenders
Reauthorization (BETTER) Act of 2019,'' on June 26, 2019, and
ordered the bill, as amended, favorably reported (with a quorum
being present) by a roll call vote of 41-0.
II. EXPLANATION OF ACT
A. Title I--Patient Improvements
Section 101. Beneficiary Enrollment Notification and Eligibility
Simplification
PRESENT LAW
The Social Security Administration (SSA) processes Medicare
Parts A and B enrollments. Individuals who are receiving Social
Security benefits prior to age 65 are automatically enrolled in
Medicare Parts A and B, and coverage begins the month that the
individual turns 65. Similarly, individuals who are receiving
Social Security Disability Insurance (SSDI) benefits are
automatically enrolled in Medicare Parts A and B at the end of
their 24-month waiting period, and coverage begins the
following month. These individuals may change their Medicare
enrollment (for example, decline Part B) during a seven-month
period (called the initial enrollment period (IEP)) surrounding
their 65th birthday or the end of their Medicare waiting
period. These individuals receive a Welcome to Medicare packet
three months before their 65th birthday or the end of their
Medicare waiting period.
Medicare-eligible individuals who have not been receiving
Social Security benefits prior to age 65 must proactively
enroll in Medicare, during the IEP. For those who enroll in
Medicare during the three months prior to the month they turn
65, coverage begins during the month they turn age 65. Coverage
for those who sign up during either the month of their 65th
birthday or the following three months may be delayed from one
to three months after the time they enroll. Such individuals do
not receive explicit notification of their upcoming initial
enrollment period or of the potential for late enrollment
penalties and gaps in coverage if enrollment in Medicare is
delayed.
When individuals first become eligible for Medicare, they
may enroll in either original Medicare (Parts A and B) or a
private Medicare Advantage (MA) plan (Medicare Part C). They
also may choose to enroll in a Medicare Part D plan at this
time. Additionally, individuals may join or switch MA and/or
Part D plans during an open enrollment period, which occurs
each fall from October 15 to December 7, with coverage
effective January 1 of the following year.
Those who do not enroll in Part B when first eligible may
be subject to late enrollment premium penalties if they enroll
at a subsequent date. Medicare-eligible individuals who do not
enroll in Part B during their initial enrollment period can
enroll during a general enrollment period that runs from
January through March each year, with coverage effective that
July. In certain cases, beneficiaries may delay Part B
enrollment without penalty and qualify for a special enrollment
period, if they or their spouse are employed and their
employer-sponsored insurance remains the primary payer with
Medicare as the secondary payer.
REASONS FOR CHANGE
There has been long-standing coordination and education
issues for individuals first enrolling in Medicare. Seniors and
individuals with disabilities who do not receive start
receiving Social Security benefits before 65 need to
proactively enroll in Medicare, but do not receive important
information about Medicare, such as the Welcome to Medicare
packet. This lack of information can lead to seniors making the
decisions that leave them paying Medicare late enrollment
penalties for the rest of their lives. Section 101 requires
information to be sent to seniors approaching ages 63 to 65,
and individuals with disabilities to Social Security disability
beneficiaries approaching the end of their 24-month Medicare
waiting period, about their Medicare coverage before they
enroll. When individuals fail to timely enroll in Part B due to
error, misrepresentation, or inaction by a government official,
the Secretary of HHS has discretion to provide relief from the
late enrollment penalty. However, individuals are not currently
informed of the availability of relief.
Despite the clear value of statements to the American
public, the Social Security Administration (SSA) currently
fails to comply with Section 1143 of the Social Security Act in
two ways. First, SSA currently only mails statements to
individuals age 60 and older who are not receiving Social
Security benefits. Second, even among this limited group of
seniors, SSA only mails statements to individuals who do not
have a mySocialSecurity online account--whether or not they
have recently viewed their statement online. A review by SSA's
Inspector General, completed at the request of former Social
Security Subcommittee Chairman Sam Johnson and Representative
Vern Buchanan (R-FL), found that only about two in five
individuals with a mySocialSecurity account accessed their
statement online in Fiscal Year 2018. Section 101 requires HHS
to reimburse SSA for the full costs of SSA's activities related
to the notifications. This provision also clarifies that SSA is
not relieved of its existing obligation under Section 1143 of
the Social Security Act to mail an annual Social Security
Statement to all individuals age 25 and older who have covered
earnings and are not receiving Social Security benefits.
Statements inform Americans about their Social Security
benefits, help individuals to plan for their retirement, and
allow workers to review and correct their earnings records.
This provision also eliminates needless multi-month
coverage gaps in Medicare by mandating that Part B insurance
begin the first of the month following an individual's
enrollment during both the later months of the beneficiary's
Initial Enrollment Period (IEP) and during the General
Enrollment Period (GEP). Additionally, the provision allows the
federal government to create a Part B Special Enrollment Period
(SEP) for exceptional circumstances like natural disasters, a
provision currently used in Medicare Advantage and Part D when
people are not able to sign up for Medicare due to occurrences
beyond their control like, such as hurricanes and other natural
disasters.
Complex Medicare enrollment rules and inadequate
notification cause tens of thousands of older adults and people
with disabilities to face lifetime fines, coverage gaps, and
other harmful consequences. With fewer people automatically
enrolled in Medicare--and 10,000 Baby Boomers aging into
Medicare each day--more people new to Medicare must actively
enroll in the program. Individuals who miss their initial
Medicare enrollment window, or who decline Part B coverage, may
pay lifetime late enrollment penalties, experience lengthy gaps
in outpatient health coverage, or face unaffordable and
unexpected out-of-pocket health care costs. In 2018, about
760,000 people with Medicare were paying a Part B Late
Enrollment Penalty (LEP) and the average LEP amounted to a
nearly 28 percent increase in a beneficiary's monthly premium.
According to the Medicare Payment Advisory Commission, ``up to
about 20 percent of beneficiaries paying Part B late-enrollment
penalties may not have known about the penalties when they
turned age 65.''\6\ A bipartisan group of eight former
Administrators of the Medicare program support the BENES Act
and urged Congress to pass the bill: ``We all agree on the
importance of treating Medicare beneficiaries fairly,
efficiently, and as helpfully as possible,'' the group said, in
an August 2016 letter to the Chairs and Ranking Members of the
House and Senate committees of jurisdiction.\7\
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\6\Report to the Congress: Medicare and the Health Care Delivery
System, MedPAC at 4 (June 2019), http://medpac.gov/docs/default-source/
reports/jun19_ch1_medpac_reporttocongress_sec.pdf.
\7\CMS Administrators Support Letter of BENES Act, Medicare Rights
Center (Aug. 22, 2016), https://www.medicarerights.org/pdf/CMS-Admin-
Support-Ltr-BENES-Act-S3236-HR5772-082216.pdf.
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EXPLANATION OF PROVISION
Section 101 is substantively similar to H.R. 2477,
Beneficiary Enrollment Notification and Eligibility
Simplification (BENES) Act of 2019, introduced by
Representatives Raul Ruiz (D-CA), Jackie Walorski (R-IN), Brad
Schneider (D-IL), and Gus Bilirakis (R-FL). Section 101 directs
the federal government to provide advance notice to individuals
approaching Medicare eligibility about basic Medicare
enrollment rules, mandates that Part B insurance begin the
first of the month following an individual's enrollment, and
creates a Part B Special Enrollment Period.
Beginning in 2021, the Secretary of HHS and the
Commissioner of Social Security are required to coordinate to
include a Medicare notification as part of the Social Security
Statement--which is required to be mailed annually to
individuals not yet receiving Social Security benefits--to
individuals attaining ages 63, 64 and 65, and to send a similar
Medicare notification twice to all SSDI beneficiaries
approaching the end of the Medicare waiting period. Going
forward, the Committee intends to continue to further develop
this provision to ensure that Social Security retirement and
survivor beneficiaries approaching age 65 also receive a
notification.
The notification will include information regarding
Medicare benefits, enrollment, late enrollment penalties, the
availability of relief from late enrollment penalties under
section 1837(h), coordination of benefits, and information for
populations for whom there are special considerations. The
Secretary and the Commissioner of the SSA shall develop the
notice in consultation with representatives of the following
groups: individuals who are 60 years of age or older; veterans;
individuals with disabilities; individuals with end stage renal
disease; low-income individuals and families; employers
(including human resources professionals); states (including
representatives of State-run Health Insurance Exchanges,
Medicaid offices, and Departments of Insurance); State Health
Insurance Assistance Programs; health insurers; health
insurance agents and brokers; and such other groups as
specified by the Secretary. The Committee anticipates that the
notification will provide clear and simple information that
would be contained on both sides of a single sheet of paper.
The Secretary of HHS and the Commissioner of SSA are
required to enter into an agreement for HHS to reimburse SSA
for the full costs of SSA's activities related to the
notifications. Reimbursement will cover not only the costs of
developing, printing, and mailing the notifications but also
costs related to increased visits to SSA's field offices and
increased calls to SSA's national 1-800 number from people who
have questions about the notifications.
This section also clarifies that SSA is not relieved of its
existing obligation under Section 1143 of the Social Security
Act to physically mail an annual Social Security Statement to
all individuals age 25 and older who have covered earnings and
are not receiving Social Security benefits. The Committee
expects that SSA will resume compliance with Section 1143 by
mailing annual Statements to all individuals age 25 and older,
regardless of whether or not an individual has a
mySocialSecurity online account.
Also beginning in 2021, the bill mandates that Part B
insurance begin the first of the month following an
individual's enrollment. Effective upon enactment, there will
also be a SEP for ``exceptional circumstances,'' such as
hurricanes and other natural disasters, to mirror authority in
Medicare Advantage and Medicare Part D.
EFFECTIVE DATE
The provision applies for statements mailed or notices
provided two years after the date of enactment; effective for
changes to enrollment periods and effective date of coverage on
November 1, 2021.
Section 102. Extension of Funding Outreach and Assistance for Low
Income Programs
PRESENT LAW
The Administration for Community Living administers federal
grant programs that fund outreach and assistance to older
adults, individuals with disabilities, and their caregivers in
accessing various health and social services. Funding for these
programs is provided through discretionary budget authority in
annual appropriations to the following entities: SHIPs; Area
Agencies on Aging (AAA); and Aging and Disability Resource
Centers (ADRCs). The National Center for Benefits and Outreach
Enrollment assists organizations to enroll older adults and
individuals with disabilities into benefit programs that they
may be eligible for, such as Medicare, Medicaid, the
Supplemental Security Income program, and the Supplemental
Nutrition Assistance Program, among others.
In addition to discretionary funding for these programs,
beginning in fiscal year (FY) 2009, Section 119 of the Medicare
Improvements for Patients and Providers Act (MIPPA; P.L. 110-
275) provided mandatory funding for specific outreach and
assistance activities to Medicare beneficiaries. This mandatory
funding was extended multiple times, most recently in the
Bipartisan Budget Act of 2018 (BBA 2018; P.L. 115-123) through
FY 2019 and provided for outreach and assistance to low-income
Medicare beneficiaries including those who may be eligible for
the Low-Income Subsidy (LIS) program, Medicare Savings Program,
and the Medicare Part D Prescription Drug Program. The
Secretary of the Department of Health and Human Services (HHS)
is required to transfer specified amounts for MIPPA program
activities from the Medicare Hospital Insurance (HI) and
Supplementary Medical Insurance (SMI) Trust Funds.
REASONS FOR CHANGE
The BETTER Act aims to improve existing law by extedning
funding for the State Health Insurance Program (SHIP), Area
Agencies on Aging (AAA), and Aging and Disability Resource
Centers (ADRCs), and the National Center for Benefits and
Outreach Enrollment counselors for three years, until Fiscal
Year (FY) 2022, and increases that funding to $50 million a
year. These counselors help Medicare beneficiaries with
enrollment and appeals questions with traditional Medicare,
Medicare Advantage, and Part D drug coverage.
EXPLANATION OF PROVISION
Section 102 is substantively similar to H.R. 3421, the
Enhancing Consumer Assistance for Medicare Beneficiaries Act,
introduced by Representatives Jimmy Gomez (D-CA), Vern Buchanan
(R-FL), and Debbie Dingell (D-MI). Section 102 increases
funding for programs that assist Medicare beneficiaries to
$50,000,000 per year and extends that funding through Fiscal
Year (FY) 2022.
Effective FY 2020, there will be a three-year extension of
the $15,000,000 per year allocated to the State Health
Insurance Assistance Programs through FY 2022. In addition,
there will be three years of additional funding at $15,000,000
per year to support the Area Agencies on Aging, three years of
additional funding at $15,000,000 per year to support a
contract with the National Center for Benefits and Outreach
Enrollment, and three years of funding at $5,000,000 per year
to support a contract with the Aging and Disability Resource
Centers.
EFFECTIVE DATE
The provision applies beginning FY 2020.
Section 103. Medicare Coverage of Certain Mental Health Telehealth
Services
PRESENT LAW
In general, certain telehealth services can be provided to
Medicare beneficiaries under Parts A and B, although a separate
payment for telehealth services may apply in certain
situations. Under current law, the term ``telehealth service''
means professional consultations, office visits, and office
psychiatry services (identified as of July 1, 2000 by
Healthcare Common Procedure Coding System (HCPCS) codes) and as
subsequently modified by the HHS Secretary. Under Part A,
telehealth services may be used to treat hospital inpatients,
but there is no statutory authority for a separate payment
under the Medicare hospital Inpatient Prospective Payment
System (IPPS). Although no payment is involved, the CMS
guidance for Part A explicitly identifies telehealth as an
alternative to face-to-face encounters when a physician writes
an order for home health services.
Under Part B, payments for telehealth services must follow
SSA Section 1834(m), which places restrictions on the location,
provider, telehealth technology, and certain other parameters.
The facility where the beneficiary is located is referred to as
the originating site, and the site where the practitioner is
located is referred to as the distant site. Medicare makes a
payment to the physician or practitioner at the distant site
for rendering the telehealth service, and a separate facility
fee to the originating site. SSA Section 1834(m) requires that
the originating site meet one of three conditions: telehealth
service originating sites must be located in a rural health
professional shortage area or a county not included in a
Metropolitan Statistical Area (MSA), or from an entity that
participates in a federal telemedicine demonstration project.
Qualifying originating sites include an office of a physician
or practitioner, a critical access hospital (CAH), a rural
health clinic, a federally qualified health center, a hospital,
a hospital- or CAH-based renal dialysis center, a skilled
nursing facility, or a community mental health center. Under
Part C, MA plans must provide telehealth services to the extent
that they are a covered service under Medicare Part B.
BBA 2018 expanded telehealth under Medicare in four ways:
(1) by increasing the opportunities for certain accountable
care organization (ACO) and Medicare shared savings models to
receive telehealth payments, beginning January 1, 2020; (2) by
eliminating the originating site restrictions for telehealth
services for acute stroke evaluation, beginning January 1,
2019; (3) by allowing MA plans to provide additional telehealth
benefits (minus capital and infrastructure costs), which are
treated as if they are benefits required under original
Medicare (Parts A and B) for payment purposes starting in plan
year 2020; and (4) by permitting Medicare patients with end-
stage renal disease on home dialysis to receive monthly
clinical assessments at home or at freestanding dialysis
facilities via telehealth, beginning January 1, 2019.
Section 2001 of the SUPPORT Act (P.L.115-271) further
amended SSA Section 1834(m) to eliminate the geographic
originating site requirements listed above for telehealth
services furnished for treating substance use disorder (SUD)
and co-occurring mental health disorders. In order to receive a
facility fee for SUD telehealth services, the originating site
must be one of the qualifying originating sites listed above
(excluding freestanding dialysis facilities). The provision
also added the home of an individual as a permissible
originating site for SUD telehealth services; however, facility
fees do not apply to originating sites from homes. Although the
provision states that the amendments in this section are to
take effect beginning July 1, 2019, the HHS Secretary was given
the authority to implement the modifications by interim final
rule and did so.
REASONS FOR CHANGE
The BETTER Act expands mental health telehealth services,
improving access to critical care that can help improve mental
health as beneficiaries age. This provision would benefit
patients in rural and urban areas alike, expanding access to a
service with well-documented gaps in access to care. This
provision removes certain restrictions around the provision of
mental health telehealth in Medicare for specific medical
billing codes, allowing reimbursement for telehealth services
outside of rural geographies and demonstration pilots. The
provision also requires an initial in-person assessment.
Ultimately, the goal of the provision is to use telehealth to
increase access to mental health services for Medicare
beneficiaries. Nothing in this provision is intended to amend
state laws affecting access to telemedicine services.
EXPLANATION OF PROVISION
Section 103 is substantively similar to H.R. 1301, The
Mental Health Telemedicine Expansion Act, introduced by
Representatives Suzan DelBene (D-WA), Tom Reed (R-NY), Adrian
Smith (R-NE), Terri Sewell (D-AL), Mike Kelly (R-PA), David
Schweikert (R-AZ), and Jackie Walorski (R-IN). Section 103
removes certain restrictions around mental health telehealth
and allows payment for telehealth services regardless of its
originating site.
Effective January 1, 2021, Medicare will pay for certain
mental health telehealth services without geographic
restrictions and outside of pilot demonstrations. The section
also lifts originating site restrictions, eliminates facility
fees at originating sites, and makes the patient's home an
originating site for mental health telehealth services.
Finally, payments will be limited to services provided after an
initial face-to-face assessment with occasional face-to-face
reassessments.
EFFECTIVE DATE
The provision applies beginning on January 1, 2021
Section 104. Requiring Prescription Drug Plan Sponsors to Include Real-
Time Benefit Information as Part of Such Sponsor's Electronic
Prescription Program Under the Medicare Program
PRESENT LAW
Under Medicare Part D, private insurers and other plan
sponsors enter into annual contracts with CMS to provide a
defined package of outpatient drug benefits in some or all of
34 Part D regions and U.S. territories. There is no central
formulary in Part D, but each plan must cover at least two
drugs in each class and category and substantially all drugs in
six protected classes. There is wide variation among Part D
plans in regard to specific formulary drugs, prescription cost-
sharing amounts, and utilization management requirements (e.g.,
prior authorization or quantity limits).
As part of program requirements, Part D plans must support
an electronic prescription (e-prescribing) program, which is
defined by CMS as the use of electronic media to transmit
prescription or prescription-related information between a
prescriber, dispenser, pharmacy benefit manager, and/or health
plan, either directly or through an intermediary, including an
e-prescribing network. Technical transmission requirements for
e-prescribing networks are based on standards set by the
National Council for Prescription Drug Programs (NCPDP SCRIPT)
and other outside organizations. E-prescribing is optional for
physicians and pharmacies; however, physicians and pharmacies
that choose to transmit e-prescriptions and related
communications with Part D plans must comply with CMS
standards. CMS also requires Part D plan sponsors and
prescribers to convey electronic formulary and benefits
information amongst themselves using NCPDP Formulary and
Benefits Standard Implementation Guides, referred to as F&B.
Part D e-prescribing standards are updated periodically to
account for new technology or to respond to statutory
requirements. In May 2019 CMS issued final regulations at 42
C.F.R. 423.160(b)(7) requiring Part D sponsors, no later than
January 1, 2021, to implement one or more electronic real-time
benefit tools (RTBT). According to CMS, the existing NCPDP
SCRIPT standard allows prescribers to conduct electronic
prescribing, while the F&B standard allows prescribers to see
what drugs are on a plan's formulary, but neither of the
standards provides patient-specific, real-time cost or coverage
information, such as formulary requirements or utilization
management data, at the point of prescribing. The RTBT data
would be used in conjunction with existing systems to provide a
more complete view of a beneficiary's prescription benefit.
Specifically, the May 2019 regulations require Part D plans to
have one or more RTBT systems capable of integrating with at
least one prescriber's e-prescribing or electronic health
record (EHR) system. Data to be provided through the RTBT
regarding individual plan formularies include information on
enrollee cost-sharing; clinically appropriate formulary
alternatives, when available; and the utilization management
requirements applicable to each drug.
REASONS FOR CHANGE
Currently, when health care providers prescribe drugs, they
do not know how much the patient will have to pay out-of-
pocket. Doctors, other prescribers, and patients want current
and reliable information about patients' out-of-pocket costs so
they can consider potential alternative therapies when
determining a course of treatment. Title I codifies and expands
the Administration's proposal for a real-time drug benefit
tool, which gives doctors and Medicare beneficiaries
information about how much a patient will pay for a drug while
they are in the doctor's office. This section provides health
care providers with real-time benefit and copay information
when prescribing drugs. This type of transparency will arm
patients and their health care providers with information that
can lower Medicare beneficiaries' costs at the pharmacy
counter.
EXPLANATION OF PROVISION
Section 104 is substantively similar to H.R. 3408 and H.R.
3415 introduced by Representatives Jodey Arrington (R-TX), Pete
Olson (R-TX), and Elissa Slotkin (D-MI), respectively. This
section codifies and expands a rule to require Part D
prescription drug plans to create a real-time benefit tool that
gives providers access to individual-specific formulary and
benefit information under a prescription drug plan to inform
patients of their actual out-of-pocket costs for a
prescription.
No later than January 1, 2021, prescription drug plans
under the Medicare program will be required to provide for the
real-time electronic transmission to prescribing health care
professionals. This tool must use technology capable of
integrating with providers' electronic prescribing or
electronic health record systems and must be able to provide
individual-specific formulary and benefit information.
Information provided through this tool must include: a
description of clinically appropriate alternatives, information
about cost-sharing requirements (including cost variations at
the pharmacy level), and information about prior authorization
requirements and any alternatives within the formulary.
EFFECTIVE DATE
The provision applies no later than January 1, 2021
Section 105. Transitional Coverage and Retroactive Medicare Part D
Coverage for Certain Low-Income Beneficiaries
PRESENT LAW
There is no means test for enrollment in Medicare Part D,
but individuals who meet specified income and assets thresholds
are eligible for the Low-Income Subsidy (LIS), which covers a
greater share of out-of-pocket spending for those individuals,
including premiums and prescription cost-sharing. The actual
amount of LIS assistance varies based on an enrollee's assets
and income and whether a beneficiary is institutionalized or is
receiving community-based care. Full-subsidy LIS enrollees,
including enrollees who qualify for Medicare and full Medicaid
benefits (dual eligible) or Supplemental Security Income (SSI),
have no deductible, minimal cost-sharing for prescription
drugs, and a cap on annual out-of-pocket spending. Partial-
subsidy-eligible LIS enrollees, meaning individuals with assets
below set thresholds and income up to 150 percent of the
federal poverty level (FPL) also receive additional Part D
subsidies, but have higher prescription cost sharing than full-
LIS enrollees.
Under the process for obtaining LIS benefits, there must
first be a determination that an individual meets the
thresholds for LIS assistance. Next, the individual must be
enrolled in a Part D plan. Over the years, advocates have
expressed concerns about gaps in coverage for individuals who
qualify for the LIS but are not yet covered by a Part D plan.
To address the situation, HHS in 2010 authorized a pilot
program, the Limited Income Newly Eligible Transition (LI NET),
to provide immediate temporary Part D coverage for LIS
individuals. LI NET provides drug coverage for up to two months
until an LIS-eligible individual is covered in a Part D plan,
as well as up to 36 months retroactive coverage for full-
subsidy LIS and SSI-only beneficiaries, in cases where their
SSI or dual eligibility is retroactive. LI NET coverage,
currently provided through health insurer Humana, reimburses
pharmacies for all Part D-covered drugs.
CMS can automatically enroll full subsidy and SSI
beneficiaries into LI NET. Individuals can also qualify for LI
NET benefits by filing for coverage at a pharmacy or submitting
a receipt for a past prescription that was paid out-of-pocket.
For LI NET participants, enrollment in a standard Part D plan
takes effect on the first day of the month after the month that
follows LI NET enrollment.
REASONS FOR CHANGE
The legislation makes permanent a CMS demonstration that
protects low-income Medicare beneficiaries in the Part D drug
program. Section 105 codifies the program as it is currently
administered, outlining specified purposes within which the
Secretary retains discretion over LI NET Program benefit design
(i.e., access to an open formulary and a prohibition on network
pharmacy restrictions). The provision also grants the Secretary
new authority to waive requirements of Titles XI and XVIII of
the Social Security Act, as necessary, to administer the LI NET
Program.
EXPLANATION OF PROVISION
Section 105 is substantively similar to H.R. 3029, The
Improving Low-Income Access to Prescription Drugs Act of 2019,
introduced by Representatives Pete Olson (R-TX), Nanette Diaz
Barragan (D-CA), Kenny Marchant (R-TX), and John Lewis (D-GA).
Section 105 would make the Medicare Limited Income Newly
Eligible Transition (LI NET) Program a permanent part of
Medicare Part D.
Beginning January 1, 2021, the LI NET Program will
transition into a permanent program for Medicare beneficiaries
who are not currently enrolled in a prescription drug plan but
who have full Medicaid benefits, receive supplemental security
income (SSI), are eligible for the Medicare Savings Program, or
are otherwise eligible for the Part D low-income subsidy
program. Eligible beneficiaries will be automatically enrolled
into LI NET, gain immediate access to coverage at the point-of-
sale, or be reimbursed for out-of-pocket costs incurred during
eligible periods of time. For Medicare beneficiaries receiving
full Medicaid benefits or SSI, LI NET offers retroactive
coverage of 30 days to 36 months. Partial duals and those
eligible for the low-income subsidy (LIS) may receive
retroactive coverage dating to the first day of the month when
they were determined eligible.
The Secretary retains discretion over the LI NET Program
benefit design, including access to an open formulary and a
prohibition on network pharmacy restrictions.
EFFECTIVE DATE
The provision applies beginning on January 1, 2021
B. Title II: Rural and Quality Improvements
Section 201. Medicare GME Treatment of Hospitals Establishing New
Medical Residency Training Programs After Hosting Medical
Resident Rotators for Short Durations
PRESENT LAW
SSA Section 1886(h) requires the HHS Secretary to make
Medicare Graduate Medical Education (GME) payments to hospitals
for the Medicare share of direct and indirect costs of an
approved medical residency training program in allopathic or
osteopathic medicine, dentistry, and podiatry. Direct costs
include resident stipends, supervisory physician salaries, and
administrative costs. Indirect costs associated with residency
programs relate to the higher patient care costs in teaching
hospitals relative to non-teaching hospitals.
Medicare GME payments for training residents in allopathic
and osteopathic medicine are subject to a hospital-specific
limit or ``cap'' on the number of full-time equivalents (FTEs).
The FTE cap is based on the number of FTE residents that a
hospital was training in the base year, which is the hospital's
most recent cost reporting period ending on or before December
31, 1996. Medicare also limits the amount it pays for each
FTE--the per resident amount (PRA)--based on a hospital's costs
for a resident FTE in a base period which is FY 1984, updated
by the Consumer Price Index for All Urban Consumers (CPI-U).
A hospital may have a Medicare PRA and FTE cap even if it
did not have an approved medical residency program during the
FTE cap or PRA base periods. This can happen when a hospital
hosts a rotating resident from another hospital's approved
medical residency program. Medicare regulations establish the
PRA based on a hospital's first cost reporting period during
which residents are on duty in either a new or existing
residency program; the FTE cap is established when a hospital
begins training residents in a new residency program. Under
these requirements, the key to ``triggering'' a PRA or FTE cap
for a hospital is based on where the resident is physically
located during training, not whether the hospital that the
resident trains in has an approved residency program.
REASON FOR CHANGE
Currently, Medicare is the primary payer for GME in the
United States, paying for more than two-thirds of the public
funding for residency training. Medicare GME payments to
hospitals are not open-ended; rather, these payments are capped
based on the number of residents the hospitals trained in a
base year. Hospitals that are starting new residencies
establish a new cap over a period of five years. However, there
is a technicality in which a hospital may still have a GME cap
even if the hospital never had an approved teaching program.
This situation arises when a hospital has a resident rotate
through another hospital's teaching program. If a hospital had
a rotator, then the hospital triggers a new cap under
Medicare's rules. This provision fixes this technicality. The
BETTER Act helps rural and community hospitals that have
technical barriers preventing them from starting a GME program
to train physicians and help reduce the physician shortage.
EXPLANATION OF PROVISION
Section 201 is substantively similar to H.R. 3425, the
Advancing Medical Resident Training in Community Hospitals Act
of 2019, introduced by Representatives Ron Kind (D-WI) and
George Holding (R-NC). Section 201 establishes new rules for
allocation of GME slots for hospitals that establish a new
medical residency training program after hosting medical
resident rotations for a short period of time.
Starting with the cost reporting period beginning on or
after the date of enactment, hospitals that begin a new
approved medical residency training program will not have their
full-time equivalent (FTE) resident amount set until the
program has trained at least 1.0 FTE resident in a single cost
reporting period. For hospitals that have been limited to less
than one FTE resident before October 1997 or fewer than three
FTE residents between October 1997 and the date of enactment of
this section, they will be able to re-establish their capped
resident slots through Medicare. These hospitals must begin to
re-establish their caps within five years of the date of
enactment.
EFFECTIVE DATE
The provision applies for cost reporting periods beginning
on or after the date of enactment.
Section 202. Extension of the Work Geographic Index Floor Under the
Medicare Program
PRESENT LAW
Payments under the Medicare physician fee schedule (MPFS)
are adjusted geographically for three factors to reflect
differences in the cost of resources needed to produce
physician services: physician work, practice expense, and
medical malpractice insurance. The geographic adjustments are
indices--known as Geographic Practice Cost Indices (GPCIs)--
that reflect how each area compares to the national average in
a ``market basket'' of goods. A value of 1.00 represents the
average across all areas. These indices are used in the
calculation of the payment rate under the MPFS. Several laws
have established a minimum value of 1.00 (floor) for the
physician work GPCI for localities where the work GPCI was less
than 1.00. Most recently, Section 50201 of BBA 2018 extended
the physician work GPCI floor through December 31, 2019.
REASON FOR CHANGE
The legislation extends the floor on the Medicare
Geographic Payment Cost Indices (GPCI), which protects
physicians in rural areas from receiving reductions in Medicare
payments. Extending this provision prevents cuts in Medicare
payments for physician practices in communities under the 1.0
work GPCI floor that are paid through the Medicare Physician
Fee Schedule. Such potential decreases could harm
beneficiaries' access to care in these communities. The GPCI
floor expires on December 31, 2019.
EXPLANATION OF PROVISION
Section 202 is substantively similar to H.R. 3302, the
Keeping Physicians Serving Patients Act of 2019, introduced by
Representatives Abby Finkenauer (D-IA), Adrian Smith (R-NE),
Ron Kind (D-WI), Terri Sewell (D-AL), and Darin LaHood (R-IL).
Section 202 extends the work GPCI floor of 1.00 through
December 31, 2022.
EFFECTIVE DATE
The provision applies beginning on January 1, 2020
Section 203. Extension of Funding for Quality Measure Endorsement,
Input, and Selection Under Medicare Program
PRESENT LAW
Under section 1890 of the Social Security Act Section, the
HHS Secretary is required to have a contract with a consensus-
based entity (e.g., NQF) to carry out specified duties related
to performance improvement and measurement. These duties
include, among others, priority setting, measure endorsement,
measure maintenance, and annual reporting to Congress. SSA
Section 1890A requires the Secretary to establish a pre-
rulemaking process to select quality measures for use in the
Medicare program, including consideration of NQF's endorsement
of measures. As part of this process, the consensus-based
entity with a contract gathers multi-stakeholder input and
annually transmits that input to the Secretary. The Secretary
makes available to the public measures under consideration for
use in Medicare quality programs and broadly disseminates the
quality measures that are selected to be used. Through its
Measure Applications Partnership (MAP), the NQF has been
convening multi-stakeholder groups to provide input into the
selection of quality measures for use in Medicare and other
federal programs. The MAP publishes annual reports with
recommendations for selection of quality measures in February
of each year, with the first report published in February 2012.
REASON FOR CHANGE
The legislation extends funding for NQF for three years,
until FY 2022, ensuring a continuation of NQF's critical work
on quality measures in the Medicare program; it also
prioritizes endorsement of quality measures around maternal
morbidity and mortality and allows NQF to provide input on the
removal of quality measures. This is based on H.R. 3430, which
amends title XVIII of the Social Security Act to extend funding
for quality measure endorsement, input, and selection under the
Medicare program introduced by Representatives Judy Chu (D-CA)
and David Schweikert (R-AZ). NQF works with diverse
stakeholders to create consensus-based measures to use in
quality evaluation in the Medicare program. These measures are
constantly reviewed, updated, and added as Medicare priorities
and quality requirements change. Quality measures are important
indicators for patients and providers to determine the extent
to which care delivered to patients is appropriate and
effective. In Medicare, quality measures are used for public
information and feedback as well as for payment purposes. The
Committee encourages CMS to seriously consider NQF's future
recommendations on measure removal in the interest of
streamlining quality measurement, avoiding duplication of
measurement, focusing more on outcomes-based measures than
process measures, and generally reducing burdens on health care
providers.
EXPLANATION OF PROVISION
Section 203 is substantively similar to H.R. 3430, To amend
title XVII of the Social Security Act to extend funding for
quality measure endorsement, input, and selection under the
Medicare program, introduced by Representatives Judy Chu (D-CA)
and David Schweikert (R-AZ). Section 203 extends funding for
quality measure endorsement through FY 2022, provides authority
for the contractor to provide input on the removal of measures,
and adds a prioritization of measures relating to maternal
morbidity and mortality.
Funding is maintained at $30,000,000 per year for FY 2020
through 2022. The contracted entity may provide input on the
removal of quality and efficiency measures to the Secretary.
From the time of enactment through December 31, 2023, the
Secretary shall prioritize the endorsement of measures relating
to maternal morbidity and mortality by the contracted entity.
EFFECTIVE DATE
The provision applies beginning FY 2020.
Section 204. Improving Measurements Under the Skilled Nursing Facility
Value-Based Purchasing Program Under the Medicare Program
PRESENT LAW
Most federally certified skilled nursing facilities (SNFs)
are paid under a prospective payment system (PPS) for providing
qualified services to Medicare beneficiaries. The Protecting
Access to Medicare Act\8\ (PAMA; P.L. 113-93) amended SSA
Section 1888 to require the HHS Secretary to specify two
quality measures and to revise the SNF PPS by adding a value-
based component to provide incentive payments for quality care
provided to beneficiaries, beginning in FY 2019.
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\8\Protecting Access to Medicare Act of 2014, Pub. Law No. 113093
(Apr. 1, 2014), https://www.congress.gov/113/plaws/publ93/PLAW-
113publ93.pdf.
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Specifically, the Secretary was required to specify two SNF
quality measures related to hospital readmissions:
1. A SNF all-cause, all-condition hospital
readmission measure (referenced hereafter as ``Measure
1''); and
2. A SNF all-condition, risk-adjusted potentially-
preventable hospital readmission measure (referenced
hereafter as ``Measure 2'').
The Secretary was also required to establish a SNF Value-
Based Purchasing (VBP) program to adjust SNF payments for
services furnished on or after October 1, 2018 as follows:
Value-based payments awarded to high-
performing SNFs are funded through a portion of a two
percent reduction in Medicare per diem payments applied
to all Medicare-covered SNF days;
Subject to the Secretary's discretion,
between 50 and 70 percent of the amount collected by
the two percent reduction is allocated to value-based
payments; and
The lowest-performing 40 percent of SNFs
receive a reduction in their Medicare SNF per diem
payment rates (i.e., any value-based payment add-on
cannot exceed the amount of the two percent reduction).
For purposes of determining the value-based payment a SNF
receives, the enactment of PAMA required the Secretary to use
Measure 2 ``as soon as practicable.'' In lieu of adopting
Measure 2, the Secretary is required to use the SNF all-cause,
all-condition hospital readmission measure for ranking
facilities (Measure 1). In August 2018, CMS issued a rule that
finalized the SNF PPS for FY2019, including the use of Measure
1 for determining value-based payments made under the VBP
program. To date, the Secretary has not yet implemented Measure
2.
REASONS FOR CHANGE
The legislation improves the SNF VBP by allowing the
Secretary of the Department of Health and Human Services to add
up to 10 additional measures to evaluate care provided to
Medicare beneficiaries in SNFs. Under current law, the
Secretary can only evaluate care based on readmission quality
measures, which does not provide a complete picture of all
value and quality in this setting. This is based on H.R. 3406,
which amends title XVIII of the Social Security Act to improve
measurements under the skilled nursing facility value-based
purchasing program under the Medicare program, and for other
purposes, introduced by Chairman Richard E. Neal (D-MA) and
Ranking Member Kevin Brady (R-TX). Moreover, to improve both
patient outcomes and the Medicare program, the Committee is
interested in pursuing a unified prospective payment system for
post-acute care services, which could include a value-based
payment program. To help achieve that goal, the legislation
requires the Medicare Payment Advisory Commission to complete a
report no later than March 15, 2021, establishing and analyzing
a prototype value-based payment program under a unified
prospective payment system for post-acute care services.
The Committee recognizes that adequate time is often needed
for providers to adapt and implement changes in clinical
practices and operations to improve care addressed by new
quality measures and expects the Secretary to implement changes
to this program in a manner consistent with how other value-
based purchasing programs have been managed to ensure there is
sufficient time to receive feedback and analysis from
stakeholders on the reliability and validity of new measures.
The Committee recommends that CMS align measures (to the
extent that such alignment may still inspire quality
improvement) with other measures used by CMS programs to
maximize the incentive to achieve improvement throughout the
Medicare program.
The Committee has suggested ``patient experience'' as a
potential measure to include. However, recognizing the cost and
staff time required to administer and implement satisfaction
surveys, the Committee encourages CMS to increase reliance on
independent, auditable measures in the Quality Measure domain
on the Nursing Home Compare website such as Medicare claims and
payroll-based journal (PBJ) data.
The Committee recommends that the Secretary take under
consideration the longstanding goals of attaining a unified
post-acute care payment system and the provisions included in
the Improving Medicare Post-Acute Care Transformation (IMPACT)
Act of 2014 while implementing this legislation.
In completing its report to Congress, the Committee
recommends that the Medicare Payment Advisory Commission
explore potential interactions between a unified post-acute
care payment system (e.g., a prospective payment system for all
post-acute care services) and a post-acute care value-based
payment program, while recognizing that a post-acute care
value-based payment program would be a component of a unified
post-acute care payment system.
EXPLANATION OF PROVISION
Section 204 is substantively similar to H.R. 3406, the
Improving Measurement Under the SNF Value-Based Purchasing
Program of 2019, introduced by Chairman Richard E. Neal (D-MA)
and Ranking Member Kevin Brady (R-TX). This section allows the
Secretary to apply additional measures to the performance
evaluation portion of the SNF VBP.
Effective for payment of services furnished on or after
October 1, 2022, the Secretary may add no more than 10 quality
measures, including measures of functional status, patient
safety, care coordination, or patient experience, to the SNF
VBP for facilities with more than the required minimum number
of cases. The validation of the submitted data will be
supported by $5,000,000 per year from the Centers for Medicare
& Medicaid Services Program Management Account for FY 2022-
2024.
The Medicare Payment Advisory Commission is required to
complete a report no later than March 15, 202, establishing and
analyzing a prototype value-based payment program under a
unified prospective payment system for post-acute care
services.
EFFECTIVE DATE
The provision applies beginning on or after October 1,
2022.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the vote of the Committee on Ways and Means in its
consideration of H.R. 3417, the BETTER Act, on June 26, 2019.
The Chairman's amendment in the nature of a substitute was
adopted by a voice vote (with a quorum being present).
The bill, H.R. 3417, was ordered favorably reported as
amended by 41-0 roll-call vote (with a quorum being present).
The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Neal...................... X ......... ......... Mr. Brady....... X ......... .........
Mr. Lewis..................... X ......... ......... Mr. Nunes....... X ......... .........
Mr. Doggett................... X ......... ......... Mr. Buchanan.... X ......... .........
Mr. Thompson.................. X ......... ......... Mr. Smith (NE).. X ......... .........
Mr. Larson.................... X ......... ......... Mr. Marchant.... X ......... .........
Mr. Blumenauer................ X ......... ......... Mr. Reed........ X ......... .........
Mr. Kind...................... X ......... ......... Mr. Kelly....... X ......... .........
Mr. Pascrell.................. X ......... ......... Mr. Holding..... X ......... .........
Mr. Davis..................... X ......... ......... Mr. Smith (MO).. X ......... .........
Ms. Sanchez................... X ......... ......... Mr. Rice........ X ......... .........
Mr. Higgins................... X ......... ......... Mr. Schweikert.. X ......... .........
Ms. Sewell.................... X ......... ......... Ms. Walorski.... ........ ......... .........
Ms. DelBene................... X ......... ......... Mr. LaHood...... X ......... .........
Ms. Chu....................... X ......... ......... Mr. Wenstrup.... X ......... .........
Ms. Moore..................... X ......... ......... Mr. Arrington... X ......... .........
Mr. Kildee.................... X ......... ......... Mr. Ferguson.... X ......... .........
Mr. Boyle..................... X ......... ......... Mr. Estes....... X ......... .........
Mr. Beyer..................... X ......... .........
Mr. Evans..................... X ......... .........
Mr. Schneider................. X ......... .........
Mr. Suozzi.................... X ......... .........
Mr. Panetta................... X ......... .........
Ms. Murphy.................... X ......... .........
Mr. Gomez..................... X ......... .........
Mr. Horsford.................. X ......... .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of the bill, H.R. 3417, as
reported. The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The bill would
Accelerate the starting date for coverage of
some new Medicare enrollees
Expand the availability of telehealth
services for mental health care
Allow certain hospitals to reset their
graduate medical education (GME) caps
Provide higher payments to Medicare
physicians in rural areas
Estimated budgetary effects would primarily stem from
Increased costs for new Medicare enrollees
Expansion of telehealth services
Increased numbers of GME positions at
certain hospitals
Higher Medicare payments to physicians in
rural areas
Areas of significant uncertainty include
Estimating the increased demand for
telehealth mental health care services and projecting
the number of providers available to meet that need
Projecting the number of GME positions
created under the new caps
Bill summary: H.R. 3417 would accelerate the start date for
coverage of certain new enrollees; expand the availability of
certain telehealth services; allow certain hospitals to
increase the number of residents in graduate medical education
programs for which Medicare provides funding; increase Medicare
payments to physicians in rural areas; and extend several
expiring programs under Medicare.
Estimated Federal cost: The estimated budgetary effect of
H.R. 3417 is shown in Table 1. The costs of the legislation
fall within budget function 570 (Medicare).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 3417
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2020-2024 2020-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increases in Direct Spending
Title I, Patient Improvements
Section 101. Beneficiary Enrollment Notification and
Eligibility Simplification
Estimated Budget Authority.............................. 0 20 35 40 40 45 45 50 55 50 135 375
Estimated Outlays....................................... 0 20 35 40 40 45 45 50 55 50 135 375
Section 102. Extension of Funding Outreach and Assistance
for Low-Income Programs
Estimated Budget Authority.............................. 50 50 50 0 0 0 0 0 0 0 150 150
Estimated Outlays....................................... 45 50 50 5 0 0 0 0 0 0 150 150
Section 103. Medicare Coverage of Certain Mental Health
Telehealth Services
Estimated Budget Authority.............................. 0 5 15 30 55 105 145 185 235 250 105 1,025
Estimated Outlays....................................... 0 5 15 30 55 105 145 185 235 250 105 1,025
Title II, Rural and Quality Improvements
Section 201. Medicare GME Treatment of Hospitals
Establishing New Medical Residency Training Programs After
Hosting Medical Resident Rotators for Short Durations
Estimated Budget Authority.............................. 0 0 1 5 14 29 42 44 47 49 20 230
Estimated Outlays....................................... 0 0 1 5 14 29 42 44 47 49 20 230
Section 202. Extension of the Work Geographic Index Floor
Under the Medicare Program
Estimated Budget Authority.............................. 230 590 655 235 0 0 0 0 0 0 1,710 1,710
Estimated Outlays....................................... 230 590 655 235 0 0 0 0 0 0 1,710 1,710
Section 203. Extension of Funding for Quality Measure
Endorsement, Input, and Selection Under Medicare Program
Estimated Budget Authority.............................. 30 30 30 0 0 0 0 0 0 0 90 90
Estimated Outlays....................................... 29 30 30 1 0 0 0 0 0 0 90 90
Total Changes in Direct Spending
Estimated Budget Authority.................................. 304 695 791 316 114 179 237 279 337 354 2,220 3,605
Estimated Outlays........................................... 304 695 791 316 114 179 237 279 337 354 2,220 3,605
--------------------------------------------------------------------------------------------------------------------------------------------------------
Components may not sum to totals because of rounding; GME = graduate medical education.
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted near the end of 2019.
Direct spending: CBO estimates that enacting H.R. 3417
would increase direct spending for Medicare by $3.6 billion
over the 2020-2029 period.
Title I, Patient improvements. Title I would accelerate the
start date for certain new enrollees, provide funding for
certain agencies and programs that provide education and
support to Medicare beneficiaries with low income, and expand
coverage of mental health services furnished via telehealth.
Section 101, Beneficiary Enrollment Notification and
Eligibility Simplification. Section 101 would accelerate the
start date for coverage of beneficiaries who enroll in the
program during the general enrollment period (January through
March of each year) or during the final three months of the
initial enrollment period (when a beneficiary first becomes
eligible to enroll); some of those enrollees would receive
services sooner than is possible under current law.
Based on historical enrollment data, CBO estimates that
about 3 percent of new enrollees would receive Medicare
benefits sooner than under current law. These additional months
of Medicare coverage would increase direct spending by $375
million over the 2019-2029 period.
Section 102, Extension of Funding Outreach and Assistance
for Low-Income Programs. Section 102 would provide $50 million
in annual funding for fiscal years 2020 through 2022 for
certain agencies and programs that provide education and
support to Medicare beneficiaries with low income. Those
entities are the State Health Insurance Assistance Programs,
Area Agencies on Aging, Aging and Disability Resource Centers,
and the National Center for Benefits and Outreach Enrollment.
CBO estimates that enacting this section would cost $150
million over the 2019-2029 period.
Section 103, Medicare Coverage of Certain Mental Health
Telehealth Services. Current law limits provision of covered
telehealth mental health services to people in rural areas, and
those beneficiaries must receive such services onsite in a
medical facility. Section 103 would eliminate the geographic
and originating-site requirements for providing mental health
telehealth services. The bill would require an initial face-to-
face assessment by a provider before telehealth psychotherapy
could begin, and it would mandate periodic in-person
reassessments. Under section 103, beneficiaries could receive
telehealth mental health services at home.
Under current law, since the use of mental health
telehealth services is limited to rural areas and provided in a
medical facility, the current use of these services is low.
Because the provision would allow rural and urban beneficiaries
to access services at home, CBO estimates that demand could
increase substantially over the next five years. However, the
ability to meet the demand for those services would depend on
the supply of mental health practitioners. The Bureau of Labor
Statistics projects growth in the mental health professions
over the next few years, but CBO estimates that demand for
services would still outstrip supply. Given those constraints,
CBO estimates that expanding mental health telehealth to urban
and rural beneficiaries at home would add an additional 150,000
visits in 2021 and Medicare would pay $73 per visit on average,
depending on the length of the visit and the type of provider.
CBO estimates that enacting section 103 would increase direct
spending by $1 billion over the 2019-2029 period.
Title II, Rural and Quality Improvements. Title II would
increase the number of residents trained in GME programs for
which Medicare provides funding, increase payment rates for
physicians in rural areas, and extend several expiring
programs.
Section 201, Medicare GME Treatment of Hospitals
Establishing New Medical Residency Training Programs After
Hosting Medical Resident Rotators for Short Durations. After
the Medicare residency caps were established in the Balanced
Budget Act of 1997, some non- teaching hospitals were assigned
such caps based on the presence of residents who rotated from
teaching hospitals that year. But the caps also limit the
number of residents in teaching programs that can be used to
calculate Medicare funding for those hospitals. Section 201
would allow them to receive funding for a higher number of
residents trained in GME programs. Hospitals would be eligible:
if the current cap on full-time-equivalent slots for resident
physicians is less than 1 (based on cost-reporting periods
before October 1, 1997) or no greater than 3 (based on cost-
reporting periods between October 1, 1997, and the date of the
bill's enactment).
Eligible hospitals would have five years from the date of
enactment to begin training new residents and increase their
residency caps. Based on CBO's analyses of Medicare cost-
reporting data and considering the challenges hospitals would
be likely to face in establishing or expanding residency
programs within the period, CBO estimates that roughly 250
positions would be created during the five years after
enactment. Those positions would remain in place for future
calculations of Medicare GME for those hospitals. Based on a
projection of costs per resident, CBO estimates that enacting
this provision would increase direct spending by $230 million
over the 2019-2029 period.
Section 202, Extension of the Work Geographic Index Floor
Under the Medicare Program. Section 202 would extend through
calendar year 2022 a provision that increases Medicare's
payments to rural physicians. Based on current spending for the
physician fee schedule in those areas (about $450 million in
2018), CBO estimates that enacting section 202 would cost $1.7
billion over the 2019-2029 period.
Section 203, Extension of Funding for Quality Measure
Endorsement, Input, and Selection Under Medicare Program. For
each fiscal year from 2020 through 2022, section 203 would
appropriate $30 million for a contract between the Department
of Health and Human Services and a consensus-based entity that
would endorse standardized measures of health care performance.
CBO estimates that enacting section 203 would cost $90 million
over the 2019-2029 period.
Spending subject to appropriation: Section 101 would
require a change in the notice of Medicare eligibility that is
sent to people between the ages of 63 and 65. It also would
require that a notice be sent to disabled individuals in the
24-month waiting period. Those individuals do not receive such
notices under current law. In addition, it would require that
the updated notice be posted on the websites of the Social
Security Administration and the Centers for Medicare & Medicaid
Services. Because of this notice, the Social Security
Administration would face increased costs for postage and
mailing, staff training, and responding to additional
inquiries. Based on information from the Social Security
Administration, CBO estimates that implementing that provision
would cost $10 million over the 2020-2024 period.
Uncertainty: Section 103 would change the way telehealth
services for mental health treatment are provided under
Medicare. CBO cannot precisely estimate either the number of
beneficiaries who would participate or whether enough providers
would be available to meet the demand. Therefore, the cost of
the section could be higher or lower than CBO estimates.
Another source of uncertainty is the number of GME
positions that would be created by hospitals that currently
have caps on training programs for resident physicians. If the
number of positions created is larger or smaller than
estimated, the costs of section 201 could differ from CBO's
estimate.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays that are subject to those
pay-as-you-go procedures are shown in Table 2.
TABLE 2.--CBO's ESTIMATE OF THE STATUTORY PAY-AS-YOU-GO EFFECTS OF H.R. 3417
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2020-2024 2020-2029
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Increase in the Deficit
Statutory Pay-As-You-Go Effect.............................. 304 695 791 316 114 179 237 279 337 354 2,220 3,605
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long-term deficits: CBO estimates that enacting
H.R. 3417 would increase on-budget deficits by more than $5
billion in at least one of the four consecutive 10-year periods
beginning in 2030.
Mandates: H.R. 3417 contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act (UMRA). Participation in Medicare is voluntary for
private entities. Therefore, the requirements in the bill
arising from participation in Medicare would not impose
private-sector mandates as defined in UMRA.
Previous CBO estimate: Section 202. On September 18, 2019,
CBO transmitted a cost estimate for H.R. 2328, the
Reauthorizing and Extending America's Community Health Act, as
ordered reported by the House Committee on Energy and Commerce
on July 17, 2019. Section 202 of H.R. 3417 is the same as
section 201 of H.R. 2328. Both bills would extend through
calendar year 2022 a provision that increases payments to rural
physicians. CBO's estimate for that provision is the same in
both bills.
Section 203. On September 18, 2019, CBO transmitted a cost
estimate for H.R. 2328, the Reauthorizing and Extending
America's Community Health Act, as ordered reported by the
House Committee on Energy and Commerce on July 17, 2019.
Section 203 of H.R. 3417 is similar to section 203 of H.R.
2328. Both bills would appropriate $30 million for a contract
between the Department of Health and Human Services and a
consensus-based entity that would endorse standardized measures
of performance in health care. CBO's estimate for that
provision is the same in both bills.
Estimate prepared by: Federal costs: Philippa Haven, Lori
Housman, Jamease Kowalczyk, Sarah Sajewski, and Rebecca Yip;
Mandates: Andrew Laughlin.
Estimate reviewed by: Tom Bradley, Chief, Health Systems
and Medicare Cost Estimates Unit; Leo Lex, Deputy Assistant
Director for Budget Analysis; Theresa Gullo, Assistant Director
for Budget Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee made findings and recommendations that are
reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
[on a bill that establishes or reauthorizes a federal
program] In compliance with clause 3(c)(5) of rule XIII of the
Rules of the House of Representatives, the Committee states
that no provision of the bill establishes or reauthorizes: (1)
a program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
to Congress pursuant to section 21 of Public Law 111-139; or
(3) a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance, published
pursuant section 6104 of title 31, United States Code.
F. Hearings
In compliance with Sec.103(i) of H. Res. 6 (116th Congress)
the following hearing was used to develop or consider H.R.
3417: Committee on Ways and Means ``Member Day Hearing,'' held
on June 4, 2019.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e)(1)(B) of rule XIII of the
Rules of the House of Representatives, changes in existing law
proposed by the bill, as reported, are shown as follows
(existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italics, existing law in
which no change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XI--GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE
SIMPLIFICATION
* * * * * * *
Part A--General Provisions
* * * * * * *
social security account statements
Provision Upon Request
Sec. 1143. (a)(1) Beginning not later than October 1, 1990,
the Commissioner of Social Security shall provide upon the
request of an eligible individual a social security account
statement (hereinafter referred to as the ``statement'').
(2) Each statement shall contain--
(A) the amount of wages paid to and self-employment
income derived by the eligible individual as shown by
the records of the Commissioner at the date of the
request;
(B) an estimate of the aggregate of the employer,
employee, and self-employment contributions of the
eligible individual for old-age, survivors, and
disability insurance as shown by the records of the
Commissioner on the date of the request;
(C) a separate estimate of the aggregate of the
employer, employee, and self-employment contributions
of the eligible individual for hospital insurance as
shown by the records of the Commissioner on the date of
the request;
(D) an estimate of the potential monthly retirement,
disability, survivor, and auxiliary benefits payable on
the eligible individual's account together with a
description of the benefits payable under the medicare
program of title XVIII; and
(E) in the case of an eligible individual described
in paragraph (3)(C)(ii), an explanation, in language
calculated to be understood by the average eligible
individual, of the operation of the provisions under
sections 202(k)(5) and 215(a)(7) and an explanation of
the maximum potential effects of such provisions on the
eligible individual's monthly retirement, survivor, and
auxiliary benefits.
(3) For purposes of this section, the term ``eligible
individual'' means an individual--
(A) who has a social security account number,
(B) who has attained age 25 or over, and
(C)(i) has wages or net earnings from self-
employment, or (ii) with respect to whom the
Commissioner has information that the pattern of wages
or self-employment income indicate a likelihood of
noncovered employment.
(4) Medicare eligibility information.--
(A) In general.--In the case of statements provided
on or after the date that is 2 years after the date of
the enactment of this paragraph to individuals who are
attaining ages 63, 64, and 65, the statement shall also
include a notice containing the information described
in subparagraph (B).
(B) Contents of notice.--The notice required under
subparagraph (A) shall include a clear, simple
explanation of--
(i) eligibility for benefits under the
Medicare program under title XVIII, and in
particular benefits under part B of such title;
(ii) the reasons a late enrollment penalty
for failure to timely enroll could be assessed
and how such late enrollment penalty is
calculated, in particular for benefits under
part B;
(iii) the availability of relief from the
late enrollment penalty and retroactive
enrollment under section 1837(h) (including as
such section is applied under sections 1818(c)
and 1818A(c)(3)), with examples of
circumstances under which such relief may be
granted and examples of circumstances under
which such relief would not be granted;
(iv) coordination of benefits (including
primary and secondary coverage scenarios)
pursuant to section 1862(b), in particular for
benefits under part B of such title; and
(v) information for populations, such as
residents of Puerto Rico and veterans, for whom
there are special considerations with respect
to enrollment, eligibility, and coordination of
benefits under title XVIII.
(C) Development of notice.--
(i) In general.--The Secretary, in
coordination with the Commissioner of Social
Security, and taking into consideration
information collected pursuant to clause (ii),
shall, not later than 12 months after the last
day of the period for the request of
information described in clause (ii), develop
the notice to be provided pursuant to
subparagraph (A).
(ii) Request for information.--Not later than
6 months after the date of the enactment of
this paragraph, the Secretary shall request
written information, including recommendations,
from stakeholders (including the groups
described in subparagraph (D)) on the
information to be included in the notice.
(iii) Notice improvement.--Beginning 4 years
after the date of enactment of this paragraph,
and not less than once every two years
thereafter, the Secretary, in coordination with
the Commissioner of Social Security, shall--
(I) review the content of the notice
to be provided under subparagraph (A);
(II) solicit recommendations on the
notice through a request for
information process as described in
clause (ii); and
(III) update and revise such notice
as the Secretary deems appropriate.
(D) Groups for consultation.--For purposes of
subparagraph (C)(ii), the groups described in this
clause include the following:
(i) Individuals who are 60 years of age or
older.
(ii) Veterans.
(iii) Individuals with disabilities.
(iv) Individuals with end stage renal
disease.
(v) Low-income individuals and families.
(vi) Employers (including human resources
professionals).
(vii) States (including representatives of
State-run Health Insurance Exchanges, Medicaid
offices, and Departments of Insurance).
(viii) State Health Insurance Assistance
Programs.
(ix) Health insurers.
(x) Health insurance agents and brokers.
(xi) Such other groups as specified by the
Secretary.
(E) Posting of notice on websites.--The Commissioner
of Social Security and the Secretary shall post the
notice required under subparagraph (A) in a prominent
location on the public Internet website of the Social
Security Administration and on the public Internet
website of the Centers for Medicare & Medicaid
Services, respectively.
(F) Reimbursement of costs.--
(i) In general.--Effective for fiscal years
beginning in the year in which the date of
enactment of this paragraph occurs, the
Commissioner of Social Security and the
Secretary shall enter into an agreement which
shall provide funding to cover the
administrative costs of the Commissioner's
activities under this paragraph. Such agreement
shall--
(I) provide funds to the Commissioner
for the full cost of the Social
Security Administration's work related
to the implementation of this
paragraph, including any costs incurred
prior to the finalization of such
agreement;
(II) provide such funding quarterly
in advance of the applicable quarter
based on estimating methodology agreed
to by the Commissioner and the
Secretary; and
(III) require an annual accounting
and reconciliation of the actual costs
incurred and funds provided under this
paragraph.
(ii) Limitation.--In no case shall funds from
the Social Security Administration's Limitation
on Administrative Expenses be used to carry out
activities related to the implementation of
this paragraph, except as the Commissioner
determines is necessary in developing the
agreement under clause (i).
(G) No effect on obligation to mail statements.--
Nothing in this paragraph shall be construed to relieve
the Commissioner of Social Security from any
requirement under subsection (c), including the
requirement to mail a statement on an annual basis to
each eligible individual who is not receiving benefits
under title II and for whom a mailing address can be
determined through such methods as the Commissioner
determines to be appropriate.
Notice to Eligible Individuals
(b) The Commissioner shall, to the maximum extent
practicable, take such steps as are necessary to assure that
eligible individuals are informed of the availability of the
statement described in subsection (a).
Mandatory Provision of Statements
(c)(1) By not later than September 30, 1995, the Commissioner
shall provide a statement to each eligible individual who has
attained age 60 by October 1, 1994, and who is not receiving
benefits under title II and for whom a current mailing address
can be determined through such methods as the Commissioner
determines to be appropriate. In fiscal years 1995 through 1999
the Commissioner shall provide a statement to each eligible
individual who attains age 60 in such fiscal years and who is
not receiving benefits under title II and for whom a current
mailing address can be determined through such methods as the
Commissioner determines to be appropriate. The Commissioner
shall provide with each statement to an eligible individual
notice that such statement is updated annually and is available
upon request.
(2) Beginning not later than October 1, 1999, the
Commissioner shall provide a statement on an annual basis to
each eligible individual who is not receiving benefits under
title II and for whom a mailing address can be determined
through such methods as the Commissioner determines to be
appropriate. With respect to statements provided to eligible
individuals who have not attained age 50, such statements need
not include estimates of monthly retirement benefits. However,
if such statements provided to eligible individuals who have
not attained age 50 do not include estimates of retirement
benefit amounts, such statements shall include a description of
the benefits (including auxiliary benefits) that are available
upon retirement.
Disclosure to Governmental Employees of Effect of Noncovered Employment
(d)(1) In the case of any individual commencing employment on
or after January 1, 2005, in any agency or instrumentality of
any State (or political subdivision thereof, as defined in
section 218(b)(2)) in a position in which service performed by
the individual does not constitute ``employment'' as defined in
section 210, the head of the agency or instrumentality shall
ensure that, prior to the date of the commencement of the
individual's employment in the position, the individual is
provided a written notice setting forth an explanation, in
language calculated to be understood by the average individual,
of the maximum effect on computations of primary insurance
amounts (under section 215(a)(7)) and the effect on benefit
amounts (under section 202(k)(5)) of monthly periodic payments
or benefits payable based on earnings derived in such service.
Such notice shall be in a form which shall be prescribed by the
Commissioner of Social Security.
(2) The written notice provided to an individual pursuant to
paragraph (1) shall include a form which, upon completion and
signature by the individual, would constitute certification by
the individual of receipt of the notice. The agency or
instrumentality providing the notice to the individual shall
require that the form be completed and signed by the individual
and submitted to the agency or instrumentality and to the
pension, annuity, retirement, or similar fund or system
established by the governmental entity involved responsible for
paying the monthly periodic payments or benefits, before
commencement of service with the agency or instrumentality.
* * * * * * *
MEDICARE ENROLLMENT NOTIFICATION AND ELIGIBILITY NOTICES FOR
INDIVIDUALS IN MEDICARE WAITING PERIOD
Sec. 1144A. (a) Notices
(1) In general.--The Commissioner of Social Security
shall distribute the notice to be provided pursuant to
section 1143(a)(4), as may be modified under paragraph
(2), to individuals in the 24-month waiting period
under section 226(b).
(2) Authority to modify notice.--The Secretary, in
coordination with the Commissioner of Social Security,
may modify the notice to be distributed under paragraph
(1) as necessary to take into account the individuals
described in such paragraph.
(3) Posting of notice on websites.--The Commissioner
of Social Security and the Secretary shall post the
notice required to be distributed under paragraph (1)
in a prominent location on the public Internet website
of the Social Security Administration and on the public
Internet website of the Centers for Medicare & Medicaid
Services, respectively.
(b) Timing Beginning not later than 2 years after the date of
the enactment of this section, a notice required under
subsection (a)(1) shall be mailed to an individual no less than
two times in accordance with the following:
(1) The notice shall be provided to such individual
not later than 3 months prior to the date on which such
individual's enrollment period begins as provided under
section 1837.
(2) The notice shall subsequently be provided to such
individual not later than one month prior to such date.
(c) Reimbursement of costs
(1) In general.--Effective for fiscal years beginning
in the year in which the date of enactment of this
section occurs, the Commissioner of Social Security and
the Secretary shall enter into an agreement which shall
provide funding to cover the administrative costs of
the Commissioner's activities under this section. Such
agreement shall--
(A) provide funds to the Commissioner for the
full cost of the Social Security
Administration's work related to the
implementation of this section, including any
costs incurred prior to the finalization of
such agreement;
(B) provide such funding quarterly in advance
of the applicable quarter based on estimating
methodology agreed to by the Commissioner and
the Secretary; and
(C) require an annual accounting and
reconciliation of the actual costs incurred and
funds provided under this section.
(2) Limitation.--In no case shall funds from the
Social Security Administration's Limitation on
Administrative Expenses be used to carry out activities
related to the implementation of this section, except
as the Commissioner determines is necessary in
developing the agreement under paragraph (1).
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
Sec. 1834. (a) Payment for Durable Medical Equipment.--
(1) General rule for payment.--
(A) In general.--With respect to a covered
item (as defined in paragraph (13)) for which
payment is determined under this subsection,
payment shall be made in the frequency
specified in paragraphs (2) through (7) and in
an amount equal to 80 percent of the payment
basis described in subparagraph (B).
(B) Payment basis.--Subject to subparagraph
(F)(i), the payment basis described in this
subparagraph is the lesser of--
(i) the actual charge for the item,
or
(ii) the payment amount recognized
under paragraphs (2) through (7) of
this subsection for the item;
except that clause (i) shall not apply if the
covered item is furnished by a public home
health agency (or by another home health agency
which demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(C) Exclusive payment rule.--Subject to
subparagraph (F)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for covered items under this
part or under part A to a home health agency.
(D) Reduction in fee schedules for certain
items.--With respect to a seat-lift chair or
transcutaneous electrical nerve stimulator
furnished on or after April 1, 1990, the
Secretary shall reduce the payment amount
applied under subparagraph (B)(ii) for such an
item by 15 percent, and, in the case of a
transcutaneous electrical nerve stimulator
furnished on or after January 1, 1991, the
Secretary shall further reduce such payment
amount (as previously reduced) by 45 percent.
(E) Clinical conditions for coverage.--
(i) In general.--The Secretary shall
establish standards for clinical
conditions for payment for covered
items under this subsection.
(ii) Requirements.--The standards
established under clause (i) shall
include the specification of types or
classes of covered items that require,
as a condition of payment under this
subsection, a face-to-face examination
of the individual by a physician (as
defined in section 1861(r)), a
physician assistant, nurse
practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) and a
prescription for the item.
(iii) Priority of establishment of
standards.--In establishing the
standards under this subparagraph, the
Secretary shall first establish
standards for those covered items for
which the Secretary determines there
has been a proliferation of use,
consistent findings of charges for
covered items that are not delivered,
or consistent findings of falsification
of documentation to provide for payment
of such covered items under this part.
(iv) Standards for power
wheelchairs.--Effective on the date of
the enactment of this subparagraph, in
the case of a covered item consisting
of a motorized or power wheelchair for
an individual, payment may not be made
for such covered item unless a
physician (as defined in section
1861(r)(1)), a physician assistant,
nurse practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) has conducted a
face-to-face examination of the
individual and written a prescription
for the item.
(v) Limitation on payment for covered
items.--Payment may not be made for a
covered item under this subsection
unless the item meets any standards
established under this subparagraph for
clinical condition of coverage.
(F) Application of competitive acquisition;
limitation of inherent reasonableness
authority.--In the case of covered items
furnished on or after January 1, 2011, subject
to subparagraphs (G) and (H), that are included
in a competitive acquisition program in a
competitive acquisition area under section
1847(a)--
(i) the payment basis under this
subsection for such items and services
furnished in such area shall be the
payment basis determined under such
competitive acquisition program;
(ii) the Secretary may (and, in the
case of covered items furnished on or
after January 1, 2016, subject to
clause (iii), shall) use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847 and
in the case of such adjustment,
paragraph (10)(B) shall not be applied;
and
(iii) in the case of covered items
furnished on or after January 1, 2016,
the Secretary shall continue to make
such adjustments described in clause
(ii) as, under such competitive
acquisition programs, additional
covered items are phased in or
information is updated as contracts
under section 1847 are recompeted in
accordance with section 1847(b)(3)(B).
(G) Use of information on competitive bid
rates.--The Secretary shall specify by
regulation the methodology to be used in
applying the provisions of subparagraph (F)(ii)
and subsection (h)(1)(H)(ii). In promulgating
such regulation, the Secretary shall consider
the costs of items and services in areas in
which such provisions would be applied compared
to the payment rates for such items and
services in competitive acquisition areas.In
the case of items and services furnished on or
after January 1, 2019, in making any
adjustments under clause (ii) or (iii) of
subparagraph (F), under subsection
(h)(1)(H)(ii), or under section 1842(s)(3)(B),
the Secretary shall--
(i) solicit and take into account
stakeholder input; and
(ii) take into account the highest
amount bid by a winning supplier in a
competitive acquisition area and a
comparison of each of the following
with respect to non-competitive
acquisition areas and competitive
acquisition areas:
(I) The average travel
distance and cost associated
with furnishing items and
services in the area.
(II) The average volume of
items and services furnished by
suppliers in the area.
(III) The number of suppliers
in the area.
(H) Diabetic supplies.--
(i) In general.--On or after the date
described in clause (ii), the payment
amount under this part for diabetic
supplies, including testing strips,
that are non-mail order items (as
defined by the Secretary) shall be
equal to the single payment amounts
established under the national mail
order competition for diabetic supplies
under section 1847.
(ii) Date described.--The date
described in this clause is the date of
the implementation of the single
payment amounts under the national mail
order competition for diabetic supplies
under section 1847.
(I) Treatment of vacuum erection systems.--
Effective for items and services furnished on
and after July 1, 2015, vacuum erection systems
described as prosthetic devices described in
section 1861(s)(8) shall be treated in the same
manner as erectile dysfunction drugs are
treated for purposes of section 1860D-
2(e)(2)(A).
(2) Payment for inexpensive and other routinely
purchased durable medical equipment.--
(A) In general.--Payment for an item of
durable medical equipment (as defined in
paragraph (13))--
(i) the purchase price of which does
not exceed $150,
(ii) which the Secretary determines
is acquired at least 75 percent of the
time by purchase,
(iii) which is an accessory used in
conjunction with a nebulizer,
aspirator, or a ventilator excluded
under paragraph (3)(A), or
(iv) in the case of devices furnished
on or after October 1, 2015, which
serves as a speech generating device or
which is an accessory that is needed
for the individual to effectively
utilize such a device,
shall be made on a rental basis or in a lump-
sum amount for the purchase of the item. The
payment amount recognized for purchase or
rental of such equipment is the amount
specified in subparagraph (B) for purchase or
rental, except that the total amount of
payments with respect to an item may not exceed
the payment amount specified in subparagraph
(B) with respect to the purchase of the item.
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to the purchase or
rental of an item furnished in a carrier
service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the purchase or rental,
respectively, of the item for the 12-
month period ending on June 30, 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year
(reduced by 10 percent, in the case of
a blood glucose testing strip furnished
after 1997 for an individual with
diabetes).
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(3) Payment for items requiring frequent and
substantial servicing.--
(A) In general.--Payment for a covered item
(such as IPPB machines and ventilators,
excluding ventilators that are either
continuous airway pressure devices or
intermittent assist devices with continuous
airway pressure devices) for which there must
be frequent and substantial servicing in order
to avoid risk to the patient's health shall be
made on a monthly basis for the rental of the
item and the amount recognized is the amount
specified in subparagraph (B).
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to an item or device
furnished in a carrier service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the rental of the item or device
for the 12-month period ending with
June 1987, increased by the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 6-month period ending
with December 1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year.
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(4) Payment for certain customized items.--Payment
with respect to a covered item that is uniquely
constructed or substantially modified to meet the
specific needs of an individual patient, and for that
reason cannot be grouped with similar items for
purposes of payment under this title, shall be made in
a lump-sum amount (A) for the purchase of the item in a
payment amount based upon the carrier's individual
consideration for that item, and (B) for the reasonable
and necessary maintenance and servicing for parts and
labor not covered by the supplier's or manufacturer's
warranty, when necessary during the period of medical
need, and the amount recognized for such maintenance
and servicing shall be paid on a lump-sum, as needed
basis based upon the carrier's individual consideration
for that item. In the case of a wheelchair furnished on
or after January 1, 1992, the wheelchair shall be
treated as a customized item for purposes of this
paragraph if the wheelchair has been measured, fitted,
or adapted in consideration of the patient's body size,
disability, period of need, or intended use, and has
been assembled by a supplier or ordered from a
manufacturer who makes available customized features,
modifications, or components for wheelchairs that are
intended for an individual patient's use in accordance
with instructions from the patient's physician.
(5) Payment for oxygen and oxygen equipment.--
(A) In general.--Payment for oxygen and
oxygen equipment shall be made on a monthly
basis in the monthly payment amount recognized
under paragraph (9) for oxygen and oxygen
equipment (other than portable oxygen
equipment), subject to subparagraphs (B), (C),
(E), and (F).
(B) Add-on for portable oxygen equipment.--
When portable oxygen equipment is used, but
subject to subparagraph (D), the payment amount
recognized under subparagraph (A) shall be
increased by the monthly payment amount
recognized under paragraph (9) for portable
oxygen equipment.
(C) Volume adjustment.--When the attending
physician prescribes an oxygen flow rate--
(i) exceeding 4 liters per minute,
the payment amount recognized under
subparagraph (A), subject to
subparagraph (D), shall be increased by
50 percent, or
(ii) of less than 1 liter per minute,
the payment amount recognized under
subparagraph (A) shall be decreased by
50 percent.
(D) Limit on adjustment.--When portable
oxygen equipment is used and the attending
physician prescribes an oxygen flow rate
exceeding 4 liters per minute, there shall only
be an increase under either subparagraph (B) or
(C), whichever increase is larger, and not
under both such subparagraphs.
(E) Recertification for patients receiving
home oxygen therapy.--In the case of a patient
receiving home oxygen therapy services who, at
the time such services are initiated, has an
initial arterial blood gas value at or above a
partial pressure of 56 or an arterial oxygen
saturation at or above 89 percent (or such
other values, pressures, or criteria as the
Secretary may specify) no payment may be made
under this part for such services after the
expiration of the 90-day period that begins on
the date the patient first receives such
services unless the patient's attending
physician certifies that, on the basis of a
follow-up test of the patient's arterial blood
gas value or arterial oxygen saturation
conducted during the final 30 days of such 90-
day period, there is a medical need for the
patient to continue to receive such services.
(F) Rental Cap.--
(i) In general.--Payment for oxygen
equipment (including portable oxygen
equipment) under this paragraph may not
extend over a period of continuous use
(as determined by the Secretary) of
longer than 36 months.
(ii) Payments and rules after rental
cap.--After the 36th continuous month
during which payment is made for the
equipment under this paragraph--
(I) the supplier furnishing
such equipment under this
subsection shall continue to
furnish the equipment during
any period of medical need for
the remainder of the reasonable
useful lifetime of the
equipment, as determined by the
Secretary;
(II) payments for oxygen
shall continue to be made in
the amount recognized for
oxygen under paragraph (9) for
the period of medical need; and
(III) maintenance and
servicing payments shall, if
the Secretary determines such
payments are reasonable and
necessary, be made (for parts
and labor not covered by the
supplier's or manufacturer's
warranty, as determined by the
Secretary to be appropriate for
the equipment), and such
payments shall be in an amount
determined to be appropriate by
the Secretary.
(6) Payment for other covered items (other than
durable medical equipment).--Payment for other covered
items (other than durable medical equipment and other
covered items described in paragraph (3), (4), or (5))
shall be made in a lump-sum amount for the purchase of
the item in the amount of the purchase price recognized
under paragraph (8).
(7) Payment for other items of durable medical
equipment.--
(A) Payment.--In the case of an item of
durable medical equipment not described in
paragraphs (2) through (6), the following rules
shall apply:
(i) Rental.--
(I) In general.--Except as
provided in clause (iii),
payment for the item shall be
made on a monthly basis for the
rental of the item during the
period of medical need (but
payments under this clause may
not extend over a period of
continuous use (as determined
by the Secretary) of longer
than 13 months).
(II) Payment amount.--Subject
to subclause (III) and
subparagraph (B), the amount
recognized for the item, for
each of the first 3 months of
such period, is 10 percent of
the purchase price recognized
under paragraph (8) with
respect to the item, and, for
each of the remaining months of
such period, is 7.5 percent of
such purchase price.
(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.
(ii) Ownership after rental.--On the
first day that begins after the 13th
continuous month during which payment
is made for the rental of an item under
clause (i), the supplier of the item
shall transfer title to the item to the
individual.
(iii) Purchase agreement option for
complex, rehabilitative power-driven
wheelchairs.--In the case of a complex,
rehabilitative power-driven wheelchair,
at the time the supplier furnishes the
item, the supplier shall offer the
individual the option to purchase the
item, and payment for such item shall
be made on a lump-sum basis if the
individual exercises such option.
(iv) Maintenance and servicing.--
After the supplier transfers title to
the item under clause (ii) or in the
case of a power-driven wheelchair for
which a purchase agreement has been
entered into under clause (iii),
maintenance and servicing payments
shall, if the Secretary determines such
payments are reasonable and necessary,
be made (for parts and labor not
covered by the supplier's or
manufacturer's warranty, as determined
by the Secretary to be appropriate for
the particular type of durable medical
equipment), and such payments shall be
in an amount determined to be
appropriate by the Secretary.
(B) Range for rental amounts.--
(i) For 1989.--For items furnished
during 1989, the payment amount
recognized under subparagraph (A)(i)
shall not be more than 115 percent, and
shall not be less than 85 percent, of
the prevailing charge established for
rental of the item in January 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987.
(ii) For 1990.--For items furnished
during 1990, clause (i) shall apply in
the same manner as it applies to items
furnished during 1989.
(C) Replacement of items.--
(i) Establishment of reasonable
useful lifetime.--In accordance with
clause (iii), the Secretary shall
determine and establish a reasonable
useful lifetime for items of durable
medical equipment for which payment may
be made under this paragraph.
(ii) Payment for replacement items.--
If the reasonable lifetime of such an
item, as so established, has been
reached during a continuous period of
medical need, or the carrier determines
that the item is lost or irreparably
damaged, the patient may elect to have
payment for an item serving as a
replacement for such item made--
(I) on a monthly basis for
the rental of the replacement
item in accordance with
subparagraph (A); or
(II) in the case of an item
for which a purchase agreement
has been entered into under
subparagraph (A)(iii), in a
lump-sum amount for the
purchase of the item.
(iii) Length of reasonable useful
lifetime.--The reasonable useful
lifetime of an item of durable medical
equipment under this subparagraph shall
be equal to 5 years, except that, if
the Secretary determines that, on the
basis of prior experience in making
payments for such an item under this
title, a reasonable useful lifetime of
5 years is not appropriate with respect
to a particular item, the Secretary
shall establish an alternative
reasonable lifetime for such item.
(8) Purchase price recognized for miscellaneous
devices and items.--For purposes of paragraphs (6) and
(7), the amount that is recognized under this paragraph
as the purchase price for a covered item is the amount
described in subparagraph (C) of this paragraph,
determined as follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price, for each item
described--
(I) in paragraph (6) equal to
the average reasonable charge
in the locality for the
purchase of the item for the
12-month period ending with
June 1987, or
(II) in paragraph (7) equal
to the average of the purchase
prices on the claims submitted
on an assignment-related basis
for the unused item supplied
during the 6-month period
ending with December 1986.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(U.S. city average) for the 6-
month period ending with
December 1987,
(II) in 1991, equal to the
local purchase price computed
under this clause for the
previous year, increased by the
covered item update for 1991,
and decreased by the percentage
by which the average of the
reasonable charges for claims
paid for all items described in
paragraph (7) is lower than the
average of the purchase prices
submitted for such items during
the final 9 months of 1988; or
(III) in 1992, 1993, and 1994
equal to the local purchase
price computed under this
clause for the previous year
increased by the covered item
update for the year.
(B) Computation of national limited purchase
price.--With respect to the furnishing of a
particular item in a year, the Secretary shall
compute a national limited purchase price--
(i) for 1991, equal to the local
purchase price computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited purchase price may not exceed
100 percent of the weighted average of
all local purchase prices for the item
computed under such subparagraph for
the year, and may not be less than 85
percent of the weighted average of all
local purchase prices for the item
computed under such subparagraph for
the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local purchase
price computed under subparagraph
(A)(ii) for the item for the year,
except that such national limited
purchase price may not exceed 100
percent of the median of all local
purchase prices computed for the item
under such subparagraph for the year
and may not be less than 85 percent of
the median of all local purchase prices
computed under such subparagraph for
the item for the year; and
(iv) for each subsequent year, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year.
(C) Purchase price recognized.--For purposes
of paragraphs (6) and (7), the amount that is
recognized under this paragraph as the purchase
price for each item furnished--
(i) in 1989 or 1990, is 100 percent
of the local purchase price computed
under subparagraph (A)(ii)(I);
(ii) in 1991, is the sum of (I) 67
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1991, and (II) 33 percent of the
national limited purchase price
computed under subparagraph (B) for
1991;
(iii) in 1992, is the sum of (I) 33
percent of the local purchase price
computed under subparagraph
(A)(ii)(III) for 1992, and (II) 67
percent of the national limited
purchase price computed under
subparagraph (B) for 1992; and
(iv) in 1993 or a subsequent year, is
the national limited purchase price
computed under subparagraph (B) for
that year.
(9) Monthly payment amount recognized with respect to
oxygen and oxygen equipment.--For purposes of paragraph
(5), the amount that is recognized under this paragraph
for payment for oxygen and oxygen equipment is the
monthly payment amount described in subparagraph (C) of
this paragraph. Such amount shall be computed
separately (i) for all items of oxygen and oxygen
equipment (other than portable oxygen equipment) and
(ii) for portable oxygen equipment (each such group
referred to in this paragraph as an ``item'').
(A) Computation of local monthly payment
rate.--Each carrier under this section shall
compute a base local payment rate for each item
as follows:
(i) The carrier shall compute a base
local average monthly payment rate per
beneficiary as an amount equal to (I)
the total reasonable charges for the
item during the 12-month period ending
with December 1986, divided by (II) the
total number of months for all
beneficiaries receiving the item in the
area during the 12-month period for
which the carrier made payment for the
item under this title.
(ii) The carrier shall compute a
local average monthly payment rate for
the item applicable--
(I) to 1989 and 1990, equal
to 95 percent of the base local
average monthly payment rate
computed under clause (i) for
the item increased by the
percentage increase in the
consumer price index for all
urban consumers (U.S. city
average) for the 6-month period
ending with December 1987, or
(II) to 1991, 1992, 1993, and
1994 equal to the local average
monthly payment rate computed
under this clause for the item
for the previous year increased
by the covered item increase
for the year.
(B) Computation of national limited monthly
payment rate.--With respect to the furnishing
of an item in a year, the Secretary shall
compute a national limited monthly payment rate
equal to--
(i) for 1991, the local monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year, and may not
be less than 85 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local monthly
payment rate computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the median of all
local monthly payment rates computed
for the item under such subparagraph
for the year and may not be less than
85 percent of the median of all local
monthly payment rates computed for the
item under such subparagraph for the
year;
(iv) for 1995, 1996, and 1997, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year;
(v) for 1998, 75 percent of the
amount determined under this
subparagraph for 1997; and
(vi) for 1999 and each subsequent
year, 70 percent of the amount
determined under this subparagraph for
1997.
(C) Monthly payment amount recognized.--For
purposes of paragraph (5), the amount that is
recognized under this paragraph as the base
monthly payment amount for each item
furnished--
(i) in 1989 and in 1990, is 100
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii) for the item;
(ii) in 1991, is the sum of (I) 67
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1991, and (II) 33 percent of the
national limited monthly payment rate
computed under subparagraph (B)(i) for
the item for 1991;
(iii) in 1992, is the sum of (I) 33
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1992, and (II) 67 percent of the
national limited monthly payment rate
computed under subparagraph (B)(ii) for
the item for 1992; and
(iv) in a subsequent year, is the
national limited monthly payment rate
computed under subparagraph (B) for the
item for that year.
(10) Exceptions and adjustments.--
(A) Areas outside continental united
states.--Exceptions to the amounts recognized
under the previous provisions of this
subsection shall be made to take into account
the unique circumstances of covered items
furnished in Alaska, Hawaii, or Puerto Rico.
(B) Adjustment for inherent reasonableness.--
The Secretary is authorized to apply the
provisions of paragraphs (8) and (9) of section
1842(b) to covered items and suppliers of such
items and payments under this subsection in an
area and with respect to covered items and
services for which the Secretary does not make
a payment amount adjustment under paragraph
(1)(F).
(C) Transcutaneous electrical nerve
stimulator (tens).--In order to permit an
attending physician time to determine whether
the purchase of a transcutaneous electrical
nerve stimulator is medically appropriate for a
particular patient, the Secretary may determine
an appropriate payment amount for the initial
rental of such item for a period of not more
than 2 months. If such item is subsequently
purchased, the payment amount with respect to
such purchase is the payment amount determined
under paragraph (2).
(11) Improper billing and requirement of physician
order.--
(A) Improper billing for certain rental
items.--Notwithstanding any other provision of
this title, a supplier of a covered item for
which payment is made under this subsection and
which is furnished on a rental basis shall
continue to supply the item without charge
(other than a charge provided under this
subsection for the maintenance and servicing of
the item) after rental payments may no longer
be made under this subsection. If a supplier
knowingly and willfully violates the previous
sentence, the Secretary may apply sanctions
against the supplier under section 1842(j)(2)
in the same manner such sanctions may apply
with respect to a physician.
(B) Requirement of physician order.--
(i) In general.--The Secretary is
authorized to require, for specified
covered items, that payment may be made
under this subsection with respect to
the item only if a physician enrolled
under section 1866(j) or an eligible
professional under section
1848(k)(3)(B) that is enrolled under
section 1866(j) has communicated to the
supplier, before delivery of the item,
a written order for the item.
(ii) Requirement for face to face
encounter.--The Secretary shall require
that such an order be written pursuant
to a physician, a physician assistant,
a nurse practitioner, or a clinical
nurse specialist (as those terms are
defined in section 1861(aa)(5))
documenting such physician, physician
assistant, practitioner, or specialist
has had a face-to-face encounter
(including through use of telehealth
under subsection (m) and other than
with respect to encounters that are
incident to services involved) with the
individual involved during the 6-month
period preceding such written order, or
other reasonable timeframe as
determined by the Secretary.
(12) Regional carriers.--The Secretary may designate,
by regulation under section 1842, one carrier for one
or more entire regions to process all claims within the
region for covered items under this section.
(13) Covered item.--In this subsection, the term
``covered item'' means durable medical equipment (as
defined in section 1861(n)), including such equipment
described in section 1861(m)(5), but not including
implantable items for which payment may be made under
section 1833(t).
(14) Covered item update.--In this subsection, the
term ``covered item update'' means, with respect to a
year--
(A) for 1991 and 1992, the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-
month period ending with June of the previous
year reduced by 1 percentage point;
(B) for 1993, 1994, 1995, 1996, and 1997, the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year;
(C) for each of the years 1998 through 2000,
0 percentage points;
(D) for 2001, the percentage increase in the
consumer price index for all urban consumers
(U.S. city average) for the 12-month period
ending with June 2000;
(E) for 2002, 0 percentage points;
(F) for 2003, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of 2002;
(G) for 2004 through 2006--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) for the year involved;
and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(H) for 2007--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage change determined by the
Secretary to be appropriate taking into
account recommendations contained in
the report of the Comptroller General
of the United States under section
302(c)(1)(B) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003; and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(I) for 2008--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) (as applied to the
payment amount for 2007 determined
after the application of the percentage
change under subparagraph (H)(i)); and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(J) for 2009--
(i) in the case of items and services
furnished in any geographic area, if
such items or services were selected
for competitive acquisition in any area
under the competitive acquisition
program under section
1847(a)(1)(B)(i)(I) before July 1,
2008, including related accessories but
only if furnished with such items and
services selected for such competition
and diabetic supplies but only if
furnished through mail order, - 9.5
percent; or
(ii) in the case of other items and
services, the percentage increase in
the consumer price index for all urban
consumers (U.S. urban average) for the
12-month period ending with June 2008;
(K) for 2010, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of the previous year; and
(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).
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.
(15) Advance determinations of coverage for certain
items.--
(A) Development of lists of items by
secretary.--The Secretary may develop and
periodically update a list of items for which
payment may be made under this subsection that
the Secretary determines, on the basis of prior
payment experience, are frequently subject to
unnecessary utilization throughout a carrier's
entire service area or a portion of such area.
(B) Development of lists of suppliers by
secretary.--The Secretary may develop and
periodically update a list of suppliers of
items for which payment may be made under this
subsection with respect to whom--
(i) the Secretary has found that a
substantial number of claims for
payment under this part for items
furnished by the supplier have been
denied on the basis of the application
of section 1862(a)(1); or
(ii) the Secretary has identified a
pattern of overutilization resulting
from the business practice of the
supplier.
(C) Determinations of coverage in advance.--A
carrier shall determine in advance of delivery
of an item whether payment for the item may not
be made because the item is not covered or
because of the application of section
1862(a)(1) if--
(i) the item is included on the list
developed by the Secretary under
subparagraph (A);
(ii) the item is furnished by a
supplier included on the list developed
by the Secretary under subparagraph
(B); or
(iii) the item is a customized item
(other than inexpensive items specified
by the Secretary) and the patient to
whom the item is to be furnished or the
supplier requests that such advance
determination be made.
(16) Disclosure of information and surety bond.--The
Secretary shall not provide for the issuance (or
renewal) of a provider number for a supplier of durable
medical equipment, for purposes of payment under this
part for durable medical equipment furnished by the
supplier, unless the supplier provides the Secretary on
a continuing basis--
(A) with--
(i) full and complete information as
to the identity of each person with an
ownership or control interest (as
defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as
defined by the Secretary in
regulations) in which the supplier
directly or indirectly has a 5 percent
or more ownership interest; and
(ii) to the extent determined to be
feasible under regulations of the
Secretary, the name of any disclosing
entity (as defined in section
1124(a)(2)) with respect to which a
person with such an ownership or
control interest in the supplier is a
person with such an ownership or
control interest in the disclosing
entity; and
(B) with a surety bond in a form specified by
the Secretary and in an amount that is not less
than $50,000 that the Secretary determines is
commensurate with the volume of the billing of
the supplier.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that
provides a comparable surety bond under State law. The
Secretary, at the Secretary's discretion, may impose
the requirements of the first sentence with respect to
some or all providers of items or services under part A
or some or all suppliers or other persons (other than
physicians or other practitioners, as defined in
section 1842(b)(18)(C)) who furnish items or services
under this part.
(17) Prohibition against unsolicited telephone
contacts by suppliers.--
(A) In general.--A supplier of a covered item
under this subsection may not contact an
individual enrolled under this part by
telephone regarding the furnishing of a covered
item to the individual unless 1 of the
following applies:
(i) The individual has given written
permission to the supplier to make
contact by telephone regarding the
furnishing of a covered item.
(ii) The supplier has furnished a
covered item to the individual and the
supplier is contacting the individual
only regarding the furnishing of such
covered item.
(iii) If the contact is regarding the
furnishing of a covered item other than
a covered item already furnished to the
individual, the supplier has furnished
at least 1 covered item to the
individual during the 15-month period
preceding the date on which the
supplier makes such contact.
(B) Prohibiting payment for items furnished
subsequent to unsolicited contacts.--If a
supplier knowingly contacts an individual in
violation of subparagraph (A), no payment may
be made under this part for any item
subsequently furnished to the individual by the
supplier.
(C) Exclusion from program for suppliers
engaging in pattern of unsolicited contacts.--
If a supplier knowingly contacts individuals in
violation of subparagraph (A) to such an extent
that the supplier's conduct establishes a
pattern of contacts in violation of such
subparagraph, the Secretary shall exclude the
supplier from participation in the programs
under this Act, in accordance with the
procedures set forth in subsections (c), (f),
and (g) of section 1128.
(18) Refund of amounts collected for certain
disallowed items.--
(A) In general.--If a nonparticipating
supplier furnishes to an individual enrolled
under this part a covered item for which no
payment may be made under this part by reason
of paragraph (17)(B), the supplier shall refund
on a timely basis to the patient (and shall be
liable to the patient for) any amounts
collected from the patient for the item,
unless--
(i) the supplier establishes that the
supplier did not know and could not
reasonably have been expected to know
that payment may not be made for the
item by reason of paragraph (17)(B), or
(ii) before the item was furnished,
the patient was informed that payment
under this part may not be made for
that item and the patient has agreed to
pay for that item.
(B) Sanctions.--If a supplier knowingly and
willfully fails to make refunds in violation of
subparagraph (A), the Secretary may apply
sanctions against the supplier in accordance
with section 1842(j)(2).
(C) Notice.--Each carrier with a contract in
effect under this part with respect to
suppliers of covered items shall send any
notice of denial of payment for covered items
by reason of paragraph (17)(B) and for which
payment is not requested on an assignment-
related basis to the supplier and the patient
involved.
(D) Timely basis defined.--A refund under
subparagraph (A) is considered to be on a
timely basis only if--
(i) in the case of a supplier who
does not request reconsideration or
seek appeal on a timely basis, the
refund is made within 30 days after the
date the supplier receives a denial
notice under subparagraph (C), or
(ii) in the case in which such a
reconsideration or appeal is taken, the
refund is made within 15 days after the
date the supplier receives notice of an
adverse determination on
reconsideration or appeal.
(19) Certain upgraded items.--
(A) Individual's right to choose upgraded
item.--Notwithstanding any other provision of
this title, the Secretary may issue regulations
under which an individual may purchase or rent
from a supplier an item of upgraded durable
medical equipment for which payment would be
made under this subsection if the item were a
standard item.
(B) Payments to supplier.--In the case of the
purchase or rental of an upgraded item under
subparagraph (A)--
(i) the supplier shall receive
payment under this subsection with
respect to such item as if such item
were a standard item; and
(ii) the individual purchasing or
renting the item shall pay the supplier
an amount equal to the difference
between the supplier's charge and the
amount under clause (i).
In no event may the supplier's charge for an
upgraded item exceed the applicable fee
schedule amount (if any) for such item.
(C) Consumer protection safeguards.--Any
regulations under subparagraph (A) shall
provide for consumer protection standards with
respect to the furnishing of upgraded equipment
under subparagraph (A). Such regulations shall
provide for--
(i) determination of fair market
prices with respect to an upgraded
item;
(ii) full disclosure of the
availability and price of standard
items and proof of receipt of such
disclosure information by the
beneficiary before the furnishing of
the upgraded item;
(iii) conditions of participation for
suppliers in the billing arrangement;
(iv) sanctions of suppliers who are
determined to engage in coercive or
abusive practices, including exclusion;
and
(v) such other safeguards as the
Secretary determines are necessary.
(20) Identification of quality standards.--
(A) In general.--Subject to subparagraph (C),
the Secretary shall establish and implement
quality standards for suppliers of items and
services described in subparagraph (D) to be
applied by recognized independent accreditation
organizations (as designated under subparagraph
(B)) and with which such suppliers shall be
required to comply in order to--
(i) furnish any such item or service
for which payment is made under this
part; and
(ii) receive or retain a provider or
supplier number used to submit claims
for reimbursement for any such item or
service for which payment may be made
under this title.
(B) Designation of independent accreditation
organizations.--Not later than the date that is
1 year after the date on which the Secretary
implements the quality standards under
subparagraph (A), notwithstanding section
1865(a), the Secretary shall designate and
approve one or more independent accreditation
organizations for purposes of such
subparagraph.
(C) Quality standards.--The quality standards
described in subparagraph (A) may not be less
stringent than the quality standards that would
otherwise apply if this paragraph did not apply
and shall include consumer services standards.
(D) Items and services described.--The items
and services described in this subparagraph are
the following items and services, as the
Secretary determines appropriate:
(i) Covered items (as defined in
paragraph (13)) for which payment may
otherwise be made under this
subsection.
(ii) Prosthetic devices and orthotics
and prosthetics described in section
1834(h)(4).
(iii) Items and services described in
section 1842(s)(2).
(E) Implementation.--The Secretary may
establish by program instruction or otherwise
the quality standards under this paragraph,
including subparagraph (F), after consultation
with representatives of relevant parties. Such
standards shall be applied prospectively and
shall be published on the Internet website of
the Centers for Medicare & Medicaid Services.
(F) Application of accreditation
requirement.--In implementing quality standards
under this paragraph--
(i) subject to clause (ii) and
subparagraph (G), the Secretary shall
require suppliers furnishing items and
services described in subparagraph (D)
on or after October 1, 2009, directly
or as a subcontractor for another
entity, to have submitted to the
Secretary evidence of accreditation by
an accreditation organization
designated under subparagraph (B) as
meeting applicable quality standards,
except that the Secretary shall not
require under this clause pharmacies to
obtain such accreditation before
January 1, 2010, except that the
Secretary shall not require a pharmacy
to have submitted to the Secretary such
evidence of accreditation prior to
January 1, 2011; and
(ii) in applying such standards and
the accreditation requirement of clause
(i) with respect to eligible
professionals (as defined in section
1848(k)(3)(B)), and including such
other persons, such as orthotists and
prosthetists, as specified by the
Secretary, furnishing such items and
services--
(I) such standards and
accreditation requirement shall
not apply to such professionals
and persons unless the
Secretary determines that the
standards being applied are
designed specifically to be
applied to such professionals
and persons; and
(II) the Secretary may exempt
such professionals and persons
from such standards and
requirement if the Secretary
determines that licensing,
accreditation, or other
mandatory quality requirements
apply to such professionals and
persons with respect to the
furnishing of such items and
services.
(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) 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.
(21) Special payment rule for specified items and
supplies.--
(A) In general.--Notwithstanding the
preceding provisions of this subsection, for
specified items and supplies (described in
subparagraph (B)) furnished during 2005, the
payment amount otherwise determined under this
subsection for such specified items and
supplies shall be reduced by the percentage
difference between--
(i) the amount of payment otherwise
determined for the specified item or
supply under this subsection for 2002,
and
(ii) the amount of payment for the
specified item or supply under chapter
89 of title 5, United States Code, as
identified in the column entitled
``Median FEHP Price'' in the table
entitled ``SUMMARY OF MEDICARE PRICES
COMPARED TO VA, MEDICAID, RETAIL, AND
FEHP PRICES FOR 16 ITEMS'' included in
the Testimony of the Inspector General
before the Senate Committee on
Appropriations, June 12, 2002, or any
subsequent report by the Inspector
General.
(B) Specified item or supply described.--For
purposes of subparagraph (A), a specified item
or supply means oxygen and oxygen equipment,
standard wheelchairs (including standard power
wheelchairs), nebulizers, diabetic supplies
consisting of lancets and testing strips,
hospital beds, and air mattresses, but only if
the HCPCS code for the item or supply is
identified in a table referred to in
subparagraph (A)(ii).
(C) Application of update to special payment
amount.--The covered item update under
paragraph (14) for specified items and supplies
for 2006 and each subsequent year shall be
applied to the payment amount under
subparagraph (A) unless payment is made for
such items and supplies under section 1847.
(22) Special payment rule for diabetic supplies.--
Notwithstanding the preceding provisions of this
subsection, for purposes of determining the payment
amount under this subsection for diabetic supplies
furnished on or after the first day of the calendar
quarter during 2013 that is at least 30 days after the
date of the enactment of this paragraph and before the
date described in paragraph (1)(H)(ii), the Secretary
shall recalculate and apply the covered item update
under paragraph (14) as if subparagraph (J)(i) of such
paragraph was amended by striking ``but only if
furnished through mail order''.
(b) Fee Schedules for Radiologist Services.--
(1) Development.--The Secretary shall develop--
(A) a relative value scale to serve as the
basis for the payment for radiologist services
under this part, and
(B) using such scale and appropriate
conversion factors and subject to subsection
(c)(1)(A), fee schedules (on a regional,
statewide, locality, or carrier service area
basis) for payment for radiologist services
under this part, to be implemented for such
services furnished during 1989.
(2) Consultation.--In carrying out paragraph (1), the
Secretary shall regularly consult closely with the
Physician Payment Review Commission, the American
College of Radiology, and other organizations
representing physicians or suppliers who furnish
radiologist services and shall share with them the data
and data analysis being used to make the determinations
under paragraph (1), including data on variations in
current medicare payments by geographic area, and by
service and physician specialty.
(3) Considerations.--In developing the relative value
scale and fee schedules under paragraph (1), the
Secretary--
(A) shall take into consideration variations
in the cost of furnishing such services among
geographic areas and among different sites
where services are furnished, and
(B) may also take into consideration such
other factors respecting the manner in which
physicians in different specialties furnish
such services as may be appropriate to assure
that payment amounts are equitable and designed
to promote effective and efficient provision of
radiologist services by physicians in the
different specialties.
(4) Savings.--
(A) Budget neutral fee schedules.--The
Secretary shall develop preliminary fee
schedules for 1989, which are designed to
result in the same amount of aggregate payments
(net of any coinsurance and deductibles under
sections 1833(a)(1)(J) and 1833(b)) for
radiologist services furnished in 1989 as would
have been made if this subsection had not been
enacted.
(B) Initial savings.--The fee schedules
established for payment purposes under this
subsection for services furnished in 1989 shall
be 97 percent of the amounts permitted under
these preliminary fee schedules developed under
subparagraph (A).
(C) 1990 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1990, after
March 31 of such year, the conversion factors
used under this subsection shall be 96 percent
of the conversion factors that applied under
this subsection as of December 31, 1989.
(D) 1991 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1991, the
conversion factors used in a locality under
this subsection shall, subject to clause (vii),
be reduced to the adjusted conversion factor
for the locality determined as follows:
(i) National weighted average
conversion factor.--The Secretary shall
estimate the national weighted average
of the conversion factors used under
this subsection for services furnished
during 1990 beginning on April 1, using
the best available data.
(ii) Reduced national weighted
average.--The national weighted average
estimated under clause (i) shall be
reduced by 13 percent.
(iii) Computation of 1990 locality
index relative to national average.--
The Secretary shall establish an index
which reflects, for each locality, the
ratio of the conversion factor used in
the locality under this subsection to
the national weighted average estimated
under clause (i).
(iv) Adjusted conversion factor.--The
adjusted conversion factor for the
professional or technical component of
a service in a locality is the sum of
\1/2\ of the locally-adjusted amount
determined under clause (v) and \1/2\
of the GPCI-adjusted amount determined
under clause (vi).
(v) Locally-adjusted amount.--For
purposes of clause (iv), the locally
adjusted amount determined under this
clause is the product of (I) the
national weighted average conversion
factor computed under clause (ii), and
(II) the index value established under
clause (iii) for the locality.
(vi) GPCI-adjusted amount.--For
purposes of clause (iv), the GPCI-
adjusted amount determined under this
clause is the sum of--
(I) the product of (a) the
portion of the reduced national
weighted average conversion
factor computed under clause
(ii) which is attributable to
physician work and (b) the
geographic work index value for
the locality (specified in
Addendum C to the Model Fee
Schedule for Physician Services
(published on September 4,
1990, 55 Federal Register pp.
36238-36243)); and
(II) the product of (a) the
remaining portion of the
reduced national weighted
average conversion factor
computed under clause (ii), and
(b) the geographic practice
cost index value specified in
section 1842(b)(14)(C)(iv) for
the locality.
In applying this clause with respect to
the professional component of a
service, 80 percent of the conversion
factor shall be considered to be
attributable to physician work and with
respect to the technical component of
the service, 0 percent shall be
considered to be attributable to
physician work.
(vii) Limits on conversion factor.--
The conversion factor to be applied to
a locality to the professional or
technical component of a service shall
not be reduced under this subparagraph
by more than 9.5 percent below the
conversion factor applied in the
locality under subparagraph (C) to such
component, but in no case shall the
conversion factor be less than 60
percent of the national weighted
average of the conversion factors
(computed under clause (i)).
(E) Rule for certain scanning services.--In
the case of the technical components of
magnetic resonance imaging (MRI) services and
computer assisted tomography (CAT) services
furnished after December 31, 1990, the amount
otherwise payable shall be reduced by 10
percent.
(F) Subsequent updating.--For radiologist
services furnished in subsequent years, the fee
schedules shall be the schedules for the
previous year updated by the percentage
increase in the MEI (as defined in section
1842(i)(3)) for the year.
(G) Nonparticipating physicians and
suppliers.--Each fee schedule so established
shall provide that the payment rate recognized
for nonparticipating physicians and suppliers
is equal to the appropriate percent (as defined
in section 1842(b)(4)(A)(iv)) of the payment
rate recognized for participating physicians
and suppliers.
(5) Limiting charges of nonparticipating physicians
and suppliers.--
(A) In general.--In the case of radiologist
services furnished after January 1, 1989, for
which payment is made under a fee schedule
under this subsection, if a nonparticipating
physician or supplier furnishes the service to
an individual entitled to benefits under this
part, the physician or supplier may not charge
the individual more than the limiting charge
(as defined in subparagraph (B)).
(B) Limiting charge defined.--In subparagraph
(A), the term ``limiting charge'' means, with
respect to a service furnished--
(i) in 1989, 125 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1),
(ii) in 1990, 120 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1), and
(iii) after 1990, 115 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1).
(C) Enforcement.--If a physician or supplier
knowingly and willfully bills in violation of
subparagraph (A), the Secretary may apply
sanctions against such physician or supplier in
accordance with section 1842(j)(2) in the same
manner as such sanctions may apply to a
physician.
(6) Radiologist services defined.--For the purposes
of this subsection and section 1833(a)(1)(J), the term
``radiologist services'' only includes radiology
services performed by, or under the direction or
supervision of, a physician--
(A) who is certified, or eligible to be
certified, by the American Board of Radiology,
or
(B) for whom radiology services account for
at least 50 percent of the total amount of
charges made under this part.
(c) Payment and Standards for Screening Mammography.--
(1) In general.--With respect to expenses incurred
for screening mammography (as defined in section
1861(jj)), payment may be made only--
(A) for screening mammography conducted
consistent with the frequency permitted under
paragraph (2); and
(B) if the screening mammography is conducted
by a facility that has a certificate (or
provisional certificate) issued under section
354 of the Public Health Service Act.
(2) Frequency covered.--
(A) In general.--Subject to revision by the
Secretary under subparagraph (B)--
(i) no payment may be made under this
part for screening mammography
performed on a woman under 35 years of
age;
(ii) payment may be made under this
part for only one screening mammography
performed on a woman over 34 years of
age, but under 40 years of age; and
(iii) in the case of a woman over 39
years of age, payment may not be made
under this part for screening
mammography performed within 11 months
following the month in which a previous
screening mammography was performed.
(B) Revision of frequency.--
(i) Review.--The Secretary, in
consultation with the Director of the
National Cancer Institute, shall review
periodically the appropriate frequency
for performing screening mammography,
based on age and such other factors as
the Secretary believes to be pertinent.
(ii) Revision of frequency.--The
Secretary, taking into consideration
the review made under clause (i), may
revise from time to time the frequency
with which screening mammography may be
paid for under this subsection.
(d) Frequency Limits and Payment for Colorectal Cancer
Screening Tests.--
(1) Screening fecal-occult blood tests.--
(A) Payment amount.--The payment amount for
colorectal cancer screening tests consisting of
screening fecal-occult blood tests is equal to
the payment amount established for diagnostic
fecal-occult blood tests under section 1833(h).
(B) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening fecal-
occult blood test--
(i) if the individual is under 50
years of age; or
(ii) if the test is performed within
the 11 months after a previous
screening fecal-occult blood test.
(2) Screening flexible sigmoidoscopies.--
(A) Fee schedule.--With respect to colorectal
cancer screening tests consisting of screening
flexible sigmoidoscopies, payment under section
1848 shall be consistent with payment under
such section for similar or related services.
(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services, payment under
this part shall not exceed such amount as the
Secretary specifies, based upon the rates
recognized for diagnostic flexible
sigmoidoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
flexible sigmoidoscopy services
furnished on or after January 1, 1999,
that--
(I) in accordance with
regulations, may be performed
in an ambulatory surgical
center and for which the
Secretary permits ambulatory
surgical center payments under
this part, and
(II) are performed in an
ambulatory surgical center or
hospital outpatient department,
payment under this part shall be based
on the lesser of the amount under the
fee schedule that would apply to such
services if they were performed in a
hospital outpatient department in an
area or the amount under the fee
schedule that would apply to such
services if they were performed in an
ambulatory surgical center in the same
area.
(ii) Limitation on coinsurance.--
Notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable copayment,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--If
during the course of such screening flexible
sigmoidoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening flexible
sigmoidoscopy but shall be made for the
procedure classified as a flexible
sigmoidoscopy with such biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
flexible sigmoidoscopy--
(i) if the individual is under 50
years of age; or
(ii) if the procedure is performed
within the 47 months after a previous
screening flexible sigmoidoscopy or, in
the case of an individual who is not at
high risk for colorectal cancer, if the
procedure is performed within the 119
months after a previous screening
colonoscopy.
(3) Screening colonoscopy.--
(A) Fee schedule.--With respect to colorectal
cancer screening test consisting of a screening
colonoscopy, payment under section 1848 shall
be consistent with payment amounts under such
section for similar or related services.
(B) Payment limit.--In the case of screening
colonoscopy services, payment under this part
shall not exceed such amount as the Secretary
specifies, based upon the rates recognized for
diagnostic colonoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
colonoscopy services furnished on or
after January 1, 1999, that are
performed in an ambulatory surgical
center or a hospital outpatient
department, payment under this part
shall be based on the lesser of the
amount under the fee schedule that
would apply to such services if they
were performed in a hospital outpatient
department in an area or the amount
under the fee schedule that would apply
to such services if they were performed
in an ambulatory surgical center in the
same area.
(ii) Limitation on coinsurance.--
Notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable coinsurance,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--If
during the course of such screening
colonoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening colonoscopy but
shall be made for the procedure classified as a
colonoscopy with such biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
colonoscopy for individuals at high risk for
colorectal cancer if the procedure is performed
within the 23 months after a previous screening
colonoscopy or for other individuals if the
procedure is performed within the 119 months
after a previous screening colonoscopy or
within 47 months after a previous screening
flexible sigmoidoscopy.
(e) Accreditation Requirement for Advanced Diagnostic Imaging
Services.--
(1) In general.--
(A) In general.--Beginning with January 1,
2012, with respect to the technical component
of advanced diagnostic imaging services for
which payment is made under the fee schedule
established under section 1848(b) and that are
furnished by a supplier, payment may only be
made if such supplier is accredited by an
accreditation organization designated by the
Secretary under paragraph (2)(B)(i).
(B) Advanced diagnostic imaging services
defined.--In this subsection, the term
``advanced diagnostic imaging services''
includes--
(i) diagnostic magnetic resonance
imaging, computed tomography, and
nuclear medicine (including positron
emission tomography); and
(ii) such other diagnostic imaging
services, including services described
in section 1848(b)(4)(B) (excluding X-
ray, ultrasound, and fluoroscopy), as
specified by the Secretary in
consultation with physician specialty
organizations and other stakeholders.
(C) Supplier defined.--In this subsection,
the term ``supplier'' has the meaning given
such term in section 1861(d).
(2) Accreditation organizations.--
(A) Factors for designation of accreditation
organizations.--The Secretary shall consider
the following factors in designating
accreditation organizations under subparagraph
(B)(i) and in reviewing and modifying the list
of accreditation organizations designated
pursuant to subparagraph (C):
(i) The ability of the organization
to conduct timely reviews of
accreditation applications.
(ii) Whether the organization has
established a process for the timely
integration of new advanced diagnostic
imaging services into the
organization's accreditation program.
(iii) Whether the organization uses
random site visits, site audits, or
other strategies for ensuring
accredited suppliers maintain adherence
to the criteria described in paragraph
(3).
(iv) The ability of the organization
to take into account the capacities of
suppliers located in a rural area (as
defined in section 1886(d)(2)(D)).
(v) Whether the organization has
established reasonable fees to be
charged to suppliers applying for
accreditation.
(vi) Such other factors as the
Secretary determines appropriate.
(B) Designation.--Not later than January 1,
2010, the Secretary shall designate
organizations to accredit suppliers furnishing
the technical component of advanced diagnostic
imaging services. The list of accreditation
organizations so designated may be modified
pursuant to subparagraph (C).
(C) Review and modification of list of
accreditation organizations.--
(i) In general.--The Secretary shall
review the list of accreditation
organizations designated under
subparagraph (B) taking into account
the factors under subparagraph (A).
Taking into account the results of such
review, the Secretary may, by
regulation, modify the list of
accreditation organizations designated
under subparagraph (B).
(ii) Special rule for accreditations
done prior to removal from list of
designated accreditation
organizations.--In the case where the
Secretary removes an organization from
the list of accreditation organizations
designated under subparagraph (B), any
supplier that is accredited by the
organization during the period
beginning on the date on which the
organization is designated as an
accreditation organization under
subparagraph (B) and ending on the date
on which the organization is removed
from such list shall be considered to
have been accredited by an organization
designated by the Secretary under
subparagraph (B) for the remaining
period such accreditation is in effect.
(3) Criteria for accreditation.--The Secretary shall
establish procedures to ensure that the criteria used
by an accreditation organization designated under
paragraph (2)(B) to evaluate a supplier that furnishes
the technical component of advanced diagnostic imaging
services for the purpose of accreditation of such
supplier is specific to each imaging modality. Such
criteria shall include--
(A) standards for qualifications of medical
personnel who are not physicians and who
furnish the technical component of advanced
diagnostic imaging services;
(B) standards for qualifications and
responsibilities of medical directors and
supervising physicians, including standards
that recognize the considerations described in
paragraph (4);
(C) procedures to ensure that equipment used
in furnishing the technical component of
advanced diagnostic imaging services meets
performance specifications;
(D) standards that require the supplier have
procedures in place to ensure the safety of
persons who furnish the technical component of
advanced diagnostic imaging services and
individuals to whom such services are
furnished;
(E) standards that require the establishment
and maintenance of a quality assurance and
quality control program by the supplier that is
adequate and appropriate to ensure the
reliability, clarity, and accuracy of the
technical quality of diagnostic images produced
by such supplier; and
(F) any other standards or procedures the
Secretary determines appropriate.
(4) Recognition in standards for the evaluation of
medical directors and supervising physicians.--The
standards described in paragraph (3)(B) shall recognize
whether a medical director or supervising physician--
(A) in a particular specialty receives
training in advanced diagnostic imaging
services in a residency program;
(B) has attained, through experience, the
necessary expertise to be a medical director or
a supervising physician;
(C) has completed any continuing medical
education courses relating to such services; or
(D) has met such other standards as the
Secretary determines appropriate.
(5) Rule for accreditations made prior to
designation.--In the case of a supplier that is
accredited before January 1, 2010, by an accreditation
organization designated by the Secretary under
paragraph (2)(B) as of January 1, 2010, such supplier
shall be considered to have been accredited by an
organization designated by the Secretary under such
paragraph as of January 1, 2012, for the remaining
period such accreditation is in effect.
(f) Reduction in Payments for Physician Pathology Services
During 1991.--
(1) In general.--For physician pathology services
furnished under this part during 1991, the prevailing
charges used in a locality under this part shall be 7
percent below the prevailing charges used in the
locality under this part in 1990 after March 31.
(2) Limitation.--The prevailing charge for the
technical and professional components of an physician
pathology service furnished by a physician through an
independent laboratory shall not be reduced pursuant to
paragraph (1) to the extent that such reduction would
reduce such prevailing charge below 115 percent of the
prevailing charge for the professional component of
such service when furnished by a hospital-based
physician in the same locality. For purposes of the
preceding sentence, an independent laboratory is a
laboratory that is independent of a hospital and
separate from the attending or consulting physicians'
office.
(g) Payment for Outpatient Critical Access Hospital
Services.--
(1) In general.--The amount of payment for outpatient
critical access hospital services of a critical access
hospital is equal to 101 percent of the reasonable
costs of the hospital in providing such services,
unless the hospital makes the election under paragraph
(2).
(2) Election of cost-based hospital outpatient
service payment plus fee schedule for professional
services.--A critical access hospital may elect to be
paid for outpatient critical access hospital services
amounts equal to the sum of the following, less the
amount that such hospital may charge as described in
section 1866(a)(2)(A):
(A) Facility fee.--With respect to facility
services, not including any services for which
payment may be made under subparagraph (B), 101
percent of the reasonable costs of the critical
access hospital in providing such services.
(B) Fee schedule for professional services.--
With respect to professional services otherwise
included within outpatient critical access
hospital services, 115 percent of such amounts
as would otherwise be paid under this part if
such services were not included in outpatient
critical access hospital services. Subsections
(x) and (y) of section 1833 shall not be taken
into account in determining the amounts that
would otherwise be paid pursuant to the
preceding sentence.
The Secretary may not require, as a condition for
applying subparagraph (B) with respect to a critical
access hospital, that each physician or other
practitioner providing professional services in the
hospital must assign billing rights with respect to
such services, except that such subparagraph shall not
apply to those physicians and practitioners who have
not assigned such billing rights.
(3) Disregarding charges.--The payment amounts under
this subsection shall be determined without regard to
the amount of the customary or other charge.
(4) Treatment of clinical diagnostic laboratory
services.--No coinsurance, deductible, copayment, or
other cost-sharing otherwise applicable under this part
shall apply with respect to clinical diagnostic
laboratory services furnished as an outpatient critical
access hospital service. Nothing in this title shall be
construed as providing for payment for clinical
diagnostic laboratory services furnished as part of
outpatient critical access hospital services, other
than on the basis described in this subsection. For
purposes of the preceding sentence and section
1861(mm)(3), clinical diagnostic laboratory services
furnished by a critical access hospital shall be
treated as being furnished as part of outpatient
critical access services without regard to whether the
individual with respect to whom such services are
furnished is physically present in the critical access
hospital, or in a skilled nursing facility or a clinic
(including a rural health clinic) that is operated by a
critical access hospital, at the time the specimen is
collected.
(5) Coverage of costs for certain emergency room on-
call providers.--In determining the reasonable costs of
outpatient critical access hospital services under
paragraphs (1) and (2)(A), the Secretary shall
recognize as allowable costs, amounts (as defined by
the Secretary) for reasonable compensation and related
costs for physicians, physician assistants, nurse
practitioners, and clinical nurse specialists who are
on-call (as defined by the Secretary) to provide
emergency services but who are not present on the
premises of the critical access hospital involved, and
are not otherwise furnishing services covered under
this title and are not on-call at any other provider or
facility.
(h) Payment for Prosthetic Devices and Orthotics and
Prosthetics.--
(1) General rule for payment.--
(A) In general.--Payment under this
subsection for prosthetic devices and orthotics
and prosthetics shall be made in a lump-sum
amount for the purchase of the item in an
amount equal to 80 percent of the payment basis
described in subparagraph (B).
(B) Payment basis.--Except as provided in
subparagraphs (C), (E), and (H)(i), the payment
basis described in this subparagraph is the
lesser of--
(i) the actual charge for the item;
or
(ii) the amount recognized under
paragraph (2) as the purchase price for
the item.
(C) Exception for certain public home health
agencies.--Subparagraph (B)(i) shall not apply
to an item furnished by a public home health
agency (or by another home health agency which
demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(D) Exclusive payment rule.--Subject to
subparagraph (H)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for prosthetic devices,
orthotics, and prosthetics under this part or
under part A to a home health agency.
(E) Exception for certain items.--Payment for
ostomy supplies, tracheostomy supplies, and
urologicals shall be made in accordance with
subparagraphs (B) and (C) of section
1834(a)(2).
(F) Special payment rules for certain
prosthetics and custom-fabricated orthotics.--
(i) In general.--No payment shall be
made under this subsection for an item
of custom-fabricated orthotics
described in clause (ii) or for an item
of prosthetics unless such item is--
(I) furnished by a qualified
practitioner; and
(II) fabricated by a
qualified practitioner or a
qualified supplier at a
facility that meets such
criteria as the Secretary
determines appropriate.
(ii) Description of custom-fabricated
item.--
(I) In general.--An item
described in this clause is an
item of custom-fabricated
orthotics that requires
education, training, and
experience to custom-fabricate
and that is included in a list
established by the Secretary in
subclause (II). Such an item
does not include shoes and shoe
inserts.
(II) List of items.--The
Secretary, in consultation with
appropriate experts in
orthotics (including national
organizations representing
manufacturers of orthotics),
shall establish and update as
appropriate a list of items to
which this subparagraph
applies. No item may be
included in such list unless
the item is individually
fabricated for the patient over
a positive model of the
patient.
(iii) Qualified practitioner
defined.--In this subparagraph, the
term ``qualified practitioner'' means a
physician or other individual who--
(I) is a qualified physical
therapist or a qualified
occupational therapist;
(II) in the case of a State
that provides for the licensing
of orthotics and prosthetics,
is licensed in orthotics or
prosthetics by the State in
which the item is supplied; or
(III) in the case of a State
that does not provide for the
licensing of orthotics and
prosthetics, is specifically
trained and educated to provide
or manage the provision of
prosthetics and custom-designed
or -fabricated orthotics, and
is certified by the American
Board for Certification in
Orthotics and Prosthetics, Inc.
or by the Board for Orthotist/
Prosthetist Certification, or
is credentialed and approved by
a program that the Secretary
determines, in consultation
with appropriate experts in
orthotics and prosthetics, has
training and education
standards that are necessary to
provide such prosthetics and
orthotics.
(iv) Qualified supplier defined.--In
this subparagraph, the term ``qualified
supplier'' means any entity that is
accredited by the American Board for
Certification in Orthotics and
Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or
accredited and approved by a program
that the Secretary determines has
accreditation and approval standards
that are essentially equivalent to
those of such Board.
(G) Replacement of prosthetic devices and
parts.--
(i) In general.--Payment shall be
made for the replacement of prosthetic
devices which are artificial limbs, or
for the replacement of any part of such
devices, without regard to continuous
use or useful lifetime restrictions if
an ordering physician determines that
the provision of a replacement device,
or a replacement part of such a device,
is necessary because of any of the
following:
(I) A change in the
physiological condition of the
patient.
(II) An irreparable change in
the condition of the device, or
in a part of the device.
(III) The condition of the
device, or the part of the
device, requires repairs and
the cost of such repairs would
be more than 60 percent of the
cost of a replacement device,
or, as the case may be, of the
part being replaced.
(ii) Confirmation may be required if
device or part being replaced is less
than 3 years old.--If a physician
determines that a replacement device,
or a replacement part, is necessary
pursuant to clause (i)--
(I) such determination shall
be controlling; and
(II) such replacement device
or part shall be deemed to be
reasonable and necessary for
purposes of section
1862(a)(1)(A);
except that if the device, or part,
being replaced is less than 3 years old
(calculated from the date on which the
beneficiary began to use the device or
part), the Secretary may also require
confirmation of necessity of the
replacement device or replacement part,
as the case may be.
(H) Application of competitive acquisition to
orthotics; limitation of inherent
reasonableness authority.--In the case of
orthotics described in paragraph (2)(C) of
section 1847(a) furnished on or after January
1, 2009, subject to subsection (a)(1)(G), that
are included in a competitive acquisition
program in a competitive acquisition area under
such section--
(i) the payment basis under this
subsection for such orthotics furnished
in such area shall be the payment basis
determined under such competitive
acquisition program; and
(ii) subject to subsection (a)(1)(G),
the Secretary may use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847,
and in the case of such adjustment,
paragraphs (8) and (9) of section
1842(b) shall not be applied.
(2) Purchase price recognized.--For purposes of
paragraph (1), the amount that is recognized under this
paragraph as the purchase price for prosthetic devices,
orthotics, and prosthetics is the amount described in
subparagraph (C) of this paragraph, determined as
follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price for each item
equal to the average reasonable charge
in the locality for the purchase of the
item for the 12-month period ending
with June 1987.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(United States city average)
for the 6-month period ending
with December 1987, or
(II) in 1991, 1992 or 1993,
equal to the local purchase
price computed under this
clause for the previous year
increased by the applicable
percentage increase for the
year.
(B) Computation of regional purchase price.--
With respect to the furnishing of a particular
item in each region (as defined by the
Secretary), the Secretary shall compute a
regional purchase price--
(i) for 1992, equal to the average
(weighted by relative volume of all
claims among carriers) of the local
purchase prices for the carriers in the
region computed under subparagraph
(A)(ii)(II) for the year, and
(ii) for each subsequent year, equal
to the regional purchase price computed
under this subparagraph for the
previous year increased by the
applicable percentage increase for the
year.
(C) Purchase price recognized.--For purposes
of paragraph (1) and subject to subparagraph
(D), the amount that is recognized under this
paragraph as the purchase price for each item
furnished--
(i) in 1989, 1990, or 1991, is 100
percent of the local purchase price
computed under subparagraph (A)(ii);
(ii) in 1992, is the sum of (I) 75
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1992, and (II) 25 percent of the
regional purchase price computed under
subparagraph (B) for 1992;
(iii) in 1993, is the sum of (I) 50
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1993, and (II) 50 percent of the
regional purchase price computed under
subparagraph (B) for 1993; and
(iv) in 1994 or a subsequent year, is
the regional purchase price computed
under subparagraph (B) for that year.
(D) Range on amount recognized.--The amount
that is recognized under subparagraph (C) as
the purchase price for an item furnished--
(i) in 1992, may not exceed 125
percent, and may not be lower than 85
percent, of the average of the purchase
prices recognized under such
subparagraph for all the carrier
service areas in the United States in
that year; and
(ii) in a subsequent year, may not
exceed 120 percent, and may not be
lower than 90 percent, of the average
of the purchase prices recognized under
such subparagraph for all the carrier
service areas in the United States in
that year.
(3) Applicability of certain provisions relating to
durable medical equipment.--Paragraphs (12) and (17)
and subparagraphs (A) and (B) of paragraph (10) and
paragraph (11) of subsection (a) shall apply to
prosthetic devices, orthotics, and prosthetics in the
same manner as such provisions apply to covered items
under such subsection.
(4) Definitions.--In this subsection--
(A) the term ``applicable percentage
increase'' means--
(i) for 1991, 0 percent;
(ii) for 1992 and 1993, 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;
(iii) for 1994 and 1995, 0 percent;
(iv) for 1996 and 1997, 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;
(v) for each of the years 1998
through 2000, 1 percent;
(vi) for 2001, the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 12-month period ending
with June 2000;
(vii) for 2002, 1 percent;
(viii) for 2003, 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;
(ix) for 2004, 2005, and 2006, 0
percent;
(x) for for each of 2007 through
2010, 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; and
(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).
(B) the term ``prosthetic devices'' has the
meaning given such term in section 1861(s)(8),
except that such term does not include
parenteral and enteral nutrition nutrients,
supplies, and equipment and does not include an
implantable item for which payment may be made
under section 1833(t); and
(C) the term ``orthotics and prosthetics''
has the meaning given such term in section
1861(s)(9) (and includes shoes described in
section 1861(s)(12)), but does not include
intraocular lenses or medical supplies
(including catheters, catheter supplies, ostomy
bags, and supplies related to ostomy care)
furnished by a home health agency under section
1861(m)(5).
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.
(5) Documentation created by orthotists and
prosthetists.--For purposes of determining the
reasonableness and medical necessity of orthotics and
prosthetics, documentation created by an orthotist or
prosthetist shall be considered part of the
individual's medical record to support documentation
created by eligible professionals described in section
1848(k)(3)(B).
(i) Payment for Surgical Dressings.--
(1) In general.--Payment under this subsection for
surgical dressings (described in section 1861(s)(5))
shall be made in a lump sum amount for the purchase of
the item in an amount equal to 80 percent of the lesser
of--
(A) the actual charge for the item; or
(B) a payment amount determined in accordance
with the methodology described in subparagraphs
(B) and (C) of subsection (a)(2) (except that
in applying such methodology, the national
limited payment amount referred to in such
subparagraphs shall be initially computed based
on local payment amounts using average
reasonable charges for the 12-month period
ending December 31, 1992, increased by the
covered item updates described in such
subsection for 1993 and 1994).
(2) Exceptions.--Paragraph (1) shall not apply to
surgical dressings that are--
(A) furnished as an incident to a physician's
professional service; or
(B) furnished by a home health agency.
(j) Requirements for Suppliers of Medical Equipment and
Supplies.--
(1) Issuance and renewal of supplier number.--
(A) Payment.--Except as provided in
subparagraph (C), no payment may be made under
this part after the date of the enactment of
the Social Security Act Amendments of 1994 for
items furnished by a supplier of medical
equipment and supplies unless such supplier
obtains (and renews at such intervals as the
Secretary may require) a supplier number.
(B) Standards for possessing a supplier
number.--A supplier may not obtain a supplier
number unless--
(i) for medical equipment and
supplies furnished on or after the date
of the enactment of the Social Security
Act Amendments of 1994 and before
January 1, 1996, the supplier meets
standards prescribed by the Secretary
in regulations issued on June 18, 1992;
and
(ii) for medical equipment and
supplies furnished on or after January
1, 1996, the supplier meets revised
standards prescribed by the Secretary
(in consultation with representatives
of suppliers of medical equipment and
supplies, carriers, and consumers) that
shall include requirements that the
supplier--
(I) comply with all
applicable State and Federal
licensure and regulatory
requirements;
(II) maintain a physical
facility on an appropriate
site;
(III) have proof of
appropriate liability
insurance; and
(IV) meet such other
requirements as the Secretary
may specify.
(C) Exception for items furnished as incident
to a physician's service.--Subparagraph (A)
shall not apply with respect to medical
equipment and supplies furnished incident to a
physician's service.
(D) Prohibition against multiple supplier
numbers.--The Secretary may not issue more than
one supplier number to any supplier of medical
equipment and supplies unless the issuance of
more than one number is appropriate to identify
subsidiary or regional entities under the
supplier's ownership or control.
(E) Prohibition against delegation of
supplier determinations.--The Secretary may not
delegate (other than by contract under section
1842) the responsibility to determine whether
suppliers meet the standards necessary to
obtain a supplier number.
(2) Certificates of medical necessity.--
(A) Limitation on information provided by
suppliers on certificates of medical
necessity.--
(i) In general.--Effective 60 days
after the date of the enactment of the
Social Security Act Amendments of 1994,
a supplier of medical equipment and
supplies may distribute to physicians,
or to individuals entitled to benefits
under this part, a certificate of
medical necessity for commercial
purposes which contains no more than
the following information completed by
the supplier:
(I) An identification of the
supplier and the beneficiary to
whom such medical equipment and
supplies are furnished.
(II) A description of such
medical equipment and supplies.
(III) Any product code
identifying such medical
equipment and supplies.
(IV) Any other administrative
information (other than
information relating to the
beneficiary's medical
condition) identified by the
Secretary.
(ii) Information on payment amount
and charges.--If a supplier distributes
a certificate of medical necessity
containing any of the information
permitted to be supplied under clause
(i), the supplier shall also list on
the certificate of medical necessity
the fee schedule amount and the
supplier's charge for the medical
equipment or supplies being furnished
prior to distribution of such
certificate to the physician.
(iii) Penalty.--Any supplier of
medical equipment and supplies who
knowingly and willfully distributes a
certificate of medical necessity in
violation of clause (i) or fails to
provide the information required under
clause (ii) is subject to a civil money
penalty in an amount not to exceed
$1,000 for each such certificate of
medical necessity so distributed. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to
civil money penalties under this
subparagraph in the same manner as they
apply to a penalty or proceeding under
section 1128A(a).
(B) Definition.--For purposes of this
paragraph, the term ``certificate of medical
necessity'' means a form or other document
containing information required by the carrier
to be submitted to show that an item is
reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve
the functioning of a malformed body member.
(3) Coverage and review criteria.--The Secretary
shall annually review the coverage and utilization of
items of medical equipment and supplies to determine
whether such items should be made subject to coverage
and utilization review criteria, and if appropriate,
shall develop and apply such criteria to such items.
(4) Limitation on patient liability.--If a supplier
of medical equipment and supplies (as defined in
paragraph (5))--
(A) furnishes an item or service to a
beneficiary for which no payment may be made by
reason of paragraph (1);
(B) furnishes an item or service to a
beneficiary for which payment is denied in
advance under subsection (a)(15); or
(C) furnishes an item or service to a
beneficiary for which payment is denied under
section 1862(a)(1);
any expenses incurred for items and services furnished
to an individual by such a supplier not on an assigned
basis shall be the responsibility of such supplier. The
individual shall have no financial responsibility for
such expenses and the supplier shall refund on a timely
basis to the individual (and shall be liable to the
individual for) any amounts collected from the
individual for such items or services. The provisions
of subsection (a)(18) shall apply to refunds required
under the previous sentence in the same manner as such
provisions apply to refunds under such subsection.
(5) Definition.--The term ``medical equipment and
supplies'' means--
(A) durable medical equipment (as defined in
section 1861(n));
(B) prosthetic devices (as described in
section 1861(s)(8));
(C) orthotics and prosthetics (as described
in section 1861(s)(9));
(D) surgical dressings (as described in
section 1861(s)(5));
(E) such other items as the Secretary may
determine; and
(F) for purposes of paragraphs (1) and (3)--
(i) home dialysis supplies and
equipment (as described in section
1861(s)(2)(F)),
(ii) immunosuppressive drugs (as
described in section 1861(s)(2)(J)),
(iii) therapeutic shoes for diabetics
(as described in section 1861(s)(12)),
(iv) oral drugs prescribed for use as
an anticancer therapeutic agent (as
described in section 1861(s)(2)(Q)),
and
(v) self-administered erythropoetin
(as described in section
1861(s)(2)(P)).
(k) Payment for Outpatient Therapy Services and Comprehensive
Outpatient Rehabilitation Services.--
(1) In general.--With respect to services described
in section 1833(a)(8) or 1833(a)(9) for which payment
is determined under this subsection, the payment basis
shall be--
(A) for services furnished during 1998, the
amount determined under paragraph (2); or
(B) for services furnished during a
subsequent year, 80 percent of the lesser of--
(i) the actual charge for the
services, or
(ii) the applicable fee schedule
amount (as defined in paragraph (3))
for the services.
(2) Payment in 1998 based upon adjusted reasonable
costs.--The amount under this paragraph for services is
the lesser of--
(A) the charges imposed for the services, or
(B) the adjusted reasonable costs (as defined
in paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed
for such services.
(3) Applicable fee schedule amount.--In this
subsection, the term ``applicable fee schedule amount''
means, with respect to services furnished in a year,
the amount determined under the fee schedule
established under section 1848 for such services
furnished during the year or, if there is no such fee
schedule established for such services, the amount
determined under the fee schedule established for such
comparable services as the Secretary specifies.
(4) Adjusted reasonable costs.--In paragraph (2), the
term ``adjusted reasonable costs'' means, with respect
to any services, reasonable costs determined for such
services, reduced by 10 percent. The 10-percent
reduction shall not apply to services described in
section 1833(a)(8)(B) (relating to services provided by
hospitals).
(5) Uniform coding.--For claims for services
submitted on or after April 1, 1998, for which the
amount of payment is determined under this subsection,
the claim shall include a code (or codes) under a
uniform coding system specified by the Secretary that
identifies the services furnished.
(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to therapy services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
(7) Adjustment in discount for certain multiple
therapy services.--In the case of therapy services
furnished on or after April 1, 2013, and for which
payment is made under this subsection pursuant to the
applicable fee schedule amount (as defined in paragraph
(3)), instead of the 25 percent multiple procedure
payment reduction specified in the final rule published
by the Secretary in the Federal Register on November
29, 2010, the reduction percentage shall be 50 percent.
(l) Establishment of Fee Schedule for Ambulance Services.--
(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services whether
provided directly by a supplier or provider or under
arrangement with a provider under this part through a
negotiated rulemaking process described in title 5,
United States Code, and in accordance with the
requirements of this subsection.
(2) Considerations.--In establishing such fee
schedule, the Secretary shall--
(A) establish mechanisms to control increases
in expenditures for ambulance services under
this part;
(B) establish definitions for ambulance
services which link payments to the type of
services provided;
(C) consider appropriate regional and
operational differences;
(D) consider adjustments to payment rates to
account for inflation and other relevant
factors; and
(E) phase in the application of the payment
rates under the fee schedule in an efficient
and fair manner consistent with paragraph (11),
except that such phase-in shall provide for
full payment of any national mileage rate for
ambulance services provided by suppliers that
are paid by carriers in any of the 50 States
where payment by a carrier for such services
for all such suppliers in such State did not,
prior to the implementation of the fee
schedule, include a separate amount for all
mileage within the county from which the
beneficiary is transported.
(3) Savings.--In establishing such fee schedule, the
Secretary shall--
(A) ensure that the aggregate amount of
payments made for ambulance services under this
part during 2000 does not exceed the aggregate
amount of payments which would have been made
for such services under this part during such
year if the amendments made by section 4531(a)
of the Balanced Budget Act of 1997 continued in
effect, except that in making such
determination the Secretary shall assume an
update in such payments for 2002 equal to
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year reduced in the case of 2002 by
1.0 percentage points;
(B) set the payment amounts provided under
the fee schedule for services furnished in 2001
and each subsequent year at amounts equal to
the payment amounts under the fee schedule for
services furnished during the previous year,
increased, subject to subparagraph (C) and the
succeeding sentence of this paragraph, by the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year reduced in the case of 2002 by
1.0 percentage points; and
(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).
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.
(4) Consultation.--In establishing the fee schedule
for ambulance services under this subsection, the
Secretary shall consult with various national
organizations representing individuals and entities who
furnish and regulate ambulance services and share with
such organizations relevant data in establishing such
schedule.
(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee
schedule for ambulance services under this subsection,
including matters described in paragraph (2).
(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to ambulance services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
(7) Coding system.--The Secretary may require the
claim for any services for which the amount of payment
is determined under this subsection to include a code
(or codes) under a uniform coding system specified by
the Secretary that identifies the services furnished.
(8) Services furnished by critical access
hospitals.--Notwithstanding any other provision of this
subsection, the Secretary shall pay 101 percent of the
reasonable costs incurred in furnishing ambulance
services if such services are furnished--
(A) by a critical access hospital (as defined
in section 1861(mm)(1)), or
(B) by an entity that is owned and operated
by a critical access hospital,
but only if the critical access hospital or entity is
the only provider or supplier of ambulance services
that is located within a 35-mile drive of such critical
access hospital.
(9) Transitional assistance for rural providers.--In
the case of ground ambulance services furnished on or
after July 1, 2001, and before January 1, 2004, for
which the transportation originates in a rural area (as
defined in section 1886(d)(2)(D)) or in a rural census
tract of a metropolitan statistical area (as determined
under the most recent modification of the Goldsmith
Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)), the
fee schedule established under this subsection shall
provide that, with respect to the payment rate for
mileage for a trip above 17 miles, and up to 50 miles,
the rate otherwise established shall be increased by
not less than \1/2\ of the additional payment per mile
established for the first 17 miles of such a trip
originating in a rural area.
(10) Phase-in providing floor using blend of fee
schedule and regional fee schedules.--In carrying out
the phase-in under paragraph (2)(E) for each level of
ground service furnished in a year, the portion of the
payment amount that is based on the fee schedule shall
be the greater of the amount determined under such fee
schedule (without regard to this paragraph) or the
following blended rate of the fee schedule under
paragraph (1) and of a regional fee schedule for the
region involved:
(A) For 2004 (for services furnished on or
after July 1, 2004), the blended rate shall be
based 20 percent on the fee schedule under
paragraph (1) and 80 percent on the regional
fee schedule.
(B) For 2005, the blended rate shall be based
40 percent on the fee schedule under paragraph
(1) and 60 percent on the regional fee
schedule.
(C) For 2006, the blended rate shall be based
60 percent on the fee schedule under paragraph
(1) and 40 percent on the regional fee
schedule.
(D) For 2007, 2008, and 2009, the blended
rate shall be based 80 percent on the fee
schedule under paragraph (1) and 20 percent on
the regional fee schedule.
(E) For 2010 and each succeeding year, the
blended rate shall be based 100 percent on the
fee schedule under paragraph (1).
For purposes of this paragraph, the Secretary shall
establish a regional fee schedule for each of the nine
census divisions (referred to in section 1886(d)(2))
using the methodology (used in establishing the fee
schedule under paragraph (1)) to calculate a regional
conversion factor and a regional mileage payment rate
and using the same payment adjustments and the same
relative value units as used in the fee schedule under
such paragraph.
(11) Adjustment in payment for certain long trips.--
In the case of ground ambulance services furnished on
or after July 1, 2004, and before January 1, 2009,
regardless of where the transportation originates, the
fee schedule established under this subsection shall
provide that, with respect to the payment rate for
mileage for a trip above 50 miles the per mile rate
otherwise established shall be increased by \1/4\ of
the payment per mile otherwise applicable to miles in
excess of 50 miles in such trip.
(12) Assistance for rural providers furnishing
services in low population density areas.--
(A) In general.--In the case of ground
ambulance services furnished on or after July
1, 2004, and before January 1, 2023, for which
the transportation originates in a qualified
rural area (identified under subparagraph
(B)(iii)), the Secretary shall provide for a
percent increase in the base rate of the fee
schedule for a trip established under this
subsection. In establishing such percent
increase, the Secretary shall estimate the
average cost per trip for such services (not
taking into account mileage) in the lowest
quartile as compared to the average cost per
trip for such services (not taking into account
mileage) in the highest quartile of all rural
county populations.
(B) Identification of qualified rural
areas.--
(i) Determination of population
density in area.--Based upon data from
the United States decennial census for
the year 2000, the Secretary shall
determine, for each rural area, the
population density for that area.
(ii) Ranking of areas.--The Secretary
shall rank each such area based on such
population density.
(iii) Identification of qualified
rural areas.--The Secretary shall
identify those areas (in subparagraph
(A) referred to as ``qualified rural
areas'') with the lowest population
densities that represent, if each such
area were weighted by the population of
such area (as used in computing such
population densities), an aggregate
total of 25 percent of the total of the
population of all such areas.
(iv) Rural area.--For purposes of
this paragraph, the term ``rural area''
has the meaning given such term in
section 1886(d)(2)(D). If feasible, the
Secretary shall treat a rural census
tract of a metropolitan statistical
area (as determined under the most
recent modification of the Goldsmith
Modification, originally published in
the Federal Register on February 27,
1992 (57 Fed. Reg. 6725) as a rural
area for purposes of this paragraph.
(v) Judicial review.--There shall be
no administrative or judicial review
under section 1869, 1878, or otherwise,
respecting the identification of an
area under this subparagraph.
(13) Temporary increase for ground ambulance
services.--
(A) In general.--After computing the rates
with respect to ground ambulance services under
the other applicable provisions of this
subsection, in the case of such services
furnished on or after July 1, 2004, and before
January 1, 2007, and for such services
furnished on or after July 1, 2008, and before
January 1, 2023, for which the transportation
originates in--
(i) a rural area described in
paragraph (9) or in a rural census
tract described in such paragraph, the
fee schedule established under this
section shall provide that the rate for
the service otherwise established,
after the application of any increase
under paragraphs (11) and (12), shall
be increased by 2 percent (or 3 percent
if such service is furnished on or
after July 1, 2008, and before January
1, 2023); and
(ii) an area not described in clause
(i), the fee schedule established under
this subsection shall provide that the
rate for the service otherwise
established, after the application of
any increase under paragraph (11),
shall be increased by 1 percent (or 2
percent if such service is furnished on
or after July 1, 2008, and before
January 1, 2023).
(B) Application of increased payments after
applicable period.--The increased payments
under subparagraph (A) shall not be taken into
account in calculating payments for services
furnished after the applicable period specified
in such subparagraph.
(14) Providing appropriate coverage of rural air
ambulance services.--
(A) In general.--The regulations described in
section 1861(s)(7) shall provide, to the extent
that any ambulance services (whether ground or
air) may be covered under such section, that a
rural air ambulance service (as defined in
subparagraph (C)) is reimbursed under this
subsection at the air ambulance rate if the air
ambulance service--
(i) is reasonable and necessary based
on the health condition of the
individual being transported at or
immediately prior to the time of the
transport; and
(ii) complies with equipment and crew
requirements established by the
Secretary.
(B) Satisfaction of requirement of medically
necessary.--The requirement of subparagraph
(A)(i) is deemed to be met for a rural air
ambulance service if--
(i) subject to subparagraph (D), such
service is requested by a physician or
other qualified medical personnel (as
specified by the Secretary) who
certifies or reasonably determines that
the individual's condition is such that
the time needed to transport the
individual by land or the instability
of transportation by land poses a
threat to the individual's survival or
seriously endangers the individual's
health; or
(ii) such service is furnished
pursuant to a protocol that is
established by a State or regional
emergency medical service (EMS) agency
and recognized or approved by the
Secretary under which the use of an air
ambulance is recommended, if such
agency does not have an ownership
interest in the entity furnishing such
service.
(C) Rural air ambulance service defined.--For
purposes of this paragraph, the term ``rural
air ambulance service'' means fixed wing and
rotary wing air ambulance service in which the
point of pick up of the individual occurs in a
rural area (as defined in section
1886(d)(2)(D)) or in a rural census tract of a
metropolitan statistical area (as determined
under the most recent modification of the
Goldsmith Modification, originally published in
the Federal Register on February 27, 1992 (57
Fed. Reg. 6725)).
(D) Limitation.--
(i) In general.--Subparagraph (B)(i)
shall not apply if there is a financial
or employment relationship between the
person requesting the rural air
ambulance service and the entity
furnishing the ambulance service, or an
entity under common ownership with the
entity furnishing the air ambulance
service, or a financial relationship
between an immediate family member of
such requester and such an entity.
(ii) Exception.--Where a hospital and
the entity furnishing rural air
ambulance services are under common
ownership, clause (i) shall not apply
to remuneration (through employment or
other relationship) by the hospital of
the requester or immediate family
member if the remuneration is for
provider-based physician services
furnished in a hospital (as described
in section 1887) which are reimbursed
under part A and the amount of the
remuneration is unrelated directly or
indirectly to the provision of rural
air ambulance services.
(15) Payment adjustment for non-emergency ambulance
transports for esrd beneficiaries.--The fee schedule
amount otherwise applicable under the preceding
provisions of this subsection shall be reduced by 10
percent for ambulance services furnished during the
period beginning on October 1, 2013, and ending on
September 30, 2018, and by 23 percent for such services
furnished on or after October 1, 2018, consisting of
non-emergency basic life support services involving
transport of an individual with end-stage renal disease
for renal dialysis services (as described in section
1881(b)(14)(B)) furnished other than on an emergency
basis by a provider of services or a renal dialysis
facility.
(16) Prior authorization for repetitive scheduled
non-emergent ambulance transports.--
(A) In general.--Beginning January 1, 2017,
if the expansion to all States of the model of
prior authorization described in paragraph (2)
of section 515(a) of the Medicare Access and
CHIP Reauthorization Act of 2015 meets the
requirements described in paragraphs (1)
through (3) of section 1115A(c), then the
Secretary shall expand such model to all
States.
(B) Funding.--The Secretary shall use funds
made available under section 1893(h)(10) to
carry out this paragraph.
(C) Clarification regarding budget
neutrality.--Nothing in this paragraph may be
construed to limit or modify the application of
section 1115A(b)(3)(B) to models described in
such section, including with respect to the
model described in subparagraph (A) and
expanded beginning on January 1, 2017, under
such subparagraph.
(17) Submission of cost and other information.--
(A) Development of data collection system.--
The Secretary shall develop a data collection
system (which may include use of a cost survey)
to collect cost, revenue, utilization, and
other information determined appropriate by the
Secretary with respect to providers of services
(in this paragraph referred to as
``providers'') and suppliers of ground
ambulance services. Such system shall be
designed to collect information--
(i) needed to evaluate the extent to
which reported costs relate to payment
rates under this subsection;
(ii) on the utilization of capital
equipment and ambulance capacity,
including information consistent with
the type of information described in
section 1121(a); and
(iii) on different types of ground
ambulance services furnished in
different geographic locations,
including rural areas and low
population density areas described in
paragraph (12).
(B) Specification of data collection
system.--
(i) In general.--The Secretary
shall--
(I) not later than December
31, 2019, specify the data
collection system under
subparagraph (A); and
(II) identify the providers
and suppliers of ground
ambulance services that would
be required to submit
information under such data
collection system, including
the representative sample
described in clause (ii).
(ii) Determination of representative
sample.--
(I) In general.--Not later
than December 31, 2019, with
respect to the data collection
for the first year under such
system, and for each subsequent
year through 2024, the
Secretary shall determine a
representative sample to submit
information under the data
collection system.
(II) Requirements.--The
sample under subclause (I)
shall be representative of the
different types of providers
and suppliers of ground
ambulance services (such as
those providers and suppliers
that are part of an emergency
service or part of a government
organization) and the
geographic locations in which
ground ambulance services are
furnished (such as urban,
rural, and low population
density areas).
(III) Limitation.--The
Secretary shall not include an
individual provider or supplier
of ground ambulance services in
the sample under subclause (I)
in 2 consecutive years, to the
extent practicable.
(C) Reporting of cost information.--For each
year, a provider or supplier of ground
ambulance services identified by the Secretary
under subparagraph (B)(i)(II) as being required
to submit information under the data collection
system with respect to a period for the year
shall submit to the Secretary information
specified under the system. Such information
shall be submitted in a form and manner, and at
a time, specified by the Secretary for purposes
of this subparagraph.
(D) Payment reduction for failure to
report.--
(i) In general.--Beginning January 1,
2022, subject to clause (ii), a 10
percent reduction to payments under
this subsection shall be made for the
applicable period (as defined in clause
(ii)) to a provider or supplier of
ground ambulance services that--
(I) is required to submit
information under the data
collection system with respect
to a period under subparagraph
(C); and
(II) does not sufficiently
submit such information, as
determined by the Secretary.
(ii) Applicable period defined.--For
purposes of clause (i), the term
``applicable period'' means, with
respect to a provider or supplier of
ground ambulance services, a year
specified by the Secretary not more
than 2 years after the end of the
period with respect to which the
Secretary has made a determination
under clause (i)(II) that the provider
or supplier of ground ambulance
services failed to sufficiently submit
information under the data collection
system.
(iii) Hardship exemption.--The
Secretary may exempt a provider or
supplier from the payment reduction
under clause (i) with respect to an
applicable period in the event of
significant hardship, such as a natural
disaster, bankruptcy, or other similar
situation that the Secretary determines
interfered with the ability of the
provider or supplier of ground
ambulance services to submit such
information in a timely manner for the
specified period.
(iv) Informal review.--The Secretary
shall establish a process under which a
provider or supplier of ground
ambulance services may seek an informal
review of a determination that the
provider or supplier is subject to the
payment reduction under clause (i).
(E) Ongoing data collection.--
(i) Revision of data collection
system.--The Secretary may, as the
Secretary determines appropriate and,
if available, taking into consideration
the report (or reports) under
subparagraph (F), revise the data
collection system under subparagraph
(A).
(ii) Subsequent data collection.--In
order to continue to evaluate the
extent to which reported costs relate
to payment rates under this subsection
and for other purposes the Secretary
deems appropriate, the Secretary shall
require providers and suppliers of
ground ambulance services to submit
information for years after 2024 as the
Secretary determines appropriate, but
in no case less often than once every 3
years.
(F) Ground ambulance data collection system
study.--
(i) In general.--Not later than March
15, 2023, and as determined necessary
by the Medicare Payment Advisory
Commission thereafter, such Commission
shall assess, and submit to Congress a
report on, information submitted by
providers and suppliers of ground
ambulance services through the data
collection system under subparagraph
(A), the adequacy of payments for
ground ambulance services under this
subsection, and geographic variations
in the cost of furnishing such
services.
(ii) Contents.--A report under clause
(i) shall contain the following:
(I) An analysis of
information submitted through
the data collection system.
(II) An analysis of any
burden on providers and
suppliers of ground ambulance
services associated with the
data collection system.
(III) A recommendation as to
whether information should
continue to be submitted
through such data collection
system or if such system should
be revised under subparagraph
(E)(i).
(IV) Other information
determined appropriate by the
Commission.
(G) Public availability.--The Secretary shall
post information on the results of the data
collection under this paragraph on the Internet
website of the Centers for Medicare & Medicaid
Services, as determined appropriate by the
Secretary.
(H) Implementation.--The Secretary shall
implement this paragraph through notice and
comment rulemaking.
(I) Administration.--Chapter 35 of title 44,
United States Code, shall not apply to the
collection of information required under this
subsection.
(J) Limitations on review.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise of the data
collection system or identification of
respondents under this paragraph.
(K) Funding for implementation.--For purposes
of carrying out subparagraph (A), the Secretary
shall provide for the transfer, from the
Federal Supplementary Medical Insurance Trust
Fund under section 1841, of $15,000,000 to the
Centers for Medicare & Medicaid Services
Program Management Account for fiscal year
2018. Amounts transferred under this
subparagraph shall remain available until
expended.
(m) Payment for Telehealth Services.--
(1) In general.--The Secretary shall pay for
telehealth services that are furnished via a
telecommunications system by a physician (as defined in
section 1861(r)) or a practitioner (described in
section 1842(b)(18)(C)) to an eligible telehealth
individual enrolled under this part notwithstanding
that the individual physician or practitioner providing
the telehealth service is not at the same location as
the beneficiary. For purposes of the preceding
sentence, in the case of any Federal telemedicine
demonstration program conducted in Alaska or Hawaii,
the term ``telecommunications system'' includes store-
and-forward technologies that provide for the
asynchronous transmission of health care information in
single or multimedia formats.
(2) Payment amount.--
(A) Distant site.--The Secretary shall pay to
a physician or practitioner located at a
distant site that furnishes a telehealth
service to an eligible telehealth individual an
amount equal to the amount that such physician
or practitioner would have been paid under this
title had such service been furnished without
the use of a telecommunications system.
(B) Facility fee for originating site.--
(i) In general.--Subject to clause
(ii) [and paragraph (6)(C)], paragraph
(6)(C), and paragraph (8)(C), with
respect to a telehealth service,
subject to section 1833(a)(1)(U), there
shall be paid to the originating site a
facility fee equal to--
(I) for the period beginning
on October 1, 2001, and ending
on December 31, 2001, and for
2002, $20; and
(II) for a subsequent year,
the facility fee specified in
subclause (I) or this subclause
for the preceding year
increased by the percentage
increase in the MEI (as defined
in section 1842(i)(3)) for such
subsequent year.
(ii) No facility fee if originating
site is the home.--No facility fee
shall be paid under this subparagraph
to an originating site described in
paragraph (4)(C)(ii)(X).
(C) Telepresenter not required.--Nothing in
this subsection shall be construed as requiring
an eligible telehealth individual to be
presented by a physician or practitioner at the
originating site for the furnishing of a
service via a telecommunications system, unless
it is medically necessary (as determined by the
physician or practitioner at the distant site).
(3) Limitation on beneficiary charges.--
(A) Physician and practitioner.--The
provisions of section 1848(g) and subparagraphs
(A) and (B) of section 1842(b)(18) shall apply
to a physician or practitioner receiving
payment under this subsection in the same
manner as they apply to physicians or
practitioners under such sections.
(B) Originating site.--The provisions of
section 1842(b)(18) shall apply to originating
sites receiving a facility fee in the same
manner as they apply to practitioners under
such section.
(4) Definitions.--For purposes of this subsection:
(A) Distant site.--The term ``distant site''
means the site at which the physician or
practitioner is located at the time the service
is provided via a telecommunications system.
(B) Eligible telehealth individual.--The term
``eligible telehealth individual'' means an
individual enrolled under this part who
receives a telehealth service furnished at an
originating site.
(C) Originating site.--
(i) In general.--Except as provided
in paragraphs (5), (6), [and (7)] (7),
and (8), the term``originating site''
means only those sites described in
clause (ii) at which the eligible
telehealth individual is located at the
time the service is furnished via a
telecommunications system and only if
such site is located--
(I) in an area that is
designated as a rural health
professional shortage area
under section 332(a)(1)(A) of
the Public Health Service Act
(42 U.S.C. 254e(a)(1)(A));
(II) in a county that is not
included in a Metropolitan
Statistical Area; or
(III) from an entity that
participates in a Federal
telemedicine demonstration
project that has been approved
by (or receives funding from)
the Secretary of Health and
Human Services as of December
31, 2000.
(ii) Sites described.--The sites
referred to in clause (i) are the
following sites:
(I) The office of a physician
or practitioner.
(II) A critical access
hospital (as defined in section
1861(mm)(1)).
(III) A rural health clinic
(as defined in section
1861(aa)(2)).
(IV) A Federally qualified
health center (as defined in
section 1861(aa)(4)).
(V) A hospital (as defined in
section 1861(e)).
(VI) A hospital-based or
critical access hospital-based
renal dialysis center
(including satellites).
(VII) A skilled nursing
facility (as defined in section
1819(a)).
(VIII) A community mental
health center (as defined in
section 1861(ff)(3)(B)).
(IX) A renal dialysis
facility, but only for purposes
of section 1881(b)(3)(B).
(X) The home of an
individual, but only for
purposes of section
1881(b)(3)(B) or telehealth
services described in paragraph
(7).
(D) Physician.--The term ``physician'' has
the meaning given that term in section 1861(r).
(E) Practitioner.--The term ``practitioner''
has the meaning given that term in section
1842(b)(18)(C).
(F) Telehealth service.--
(i) In general.--The term
``telehealth service'' means
professional consultations, office
visits, and office psychiatry services
(identified as of July 1, 2000, by
HCPCS codes 99241-99275, 99201-99215,
90804-90809, and 90862 (and as
subsequently modified by the
Secretary)), services identified by CPT
codes 90832, 90834, and 90837 (and as
subsequently modified by the
Secretary), and any additional service
specified by the Secretary.
(ii) Yearly update.--The Secretary
shall establish a process that
provides, on an annual basis, for the
addition or deletion of services (and
HCPCS codes), as appropriate, to those
specified in clause (i) for authorized
payment under paragraph (1).
(5) Treatment of home dialysis monthly esrd-related
visit.--The geographic requirements described in
paragraph (4)(C)(i) shall not apply with respect to
telehealth services furnished on or after January 1,
2019, for purposes of section 1881(b)(3)(B), at an
originating site described in subclause (VI), (IX), or
(X) of paragraph (4)(C)(ii).
(6) Treatment of stroke telehealth services.--
(A) Non-application of originating site
requirements.--The requirements described in
[paragraph (4)(C)] paragraph (4)(C)(i) shall
not apply with respect to telehealth services
furnished on or after January 1, 2019, for
purposes of diagnosis, evaluation, or treatment
of symptoms of an acute stroke, as determined
by the Secretary.
(B) Inclusion of certain sites.--With respect
to telehealth services described in
subparagraph (A), the term ``originating site''
shall include any hospital (as defined in
section 1861(e)) or critical access hospital
(as defined in section 1861(mm)(1)), any mobile
stroke unit (as defined by the Secretary), or
any other site determined appropriate by the
Secretary, at which the eligible telehealth
individual is located at the time the service
is furnished via a telecommunications system.
(C) No originating site facility fee for new
sites.--No facility fee shall be paid under
paragraph (2)(B) to an originating site with
respect to a telehealth service described in
subparagraph (A) if the originating site does
not otherwise meet the requirements for an
originating site under paragraph (4)(C).
(7) Treatment of substance use disorder services
furnished through telehealth.--[The geographic
requirements] Subject to paragraph (8)(D), the
geographic requirements described in paragraph
(4)(C)(i) shall not apply with respect to telehealth
services furnished on or after July 1, 2019, to an
eligible telehealth individual with a substance use
disorder diagnosis for purposes of treatment of such
disorder or co-occurring mental health disorder, as
determined by the Secretary, at an originating site
described in paragraph (4)(C)(ii) (other than an
originating site described in subclause (IX) of such
paragraph).
(8) Treatment of mental health telehealth services.--
(A) Non-application of originating site
requirements.--The requirements described in
paragraph (4)(C)(i) shall not apply with
respect to telehealth services furnished on or
after January 1, 2021, that are mental health
telehealth services. Nothing in the previous
sentence shall waive any applicable State law
requirements.
(B) Inclusion of certain sites.--With respect
to telehealth services described in
subparagraph (A), the term ``originating site''
shall include the home of the eligible
telehealth individual at which the individual
is located at the time the service is furnished
via a telecommunications system.
(C) No originating site facility fee.--No
facility fee shall be paid under paragraph
(2)(B) to an originating site with respect to a
telehealth service described in subparagraph
(A) if the originating site does not otherwise
meet the requirements for an originating site
under paragraph (4)(C).
(D) Face-to-face initial assessment;
reassessments.--Payment may not be made for
mental health telehealth services under this
paragraph (if such payment would not otherwise
be allowed under this subsection without
application of this paragraph or paragraph (7))
furnished to an eligible telehealth individual
unless--
(i) within the 6-month period prior
to the provision of such mental health
telehealth services, the individual
receives a face-to-face clinical
assessment, without the use of
telehealth, by a physician described in
subparagraph (F)(i) or a practitioner
described in subparagraph (F)(ii) of
the needs of such individual for such
services; and
(ii) the individual receives a
reassessment (at a frequency specified
by the Secretary) by a physician so
described or a practitioner so
described of the needs of such
individual for such services.
(E) Mental health telehealth services
defined.--For purposes of this paragraph, the
term ``mental health telehealth service'' means
services identified by CPT codes 90832, 90834,
and 90837 (and as subsequently modified by the
Secretary).
(F) Physician and practitioner described.--
For purposes of subparagraph (D):
(i) Physician.--A physician described
in this clause is a physician, as
defined in section 1861(r)(1).
(ii) Practitioner.--A practitioner
described in this clause is a
practitioner described in any of
clauses (i), (iv), or (v) of section
1842(b)(18)(C).
(n) Authority To Modify or Eliminate Coverage of Certain
Preventive Services.--Notwithstanding any other provision of
this title, effective beginning on January 1, 2010, if the
Secretary determines appropriate, the Secretary may--
(1) modify--
(A) the coverage of any preventive service
described in subparagraph (A) of section
1861(ddd)(3) to the extent that such
modification is consistent with the
recommendations of the United States Preventive
Services Task Force; and
(B) the services included in the initial
preventive physical examination described in
subparagraph (B) of such section; and
(2) provide that no payment shall be made under this
title for a preventive service described in
subparagraph (A) of such section that has not received
a grade of A, B, C, or I by such Task Force.
(o) Development and Implementation of Prospective Payment
System.--
(1) Development.--
(A) In general.--The Secretary shall develop
a prospective payment system for payment for
Federally qualified health center services
furnished by Federally qualified health centers
under this title. Such system shall include a
process for appropriately describing the
services furnished by Federally qualified
health centers and shall establish payment
rates for specific payment codes based on such
appropriate descriptions of services. Such
system shall be established to take into
account the type, intensity, and duration of
services furnished by Federally qualified
health centers. Such system may include
adjustments, including geographic adjustments,
determined appropriate by the Secretary.
(B) Collection of data and evaluation.--By
not later than January 1, 2011, the Secretary
shall require Federally qualified health
centers to submit to the Secretary such
information as the Secretary may require in
order to develop and implement the prospective
payment system under this subsection, including
the reporting of services using HCPCS codes.
(2) Implementation.--
(A) In general.--Notwithstanding section
1833(a)(3)(A), the Secretary shall provide, for
cost reporting periods beginning on or after
October 1, 2014, for payments of prospective
payment rates for Federally qualified health
center services furnished by Federally
qualified health centers under this title in
accordance with the prospective payment system
developed by the Secretary under paragraph (1).
(B) Payments.--
(i) Initial payments.--The Secretary
shall implement such prospective
payment system so that the estimated
aggregate amount of prospective payment
rates (determined prior to the
application of section 1833(a)(1)(Z))
under this title for Federally
qualified health center services in the
first year that such system is
implemented is equal to 100 percent of
the estimated amount of reasonable
costs (determined without the
application of a per visit payment
limit or productivity screen and prior
to the application of section
1866(a)(2)(A)(ii)) that would have
occurred for such services under this
title in such year if the system had
not been implemented.
(ii) Payments in subsequent years.--
Payment rates in years after the year
of implementation of such system shall
be the payment rates in the previous
year increased--
(I) in the first year after
implementation of such system,
by the percentage increase in
the MEI (as defined in section
1842(i)(3)) for the year
involved; and
(II) in subsequent years, by
the percentage increase in a
market basket of Federally
qualified health center goods
and services as promulgated
through regulations, or if such
an index is not available, by
the percentage increase in the
MEI (as defined in section
1842(i)(3)) for the year
involved.
(C) Preparation for pps implementation.--
Notwithstanding any other provision of law, the
Secretary may establish and implement by
program instruction or otherwise the payment
codes to be used under the prospective payment
system under this section.
(3) Additional payments for certain fqhcs with
physicians or other practitioners receiving data 2000
waivers.--
(A) In general.--In the case of a Federally
qualified health center with respect to which,
beginning on or after January 1, 2019,
Federally qualified health center services (as
defined in section 1861(aa)(3)) are furnished
for the treatment of opioid use disorder by a
physician or practitioner who meets the
requirements described in subparagraph (C), the
Secretary shall, subject to availability of
funds under subparagraph (D), make a payment
(at such time and in such manner as specified
by the Secretary) to such Federally qualified
health center after receiving and approving an
application submitted by such Federally
qualified health center under subparagraph (B).
Such a payment shall be in an amount determined
by the Secretary, based on an estimate of the
average costs of training for purposes of
receiving a waiver described in subparagraph
(C)(ii). Such a payment may be made only one
time with respect to each such physician or
practitioner.
(B) Application.--In order to receive a
payment described in subparagraph (A), a
Federally qualified health center shall submit
to the Secretary an application for such a
payment at such time, in such manner, and
containing such information as specified by the
Secretary. A Federally qualified health center
may apply for such a payment for each physician
or practitioner described in subparagraph (A)
furnishing services described in such
subparagraph at such center.
(C) Requirements.--For purposes of
subparagraph (A), the requirements described in
this subparagraph, with respect to a physician
or practitioner, are the following:
(i) The physician or practitioner is
employed by or working under contract
with a Federally qualified health
center described in subparagraph (A)
that submits an application under
subparagraph (B).
(ii) The physician or practitioner
first receives a waiver under section
303(g) of the Controlled Substances Act
on or after January 1, 2019.
(D) Funding.--For purposes of making payments
under this paragraph, there are appropriated,
out of amounts in the Treasury not otherwise
appropriated, $6,000,000, which shall remain
available until expended.
(p) Quality Incentives To Promote Patient Safety and Public
Health in Computed Tomography.--
(1) Quality incentives.--In the case of an applicable
computed tomography service (as defined in paragraph
(2)) for which payment is made under an applicable
payment system (as defined in paragraph (3)) and that
is furnished on or after January 1, 2016, using
equipment that is not consistent with the CT equipment
standard (described in paragraph (4)), the payment
amount for such service shall be reduced by the
applicable percentage (as defined in paragraph (5)).
(2) Applicable computed tomography services
defined.--In this subsection, the term ``applicable
computed tomography service'' means a service billed
using diagnostic radiological imaging codes for
computed tomography (identified as of January 1, 2014,
by HCPCS codes 70450-70498, 71250-71275, 72125-72133,
72191-72194, 73200-73206, 73700-73706, 74150-74178,
74261-74263, and 75571-75574 (and any succeeding
codes).
(3) Applicable payment system defined.--In this
subsection, the term ``applicable payment system''
means the following:
(A) The technical component and the technical
component of the global fee under the fee
schedule established under section 1848(b).
(B) The prospective payment system for
hospital outpatient department services under
section 1833(t).
(4) Consistency with ct equipment standard.--In this
subsection, the term ``not consistent with the CT
equipment standard'' means, with respect to an
applicable computed tomography service, that the
service was furnished using equipment that does not
meet each of the attributes of the National Electrical
Manufacturers Association (NEMA) Standard XR-29-2013,
entitled ``Standard Attributes on CT Equipment Related
to Dose Optimization and Management''. Through
rulemaking, the Secretary may apply successor
standards.
(5) Applicable percentage defined.--In this
subsection, the term ``applicable percentage'' means--
(A) for 2016, 5 percent; and
(B) for 2017 and subsequent years, 15
percent.
(6) Implementation.--
(A) Information.--The Secretary shall require
that information be provided and attested to by
a supplier and a hospital outpatient department
that indicates whether an applicable computed
tomography service was furnished that was not
consistent with the CT equipment standard
(described in paragraph (4)). Such information
may be included on a claim and may be a
modifier. Such information shall be verified,
as appropriate, as part of the periodic
accreditation of suppliers under section
1834(e) and hospitals under section 1865(a).
(B) Administration.--Chapter 35 of title 44,
United States Code, shall not apply to
information described in subparagraph (A).
(q) Recognizing Appropriate Use Criteria for Certain Imaging
Services.--
(1) Program established.--
(A) In general.--The Secretary shall
establish a program to promote the use of
appropriate use criteria (as defined in
subparagraph (B)) for applicable imaging
services (as defined in subparagraph (C))
furnished in an applicable setting (as defined
in subparagraph (D)) by ordering professionals
and furnishing professionals (as defined in
subparagraphs (E) and (F), respectively).
(B) Appropriate use criteria defined.--In
this subsection, the term ``appropriate use
criteria'' means criteria, only developed or
endorsed by national professional medical
specialty societies or other provider-led
entities, to assist ordering professionals and
furnishing professionals in making the most
appropriate treatment decision for a specific
clinical condition for an individual. To the
extent feasible, such criteria shall be
evidence-based.
(C) Applicable imaging service defined.--In
this subsection, the term ``applicable imaging
service'' means an advanced diagnostic imaging
service (as defined in subsection (e)(1)(B))
for which the Secretary determines--
(i) one or more applicable
appropriate use criteria specified
under paragraph (2) apply;
(ii) there are one or more qualified
clinical decision support mechanisms
listed under paragraph (3)(C); and
(iii) one or more of such mechanisms
is available free of charge.
(D) Applicable setting defined.--In this
subsection, the term ``applicable setting''
means a physician's office, a hospital
outpatient department (including an emergency
department), an ambulatory surgical center, and
any other provider-led outpatient setting
determined appropriate by the Secretary.
(E) Ordering professional defined.--In this
subsection, the term ``ordering professional''
means a physician (as defined in section
1861(r)) or a practitioner described in section
1842(b)(18)(C) who orders an applicable imaging
service.
(F) Furnishing professional defined.--In this
subsection, the term ``furnishing
professional'' means a physician (as defined in
section 1861(r)) or a practitioner described in
section 1842(b)(18)(C) who furnishes an
applicable imaging service.
(2) Establishment of applicable appropriate use
criteria.--
(A) In general.--Not later than November 15,
2015, the Secretary shall through rulemaking,
and in consultation with physicians,
practitioners, and other stakeholders, specify
applicable appropriate use criteria for
applicable imaging services only from among
appropriate use criteria developed or endorsed
by national professional medical specialty
societies or other provider-led entities.
(B) Considerations.--In specifying applicable
appropriate use criteria under subparagraph
(A), the Secretary shall take into account
whether the criteria--
(i) have stakeholder consensus;
(ii) are scientifically valid and
evidence based; and
(iii) are based on studies that are
published and reviewable by
stakeholders.
(C) Revisions.--The Secretary shall review,
on an annual basis, the specified applicable
appropriate use criteria to determine if there
is a need to update or revise (as appropriate)
such specification of applicable appropriate
use criteria and make such updates or revisions
through rulemaking.
(D) Treatment of multiple applicable
appropriate use criteria.--In the case where
the Secretary determines that more than one
appropriate use criterion applies with respect
to an applicable imaging service, the Secretary
shall apply one or more applicable appropriate
use criteria under this paragraph for the
service.
(3) Mechanisms for consultation with applicable
appropriate use criteria.--
(A) Identification of mechanisms to consult
with applicable appropriate use criteria.--
(i) In general.--The Secretary shall
specify qualified clinical decision
support mechanisms that could be used
by ordering professionals to consult
with applicable appropriate use
criteria for applicable imaging
services.
(ii) Consultation.--The Secretary
shall consult with physicians,
practitioners, health care technology
experts, and other stakeholders in
specifying mechanisms under this
paragraph.
(iii) Inclusion of certain
mechanisms.--Mechanisms specified under
this paragraph may include any or all
of the following that meet the
requirements described in subparagraph
(B)(ii):
(I) Use of clinical decision
support modules in certified
EHR technology (as defined in
section 1848(o)(4)).
(II) Use of private sector
clinical decision support
mechanisms that are independent
from certified EHR technology,
which may include use of
clinical decision support
mechanisms available from
medical specialty
organizations.
(III) Use of a clinical
decision support mechanism
established by the Secretary.
(B) Qualified clinical decision support
mechanisms.--
(i) In general.--For purposes of this
subsection, a qualified clinical
decision support mechanism is a
mechanism that the Secretary determines
meets the requirements described in
clause (ii).
(ii) Requirements.--The requirements
described in this clause are the
following:
(I) The mechanism makes
available to the ordering
professional applicable
appropriate use criteria
specified under paragraph (2)
and the supporting
documentation for the
applicable imaging service
ordered.
(II) In the case where there
is more than one applicable
appropriate use criterion
specified under such paragraph
for an applicable imaging
service, the mechanism
indicates the criteria that it
uses for the service.
(III) The mechanism
determines the extent to which
an applicable imaging service
ordered is consistent with the
applicable appropriate use
criteria so specified.
(IV) The mechanism generates
and provides to the ordering
professional a certification or
documentation that documents
that the qualified clinical
decision support mechanism was
consulted by the ordering
professional.
(V) The mechanism is updated
on a timely basis to reflect
revisions to the specification
of applicable appropriate use
criteria under such paragraph.
(VI) The mechanism meets
privacy and security standards
under applicable provisions of
law.
(VII) The mechanism performs
such other functions as
specified by the Secretary,
which may include a requirement
to provide aggregate feedback
to the ordering professional.
(C) List of mechanisms for consultation with
applicable appropriate use criteria.--
(i) Initial list.--Not later than
April 1, 2016, the Secretary shall
publish a list of mechanisms specified
under this paragraph.
(ii) Periodic updating of list.--The
Secretary shall identify on an annual
basis the list of qualified clinical
decision support mechanisms specified
under this paragraph.
(4) Consultation with applicable appropriate use
criteria.--
(A) Consultation by ordering professional.--
Beginning with January 1, 2017, subject to
subparagraph (C), with respect to an applicable
imaging service ordered by an ordering
professional that would be furnished in an
applicable setting and paid for under an
applicable payment system (as defined in
subparagraph (D)), an ordering professional
shall--
(i) consult with a qualified decision
support mechanism listed under
paragraph (3)(C); and
(ii) provide to the furnishing
professional the information described
in clauses (i) through (iii) of
subparagraph (B).
(B) Reporting by furnishing professional.--
Beginning with January 1, 2017, subject to
subparagraph (C), with respect to an applicable
imaging service furnished in an applicable
setting and paid for under an applicable
payment system (as defined in subparagraph
(D)), payment for such service may only be made
if the claim for the service includes the
following:
(i) Information about which qualified
clinical decision support mechanism was
consulted by the ordering professional
for the service.
(ii) Information regarding--
(I) whether the service
ordered would adhere to the
applicable appropriate use
criteria specified under
paragraph (2);
(II) whether the service
ordered would not adhere to
such criteria; or
(III) whether such criteria
was not applicable to the
service ordered.
(iii) The national provider
identifier of the ordering professional
(if different from the furnishing
professional).
(C) Exceptions.--The provisions of
subparagraphs (A) and (B) and paragraph (6)(A)
shall not apply to the following:
(i) Emergency services.--An
applicable imaging service ordered for
an individual with an emergency medical
condition (as defined in section
1867(e)(1)).
(ii) Inpatient services.--An
applicable imaging service ordered for
an inpatient and for which payment is
made under part A.
(iii) Significant hardship.--An
applicable imaging service ordered by
an ordering professional who the
Secretary may, on a case-by-case basis,
exempt from the application of such
provisions if the Secretary determines,
subject to annual renewal, that
consultation with applicable
appropriate use criteria would result
in a significant hardship, such as in
the case of a professional who
practices in a rural area without
sufficient Internet access.
(D) Applicable payment system defined.--In
this subsection, the term ``applicable payment
system'' means the following:
(i) The physician fee schedule
established under section 1848(b).
(ii) The prospective payment system
for hospital outpatient department
services under section 1833(t).
(iii) The ambulatory surgical center
payment systems under section 1833(i).
(5) Identification of outlier ordering
professionals.--
(A) In general.--With respect to applicable
imaging services furnished beginning with 2017,
the Secretary shall determine, on an annual
basis, no more than five percent of the total
number of ordering professionals who are
outlier ordering professionals.
(B) Outlier ordering professionals.--The
determination of an outlier ordering
professional shall--
(i) be based on low adherence to
applicable appropriate use criteria
specified under paragraph (2), which
may be based on comparison to other
ordering professionals; and
(ii) include data for ordering
professionals for whom prior
authorization under paragraph (6)(A)
applies.
(C) Use of two years of data.--The Secretary
shall use two years of data to identify outlier
ordering professionals under this paragraph.
(D) Process.--The Secretary shall establish a
process for determining when an outlier
ordering professional is no longer an outlier
ordering professional.
(E) Consultation with stakeholders.--The
Secretary shall consult with physicians,
practitioners and other stakeholders in
developing methods to identify outlier ordering
professionals under this paragraph.
(6) Prior authorization for ordering professionals
who are outliers.--
(A) In general.--Beginning January 1, 2020,
subject to paragraph (4)(C), with respect to
services furnished during a year, the Secretary
shall, for a period determined appropriate by
the Secretary, apply prior authorization for
applicable imaging services that are ordered by
an outlier ordering professional identified
under paragraph (5).
(B) Appropriate use criteria in prior
authorization.--In applying prior authorization
under subparagraph (A), the Secretary shall
utilize only the applicable appropriate use
criteria specified under this subsection.
(C) Funding.--For purposes of carrying out
this paragraph, the Secretary shall provide for
the transfer, from the Federal Supplementary
Medical Insurance Trust Fund under section
1841, of $5,000,000 to the Centers for Medicare
& Medicaid Services Program Management Account
for each of fiscal years 2019 through 2021.
Amounts transferred under the preceding
sentence shall remain available until expended.
(7) Construction.--Nothing in this subsection shall
be construed as granting the Secretary the authority to
develop or initiate the development of clinical
practice guidelines or appropriate use criteria.
(r) Payment for Renal Dialysis Services for Individuals With
Acute Kidney Injury.--
(1) Payment rate.--In the case of renal dialysis
services (as defined in subparagraph (B) of section
1881(b)(14)) furnished under this part by a renal
dialysis facility or provider of services paid under
such section during a year (beginning with 2017) to an
individual with acute kidney injury (as defined in
paragraph (2)), the amount of payment under this part
for such services shall be the base rate for renal
dialysis services determined for such year under such
section, as adjusted by any applicable geographic
adjustment factor applied under subparagraph
(D)(iv)(II) of such section and may be adjusted by the
Secretary (on a budget neutral basis for payments under
this paragraph) by any other adjustment factor under
subparagraph (D) of such section.
(2) Individual with acute kidney injury defined.--In
this subsection, the term ``individual with acute
kidney injury'' means an individual who has acute loss
of renal function and does not receive renal dialysis
services for which payment is made under section
1881(b)(14).
(s) Payment for Applicable Disposable Devices.--
(1) Separate payment.--The Secretary shall make a
payment (separate from the payments otherwise made
under section 1895) in the amount established under
paragraph (3) to a home health agency for an applicable
disposable device (as defined in paragraph (2)) when
furnished on or after January 1, 2017, to an individual
who receives home health services for which payment is
made under section 1895(b).
(2) Applicable disposable device.--In this
subsection, the term applicable disposable device means
a disposable device that, as determined by the
Secretary, is--
(A) a disposable negative pressure wound
therapy device that is an integrated system
comprised of a non-manual vacuum pump, a
receptacle for collecting exudate, and
dressings for the purposes of wound therapy;
and
(B) a substitute for, and used in lieu of, a
negative pressure wound therapy durable medical
equipment item that is an integrated system of
a negative pressure vacuum pump, a separate
exudate collection canister, and dressings that
would otherwise be covered for individuals for
such wound therapy.
(3) Payment amount.--The separate payment amount
established under this paragraph for an applicable
disposable device for a year shall be equal to the
amount of the payment that would be made under section
1833(t) (relating to payment for covered OPD services)
for the year for the Level I Healthcare Common
Procedure Coding System (HCPCS) code for which the
description for a professional service includes the
furnishing of such device.
(t) Site-of-Service Price Transparency.--
(1) In general.--In order to facilitate price
transparency with respect to items and services for
which payment may be made either to a hospital
outpatient department or to an ambulatory surgical
center under this title, the Secretary shall, for 2018
and each year thereafter, make available to the public
via a searchable Internet website, with respect to an
appropriate number of such items and services--
(A) the estimated payment amount for the item
or service under the outpatient department fee
schedule under subsection (t) of section 1833
and the ambulatory surgical center payment
system under subsection (i) of such section;
and
(B) the estimated amount of beneficiary
liability applicable to the item or service.
(2) Calculation of estimated beneficiary liability.--
For purposes of paragraph (1)(B), the estimated amount
of beneficiary liability, with respect to an item or
service, is the amount for such item or service for
which an individual who does not have coverage under a
Medicare supplemental policy certified under section
1882 or any other supplemental insurance coverage is
responsible.
(3) Implementation.--In carrying out this subsection,
the Secretary--
(A) shall include in the notice described in
section 1804(a) a notification of the
availability of the estimated amounts made
available under paragraph (1); and
(B) may utilize mechanisms in existence on
the date of enactment of this subsection, such
as the portion of the Internet website of the
Centers for Medicare & Medicaid Services on
which information comparing physician
performance is posted (commonly referred to as
the Physician Compare Internet website), to
make available such estimated amounts under
such paragraph.
(4) Funding.--For purposes of implementing this
subsection, the Secretary shall provide for the
transfer, from the Federal Supplementary Medical
Insurance Trust Fund under section 1841 to the Centers
for Medicare & Medicaid Services Program Management
Account, of $6,000,000 for fiscal year 2017, to remain
available until expended.
(u) Payment and Related Requirements for Home Infusion
Therapy.--
(1) Payment.--
(A) Single payment.--
(i) In general.--Subject to clause
(iii) and subparagraphs (B) and (C),
the Secretary shall implement a payment
system under which a single payment is
made under this title to a qualified
home infusion therapy supplier for
items and services described in
subparagraphs (A) and (B) of section
1861(iii)(2)) furnished by a qualified
home infusion therapy supplier (as
defined in section 1861(iii)(3)(D)) in
coordination with the furnishing of
home infusion drugs (as defined in
section 1861(iii)(3)(C)) under this
part.
(ii) Unit of single payment.--A unit
of single payment under the payment
system implemented under this
subparagraph is for each infusion drug
administration calendar day in the
individual's home. The Secretary shall,
as appropriate, establish single
payment amounts for types of infusion
therapy, including to take into account
variation in utilization of nursing
services by therapy type.
(iii) Limitation.--The single payment
amount determined under this
subparagraph after application of
subparagraph (B) and paragraph (3)
shall not exceed the amount determined
under the fee schedule under section
1848 for infusion therapy services
furnished in a calendar day if
furnished in a physician office
setting, except such single payment
shall not reflect more than 5 hours of
infusion for a particular therapy in a
calendar day.
(B) Required adjustments.--The Secretary
shall adjust the single payment amount
determined under subparagraph (A) for home
infusion therapy services under section
1861(iii)(1) to reflect other factors such as--
(i) a geographic wage index and other
costs that may vary by region; and
(ii) patient acuity and complexity of
drug administration.
(C) Discretionary adjustments.--
(i) In general.--Subject to clause
(ii), the Secretary may adjust the
single payment amount determined under
subparagraph (A) (after application of
subparagraph (B)) to reflect outlier
situations and other factors as the
Secretary determines appropriate.
(ii) Requirement of budget
neutrality.--Any adjustment under this
subparagraph shall be made in a budget
neutral manner.
(2) Considerations.--In developing the payment system
under this subsection, the Secretary may consider the
costs of furnishing infusion therapy in the home,
consult with home infusion therapy suppliers, consider
payment amounts for similar items and services under
this part and part A, and consider payment amounts
established by Medicare Advantage plans under part C
and in the private insurance market for home infusion
therapy (including average per treatment day payment
amounts by type of home infusion therapy).
(3) Annual updates.--
(A) In general.--Subject to subparagraph (B),
the Secretary shall update the single payment
amount under this subsection from year to year
beginning in 2022 by increasing the single
payment amount from the prior year 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.
(B) Adjustment.--For each year, the Secretary
shall reduce the percentage increase described
in subparagraph (A) by the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II). The application of the
preceding sentence may result in a percentage
being less than 0.0 for a year, and may result
in payment being less than such payment rates
for the preceding year.
(4) Authority to apply prior authorization.--The
Secretary may, as determined appropriate by the
Secretary, apply prior authorization for home infusion
therapy services under section 1861(iii)(1).
(5) Accreditation of qualified home infusion therapy
suppliers.--
(A) Factors for designation of accreditation
organizations.--The Secretary shall consider
the following factors in designating
accreditation organizations under subparagraph
(B) and in reviewing and modifying the list of
accreditation organizations designated pursuant
to subparagraph (C):
(i) The ability of the organization
to conduct timely reviews of
accreditation applications.
(ii) The ability of the organization
to take into account the capacities of
suppliers located in a rural area (as
defined in section 1886(d)(2)(D)).
(iii) Whether the organization has
established reasonable fees to be
charged to suppliers applying for
accreditation.
(iv) Such other factors as the
Secretary determines appropriate.
(B) Designation.--Not later than January 1,
2021, the Secretary shall designate
organizations to accredit suppliers furnishing
home infusion therapy. The list of
accreditation organizations so designated may
be modified pursuant to subparagraph (C).
(C) Review and modification of list of
accreditation organizations.--
(i) In general.--The Secretary shall
review the list of accreditation
organizations designated under
subparagraph (B) taking into account
the factors under subparagraph (A).
Taking into account the results of such
review, the Secretary may, by
regulation, modify the list of
accreditation organizations designated
under subparagraph (B).
(ii) Special rule for accreditations
done prior to removal from list of
designated accreditation
organizations.--In the case where the
Secretary removes an organization from
the list of accreditation organizations
designated under subparagraph (B), any
supplier that is accredited by the
organization during the period
beginning on the date on which the
organization is designated as an
accreditation organization under
subparagraph (B) and ending on the date
on which the organization is removed
from such list shall be considered to
have been accredited by an organization
designated by the Secretary under
subparagraph (B) for the remaining
period such accreditation is in effect.
(D) Rule for accreditations made prior to
designation.--In the case of a supplier that is
accredited before January 1, 2021, by an
accreditation organization designated by the
Secretary under subparagraph (B) as of January
1, 2019, such supplier shall be considered to
have been accredited by an organization
designated by the Secretary under such
paragraph as of January 1, 2023, for the
remaining period such accreditation is in
effect.
(6) Notification of infusion therapy options
available prior to furnishing home infusion therapy.--
Prior to the furnishing of home infusion therapy to an
individual, the physician who establishes the plan
described in section 1861(iii)(1) for the individual
shall provide notification (in a form, manner, and
frequency determined appropriate by the Secretary) of
the options available (such as home, physician's
office, hospital outpatient department) for the
furnishing of infusion therapy under this part.
(7) Home infusion therapy services temporary
transitional payment.--
(A) Temporary transitional payment.--
(i) In general.--The Secretary shall,
in accordance with the payment
methodology described in subparagraph
(B) and subject to the provisions of
this paragraph, provide a home infusion
therapy services temporary transitional
payment under this part to an eligible
home infusion supplier (as defined in
subparagraph (F)) for items and
services described in subparagraphs (A)
and (B) of section 1861(iii)(2))
furnished during the period specified
in clause (ii) by such supplier in
coordination with the furnishing of
transitional home infusion drugs (as
defined in clause (iii)).
(ii) Period specified.--For purposes
of clause (i), the period specified in
this clause is the period beginning on
January 1, 2019, and ending on the day
before the date of the implementation
of the payment system under paragraph
(1)(A).
(iii) Transitional home infusion drug
defined.--For purposes of this
paragraph, the term ``transitional home
infusion drug'' has the meaning given
to the term ``home infusion drug''
under section 1861(iii)(3)(C)), except
that clause (ii) of such section shall
not apply if a drug described in such
clause is identified in clauses (i),
(ii), (iii) or (iv) of subparagraph (C)
as of the date of the enactment of this
paragraph.
(B) Payment methodology.--For purposes of
this paragraph, the Secretary shall establish a
payment methodology, with respect to items and
services described in subparagraph (A)(i).
Under such payment methodology the Secretary
shall--
(i) create the three payment
categories described in clauses (i),
(ii), and (iii) of subparagraph (C);
(ii) assign drugs to such categories,
in accordance with such clauses;
(iii) assign appropriate Healthcare
Common Procedure Coding System (HCPCS)
codes to each payment category; and
(iv) establish a single payment
amount for each such payment category,
in accordance with subparagraph (D),
for each infusion drug administration
calendar day in the individual's home
for drugs assigned to such category.
(C) Payment categories.--
(i) Payment category 1.--The
Secretary shall create a payment
category 1 and assign to such category
drugs which are covered under the Local
Coverage Determination on External
Infusion Pumps (LCD number L33794) and
billed with the following HCPCS codes
(as identified as of January 1, 2018,
and as subsequently modified by the
Secretary): J0133, J0285, J0287, J0288,
J0289, J0895, J1170, J1250, J1265,
J1325, J1455, J1457, J1570, J2175,
J2260, J2270, J2274, J2278, J3010, or
J3285.
(ii) Payment category 2.--The
Secretary shall create a payment
category 2 and assign to such category
drugs which are covered under such
local coverage determination and billed
with the following HCPCS codes (as
identified as of January 1, 2018, and
as subsequently modified by the
Secretary): J1555 JB, J1559 JB, J1561
JB, J1562 JB, J1569 JB, or J1575 JB.
(iii) Payment category 3.--The
Secretary shall create a payment
category 3 and assign to such category
drugs which are covered under such
local coverage determination and billed
with the following HCPCS codes (as
identified as of January 1, 2018, and
as subsequently modified by the
Secretary): J9000, J9039, J9040, J9065,
J9100, J9190, J9200, J9360, or J9370.
(iv) Infusion drugs not otherwise
included.--With respect to drugs that
are not included in payment category 1,
2, or 3 under clause (i), (ii), or
(iii), respectively, the Secretary
shall assign to the most appropriate of
such categories, as determined by the
Secretary, drugs which are--
(I) covered under such local
coverage determination and
billed under HCPCS codes J7799
or J7999 (as identified as of
July 1, 2017, and as
subsequently modified by the
Secretary); or
(II) billed under any code
that is implemented after the
date of the enactment of this
paragraph and included in such
local coverage determination or
included in subregulatory
guidance as a home infusion
drug described in subparagraph
(A)(i).
(D) Payment amounts.--
(i) In general.--Under the payment
methodology, the Secretary shall pay
eligible home infusion suppliers, with
respect to items and services described
in subparagraph (A)(i) furnished during
the period described in subparagraph
(A)(ii) by such supplier to an
individual, at amounts equal to the
amounts determined under the physician
fee schedule established under section
1848 for services furnished during the
year for codes and units of such codes
described in clauses (ii), (iii), and
(iv) with respect to drugs included in
the payment category under subparagraph
(C) specified in the respective clause,
determined without application of the
geographic adjustment under subsection
(e) of such section.
(ii) Payment amount for category 1.--
For purposes of clause (i), the codes
and units described in this clause,
with respect to drugs included in
payment category 1 described in
subparagraph (C)(i), are one unit of
HCPCS code 96365 plus three units of
HCPCS code 96366 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(iii) Payment amount for category
2.--For purposes of clause (i), the
codes and units described in this
clause, with respect to drugs included
in payment category 2 described in
subparagraph (C)(i), are one unit of
HCPCS code 96369 plus three units of
HCPCS code 96370 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(iv) Payment amount for category 3.--
For purposes of clause (i), the codes
and units described in this clause,
with respect to drugs included in
payment category 3 described in
subparagraph (C)(i), are one unit of
HCPCS code 96413 plus three units of
HCPCS code 96415 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(E) Clarifications.--
(i) Infusion drug administration
day.--For purposes of this subsection,
with respect to the furnishing of
transitional home infusion drugs or
home infusion drugs to an individual by
an eligible home infusion supplier or a
qualified home infusion therapy
supplier, a reference to payment to
such supplier for an infusion drug
administration calendar day in the
individual's home shall refer to
payment only for the date on which
professional services (as described in
section 1861(iii)(2)(A)) were furnished
to administer such drugs to such
individual. For purposes of the
previous sentence, an infusion drug
administration calendar day shall
include all such drugs administered to
such individual on such day.
(ii) Treatment of multiple drugs
administered on same infusion drug
administration day.--In the case that
an eligible home infusion supplier,
with respect to an infusion drug
administration calendar day in an
individual's home, furnishes to such
individual transitional home infusion
drugs which are not all assigned to the
same payment category under
subparagraph (C), payment to such
supplier for such infusion drug
administration calendar day in the
individual's home shall be a single
payment equal to the amount of payment
under this paragraph for the drug,
among all such drugs so furnished to
such individual during such calendar
day, for which the highest payment
would be made under this paragraph.
(F) Eligible home infusion suppliers.--In
this paragraph, the term ``eligible home
infusion supplier'' means a supplier that is
enrolled under this part as a pharmacy that
provides external infusion pumps and external
infusion pump supplies and that maintains all
pharmacy licensure requirements in the State in
which the applicable infusion drugs are
administered.
(G) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(v) Payment for Outpatient Physical Therapy Services and
Outpatient Occupational Therapy Services Furnished by a Therapy
Assistant.--
(1) In general.--In the case of an outpatient
physical therapy service or outpatient occupational
therapy service furnished on or after January 1, 2022,
for which payment is made under section 1848 or
subsection (k), that is furnished in whole or in part
by a therapy assistant (as defined by the Secretary),
the amount of payment for such service shall be an
amount equal to 85 percent of the amount of payment
otherwise applicable for the service under this part.
Nothing in the preceding sentence shall be construed to
change applicable requirements with respect to such
services.
(2) Use of modifier.--
(A) Establishment.--Not later than January 1,
2019, the Secretary shall establish a modifier
to indicate (in a form and manner specified by
the Secretary), in the case of an outpatient
physical therapy service or outpatient
occupational therapy service furnished in whole
or in part by a therapy assistant (as so
defined), that the service was furnished by a
therapy assistant.
(B) Required use.--Each request for payment,
or bill submitted, for an outpatient physical
therapy service or outpatient occupational
therapy service furnished in whole or in part
by a therapy assistant (as so defined) on or
after January 1, 2020, shall include the
modifier established under subparagraph (A) for
each such service.
(3) Implementation.--The Secretary shall implement
this subsection through notice and comment rulemaking.
(w) Opioid Use Disorder Treatment Services.--
(1) In general.--The Secretary shall pay to an opioid
treatment program (as defined in paragraph (2) of
section 1861(jjj)) an amount that is equal to 100
percent of a bundled payment under this part for opioid
use disorder treatment services (as defined in
paragraph (1) of such section) that are furnished by
such program to an individual during an episode of care
(as defined by the Secretary) beginning on or after
January 1, 2020. The Secretary shall ensure, as
determined appropriate by the Secretary, that no
duplicative payments are made under this part or part D
for items and services furnished by an opioid treatment
program.
(2) Considerations.--The Secretary may implement this
subsection through one or more bundles based on the
type of medication provided (such as buprenorphine,
methadone, naltrexone, or a new innovative drug), the
frequency of services, the scope of services furnished,
characteristics of the individuals furnished such
services, or other factors as the Secretary determine
appropriate. In developing such bundles, the Secretary
may consider payment rates paid to opioid treatment
programs for comparable services under State plans
under title XIX or under the TRICARE program under
chapter 55 of title 10 of the United States Code.
(3) Annual updates.--The Secretary shall provide an
update each year to the bundled payment amounts under
this subsection.
* * * * * * *
ENROLLMENT PERIODS
Sec. 1837. (a) An individual may enroll in the insurance
program established by this part only in such manner and form
as may be prescribed by regulations, and only during an
enrollment period prescribed in or under this section.
(c) In the case of individuals who first satisfy paragraph
(1) or (2) of section 1836 before March 1, 1966, the initial
general enrollment period shall begin on the first day of the
second month which begins after the date of enactment of this
title and shall end on May 31, 1966. For purposes of this
subsection and subsection (d), an individual who has attained
age 65 and who satisfies paragraph (1) of section 1836 but not
paragraph (2) of such section shall be treated as satisfying
such paragraph (1) on the first day on which he is (or on
filing application would have been) entitled to hospital
insurance benefits under part A.
(d) In the case of an individual who first satisfies
paragraph (1) or (2) of section 1836 on or after March 1, 1966,
his initial enrollment period shall begin on the first day of
the third month before the month in which he first satisfies
such paragraphs and shall end seven months later. Where the
Secretary finds that an individual who has attained age 65
failed to enroll under this part during his initial enrollment
period (based on a determination by the Secretary of the month
in which such individual attained age 65), because such
individual (relying on documentary evidence) was mistaken as to
his correct date of birth, the Secretary shall establish for
such individual an initial enrollment period based on his
attaining age 65 at the time shown in such documentary evidence
(with a coverage period determined under section 1838 as though
he had attained such age at that time).
(e) There shall be a general enrollment period during the
period beginning on January 1 and ending on March 31 of each
year.
(f) Any individual--
(1) who is eligible under section 1836 to enroll in
the medical insurance program by reason of entitlement
to hospital insurance benefits as described in
paragraph (1) of such section, and
(2) whose initial enrollment period under subsection
(d) begins after March 31, 1973, and
(3) who is residing in the United States, exclusive
of Puerto Rico,
shall be deemed to have enrolled in the medical insurance
program established by this part.
(g) All of the provisions of this section shall apply to
individuals satisfying subsection (f), except that--
(1) in the case of an individual who satisfies
subsection (f) by reason of entitlement to disability
insurance benefits described in section 226(b), his
initial enrollment period shall begin on the first day
of the later of (A) April 1973 or (B) the third month
before the 25th month of such entitlement, and shall
reoccur with each continuous period of eligibility (as
defined in section 1839(d)) and upon attainment of age
65;
(2)(A) in the case of an individual who is entitled
to monthly benefits under section 202 or 223 on the
first day of his initial enrollment period or becomes
entitled to monthly benefits under section 202 during
the first 3 months of such period, his enrollment shall
be deemed to have occurred in the third month of his
initial enrollment period, and
(B) in the case of an individual who is not entitled
to benefits under section 202 on the first day of his
initial enrollment period and does not become so
entitled during the first 3 months of such period, his
enrollment shall be deemed to have occurred in the
month in which he files the application establishing
his entitlement to hospital insurance benefits provided
such filing occurs during the last 4 months of his
initial enrollment period; and
(3) in the case of an individual who would otherwise
satisfy subsection (f) but does not establish his
entitlement to hospital insurance benefits until after
the last day of his initial enrollment period (as
defined in subsection (d) of this section), his
enrollment shall be deemed to have occurred on the
first day of the earlier of the then current or
immediately succeeding general enrollment period (as
defined in subsection (e) of this section).
(h) In any case where the Secretary finds that an
individual's enrollment or nonenrollment in the insurance
program established by this part or part A pursuant to section
1818 is unintentional, inadvertent, or erroneous and is the
result of the error, misrepresentation, or inaction of an
officer, employee, or agent of the Federal Government, or its
instrumentalities, the Secretary may take such action
(including the designation for such individual of a special
initial or subsequent enrollment period, with a coverage period
determined on the basis thereof and with appropriate
adjustments of premiums) as may be necessary to correct or
eliminate the effects of such error, misrepresentation, or
inaction.
(i)(1) In the case of an individual who--
(A) at the time the individual first satisfies
paragraph (1) or (2) of section 1836, is enrolled in a
group health plan described in section 1862(b)(1)(A)(v)
by reason of the individual's (or the individual's
spouse's) current employment status, and
(B) has elected not to enroll (or to be deemed
enrolled) under this section during the individual's
initial enrollment period,
there shall be a special enrollment period described in
paragraph (3). In the case of an individual not described in
the previous sentence who has not attained the age of 65, at
the time the individual first satisfies paragraph (1) of
section 1836, is enrolled in a large group health plan (as that
term is defined in section 1862(b)(1)(B)(iii)) by reason of the
individual's current employment status (or the current
employment status of a family member of the individual), and
has elected not to enroll (or to be deemed enrolled) under this
section during the individual's initial enrollment period,
there shall be a special enrollment period described in
paragraph (3)(B).
(2) In the case of an individual who--
(A)(i) has enrolled (or has been deemed to have
enrolled) in the medical insurance program established
under this part during the individual's initial
enrollment period, or (ii) is an individual described
in paragraph (1)(A);
(B) has enrolled in such program during any
subsequent special enrollment period under this
subsection during which the individual was not enrolled
in a group health plan described in section
1862(b)(1)(A)(v) by reason of the individual's (or
individual's spouse's) current employment status; and
(C) has not terminated enrollment under this section
at any time at which the individual is not enrolled in
such a group health plan by reason of the individual's
(or individual's spouse's) current employment status,
there shall be a special enrollment period described in
paragraph (3). In the case of an individual not described in
the previous sentence who has not attained the age of 65, has
enrolled (or has been deemed to have enrolled) in the medical
insurance program established under this part during the
individual's initial enrollment period, or is an individual
described in the second sentence of paragraph (1), has enrolled
in such program during any subsequent special enrollment period
under this subsection during which the individual was not
enrolled in a large group health plan (as that term is defined
in section 1862(b)(1)(B)(iii)) by reason of the individual's
current employment status (or the current employment status of
a family member of the individual), and has not terminated
enrollment under this section at any time at which the
individual is not enrolled in such a large group health plan by
reason of the individual's current employment status (or the
current employment status of a family member of the
individual), there shall be a special enrollment period
described in paragraph (3)(B).
(3)(A) The special enrollment period referred to in the first
sentences of paragraphs (1) and (2) is the period including
each month during any part of which the individual is enrolled
in a group health plan described in section 1862(b)(1)(A)(v) by
reason of current employment status ending with the last day of
the eighth consecutive month in which the individual is at no
time so enrolled.
(B) The special enrollment period referred to in the second
sentences of paragraphs (1) and (2) is the period including
each month during any part of which the individual is enrolled
in a large group health plan (as that term is defined in
section 1862(b)(1)(B)(iii)) by reason of the individual's
current employment status (or the current employment status of
a family member of the individual) ending with the last day of
the eighth consecutive month in which the individual is at no
time so enrolled.
(4)(A) In the case of an individual who is entitled to
benefits under part A pursuant to section 226(b) and--
(i) who at the time the individual first satisfies
paragraph (1) of section 1836--
(I) is enrolled in a group health plan
described in section 1862(b)(1)(A)(v) by reason
of the individual's current or former
employment or by reason of the current or
former employment status of a member of the
individual's family, and
(II) has elected not to enroll (or to be
deemed enrolled) under this section during the
individual's initial enrollment period; and
(ii) whose continuous enrollment under such group
health plan is involuntarily terminated at a time when
the enrollment under the plan is not by reason of the
individual's current employment or by reason of the
current employment of a member of the individual's
family,
there shall be a special enrollment period described in
subparagraph (B).
(B) The special enrollment period referred to in subparagraph
(A) is the 6-month period beginning on the first day of the
month which includes the date of the enrollment termination
described in subparagraph (A)(ii).
(j) In applying this section in the case of an individual who
is entitled to benefits under part A pursuant to the operation
of section 226(h), the following special rules apply:
(1) The initial enrollment period under subsection
(d) shall begin on the first day of the first month in
which the individual satisfies the requirement of
section 1836(1).
(2) In applying subsection (g)(1), the initial
enrollment period shall begin on the first day of the
first month of entitlement to disability insurance
benefits referred to in such subsection.
(k)(1) In the case of an individual who--
(A) at the time the individual first satisfies
paragraph (1) or (2) of section 1836, is described in
paragraph (3), and has elected not to enroll (or to be
deemed enrolled) under this section during the
individual's initial enrollment period; or
(B) has terminated enrollment under this section
during a month in which the individual is described in
paragraph (3),
there shall be a special enrollment period described in
paragraph (2).
(2) The special enrollment period described in this paragraph
is the 6-month period beginning on the first day of the month
which includes the date that the individual is no longer
described in paragraph (3).
(3) For purposes of paragraph (1), an individual described in
this paragraph is an individual who--
(A) is serving as a volunteer outside of the United
States through a program--
(i) that covers at least a 12-month period;
and
(ii) that is sponsored by an organization
described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code; and
(B) demonstrates health insurance coverage while
serving in the program.
(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.
(m) Beginning January 1, 2021, the Secretary may establish
special enrollment periods in the case of individuals who meet
such exceptional conditions as the Secretary may provide, such
as individuals who reside in an area with an emergency or
disaster as determined by the Secretary.
COVERAGE PERIOD
Sec. 1838. (a) The period during which an individual is
entitled to benefits under the insurance program established by
this part (hereinafter referred to as his ``coverage period'')
shall begin on whichever of the following is the latest:
(1) July 1, 1966, or (in the case of a disabled
individual who has not attained age 65) July 1, 1973;
or
[(2)(A) in the case of an individual who enrolls
pursuant to subsection (d) of section 1837 before the
month in which he first satisfies paragraph (1) or (2)
of section 1836, the first day of such month, or
[(B) in the case of an individual who enrolls
pursuant to such subsection (d) in the month in which
he first satisfies such paragraph, the first day of the
month following the month in which he so enrolls, or
[(C) in the case of an individual who enrolls
pursuant to such subsection (d) in the month following
the month in which he first satisfies such paragraph,
the first day of the second month following the month
in which he so enrolls, or
[(D) in the case of an individual who enrolls
pursuant to such subsection (d) more than one month
following the month in which he satisfies such
paragraph, the first day of the third month following
the month in which he so enrolls, or
[(E) in the case of an individual who enrolls
pursuant to subsection (e) of section 1837, the July 1
following the month in which he so enrolls; or
[(3)(A) in the case of an individual who is deemed to
have enrolled on or before the last day of the third
month of his initial enrollment period, the first day
of the month in which he first meets the applicable
requirements of section 1836 or July 1, 1973, whichever
is later, or
[(B) in the case of an individual who is deemed to
have enrolled on or after the first day of the fourth
month of his initial enrollment period, as prescribed
under subparagraphs (B), (C), (D), and (E) of paragraph
(2) of this subsection.]
(2)(A) in the case of an individual who enrolls
pursuant to subsection (d) of section 1837 before the
month in which he first satisfies paragraph (1) or (2)
of section 1836, the first day of such month,
(B) in the case of an individual who first satisfies
such paragraph in a month beginning before January 2021
and who enrolls pursuant to such subsection (d)--
(i) in such month in which he first satisfies
such paragraph, the first day of the month
following the month in which he so enrolls,
(ii) in the month following such month in
which he first satisfies such paragraph, the
first day of the second month following the
month in which he so enrolls, or
(iii) more than one month following such
month in which he satisfies such paragraph, the
first day of the third month following the
month in which he so enrolls,
(C) in the case of an individual who first satisfies
such paragraph in a month beginning on or after January
1, 2021, and who enrolls pursuant to such subsection
(d) in such month in which he first satisfies such
paragraph or in any subsequent month of his initial
enrollment period, the first day of the month following
the month in which he so enrolls, or
(D) in the case of an individual who enrolls pursuant
to subsection (e) of section 1837 in a month
beginning--
(i) before January 1, 2021, the July 1
following the month in which he so enrolls, or
(ii) on or after January 1, 2021, the first
day of the month following the month in which
he so enrolls, or
(3) in the case of an individual who is deemed to
have enrolled--
(A) on or before the last day of the third
month of his initial enrollment period, the
first day of the month in which he first meets
the applicable requirements of section 1836 or
July 1, 1973, whichever is later, or
(B) on or after the first day of the fourth
month of his initial enrollment period, and
where such month begins--
(i) before January 1, 2021, as
prescribed under subparagraphs (B)(i),
(B)(ii), (B)(iii), and (D) of paragraph
(2), or
(ii) on or after January 1, 2021, as
prescribed under paragraph (2)(C).
(b) An individual's coverage period shall continue until his
enrollment has been terminated--
(1) by the filing of notice that the individual no
longer wishes to participate in the insurance program
established by this part, or
(2) for nonpayment of premiums.
The termination of a coverage period under paragraph (1) shall
(except as otherwise provided in section 1843(e)) take effect
at the close of the month following the month in which the
notice is filed. The termination of a coverage period under
paragraph (2) shall take effect on a date determined under
regulations, which may be determined so as to provide a grace
period in which overdue premiums may be paid and coverage
continued. The grace period determined under the preceding
sentence shall not exceed 90 days; except that it may be
extended to not to exceed 180 days in any case where the
Secretary determines that there was good cause for failure to
pay the overdue premiums within such 90-day period.
Where an individual who is deemed to have enrolled for
medical insurance pursuant to section 1837(f) files a notice
before the first day of the month in which his coverage period
begins advising that he does not wish to be so enrolled, the
termination of the coverage period resulting from such deemed
enrollment shall take effect with the first day of the month
the coverage would have been effective. Where an individual who
is deemed enrolled for medical insurance benefits pursuant to
section 1837(f) files a notice requesting termination of his
deemed coverage in or after the month in which such coverage
becomes effective, the termination of such coverage shall take
effect at the close of the month following the month in which
the notice is filed.
(c) In the case of an individual satisfying paragraph (1) of
section 1836 whose entitlement to hospital insurance benefits
under part A is based on a disability rather than on his having
attained the age of 65, his coverage period (and his enrollment
under this part) shall be terminated as of the close of the
last month for which he is entitled to hospital insurance
benefits.
(d) No payments may be made under this part with respect to
the expenses of an individual unless such expenses were
incurred by such individual during a period which, with respect
to him, is a coverage period.
(e) Notwithstanding subsection (a), in the case of an
individual who enrolls during a special enrollment period
pursuant to section 1837(i)(3) or 1837(i)(4)(B)--
(1) in any month of the special enrollment period in
which the individual is at any time enrolled in a plan
(specified in subparagraph (A) or (B), as applicable,
of section 1837(i)(3) or specified in section
1837(i)(4)(A)(i)) or in the first month following such
a month, the coverage period shall begin on the first
day of the month in which the individual so enrolls
(or, at the option of the individual, on the first day
of any of the following three months), or
(2) in any other month of the special enrollment
period, the coverage period shall begin on the first
day of the month following the month in which the
individual so enrolls.
(f) Notwithstanding subsection (a), in the case of an
individual who enrolls during a special enrollment period
pursuant to section 1837(k), the coverage period shall begin on
the first day of the month following the month in which the
individual so enrolls.
(g) Notwithstanding subsection (a), in the case of an
individual who enrolls during a special enrollment period
pursuant to section 1837(m), the coverage period shall begin on
a date the Secretary provides in a manner consistent (to the
extent practicable) with protecting continuity of health
benefit coverage.
amounts of premiums
Sec. 1839. (a)(1) The Secretary shall, during September of
1983 and of each year thereafter, determine the monthly
actuarial rate for enrollees age 65 and over which shall be
applicable for the succeeding calendar year. Subject to
paragraphs (5) and (6), such actuarial rate shall be the amount
the Secretary estimates to be necessary so that the aggregate
amount for such calendar year with respect to those enrollees
age 65 and older will equal one-half of the total of the
benefits and administrative costs which he estimates will be
payable from the Federal Supplementary Medical Insurance Trust
Fund for services performed and related administrative costs
incurred in such calendar year with respect to such enrollees.
In calculating the monthly actuarial rate, the Secretary shall
include an appropriate amount for a contingency margin. In
applying this paragraph there shall not be taken into account
additional payments under section 1848(o) and section
1853(l)(3) and the Government contribution under section
1844(a)(3).
(2) The monthly premium of each individual enrolled under
this part for each month after December 1983 shall be the
amount determined under paragraph (3), adjusted as required in
accordance with subsections (b), (c), (f), and (i), and to
reflect any credit provided under section
1854(b)(1)(C)(ii)(III).
(3) The Secretary, during September of each year, shall
determine and promulgate a monthly premium rate for the
succeeding calendar year that (except as provided in subsection
(g)) is equal to 50 percent of the monthly actuarial rate for
enrollees age 65 and over, determined according to paragraph
(1), for that succeeding calendar year. Whenever the Secretary
promulgates the dollar amount which shall be applicable as the
monthly premium rate for any period, he shall, at the time such
promulgation is announced, issue a public statement setting
forth the actuarial assumptions and bases employed by him in
arriving at the amount of an adequate actuarial rate for
enrollees age 65 and older as provided in paragraph (1).
(4) The Secretary shall also, during September of 1983 and of
each year thereafter, determine the monthly actuarial rate for
disabled enrollees under age 65 which shall be applicable for
the succeeding calendar year. Such actuarial rate shall be the
amount the Secretary estimates to be necessary so that the
aggregate amount for such calendar year with respect to
disabled enrollees under age 65 will equal one-half of the
total of the benefits and administrative costs which he
estimates will be payable from the Federal Supplementary
Medical Insurance Trust Fund for services performed and related
administrative costs incurred in such calendar year with
respect to such enrollees. In calculating the monthly actuarial
rate under this paragraph, the Secretary shall include an
appropriate amount for a contingency margin.
(5)(A) In applying this part (including subsection (i) and
section 1833(b)), the monthly actuarial rate for enrollees age
65 and over for 2016 shall be determined as if subsection (f)
did not apply.
(B) Subsection (f) shall continue to be applied to paragraph
(6)(A) (during a repayment month, as described in paragraph
(6)(B)) and without regard to the application of subparagraph
(A).
(6)(A) With respect to a repayment month (as described in
subparagraph (B)), the monthly premium otherwise established
under paragraph (3) shall be increased by, subject to
subparagraph (D), $3.
(B) For purposes of this paragraph, a repayment month is a
month during a year, beginning with 2016, for which a balance
due amount is computed under subparagraph (C) as greater than
zero.
(C) For purposes of this paragraph, the balance due amount
computed under this subparagraph, with respect to a month, is
the amount estimated by the Chief Actuary of the Centers for
Medicare & Medicaid Services to be equal to--
(i) the amount transferred under section 1844(d)(1);
plus
(ii) the amount that is equal to the aggregate
reduction, for all individuals enrolled under this
part, in the income related monthly adjustment amount
as a result of the application of paragraph (5); minus
(iii) the amounts payable under this part as a result
of the application of this paragraph for preceding
months.
(D) If the balance due amount computed under subparagraph
(C), without regard to this subparagraph, for December of a
year would be less than zero, the Chief Actuary of the Centers
for Medicare & Medicaid Services shall estimate, and the
Secretary shall apply, a reduction to the dollar amount
increase applied under subparagraph (A) for each month during
such year in a manner such that the balance due amount for
January of the subsequent year is equal to zero.
(b) In the case of an individual whose coverage period began
pursuant to an enrollment after his initial enrollment period
(determined pursuant to subsection (c) or (d) of section 1837)
and not pursuant to a special enrollment period under
subsection (i)(4) [or (l)], (l), or (m) of section 1837, the
monthly premium determined under subsection (a) (without regard
to any adjustment under subsection (i)) shall be increased by
10 percent of the monthly premium so determined for each full
12 months (in the same continuous period of eligibility) in
which he could have been but was not enrolled. For purposes of
the preceding sentence, there shall be taken into account (1)
the months which elapsed between the close of his initial
enrollment period and the close of the enrollment period in
which he enrolled, plus (in the case of an individual who
reenrolls) (2) the months which elapsed between the date of
termination of a previous coverage period and the close of the
enrollment period in which he reenrolled, but there shall not
be taken into account months for which the individual can
demonstrate that the individual was enrolled in a group health
plan described in section 1862(b)(1)(A)(v) by reason of the
individual's (or the individual's spouse's) current employment
or months during which the individual has not attained the age
of 65 and for which the individual can demonstrate that the
individual was enrolled in a large group health plan as an
active individual (as those terms are defined in section
1862(b)(1)(B)(iii)) or months for which the individual can
demonstrate that the individual was an individual described in
section 1837(k)(3). Any increase in an individual's monthly
premium under the first sentence of this subsection with
respect to a particular continuous period of eligibility shall
not be applicable with respect to any other continuous period
of eligibility which such individual may have. No increase in
the premium shall be effected for a month in the case of an
individual who enrolls under this part during 2001, 2002, 2003,
or 2004 and who demonstrates to the Secretary before December
31, 2004, that the individual is a covered beneficiary (as
defined in section 1072(5) of title 10, United States Code).
The Secretary of Health and Human Services shall consult with
the Secretary of Defense in identifying individuals described
in the previous sentence. For purposes of determining any
increase under this subsection for individuals whose enrollment
occurs on or after January 1, 2021, the second sentence of this
subsection shall be applied by substituting ``close of the
month'' for ``close of the enrollment period'' each place it
appears.
(c) If any monthly premium determined under the foregoing
provisions of this section is not a multiple of 10 cents, such
premium shall be rounded to the nearest multiple of 10 cents.
(d) For purposes of subsection (b) (and section 1837(g)(1)),
an individual's ``continuous period of eligibility'' is the
period beginning with the first day on which he is eligible to
enroll under section 1836 and ending with his death; except
that any period during all of which an individual satisfied
paragraph (1) of section 1836 and which terminated in or before
the month preceding the month in which he attained age 65 shall
be a separate ``continuous period of eligibility'' with respect
to such individual (and each such period which terminates shall
be deemed not to have existed for purposes of subsequently
applying this section).
(e)(1) Upon the request of a State (or any appropriate State
or local governmental entity specified by the Secretary), the
Secretary may enter into an agreement with the State (or such
entity) under which the State (or such entity) agrees to pay on
a quarterly or other periodic basis to the Secretary (to be
deposited in the Treasury to the credit of the Federal
Supplementary Medical Insurance Trust Fund) an amount equal to
the amount of the part B late enrollment premium increases with
respect to the premiums for eligible individuals (as defined in
paragraph (3)(A)).
(2) No part B late enrollment premium increase shall apply to
an eligible individual for premiums for months for which the
amount of such an increase is payable under an agreement under
paragraph (1).
(3) In this subsection:
(A) The term ``eligible individual'' means an
individual who is enrolled under this part B and who is
within a class of individuals specified in the
agreement under paragraph (1).
(B) The term ``part B late enrollment premium
increase'' means any increase in a premium as a result
of the application of subsection (b).
(f) For any calendar year after 1988, if an individual is
entitled to monthly benefits under section 202 or 223 or to a
monthly annuity under section 3(a), 4(a), or 4(f) of the
Railroad Retirement Act of 1974 for November and December of
the preceding year, if the monthly premium of the individual
under this section for December and for January is deducted
from those benefits under section 1840(a)(1) or section
1840(b)(1), and if the amount of the individual's premium is
not adjusted for such January under subsection (i), the monthly
premium otherwise determined under this section for an
individual for that year shall not be increased, pursuant to
this subsection, to the extent that such increase would reduce
the amount of benefits payable to that individual for that
December below the amount of benefits payable to that
individual for that November (after the deduction of the
premium under this section). For purposes of this subsection,
retroactive adjustments or payments and deductions on account
of work shall not be taken into account in determining the
monthly benefits to which an individual is entitled under
section 202 or 223 or under the Railroad Retirement Act of
1974.
(g) In estimating the benefits and administrative costs which
will be payable from the Federal Supplementary Medical
Insurance Trust Fund for a year for purposes of determining the
monthly premium rate under subsection (a)(3), the Secretary
shall exclude an estimate of any benefits and administrative
costs attributable to--
(1) the application of section 1861(v)(1)(L)(viii) or
to the establishment under section 1861(v)(1)(L)(i)(V)
of a per visit limit at 106 percent of the median
(instead of 105 percent of the median), but only to the
extent payment for home health services under this
title is not being made under section 1895 (relating to
prospective payment for home health services); and
(2) the medicare prescription drug discount card and
transitional assistance program under section 1860D-31.
(h) Potential Application of Comparative Cost Adjustment in
CCA Areas.--
(1) In general.--Certain individuals who are residing
in a CCA area under section 1860C-1 who are not
enrolled in an MA plan under part C may be subject to a
premium adjustment under subsection (f) of such section
for months in which the CCA program under such section
is in effect in such area.
(2) No effect on late enrollment penalty or income-
related adjustment in subsidies.--Nothing in this
subsection or section 1860C-1(f) shall be construed as
affecting the amount of any premium adjustment under
subsection (b) or (i). Subsection (f) shall be applied
without regard to any premium adjustment referred to in
paragraph (1).
(3) Implementation.--In order to carry out a premium
adjustment under this subsection and section 1860C-1(f)
(insofar as it is effected through the manner of
collection of premiums under section 1840(a)), the
Secretary shall transmit to the Commissioner of Social
Security--
(A) at the beginning of each year, the name,
social security account number, and the amount
of the premium adjustment (if any) for each
individual enrolled under this part for each
month during the year; and
(B) periodically throughout the year,
information to update the information
previously transmitted under this paragraph for
the year.
(i) Reduction in Premium Subsidy Based on Income.--
(1) In general.--In the case of an individual whose
modified adjusted gross income exceeds the threshold
amount under paragraph (2), the monthly amount of the
premium subsidy applicable to the premium under this
section for a month after December 2006 shall be
reduced (and the monthly premium shall be increased) by
the monthly adjustment amount specified in paragraph
(3).
(2) Threshold amount.--For purposes of this
subsection, subject to paragraph (6), the threshold
amount is--
(A) except as provided in subparagraph (B),
$80,000 (or, beginning with 2018, $85,000), and
(B) in the case of a joint return, twice the
amount applicable under subparagraph (A) for
the calendar year.
(3) Monthly adjustment amount.--
(A) In general.--Subject to subparagraph (B),
the monthly adjustment amount specified in this
paragraph for an individual for a month in a
year is equal to the product of the following:
(i) Sliding scale percentage.--
Subject to paragraph (6), the
applicable percentage specified in the
applicable table in subparagraph (C)
for the individual minus 25 percentage
points.
(ii) Unsubsidized part b premium
amount.--
(I) 200 percent of the monthly
actuarial rate for enrollees age 65 and
over (as determined under subsection
(a)(1) for the year); plus
(II) 4 times the amount of
the increase in the monthly
premium under subsection (a)(6)
for a month in the year.
(B) 3-year phase in.--The monthly adjustment
amount specified in this paragraph for an
individual for a month in a year before 2009 is
equal to the following percentage of the
monthly adjustment amount specified in
subparagraph (A):
(i) For 2007, 33 percent.
(ii) For 2008, 67 percent.
(C) Applicable percentage.--
(i) In general.--
(I) Subject to paragraphs (5)
and (6), for years before 2018:
If the modified adjusted gross income is: The applicable
percentage is:
More than $80,000 but not more than $100,000.............35 percent
More than $100,000 but not more than $150,000............50 percent
More than $150,000 but not more than $200,000............65 percent
More than $200,000.......................................80 percent.
(II) Subject to paragraph
(5), for 2018:
If the modified adjusted gross income is: The applicable
percentage is:
More than $85,000 but not more than $107,000..... 35 percent
More than $107,000 but not more than $133,500.... 50 percent
More than $133,500 but not more than $160,000.... 65 percent
More than $160,000............................... 80 percent.
(III) Subject to paragraph
(5), for years beginning with
2019:
If the modified adjusted gross income is:......... The applicable
percentage is:
More than $85,000 but not more than $107,000...... 35 percent
More than $107,000 but not more than $133,500..... 50 percent
More than $133,500 but not more than $160,000..... 65 percent
More than $160,000 but less than $500,000......... 80 percent
At least $500,000................................. 85 percent.
(ii) Joint returns.--In the case of a
joint return, clause (i) shall be
applied by substituting dollar amounts
which are twice the dollar amounts
otherwise applicable under clause (i)
for the calendar year except, with
respect to the dollar amounts applied
in the last row of the table under
subclause (III) of such clause (and the
second dollar amount specified in the
second to last row of such table),
clause (i) shall be applied by
substituting dollar amounts which are
150 percent of such dollar amounts for
the calendar year.
(iii) Married individuals filing
separate returns.--In the case of an
individual who--
(I) is married as of the
close of the taxable year
(within the meaning of section
7703 of the Internal Revenue
Code of 1986) but does not file
a joint return for such year,
and
(II) does not live apart from
such individual's spouse at all
times during the taxable year,
clause (i) shall be applied by reducing
each of the dollar amounts otherwise
applicable under such clause for the
calendar year by the threshold amount
for such year applicable to an
unmarried individual.
(4) Modified adjusted gross income.--
(A) In general.--For purposes of this
subsection, the term ``modified adjusted gross
income'' means adjusted gross income (as
defined in section 62 of the Internal Revenue
Code of 1986)--
(i) determined without regard to
sections 135, 911, 931, and 933 of such
Code; and
(ii) increased by the amount of
interest received or accrued during the
taxable year which is exempt from tax
under such Code.
In the case of an individual filing a joint
return, any reference in this subsection to the
modified adjusted gross income of such
individual shall be to such return's modified
adjusted gross income.
(B) Taxable year to be used in determining
modified adjusted gross income.--
(i) In general.--In applying this
subsection for an individual's premiums
in a month in a year, subject to clause
(ii) and subparagraph (C), the
individual's modified adjusted gross
income shall be such income determined
for the individual's last taxable year
beginning in the second calendar year
preceding the year involved.
(ii) Temporary use of other data.--
If, as of October 15 before a calendar
year, the Secretary of the Treasury
does not have adequate data for an
individual in appropriate electronic
form for the taxable year referred to
in clause (i), the individual's
modified adjusted gross income shall be
determined using the data in such form
from the previous taxable year. Except
as provided in regulations prescribed
by the Commissioner of Social Security
in consultation with the Secretary, the
preceding sentence shall cease to apply
when adequate data in appropriate
electronic form are available for the
individual for the taxable year
referred to in clause (i), and proper
adjustments shall be made to the extent
that the premium adjustments determined
under the preceding sentence were
inconsistent with those determined
using such taxable year.
(iii) Non-filers.--In the case of
individuals with respect to whom the
Secretary of the Treasury does not have
adequate data in appropriate electronic
form for either taxable year referred
to in clause (i) or clause (ii), the
Commissioner of Social Security, in
consultation with the Secretary, shall
prescribe regulations which provide for
the treatment of the premium adjustment
with respect to such individual under
this subsection, including regulations
which provide for--
(I) the application of the
highest applicable percentage
under paragraph (3)(C) to such
individual if the Commissioner
has information which indicates
that such individual's modified
adjusted gross income might
exceed the threshold amount for
the taxable year referred to in
clause (i), and
(II) proper adjustments in
the case of the application of
an applicable percentage under
subclause (I) to such
individual which is
inconsistent with such
individual's modified adjusted
gross income for such taxable
year.
(C) Use of more recent taxable year.--
(i) In general.--The Commissioner of
Social Security in consultation with
the Secretary of the Treasury shall
establish a procedures under which an
individual's modified adjusted gross
income shall, at the request of such
individual, be determined under this
subsection--
(I) for a more recent taxable
year than the taxable year
otherwise used under
subparagraph (B), or
(II) by such methodology as
the Commissioner, in
consultation with such
Secretary, determines to be
appropriate, which may include
a methodology for aggregating
or disaggregating information
from tax returns in the case of
marriage or divorce.
(ii) Standard for granting
requests.--A request under clause
(i)(I) to use a more recent taxable
year may be granted only if--
(I) the individual furnishes
to such Commissioner with
respect to such year such
documentation, such as a copy
of a filed Federal income tax
return or an equivalent
document, as the Commissioner
specifies for purposes of
determining the premium
adjustment (if any) under this
subsection; and
(II) the individual's
modified adjusted gross income
for such year is significantly
less than such income for the
taxable year determined under
subparagraph (B) by reason of
the death of such individual's
spouse, the marriage or divorce
of such individual, or other
major life changing events
specified in regulations
prescribed by the Commissioner
in consultation with the
Secretary.
(5) Inflation adjustment.--
(A) In general.--Subject to subparagraph (C),
in the case of any calendar year beginning
after 2007 (other than 2018 and 2019), each
dollar amount in paragraph (2) or (3) shall be
increased by an amount equal to--
(i) such dollar amount, multiplied by
(ii) the percentage (if any) by which
the average of the Consumer Price Index
for all urban consumers (United States
city average) for the 12-month period
ending with August of the preceding
calendar year exceeds such average for
the 12-month period ending with August
2006 (or, in the case of a calendar
year beginning with 2020, August 2018).
(B) Rounding.--If any dollar amount after
being increased under subparagraph (A) or (C)
is not a multiple of $1,000, such dollar amount
shall be rounded to the nearest multiple of
$1,000.
(C) Treatment of adjustments for certain
higher income individuals.--
(i) In general.--Subparagraph (A)
shall not apply with respect to each
dollar amount in paragraph (3) of
$500,000.
(ii) Adjustment beginning 2028.--In
the case of any calendar year beginning
after 2027, each dollar amount in
paragraph (3) of $500,000 shall be
increased by an amount equal to--
(I) such dollar amount,
multiplied by
(II) the percentage (if any)
by which the average of the
Consumer Price Index for all
urban consumers (United States
city average) for the 12-month
period ending with August of
the preceding calendar year
exceeds such average for the
12-month period ending with
August 2026.
(6) 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, 2017--
(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.
(7) Joint return defined.--For purposes of this
subsection, the term ``joint return'' has the meaning
given to such term by section 7701(a)(38) of the
Internal Revenue Code of 1986.
* * * * * * *
payment for physicians' services
Sec. 1848. (a) Payment Based on Fee Schedule.--
(1) In general.--Effective for all physicians'
services (as defined in subsection (j)(3)) furnished
under this part during a year (beginning with 1992) for
which payment is otherwise made on the basis of a
reasonable charge or on the basis of a fee schedule
under section 1834(b), payment under this part shall
instead be based on the lesser of--
(A) the actual charge for the service, or
(B) subject to the succeeding provisions of
this subsection, the amount determined under
the fee schedule established under subsection
(b) for services furnished during that year (in
this subsection referred to as the ``fee
schedule amount'').
(2) Transition to full fee schedule.--
(A) Limiting reductions and increases to 15
percent in 1992.--
(i) Limit on increase.--In the case
of a service in a fee schedule area (as
defined in subsection (j)(2)) for which
the adjusted historical payment basis
(as defined in subparagraph (D)) is
less than 85 percent of the fee
schedule amount for services furnished
in 1992, there shall be substituted for
the fee schedule amount an amount equal
to the adjusted historical payment
basis plus 15 percent of the fee
schedule amount otherwise established
(without regard to this paragraph).
(ii) Limit in reduction.--In the case
of a service in a fee schedule area for
which the adjusted historical payment
basis exceeds 115 percent of the fee
schedule amount for services furnished
in 1992, there shall be substituted for
the fee schedule amount an amount equal
to the adjusted historical payment
basis minus 15 percent of the fee
schedule amount otherwise established
(without regard to this paragraph).
(B) Special rule for 1993, 1994, and 1995.--
If a physicians' service in a fee schedule area
is subject to the provisions of subparagraph
(A) in 1992, for physicians' services furnished
in the area--
(i) during 1993, there shall be
substituted for the fee schedule amount
an amount equal to the sum of--
(I) 75 percent of the fee
schedule amount determined
under subparagraph (A),
adjusted by the update
established under subsection
(d)(3) for 1993, and
(II) 25 percent of the fee
schedule amount determined
under paragraph (1) for 1993
without regard to this
paragraph;
(ii) during 1994, there shall be
substituted for the fee schedule amount
an amount equal to the sum of--
(I) 67 percent of the fee
schedule amount determined
under clause (i), adjusted by
the update established under
subsection (d)(3) for 1994 and
as adjusted under subsection
(c)(2)(F)(ii) and under section
13515(b) of the Omnibus Budget
Reconciliation Act of 1993, and
(II) 33 percent of the fee
schedule amount determined
under paragraph (1) for 1994
without regard to this
paragraph; and
(iii) during 1995, there shall be
substituted for the fee schedule amount
an amount equal to the sum of--
(I) 50 percent of the fee
schedule amount determined
under clause (ii) adjusted by
the update established under
subsection (d)(3) for 1995, and
(II) 50 percent of the fee
schedule amount determined
under paragraph (1) for 1995
without regard to this
paragraph.
(C) Special rule for anesthesia and radiology
services.--With respect to physicians' services
which are anesthesia services, the Secretary
shall provide for a transition in the same
manner as a transition is provided for other
services under subparagraph (B). With respect
to radiology services, ``109 percent'' and ``9
percent'' shall be substituted for ``115
percent'' and ``15 percent'', respectively, in
subparagraph (A)(ii).
(D) Adjusted historical payment basis
defined.--
(i) In general.--In this paragraph,
the term ``adjusted historical payment
basis'' means, with respect to a
physicians' service furnished in a fee
schedule area, the weighted average
prevailing charge applied in the area
for the service in 1991 (as determined
by the Secretary without regard to
physician specialty and as adjusted to
reflect payments for services with
customary charges below the prevailing
charge or other payment limitations
imposed by law or regulation) adjusted
by the update established under
subsection (d)(3) for 1992.
(ii) Application to radiology
services.--In applying clause (i) in
the case of physicians' services which
are radiology services (including
radiologist services, as defined in
section 1834(b)(6)), but excluding
nuclear medicine services that are
subject to section 6105(b) of the
Omnibus Budget Reconciliation Act of
1989, there shall be substituted for
the weighted average prevailing charge
the amount provided under the fee
schedule established for the service
for the fee schedule area under section
1834(b).
(iii) Nuclear medicine services.--In
applying clause (i) in the case of
physicians' services which are nuclear
medicine services, there shall be
substituted for the weighted average
prevailing charge the amount provided
under section 6105(b) of the Omnibus
Budget Reconciliation Act of 1989.
(3) Incentives for participating physicians and
suppliers.--In applying paragraph (1)(B) in the case of
a nonparticipating physician or a nonparticipating
supplier or other person, the fee schedule amount shall
be 95 percent of such amount otherwise applied under
this subsection (without regard to this paragraph). In
the case of physicians' services (including services
which the Secretary excludes pursuant to subsection
(j)(3)) of a nonparticipating physician, supplier, or
other person for which payment is made under this part
on a basis other than the fee schedule amount, the
payment shall be based on 95 percent of the payment
basis for such services furnished by a participating
physician, supplier, or other person.
(4) Special rule for medical direction.--
(A) In general.--With respect to physicians'
services furnished on or after January 1, 1994,
and consisting of medical direction of two,
three, or four concurrent anesthesia cases,
except as provided in paragraph (5), the fee
schedule amount to be applied shall be equal to
one-half of the amount described in
subparagraph (B).
(B) Amount.--The amount described in this
subparagraph, for a physician's medical
direction of the performance of anesthesia
services, is the following percentage of the
fee schedule amount otherwise applicable under
this section if the anesthesia services were
personally performed by the physician alone:
(i) For services furnished during
1994, 120 percent.
(ii) For services furnished during
1995, 115 percent.
(iii) For services furnished during
1996, 110 percent.
(iv) For services furnished during
1997, 105 percent.
(v) For services furnished after
1997, 100 percent.
(5) Incentives for electronic prescribing.--
(A) Adjustment.--
(i) In general.--Subject to
subparagraph (B) and subsection
(m)(2)(B), with respect to covered
professional services furnished by an
eligible professional during 2012, 2013
or 2014, if the eligible professional
is not a successful electronic
prescriber for the reporting period for
the year (as determined under
subsection (m)(3)(B)), 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
paragraph (3) but without regard to
this paragraph).
(ii) Applicable percent.--For
purposes of clause (i), the term
``applicable percent'' means--
(I) for 2012, 99 percent;
(II) for 2013, 98.5 percent;
and
(III) for 2014, 98 percent.
(B) Significant hardship exception.--The
Secretary may, on a case-by-case basis, exempt
an eligible professional from the application
of the payment adjustment under subparagraph
(A) if the Secretary determines, subject to
annual renewal, that compliance with the
requirement for being a successful electronic
prescriber would result in a significant
hardship, such as in the case of an eligible
professional who practices in a rural area
without sufficient Internet access.
(C) 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.
(D) 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) Reporting period.--The term
``reporting period'' means, with
respect to a year, a period specified
by the Secretary.
(6) Special rule for teaching anesthesiologists.--
With respect to physicians' services furnished on or
after January 1, 2010, in the case of teaching
anesthesiologists involved in the training of physician
residents in a single anesthesia case or two concurrent
anesthesia cases, the fee schedule amount to be applied
shall be 100 percent of the fee schedule amount
otherwise applicable under this section if the
anesthesia services were personally performed by the
teaching anesthesiologist alone and paragraph (4) shall
not apply if--
(A) the teaching anesthesiologist is present
during all critical or key portions of the
anesthesia service or procedure involved; and
(B) the teaching anesthesiologist (or another
anesthesiologist with whom the teaching
anesthesiologist has entered into an
arrangement) is immediately available to
furnish anesthesia services during the entire
procedure.
(7) Incentives for meaningful use of certified ehr
technology.--
(A) Adjustment.--
(i) In general.--Subject to
subparagraphs (B) and (D), with respect
to covered professional services
furnished by an eligible professional
during each of 2015 through 2018, if
the eligible professional is not a
meaningful EHR user (as determined
under subsection (o)(2)) for an EHR
reporting period for the year, 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 paragraph (3) but
without regard to this paragraph).
(ii) Applicable percent.--Subject to
clause (iii), for purposes of clause
(i), the term ``applicable percent''
means--
(I) for 2015, 99 percent (or,
in the case of an eligible
professional who was subject to
the application of the payment
adjustment under section
1848(a)(5) for 2014, 98
percent);
(II) for 2016, 98 percent;
and
(III) for 2017 and 2018, 97
percent.
(iii) Authority to decrease
applicable percentage for 2018.--For
2018, if the Secretary finds that the
proportion of eligible professionals
who are meaningful EHR users (as
determined under subsection (o)(2)) is
less than 75 percent, the applicable
percent shall be decreased by 1
percentage point from the applicable
percent in the preceding year.
(B) Significant hardship exception.--The
Secretary may, on a case-by-case basis (and,
with respect to the payment adjustment under
subparagraph (A) for 2017, for categories of
eligible professionals, as established by the
Secretary and posted on the Internet website of
the Centers for Medicare & Medicaid Services
prior to December 15, 2015, an application for
which must be submitted to the Secretary by not
later than March 15, 2016), exempt an eligible
professional from the application of the
payment adjustment under subparagraph (A) if
the Secretary determines, subject to annual
renewal, that compliance with the requirement
for being a meaningful EHR user would result in
a significant hardship, such as in the case of
an eligible professional who practices in a
rural area without sufficient Internet access.
The Secretary shall exempt an eligible
professional from the application of the
payment adjustment under subparagraph (A) with
respect to a year, subject to annual renewal,
if the Secretary determines that compliance
with the requirement for being a meaningful EHR
user is not possible because the certified EHR
technology used by such professional has been
decertified under a program kept or recognized
pursuant to section 3001(c)(5) of the Public
Health Service Act. In no case may an eligible
professional be granted an exemption under this
subparagraph for more than 5 years.
(C) Application of 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.
(D) Non-application to hospital-based and
ambulatory surgical center-based eligible
professionals.--
(i) Hospital-based.--No payment
adjustment may be made under
subparagraph (A) in the case of
hospital-based eligible professionals
(as defined in subsection
(o)(1)(C)(ii)).
(ii) Ambulatory surgical center-
based.--Subject to clause (iv), no
payment adjustment may be made under
subparagraph (A) for 2017 and 2018 in
the case of an eligible professional
with respect to whom substantially all
of the covered professional services
furnished by such professional are
furnished in an ambulatory surgical
center.
(iii) Determination.--The
determination of whether an eligible
professional is an eligible
professional described in clause (ii)
may be made on the basis of--
(I) the site of service (as
defined by the Secretary); or
(II) an attestation submitted
by the eligible professional.
Determinations made under subclauses
(I) and (II) shall be made without
regard to any employment or billing
arrangement between the eligible
professional and any other supplier or
provider of services.
(iv) Sunset.--Clause (ii) shall no
longer apply as of the first year that
begins more than 3 years after the date
on which the Secretary determines,
through notice and comment rulemaking,
that certified EHR technology
applicable to the ambulatory surgical
center setting is available.
(E) Definitions.--For purposes of this
paragraph:
(i) Covered professional services.--
The term ``covered professional
services'' has the meaning given such
term in subsection (k)(3).
(ii) EHR reporting period.--The term
``EHR reporting period'' means, with
respect to a year, a period (or
periods) specified by the Secretary.
(iii) Eligible professional.--The
term ``eligible professional'' means a
physician, as defined in section
1861(r).
(8) Incentives for quality reporting.--
(A) Adjustment.--
(i) In general.--With respect to
covered professional services furnished
by an eligible professional during each
of 2015 through 2018, 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, 2017, and
2018, 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.
(9) Information reporting on services included in
global surgical packages.--With respect to services for
which a physician is required to report information in
accordance with subsection (c)(8)(B)(i), the Secretary
may through rulemaking delay payment of 5 percent of
the amount that would otherwise be payable under the
physician fee schedule under this section for such
services until the information so required is reported.
(b) Establishment of Fee Schedules.--
(1) In general.--Before November 1 of the preceding
year, for each year beginning with 1998, subject to
subsection (p), the Secretary shall establish, by
regulation, fee schedules that establish payment
amounts for all physicians' services furnished in all
fee schedule areas (as defined in subsection (j)(2))
for the year. Except as provided in paragraph (2), each
such payment amount for a service shall be equal to the
product of--
(A) the relative value for the service (as
determined in subsection (c)(2)),
(B) the conversion factor (established under
subsection (d)) for the year, and
(C) the geographic adjustment factor
(established under subsection (e)(2)) for the
service for the fee schedule area.
(2) Treatment of radiology services and anesthesia
services.--
(A) Radiology services.--With respect to
radiology services (including radiologist
services, as defined in section 1834(b)(6)),
the Secretary shall base the relative values on
the relative value scale developed under
section 1834(b)(1)(A), with appropriate
modifications of the relative values to assure
that the relative values established for
radiology services which are similar or related
to other physicians' services are consistent
with the relative values established for those
similar or related services.
(B) Anesthesia services.--In establishing the
fee schedule for anesthesia services for which
a relative value guide has been established
under section 4048(b) of the Omnibus Budget
Reconciliation Act of 1987, the Secretary shall
use, to the extent practicable, such relative
value guide, with appropriate adjustment of the
conversion factor, in a manner to assure that
the fee schedule amounts for anesthesia
services are consistent with the fee schedule
amounts for other services determined by the
Secretary to be of comparable value. In
applying the previous sentence, the Secretary
shall adjust the conversion factor by
geographic adjustment factors in the same
manner as such adjustment is made under
paragraph (1)(C).
(C) Consultation.--The Secretary shall
consult with the Physician Payment Review
Commission and organizations representing
physicians or suppliers who furnish radiology
services and anesthesia services in applying
subparagraphs (A) and (B).
(3) Treatment of interpretation of
electrocardiograms.--The Secretary--
(A) shall make separate payment under this
section for the interpretation of
electrocardiograms performed or ordered to be
performed as part of or in conjunction with a
visit to or a consultation with a physician,
and
(B) shall adjust the relative values
established for visits and consultations under
subsection (c) so as not to include relative
value units for interpretations of
electrocardiograms in the relative value for
visits and consultations.
(4) Special rule for imaging services.--
(A) In general.--In the case of imaging
services described in subparagraph (B)
furnished on or after January 1, 2007, if--
(i) the technical component
(including the technical component
portion of a global fee) of the service
established for a year under the fee
schedule described in paragraph (1)
without application of the geographic
adjustment factor described in
paragraph (1)(C), exceeds
(ii) the Medicare OPD fee schedule
amount established under the
prospective payment system for hospital
outpatient department services under
paragraph (3)(D) of section 1833(t) for
such service for such year, determined
without regard to geographic adjustment
under paragraph (2)(D) of such section,
the Secretary shall substitute the amount
described in clause (ii), adjusted by the
geographic adjustment factor described in
paragraph (1)(C), for the fee schedule amount
for such technical component for such year.
(B) Imaging services described.--For purposes
of this paragraph, imaging services described
in this subparagraph are imaging and computer-
assisted imaging services, including X-ray,
ultrasound (including echocardiography),
nuclear medicine (including positron emission
tomography), magnetic resonance imaging,
computed tomography, and fluoroscopy, but
excluding diagnostic and screening mammography,
and for 2010, 2011, and the first 2 months of
2012, dual-energy x-ray absorptiometry services
(as described in paragraph (6)).
(C) Adjustment in imaging utilization rate.--
With respect to fee schedules established for
2011, 2012, and 2013, in the methodology for
determining practice expense relative value
units for expensive diagnostic imaging
equipment under the final rule published by the
Secretary in the Federal Register on November
25, 2009 (42 CFR 410 et al.), the Secretary
shall use a 75 percent assumption instead of
the utilization rates otherwise established in
such final rule. With respect to fee schedules
established for 2014 and subsequent years, in
such methodology, the Secretary shall use a 90
percent utilization rate.
(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.
(5) Treatment of intensive cardiac rehabilitation
program.--
(A) In general.--In the case of an intensive
cardiac rehabilitation program described in
section 1861(eee)(4), the Secretary shall
substitute the Medicare OPD fee schedule amount
established under the prospective payment
system for hospital outpatient department
service under paragraph (3)(D) of section
1833(t) for cardiac rehabilitation (under HCPCS
codes 93797 and 93798 for calendar year 2007,
or any succeeding HCPCS codes for cardiac
rehabilitation).
(B) Definition of session.--Each of the
services described in subparagraphs (A) through
(E) of section 1861(eee)(3), when furnished for
one hour, is a separate session of intensive
cardiac rehabilitation.
(C) Multiple sessions per day.--Payment may
be made for up to 6 sessions per day of the
series of 72 one-hour sessions of intensive
cardiac rehabilitation services described in
section 1861(eee)(4)(B).
(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, 2011, and the first 2 months of
2012, 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,
2011, and the first 2 months of 2012,
respectively.
(7) Adjustment in discount for certain multiple
therapy services.--In the case of therapy services
furnished on or after January 1, 2011, and before April
1, 2013, and for which payment is made under fee
schedules established under this section, instead of
the 25 percent multiple procedure payment reduction
specified in the final rule published by the Secretary
in the Federal Register on November 29, 2010, the
reduction percentage shall be 20 percent. In the case
of such services furnished on or after April 1, 2013,
and for which payment is made under such fee schedules,
instead of the 25 percent multiple procedure payment
reduction specified in such final rule, the reduction
percentage shall be 50 percent.
(8) Encouraging care management for individuals with
chronic care needs.--
(A) In general.--In order to encourage the
management of care for individuals with chronic
care needs the Secretary shall, subject to
subparagraph (B), make payment (as the
Secretary determines to be appropriate) under
this section for chronic care management
services furnished on or after January 1, 2015,
by a physician (as defined in section
1861(r)(1)), physician assistant or nurse
practitioner (as defined in section
1861(aa)(5)(A)), clinical nurse specialist (as
defined in section 1861(aa)(5)(B)), or
certified nurse midwife (as defined in section
1861(gg)(2)).
(B) Policies relating to payment.--In
carrying out this paragraph, with respect to
chronic care management services, the Secretary
shall--
(i) make payment to only one
applicable provider for such services
furnished to an individual during a
period;
(ii) not make payment under
subparagraph (A) if such payment would
be duplicative of payment that is
otherwise made under this title for
such services; and
(iii) not require that an annual
wellness visit (as defined in section
1861(hhh)) or an initial preventive
physical examination (as defined in
section 1861(ww)) be furnished as a
condition of payment for such
management services.
(9) Special rule to incentivize transition from
traditional x-ray imaging to digital radiography.--
(A) Limitation on payment for film x-ray
imaging services.--In the case of an imaging
service (including the imaging portion of a
service) that is an X-ray taken using film and
that is furnished during 2017 or a subsequent
year, the payment amount for the technical
component (including the technical component
portion of a global service) of such service
that would otherwise be determined under this
section (without application of this paragraph
and before application of any other adjustment
under this section) for such year shall be
reduced by 20 percent.
(B) Phased-in limitation on payment for
computed radiography imaging services.--In the
case of an imaging service (including the
imaging portion of a service) that is an X-ray
taken using computed radiography technology--
(i) in the case of such a service
furnished during 2018, 2019, 2020,
2021, or 2022, the payment amount for
the technical component (including the
technical component portion of a global
service) of such service that would
otherwise be determined under this
section (without application of this
paragraph and before application of any
other adjustment under this section)
for such year shall be reduced by 7
percent; and
(ii) in the case of such a service
furnished during 2023 or a subsequent
year, the payment amount for the
technical component (including the
technical component portion of a global
service) of such service that would
otherwise be determined under this
section (without application of this
paragraph and before application of any
other adjustment under this section)
for such year shall be reduced by 10
percent.
(C) Computed radiography technology
defined.--For purposes of this paragraph, the
term ``computed radiography technology'' means
cassette-based imaging which utilizes an
imaging plate to create the image involved.
(D) Implementation.--In order to implement
this paragraph, the Secretary shall adopt
appropriate mechanisms which may include use of
modifiers.
(10) Reduction of discount in payment for
professional component of multiple imaging services.--
In the case of the professional component of imaging
services furnished on or after January 1, 2017, instead
of the 25 percent reduction for multiple procedures
specified in the final rule published by the Secretary
in the Federal Register on November 28, 2011, as
amended in the final rule published by the Secretary in
the Federal Register on November 16, 2012, the
reduction percentage shall be 5 percent.
(11) Special rule for certain radiation therapy
services.--The code definitions, the work relative
value units under subsection (c)(2)(C)(i), and the
direct inputs for the practice expense relative value
units under subsection (c)(2)(C)(ii) for radiation
treatment delivery and related imaging services
(identified in 2016 by HCPCS G-codes G6001 through
G6015) for the fee schedule established under this
subsection for services furnished in 2017, 2018, and
2019 shall be the same as such definitions, units, and
inputs for such services for the fee schedule
established for services furnished in 2016.
(c) Determination of Relative Values for Physicians'
Services.--
(1) Division of physicians' services into
components.--In this section, with respect to a
physicians' service:
(A) Work component defined.--The term ``work
component'' means the portion of the resources
used in furnishing the service that reflects
physician time and intensity in furnishing the
service. Such portion shall--
(i) include activities before and
after direct patient contact, and
(ii) be defined, with respect to
surgical procedures, to reflect a
global definition including pre-
operative and post-operative
physicians' services.
(B) Practice expense component defined.--The
term ``practice expense component'' means the
portion of the resources used in furnishing the
service that reflects the general categories of
expenses (such as office rent and wages of
personnel, but excluding malpractice expenses)
comprising practice expenses.
(C) Malpractice component defined.--The term
``malpractice component'' means the portion of
the resources used in furnishing the service
that reflects malpractice expenses in
furnishing the service.
(2) Determination of relative values.--
(A) In general.--
(i) Combination of units for
components.--The Secretary shall
develop a methodology for combining the
work, practice expense, and malpractice
relative value units, determined under
subparagraph (C), for each service in a
manner to produce a single relative
value for that service. Such relative
values are subject to adjustment under
subparagraph (F)(i) and section
13515(b) of the Omnibus Budget
Reconciliation Act of 1993.
(ii) Extrapolation.--The Secretary
may use extrapolation and other
techniques to determine the number of
relative value units for physicians'
services for which specific data are
not available and shall take into
account recommendations of the
Physician Payment Review Commission and
the results of consultations with
organizations representing physicians
who provide such services.
(B) Periodic review and adjustments in
relative values.--
(i) Periodic review.--The Secretary,
not less often than every 5 years,
shall review the relative values
established under this paragraph for
all physicians' services.
(ii) Adjustments.--
(I) In general.--The
Secretary shall, to the extent
the Secretary determines to be
necessary and subject to
subclause (II) and paragraph
(7), adjust the number of such
units to take into account
changes in medical practice,
coding changes, new data on
relative value components, or
the addition of new procedures.
The Secretary shall publish an
explanation of the basis for
such adjustments.
(II) Limitation on annual
adjustments.--Subject to
clauses (iv) and (v), the
adjustments under subclause (I)
for a year may not cause the
amount of expenditures under
this part for the year to
differ by more than $20,000,000
from the amount of expenditures
under this part that would have
been made if such adjustments
had not been made.
(iii) Consultation.--The Secretary,
in making adjustments under clause
(ii), shall consult with the Medicare
Payment Advisory Commission and
organizations representing physicians.
(iv) Exemption of certain additional
expenditures from budget neutrality.--
The additional expenditures
attributable to--
(I) subparagraph (H) shall
not be taken into account in
applying clause (ii)(II) for
2004;
(II) subparagraph (I) insofar
as it relates to a physician
fee schedule for 2005 or 2006
shall not be taken into account
in applying clause (ii)(II) for
drug administration services
under the fee schedule for such
year for a specialty described
in subparagraph (I)(ii)(II);
(III) subparagraph (J)
insofar as it relates to a
physician fee schedule for 2005
or 2006 shall not be taken into
account in applying clause
(ii)(II) for drug
administration services under
the fee schedule for such year;
and
(IV) subsection (b)(6) shall
not be taken into account in
applying clause (ii)(II) for
2010, 2011, or the first 2
months of 2012.
(v) Exemption of certain reduced
expenditures from budget-neutrality
calculation.--The following reduced
expenditures, as estimated by the
Secretary, shall not be taken into
account in applying clause (ii)(II):
(I) Reduced payment for
multiple imaging procedures.--
Effective for fee schedules
established beginning with
2007, reduced expenditures
attributable to the multiple
procedure payment reduction for
imaging under the final rule
published by the Secretary in
the Federal Register on
November 21, 2005 (42 CFR 405,
et al.) insofar as it relates
to the physician fee schedules
for 2006 and 2007.
(II) OPD payment cap for
imaging services.--Effective
for fee schedules established
beginning with 2007, reduced
expenditures attributable to
subsection (b)(4).
(III) Change in utilization
rate for certain imaging
services.--Effective for fee
schedules established beginning
with 2011, reduced expenditures
attributable to the changes in
the utilization rate applicable
to 2011 and 2014, as described
in the first and second
sentence, respectively, of
subsection (b)(4)(C).
(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)).
(VII) Reduced expenditures
for multiple therapy
services.--Effective for fee
schedules established beginning
with 2011, reduced expenditures
attributable to the multiple
procedure payment reduction for
therapy services (as described
in subsection (b)(7)).
(VIII) Reduced expenditures
attributable to application of
quality incentives for computed
tomography.--Effective for fee
schedules established beginning
with 2016, reduced expenditures
attributable to the application
of the quality incentives for
computed tomography under
section 1834(p)
(IX) Reductions for misvalued
services if target not met.--
Effective for fee schedules
beginning with 2016, reduced
expenditures attributable to
the application of the target
recapture amount described in
subparagraph (O)(iii).
(X) Reduced expenditures
attributable to incentives to
transition to digital
radiography.--Effective for fee
schedules established beginning
with 2017, reduced expenditures
attributable to subparagraph
(A) of subsection (b)(9) and
effective for fee schedules
established beginning with
2018, reduced expenditures
attributable to subparagraph
(B) of such subsection.
(XI) Discount in payment for
professional component of
imaging services.--Effective
for fee schedules established
beginning with 2017, reduced
expenditures attributable to
subsection (b)(10).
(vi) Alternative application of
budget-neutrality adjustment.--
Notwithstanding subsection (d)(9)(A),
effective for fee schedules established
beginning with 2009, with respect to
the 5-year review of work relative
value units used in fee schedules for
2007 and 2008, in lieu of continuing to
apply budget-neutrality adjustments
required under clause (ii) for 2007 and
2008 to work relative value units, the
Secretary shall apply such budget-
neutrality adjustments to the
conversion factor otherwise determined
for years beginning with 2009.
(C) Computation of relative value units for
components.--For purposes of this section for
each physicians' service--
(i) Work relative value units.--The
Secretary shall determine a number of
work relative value units for the
service or group of services based on
the relative resources incorporating
physician time and intensity required
in furnishing the service or group of
services.
(ii) Practice expense relative value
units.--The Secretary shall determine a
number of practice expense relative
value units for the service for years
before 1999 equal to the product of--
(I) the base allowed charges
(as defined in subparagraph
(D)) for the service, and
(II) the practice expense
percentage for the service (as
determined under paragraph
(3)(C)(ii)),
and for years beginning with 1999 based
on the relative practice expense
resources involved in furnishing the
service or group of services. For 1999,
such number of units shall be
determined based 75 percent on such
product and based 25 percent on the
relative practice expense resources
involved in furnishing the service. For
2000, such number of units shall be
determined based 50 percent on such
product and based 50 percent on such
relative practice expense resources.
For 2001, such number of units shall be
determined based 25 percent on such
product and based 75 percent on such
relative practice expense resources.
For a subsequent year, such number of
units shall be determined based
entirely on such relative practice
expense resources.
(iii) Malpractice relative value
units.--The Secretary shall determine a
number of malpractice relative value
units for the service or group of
services for years before 2000 equal to
the product of--
(I) the base allowed charges
(as defined in subparagraph
(D)) for the service or group
of services, and
(II) the malpractice
percentage for the service or
group of services (as
determined under paragraph
(3)(C)(iii)),
and for years beginning with 2000 based
on the malpractice expense resources
involved in furnishing the service or
group of services.
(D) Base allowed charges defined.--In this
paragraph, the term ``base allowed charges''
means, with respect to a physician's service,
the national average allowed charges for the
service under this part for services furnished
during 1991, as estimated by the Secretary
using the most recent data available.
(E) Reduction in practice expense relative
value units for certain services.--
(i) In general.--Subject to clause
(ii), the Secretary shall reduce the
practice expense relative value units
applied to services described in clause
(iii) furnished in--
(I) 1994, by 25 percent of
the number by which the number
of practice expense relative
value units (determined for
1994 without regard to this
subparagraph) exceeds the
number of work relative value
units determined for 1994,
(II) 1995, by an additional
25 percent of such excess, and
(III) 1996, by an additional
25 percent of such excess.
(ii) Floor on reductions.--The
practice expense relative value units
for a physician's service shall not be
reduced under this subparagraph to a
number less than 128 percent of the
number of work relative value units.
(iii) Services covered.--For purposes
of clause (i), the services described
in this clause are physicians' services
that are not described in clause (iv)
and for which--
(I) there are work relative
value units, and
(II) the number of practice
expense relative value units
(determined for 1994) exceeds
128 percent of the number of
work relative value units
(determined for such year).
(iv) Excluded services.--For purposes
of clause (iii), the services described
in this clause are services which the
Secretary determines at least 75
percent of which are provided under
this title in an office setting.
(F) Budget neutrality adjustments.--The
Secretary--
(i) shall reduce the relative values
for all services (other than anesthesia
services) established under this
paragraph (and in the case of
anesthesia services, the conversion
factor established by the Secretary for
such services) by such percentage as
the Secretary determines to be
necessary so that, beginning in 1996,
the amendment made by section 13514(a)
of the Omnibus Budget Reconciliation
Act of 1993 would not result in
expenditures under this section that
exceed the amount of such expenditures
that would have been made if such
amendment had not been made, and
(ii) shall reduce the amounts
determined under subsection
(a)(2)(B)(ii)(I) by such percentage as
the Secretary determines to be required
to assure that, taking into account the
reductions made under clause (i), the
amendment made by section 13514(a) of
the Omnibus Budget Reconciliation Act
of 1993 would not result in
expenditures under this section in 1994
that exceed the amount of such
expenditures that would have been made
if such amendment had not been made.
(G) Adjustments in relative value units for
1998.--
(i) In general.--The Secretary
shall--
(I) subject to clauses (iv)
and (v), reduce the practice
expense relative value units
applied to any services
described in clause (ii)
furnished in 1998 to a number
equal to 110 percent of the
number of work relative value
units, and
(II) increase the practice
expense relative value units
for office visit procedure
codes during 1998 by a uniform
percentage which the Secretary
estimates will result in an
aggregate increase in payments
for such services equal to the
aggregate decrease in payments
by reason of subclause (I).
(ii) Services covered.--For purposes
of clause (i), the services described
in this clause are physicians' services
that are not described in clause (iii)
and for which--
(I) there are work relative
value units, and
(II) the number of practice
expense relative value units
(determined for 1998) exceeds
110 percent of the number of
work relative value units
(determined for such year).
(iii) Excluded services.--For
purposes of clause (ii), the services
described in this clause are services
which the Secretary determines at least
75 percent of which are provided under
this title in an office setting.
(iv) Limitation on aggregate
reallocation.--If the application of
clause (i)(I) would result in an
aggregate amount of reductions under
such clause in excess of $390,000,000,
such clause shall be applied by
substituting for 110 percent such
greater percentage as the Secretary
estimates will result in the aggregate
amount of such reductions equaling
$390,000,000.
(v) No reduction for certain
services.--Practice expense relative
value units for a procedure performed
in an office or in a setting out of an
office shall not be reduced under
clause (i) if the in-office or out-of-
office practice expense relative value,
respectively, for the procedure would
increase under the proposed rule on
resource-based practice expenses issued
by the Secretary on June 18, 1997 (62
Federal Register 33158 et seq.).
(H) Adjustments in practice expense relative
value units for certain drug administration
services beginning in 2004.--
(i) Use of survey data.--In
establishing the physician fee schedule
under subsection (b) with respect to
payments for services furnished on or
after January 1, 2004, the Secretary
shall, in determining practice expense
relative value units under this
subsection, utilize a survey submitted
to the Secretary as of January 1, 2003,
by a physician specialty organization
pursuant to section 212 of the
Medicare, Medicaid, and SCHIP Balanced
Budget Refinement Act of 1999 if the
survey--
(I) covers practice expenses
for oncology drug
administration services; and
(II) meets criteria
established by the Secretary
for acceptance of such surveys.
(ii) Pricing of clinical oncology
nurses in practice expense
methodology.--If the survey described
in clause (i) includes data on wages,
salaries, and compensation of clinical
oncology nurses, the Secretary shall
utilize such data in the methodology
for determining practice expense
relative value units under subsection
(c).
(iii) Work relative value units for
certain drug administration services.--
In establishing the relative value
units under this paragraph for drug
administration services described in
clause (iv) furnished on or after
January 1, 2004, the Secretary shall
establish work relative value units
equal to the work relative value units
for a level 1 office medical visit for
an established patient.
(iv) Drug administration services
described.--The drug administration
services described in this clause are
physicians' services--
(I) which are classified as
of October 1, 2003, within any
of the following groups of
procedures: therapeutic or
diagnostic infusions (excluding
chemotherapy); chemotherapy
administration services; and
therapeutic, prophylactic, or
diagnostic injections;
(II) for which there are no
work relative value units
assigned under this subsection
as of such date; and
(III) for which national
relative value units have been
assigned under this subsection
as of such date.
(I) Adjustments in practice expense relative
value units for certain drug administration
services beginning with 2005.--
(i) In general.--In establishing the
physician fee schedule under subsection
(b) with respect to payments for
services furnished on or after January
1, 2005 or 2006, the Secretary shall
adjust the practice expense relative
value units for such year consistent
with clause (ii).
(ii) Use of supplemental survey
data.--
(I) In general.--Subject to
subclause (II), if a specialty
submits to the Secretary by not
later than March 1, 2004, for
2005, or March 1, 2005, for
2006, data that includes
expenses for the administration
of drugs and biologicals for
which the payment amount is
determined pursuant to section
1842(o), the Secretary shall
use such supplemental survey
data in carrying out this
subparagraph for the years
involved insofar as they are
collected and provided by
entities and organizations
consistent with the criteria
established by the Secretary
pursuant to section 212(a) of
the Medicare, Medicaid, and
SCHIP Balanced Budget
Refinement Act of 1999.
(II) Limitation on
specialty.--Subclause (I) shall
apply to a specialty only
insofar as not less than 40
percent of payments for the
specialty under this title in
2002 are attributable to the
administration of drugs and
biologicals, as determined by
the Secretary.
(III) Application.--This
clause shall not apply with
respect to a survey to which
subparagraph (H)(i) applies.
(J) Provisions for appropriate reporting and
billing for physicians' services associated
with the administration of covered outpatient
drugs and biologicals.--
(i) Evaluation of codes.--The
Secretary shall promptly evaluate
existing drug administration codes for
physicians' services to ensure accurate
reporting and billing for such
services, taking into account levels of
complexity of the administration and
resource consumption.
(ii) Use of existing processes.--In
carrying out clause (i), the Secretary
shall use existing processes for the
consideration of coding changes and, to
the extent coding changes are made,
shall use such processes in
establishing relative values for such
services.
(iii) Implementation.--In carrying
out clause (i), the Secretary shall
consult with representatives of
physician specialties affected by the
implementation of section 1847A or
section 1847B, and shall take such
steps within the Secretary's authority
to expedite such considerations under
clause (ii).
(iv) Subsequent, budget neutral
adjustments permitted.--Nothing in
subparagraph (H) or (I) or this
subparagraph shall be construed as
preventing the Secretary from providing
for adjustments in practice expense
relative value units under (and
consistent with) subparagraph (B) for
years after 2004, 2005, or 2006,
respectively.
(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 codes
pursuant to clause (i)(I), the
Secretary shall examine codes (and
families of codes as appropriate) based
on any or all of the following
criteria:
(I) Codes that have
experienced the fastest growth.
(II) Codes that have
experienced substantial changes
in practice expenses.
(III) Codes that describe new
technologies or services within
an appropriate time period
(such as 3 years) after the
relative values are initially
established for such codes.
(IV) Codes which are multiple
codes that are frequently
billed in conjunction with
furnishing a single service.
(V) Codes with low relative
values, particularly those that
are often billed multiple times
for a single treatment.
(VI) Codes that have not been
subject to review since
implementation of the fee
schedule.
(VII) Codes that account for
the majority of spending under
the physician fee schedule.
(VIII) Codes for services
that have experienced a
substantial change in the
hospital length of stay or
procedure time.
(IX) Codes for which there
may be a change in the typical
site of service since the code
was last valued.
(X) Codes for which there is
a significant difference in
payment for the same service
between different sites of
service.
(XI) Codes for which there
may be anomalies in relative
values within a family of
codes.
(XII) Codes for services
where there may be efficiencies
when a service is furnished at
the same time as other
services.
(XIII) Codes with high intra-
service work per unit of time.
(XIV) Codes with high
practice expense relative value
units.
(XV) Codes with high cost
supplies.
(XVI) Codes as determined
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) and
paragraph (7) 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)(I).
(iv) Treatment of certain radiation
therapy services.--Radiation treatment
delivery and related imaging services
identified under subsection (b)(11)
shall not be considered as potentially
misvalued services for purposes of this
subparagraph and subparagraph (O) for
2017, 2018, and 2019.
(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).
(M) Authority to collect and use information
on physicians' services in the determination of
relative values.--
(i) Collection of information.--
Notwithstanding any other provision of
law, the Secretary may collect or
obtain information on the resources
directly or indirectly related to
furnishing services for which payment
is made under the fee schedule
established under subsection (b). Such
information may be collected or
obtained from any eligible professional
or any other source.
(ii) Use of information.--
Notwithstanding any other provision of
law, subject to clause (v), the
Secretary may (as the Secretary
determines appropriate) use information
collected or obtained pursuant to
clause (i) in the determination of
relative values for services under this
section.
(iii) Types of information.--The
types of information described in
clauses (i) and (ii) may, at the
Secretary's discretion, include any or
all of the following:
(I) Time involved in
furnishing services.
(II) Amounts and types of
practice expense inputs
involved with furnishing
services.
(III) Prices (net of any
discounts) for practice expense
inputs, which may include paid
invoice prices or other
documentation or records.
(IV) Overhead and accounting
information for practices of
physicians and other suppliers.
(V) Any other element that
would improve the valuation of
services under this section.
(iv) Information collection
mechanisms.--Information may be
collected or obtained pursuant to this
subparagraph from any or all of the
following:
(I) Surveys of physicians,
other suppliers, providers of
services, manufacturers, and
vendors.
(II) Surgical logs, billing
systems, or other practice or
facility records.
(III) Electronic health
records.
(IV) Any other mechanism
determined appropriate by the
Secretary.
(v) Transparency of use of
information.--
(I) In general.--Subject to
subclauses (II) and (III), if
the Secretary uses information
collected or obtained under
this subparagraph in the
determination of relative
values under this subsection,
the Secretary shall disclose
the information source and
discuss the use of such
information in such
determination of relative
values through notice and
comment rulemaking.
(II) Thresholds for use.--The
Secretary may establish
thresholds in order to use such
information, including the
exclusion of information
collected or obtained from
eligible professionals who use
very high resources (as
determined by the Secretary) in
furnishing a service.
(III) Disclosure of
information.--The Secretary
shall make aggregate
information available under
this subparagraph but shall not
disclose information in a form
or manner that identifies an
eligible professional or a
group practice, or information
collected or obtained pursuant
to a nondisclosure agreement.
(vi) Incentive to participate.--The
Secretary may provide for such payments
under this part to an eligible
professional that submits such
solicited information under this
subparagraph as the Secretary
determines appropriate in order to
compensate such eligible professional
for such submission. Such payments
shall be provided in a form and manner
specified by the Secretary.
(vii) Administration.--Chapter 35 of
title 44, United States Code, shall not
apply to information collected or
obtained under this subparagraph.
(viii) Definition of eligible
professional.--In this subparagraph,
the term ``eligible professional'' has
the meaning given such term in
subsection (k)(3)(B).
(ix) Funding.--For purposes of
carrying out this subparagraph, in
addition to funds otherwise
appropriated, the Secretary shall
provide for the transfer, from the
Federal Supplementary Medical Insurance
Trust Fund under section 1841, of
$2,000,000 to the Centers for Medicare
& Medicaid Services Program Management
Account for each fiscal year beginning
with fiscal year 2014. Amounts
transferred under the preceding
sentence for a fiscal year shall be
available until expended.
(N) Authority for alternative approaches to
establishing practice expense relative
values.--The Secretary may establish or adjust
practice expense relative values under this
subsection using cost, charge, or other data
from suppliers or providers of services,
including information collected or obtained
under subparagraph (M).
(O) Target for relative value adjustments for
misvalued services.--With respect to fee
schedules established for each of 2016 through
2018, the following shall apply:
(i) Determination of net reduction in
expenditures.--For each year, the
Secretary shall determine the estimated
net reduction in expenditures under the
fee schedule under this section with
respect to the year as a result of
adjustments to the relative values
established under this paragraph for
misvalued codes.
(ii) Budget neutral redistribution of
funds if target met and counting
overages towards the target for the
succeeding year.--If the estimated net
reduction in expenditures determined
under clause (i) for the year is equal
to or greater than the target for the
year--
(I) reduced expenditures
attributable to such
adjustments shall be
redistributed for the year in a
budget neutral manner in
accordance with subparagraph
(B)(ii)(II); and
(II) the amount by which such
reduced expenditures exceeds
the target for the year shall
be treated as a reduction in
expenditures described in
clause (i) for the succeeding
year, for purposes of
determining whether the target
has or has not been met under
this subparagraph with respect
to that year.
(iii) Exemption from budget
neutrality if target not met.--If the
estimated net reduction in expenditures
determined under clause (i) for the
year is less than the target for the
year, reduced expenditures in an amount
equal to the target recapture amount
shall not be taken into account in
applying subparagraph (B)(ii)(II) with
respect to fee schedules beginning with
2016.
(iv) Target recapture amount.--For
purposes of clause (iii), the target
recapture amount is, with respect to a
year, an amount equal to the difference
between--
(I) the target for the year;
and
(II) the estimated net
reduction in expenditures
determined under clause (i) for
the year.
(v) Target.--For purposes of this
subparagraph, with respect to a year,
the target is calculated as 0.5 percent
(or, for 2016, 1.0 percent) of the
estimated amount of expenditures under
the fee schedule under this section for
the year.
(3) Component percentages.--For purposes of paragraph
(2), the Secretary shall determine a work percentage, a
practice expense percentage, and a malpractice
percentage for each physician's service as follows:
(A) Division of services by specialty.--For
each physician's service or class of
physicians' services, the Secretary shall
determine the average percentage of each such
service or class of services that is performed,
nationwide, under this part by physicians in
each of the different physician specialties (as
identified by the Secretary).
(B) Division of specialty by component.--The
Secretary shall determine the average
percentage division of resources, among the
work component, the practice expense component,
and the malpractice component, used by
physicians in each of such specialties in
furnishing physicians' services. Such
percentages shall be based on national data
that describe the elements of physician
practice costs and revenues, by physician
specialty. The Secretary may use extrapolation
and other techniques to determine practice
costs and revenues for specialties for which
adequate data are not available.
(C) Determination of component percentages.--
(i) Work percentage.--The work
percentage for a service (or class of
services) is equal to the sum (for all
physician specialties) of--
(I) the average percentage
division for the work component
for each physician specialty
(determined under subparagraph
(B)), multiplied by
(II) the proportion
(determined under subparagraph
(A)) of such service (or
services) performed by
physicians in that specialty.
(ii) Practice expense percentage.--
For years before 2002, the practice
expense percentage for a service (or
class of services) is equal to the sum
(for all physician specialties) of--
(I) the average percentage
division for the practice
expense component for each
physician specialty (determined
under subparagraph (B)),
multiplied by
(II) the proportion
(determined under subparagraph
(A)) of such service (or
services) performed by
physicians in that specialty.
(iii) Malpractice percentage.--For
years before 1999, the malpractice
percentage for a service (or class of
services) is equal to the sum (for all
physician specialties) of--
(I) the average percentage
division for the malpractice
component for each physician
specialty (determined under
subparagraph (B)), multiplied
by
(II) the proportion
(determined under subparagraph
(A)) of such service (or
services) performed by
physicians in that specialty.
(D) Periodic recomputation.--The Secretary
may, from time to time, provide for the
recomputation of work percentages, practice
expense percentages, and malpractice
percentages determined under this paragraph.
(4) Ancillary policies.--The Secretary may establish
ancillary policies (with respect to the use of
modifiers, local codes, and other matters) as may be
necessary to implement this section.
(5) Coding.--The Secretary shall establish a uniform
procedure coding system for the coding of all
physicians' services. The Secretary shall provide for
an appropriate coding structure for visits and
consultations. The Secretary may incorporate the use of
time in the coding for visits and consultations. The
Secretary, in establishing such coding system, shall
consult with the Physician Payment Review Commission
and other organizations representing physicians.
(6) No variation for specialists.--The Secretary may
not vary the conversion factor or the number of
relative value units for a physicians' service based on
whether the physician furnishing the service is a
specialist or based on the type of specialty of the
physician.
(7) Phase-in of significant relative value unit (rvu)
reductions.--Effective for fee schedules established
beginning with 2016, for services that are not new or
revised codes, if the total relative value units for a
service for a year would otherwise be decreased by an
estimated amount equal to or greater than 20 percent as
compared to the total relative value units for the
previous year, the applicable adjustments in work,
practice expense, and malpractice relative value units
shall be phased-in over a 2-year period.
(8) Global surgical packages.--
(A) Prohibition of implementation of rule
regarding global surgical packages.--
(i) In general.--The Secretary shall
not implement the policy established in
the final rule published on November
13, 2014 (79 Fed. Reg. 67548 et seq.),
that requires the transition of all 10-
day and 90-day global surgery packages
to 0-day global periods.
(ii) Construction.--Nothing in clause
(i) shall be construed to prevent the
Secretary from revaluing misvalued
codes for specific surgical services or
assigning values to new or revised
codes for surgical services.
(B) Collection of data on services included
in global surgical packages.--
(i) In general.--Subject to clause
(ii), the Secretary shall through
rulemaking develop and implement a
process to gather, from a
representative sample of physicians,
beginning not later than January 1,
2017, information needed to value
surgical services. Such information
shall include the number and level of
medical visits furnished during the
global period and other items and
services related to the surgery and
furnished during the global period, as
appropriate. Such information shall be
reported on claims at the end of the
global period or in another manner
specified by the Secretary. For
purposes of carrying out this paragraph
(other than clause (iii)), the
Secretary shall transfer from the
Federal Supplemental Medical Insurance
Trust Fund under section 1841
$2,000,000 to the Center for Medicare &
Medicaid Services Program Management
Account for fiscal year 2015. Amounts
transferred under the previous sentence
shall remain available until expended.
(ii) Reassessment and potential
sunset.--Every 4 years, the Secretary
shall reassess the value of the
information collected pursuant to
clause (i). Based on such a
reassessment and by regulation, the
Secretary may discontinue the
requirement for collection of
information under such clause if the
Secretary determines that the Secretary
has adequate information from other
sources, such as qualified clinical
data registries, surgical logs, billing
systems or other practice or facility
records, and electronic health records,
in order to accurately value global
surgical services under this section.
(iii) Inspector general audit.--The
Inspector General of the Department of
Health and Human Services shall audit a
sample of the information reported
under clause (i) to verify the accuracy
of the information so reported.
(C) Improving accuracy of pricing for
surgical services.--For years beginning with
2019, the Secretary shall use the information
reported under subparagraph (B)(i) as
appropriate and other available data for the
purpose of improving the accuracy of valuation
of surgical services under the physician fee
schedule under this section.
(d) Conversion Factors.--
(1) Establishment.--
(A) In general.--The conversion factor for
each year shall be the conversion factor
established under this subsection for the
previous year (or, in the case of 1992,
specified in subparagraph (B)) adjusted by the
update (established under paragraph (3)) for
the year involved (for years before 2001) and,
for years beginning with 2001 and ending with
2025, multiplied by the update (established
under paragraph (4) or a subsequent paragraph)
for the year involved. There shall be two
separate conversion factors for each year
beginning with 2026, one for items and services
furnished by a qualifying APM participant (as
defined in section 1833(z)(2)) (referred to in
this subsection as the ``qualifying APM
conversion factor'') and the other for other
items and services (referred to in this
subsection as the ``nonqualifying APM
conversion factor''), equal to the respective
conversion factor for the previous year (or, in
the case of 2026, equal to the single
conversion factor for 2025) multiplied by the
update established under paragraph (20) for
such respective conversion factor for such
year.
(B) Special provision for 1992.--For purposes
of subparagraph (A), the conversion factor
specified in this subparagraph is a conversion
factor (determined by the Secretary) which, if
this section were to apply during 1991 using
such conversion factor, would result in the
same aggregate amount of payments under this
part for physicians' services as the estimated
aggregate amount of the payments under this
part for such services in 1991.
(C) Special rules for 1998.--Except as
provided in subparagraph (D), the single
conversion factor for 1998 under this
subsection shall be the conversion factor for
primary care services for 1997, increased by
the Secretary's estimate of the weighted
average of the three separate updates that
would otherwise occur were it not for the
enactment of chapter 1 of subtitle F of title
IV of the Balanced Budget Act of 1997.
(D) Special rules for anesthesia services.--
The separate conversion factor for anesthesia
services for a year shall be equal to 46
percent of the single conversion factor (or,
beginning with 2026, applicable conversion
factor) established for other physicians'
services, except as adjusted for changes in
work, practice expense, or malpractice relative
value units.
(E) Publication and dissemination of
information.--The Secretary shall--
(i) cause to have published in the
Federal Register not later than
November 1 of each year (beginning with
2000) the conversion factor which will
apply to physicians' services for the
succeeding year, the update determined
under paragraph (4) for such succeeding
year, and the allowed expenditures
under such paragraph for such
succeeding year; and
(ii) make available to the Medicare
Payment Advisory Commission and the
public by March 1 of each year
(beginning with 2000) an estimate of
the sustainable growth rate and of the
conversion factor which will apply to
physicians' services for the succeeding
year and data used in making such
estimate.
(3) Update for 1999 and 2000.--
(A) In general.--Unless otherwise provided by
law, subject to subparagraph (D) and the
budget-neutrality factor determined by the
Secretary under subsection (c)(2)(B)(ii), the
update to the single conversion factor
established in paragraph (1)(C) for 1999 and
2000 is equal to the product of--
(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for
the year (divided by 100), and
(ii) 1 plus the Secretary's estimate
of the update adjustment factor for the
year (divided by 100),
minus 1 and multiplied by 100.
(B) Update adjustment factor.--For purposes
of subparagraph (A)(ii), the ``update
adjustment factor'' for a year is equal (as
estimated by the Secretary) to--
(i) the difference between (I) the
sum of the allowed expenditures for
physicians' services (as determined
under subparagraph (C)) for the period
beginning April 1, 1997, and ending on
March 31 of the year involved, and (II)
the amount of actual expenditures for
physicians' services furnished during
the period beginning April 1, 1997, and
ending on March 31 of the preceding
year; divided by
(ii) the actual expenditures for
physicians' services for the 12-month
period ending on March 31 of the
preceding year, increased by the
sustainable growth rate under
subsection (f) for the fiscal year
which begins during such 12-month
period.
(C) Determination of allowed expenditures.--
For purposes of this paragraph and paragraph
(4), the allowed expenditures for physicians'
services for the 12-month period ending with
March 31 of--
(i) 1997 is equal to the actual
expenditures for physicians' services
furnished during such 12-month period,
as estimated by the Secretary; or
(ii) a subsequent year is equal to
the allowed expenditures for
physicians' services for the previous
year, increased by the sustainable
growth rate under subsection (f) for
the fiscal year which begins during
such 12-month period.
(D) Restriction on variation from medicare
economic index.--Notwithstanding the amount of
the update adjustment factor determined under
subparagraph (B) for a year, the update in the
conversion factor under this paragraph for the
year may not be--
(i) greater than 100 times the
following amount: (1.03 + (MEI
percentage/100)) -1; or
(ii) less than 100 times the
following amount: (0.93 + (MEI
percentage/100)) -1,
where ``MEI percentage'' means the Secretary's
estimate of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for the year
involved.
(4) Update for years beginning with 2001 and ending
with 2014.--
(A) In general.--Unless otherwise provided by
law, subject to the budget-neutrality factor
determined by the Secretary under subsection
(c)(2)(B)(ii) and subject to adjustment under
subparagraph (F), the update to the single
conversion factor established in paragraph
(1)(C) for a year beginning with 2001 and
ending with 2014 is equal to the product of--
(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for
the year (divided by 100); and
(ii) 1 plus the Secretary's estimate
of the update adjustment factor under
subparagraph (B) for the year.
(B) Update adjustment factor.--For purposes
of subparagraph (A)(ii), subject to
subparagraph (D) and the succeeding paragraphs
of this subsection, the ``update adjustment
factor'' for a year is equal (as estimated by
the Secretary) to the sum of the following:
(i) Prior year adjustment
component.--An amount determined by--
(I) computing the difference
(which may be positive or
negative) between the amount of
the allowed expenditures for
physicians' services for the
prior year (as determined under
subparagraph (C)) and the
amount of the actual
expenditures for such services
for that year;
(II) dividing that difference
by the amount of the actual
expenditures for such services
for that year; and
(III) multiplying that
quotient by 0.75.
(ii) Cumulative adjustment
component.--An amount determined by--
(I) computing the difference
(which may be positive or
negative) between the amount of
the allowed expenditures for
physicians' services (as
determined under subparagraph
(C)) from April 1, 1996,
through the end of the prior
year and the amount of the
actual expenditures for such
services during that period;
(II) dividing that difference
by actual expenditures for such
services for the prior year as
increased by the sustainable
growth rate under subsection
(f) for the year for which the
update adjustment factor is to
be determined; and
(III) multiplying that
quotient by 0.33.
(C) Determination of allowed expenditures.--
For purposes of this paragraph:
(i) Period up to april 1, 1999.--The
allowed expenditures for physicians'
services for a period before April 1,
1999, shall be the amount of the
allowed expenditures for such period as
determined under paragraph (3)(C).
(ii) Transition to calendar year
allowed expenditures.--Subject to
subparagraph (E), the allowed
expenditures for--
(I) the 9-month period
beginning April 1, 1999, shall
be the Secretary's estimate of
the amount of the allowed
expenditures that would be
permitted under paragraph
(3)(C) for such period; and
(II) the year of 1999, shall
be the Secretary's estimate of
the amount of the allowed
expenditures that would be
permitted under paragraph
(3)(C) for such year.
(iii) Years beginning with 2000.--The
allowed expenditures for a year
(beginning with 2000) is equal to the
allowed expenditures for physicians'
services for the previous year,
increased by the sustainable growth
rate under subsection (f) for the year
involved.
(D) Restriction on update adjustment
factor.--The update adjustment factor
determined under subparagraph (B) for a year
may not be less than -0.07 or greater than
0.03.
(E) Recalculation of allowed expenditures for
updates beginning with 2001.--For purposes of
determining the update adjustment factor for a
year beginning with 2001, the Secretary shall
recompute the allowed expenditures for previous
periods beginning on or after April 1, 1999,
consistent with subsection (f)(3).
(F) Transitional adjustment designed to
provide for budget neutrality.--Under this
subparagraph the Secretary shall provide for an
adjustment to the update under subparagraph
(A)--
(i) for each of 2001, 2002, 2003, and
2004, of -0.2 percent; and
(ii) for 2005 of +0.8 percent.
(5) Update for 2004 and 2005.--The update to the
single conversion factor established in paragraph
(1)(C) for each of 2004 and 2005 shall be not less than
1.5 percent.
(6) Update for 2006.--The update to the single
conversion factor established in paragraph (1)(C) for
2006 shall be 0 percent.
(7) Conversion factor for 2007.--
(A) In general.--The conversion factor that
would otherwise be applicable under this
subsection for 2007 shall be the amount of such
conversion factor divided by the product of--
(i) 1 plus the Secretary's estimate
of the percentage increase in the MEI
(as defined in section 1842(i)(3)) for
2007 (divided by 100); and
(ii) 1 plus the Secretary's estimate
of the update adjustment factor under
paragraph (4)(B) for 2007.
(B) No effect on computation of conversion
factor for 2008.--The conversion factor under
this subsection shall be computed under
paragraph (1)(A) for 2008 as if subparagraph
(A) had never applied.
(8) Update for 2008.--
(A) In general.--Subject to paragraph (7)(B),
in lieu of the update to the single conversion
factor established in paragraph (1)(C) that
would otherwise apply for 2008, the update to
the single conversion factor shall be 0.5
percent.
(B) No effect on computation of conversion
factor for 2009.--The conversion factor under
this subsection shall be computed under
paragraph (1)(A) for 2009 and subsequent years
as if subparagraph (A) had never applied.
(9) Update for 2009.--
(A) In general.--Subject to paragraphs (7)(B)
and (8)(B), in lieu of the update to the single
conversion factor established in paragraph
(1)(C) that would otherwise apply for 2009, the
update to the single conversion factor shall be
1.1 percent.
(B) No effect on computation of conversion
factor for 2010 and subsequent years.--The
conversion factor under this subsection shall
be computed under paragraph (1)(A) for 2010 and
subsequent years as if subparagraph (A) had
never applied.
(10) Update for January through may of 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 for the period
beginning on January 1, 2010, and ending on May
31, 2010, the update to the single conversion
factor shall be 0 percent for 2010.
(B) No effect on computation of conversion
factor for remaining portion of 2010 and
subsequent years.--The conversion factor under
this subsection shall be computed under
paragraph (1)(A) for the period beginning on
June 1, 2010, and ending on December 31, 2010,
and for 2011 and subsequent years as if
subparagraph (A) had never applied.
(11) Update for june through december of 2010.--
(A) In general.--Subject to paragraphs
(7)(B), (8)(B), (9)(B), and (10)(B), in lieu of
the update to the single conversion factor
established in paragraph (1)(C) that would
otherwise apply for 2010 for the period
beginning on June 1, 2010, and ending on
December 31, 2010, the update to the single
conversion factor shall be 2.2 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.
(12) Update for 2011.--
(A) In general.--Subject to paragraphs
(7)(B), (8)(B), (9)(B), (10)(B), and (11)(B),
in lieu of the update to the single conversion
factor established in paragraph (1)(C) that
would otherwise apply for 2011, the update to
the single conversion factor shall be 0
percent.
(B) No effect on computation of conversion
factor for 2012 and subsequent years.--The
conversion factor under this subsection shall
be computed under paragraph (1)(A) for 2012 and
subsequent years as if subparagraph (A) had
never applied.
(13) Update for 2012.--
(A) In general.--Subject to paragraphs
(7)(B), (8)(B), (9)(B), (10)(B), (11)(B), and
(12)(B), in lieu of the update to the single
conversion factor established in paragraph
(1)(C) that would otherwise apply for 2012, the
update to the single conversion factor shall be
zero percent.
(B) No effect on computation of conversion
factor for 2013 and subsequent years.--The
conversion factor under this subsection shall
be computed under paragraph (1)(A) for 2013 and
subsequent years as if subparagraph (A) had
never applied.
(14) Update for 2013.--
(A) In general.--Subject to paragraphs
(7)(B), (8)(B), (9)(B), (10)(B), (11)(B),
(12)(B), and (13)(B), in lieu of the update to
the single conversion factor established in
paragraph (1)(C) that would otherwise apply for
2013, the update to the single conversion
factor for such year shall be zero percent.
(B) No effect on computation of conversion
factor for 2014 and subsequent years.--The
conversion factor under this subsection shall
be computed under paragraph (1)(A) for 2014 and
subsequent years as if subparagraph (A) had
never applied.
(15) Update for 2014.--
(A) In general.--Subject to paragraphs
(7)(B), (8)(B), (9)(B), (10)(B), (11)(B),
(12)(B), (13)(B), and (14)(B), in lieu of the
update to the single conversion factor
established in paragraph (1)(C) that would
otherwise apply for 2014, the update to the
single conversion factor shall be 0.5 percent.
(B) No effect on computation of conversion
factor for subsequent years.--The conversion
factor under this subsection shall be computed
under paragraph (1)(A) for 2015 and subsequent
years as if subparagraph (A) had never applied.
(16) Update for january through june of 2015.--
Subject to paragraphs (7)(B), (8)(B), (9)(B), (10)(B),
(11)(B), (12)(B), (13)(B), (14)(B), and (15)(B), in
lieu of the update to the single conversion factor
established in paragraph (1)(C) that would otherwise
apply for 2015 for the period beginning on January 1,
2015, and ending on June 30, 2015, the update to the
single conversion factor shall be 0.0 percent.
(17) Update for july through december of 2015.--The
update to the single conversion factor established in
paragraph (1)(C) for the period beginning on July 1,
2015, and ending on December 31, 2015, shall be 0.5
percent.
(18) Update for 2016 through 2019.--The update to the
single conversion factor established in paragraph
(1)(C)--
(A) for 2016 and each subsequent year through
2018 shall be 0.5 percent; and
(B) for 2019 shall be 0.25 percent.
(19) Update for 2020 through 2025.--The update to the
single conversion factor established in paragraph
(1)(C) for 2020 and each subsequent year through 2025
shall be 0.0 percent.
(20) Update for 2026 and subsequent years.--For 2026
and each subsequent year, the update to the qualifying
APM conversion factor established under paragraph
(1)(A) is 0.75 percent, and the update to the
nonqualifying APM conversion factor established under
such paragraph is 0.25 percent.
(e) Geographic Adjustment Factors.--
(1) Establishment of geographic indices.--
(A) In general.--Subject to subparagraphs
(B), (C), (E), (G), (H), and (I), the Secretary
shall establish--
(i) an index which reflects the
relative costs of the mix of goods and
services comprising practice expenses
(other than malpractice expenses) in
the different fee schedule areas
compared to the national average of
such costs,
(ii) an index which reflects the
relative costs of malpractice expenses
in the different fee schedule areas
compared to the national average of
such costs, and
(iii) an index which reflects \1/4\
of the difference between the relative
value of physicians' work effort in
each of the different fee schedule
areas and the national average of such
work effort.
(B) Class-specific geographic cost-of-
practice indices.--The Secretary may establish
more than one index under subparagraph (A)(i)
in the case of classes of physicians' services,
if, because of differences in the mix of goods
and services comprising practice expenses for
the different classes of services, the
application of a single index under such clause
to different classes of such services would be
substantially inequitable.
(C) Periodic review and adjustments in
geographic adjustment factors.--The Secretary,
not less often than every 3 years, shall, in
consultation with appropriate representatives
of physicians, review the indices established
under subparagraph (A) and the geographic index
values applied under this subsection for all
fee schedule areas. Based on such review, the
Secretary may revise such index and adjust such
index values, except that, if more than 1 year
has elapsed since the date of the last previous
adjustment, the adjustment to be applied in the
first year of the next adjustment shall be \1/
2\ of the adjustment that otherwise would be
made.
(D) Use of recent data.--In establishing
indices and index values under this paragraph,
the Secretary shall use the most recent data
available relating to practice expenses,
malpractice expenses, and physician work effort
in different fee schedule areas.
(E) Floor at 1.0 on work geographic index.--
After calculating the work geographic index in
subparagraph (A)(iii), for purposes of payment
for services furnished on or after January 1,
2004, and before January 1, [2020] 2023, the
Secretary shall increase the work geographic
index to 1.00 for any locality for which such
work geographic index is less than 1.00.
(G) Floor for practice expense, malpractice,
and work geographic indices for services
furnished in alaska.--For purposes of payment
for services furnished in Alaska on or after
January 1, 2004, and before January 1, 2006,
after calculating the practice expense,
malpractice, and work geographic indices in
clauses (i), (ii), and (iii) of subparagraph
(A) and in subparagraph (B), the Secretary
shall increase any such index to 1.67 if such
index would otherwise be less than 1.67. For
purposes of payment for services furnished in
the State described in the preceding sentence
on or after January 1, 2009, after calculating
the work geographic index in subparagraph
(A)(iii), the Secretary shall increase the work
geographic index to 1.5 if such index would
otherwise be less than 1.5
(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 \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.
(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) 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.
(I) Floor for practice expense index for
services furnished in frontier states.--
(i) In general.--Subject to clause
(ii), for purposes of payment for
services furnished in a frontier State
(as defined in section
1886(d)(3)(E)(iii)(II)) on or after
January 1, 2011, after calculating the
practice expense index in subparagraph
(A)(i), the Secretary shall increase
any such index to 1.00 if such index
would otherwise be less that 1.00. The
preceding sentence shall not be applied
in a budget neutral manner.
(ii) Limitation.--This subparagraph
shall not apply to services furnished
in a State that receives a non-labor
related share adjustment under section
1886(d)(5)(H).
(2) Computation of geographic adjustment factor.--For
purposes of subsection (b)(1)(C), for all physicians'
services for each fee schedule area the Secretary shall
establish a geographic adjustment factor equal to the
sum of the geographic cost-of-practice adjustment
factor (specified in paragraph (3)), the geographic
malpractice adjustment factor (specified in paragraph
(4)), and the geographic physician work adjustment
factor (specified in paragraph (5)) for the service and
the area.
(3) Geographic cost-of-practice adjustment factor.--
For purposes of paragraph (2), the ``geographic cost-
of-practice adjustment factor'', for a service for a
fee schedule area, is the product of--
(A) the proportion of the total relative
value for the service that reflects the
relative value units for the practice expense
component, and
(B) the geographic cost-of-practice index
value for the area for the service, based on
the index established under paragraph (1)(A)(i)
or (1)(B) (as the case may be).
(4) Geographic malpractice adjustment factor.--For
purposes of paragraph (2), the ``geographic malpractice
adjustment factor'', for a service for a fee schedule
area, is the product of--
(A) the proportion of the total relative
value for the service that reflects the
relative value units for the malpractice
component, and
(B) the geographic malpractice index value
for the area, based on the index established
under paragraph (1)(A)(ii).
(5) Geographic physician work adjustment factor.--For
purposes of paragraph (2), the ``geographic physician
work adjustment factor'', for a service for a fee
schedule area, is the product of--
(A) the proportion of the total relative
value for the service that reflects the
relative value units for the work component,
and
(B) the geographic physician work index value
for the area, based on the index established
under paragraph (1)(A)(iii).
(6) Use of msas as fee schedule areas in
california.--
(A) In general.--Subject to the succeeding
provisions of this paragraph and
notwithstanding the previous provisions of this
subsection, for services furnished on or after
January 1, 2017, the fee schedule areas used
for payment under this section applicable to
California shall be the following:
(i) Each Metropolitan Statistical
Area (each in this paragraph referred
to as an ``MSA''), as defined by the
Director of the Office of Management
and Budget as of December 31 of the
previous year, shall be a fee schedule
area.
(ii) All areas not included in an MSA
shall be treated as a single rest-of-
State fee schedule area.
(B) Transition for msas previously in rest-
of-state payment locality or in locality 3.--
(i) In general.--For services
furnished in California during a year
beginning with 2017 and ending with
2021 in an MSA in a transition area (as
defined in subparagraph (D)), subject
to subparagraph (C), the geographic
index values to be applied under this
subsection for such year shall be equal
to the sum of the following:
(I) Current law component.--
The old weighting factor
(described in clause (ii)) for
such year multiplied by the
geographic index values under
this subsection for the fee
schedule area that included
such MSA that would have
applied in such area (as
estimated by the Secretary) if
this paragraph did not apply.
(II) MSA-based component.--
The MSA-based weighting factor
(described in clause (iii)) for
such year multiplied by the
geographic index values
computed for the fee schedule
area under subparagraph (A) for
the year (determined without
regard to this subparagraph).
(ii) Old weighting factor.--The old
weighting factor described in this
clause--
(I) for 2017, is \5/6\; and
(II) for each succeeding
year, is the old weighting
factor described in this clause
for the previous year minus \1/
6\.
(iii) MSA-based weighting factor.--
The MSA-based weighting factor
described in this clause for a year is
1 minus the old weighting factor under
clause (ii) for that year.
(C) Hold harmless.--For services furnished in
a transition area in California during a year
beginning with 2017, the geographic index
values to be applied under this subsection for
such year shall not be less than the
corresponding geographic index values that
would have applied in such transition area (as
estimated by the Secretary) if this paragraph
did not apply.
(D) Transition area defined.--In this
paragraph, the term ``transition area'' means
each of the following fee schedule areas for
2013:
(i) The rest-of-State payment
locality.
(ii) Payment locality 3.
(E) References to fee schedule areas.--
Effective for services furnished on or after
January 1, 2017, for California, any reference
in this section to a fee schedule area shall be
deemed a reference to a fee schedule area
established in accordance with this paragraph.
(f) Sustainable Growth Rate.--
(1) Publication.--The Secretary shall cause to have
published in the Federal Register not later than--
(A) November 1, 2000, the sustainable growth
rate for 2000 and 2001; and
(B) November 1 of each succeeding year
through 2014 the sustainable growth rate for
such succeeding year and each of the preceding
2 years.
(2) Specification of growth rate.--The sustainable
growth rate for all physicians' services for a fiscal
year (beginning with fiscal year 1998 and ending with
fiscal year 2000) and a year beginning with 2000 and
ending with 2014 shall be equal to the product of--
(A) 1 plus the Secretary's estimate of the
weighted average percentage increase (divided
by 100) in the fees for all physicians'
services in the applicable period involved,
(B) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in the
average number of individuals enrolled under
this part (other than Medicare+Choice plan
enrollees) from the previous applicable period
to the applicable period involved,
(C) 1 plus the Secretary's estimate of the
annual average percentage growth in real gross
domestic product per capita (divided by 100)
during the 10-year period ending with the
applicable period involved, and
(D) 1 plus the Secretary's estimate of the
percentage change (divided by 100) in
expenditures for all physicians' services in
the applicable period (compared with the
previous applicable period) which will result
from changes in law and regulations, determined
without taking into account estimated changes
in expenditures resulting from the update
adjustment factor determined under subsection
(d)(3)(B) or (d)(4)(B), as the case may be,
minus 1 and multiplied by 100.
(3) Data to be used.--For purposes of determining the
update adjustment factor under subsection (d)(4)(B) for
a year beginning with 2001, the sustainable growth
rates taken into consideration in the determination
under paragraph (2) shall be determined as follows:
(A) For 2001.--For purposes of such
calculations for 2001, the sustainable growth
rates for fiscal year 2000 and the years 2000
and 2001 shall be determined on the basis of
the best data available to the Secretary as of
September 1, 2000.
(B) For 2002.--For purposes of such
calculations for 2002, the sustainable growth
rates for fiscal year 2000 and for years 2000,
2001, and 2002 shall be determined on the basis
of the best data available to the Secretary as
of September 1, 2001.
(C) For 2003 and succeeding years.--For
purposes of such calculations for a year after
2002--
(i) the sustainable growth rates for
that year and the preceding 2 years
shall be determined on the basis of the
best data available to the Secretary as
of September 1 of the year preceding
the year for which the calculation is
made; and
(ii) the sustainable growth rate for
any year before a year described in
clause (i) shall be the rate as most
recently determined for that year under
this subsection.
Nothing in this paragraph shall be construed as
affecting the sustainable growth rates established for
fiscal year 1998 or fiscal year 1999.
(4) Definitions.--In this subsection:
(A) Services included in physicians'
services.--The term ``physicians' services''
includes other items and services (such as
clinical diagnostic laboratory tests and
radiology services), specified by the
Secretary, that are commonly performed or
furnished by a physician or in a physician's
office, but does not include services furnished
to a Medicare+Choice plan enrollee.
(B) Medicare+choice plan enrollee.--The term
``Medicare+Choice plan enrollee'' means, with
respect to a fiscal year, an individual
enrolled under this part who has elected to
receive benefits under this title for the
fiscal year through a Medicare+Choice plan
offered under part C, and also includes an
individual who is receiving benefits under this
part through enrollment with an eligible
organization with a risk-sharing contract under
section 1876.
(C) Applicable period.--The term ``applicable
period'' means--
(i) a fiscal year, in the case of
fiscal year 1998, fiscal year 1999, and
fiscal year 2000; or
(ii) a calendar year with respect to
a year beginning with 2000;
as the case may be.
(g) Limitation on Beneficiary Liability.--
(1) Limitation on actual charges.--
(A) In general.--In the case of a
nonparticipating physician or nonparticipating
supplier or other person (as defined in section
1842(i)(2)) who does not accept payment on an
assignment-related basis for a physician's
service furnished with respect to an individual
enrolled under this part, the following rules
apply:
(i) Application of limiting charge.--
No person may bill or collect an actual
charge for the service in excess of the
limiting charge described in paragraph
(2) for such service.
(ii) No liability for excess
charges.--No person is liable for
payment of any amounts billed for the
service in excess of such limiting
charge.
(iii) Correction of excess charges.--
If such a physician, supplier, or other
person bills, but does not collect, an
actual charge for a service in
violation of clause (i), the physician,
supplier, or other person shall reduce
on a timely basis the actual charge
billed for the service to an amount not
to exceed the limiting charge for the
service.
(iv) Refund of excess collections.--
If such a physician, supplier, or other
person collects an actual charge for a
service in violation of clause (i), the
physician, supplier, or other person
shall provide on a timely basis a
refund to the individual charged in the
amount by which the amount collected
exceeded the limiting charge for the
service. The amount of such a refund
shall be reduced to the extent the
individual has an outstanding balance
owed by the individual to the
physician.
(B) Sanctions.--If a physician, supplier, or
other person--
(i) knowingly and willfully bills or
collects for services in violation of
subparagraph (A)(i) on a repeated
basis, or
(ii) fails to comply with clause
(iii) or (iv) of subparagraph (A) on a
timely basis,
the Secretary may apply sanctions against the
physician, supplier, or other person in
accordance with paragraph (2) of section
1842(j). In applying this subparagraph,
paragraph (4) of such section applies in the
same manner as such paragraph applies to such
section and any reference in such section to a
physician is deemed also to include a reference
to a supplier or other person under this
subparagraph.
(C) Timely basis.--For purposes of this
paragraph, a correction of a bill for an excess
charge or refund of an amount with respect to a
violation of subparagraph (A)(i) in the case of
a service is considered to be provided ``on a
timely basis'', if the reduction or refund is
made not later than 30 days after the date the
physician, supplier, or other person is
notified by the carrier under this part of such
violation and of the requirements of
subparagraph (A).
(2) Limiting charge defined.--
(A) For 1991.--For physicians' services of a
physician furnished during 1991, other than
radiologist services subject to section
1834(b), the ``limiting charge'' shall be the
same percentage (or, if less, 25 percent) above
the recognized payment amount under this part
with respect to the physician (as a
nonparticipating physician) as the percentage
by which--
(i) the maximum allowable actual
charge (as determined under section
1842(j)(1)(C) as of December 31, 1990,
or, if less, the maximum actual charge
otherwise permitted for the service
under this part as of such date) for
the service of the physician, exceeds
(ii) the recognized payment amount
for the service of the physician (as a
nonparticipating physician) as of such
date.
In the case of evaluation and management services (as specified
in section 1842(b)(16)(B)(ii)), the preceding sentence shall be
applied by substituting ``40 percent'' for ``25 percent''.
(B) For 1992.--For physicians' services
furnished during 1992, other than radiologist
services subject to section 1834(b), the
``limiting charge'' shall be the same
percentage (or, if less, 20 percent) above the
recognized payment amount under this part for
nonparticipating physicians as the percentage
by which--
(i) the limiting charge (as
determined under subparagraph (A) as of
December 31, 1991) for the service,
exceeds
(ii) the recognized payment amount
for the service for nonparticipating
physicians as of such date.
(C) After 1992.--For physicians' services
furnished in a year after 1992, the ``limiting
charge'' shall be 115 percent of the recognized
payment amount under this part for
nonparticipating physicians or for
nonparticipating suppliers or other persons.
(D) Recognized payment amount.--In this
section, the term ``recognized payment amount''
means, for services furnished on or after
January 1, 1992, the fee schedule amount
determined under subsection (a) (or, if payment
under this part is made on a basis other than
the fee schedule under this section, 95 percent
of the other payment basis), and, for services
furnished during 1991, the applicable
percentage (as defined in section
1842(b)(4)(A)(iv)) of the prevailing charge (or
fee schedule amount) for nonparticipating
physicians for that year.
(3) Limitation on charges for medicare beneficiaries
eligible for medicaid benefits.--
(A) In general.--Payment for physicians'
services furnished on or after April 1, 1990,
to an individual who is enrolled under this
part and eligible for any medical assistance
(including as a qualified medicare beneficiary,
as defined in section 1905(p)(1)) with respect
to such services under a State plan approved
under title XIX may only be made on an
assignment-related basis and the provisions of
section 1902(n)(3)(A) apply to further limit
permissible charges under this section.
(B) Penalty.--A person may not bill for
physicians' services subject to subparagraph
(A) other than on an assignment-related basis.
No person is liable for payment of any amounts
billed for such a service in violation of the
previous sentence. If a person knowingly and
willfully bills for physicians' services in
violation of the first sentence, the Secretary
may apply sanctions against the person in
accordance with section 1842(j)(2).
(4) Physician submission of claims.--
(A) In general.--For services furnished on or
after September 1, 1990, within 1 year after
the date of providing a service for which
payment is made under this part on a reasonable
charge or fee schedule basis, a physician,
supplier, or other person (or an employer or
facility in the cases described in section
1842(b)(6)(A))--
(i) shall complete and submit a claim
for such service on a standard claim
form specified by the Secretary to the
carrier on behalf of a beneficiary, and
(ii) may not impose any charge
relating to completing and submitting
such a form.
(B) Penalty.--(i) With respect to an assigned
claim wherever a physician, provider, supplier
or other person (or an employer or facility in
the cases described in section 1842(b)(6)(A))
fails to submit such a claim as required in
subparagraph (A), the Secretary shall reduce by
10 percent the amount that would otherwise be
paid for such claim under this part.
(ii) If a physician, supplier, or other
person (or an employer or facility in the cases
described in section 1842(b)(6)(A)) fails to
submit a claim required to be submitted under
subparagraph (A) or imposes a charge in
violation of such subparagraph, the Secretary
shall apply the sanction with respect to such a
violation in the same manner as a sanction may
be imposed under section 1842(p)(3) for a
violation of section 1842(p)(1).
(5) Electronic billing; direct deposit.--The
Secretary shall encourage and develop a system
providing for expedited payment for claims submitted
electronically. The Secretary shall also encourage and
provide incentives allowing for direct deposit as
payments for services furnished by participating
physicians. The Secretary shall provide physicians with
such technical information as necessary to enable such
physicians to submit claims electronically. The
Secretary shall submit a plan to Congress on this
paragraph by May 1, 1990.
(6) Monitoring of charges.--
(A) In general.--The Secretary shall
monitor--
(i) the actual charges of
nonparticipating physicians for
physicians' services furnished on or
after January 1, 1991, to individuals
enrolled under this part, and
(ii) changes (by specialty, type of
service, and geographic area) in (I)
the proportion of expenditures for
physicians' services provided under
this part by participating physicians,
(II) the proportion of expenditures for
such services for which payment is made
under this part on an assignment-
related basis, and (III) the amounts
charged above the recognized payment
amounts under this part.
(B) Report.--The Secretary shall, by not
later than April 15 of each year (beginning in
1992), report to the Congress information on
the extent to which actual charges exceed
limiting charges, the number and types of
services involved, and the average amount of
excess charges and information regarding the
changes described in subparagraph (A)(ii).
(C) Plan.--If the Secretary finds that there
has been a significant decrease in the
proportions described in subclauses (I) and
(II) of subparagraph (A)(ii) or an increase in
the amounts described in subclause (III) of
that subparagraph, the Secretary shall develop
a plan to address such a problem and transmit
to Congress recommendations regarding the plan.
The Medicare Payment Advisory Commission shall
review the Secretary's plan and recommendations
and transmit to Congress its comments regarding
such plan and recommendations.
(7) Monitoring of utilization and access.--
(A) In general.--The Secretary shall
monitor--
(i) changes in the utilization of and
access to services furnished under this
part within geographic, population, and
service related categories,
(ii) possible sources of
inappropriate utilization of services
furnished under this part which
contribute to the overall level of
expenditures under this part, and
(iii) factors underlying these
changes and their interrelationships.
(B) Report.--The Secretary shall by not later
than April 15, of each year (beginning with
1991) report to the Congress on the changes
described in subparagraph (A)(i) and shall
include in the report an examination of the
factors (including factors relating to
different services and specific categories and
groups of services and geographic and
demographic variations in utilization) which
may contribute to such changes.
(C) Recommendations.--The Secretary shall
include in each annual report under
subparagraph (B) recommendations--
(i) addressing any identified
patterns of inappropriate utilization,
(ii) on utilization review,
(iii) on physician education or
patient education,
(iv) addressing any problems of
beneficiary access to care made evident
by the monitoring process, and
(v) on such other matters as the
Secretary deems appropriate.
The Medicare Payment Advisory Commission shall
comment on the Secretary's recommendations and
in developing its comments, the Commission
shall convene and consult a panel of physician
experts to evaluate the implications of medical
utilization patterns for the quality of and
access to patient care.
(h) Sending Information to Physicians.--Before the beginning
of each year (beginning with 1992), the Secretary shall send to
each physician or nonparticipating supplier or other person
furnishing physicians' services (as defined in section
1848(j)(3)) furnishing physicians' services under this part,
for services commonly performed by the physician, supplier, or
other person, information on fee schedule amounts that apply
for the year in the fee schedule area for participating and
non-participating physicians, and the maximum amount that may
be charged consistent with subsection (g)(2). Such information
shall be transmitted in conjunction with notices to physicians,
suppliers, and other persons under section 1842(h) (relating to
the participating physician program) for a year.
(i) Miscellaneous Provisions.--
(1) Restriction on administrative and judicial
review.--There shall be no administrative or judicial
review under section 1869 or otherwise of--
(A) the determination of the adjusted
historical payment basis (as defined in
subsection (a)(2)(D)(i)),
(B) the determination of relative values and
relative value units under subsection (c),
including adjustments under subsections
(c)(2)(F), (c)(2)(H), and (c)(2)(I) and section
13515(b) of the Omnibus Budget Reconciliation
Act of 1993,
(C) the determination of conversion factors
under subsection (d), including without
limitation a prospective redetermination of the
sustainable growth rates for any or all
previous fiscal years,
(D) the establishment of geographic
adjustment factors under subsection (e),
(E) the establishment of the system for the
coding of physicians' services under this
section, and
(F) the collection and use of information in
the determination of relative values under
subsection (c)(2)(M).
(2) Assistants-at-surgery.--
(A) In general.--Subject to subparagraph (B),
in the case of a surgical service furnished by
a physician, if payment is made separately
under this part for the services of a physician
serving as an assistant-at-surgery, the fee
schedule amount shall not exceed 16 percent of
the fee schedule amount otherwise determined
under this section for the global surgical
service involved.
(B) Denial of payment in certain cases.--If
the Secretary determines, based on the most
recent data available, that for a surgical
procedure (or class of surgical procedures) the
national average percentage of such procedure
performed under this part which involve the use
of a physician as an assistant at surgery is
less than 5 percent, no payment may be made
under this part for services of an assistant at
surgery involved in the procedure.
(3) No comparability adjustment.--For physicians'
services for which payment under this part is
determined under this section--
(A) a carrier may not make any adjustment in
the payment amount under section 1842(b)(3)(B)
on the basis that the payment amount is higher
than the charge applicable, for comparable
services and under comparable circumstances, to
the policyholders and subscribers of the
carrier,
(B) no payment adjustment may be made under
section 1842(b)(8), and
(C) section 1842(b)(9) shall not apply.
(j) Definitions.--In this section:
(1) Category.--For services furnished before January
1, 1998, the term ``category'' means, with respect to
physicians' services, surgical services (as defined by
the Secretary and including anesthesia services),
primary care services (as defined in section
1842(i)(4)), and all other physicians' services. The
Secretary shall define surgical services and publish
such definitions in the Federal Register no later than
May 1, 1990, after consultation with organizations
representing physicians.
(2) Fee schedule area.--Except as provided in
subsection (e)(6)(D), the term ``fee schedule area''
means a locality used under section 1842(b) for
purposes of computing payment amounts for physicians'
services.
(3) Physicians' services.--The term ``physicians'
services'' includes items and services described in
paragraphs (1), (2)(A), (2)(D), (2)(G), (2)(P) (with
respect to services described in subparagraphs (A) and
(C) of section 1861(oo)(2)), (2)(R) (with respect to
services described in suparagraphs (B), (C), and (D) of
section 1861(pp)(1)), (2)(S), (2)(W), (2)(AA), (2)(DD),
(2)(EE), (2)(FF) (including administration of the
health risk assessment), (3), (4), (13), (14) (with
respect to services described in section 1861(nn)(2)),
and (15) of section 1861(s) (other than clinical
diagnostic laboratory tests and, except for purposes of
subsection (a)(3), (g), and (h) such other items and
services as the Secretary may specify).
(4) Practice expenses.--The term ``practice
expenses'' includes all expenses for furnishing
physicians' services, excluding malpractice expenses,
physician compensation, and other physician fringe
benefits.
(k) Quality Reporting System.--
(1) In general.--The Secretary shall implement a
system for the reporting by eligible professionals of
data on quality measures specified under paragraph (2).
Such data shall be submitted in a form and manner
specified by the Secretary (by program instruction or
otherwise), which may include submission of such data
on claims under this part.
(2) Use of consensus-based quality measures.--
(A) For 2007.--
(i) In general.--For purposes of
applying this subsection for the
reporting of data on quality measures
for covered professional services
furnished during the period beginning
July 1, 2007, and ending December 31,
2007, the quality measures specified
under this paragraph are the measures
identified as 2007 physician quality
measures under the Physician Voluntary
Reporting Program as published on the
public website of the Centers for
Medicare & Medicaid Services as of the
date of the enactment of this
subsection, except as may be changed by
the Secretary based on the results of a
consensus-based process in January of
2007, if such change is published on
such website by not later than April 1,
2007.
(ii) Subsequent refinements in
application permitted.--The Secretary
may, from time to time (but not later
than July 1, 2007), publish on such
website (without notice or opportunity
for public comment) modifications or
refinements (such as code additions,
corrections, or revisions) for the
application of quality measures
previously published under clause (i),
but may not, under this clause, change
the quality measures under the
reporting system.
(iii) Implementation.--
Notwithstanding any other provision of
law, the Secretary may implement by
program instruction or otherwise this
subsection for 2007.
(B) For 2008 and 2009.--
(i) In general.--For purposes of
reporting data on quality measures for
covered professional services furnished
during 2008 and 2009, the quality
measures specified under this paragraph
for covered professional services shall
be measures that have been adopted or
endorsed by a consensus organization
(such as the National Quality Forum or
AQA), that include measures that have
been submitted by a physician
specialty, and that the Secretary
identifies as having used a consensus-
based process for developing such
measures. Such measures shall include
structural measures, such as the use of
electronic health records and
electronic prescribing technology.
(ii) Proposed set of measures.--Not
later than August 15 of each of 2007
and 2008, the Secretary shall publish
in the Federal Register a proposed set
of quality measures that the Secretary
determines are described in clause (i)
and would be appropriate for eligible
professionals to use to submit data to
the Secretary in 2008 or 2009, as
applicable. The Secretary shall provide
for a period of public comment on such
set of measures.
(iii) Final set of measures.--Not
later than November 15 of each of 2007
and 2008, the Secretary shall publish
in the Federal Register a final set of
quality measures that the Secretary
determines are described in clause (i)
and would be appropriate for eligible
professionals to use to submit data to
the Secretary in 2008 or 2009, as
applicable.
(C) For 2010 and subsequent years.--
(i) In general.--Subject to clause
(ii), for purposes of reporting data on
quality measures for covered
professional services furnished during
2010 and each subsequent year, subject
to subsection (m)(3)(C), the quality
measures (including electronic
prescribing quality measures) specified
under this paragraph shall be such
measures selected by the Secretary from
measures that have been endorsed by the
entity with a contract with the
Secretary 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, such as
the AQA alliance.
(D) Opportunity to provide input on measures
for 2009 and subsequent years.--For each
quality measure (including an electronic
prescribing quality measure) adopted by the
Secretary under subparagraph (B) (with respect
to 2009) or subparagraph (C), the Secretary
shall ensure that eligible professionals have
the opportunity to provide input during the
development, endorsement, or selection of
measures applicable to services they furnish.
(3) Covered professional services and eligible
professionals defined.--For purposes of this
subsection:
(A) Covered professional services.--The term
``covered professional services'' means
services for which payment is made under, or is
based on, the fee schedule established under
this section and which are furnished by an
eligible professional.
(B) Eligible professional.--The term
``eligible professional'' means any of the
following:
(i) A physician.
(ii) A practitioner described in
section 1842(b)(18)(C).
(iii) A physical or occupational
therapist or a qualified speech-
language pathologist.
(iv) Beginning with 2009, a qualified
audiologist (as defined in section
1861(ll)(3)(B)).
(4) Use of registry-based reporting.--As part of the
publication of proposed and final quality measures for
2008 under clauses (ii) and (iii) of paragraph (2)(B),
the Secretary shall address a mechanism whereby an
eligible professional may provide data on quality
measures through an appropriate medical registry (such
as the Society of Thoracic Surgeons National Database)
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, as identified by the Secretary.
(5) Identification units.--For purposes of applying
this subsection, the Secretary may identify eligible
professionals through billing units, which may include
the use of the Provider Identification Number, the
unique physician identification number (described in
section 1833(q)(1)), the taxpayer identification
number, or the National Provider Identifier. For
purposes of applying this subsection for 2007, the
Secretary shall use the taxpayer identification number
as the billing unit.
(6) Education and outreach.--The Secretary shall
provide for education and outreach to eligible
professionals on the operation of this subsection.
(7) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise, of the development and
implementation of the reporting system under paragraph
(1), including identification of quality measures under
paragraph (2) and the application of paragraphs (4) and
(5).
(8) Implementation.--The Secretary shall carry out
this subsection acting through the Administrator of the
Centers for Medicare & Medicaid Services.
(9) Continued application for purposes of mips and
for certain professionals volunteering to report.--The
Secretary shall, in accordance with subsection
(q)(1)(F), carry out the provisions of this
subsection--
(A) for purposes of subsection (q); and
(B) for eligible professionals who are not
MIPS eligible professionals (as defined in
subsection (q)(1)(C)) for the year involved.
(l) Physician Assistance and Quality Initiative Fund.--
(1) Establishment.--The Secretary shall establish
under this subsection a Physician Assistance and
Quality Initiative Fund (in this subsection referred to
as the ``Fund'') which shall be available to the
Secretary for physician payment and quality improvement
initiatives, which may include application of an
adjustment to the update of the conversion factor under
subsection (d).
(2) Funding.--
(A) Amount available.--
(i) In general.--Subject to clause
(ii), there shall be available to the
Fund the following amounts:
(I) For expenditures during
2008, an amount equal to
$150,500,000.
(II) For expenditures during
2009, an amount equal to
$24,500,000.
(ii) Limitations on expenditures.--
(I) 2008.--The amount
available for expenditures
during 2008 shall be reduced as
provided by subparagraph (A) of
section 225(c)(1) and section
524 of the Departments of
Labor, Health and Human
Services, and Education, and
Related Agencies Appropriations
Act, 2008 (division G of the
Consolidated Appropriations
Act, 2008).
(II) 2009.--The amount
available for expenditures
during 2009 shall be reduced as
provided by subparagraph (B) of
such section 225(c)(1).
(B) Timely obligation of all available funds
for services.--The Secretary shall provide for
expenditures from the Fund in a manner designed
to provide (to the maximum extent feasible) for
the obligation of the entire amount available
for expenditures, after application of
subparagraph (A)(ii), during--
(i) 2008 for payment with respect to
physicians' services furnished during
2008; and
(ii) 2009 for payment with respect to
physicians' services furnished during
2009.
(C) Payment from trust fund.--The amount
specified in subparagraph (A) shall be
available to the Fund, as expenditures are made
from the Fund, from the Federal Supplementary
Medical Insurance Trust Fund under section
1841.
(D) Funding limitation.--Amounts in the Fund
shall be available in advance of appropriations
in accordance with subparagraph (B) but only if
the total amount obligated from the Fund does
not exceed the amount available to the Fund
under subparagraph (A). The Secretary may
obligate funds from the Fund only if the
Secretary determines (and the Chief Actuary of
the Centers for Medicare & Medicaid Services
and the appropriate budget officer certify)
that there are available in the Fund sufficient
amounts to cover all such obligations incurred
consistent with the previous sentence.
(E) Construction.--In the case that
expenditures from the Fund are applied to, or
otherwise affect, a conversion factor under
subsection (d) for a year, the conversion
factor under such subsection shall be computed
for a subsequent year as if such application or
effect had never occurred.
(m) Incentive Payments for Quality Reporting.--
(1) Incentive payments.--
(A) In general.--For 2007 through 2014, with
respect to covered professional services
furnished during a reporting period by an
eligible professional, if--
(i) there are any quality measures
that have been established under the
physician reporting system that are
applicable to any such services
furnished by such professional for such
reporting period;
(ii) the eligible professional
satisfactorily submits (as determined
under this subsection) to the Secretary
data on such quality measures in
accordance with such reporting system
for such reporting period,
in addition to the amount otherwise paid under
this part, there also shall be paid to the
eligible professional (or to an employer or
facility in the cases described in clause (A)
of section 1842(b)(6)) or, in the case of a
group practice under paragraph (3)(C), to the
group practice, from the Federal Supplementary
Medical Insurance Trust Fund established under
section 1841 an amount equal to the applicable
quality percent of the Secretary's estimate
(based on claims submitted not later than 2
months after the end of the reporting period)
of the allowed charges under this part for all
such covered professional services furnished by
the eligible professional (or, in the case of a
group practice under paragraph (3)(C), by the
group practice) during the reporting period.
(B) Applicable quality percent.--For purposes
of subparagraph (A), the term ``applicable
quality percent'' means--
(i) for 2007 and 2008, 1.5 percent;
and
(ii) for 2009 and 2010, 2.0 percent;
(iii) for 2011, 1.0 percent; and
(iv) for 2012, 2013, and 2014, 0.5
percent.
(2) Incentive payments for electronic prescribing.--
(A) In general.--Subject to subparagraph (D),
for 2009 through 2013, with respect to covered
professional services furnished during a
reporting period by an eligible professional,
if the eligible professional is a successful
electronic prescriber for such reporting
period, in addition to the amount otherwise
paid under this part, there also shall be paid
to the eligible professional (or to an employer
or facility in the cases described in clause
(A) of section 1842(b)(6)) or, in the case of a
group practice under paragraph (3)(C), to the
group practice, from the Federal Supplementary
Medical Insurance Trust Fund established under
section 1841 an amount equal to the applicable
electronic prescribing percent of the
Secretary's estimate (based on claims submitted
not later than 2 months after the end of the
reporting period) of the allowed charges under
this part for all such covered professional
services furnished by the eligible professional
(or, in the case of a group practice under
paragraph (3)(C), by the group practice) during
the reporting period.
(B) Limitation with respect to electronic
prescribing quality measures.--The provisions
of this paragraph and subsection (a)(5) shall
not apply to an eligible professional (or, in
the case of a group practice under paragraph
(3)(C), to the group practice) if, for the
reporting period (or, for purposes of
subsection (a)(5), for the reporting period for
a year)--
(i) the allowed charges under this
part for all covered professional
services furnished by the eligible
professional (or group, as applicable)
for the codes to which the electronic
prescribing quality measure applies (as
identified by the Secretary and
published on the Internet website of
the Centers for Medicare & Medicaid
Services as of January 1, 2008, and as
subsequently modified by the Secretary)
are less than 10 percent of the total
of the allowed charges under this part
for all such covered professional
services furnished by the eligible
professional (or the group, as
applicable); or
(ii) if determined appropriate by the
Secretary, the eligible professional
does not submit (including both
electronically and nonelectronically) a
sufficient number (as determined by the
Secretary) of prescriptions under part
D.
If the Secretary makes the determination to
apply clause (ii) for a period, then clause (i)
shall not apply for such period.
(C) Applicable electronic prescribing
percent.--For purposes of subparagraph (A), the
term ``applicable electronic prescribing
percent'' means--
(i) for 2009 and 2010, 2.0 percent;
(ii) for 2011 and 2012, 1.0 percent;
and
(iii) for 2013, 0.5 percent.
(D) Limitation with respect to ehr incentive
payments.--The provisions of this paragraph
shall not apply to an eligible professional
(or, in the case of a group practice under
paragraph (3)(C), to the group practice) if,
for the EHR reporting period the eligible
professional (or group practice) receives an
incentive payment under subsection (o)(1)(A)
with respect to a certified EHR technology (as
defined in subsection (o)(4)) that has the
capability of electronic prescribing.
(3) Satisfactory reporting and successful electronic
prescriber and described.--
(A) In general.--For purposes of paragraph
(1), an eligible professional shall be treated
as satisfactorily submitting data on quality
measures for covered professional services for
a reporting period (or, for purposes of
subsection (a)(8), for the quality reporting
period for the year) if quality measures have
been reported as follows:
(i) Three or fewer quality measures
applicable.--If there are no more than
3 quality measures that are provided
under the physician reporting system
and that are applicable to such
services of such professional furnished
during the period, each such quality
measure has been reported under such
system in at least 80 percent of the
cases in which such measure is
reportable under the system.
(ii) Four or more quality measures
applicable.--If there are 4 or more
quality measures that are provided
under the physician reporting system
and that are applicable to such
services of such professional
furnishedduring the period, at least 3
such quality measures have been
reported under such system in at least
80 percent of the cases in which the
respective measure is reportable under
the system.
For years after 2008, quality measures for
purposes of this subparagraph shall not include
electronic prescribing quality measures.
(B) Successful electronic prescriber.--
(i) In general.--For purposes of
paragraph (2) and subsection (a)(5), an
eligible professional shall be treated
as a successful electronic prescriber
for a reporting period (or, for
purposes of subsection (a)(5), for the
reporting period for a year) if the
eligible professional meets the
requirement described in clause (ii),
or, if the Secretary determines
appropriate, the requirement described
in clause (iii). If the Secretary makes
the determination under the preceding
sentence to apply the requirement
described in clause (iii) for a period,
then the requirement described in
clause (ii) shall not apply for such
period.
(ii) Requirement for submitting data
on electronic prescribing quality
measures.--The requirement described in
this clause is that, with respect to
covered professional services furnished
by an eligible professional during a
reporting period (or, for purposes of
subsection (a)(5), for the reporting
period for a year), if there are any
electronic prescribing quality measures
that have been established under the
physician reporting system and are
applicable to any such services
furnished by such professional for the
period, such professional reported each
such measure under such system in at
least 50 percent of the cases in which
such measure is reportable by such
professional under such system.
(iii) Requirement for electronically
prescribing under part d.--The
requirement described in this clause is
that the eligible professional
electronically submitted a sufficient
number (as determined by the Secretary)
of prescriptions under part D during
the reporting period (or, for purposes
of subsection (a)(5), for the reporting
period for a year).
(iv) Use of part d data.--
Notwithstanding sections 1860D-
15(d)(2)(B) and 1860D-15(f)(2), the
Secretary may use data regarding drug
claims submitted for purposes of
section 1860D-15 that are necessary for
purposes of clause (iii), paragraph
(2)(B)(ii), and paragraph (5)(G).
(v) Standards for electronic
prescribing.--To the extent
practicable, in determining whether
eligible professionals meet the
requirements under clauses (ii) and
(iii) for purposes of clause (i), the
Secretary shall ensure that eligible
professionals utilize electronic
prescribing systems in compliance with
standards established for such systems
pursuant to the Part D Electronic
Prescribing Program under section
1860D-4(e).
(C) Satisfactory reporting measures for group
practices.--
(i) In general.--By January 1, 2010,
the Secretary shall establish and have
in place a process under which eligible
professionals in a group practice (as
defined by the Secretary) shall be
treated as satisfactorily submitting
data on quality measures under
subparagraph (A) and as meeting the
requirement described in subparagraph
(B)(ii) for covered professional
services for a reporting period (or,
for purposes of subsection (a)(5), for
a reporting period for a year, or, for
purposes of subsection (a)(8), for a
quality reporting period for the year)
if, in lieu of reporting measures under
subsection (k)(2)(C), the group
practice reports measures determined
appropriate by the Secretary, such as
measures that target high-cost chronic
conditions and preventive care, in a
form and manner, and at a time,
specified by the Secretary.
(ii) Statistical sampling model.--The
process under clause (i) shall provide
and, for 2016 and subsequent years, may
provide for the use of a statistical
sampling model to submit data on
measures, such as the model used under
the Physician Group Practice
demonstration project under section
1866A.
(iii) No double payments.--Payments
to a group practice under this
subsection by reason of the process
under clause (i) shall be in lieu of
the payments that would otherwise be
made under this subsection to eligible
professionals in the group practice for
satisfactorily submitting data on
quality measures.
(D) Satisfactory reporting measures through
participation in a qualified clinical data
registry.--For 2014 and subsequent years, the
Secretary shall treat an eligible professional
as satisfactorily submitting data on quality
measures under subparagraph (A) and, for 2016
and subsequent years, subparagraph (A) or (C)
if, in lieu of reporting measures under
subsection (k)(2)(C), the eligible professional
is satisfactorily participating, as determined
by the Secretary, in a qualified clinical data
registry (as described in subparagraph (E)) for
the year.
(E) Qualified clinical data registry.--
(i) In general.--The Secretary shall
establish requirements for an entity to
be considered a qualified clinical data
registry. Such requirements shall
include a requirement that the entity
provide the Secretary with such
information, at such times, and in such
manner, as the Secretary determines
necessary to carry out this subsection.
(ii) Considerations.--In establishing
the requirements under clause (i), the
Secretary shall consider whether an
entity--
(I) has in place mechanisms
for the transparency of data
elements and specifications,
risk models, and measures;
(II) requires the submission
of data from participants with
respect to multiple payers;
(III) provides timely
performance reports to
participants at the individual
participant level; and
(IV) supports quality
improvement initiatives for
participants.
(iii) Measures.--With respect to
measures used by a qualified clinical
data registry--
(I) sections 1890(b)(7) and
1890A(a) shall not apply; and
(II) measures endorsed by the
entity with a contract with the
Secretary under section 1890(a)
may be used.
(iv) Consultation.--In carrying out
this subparagraph, the Secretary shall
consult with interested parties.
(v) Determination.--The Secretary
shall establish a process to determine
whether or not an entity meets the
requirements established under clause
(i). Such process may involve one or
both of the following:
(I) A determination by the
Secretary.
(II) A designation by the
Secretary of one or more
independent organizations to
make such determination.
(F) Authority to revise satisfactorily
reporting data.--For years after 2009, the
Secretary, in consultation with stakeholders
and experts, may revise the criteria under this
subsection for satisfactorily submitting data
on quality measures under subparagraph (A) and
the criteria for submitting data on electronic
prescribing quality measures under subparagraph
(B)(ii).
(4) Form of payment.--The payment under this
subsection shall be in the form of a single
consolidated payment.
(5) Application.--
(A) Physician reporting system rules.--
Paragraphs (5), (6),and (8) of subsection (k)
shall apply for purposes of this subsection in
the same manner as they apply for purposes of
such subsection.
(B) Coordination with other bonus payments.--
The provisions of this subsection shall not be
taken into account in applying subsections (m)
and (u) of section 1833 and any payment under
such subsections shall not be taken into
account in computing allowable charges under
this subsection.
(C) Implementation.--Notwithstanding any
other provision of law, for 2007, 2008, and
2009, the Secretary may implement by program
instruction or otherwise this subsection.
(D) Validation.--
(i) In general.--Subject to the
succeeding provisions of this
subparagraph, for purposes of
determining whether a measure is
applicable to the covered professional
services of an eligible professional
under this subsection for 2007 and 288,
the Secretary shall presume that if an
eligible professional submits data for
a measure, such measure is applicable
to such professional.
(ii) Method.--The Secretary may
establish procedures to validate (by
sampling or other means as the
Secretary determines to be appropriate)
whether measures applicable to covered
professional services of an eligible
professional have been reported.
(iii) Denial of payment authority.--
If the Secretary determines that an
eligible professional (or, in the case
of a group practice under paragraph
(3)(C), the group practice) has not
reported measures applicable to covered
professional services of such
professional, the Secretary shall not
pay the incentive payment under this
subsection. If such payments for such
period have already been made, the
Secretary shall recoup such payments
from the eligible professional (or the
group practice).
(E) Limitations on review.--
Except as provided in subparagraph
(I), there shall be no administrative
or judicial review under 1869, section
1878, or otherwise of
(i) the determination of measures
applicable to services furnished by
eligible professionals under this
subsection;
(ii) the determination of
satisfactory reporting under this
subsection;
(iii) the determination of a
successful electronic prescriber under
paragraph (3), the limitation under
paragraph (2)(B), and the exception
under subsection (a)(5)(B); and
(iv) the determination of any
incentive payment under this subsection
and the payment adjustment under
paragraphs (5)(A) and (8)(A) of
subsection (a).
(F) Extension.--For 2008 through reporting
periods occurring in 2015, the Secretary shall
establish and, for reporting periods occurring
in 2016 and subsequent years, the Secretary may
establish alternative criteria for
satisfactorily reporting under this subsection
and alternative reporting periods under
paragraph (6)(C) for reporting groups of
measures under subsection (k)(2)(B) and for
reporting using the method specified in
subsection (k)(4).
(G) Posting on website.--The Secretary shall
post on the Internet website of the Centers for
Medicare & Medicaid Services, in an easily
understandable format, a list of the names of
the following:
(i) The eligible professionals (or,
in the case of reporting under
paragraph (3)(C), the group practices)
who satisfactorily submitted data on
quality measures under this subsection.
(ii) The eligible professionals (or,
in the case of reporting under
paragraph (3)(C), the group practices)
who are successful electronic
prescribers.
(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.
(I) Informal appeals process.--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.
(6) Definitions.--For purposes of this subsection:
(A) Eligible professional; covered
professional services.--The terms ``eligible
professional'' and ``covered professional
services'' have the meanings given such termsin
subsection (k)(3).
(B) Physician reporting system.--The term
``physician reporting system'' means the system
established under subsection (k).
(C) Reporting period.--
(i) In general.--Subject to clauses
(ii) and (iii), the term ``reporting
period'' means--
(I) for 2007, the period
beginning on July 1, 2007, and
ending on December 31, 2007;
and
(II) for 2008 and subsequent
years, the entire year.
(ii) Authority to revise reporting
period.--For years after 2009, the
Secretary may revise the reporting
period under clause (i) if the
Secretary determines such revision is
appropriate, produces valid results on
measures reported, and is consistent
with the goals of maximizing scientific
validity and reducing administrative
burden. If the Secretary revises such
period pursuant to the preceding
sentence, the term ``reporting period''
shall mean such revised period.
(iii) Reference.--Any reference in
this subsection to a reporting period
with respect to the application of
subsection (a)(5) (a)(8) shall be
deemed a reference to the reporting
period under subsection (a)(5)(D)(iii)
or the quality reporting period under
subsection (a)(8)(D)(iii),
respectively.
(7) Integration of physician quality reporting and
ehr reporting.--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.
(8) Additional incentive payment.--
(A) In general.--For 2011 through 2014, if an
eligible professional meets the requirements
described in subparagraph (B), the applicable
quality percent for such year, as described in
clauses (iii) and (iv) of paragraph (1)(B),
shall be increased by 0.5 percentage points.
(B) Requirements described.--In order to
qualify for the additional incentive payment
described in subparagraph (A), an eligible
professional shall meet the following
requirements:
(i) The eligible professional shall--
(I) satisfactorily submit
data on quality measures for
purposes of paragraph (1) for a
year; and
(II) have such data submitted
on their behalf through a
Maintenance of Certification
Program (as defined in
subparagraph (C)(i)) that
meets--
(aa) the criteria for
a registry (as
described in subsection
(k)(4)); or
(bb) an alternative
form and manner
determined appropriate
by the Secretary.
(ii) The eligible professional, more
frequently than is required to qualify
for or maintain board certification
status--
(I) participates in such a
Maintenance of Certification
program for a year; and
(II) successfully completes a
qualified Maintenance of
Certification Program practice
assessment (as defined in
subparagraph (C)(ii)) for such
year.
(iii) A Maintenance of Certification
program submits to the Secretary, on
behalf of the eligible professional,
information--
(I) in a form and manner
specified by the Secretary,
that the eligible professional
has successfully met the
requirements of clause (ii)
(which may be in the form of a
structural measure);
(II) if requested by the
Secretary, on the survey of
patient experience with care
(as described in subparagraph
(C)(ii)(II)); and
(III) as the Secretary may
require, on the methods,
measures, and data used under
the Maintenance of
Certification Program and the
qualified Maintenance of
Certification Program practice
assessment.
(C) Definitions.--For purposes of this
paragraph:
(i) The term ``Maintenance of
Certification Program'' means a
continuous assessment program, such as
qualified American Board of Medical
Specialties Maintenance of
Certification program or an equivalent
program (as determined by the
Secretary), that advances quality and
the lifelong learning and self-
assessment of board certified specialty
physicians by focusing on the
competencies of patient care, medical
knowledge, practice-based learning,
interpersonal and communication skills
and professionalism. Such a program
shall include the following:
(I) The program requires the
physician to maintain a valid,
unrestricted medical license in
the United States.
(II) The program requires a
physician to participate in
educational and self-assessment
programs that require an
assessment of what was learned.
(III) The program requires a
physician to demonstrate,
through a formalized, secure
examination, that the physician
has the fundamental diagnostic
skills, medical knowledge, and
clinical judgment to provide
quality care in their
respective specialty.
(IV) The program requires
successful completion of a
qualified Maintenance of
Certification Program practice
assessment as described in
clause (ii).
(ii) The term ``qualified Maintenance
of Certification Program practice
assessment'' means an assessment of a
physician's practice that--
(I) includes an initial
assessment of an eligible
professional's practice that is
designed to demonstrate the
physician's use of evidence-
based medicine;
(II) includes a survey of
patient experience with care;
and
(III) requires a physician to
implement a quality improvement
intervention to address a
practice weakness identified in
the initial assessment under
subclause (I) and then to
remeasure to assess performance
improvement after such
intervention.
(9) Continued application for purposes of mips and
for certain professionals volunteering to report.--The
Secretary shall, in accordance with subsection
(q)(1)(F), carry out the processes under this
subsection--
(A) for purposes of subsection (q); and
(B) for eligible professionals who are not
MIPS eligible professionals (as defined in
subsection (q)(1)(C)) for the year involved.
(n) Physician Feedback Program.--
(1) Establishment.--
(A) In general.--
(i) Establishment.--The Secretary
shall establish a Physician Feedback
Program (in this subsection referred to
as the ``Program'').
(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.
(B) Resource use.--The resources described in
subparagraph (A)(ii) may be measured--
(i) on an episode basis;
(ii) on a per capita basis; or
(iii) on both an episode and a per
capita basis.
(2) Implementation.--The Secretary shall implement
the Program by not later than January 1, 2009.
(3) Data for reports.--To the extent practicable,
reports under the Program shall be based on the most
recent data available.
(4) Authority to focus initial application.--The
Secretary may focus the initial application of the
Program as appropriate, such as focusing the Program
on--
(A) physician specialties that account for a
certain percentage of all spending for
physicians' services under this title;
(B) physicians who treat conditions that have
a high cost or a high volume, or both, under
this title;
(C) physicians who use a high amount of
resources compared to other physicians;
(D) physicians practicing in certain
geographic areas; or
(E) physicians who treat a minimum number of
individuals under this title.
(5) Authority to exclude certain information if
insufficient information.--The Secretary may exclude
certain information regarding a service from a report
under the Program with respect to a physician (or group
of physicians) if the Secretary determines that there
is insufficient information relating to that service to
provide a valid report on that service.
(6) Adjustment of data.--To the extent practicable,
the Secretary shall make appropriate adjustments to the
data used in preparing reports under the Program, such
as adjustments to take into account variations in
health status and other patient characteristics. For
adjustments for reports on utilization under paragraph
(9), see subparagraph (D) of such paragraph.
(7) Education and outreach.--The Secretary shall
provide for education and outreach activities to
physicians on the operation of, and methodologies
employed under, the Program.
(8) Disclosure exemption.--Reports under the Program
shall be exempt from disclosure under section 552 of
title 5, United States Code.
(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.
(11) Reports ending with 2017.--Reports under the
Program shall not be provided after December 31, 2017.
See subsection (q)(12) for reports under the eligible
professionals Merit-based Incentive Payment System.
(o) Incentives for Adoption and Meaningful Use of Certified
EHR Technology.--
(1) Incentive payments.--
(A) In general.--
(i) In general.--Subject to the
succeeding subparagraphs of this
paragraph, with respect to covered
professional services furnished by an
eligible professional during a payment
year (as defined in subparagraph (E)),
if the eligible professional is a
meaningful EHR user (as determined
under paragraph (2)) for the EHR
reporting period with respect to such
year, in addition to the amount
otherwise paid under this part, there
also shall be paid to the eligible
professional (or to an employer or
facility in the cases described in
clause (A) of section 1842(b)(6)), from
the Federal Supplementary Medical
Insurance Trust Fund established under
section 1841 an amount equal to 75
percent of the Secretary's estimate
(based on claims submitted not later
than 2 months after the end of the
payment year) of the allowed charges
under this part for all such covered
professional services furnished by the
eligible professional during such year.
(ii) No incentive payments with
respect to years after 2016.--No
incentive payments may be made under
this subsection with respect to a year
after 2016.
(B) Limitations on amounts of incentive
payments.--
(i) In general.--In no case shall the
amount of the incentive payment
provided under this paragraph for an
eligible professional for a payment
year exceed the applicable amount
specified under this subparagraph with
respect to such eligible professional
and such year.
(ii) Amount.--Subject to clauses
(iii) through (v), the applicable
amount specified in this subparagraph
for an eligible professional is as
follows:
(I) For the first payment
year for such professional,
$15,000 (or, if the first
payment year for such eligible
professional is 2011 or 2012,
$18,000).
(II) For the second payment
year for such professional,
$12,000.
(III) For the third payment
year for such professional,
$8,000.
(IV) For the fourth payment
year for such professional,
$4,000.
(V) For the fifth payment
year for such professional,
$2,000.
(VI) For any succeeding
payment year for such
professional, $0.
(iii) Phase down for eligible
professionals first adopting ehr after
2013.--If the first payment year for an
eligible professional is after 2013,
then the amount specified in this
subparagraph for a payment year for
such professional is the same as the
amount specified in clause (ii) for
such payment year for an eligible
professional whose first payment year
is 2013.
(iv) Increase for certain eligible
professionals.--In the case of an
eligible professional who predominantly
furnishes services under this part in
an area that is designated by the
Secretary (under section 332(a)(1)(A)
of the Public Health Service Act) as a
health professional shortage area, the
amount that would otherwise apply for a
payment year for such professional
under subclauses (I) through (V) of
clause (ii) shall be increased by 10
percent. In implementing the preceding
sentence, the Secretary may, as
determined appropriate, apply
provisions of subsections (m) and (u)
of section 1833 in a similar manner as
such provisions apply under such
subsection.
(v) No incentive payment if first
adopting after 2014.--If the first
payment year for an eligible
professional is after 2014 then the
applicable amount specified in this
subparagraph for such professional for
such year and any subsequent year shall
be $0.
(C) Non-application to hospital-based
eligible professionals.--
(i) In general.--No incentive payment
may be made under this paragraph in the
case of a hospital-based eligible
professional.
(ii) Hospital-based eligible
professional.--For purposes of clause
(i), the term ``hospital-based eligible
professional'' means, with respect to
covered professional services furnished
by an eligible professional during the
EHR reporting period for a payment
year, an eligible professional, such as
a pathologist, anesthesiologist, or
emergency physician, who furnishes
substantially all of such services in a
hospital inpatient or emergency room
setting and through the use of the
facilities and equipment, including
qualified electronic health records, of
the hospital. The determination of
whether an eligible professional is a
hospital-based eligible professional
shall be made on the basis of the site
of service (as defined by the
Secretary) and without regard to any
employment or billing arrangement
between the eligible professional and
any other provider.
(D) Payment.--
(i) Form of payment.--The payment
under this paragraph may be in the form
of a single consolidated payment or in
the form of such periodic installments
as the Secretary may specify.
(ii) Coordination of application of
limitation for professionals in
different practices.--In the case of an
eligible professional furnishing
covered professional services in more
than one practice (as specified by the
Secretary), the Secretary shall
establish rules to coordinate the
incentive payments, including the
application of the limitation on
amounts of such incentive payments
under this paragraph, among such
practices.
(iii) Coordination with medicaid.--
The Secretary shall seek, to the
maximum extent practicable, to avoid
duplicative requirements from Federal
and State governments to demonstrate
meaningful use of certified EHR
technology under this title and title
XIX. The Secretary may also adjust the
reporting periods under such title and
such subsections in order to carry out
this clause.
(E) Payment year defined.--
(i) In general.--For purposes of this
subsection, the term ``payment year''
means a year beginning with 2011.
(ii) First, second, etc. payment
year.--The term ``first payment year''
means, with respect to covered
professional services furnished by an
eligible professional, the first year
for which an incentive payment is made
for such services under this
subsection. The terms ``second payment
year'', ``third payment year'',
``fourth payment year'', and ``fifth
payment year'' mean, with respect to
covered professional services furnished
by such eligible professional, each
successive year immediately following
the first payment year for such
professional.
(2) Meaningful ehr user.--
(A) In general.--An eligible professional
shall be treated as a meaningful EHR user for
an EHR reporting period for a payment year (or,
for purposes of subsection (a)(7), for an EHR
reporting period under such subsection for a
year, or pursuant to subparagraph (D) for
purposes of subsection (q), for a performance
period under such subsection for a year) if
each of the following requirements is met:
(i) Meaningful use of certified ehr
technology.--The eligible professional
demonstrates to the satisfaction of the
Secretary, in accordance with
subparagraph (C)(i), that during such
period the professional is using
certified EHR technology in a
meaningful manner, which shall include
the use of electronic prescribing as
determined to be appropriate by the
Secretary.
(ii) Information exchange.--The
eligible professional demonstrates to
the satisfaction of the Secretary, in
accordance with subparagraph (C)(i),
that during such period such certified
EHR technology is connected in a manner
that provides, in accordance with law
and standards applicable to the
exchange of information, for the
electronic exchange of health
information to improve the quality of
health care, such as promoting care
coordination, and the professional
demonstrates (through a process
specified by the Secretary, such as the
use of an attestation) that the
professional has not knowingly and
willfully taken action (such as to
disable functionality) to limit or
restrict the compatibility or
interoperability of the certified EHR
technology.
(iii) Reporting on measures using
ehr.--Subject to subparagraph (B)(ii)
and subsection (q)(5)(B)(ii)(II) and
using such certified EHR technology,
the eligible professional submits
information for such period, in a form
and manner specified by the Secretary,
on such clinical quality measures and
such other measures as selected by the
Secretary under subparagraph (B)(i).
The Secretary may provide for the use of
alternative means for meeting the requirements
of clauses (i), (ii), and (iii) in the case of
an eligible professional furnishing covered
professional services in a group practice (as
defined by the Secretary). The Secretary shall
seek to improve the use of electronic health
records and health care quality over time.
(B) Reporting on measures.--
(i) Selection.--The Secretary shall
select measures for purposes of
subparagraph (A)(iii) but only
consistent with the following:
(I) The Secretary shall
provide preference to clinical
quality measures that have been
endorsed by the entity with a
contract with the Secretary
under section 1890(a).
(II) Prior to any measure
being selected under this
subparagraph, the Secretary
shall publish in the Federal
Register such measure and
provide for a period of public
comment on such measure.
(ii) Limitation.--The Secretary may
not require the electronic reporting of
information on clinical quality
measures under subparagraph (A)(iii)
unless the Secretary has the capacity
to accept the information
electronically, which may be on a pilot
basis.
(iii) Coordination of reporting of
information.--In selecting such
measures, and in establishing the form
and manner for reporting measures under
subparagraph (A)(iii), the Secretary
shall seek to avoid redundant or
duplicative reporting otherwise
required, including reporting under
subsection (k)(2)(C).
(C) Demonstration of meaningful use of
certified ehr technology and information
exchange.--
(i) In general.--A professional may
satisfy the demonstration requirement
of clauses (i) and (ii) of subparagraph
(A) through means specified by the
Secretary, which may include--
(I) an attestation;
(II) the submission of claims
with appropriate coding (such
as a code indicating that a
patient encounter was
documented using certified EHR
technology);
(III) a survey response;
(IV) reporting under
subparagraph (A)(iii); and
(V) other means specified by
the Secretary.
(ii) Use of part d data.--
Notwithstanding sections 1860D-
15(d)(2)(B) and 1860D-15(f)(2), the
Secretary may use data regarding drug
claims submitted for purposes of
section 1860D-15 that are necessary for
purposes of subparagraph (A).
(D) Continued application for purposes of
mips.--With respect to 2019 and each subsequent
payment year, the Secretary shall, for purposes
of subsection (q) and in accordance with
paragraph (1)(F) of such subsection, determine
whether an eligible professional who is a MIPS
eligible professional (as defined in subsection
(q)(1)(C)) for such year is a meaningful EHR
user under this paragraph for the performance
period under subsection (q) for such year. The
provisions of subparagraphs (B) and (D) of
subsection (a)(7), shall apply to assessments
of MIPS eligible professionals under subsection
(q) with respect to the performance category
described in subsection (q)(2)(A)(iv) in an
appropriate manner which may be similar to the
manner in which such provisions apply with
respect to payment adjustments made under
subsection (a)(7)(A).
(3) Application.--
(A) Physician reporting system rules.--
Paragraphs (5), (6), and (8) of subsection (k)
shall apply for purposes of this subsection in
the same manner as they apply for purposes of
such subsection.
(B) Coordination with other payments.--The
provisions of this subsection shall not be
taken into account in applying the provisions
of subsection (m) of this section and of
section 1833(m) and any payment under such
provisions shall not be taken into account in
computing allowable charges under this
subsection.
(C) Limitations on review.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise, of--
(i) the methodology and standards for
determining payment amounts under this
subsection and payment adjustments
under subsection (a)(7)(A), including
the limitation under paragraph (1)(B)
and coordination under clauses (ii) and
(iii) of paragraph (1)(D);
(ii) the methodology and standards
for determining a meaningful EHR user
under paragraph (2), including
selection of measures under paragraph
(2)(B), specification of the means of
demonstrating meaningful EHR use under
paragraph (2)(C), and the hardship
exception under subsection (a)(7)(B);
(iii) the methodology and standards
for determining a hospital-based
eligible professional under paragraph
(1)(C); and
(iv) the specification of reporting
periods under paragraph (5) and the
selection of the form of payment under
paragraph (1)(D)(i).
(D) Posting on website.--The Secretary shall
post on the Internet website of the Centers for
Medicare & Medicaid Services, in an easily
understandable format, a list of the names,
business addresses, and business phone numbers
of the eligible professionals who are
meaningful EHR users and, as determined
appropriate by the Secretary, of group
practices receiving incentive payments under
paragraph (1).
(4) Certified ehr technology defined.--For purposes
of this section, the term ``certified EHR technology''
means a qualified electronic health record (as defined
in section 3000(13) of the Public Health Service Act)
that is certified pursuant to section 3001(c)(5) of
such Act as meeting standards adopted under section
3004 of such Act that are applicable to the type of
record involved (as determined by the Secretary, such
as an ambulatory electronic health record for office-
based physicians or an inpatient hospital electronic
health record for hospitals).
(5) Definitions.--For purposes of this subsection:
(A) Covered professional services.--The term
``covered professional services'' has the
meaning given such term in subsection (k)(3).
(B) EHR reporting period.--The term ``EHR
reporting period'' means, with respect to a
payment year, any period (or periods) as
specified by the Secretary.
(C) Eligible professional.--The term
``eligible professional'' means a physician, as
defined in section 1861(r).
(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).
(C) Continued application for purposes of
mips.--The Secretary shall, in accordance with
subsection (q)(1)(F), carry out subparagraph
(B) for purposes of subsection (q).
(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. With respect
to 2019 and each subsequent year, the Secretary shall,
in accordance with subsection (q)(1)(F), carry out this
paragraph for purposes of subsection (q).
(4) Implementation.--
(A) Publication of measures, dates of
implementation, performance period.--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 on or
after January 1, 2015, with respect to
specific physicians and groups of
physicians the Secretary determines
appropriate, and for services furnished
on or after January 1, 2017, with
respect to all physicians and groups of
physicians. Such payment modifier shall
not be applied for items and services
furnished on or after January 1, 2019.
(C) Budget neutrality.--The payment modifier
established under this subsection shall be
implemented in a budget neutral manner.
(5) Systems-based care.--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.--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). 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.--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.
(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).
(q) Merit-Based Incentive Payment System.--
(1) Establishment.--
(A) In general.--Subject to the succeeding
provisions of this subsection, the Secretary
shall establish an eligible professional Merit-
based Incentive Payment System (in this
subsection referred to as the ``MIPS'') under
which the Secretary shall--
(i) develop a methodology for
assessing the total performance of each
MIPS eligible professional according to
performance standards under paragraph
(3) for a performance period (as
established under paragraph (4)) for a
year;
(ii) using such methodology, provide
for a composite performance score in
accordance with paragraph (5) for each
such professional for each performance
period; and
(iii) use such composite performance
score of the MIPS eligible professional
for a performance period for a year to
determine and apply a MIPS adjustment
factor (and, as applicable, an
additional MIPS adjustment factor)
under paragraph (6) to the professional
for the year.
Notwithstanding subparagraph (C)(ii), under the
MIPS, the Secretary shall permit any eligible
professional (as defined in subsection
(k)(3)(B)) to report on applicable measures and
activities described in paragraph (2)(B).
(B) Program implementation.--The MIPS shall
apply to payments for covered professional
services (as defined in subsection (k)(3)(A))
furnished on or after January 1, 2019.
(C) MIPS eligible professional defined.--
(i) In general.--For purposes of this
subsection, subject to clauses (ii) and
(iv), the term ``MIPS eligible
professional'' means--
(I) for the first and second
years for which the MIPS
applies to payments (and for
the performance period for such
first and second year), a
physician (as defined in
section 1861(r)), a physician
assistant, nurse practitioner,
and clinical nurse specialist
(as such terms are defined in
section 1861(aa)(5)), a
certified registered nurse
anesthetist (as defined in
section 1861(bb)(2)), and a
group that includes such
professionals; and
(II) for the third year for
which the MIPS applies to
payments (and for the
performance period for such
third year) and for each
succeeding year (and for the
performance period for each
such year), the professionals
described in subclause (I),
such other eligible
professionals (as defined in
subsection (k)(3)(B)) as
specified by the Secretary, and
a group that includes such
professionals.
(ii) Exclusions.--For purposes of
clause (i), the term ``MIPS eligible
professional'' does not include, with
respect to a year, an eligible
professional (as defined in subsection
(k)(3)(B)) who--
(I) is a qualifying APM
participant (as defined in
section 1833(z)(2));
(II) subject to clause (vii),
is a partial qualifying APM
participant (as defined in
clause (iii)) for the most
recent period for which data
are available and who, for the
performance period with respect
to such year, does not report
on applicable measures and
activities described in
paragraph (2)(B) that are
required to be reported by such
a professional under the MIPS;
or
(III) for the performance
period with respect to such
year, does not exceed the low-
volume threshold measurement
selected under clause (iv).
(iii) Partial qualifying apm
participant.--For purposes of this
subparagraph, the term ``partial
qualifying APM participant'' means,
with respect to a year, an eligible
professional for whom the Secretary
determines the minimum payment
percentage (or percentages), as
applicable, described in paragraph (2)
of section 1833(z) for such year have
not been satisfied, but who would be
considered a qualifying APM participant
(as defined in such paragraph) for such
year if--
(I) with respect to 2019 and
2020, the reference in
subparagraph (A) of such
paragraph to 25 percent was
instead a reference to 20
percent;
(II) with respect to 2021 and
2022--
(aa) the reference in
subparagraph (B)(i) of
such paragraph to 50
percent was instead a
reference to 40
percent; and
(bb) the references
in subparagraph (B)(ii)
of such paragraph to 50
percent and 25 percent
of such paragraph were
instead references to
40 percent and 20
percent, respectively;
and
(III) with respect to 2023
and subsequent years--
(aa) the reference in
subparagraph (C)(i) of
such paragraph to 75
percent was instead a
reference to 50
percent; and
(bb) the references
in subparagraph (C)(ii)
of such paragraph to 75
percent and 25 percent
of such paragraph were
instead references to
50 percent and 20
percent, respectively.
(iv) Selection of low-volume
threshold measurement.--The Secretary
shall select a low-volume threshold to
apply for purposes of clause (ii)(III),
which may include one or more or a
combination of the following:
(I) The minimum number (as
determined by the Secretary)
of--
(aa) for performance
periods beginning
before January 1, 2018,
individuals enrolled
under this part who are
treated by the eligible
professional for the
performance period
involved; and
(bb) for performance
periods beginning on or
after January 1, 2018,
individuals enrolled
under this part who are
furnished covered
professional services
(as defined in
subsection (k)(3)(A))
by the eligible
professional for the
performance period
involved.
(II) The minimum number (as
determined by the Secretary) of
covered professional services
(as defined in subsection
(k)(3)(A)) furnished to
individuals enrolled under this
part by such professional for
such performance period.
(III) The minimum amount (as
determined by the Secretary)
of--
(aa) for performance
periods beginning
before January 1, 2018,
allowed charges billed
by such professional
under this part for
such performance
period; and
(bb) for performance
periods beginning on or
after January 1, 2018,
allowed charges for
covered professional
services (as defined in
subsection (k)(3)(A))
billed by such
professional for such
performance period.
(v) Treatment of new medicare
enrolled eligible professionals.--In
the case of a professional who first
becomes a Medicare enrolled eligible
professional during the performance
period for a year (and had not
previously submitted claims under this
title such as a person, an entity, or a
part of a physician group or under a
different billing number or tax
identifier), such professional shall
not be treated under this subsection as
a MIPS eligible professional until the
subsequent year and performance period
for such subsequent year.
(vi) Clarification.--In the case of
items and services furnished during a
year by an individual who is not a MIPS
eligible professional (including
pursuant to clauses (ii) and (v)) with
respect to a year, in no case shall a
MIPS adjustment factor (or additional
MIPS adjustment factor) under paragraph
(6) apply to such individual for such
year.
(vii) Partial qualifying apm
participant clarifications.--
(I) Treatment as mips
eligible professional.--In the
case of an eligible
professional who is a partial
qualifying APM participant,
with respect to a year, and
who, for the performance period
for such year, reports on
applicable measures and
activities described in
paragraph (2)(B) that are
required to be reported by such
a professional under the MIPS,
such eligible professional is
considered to be a MIPS
eligible professional with
respect to such year.
(II) Not eligible for
qualifying apm participant
payments.--In no case shall an
eligible professional who is a
partial qualifying APM
participant, with respect to a
year, be considered a
qualifying APM participant (as
defined in paragraph (2) of
section 1833(z)) for such year
or be eligible for the
additional payment under
paragraph (1) of such section
for such year.
(D) Application to group practices.--
(i) In general.--Under the MIPS:
(I) Quality performance
category.--The Secretary shall
establish and apply a process
that includes features of the
provisions of subsection
(m)(3)(C) for MIPS eligible
professionals in a group
practice with respect to
assessing performance of such
group with respect to the
performance category described
in clause (i) of paragraph
(2)(A).
(II) Other performance
categories.--The Secretary may
establish and apply a process
that includes features of the
provisions of subsection
(m)(3)(C) for MIPS eligible
professionals in a group
practice with respect to
assessing the performance of
such group with respect to the
performance categories
described in clauses (ii)
through (iv) of such paragraph.
(ii) Ensuring comprehensiveness of
group practice assessment.--The process
established under clause (i) shall to
the extent practicable reflect the
range of items and services furnished
by the MIPS eligible professionals in
the group practice involved.
(E) Use of registries.--Under the MIPS, the
Secretary shall encourage the use of qualified
clinical data registries pursuant to subsection
(m)(3)(E) in carrying out this subsection.
(F) Application of certain provisions.--In
applying a provision of subsection (k), (m),
(o), or (p) for purposes of this subsection,
the Secretary shall--
(i) adjust the application of such
provision to ensure the provision is
consistent with the provisions of this
subsection; and
(ii) not apply such provision to the
extent that the provision is
duplicative with a provision of this
subsection.
(G) Accounting for risk factors.--
(i) Risk factors.--Taking into
account the relevant studies conducted
and recommendations made in reports
under section 2(d) of the Improving
Medicare Post-Acute Care Transformation
Act of 2014, and, as appropriate, other
information, including information
collected before completion of such
studies and recommendations, the
Secretary, on an ongoing basis, shall,
as the Secretary determines appropriate
and based on an individual's health
status and other risk factors--
(I) assess appropriate
adjustments to quality
measures, resource use
measures, and other measures
used under the MIPS; and
(II) assess and implement
appropriate adjustments to
payment adjustments, composite
performance scores, scores for
performance categories, or
scores for measures or
activities under the MIPS.
(2) Measures and activities under performance
categories.--
(A) Performance categories.--Under the MIPS,
the Secretary shall use the following
performance categories (each of which is
referred to in this subsection as a performance
category) in determining the composite
performance score under paragraph (5):
(i) Quality.
(ii) Resource use.
(iii) Clinical practice improvement
activities.
(iv) Meaningful use of certified EHR
technology.
(B) Measures and activities specified for
each category.--For purposes of paragraph
(3)(A) and subject to subparagraph (C),
measures and activities specified for a
performance period (as established under
paragraph (4)) for a year are as follows:
(i) Quality.--For the performance
category described in subparagraph
(A)(i), the quality measures included
in the final measures list published
under subparagraph (D)(i) for such year
and the list of quality measures
described in subparagraph (D)(vi) used
by qualified clinical data registries
under subsection (m)(3)(E).
(ii) Resource use.--For the
performance category described in
subparagraph (A)(ii), the measurement
of resource use for such period under
subsection (p)(3), using the
methodology under subsection (r) as
appropriate, and, as feasible and
applicable, accounting for the cost of
drugs under part D.
(iii) Clinical practice improvement
activities.--For the performance
category described in subparagraph
(A)(iii), clinical practice improvement
activities (as defined in subparagraph
(C)(v)(III)) under subcategories
specified by the Secretary for such
period, which shall include at least
the following:
(I) The subcategory of
expanded practice access, such
as same day appointments for
urgent needs and after hours
access to clinician advice.
(II) The subcategory of
population management, such as
monitoring health conditions of
individuals to provide timely
health care interventions or
participation in a qualified
clinical data registry.
(III) The subcategory of care
coordination, such as timely
communication of test results,
timely exchange of clinical
information to patients and
other providers, and use of
remote monitoring or
telehealth.
(IV) The subcategory of
beneficiary engagement, such as
the establishment of care plans
for individuals with complex
care needs, beneficiary self-
management assessment and
training, and using shared
decision-making mechanisms.
(V) The subcategory of
patient safety and practice
assessment, such as through use
of clinical or surgical
checklists and practice
assessments related to
maintaining certification.
(VI) The subcategory of
participation in an alternative
payment model (as defined in
section 1833(z)(3)(C)).
In establishing activities under this
clause, the Secretary shall give
consideration to the circumstances of
small practices (consisting of 15 or
fewer professionals) and practices
located in rural areas and in health
professional shortage areas (as
designated under section 332(a)(1)(A)
of the Public Health Service Act).
(iv) Meaningful ehr use.--For the
performance category described in
subparagraph (A)(iv), the requirements
established for such period under
subsection (o)(2) for determining
whether an eligible professional is a
meaningful EHR user.
(C) Additional provisions.--
(i) Emphasizing outcome measures
under the quality performance
category.--In applying subparagraph
(B)(i), the Secretary shall, as
feasible, emphasize the application of
outcome measures.
(ii) Application of additional system
measures.--The Secretary may use
measures used for a payment system
other than for physicians, such as
measures for inpatient hospitals, for
purposes of the performance categories
described in clauses (i) and (ii) of
subparagraph (A). For purposes of the
previous sentence, the Secretary may
not use measures for hospital
outpatient departments, except in the
case of items and services furnished by
emergency physicians, radiologists, and
anesthesiologists.
(iii) Global and population-based
measures.--The Secretary may use global
measures, such as global outcome
measures, and population-based measures
for purposes of the performance
category described in subparagraph
(A)(i).
(iv) Application of measures and
activities to non-patient-facing
professionals.--In carrying out this
paragraph, with respect to measures and
activities specified in subparagraph
(B) for performance categories
described in subparagraph (A), the
Secretary--
(I) shall give consideration
to the circumstances of
professional types (or
subcategories of those types
determined by practice
characteristics) who typically
furnish services that do not
involve face-to-face
interaction with a patient; and
(II) may, to the extent
feasible and appropriate, take
into account such circumstances
and apply under this subsection
with respect to MIPS eligible
professionals of such
professional types or
subcategories, alternative
measures or activities that
fulfill the goals of the
applicable performance
category.
In carrying out the previous sentence,
the Secretary shall consult with
professionals of such professional
types or subcategories.
(v) Clinical practice improvement
activities.--
(I) Request for
information.--In initially
applying subparagraph (B)(iii),
the Secretary shall use a
request for information to
solicit recommendations from
stakeholders to identify
activities described in such
subparagraph and specifying
criteria for such activities.
(II) Contract authority for
clinical practice improvement
activities performance
category.--In applying
subparagraph (B)(iii), the
Secretary may contract with
entities to assist the
Secretary in--
(aa) identifying
activities described in
subparagraph (B)(iii);
(bb) specifying
criteria for such
activities; and
(cc) determining
whether a MIPS eligible
professional meets such
criteria.
(III) Clinical practice
improvement activities
defined.--For purposes of this
subsection, the term ``clinical
practice improvement activity''
means an activity that relevant
eligible professional
organizations and other
relevant stakeholders identify
as improving clinical practice
or care delivery and that the
Secretary determines, when
effectively executed, is likely
to result in improved outcomes.
(D) Annual list of quality measures available
for mips assessment.--
(i) In general.--Under the MIPS, the
Secretary, through notice and comment
rulemaking and subject to the
succeeding clauses of this
subparagraph, shall, with respect to
the performance period for a year,
establish an annual final list of
quality measures from which MIPS
eligible professionals may choose for
purposes of assessment under this
subsection for such performance period.
Pursuant to the previous sentence, the
Secretary shall--
(I) not later than November 1
of the year prior to the first
day of the first performance
period under the MIPS,
establish and publish in the
Federal Register a final list
of quality measures; and
(II) not later than November
1 of the year prior to the
first day of each subsequent
performance period, update the
final list of quality measures
from the previous year (and
publish such updated final list
in the Federal Register), by--
(aa) removing from
such list, as
appropriate, quality
measures, which may
include the removal of
measures that are no
longer meaningful (such
as measures that are
topped out);
(bb) adding to such
list, as appropriate,
new quality measures;
and
(cc) determining
whether or not quality
measures on such list
that have undergone
substantive changes
should be included in
the updated list.
(ii) Call for quality measures.--
(I) In general.--Eligible
professional organizations and
other relevant stakeholders
shall be requested to identify
and submit quality measures to
be considered for selection
under this subparagraph in the
annual list of quality measures
published under clause (i) and
to identify and submit updates
to the measures on such list.
For purposes of the previous
sentence, measures may be
submitted regardless of whether
such measures were previously
published in a proposed rule or
endorsed by an entity with a
contract under section 1890(a).
(II) Eligible professional
organization defined.--In this
subparagraph, the term
``eligible professional
organization'' means a
professional organization as
defined by nationally
recognized specialty boards of
certification or equivalent
certification boards.
(iii) Requirements.--In selecting
quality measures for inclusion in the
annual final list under clause (i), the
Secretary shall--
(I) provide that, to the
extent practicable, all quality
domains (as defined in
subsection (s)(1)(B)) are
addressed by such measures; and
(II) ensure that such
selection is consistent with
the process for selection of
measures under subsections (k),
(m), and (p)(2).
(iv) Peer review.--Before including a
new measure in the final list of
measures published under clause (i) for
a year, the Secretary shall submit for
publication in applicable specialty-
appropriate, peer-reviewed journals
such measure and the method for
developing and selecting such measure,
including clinical and other data
supporting such measure.
(v) Measures for inclusion.--The
final list of quality measures
published under clause (i) shall
include, as applicable, measures under
subsections (k), (m), and (p)(2),
including quality measures from among--
(I) measures endorsed by a
consensus-based entity;
(II) measures developed under
subsection (s); and
(III) measures submitted
under clause (ii)(I).
Any measure selected for inclusion in
such list that is not endorsed by a
consensus-based entity shall have a
focus that is evidence-based.
(vi) Exception for qualified clinical
data registry measures.--Measures used
by a qualified clinical data registry
under subsection (m)(3)(E) shall not be
subject to the requirements under
clauses (i), (iv), and (v). The
Secretary shall publish the list of
measures used by such qualified
clinical data registries on the
Internet website of the Centers for
Medicare & Medicaid Services.
(vii) Exception for existing quality
measures.--Any quality measure
specified by the Secretary under
subsection (k) or (m), including under
subsection (m)(3)(E), and any measure
of quality of care established under
subsection (p)(2) for the reporting
period or performance period under the
respective subsection beginning before
the first performance period under the
MIPS--
(I) shall not be subject to
the requirements under clause
(i) (except under items (aa)
and (cc) of subclause (II) of
such clause) or to the
requirement under clause (iv);
and
(II) shall be included in the
final list of quality measures
published under clause (i)
unless removed under clause
(i)(II)(aa).
(viii) Consultation with relevant
eligible professional organizations and
other relevant stakeholders.--Relevant
eligible professional organizations and
other relevant stakeholders, including
State and national medical societies,
shall be consulted in carrying out this
subparagraph.
(ix) Optional application.--The
process under section 1890A is not
required to apply to the selection of
measures under this subparagraph.
(3) Performance standards.--
(A) Establishment.--Under the MIPS, the
Secretary shall establish performance standards
with respect to measures and activities
specified under paragraph (2)(B) for a
performance period (as established under
paragraph (4)) for a year.
(B) Considerations in establishing
standards.--In establishing such performance
standards with respect to measures and
activities specified under paragraph (2)(B),
the Secretary shall consider the following:
(i) Historical performance standards.
(ii) Improvement.
(iii) The opportunity for continued
improvement.
(4) Performance period.--The Secretary shall
establish a performance period (or periods) for a year
(beginning with 2019). Such performance period (or
periods) shall begin and end prior to the beginning of
such year and be as close as possible to such year. In
this subsection, such performance period (or periods)
for a year shall be referred to as the performance
period for the year.
(5) Composite performance score.--
(A) In general.--Subject to the succeeding
provisions of this paragraph and taking into
account, as available and applicable, paragraph
(1)(G), the Secretary shall develop a
methodology for assessing the total performance
of each MIPS eligible professional according to
performance standards under paragraph (3) with
respect to applicable measures and activities
specified in paragraph (2)(B) with respect to
each performance category applicable to such
professional for a performance period (as
established under paragraph (4)) for a year.
Using such methodology, the Secretary shall
provide for a composite assessment (using a
scoring scale of 0 to 100) for each such
professional for the performance period for
such year. In this subsection such a composite
assessment for such a professional with respect
to a performance period shall be referred to as
the ``composite performance score'' for such
professional for such performance period.
(B) Incentive to report; encouraging use of
certified ehr technology for reporting quality
measures.--
(i) Incentive to report.--Under the
methodology established under
subparagraph (A), the Secretary shall
provide that in the case of a MIPS
eligible professional who fails to
report on an applicable measure or
activity that is required to be
reported by the professional, the
professional shall be treated as
achieving the lowest potential score
applicable to such measure or activity.
(ii) Encouraging use of certified ehr
technology and qualified clinical data
registries for reporting quality
measures.--Under the methodology
established under subparagraph (A), the
Secretary shall--
(I) encourage MIPS eligible
professionals to report on
applicable measures with
respect to the performance
category described in paragraph
(2)(A)(i) through the use of
certified EHR technology and
qualified clinical data
registries; and
(II) with respect to a
performance period, with
respect to a year, for which a
MIPS eligible professional
reports such measures through
the use of such EHR technology,
treat such professional as
satisfying the clinical quality
measures reporting requirement
described in subsection
(o)(2)(A)(iii) for such year.
(C) Clinical practice improvement activities
performance score.--
(i) Rule for certification.--A MIPS
eligible professional who is in a
practice that is certified as a
patient-centered medical home or
comparable specialty practice, as
determined by the Secretary, with
respect to a performance period shall
be given the highest potential score
for the performance category described
in paragraph (2)(A)(iii) for such
period.
(ii) APM participation.--
Participation by a MIPS eligible
professional in an alternative payment
model (as defined in section
1833(z)(3)(C)) with respect to a
performance period shall earn such
eligible professional a minimum score
of one-half of the highest potential
score for the performance category
described in paragraph (2)(A)(iii) for
such performance period.
(iii) Subcategories.--A MIPS eligible
professional shall not be required to
perform activities in each subcategory
under paragraph (2)(B)(iii) or
participate in an alternative payment
model in order to achieve the highest
potential score for the performance
category described in paragraph
(2)(A)(iii).
(D) Achievement and improvement.--
(i) Taking into account
improvement.--Beginning with the second
year to which the MIPS applies, in
addition to the achievement of a MIPS
eligible professional, if data
sufficient to measure improvement is
available, the methodology developed
under subparagraph (A)--
(I) in the case of the
performance score for the
performance category described
in clauses (i) and (ii) of
paragraph (2)(A), subject to
clause (iii), shall take into
account the improvement of the
professional; and
(II) in the case of
performance scores for other
performance categories, may
take into account the
improvement of the
professional.
(ii) Assigning higher weight for
achievement.--Subject to clause (i),
under the methodology developed under
subparagraph (A), the Secretary may
assign a higher scoring weight under
subparagraph (F) with respect to the
achievement of a MIPS eligible
professional than with respect to any
improvement of such professional
applied under clause (i) with respect
to a measure, activity, or category
described in paragraph (2).
(iii) Transition years.--For each of
the second, third, fourth, and fifth
years for which the MIPS applies to
payments, the performance score for the
performance category described in
paragraph (2)(A)(ii) shall not take
into account the improvement of the
professional involved.
(E) Weights for the performance categories.--
(i) In general.--Under the
methodology developed under
subparagraph (A), subject to
subparagraph (F)(i) and clause (ii),
the composite performance score shall
be determined as follows:
(I) Quality.--
(aa) In general.--
Subject to item (bb),
thirty percent of such
score shall be based on
performance with
respect to the category
described in clause (i)
of paragraph (2)(A). In
applying the previous
sentence, the Secretary
shall, as feasible,
encourage the
application of outcome
measures within such
category.
(bb) First 5 years.--
For each of the first
through fifth years for
which the MIPS applies
to payments, the
percentage applicable
under item (aa) shall
be increased in a
manner such that the
total percentage points
of the increase under
this item for the
respective year equals
the total number of
percentage points by
which the percentage
applied under subclause
(II)(bb) for the
respective year is less
than 30 percent.
(II) Resource use.--
(aa) In general.--
Subject to item (bb),
thirty percent of such
score shall be based on
performance with
respect to the category
described in clause
(ii) of paragraph
(2)(A).
(bb) First 5 years.--
For the first year for
which the MIPS applies
to payments, not more
than 10 percent of such
score shall be based on
performance with
respect to the category
described in clause
(ii) of paragraph
(2)(A). For each of the
second, third, fourth,
and fifth years for
which the MIPS applies
to payments, not less
than 10 percent and not
more than 30 percent of
such score shall be
based on performance
with respect to the
category described in
clause (ii) of
paragraph (2)(A).
Nothing in the previous
sentence shall be
construed, with respect
to a performance period
for a year described in
the previous sentence,
as preventing the
Secretary from basing
30 percent of such
score for such year
with respect to the
category described in
such clause (ii), if
the Secretary
determines, based on
information posted
under subsection
(r)(2)(I) that
sufficient resource use
measures are ready for
adoption for use under
the performance
category under
paragraph (2)(A)(ii)
for such performance
period.
(III) Clinical practice
improvement activities.--
Fifteen percent of such score
shall be based on performance
with respect to the category
described in clause (iii) of
paragraph (2)(A).
(IV) Meaningful use of
certified ehr technology.--
Twenty-five percent of such
score shall be based on
performance with respect to the
category described in clause
(iv) of paragraph (2)(A).
(ii) Authority to adjust percentages
in case of high ehr meaningful use
adoption.--In any year in which the
Secretary estimates that the proportion
of eligible professionals (as defined
in subsection (o)(5)) who are
meaningful EHR users (as determined
under subsection (o)(2)) is 75 percent
or greater, the Secretary may reduce
the percent applicable under clause
(i)(IV), but not below 15 percent. If
the Secretary makes such reduction for
a year, subject to subclauses (I)(bb)
and (II)(bb) of clause (i), the
percentages applicable under one or
more of subclauses (I), (II), and (III)
of clause (i) for such year shall be
increased in a manner such that the
total percentage points of the increase
under this clause for such year equals
the total number of percentage points
reduced under the preceding sentence
for such year.
(F) Certain flexibility for weighting
performance categories, measures, and
activities.--Under the methodology under
subparagraph (A), if there are not sufficient
measures and activities (described in paragraph
(2)(B)) applicable and available to each type
of eligible professional involved, the
Secretary shall assign different scoring
weights (including a weight of 0)--
(i) which may vary from the scoring
weights specified in subparagraph (E),
for each performance category based on
the extent to which the category is
applicable to the type of eligible
professional involved; and
(ii) for each measure and activity
specified under paragraph (2)(B) with
respect to each such category based on
the extent to which the measure or
activity is applicable and available to
the type of eligible professional
involved.
(G) Resource use.--Analysis of the
performance category described in paragraph
(2)(A)(ii) shall include results from the
methodology described in subsection (r)(5), as
appropriate.
(H) Inclusion of quality measure data from
other payers.--In applying subsections (k),
(m), and (p) with respect to measures described
in paragraph (2)(B)(i), analysis of the
performance category described in paragraph
(2)(A)(i) may include data submitted by MIPS
eligible professionals with respect to items
and services furnished to individuals who are
not individuals entitled to benefits under part
A or enrolled under part B.
(I) Use of voluntary virtual groups for
certain assessment purposes.--
(i) In general.--In the case of MIPS
eligible professionals electing to be a
virtual group under clause (ii) with
respect to a performance period for a
year, for purposes of applying the
methodology under subparagraph (A) with
respect to the performance categories
described in clauses (i) and (ii) of
paragraph (2)(A)--
(I) the assessment of
performance provided under such
methodology with respect to
such performance categories
that is to be applied to each
such professional in such group
for such performance period
shall be with respect to the
combined performance of all
such professionals in such
group for such period; and
(II) with respect to the
composite performance score
provided under this paragraph
for such performance period for
each such MIPS eligible
professional in such virtual
group, the components of the
composite performance score
that assess performance with
respect to such performance
categories shall be based on
the assessment of the combined
performance under subclause (I)
for such performance categories
and performance period.
(ii) Election of practices to be a
virtual group.--The Secretary shall, in
accordance with the requirements under
clause (iii), establish and have in
place a process to allow an individual
MIPS eligible professional or a group
practice consisting of not more than 10
MIPS eligible professionals to elect,
with respect to a performance period
for a year to be a virtual group under
this subparagraph with at least one
other such individual MIPS eligible
professional or group practice. Such a
virtual group may be based on
appropriate classifications of
providers, such as by geographic areas
or by provider specialties defined by
nationally recognized specialty boards
of certification or equivalent
certification boards.
(iii) Requirements.--The requirements
for the process under clause (ii)
shall--
(I) provide that an election
under such clause, with respect
to a performance period, shall
be made before the beginning of
such performance period and may
not be changed during such
performance period;
(II) provide that an
individual MIPS eligible
professional and a group
practice described in clause
(ii) may elect to be in no more
than one virtual group for a
performance period and that, in
the case of such a group
practice that elects to be in
such virtual group for such
performance period, such
election applies to all MIPS
eligible professionals in such
group practice;
(III) provide that a virtual
group be a combination of tax
identification numbers;
(IV) provide for formal
written agreements among MIPS
eligible professionals electing
to be a virtual group under
this subparagraph; and
(V) include such other
requirements as the Secretary
determines appropriate.
(6) MIPS payments.--
(A) MIPS adjustment factor.--Taking into
account paragraph (1)(G), the Secretary shall
specify a MIPS adjustment factor for each MIPS
eligible professional for a year. Such MIPS
adjustment factor for a MIPS eligible
professional for a year shall be in the form of
a percent and shall be determined--
(i) by comparing the composite
performance score of the eligible
professional for such year to the
performance threshold established under
subparagraph (D)(i) for such year;
(ii) in a manner such that the
adjustment factors specified under this
subparagraph for a year result in
differential payments under this
paragraph reflecting that--
(I) MIPS eligible
professionals with composite
performance scores for such
year at or above such
performance threshold for such
year receive zero or positive
payment adjustment factors for
such year in accordance with
clause (iii), with such
professionals having higher
composite performance scores
receiving higher adjustment
factors; and
(II) MIPS eligible
professionals with composite
performance scores for such
year below such performance
threshold for such year receive
negative payment adjustment
factors for such year in
accordance with clause (iv),
with such professionals having
lower composite performance
scores receiving lower
adjustment factors;
(iii) in a manner such that MIPS
eligible professionals with composite
scores described in clause (ii)(I) for
such year, subject to clauses (i) and
(ii) of subparagraph (F), receive a
zero or positive adjustment factor on a
linear sliding scale such that an
adjustment factor of 0 percent is
assigned for a score at the performance
threshold and an adjustment factor of
the applicable percent specified in
subparagraph (B) is assigned for a
score of 100; and
(iv) in a manner such that--
(I) subject to subclause
(II), MIPS eligible
professionals with composite
performance scores described in
clause (ii)(II) for such year
receive a negative payment
adjustment factor on a linear
sliding scale such that an
adjustment factor of 0 percent
is assigned for a score at the
performance threshold and an
adjustment factor of the
negative of the applicable
percent specified in
subparagraph (B) is assigned
for a score of 0; and
(II) MIPS eligible
professionals with composite
performance scores that are
equal to or greater than 0, but
not greater than \1/4\ of the
performance threshold specified
under subparagraph (D)(i) for
such year, receive a negative
payment adjustment factor that
is equal to the negative of the
applicable percent specified in
subparagraph (B) for such year.
(B) Applicable percent defined.--For purposes
of this paragraph, the term ``applicable
percent'' means--
(i) for 2019, 4 percent;
(ii) for 2020, 5 percent;
(iii) for 2021, 7 percent; and
(iv) for 2022 and subsequent years, 9
percent.
(C) Additional mips adjustment factors for
exceptional performance.--For 2019 and each
subsequent year through 2024, in the case of a
MIPS eligible professional with a composite
performance score for a year at or above the
additional performance threshold under
subparagraph (D)(ii) for such year, in addition
to the MIPS adjustment factor under
subparagraph (A) for the eligible professional
for such year, subject to subparagraph (F)(iv),
the Secretary shall specify an additional
positive MIPS adjustment factor for such
professional and year. Such additional MIPS
adjustment factors shall be in the form of a
percent and determined by the Secretary in a
manner such that professionals having higher
composite performance scores above the
additional performance threshold receive higher
additional MIPS adjustment factors.
(D) Establishment of performance
thresholds.--
(i) Performance threshold.--For each
year of the MIPS, the Secretary shall
compute a performance threshold with
respect to which the composite
performance score of MIPS eligible
professionals shall be compared for
purposes of determining adjustment
factors under subparagraph (A) that are
positive, negative, and zero. Subject
to clauses (iii) and (iv), such
performance threshold for a year shall
be the mean or median (as selected by
the Secretary) of the composite
performance scores for all MIPS
eligible professionals with respect to
a prior period specified by the
Secretary. The Secretary may reassess
the selection of the mean or median
under the previous sentence every 3
years.
(ii) Additional performance threshold
for exceptional performance.--In
addition to the performance threshold
under clause (i), for each year of the
MIPS (beginning with 2019 and ending
with 2024), the Secretary shall compute
an additional performance threshold for
purposes of determining the additional
MIPS adjustment factors under
subparagraph (C). For each such year,
subject to clause (iii), the Secretary
shall apply either of the following
methods for computing such additional
performance threshold for such a year:
(I) The threshold shall be
the score that is equal to the
25th percentile of the range of
possible composite performance
scores above the performance
threshold determined under
clause (i).
(II) The threshold shall be
the score that is equal to the
25th percentile of the actual
composite performance scores
for MIPS eligible professionals
with composite performance
scores at or above the
performance threshold with
respect to the prior period
described in clause (i).
(iii) Special rule for initial 5
years.--With respect to each of the
first five years to which the MIPS
applies, the Secretary shall, prior to
the performance period for such years,
establish a performance threshold for
purposes of determining MIPS adjustment
factors under subparagraph (A) and a
threshold for purposes of determining
additional MIPS adjustment factors
under subparagraph (C). Each such
performance threshold shall--
(I) be based on a period
prior to such performance
periods; and
(II) take into account--
(aa) data available
with respect to
performance on measures
and activities that may
be used under the
performance categories
under subparagraph
(2)(B); and
(bb) other factors
determined appropriate
by the Secretary.
(iv) Additional special rule for
third, fourth and fifth years of
mips.--For purposes of determining MIPS
adjustment factors under subparagraph
(A), in addition to the requirements
specified in clause (iii), the
Secretary shall increase the
performance threshold with respect to
each of the third, fourth, and fifth
years to which the MIPS applies to
ensure a gradual and incremental
transition to the performance threshold
described in clause (i) (as estimated
by the Secretary) with respect to the
sixth year to which the MIPS applies.
(E) Application of mips adjustment factors.--
In the case of covered professional services
(as defined in subsection (k)(3)(A)) furnished
by a MIPS eligible professional during a year
(beginning with 2019), the amount otherwise
paid under this part with respect to such
covered professional services and MIPS eligible
professional for such year, shall be multiplied
by--
(i) 1, plus
(ii) the sum of--
(I) the MIPS adjustment
factor determined under
subparagraph (A) divided by
100, and
(II) as applicable, the
additional MIPS adjustment
factor determined under
subparagraph (C) divided by
100.
(F) Aggregate application of mips adjustment
factors.--
(i) Application of scaling factor.--
(I) In general.--With respect
to positive MIPS adjustment
factors under subparagraph
(A)(ii)(I) for eligible
professionals whose composite
performance score is above the
performance threshold under
subparagraph (D)(i) for such
year, subject to subclause
(II), the Secretary shall
increase or decrease such
adjustment factors by a scaling
factor in order to ensure that
the budget neutrality
requirement of clause (ii) is
met.
(II) Scaling factor limit.--
In no case may the scaling
factor applied under this
clause exceed 3.0.
(ii) Budget neutrality requirement.--
(I) In general.--Subject to
clause (iii), the Secretary
shall ensure that the estimated
amount described in subclause
(II) for a year is equal to the
estimated amount described in
subclause (III) for such year.
(II) Aggregate increases.--
The amount described in this
subclause is the estimated
increase in the aggregate
allowed charges resulting from
the application of positive
MIPS adjustment factors under
subparagraph (A) (after
application of the scaling
factor described in clause (i))
to MIPS eligible professionals
whose composite performance
score for a year is above the
performance threshold under
subparagraph (D)(i) for such
year.
(III) Aggregate decreases.--
The amount described in this
subclause is the estimated
decrease in the aggregate
allowed charges resulting from
the application of negative
MIPS adjustment factors under
subparagraph (A) to MIPS
eligible professionals whose
composite performance score for
a year is below the performance
threshold under subparagraph
(D)(i) for such year.
(iii) Exceptions.--
(I) In the case that all MIPS
eligible professionals receive
composite performance scores
for a year that are below the
performance threshold under
subparagraph (D)(i) for such
year, the negative MIPS
adjustment factors under
subparagraph (A) shall apply
with respect to such MIPS
eligible professionals and the
budget neutrality requirement
of clause (ii) and the
additional adjustment factors
under clause (iv) shall not
apply for such year.
(II) In the case that, with
respect to a year, the
application of clause (i)
results in a scaling factor
equal to the maximum scaling
factor specified in clause
(i)(II), such scaling factor
shall apply and the budget
neutrality requirement of
clause (ii) shall not apply for
such year.
(iv) Additional incentive payment
adjustments.--
(I) In general.--Subject to
subclause (II), in specifying
the MIPS additional adjustment
factors under subparagraph (C)
for each applicable MIPS
eligible professional for a
year, the Secretary shall
ensure that the estimated
aggregate increase in payments
under this part resulting from
the application of such
additional adjustment factors
for MIPS eligible professionals
in a year shall be equal (as
estimated by the Secretary) to
$500,000,000 for each year
beginning with 2019 and ending
with 2024.
(II) Limitation on additional
incentive payment
adjustments.--The MIPS
additional adjustment factor
under subparagraph (C) for a
year for an applicable MIPS
eligible professional whose
composite performance score is
above the additional
performance threshold under
subparagraph (D)(ii) for such
year shall not exceed 10
percent. The application of the
previous sentence may result in
an aggregate amount of
additional incentive payments
that are less than the amount
specified in subclause (I).
(7) Announcement of result of adjustments.--Under the
MIPS, the Secretary shall, not later than 30 days prior
to January 1 of the year involved, make available to
MIPS eligible professionals the MIPS adjustment factor
(and, as applicable, the additional MIPS adjustment
factor) under paragraph (6) applicable to the eligible
professional for covered professional services (as
defined in subsection (k)(3)(A)) furnished by the
professional for such year. The Secretary may include
such information in the confidential feedback under
paragraph (12).
(8) No effect in subsequent years.--The MIPS
adjustment factors and additional MIPS adjustment
factors under paragraph (6) shall apply only with
respect to the year involved, and the Secretary shall
not take into account such adjustment factors in making
payments to a MIPS eligible professional under this
part in a subsequent year.
(9) Public reporting.--
(A) In general.--The Secretary shall, in an
easily understandable format, make available on
the Physician Compare Internet website of the
Centers for Medicare & Medicaid Services the
following:
(i) Information regarding the
performance of MIPS eligible
professionals under the MIPS, which--
(I) shall include the
composite score for each such
MIPS eligible professional and
the performance of each such
MIPS eligible professional with
respect to each performance
category; and
(II) may include the
performance of each such MIPS
eligible professional with
respect to each measure or
activity specified in paragraph
(2)(B).
(ii) The names of eligible
professionals in eligible alternative
payment models (as defined in section
1833(z)(3)(D)) and, to the extent
feasible, the names of such eligible
alternative payment models and
performance of such models.
(B) Disclosure.--The information made
available under this paragraph shall indicate,
where appropriate, that publicized information
may not be representative of the eligible
professional's entire patient population, the
variety of services furnished by the eligible
professional, or the health conditions of
individuals treated.
(C) Opportunity to review and submit
corrections.--The Secretary shall provide for
an opportunity for a professional described in
subparagraph (A) to review, and submit
corrections for, the information to be made
public with respect to the professional under
such subparagraph prior to such information
being made public.
(D) Aggregate information.--The Secretary
shall periodically post on the Physician
Compare Internet website aggregate information
on the MIPS, including the range of composite
scores for all MIPS eligible professionals and
the range of the performance of all MIPS
eligible professionals with respect to each
performance category.
(10) Consultation.--The Secretary shall consult with
stakeholders in carrying out the MIPS, including for
the identification of measures and activities under
paragraph (2)(B) and the methodologies developed under
paragraphs (5)(A) and (6) and regarding the use of
qualified clinical data registries. Such consultation
shall include the use of a request for information or
other mechanisms determined appropriate.
(11) Technical assistance to small practices and
practices in health professional shortage areas.--
(A) In general.--The Secretary shall enter
into contracts or agreements with appropriate
entities (such as quality improvement
organizations, regional extension centers (as
described in section 3012(c) of the Public
Health Service Act), or regional health
collaboratives) to offer guidance and
assistance to MIPS eligible professionals in
practices of 15 or fewer professionals (with
priority given to such practices located in
rural areas, health professional shortage areas
(as designated under in section 332(a)(1)(A) of
such Act), and medically underserved areas, and
practices with low composite scores) with
respect to--
(i) the performance categories
described in clauses (i) through (iv)
of paragraph (2)(A); or
(ii) how to transition to the
implementation of and participation in
an alternative payment model as
described in section 1833(z)(3)(C).
(B) Funding for technical assistance.--For
purposes of implementing subparagraph (A), the
Secretary shall provide for the transfer from
the Federal Supplementary Medical Insurance
Trust Fund established under section 1841 to
the Centers for Medicare & Medicaid Services
Program Management Account of $20,000,000 for
each of fiscal years 2016 through 2020. Amounts
transferred under this subparagraph for a
fiscal year shall be available until expended.
(12) Feedback and information to improve
performance.--
(A) Performance feedback.--
(i) In general.--Beginning July 1,
2017, the Secretary--
(I) shall make available
timely (such as quarterly)
confidential feedback to MIPS
eligible professionals on the
performance of such
professionals with respect to
the performance categories
under clauses (i) and (ii) of
paragraph (2)(A); and
(II) may make available
confidential feedback to such
professionals on the
performance of such
professionals with respect to
the performance categories
under clauses (iii) and (iv) of
such paragraph.
(ii) Mechanisms.--The Secretary may
use one or more mechanisms to make
feedback available under clause (i),
which may include use of a web-based
portal or other mechanisms determined
appropriate by the Secretary. With
respect to the performance category
described in paragraph (2)(A)(i),
feedback under this subparagraph shall,
to the extent an eligible professional
chooses to participate in a data
registry for purposes of this
subsection (including registries under
subsections (k) and (m)), be provided
based on performance on quality
measures reported through the use of
such registries. With respect to any
other performance category described in
paragraph (2)(A), the Secretary shall
encourage provision of feedback through
qualified clinical data registries as
described in subsection (m)(3)(E)).
(iii) Use of data.--For purposes of
clause (i), the Secretary may use data,
with respect to a MIPS eligible
professional, from periods prior to the
current performance period and may use
rolling periods in order to make
illustrative calculations about the
performance of such professional.
(iv) Disclosure exemption.--Feedback
made available under this subparagraph
shall be exempt from disclosure under
section 552 of title 5, United States
Code.
(v) Receipt of information.--The
Secretary may use the mechanisms
established under clause (ii) to
receive information from professionals,
such as information with respect to
this subsection.
(B) Additional information.--
(i) In general.--Beginning July 1,
2018, the Secretary shall make
available to MIPS eligible
professionals information, with respect
to individuals who are patients of such
MIPS eligible professionals, about
items and services for which payment is
made under this title that are
furnished to such individuals by other
suppliers and providers of services,
which may include information described
in clause (ii). Such information may be
made available under the previous
sentence to such MIPS eligible
professionals by mechanisms determined
appropriate by the Secretary, which may
include use of a web-based portal. Such
information may be made available in
accordance with the same or similar
terms as data are made available to
accountable care organizations
participating in the shared savings
program under section 1899.
(ii) Type of information.--For
purposes of clause (i), the information
described in this clause, is the
following:
(I) With respect to selected
items and services (as
determined appropriate by the
Secretary) for which payment is
made under this title and that
are furnished to individuals,
who are patients of a MIPS
eligible professional, by
another supplier or provider of
services during the most recent
period for which data are
available (such as the most
recent three-month period),
such as the name of such
providers furnishing such items
and services to such patients
during such period, the types
of such items and services so
furnished, and the dates such
items and services were so
furnished.
(II) Historical data, such as
averages and other measures of
the distribution if
appropriate, of the total, and
components of, allowed charges
(and other figures as
determined appropriate by the
Secretary).
(13) Review.--
(A) Targeted review.--The Secretary shall
establish a process under which a MIPS eligible
professional may seek an informal review of the
calculation of the MIPS adjustment factor (or
factors) applicable to such eligible
professional under this subsection for a year.
The results of a review conducted pursuant to
the previous sentence shall not be taken into
account for purposes of paragraph (6) with
respect to a year (other than with respect to
the calculation of such eligible professional's
MIPS adjustment factor for such year or
additional MIPS adjustment factor for such
year) after the factors determined in
subparagraph (A) and subparagraph (C) of such
paragraph have been determined for such year.
(B) Limitation.--Except as provided for 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 MIPS adjustment
factor under paragraph (6)(A) and the
amount of the additional MIPS
adjustment factor under paragraph
(6)(C) and the determination of such
amounts.
(ii) The establishment of the
performance standards under paragraph
(3) and the performance period under
paragraph (4).
(iii) The identification of measures
and activities specified under
paragraph (2)(B) and information made
public or posted on the Physician
Compare Internet website of the Centers
for Medicare & Medicaid Services under
paragraph (9).
(iv) The methodology developed under
paragraph (5) that is used to calculate
performance scores and the calculation
of such scores, including the weighting
of measures and activities under such
methodology.
(r) Collaborating With the Physician, Practitioner, and Other
Stakeholder Communities To Improve Resource Use Measurement.--
(1) In general.--In order to involve the physician,
practitioner, and other stakeholder communities in
enhancing the infrastructure for resource use
measurement, including for purposes of the Merit-based
Incentive Payment System under subsection (q) and
alternative payment models under section 1833(z), the
Secretary shall undertake the steps described in the
succeeding provisions of this subsection.
(2) Development of care episode and patient condition
groups and classification codes.--
(A) In general.--In order to classify similar
patients into care episode groups and patient
condition groups, the Secretary shall undertake
the steps described in the succeeding
provisions of this paragraph.
(B) Public availability of existing efforts
to design an episode grouper.--Not later than
180 days after the date of the enactment of
this subsection, the Secretary shall post on
the Internet website of the Centers for
Medicare & Medicaid Services a list of the
episode groups developed pursuant to subsection
(n)(9)(A) and related descriptive information.
(C) Stakeholder input.--The Secretary shall
accept, through the date that is 120 days after
the day the Secretary posts the list pursuant
to subparagraph (B), suggestions from physician
specialty societies, applicable practitioner
organizations, and other stakeholders for
episode groups in addition to those posted
pursuant to such subparagraph, and specific
clinical criteria and patient characteristics
to classify patients into--
(i) care episode groups; and
(ii) patient condition groups.
(D) Development of proposed classification
codes.--
(i) In general.--Taking into account
the information described in
subparagraph (B) and the information
received under subparagraph (C), the
Secretary shall--
(I) establish care episode
groups and patient condition
groups, which account for a
target of an estimated \1/2\ of
expenditures under parts A and
B (with such target increasing
over time as appropriate); and
(II) assign codes to such
groups.
(ii) Care episode groups.--In
establishing the care episode groups
under clause (i), the Secretary shall
take into account--
(I) the patient's clinical
problems at the time items and
services are furnished during
an episode of care, such as the
clinical conditions or
diagnoses, whether or not
inpatient hospitalization
occurs, and the principal
procedures or services
furnished; and
(II) other factors determined
appropriate by the Secretary.
(iii) Patient condition groups.--In
establishing the patient condition
groups under clause (i), the Secretary
shall take into account--
(I) the patient's clinical
history at the time of a
medical visit, such as the
patient's combination of
chronic conditions, current
health status, and recent
significant history (such as
hospitalization and major
surgery during a previous
period, such as 3 months); and
(II) other factors determined
appropriate by the Secretary,
such as eligibility status
under this title (including
eligibility under section
226(a), 226(b), or 226A, and
dual eligibility under this
title and title XIX).
(E) Draft care episode and patient condition
groups and classification codes.--Not later
than 270 days after the end of the comment
period described in subparagraph (C), the
Secretary shall post on the Internet website of
the Centers for Medicare & Medicaid Services a
draft list of the care episode and patient
condition codes established under subparagraph
(D) (and the criteria and characteristics
assigned to such code).
(F) Solicitation of input.--The Secretary
shall seek, through the date that is 120 days
after the Secretary posts the list pursuant to
subparagraph (E), comments from physician
specialty societies, applicable practitioner
organizations, and other stakeholders,
including representatives of individuals
entitled to benefits under part A or enrolled
under this part, regarding the care episode and
patient condition groups (and codes) posted
under subparagraph (E). In seeking such
comments, the Secretary shall use one or more
mechanisms (other than notice and comment
rulemaking) that may include use of open door
forums, town hall meetings, or other
appropriate mechanisms.
(G) Operational list of care episode and
patient condition groups and codes.--Not later
than 270 days after the end of the comment
period described in subparagraph (F), taking
into account the comments received under such
subparagraph, the Secretary shall post on the
Internet website of the Centers for Medicare &
Medicaid Services an operational list of care
episode and patient condition codes (and the
criteria and characteristics assigned to such
code).
(H) Subsequent revisions.--Not later than
November 1 of each year (beginning with 2018),
the Secretary shall, through rulemaking, make
revisions to the operational lists of care
episode and patient condition codes as the
Secretary determines may be appropriate. Such
revisions may be based on experience, new
information developed pursuant to subsection
(n)(9)(A), and input from the physician
specialty societies, applicable practitioner
organizations, and other stakeholders,
including representatives of individuals
entitled to benefits under part A or enrolled
under this part.
(I) Information.--The Secretary shall, not
later than December 31st of each year
(beginning with 2018), post on the Internet
website of the Centers for Medicare & Medicaid
Services information on resource use measures
in use under subsection (q), resource use
measures under development and the time-frame
for such development, potential future resource
use measure topics, a description of
stakeholder engagement, and the percent of
expenditures under part A and this part that
are covered by resource use measures.
(3) Attribution of patients to physicians or
practitioners.--
(A) In general.--In order to facilitate the
attribution of patients and episodes (in whole
or in part) to one or more physicians or
applicable practitioners furnishing items and
services, the Secretary shall undertake the
steps described in the succeeding provisions of
this paragraph.
(B) Development of patient relationship
categories and codes.--The Secretary shall
develop patient relationship categories and
codes that define and distinguish the
relationship and responsibility of a physician
or applicable practitioner with a patient at
the time of furnishing an item or service. Such
patient relationship categories shall include
different relationships of the physician or
applicable practitioner to the patient (and the
codes may reflect combinations of such
categories), such as a physician or applicable
practitioner who--
(i) considers themself to have the
primary responsibility for the general
and ongoing care for the patient over
extended periods of time;
(ii) considers themself to be the
lead physician or practitioner and who
furnishes items and services and
coordinates care furnished by other
physicians or practitioners for the
patient during an acute episode;
(iii) furnishes items and services to
the patient on a continuing basis
during an acute episode of care, but in
a supportive rather than a lead role;
(iv) furnishes items and services to
the patient on an occasional basis,
usually at the request of another
physician or practitioner; or
(v) furnishes items and services only
as ordered by another physician or
practitioner.
(C) Draft list of patient relationship
categories and codes.--Not later than one year
after the date of the enactment of this
subsection, the Secretary shall post on the
Internet website of the Centers for Medicare &
Medicaid Services a draft list of the patient
relationship categories and codes developed
under subparagraph (B).
(D) Stakeholder input.--The Secretary shall
seek, through the date that is 120 days after
the Secretary posts the list pursuant to
subparagraph (C), comments from physician
specialty societies, applicable practitioner
organizations, and other stakeholders,
including representatives of individuals
entitled to benefits under part A or enrolled
under this part, regarding the patient
relationship categories and codes posted under
subparagraph (C). In seeking such comments, the
Secretary shall use one or more mechanisms
(other than notice and comment rulemaking) that
may include open door forums, town hall
meetings, web-based forums, or other
appropriate mechanisms.
(E) Operational list of patient relationship
categories and codes.--Not later than 240 days
after the end of the comment period described
in subparagraph (D), taking into account the
comments received under such subparagraph, the
Secretary shall post on the Internet website of
the Centers for Medicare & Medicaid Services an
operational list of patient relationship
categories and codes.
(F) Subsequent revisions.--Not later than
November 1 of each year (beginning with 2018),
the Secretary shall, through rulemaking, make
revisions to the operational list of patient
relationship categories and codes as the
Secretary determines appropriate. Such
revisions may be based on experience, new
information developed pursuant to subsection
(n)(9)(A), and input from the physician
specialty societies, applicable practitioner
organizations, and other stakeholders,
including representatives of individuals
entitled to benefits under part A or enrolled
under this part.
(4) Reporting of information for resource use
measurement.--Claims submitted for items and services
furnished by a physician or applicable practitioner on
or after January 1, 2018, shall, as determined
appropriate by the Secretary, include--
(A) applicable codes established under
paragraphs (2) and (3); and
(B) the national provider identifier of the
ordering physician or applicable practitioner
(if different from the billing physician or
applicable practitioner).
(5) Methodology for resource use analysis.--
(A) In general.--In order to evaluate the
resources used to treat patients (with respect
to care episode and patient condition groups),
the Secretary shall, as the Secretary
determines appropriate--
(i) use the patient relationship
codes reported on claims pursuant to
paragraph (4) to attribute patients (in
whole or in part) to one or more
physicians and applicable
practitioners;
(ii) use the care episode and patient
condition codes reported on claims
pursuant to paragraph (4) as a basis to
compare similar patients and care
episodes and patient condition groups;
and
(iii) conduct an analysis of resource
use (with respect to care episodes and
patient condition groups of such
patients).
(B) Analysis of patients of physicians and
practitioners.--In conducting the analysis
described in subparagraph (A)(iii) with respect
to patients attributed to physicians and
applicable practitioners, the Secretary shall,
as feasible--
(i) use the claims data experience of
such patients by patient condition
codes during a common period, such as
12 months; and
(ii) use the claims data experience
of such patients by care episode
codes--
(I) in the case of episodes
without a hospitalization,
during periods of time (such as
the number of days) determined
appropriate by the Secretary;
and
(II) in the case of episodes
with a hospitalization, during
periods of time (such as the
number of days) before, during,
and after the hospitalization.
(C) Measurement of resource use.--In
measuring such resource use, the Secretary--
(i) shall use per patient total
allowed charges for all services under
part A and this part (and, if the
Secretary determines appropriate, part
D) for the analysis of patient resource
use, by care episode codes and by
patient condition codes; and
(ii) may, as determined appropriate,
use other measures of allowed charges
(such as subtotals for categories of
items and services) and measures of
utilization of items and services (such
as frequency of specific items and
services and the ratio of specific
items and services among attributed
patients or episodes).
(D) Stakeholder input.--The Secretary shall
seek comments from the physician specialty
societies, applicable practitioner
organizations, and other stakeholders,
including representatives of individuals
entitled to benefits under part A or enrolled
under this part, regarding the resource use
methodology established pursuant to this
paragraph. In seeking comments the Secretary
shall use one or more mechanisms (other than
notice and comment rulemaking) that may include
open door forums, town hall meetings, web-based
forums, or other appropriate mechanisms.
(6) Implementation.--To the extent that the Secretary
contracts with an entity to carry out any part of the
provisions of this subsection, the Secretary may not
contract with an entity or an entity with a subcontract
if the entity or subcontracting entity currently makes
recommendations to the Secretary on relative values for
services under the fee schedule for physicians'
services under this section.
(7) Limitation.--There shall be no administrative or
judicial review under section 1869, section 1878, or
otherwise of--
(A) care episode and patient condition groups
and codes established under paragraph (2);
(B) patient relationship categories and codes
established under paragraph (3); and
(C) measurement of, and analyses of resource
use with respect to, care episode and patient
condition codes and patient relationship codes
pursuant to paragraph (5).
(8) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to this section.
(9) Definitions.--In this subsection:
(A) Physician.--The term ``physician'' has
the meaning given such term in section
1861(r)(1).
(B) Applicable practitioner.--The term
``applicable practitioner'' means--
(i) a physician assistant, nurse
practitioner, and clinical nurse
specialist (as such terms are defined
in section 1861(aa)(5)), and a
certified registered nurse anesthetist
(as defined in section 1861(bb)(2));
and
(ii) beginning January 1, 2019, such
other eligible professionals (as
defined in subsection (k)(3)(B)) as
specified by the Secretary.
(10) Clarification.--The provisions of sections
1890(b)(7) and 1890A shall not apply to this
subsection.
(s) Priorities and Funding for Measure Development.--
(1) Plan identifying measure development priorities
and timelines.--
(A) Draft measure development plan.--Not
later than January 1, 2016, the Secretary shall
develop, and post on the Internet website of
the Centers for Medicare & Medicaid Services, a
draft plan for the development of quality
measures for application under the applicable
provisions (as defined in paragraph (5)). Under
such plan the Secretary shall--
(i) address how measures used by
private payers and integrated delivery
systems could be incorporated under
title XVIII;
(ii) describe how coordination, to
the extent possible, will occur across
organizations developing such measures;
and
(iii) take into account how clinical
best practices and clinical practice
guidelines should be used in the
development of quality measures.
(B) Quality domains.--For purposes of this
subsection, the term ``quality domains'' means
at least the following domains:
(i) Clinical care.
(ii) Safety.
(iii) Care coordination.
(iv) Patient and caregiver
experience.
(v) Population health and prevention.
(C) Consideration.--In developing the draft
plan under this paragraph, the Secretary shall
consider--
(i) gap analyses conducted by the
entity with a contract under section
1890(a) or other contractors or
entities;
(ii) whether measures are applicable
across health care settings;
(iii) clinical practice improvement
activities submitted under subsection
(q)(2)(C)(iv) for identifying possible
areas for future measure development
and identifying existing gaps with
respect to such measures; and
(iv) the quality domains applied
under this subsection.
(D) Priorities.--In developing the draft plan
under this paragraph, the Secretary shall give
priority to the following types of measures:
(i) Outcome measures, including
patient reported outcome and functional
status measures.
(ii) Patient experience measures.
(iii) Care coordination measures.
(iv) Measures of appropriate use of
services, including measures of over
use.
(E) Stakeholder input.--The Secretary shall
accept through March 1, 2016, comments on the
draft plan posted under paragraph (1)(A) from
the public, including health care providers,
payers, consumers, and other stakeholders.
(F) Final measure development plan.--Not
later than May 1, 2016, taking into account the
comments received under this subparagraph, the
Secretary shall finalize the plan and post on
the Internet website of the Centers for
Medicare & Medicaid Services an operational
plan for the development of quality measures
for use under the applicable provisions. Such
plan shall be updated as appropriate.
(2) Contracts and other arrangements for quality
measure development.--
(A) In general.--The Secretary shall enter
into contracts or other arrangements with
entities for the purpose of developing,
improving, updating, or expanding in accordance
with the plan under paragraph (1) quality
measures for application under the applicable
provisions. Such entities shall include
organizations with quality measure development
expertise.
(B) Prioritization.--
(i) In general.--In entering into
contracts or other arrangements under
subparagraph (A), the Secretary shall
give priority to the development of the
types of measures described in
paragraph (1)(D).
(ii) Consideration.--In selecting
measures for development under this
subsection, the Secretary shall
consider--
(I) whether such measures
would be electronically
specified; and
(II) clinical practice
guidelines to the extent that
such guidelines exist.
(3) Annual report by the secretary.--
(A) In general.--Not later than May 1, 2017,
and annually thereafter, the Secretary shall
post on the Internet website of the Centers for
Medicare & Medicaid Services a report on the
progress made in developing quality measures
for application under the applicable
provisions.
(B) Requirements.--Each report submitted
pursuant to subparagraph (A) shall include the
following:
(i) A description of the Secretary's
efforts to implement this paragraph.
(ii) With respect to the measures
developed during the previous year--
(I) a description of the
total number of quality
measures developed and the
types of such measures, such as
an outcome or patient
experience measure;
(II) the name of each measure
developed;
(III) the name of the
developer and steward of each
measure;
(IV) with respect to each
type of measure, an estimate of
the total amount expended under
this title to develop all
measures of such type; and
(V) whether the measure would
be electronically specified.
(iii) With respect to measures in
development at the time of the report--
(I) the information described
in clause (ii), if available;
and
(II) a timeline for
completion of the development
of such measures.
(iv) A description of any updates to
the plan under paragraph (1) (including
newly identified gaps and the status of
previously identified gaps) and the
inventory of measures applicable under
the applicable provisions.
(v) Other information the Secretary
determines to be appropriate.
(4) Stakeholder input.--With respect to paragraph
(1), the Secretary shall seek stakeholder input with
respect to--
(A) the identification of gaps where no
quality measures exist, particularly with
respect to the types of measures described in
paragraph (1)(D);
(B) prioritizing quality measure development
to address such gaps; and
(C) other areas related to quality measure
development determined appropriate by the
Secretary.
(5) Definition of applicable provisions.--In this
subsection, the term ``applicable provisions'' means
the following provisions:
(A) Subsection (q)(2)(B)(i).
(B) Section 1833(z)(3)(D).
(6) Funding.--For purposes of carrying out this
subsection, the Secretary shall provide for the
transfer, from the Federal Supplementary Medical
Insurance Trust Fund under section 1841, of $15,000,000
to the Centers for Medicare & Medicaid Services Program
Management Account for each of fiscal years 2015
through 2019. Amounts transferred under this paragraph
shall remain available through the end of fiscal year
2022.
(7) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to the collection of
information for the development of quality measures.
* * * * * * *
Part D--Voluntary Prescription Drug Benefit Program
Subpart 1--Part D Eligible Individuals and Prescription Drug Benefits
* * * * * * *
beneficiary protections for qualified prescription drug coverage
Sec. 1860D-4. (a) Dissemination of Information.--
(1) General information.--
(A) Application of ma information.--A PDP
sponsor shall disclose, in a clear, accurate,
and standardized form to each enrollee with a
prescription drug plan offered by the sponsor
under this part at the time of enrollment and
at least annually thereafter, the information
described in section 1852(c)(1) relating to
such plan, insofar as the Secretary determines
appropriate with respect to benefits provided
under this part, and, subject to subparagraph
(C), including the information described in
subparagraph (B).
(B) Drug specific information.--The
information described in this subparagraph is
information concerning the following:
(i) Access to specific covered part D
drugs, including access through
pharmacy networks.
(ii) How any formulary (including any
tiered formulary structure) used by the
sponsor functions, including a
description of how a part D eligible
individual may obtain information on
the formulary consistent with paragraph
(3).
(iii) Beneficiary cost-sharing
requirements and how a part D eligible
individual may obtain information on
such requirements, including tiered or
other copayment level applicable to
each drug (or class of drugs),
consistent with paragraph (3).
(iv) The medication therapy
management program required under
subsection (c).
(v) The drug management program for
at-risk beneficiaries under subsection
(c)(5).
(vi) For plan year 2021 and each
subsequent plan year, subject to
subparagraph (C), with respect to the
treatment of pain--
(I) the risks associated with
prolonged opioid use; and
(II) coverage of
nonpharmacological therapies,
devices, and nonopioid
medications--
(aa) in the case of
an MA-PD plan under
part C, under such
plan; and
(bb) in the case of a
prescription drug plan,
under such plan and
under parts A and B.
(C) Targeted provision of information.--A PDP
sponsor of a prescription drug plan may, in
lieu of disclosing the information described in
subparagraph (B)(vi) to each enrollee under the
plan, disclose such information through mail or
electronic communications to a subset of
enrollees under the plan, such as enrollees who
have been prescribed an opioid in the previous
2-year period.
(2) Disclosure upon request of general coverage,
utilization, and grievance information.--Upon request
of a part D eligible individual who is eligible to
enroll in a prescription drug plan, the PDP sponsor
offering such plan shall provide information similar
(as determined by the Secretary) to the information
described in subparagraphs (A), (B), and (C) of section
1852(c)(2) to such individual.
(3) Provision of specific information.--
(A) Response to beneficiary questions.--Each
PDP sponsor offering a prescription drug plan
shall have a mechanism for providing specific
information on a timely basis to enrollees upon
request. Such mechanism shall include access to
information through the use of a toll-free
telephone number and, upon request, the
provision of such information in writing.
(B) Availability of information on changes in
formulary through the internet.--A PDP sponsor
offering a prescription drug plan shall make
available on a timely basis through an Internet
website information on specific changes in the
formulary under the plan (including changes to
tiered or preferred status of covered part D
drugs).
(4) Claims information.--A PDP sponsor offering a
prescription drug plan must furnish to each enrollee in
a form easily understandable to such enrollees--
(A) an explanation of benefits (in accordance
with section 1806(a) or in a comparable
manner); and
(B) when prescription drug benefits are
provided under this part, a notice of the
benefits in relation to--
(i) the initial coverage limit for
the current year; and
(ii) the annual out-of-pocket
threshold for the current year.
Notices under subparagraph (B) need not be
provided more often than as specified by the
Secretary and notices under subparagraph
(B)(ii) shall take into account the application
of section 1860D-2(b)(4)(C) to the extent
practicable, as specified by the Secretary.
(b) Access to Covered Part D Drugs.--
(1) Assuring pharmacy access.--
(A) Participation of any willing pharmacy.--A
prescription drug plan shall permit the
participation of any pharmacy that meets the
terms and conditions under the plan.
(B) Discounts allowed for network
pharmacies.--For covered part D drugs dispensed
through in-network pharmacies, a prescription
drug plan may, notwithstanding subparagraph
(A), reduce coinsurance or copayments for part
D eligible individuals enrolled in the plan
below the level otherwise required. In no case
shall such a reduction result in an increase in
payments made by the Secretary under section
1860D-15 to a plan.
(C) Convenient access for network
pharmacies.--
(i) In general.--The PDP sponsor of
the prescription drug plan shall secure
the participation in its network of a
sufficient number of pharmacies that
dispense (other than by mail order)
drugs directly to patients to ensure
convenient access (consistent with
rules established by the Secretary).
(ii) Application of tricare
standards.--The Secretary shall
establish rules for convenient access
to in-network pharmacies under this
subparagraph that are no less favorable
to enrollees than the rules for
convenient access to pharmacies
included in the statement of work of
solicitation (#MDA906-03-R-0002) of the
Department of Defense under the TRICARE
Retail Pharmacy (TRRx) as of March 13,
2003.
(iii) Adequate emergency access.--
Such rules shall include adequate
emergency access for enrollees.
(iv) Convenient access in long-term
care facilities.--Such rules may
include standards with respect to
access for enrollees who are residing
in long-term care facilities and for
pharmacies operated by the Indian
Health Service, Indian tribes and
tribal organizations, and urban Indian
organizations (as defined in section 4
of the Indian Health Care Improvement
Act).
(D) Level playing field.--Such a sponsor
shall permit enrollees to receive benefits
(which may include a 90-day supply of drugs or
biologicals) through a pharmacy (other than a
mail order pharmacy), with any differential in
charge paid by such enrollees.
(E) Not required to accept insurance risk.--
The terms and conditions under subparagraph (A)
may not require participating pharmacies to
accept insurance risk as a condition of
participation.
(2) Use of standardized technology.--
(A) In general.--The PDP sponsor of a
prescription drug plan shall issue (and
reissue, as appropriate) such a card (or other
technology) that may be used by an enrollee to
assure access to negotiated prices under
section 1860D-2(d).
(B) Standards.--
(i) In general.--The Secretary shall
provide for the development, adoption,
or recognition of standards relating to
a standardized format for the card or
other technology required under
subparagraph (A). Such standards shall
be compatible with part C of title XI
and may be based on standards developed
by an appropriate standard setting
organization.
(ii) Consultation.--In developing the
standards under clause (i), the
Secretary shall consult with the
National Council for Prescription Drug
Programs and other standard setting
organizations determined appropriate by
the Secretary.
(iii) Implementation.--The Secretary
shall develop, adopt, or recognize the
standards under clause (i) by such date
as the Secretary determines shall be
sufficient to ensure that PDP sponsors
utilize such standards beginning
January 1, 2006.
(3) Requirements on development and application of
formularies.--If a PDP sponsor of a prescription drug
plan uses a formulary (including the use of tiered
cost-sharing), the following requirements must be met:
(A) Development and revision by a pharmacy
and therapeutic (p&t) committee.--
(i) In general.--The formulary must
be developed and reviewed by a pharmacy
and therapeutic committee. A majority
of the members of such committee shall
consist of individuals who are
practicing physicians or practicing
pharmacists (or both).
(ii) Inclusion of independent
experts.--Such committee shall include
at least one practicing physician and
at least one practicing pharmacist,
each of whom--
(I) is independent and free
of conflict with respect to the
sponsor and plan; and
(II) has expertise in the
care of elderly or disabled
persons.
(B) Formulary development.--In developing and
reviewing the formulary, the committee shall--
(i) base clinical decisions on the
strength of scientific evidence and
standards of practice, including
assessing peer-reviewed medical
literature, such as randomized clinical
trials, pharmacoeconomic studies,
outcomes research data, and on such
other information as the committee
determines to be appropriate; and
(ii) take into account whether
including in the formulary (or in a
tier in such formulary) particular
covered part D drugs has therapeutic
advantages in terms of safety and
efficacy.
(C) Inclusion of drugs in all therapeutic
categories and classes.--
(i) In general.--Subject to
subparagraph (G), the formulary must
include drugs within each therapeutic
category and class of covered part D
drugs, although not necessarily all
drugs within such categories and
classes.
(ii) Model guidelines.--The Secretary
shall request the United States
Pharmacopeia to develop, in
consultation with pharmaceutical
benefit managers and other interested
parties, a list of categories and
classes that may be used by
prescription drug plans under this
paragraph and to revise such
classification from time to time to
reflect changes in therapeutic uses of
covered part D drugs and the additions
of new covered part D drugs.
(iii) Limitation on changes in
therapeutic classification.--The PDP
sponsor of a prescription drug plan may
not change the therapeutic categories
and classes in a formulary other than
at the beginning of each plan year
except as the Secretary may permit to
take into account new therapeutic uses
and newly approved covered part D
drugs.
(D) Provider and patient education.--The PDP
sponsor shall establish policies and procedures
to educate and inform health care providers and
enrollees concerning the formulary.
(E) Notice before removing drug from
formulary or changing preferred or tier status
of drug.--Any removal of a covered part D drug
from a formulary and any change in the
preferred or tiered cost-sharing status of such
a drug shall take effect only after appropriate
notice is made available (such as under
subsection (a)(3)) to the Secretary, affected
enrollees, physicians, pharmacies, and
pharmacists.
(F) Periodic evaluation of protocols.--In
connection with the formulary, the sponsor of a
prescription drug plan shall provide for the
periodic evaluation and analysis of treatment
protocols and procedures.
(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).
(iii) 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.
(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.
(c) Cost and Utilization Management; Quality Assurance;
Medication Therapy Management Program.--
(1) In general.--The PDP sponsor shall have in place,
directly or through appropriate arrangements, with
respect to covered part D drugs, the following:
(A) A cost-effective drug utilization
management program, including incentives to
reduce costs when medically appropriate, such
as through the use of multiple source drugs (as
defined in section 1927(k)(7)(A)(i)).
(B) Quality assurance measures and systems to
reduce medication errors and adverse drug
interactions and improve medication use.
(C) A medication therapy management program
described in paragraph (2).
(D) A program to control fraud, abuse, and
waste.
(E) A utilization management tool to prevent
drug abuse (as described in paragraph (6)(A)).
(F) With respect to plan years beginning on
or after January 1, 2022, a drug management
program for at-risk beneficiaries described in
paragraph (5).
Nothing in this section shall be construed as impairing
a PDP sponsor from utilizing cost management tools
(including differential payments) under all methods of
operation.
(2) Medication therapy management program.--
(A) Description.--
(i) In general.--A medication therapy
management program described in this
paragraph is a program of drug therapy
management that may be furnished by a
pharmacist and that is designed to
assure, with respect to targeted
beneficiaries described in clause (ii),
that covered part D drugs under the
prescription drug plan are
appropriately used to optimize
therapeutic outcomes through improved
medication use, and to reduce the risk
of adverse events, including adverse
drug interactions. Such a program may
distinguish between services in
ambulatory and institutional settings.
(ii) Targeted beneficiaries
described.--Targeted beneficiaries
described in this clause are the
following:
(I) Part D eligible
individuals who--
(aa) have multiple
chronic diseases (such
as diabetes, asthma,
hypertension,
hyperlipidemia, and
congestive heart
failure);
(bb) are taking
multiple covered part D
drugs; and
(cc) are identified
as likely to incur
annual costs for
covered part D drugs
that exceed a level
specified by the
Secretary.
(II) Beginning January 1,
2021, at-risk beneficiaries for
prescription drug abuse (as
defined in paragraph (5)(C)).
(B) Elements.--Such program--
(i) may include elements that
promote--
(I) enhanced enrollee
understanding to promote the
appropriate use of medications
by enrollees and to reduce the
risk of potential adverse
events associated with
medications, through
beneficiary education,
counseling, and other
appropriate means;
(II) increased enrollee
adherence with prescription
medication regimens through
medication refill reminders,
special packaging, and other
compliance programs and other
appropriate means; and
(III) detection of adverse
drug events and patterns of
overuse and underuse of
prescription drugs; and
(ii) with respect to plan years
beginning on or after January 1, 2021,
shall provide for--
(I) the provision of
information to the enrollee on
the safe disposal of
prescription drugs that are
controlled substances that
meets the criteria established
under section 1852(n)(2),
including information on drug
takeback programs that meet
such requirements determined
appropriate by the Secretary
and information on in-home
disposal; and
(II) cost-effective means by
which an enrollee may so safely
dispose of such drugs.
(C) Required interventions.--For plan years
beginning on or after the date that is 2 years
after the date of the enactment of the Patient
Protection and Affordable Care Act,
prescription drug plan sponsors shall offer
medication therapy management services to
targeted beneficiaries described in
subparagraph (A)(ii) that include, at a
minimum, the following to increase adherence to
prescription medications or other goals deemed
necessary by the Secretary:
(i) An annual comprehensive
medication review furnished person-to-
person or using telehealth technologies
(as defined by the Secretary) by a
licensed pharmacist or other qualified
provider. The comprehensive medication
review--
(I) shall include a review of
the individual's medications
and may result in the creation
of a recommended medication
action plan or other actions in
consultation with the
individual and with input from
the prescriber to the extent
necessary and practicable; and
(II) shall include providing
the individual with a written
or printed summary of the
results of the review.
The Secretary, in consultation with
relevant stakeholders, shall develop a
standardized format for the action plan
under subclause (I) and the summary
under subclause (II).
(ii) Follow-up interventions as
warranted based on the findings of the
annual medication review or the
targeted medication enrollment and
which may be provided person-to-person
or using telehealth technologies (as
defined by the Secretary).
(D) Assessment.--The prescription drug plan
sponsor shall have in place a process to
assess, at least on a quarterly basis, the
medication use of individuals who are at risk
but not enrolled in the medication therapy
management program, including individuals who
have experienced a transition in care, if the
prescription drug plan sponsor has access to
that information.
(E) Automatic enrollment with ability to opt-
out.--The prescription drug plan sponsor shall
have in place a process to--
(i) subject to clause (ii),
automatically enroll targeted
beneficiaries described in subparagraph
(A)(ii), including beneficiaries
identified under subparagraph (D), in
the medication therapy management
program required under this subsection;
and
(ii) permit such beneficiaries to
opt-out of enrollment in such program.
(E) Development of program in cooperation
with licensed pharmacists.--Such program shall
be developed in cooperation with licensed and
practicing pharmacists and physicians.
(F) Coordination with care management
plans.--The Secretary shall establish
guidelines for the coordination of any
medication therapy management program under
this paragraph with respect to a targeted
beneficiary with any care management plan
established with respect to such beneficiary
under a chronic care improvement program under
section 1807.
(G) Considerations in pharmacy fees.--The PDP
sponsor of a prescription drug plan shall take
into account, in establishing fees for
pharmacists and others providing services under
such plan, the resources used, and time
required to, implement the medication therapy
management program under this paragraph. Each
such sponsor shall disclose to the Secretary
upon request the amount of any such management
or dispensing fees. The provisions of section
1927(b)(3)(D) apply to information disclosed
under this subparagraph.
(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.
(4) Requiring valid prescriber national provider
identifiers on pharmacy claims.--
(A) In general.--For plan year 2016 and
subsequent plan years, the Secretary shall
require a claim for a covered part D drug for a
part D eligible individual enrolled in a
prescription drug plan under this part or an
MA-PD plan under part C to include a prescriber
National Provider Identifier that is determined
to be valid under the procedures established
under subparagraph (B)(i).
(B) Procedures.--
(i) Validity of prescriber national
provider identifiers.--The Secretary,
in consultation with appropriate
stakeholders, shall establish
procedures for determining the validity
of prescriber National Provider
Identifiers under subparagraph (A).
(ii) Informing beneficiaries of
reason for denial.--The Secretary shall
establish procedures to ensure that, in
the case that a claim for a covered
part D drug of an individual described
in subparagraph (A) is denied because
the claim does not meet the
requirements of this paragraph, the
individual is properly informed at the
point of service of the reason for the
denial.
(C) Report.--Not later than January 1, 2018,
the Inspector General of the Department of
Health and Human Services shall submit to
Congress a report on the effectiveness of the
procedures established under subparagraph
(B)(i).
(D) Notification and additional requirements
with respect to outlier prescribers of
opioids.--
(i) Notification.--Not later than
January 1, 2021, the Secretary shall,
in the case of a prescriber identified
by the Secretary under clause (ii) to
be an outlier prescriber of opioids,
provide, subject to clause (iv), an
annual notification to such prescriber
that such prescriber has been so
identified and that includes resources
on proper prescribing methods and other
information as specified in accordance
with clause (iii).
(ii) Identification of outlier
prescribers of opioids.--
(I) In general.--The
Secretary shall, subject to
subclause (III), using the
valid prescriber National
Provider Identifiers included
pursuant to subparagraph (A) on
claims for covered part D drugs
for part D eligible individuals
enrolled in prescription drug
plans under this part or MA-PD
plans under part C and based on
the thresholds established
under subclause (II), identify
prescribers that are outlier
opioids prescribers for a
period of time specified by the
Secretary.
(II) Establishment of
thresholds.--For purposes of
subclause (I) and subject to
subclause (III), the Secretary
shall, after consultation with
stakeholders, establish
thresholds, based on prescriber
specialty and geographic area,
for identifying whether a
prescriber in a specialty and
geographic area is an outlier
prescriber of opioids as
compared to other prescribers
of opioids within such
specialty and area.
(III) Exclusions.--The
following shall not be included
in the analysis for identifying
outlier prescribers of opioids
under this clause:
(aa) Claims for
covered part D drugs
for part D eligible
individuals who are
receiving hospice care
under this title.
(bb) Claims for
covered part D drugs
for part D eligible
individuals who are
receiving oncology
services under this
title.
(cc) Prescribers who
are the subject of an
investigation by the
Centers for Medicare &
Medicaid Services or
the Inspector General
of the Department of
Health and Human
Services.
(iii) Contents of notification.--The
Secretary shall include the following
information in the notifications
provided under clause (i):
(I) Information on how such
prescriber compares to other
prescribers within the same
specialty and geographic area.
(II) Information on opioid
prescribing guidelines, based
on input from stakeholders,
that may include the Centers
for Disease Control and
Prevention guidelines for
prescribing opioids for chronic
pain and guidelines developed
by physician organizations.
(III) Other information
determined appropriate by the
Secretary.
(iv) Modifications and expansions.--
(I) Frequency.--Beginning 5
years after the date of the
enactment of this subparagraph,
the Secretary may change the
frequency of the notifications
described in clause (i) based
on stakeholder input and
changes in opioid prescribing
utilization and trends.
(II) Expansion to other
prescriptions.--The Secretary
may expand notifications under
this subparagraph to include
identifications and
notifications with respect to
concurrent prescriptions of
covered Part D drugs used in
combination with opioids that
are considered to have adverse
side effects when so used in
such combination, as determined
by the Secretary.
(v) Additional requirements for
persistent outlier prescribers.--In the
case of a prescriber who the Secretary
determines is persistently identified
under clause (ii) as an outlier
prescriber of opioids, the following
shall apply:
(I) Such prescriber may be
required to enroll in the
program under this title under
section 1866(j) if such
prescriber is not otherwise
required to enroll, but only
after other appropriate
remedies have been provided,
such as the provision of
education funded through
section 6052 of the SUPPORT for
Patients and Communities Act,
for a period determined by the
Secretary as sufficient to
correct the prescribing
patterns that lead to
identification of such
prescriber as a persistent
outlier prescriber of opioids.
The Secretary shall determine
the length of the period for
which such prescriber is
required to maintain such
enrollment, which shall be the
minimum period necessary to
correct such prescribing
patterns.
(II) Not less frequently than
annually (and in a form and
manner determined appropriate
by the Secretary), the
Secretary, consistent with
clause(iv)(I), shall
communicate information on such
prescribers to sponsors of a
prescription drug plan and
Medicare Advantage
organizations offering an MA-PD
plan.
(vi) Public availability of
information.--The Secretary shall make
aggregate information under this
subparagraph available on the internet
website of the Centers for Medicare &
Medicaid Services. Such information
shall be in a form and manner
determined appropriate by the Secretary
and shall not identify any specific
prescriber. In carrying out this
clause, the Secretary shall consult
with interested stakeholders.
(vii) Opioids defined.--For purposes
of this subparagraph, the term
``opioids'' has such meaning as
specified by the Secretary.
(viii) Other activities.--Nothing in
this subparagraph shall preclude the
Secretary from conducting activities
that provide prescribers with
information as to how they compare to
other prescribers that are in addition
to the activities under this
subparagraph, including activities that
were being conducted as of the date of
the enactment of this subparagraph.
(5) Drug management program for at-risk
beneficiaries.--
(A) Authority to establish.--A PDP sponsor
may (and for plan years beginning on or after
January 1, 2022, a PDP sponsor shall) establish
a drug management program for at-risk
beneficiaries under which, subject to
subparagraph (B), the PDP sponsor may, in the
case of an at-risk beneficiary for prescription
drug abuse who is an enrollee in a prescription
drug plan of such PDP sponsor, limit such
beneficiary's access to coverage for frequently
abused drugs under such plan to frequently
abused drugs that are prescribed for such
beneficiary by one or more prescribers selected
under subparagraph (D), and dispensed for such
beneficiary by one or more pharmacies selected
under such subparagraph.
(B) Requirement for notices.--
(i) In general.--A PDP sponsor may
not limit the access of an at-risk
beneficiary for prescription drug abuse
to coverage for frequently abused drugs
under a prescription drug plan until
such sponsor--
(I) provides to the
beneficiary an initial notice
described in clause (ii) and a
second notice described in
clause (iii); and
(II) verifies with the
providers of the beneficiary
that the beneficiary is an at-
risk beneficiary for
prescription drug abuse.
(ii) Initial notice.--An initial
notice described in this clause is a
notice that provides to the
beneficiary--
(I) notice that the PDP
sponsor has identified the
beneficiary as potentially
being an at-risk beneficiary
for prescription drug abuse;
(II) information describing
all State and Federal public
health resources that are
designed to address
prescription drug abuse to
which the beneficiary has
access, including mental health
services and other counseling
services;
(III) notice of, and
information about, the right of
the beneficiary to appeal such
identification under subsection
(h), including notice that if
on reconsideration a PDP
sponsor affirms its denial, in
whole or in part, the case
shall be automatically
forwarded to the independent,
outside entity contracted with
the Secretary for review and
resolution;
(IV) a request for the
beneficiary to submit to the
PDP sponsor preferences for
which prescribers and
pharmacies the beneficiary
would prefer the PDP sponsor to
select under subparagraph (D)
in the case that the
beneficiary is identified as an
at-risk beneficiary for
prescription drug abuse as
described in clause (iii)(I);
(V) an explanation of the
meaning and consequences of the
identification of the
beneficiary as potentially
being an at-risk beneficiary
for prescription drug abuse,
including an explanation of the
drug management program
established by the PDP sponsor
pursuant to subparagraph (A);
(VI) clear instructions that
explain how the beneficiary can
contact the PDP sponsor in
order to submit to the PDP
sponsor the preferences
described in subclause (IV) and
any other communications
relating to the drug management
program for at-risk
beneficiaries established by
the PDP sponsor; and
(VII) contact information for
other organizations that can
provide the beneficiary with
assistance regarding such drug
management program (similar to
the information provided by the
Secretary in other standardized
notices provided to part D
eligible individuals enrolled
in prescription drug plans
under this part).
(iii) Second notice.--A second notice
described in this clause is a notice
that provides to the beneficiary
notice--
(I) that the PDP sponsor has
identified the beneficiary as
an at-risk beneficiary for
prescription drug abuse;
(II) that such beneficiary is
subject to the requirements of
the drug management program for
at-risk beneficiaries
established by such PDP sponsor
for such plan;
(III) of the prescriber (or
prescribers) and pharmacy (or
pharmacies) selected for such
individual under subparagraph
(D);
(IV) of, and information
about, the beneficiary's right
to appeal such identification
under subsection (h), including
notice that if on
reconsideration a PDP sponsor
affirms its denial, in whole or
in part, the case shall be
automatically forwarded to the
independent, outside entity
contracted with the Secretary
for review and resolution;
(V) that the beneficiary can,
in the case that the
beneficiary has not previously
submitted to the PDP sponsor
preferences for which
prescribers and pharmacies the
beneficiary would prefer the
PDP sponsor select under
subparagraph (D), submit such
preferences to the PDP sponsor;
and
(VI) that includes clear
instructions that explain how
the beneficiary can contact the
PDP sponsor.
(iv) Timing of notices.--
(I) In general.--Subject to
subclause (II), a second notice
described in clause (iii) shall
be provided to the beneficiary
on a date that is not less than
30 days after an initial notice
described in clause (ii) is
provided to the beneficiary.
(II) Exception.--In the case
that the PDP sponsor, in
conjunction with the Secretary,
determines that concerns
identified through rulemaking
by the Secretary regarding the
health or safety of the
beneficiary or regarding
significant drug diversion
activities require the PDP
sponsor to provide a second
notice described in clause
(iii) to the beneficiary on a
date that is earlier than the
date described in subclause
(I), the PDP sponsor may
provide such second notice on
such earlier date.
(C) At-risk beneficiary for prescription drug
abuse.--
(i) In general.--Except as provided
in clause (v), for purposes of this
paragraph, the term ``at-risk
beneficiary for prescription drug
abuse'' means a part D eligible
individual who is not an exempted
individual described in clause (ii)
and--
(I) who is identified as such
an at-risk beneficiary through
the use of clinical guidelines
that indicate misuse or abuse
of prescription drugs described
in subparagraph (G) and that
are developed by the Secretary
in consultation with PDP
sponsors and other
stakeholders, including
individuals entitled to
benefits under part A or
enrolled under part B, advocacy
groups representing such
individuals, physicians,
pharmacists, and other
clinicians, retail pharmacies,
plan sponsors, entities
delegated by plan sponsors, and
biopharmaceutical
manufacturers; or
(II) with respect to whom the
PDP sponsor of a prescription
drug plan, upon enrolling such
individual in such plan,
received notice from the
Secretary that such individual
was identified under this
paragraph to be an at-risk
beneficiary for prescription
drug abuse under the
prescription drug plan in which
such individual was most
recently previously enrolled
and such identification has not
been terminated under
subparagraph (F).
(ii) Exempted individual described.--
An exempted individual described in
this clause is an individual who--
(I) receives hospice care
under this title;
(II) is a resident of a long-
term care facility, of a
facility described in section
1905(d), or of another facility
for which frequently abused
drugs are dispensed for
residents through a contract
with a single pharmacy; or
(III) the Secretary elects to
treat as an exempted individual
for purposes of clause (i).
(iii) Program size.--The Secretary
shall establish policies, including the
guidelines developed under clause
(i)(I) and the exemptions under clause
(ii)(III), to ensure that the
population of enrollees in a drug
management program for at-risk
beneficiaries operated by a
prescription drug plan can be
effectively managed by such plans.
(iv) Clinical contact.--With respect
to each at-risk beneficiary for
prescription drug abuse enrolled in a
prescription drug plan offered by a PDP
sponsor, the PDP sponsor shall contact
the beneficiary's providers who have
prescribed frequently abused drugs
regarding whether prescribed
medications are appropriate for such
beneficiary's medical conditions.
(v) Treatment of enrollees with a
history of opioid-related overdose.--
(I) In general.--For plan
years beginning not later than
January 1, 2021, a part D
eligible individual who is not
an exempted individual
described in clause (ii) and
who is identified under this
clause as a part D eligible
individual with a history of
opioid-related overdose (as
defined by the Secretary) shall
be included as a potentially
at-risk beneficiary for
prescription drug abuse under
the drug management program
under this paragraph.
(II) Identification and
notice.--For purposes of this
clause, the Secretary shall--
(aa) identify part D
eligible individuals
with a history of
opioid-related overdose
(as so defined); and
(bb) notify the PDP
sponsor of the
prescription drug plan
in which such an
individual is enrolled
of such identification.
(D) Selection of prescribers and
pharmacies.--
(i) In general.--With respect to each
at-risk beneficiary for prescription
drug abuse enrolled in a prescription
drug plan offered by such sponsor, a
PDP sponsor shall, based on the
preferences submitted to the PDP
sponsor by the beneficiary pursuant to
clauses (ii)(IV) and (iii)(V) of
subparagraph (B) (except as otherwise
provided in this subparagraph) select--
(I) one, or, if the PDP
sponsor reasonably determines
it necessary to provide the
beneficiary with reasonable
access under clause (ii), more
than one, individual who is
authorized to prescribe
frequently abused drugs
(referred to in this paragraph
as a ``prescriber'') who may
write prescriptions for such
drugs for such beneficiary; and
(II) one, or, if the PDP
sponsor reasonably determines
it necessary to provide the
beneficiary with reasonable
access under clause (ii), more
than one, pharmacy that may
dispense such drugs to such
beneficiary.
For purposes of subclause (II), in the
case of a pharmacy that has multiple
locations that share real-time
electronic data, all such locations of
the pharmacy shall collectively be
treated as one pharmacy.
(ii) Reasonable access.--In making
the selections under this
subparagraph--
(I) a PDP sponsor shall
ensure that the beneficiary
continues to have reasonable
access to frequently abused
drugs (as defined in
subparagraph (G)), taking into
account geographic location,
beneficiary preference, impact
on costsharing, and reasonable
travel time; and
(II) a PDP sponsor shall
ensure such access (including
access to prescribers and
pharmacies with respect to
frequently abused drugs) in the
case of individuals with
multiple residences, in the
case of natural disasters and
similar situations, and in the
case of the provision of
emergency services.
(iii) Beneficiary preferences.--If an
at-risk beneficiary for prescription
drug abuse submits preferences for
which in-network prescribers and
pharmacies the beneficiary would prefer
the PDP sponsor select in response to a
notice under subparagraph (B), the PDP
sponsor shall--
(I) review such preferences;
(II) select or change the
selection of prescribers and
pharmacies for the beneficiary
based on such preferences; and
(III) inform the beneficiary
of such selection or change of
selection.
(iv) Exception regarding beneficiary
preferences.--In the case that the PDP
sponsor determines that a change to the
selection of prescriber or pharmacy
under clause (iii)(II) by the PDP
sponsor is contributing or would
contribute to prescription drug abuse
or drug diversion by the beneficiary,
the PDP sponsor may change the
selection of prescriber or pharmacy for
the beneficiary without regard to the
preferences of the beneficiary
described in clause (iii). If the PDP
sponsor changes the selection pursuant
to the preceding sentence, the PDP
sponsor shall provide the beneficiary
with--
(I) at least 30 days written
notice of the change of
selection; and
(II) a rationale for the
change.
(v) Confirmation.--Before selecting a
prescriber or pharmacy under this
subparagraph, a PDP sponsor must notify
the prescriber and pharmacy that the
beneficiary involved has been
identified for inclusion in the drug
management program for at-risk
beneficiaries and that the prescriber
and pharmacy has been selected as the
beneficiary's designated prescriber and
pharmacy.
(E) Terminations and appeals.--The
identification of an individual as an at-risk
beneficiary for prescription drug abuse under
this paragraph, a coverage determination made
under a drug management program for at-risk
beneficiaries, the selection of prescriber or
pharmacy under subparagraph (D), and
information to be shared under subparagraph
(I), with respect to such individual, shall be
subject to reconsideration and appeal under
subsection (h) and if on reconsideration a PDP
sponsor affirms its denial, in whole or in
part, the case shall be automatically forwarded
to the independent, outside entity contracted
with the Secretary for review and resolution.
(F) Termination of identification.--
(i) In general.--The Secretary shall
develop standards for the termination
of identification of an individual as
an at-risk beneficiary for prescription
drug abuse under this paragraph. Under
such standards such identification
shall terminate as of the earlier of--
(I) the date the individual
demonstrates that the
individual is no longer likely,
in the absence of the
restrictions under this
paragraph, to be an at-risk
beneficiary for prescription
drug abuse described in
subparagraph (C)(i); and
(II) the end of such maximum
period of identification as the
Secretary may specify.
(ii) Rule of construction.--Nothing
in clause (i) shall be construed as
preventing a plan from identifying an
individual as an at-risk beneficiary
for prescription drug abuse under
subparagraph (C)(i) after such
termination on the basis of additional
information on drug use occurring after
the date of notice of such termination.
(G) Frequently abused drug.--For purposes of
this subsection, the term ``frequently abused
drug'' means a drug that is a controlled
substance that the Secretary determines to be
frequently abused or diverted.
(H) Data disclosure.--
(i) Data on decision to impose
limitation.--In the case of an at-risk
beneficiary for prescription drug abuse
(or an individual who is a potentially
at-risk beneficiary for prescription
drug abuse) whose access to coverage
for frequently abused drugs under a
prescription drug plan has been limited
by a PDP sponsor under this paragraph,
the Secretary shall establish rules and
procedures to require the PDP sponsor
to disclose data, including any
necessary individually identifiable
health information, in a form and
manner specified by the Secretary,
about the decision to impose such
limitations and the limitations imposed
by the sponsor under this part.
(ii) Data to reduce fraud, abuse, and
waste.--The Secretary shall establish
rules and procedures to require PDP
sponsors operating a drug management
program for at-risk beneficiaries under
this paragraph to provide the Secretary
with such data as the Secretary
determines appropriate for purposes of
identifying patterns of prescription
drug utilization for plan enrollees
that are outside normal patterns and
that may indicate fraudulent, medically
unnecessary, or unsafe use.
(I) Sharing of information for subsequent
plan enrollments.--The Secretary shall
establish procedures under which PDP sponsors
who offer prescription drug plans shall share
information with respect to individuals who are
at-risk beneficiaries for prescription drug
abuse (or individuals who are potentially at-
risk beneficiaries for prescription drug abuse)
and enrolled in a prescription drug plan and
who subsequently disenroll from such plan and
enroll in another prescription drug plan
offered by another PDP sponsor.
(J) Privacy issues.--Prior to the
implementation of the rules and procedures
under this paragraph, the Secretary shall
clarify privacy requirements, including
requirements under the regulations promulgated
pursuant to section 264(c) of the Health
Insurance Portability and Accountability Act of
1996 (42 U.S.C. 1320d-2 note), related to the
sharing of data under subparagraphs (H) and (I)
by PDP sponsors. Such clarification shall
provide that the sharing of such data shall be
considered to be protected health information
in accordance with the requirements of the
regulations promulgated pursuant to such
section 264(c).
(K) Education.--The Secretary shall provide
education to enrollees in prescription drug
plans of PDP sponsors and providers regarding
the drug management program for at-risk
beneficiaries described in this paragraph,
including education--
(i) provided by Medicare
administrative contractors through the
improper payment outreach and education
program described in section 1874A(h);
and
(ii) through current education
efforts (such as State health insurance
assistance programs described in
subsection (a)(1)(A) of section 119 of
the Medicare Improvements for Patients
and Providers Act of 2008 (42 U.S.C.
1395b-3 note)) and materials directed
toward such enrollees.
(L) Application under ma-pd plans.--Pursuant
to section 1860D-21(c)(1), the provisions of
this paragraph apply under part D to MA
organizations offering MA-PD plans to MA
eligible individuals in the same manner as such
provisions apply under this part to a PDP
sponsor offering a prescription drug plan to a
part D eligible individual.
(M) CMS compliance review.--The Secretary
shall ensure that existing plan sponsor
compliance reviews and audit processes include
the drug management programs for at-risk
beneficiaries under this paragraph, including
appeals processes under such programs.
(6) Utilization management tool to prevent drug
abuse.--
(A) In general.--A tool described in this
paragraph is any of the following:
(i) A utilization tool designed to
prevent the abuse of frequently abused
drugs by individuals and to prevent the
diversion of such drugs at pharmacies.
(ii) Retrospective utilization review
to identify--
(I) individuals that receive
frequently abused drugs at a
frequency or in amounts that
are not clinically appropriate;
and
(II) providers of services or
suppliers that may facilitate
the abuse or diversion of
frequently abused drugs by
beneficiaries.
(iii) Consultation with the
contractor described in subparagraph
(B) to verify if an individual
enrolling in a prescription drug plan
offered by a PDP sponsor has been
previously identified by another PDP
sponsor as an individual described in
clause (ii)(I).
(B) Reporting.--A PDP sponsor offering a
prescription drug plan (and an MA organization
offering an MA-PD plan) in a State shall submit
to the Secretary and the Medicare drug
integrity contractor with which the Secretary
has entered into a contract under section 1893
with respect to such State a report, on a
monthly basis, containing information on--
(i) any provider of services or
supplier described in subparagraph
(A)(ii)(II) that is identified by such
plan sponsor (or organization) during
the 30-day period before such report is
submitted; and
(ii) the name and prescription
records of individuals described in
paragraph (5)(C).
(C) CMS compliance review.--The Secretary
shall ensure that plan sponsor compliance
reviews and program audits biennially include a
certification that utilization management tools
under this paragraph are in compliance with the
requirements for such tools.
(6) Providing prescription drug plans with parts a
and b claims data to promote the appropriate use of
medications and improve health outcomes.--
(A) Process.--Subject to subparagraph (B),
the Secretary shall establish a process under
which a PDP sponsor of a prescription drug plan
may submit a request for the Secretary to
provide the sponsor, on a periodic basis and in
an electronic format, beginning in plan year
2020, data described in subparagraph (D) with
respect to enrollees in such plan. Such data
shall be provided without regard to whether
such enrollees are described in clause (ii) of
paragraph (2)(A).
(B) Purposes.--A PDP sponsor may use the data
provided to the sponsor pursuant to
subparagraph (A) for any of the following
purposes:
(i) To optimize therapeutic outcomes
through improved medication use, as
such phrase is used in clause (i) of
paragraph (2)(A).
(ii) To improving care coordination
so as to prevent adverse health
outcomes, such as preventable emergency
department visits and hospital
readmissions.
(iii) For any other purpose
determined appropriate by the
Secretary.
(C) Limitations on data use.--A PDP sponsor
shall not use data provided to the sponsor
pursuant to subparagraph (A) for any of the
following purposes:
(i) To inform coverage determinations
under this part.
(ii) To conduct retroactive reviews
of medically accepted indications
determinations.
(iii) To facilitate enrollment
changes to a different prescription
drug plan or an MA-PD plan offered by
the same parent organization.
(iv) To inform marketing of benefits.
(v) For any other purpose that the
Secretary determines is necessary to
include in order to protect the
identity of individuals entitled to, or
enrolled for, benefits under this title
and to protect the security of personal
health information.
(D) Data described.--The data described in
this clause are standardized extracts (as
determined by the Secretary) of claims data
under parts A and B for items and services
furnished under such parts for time periods
specified by the Secretary. Such data shall
include data as current as practicable.
(d) Consumer Satisfaction Surveys.--In order to provide for
comparative information under section 1860D-1(c)(3)(A)(v), the
Secretary shall conduct consumer satisfaction surveys with
respect to PDP sponsors and prescription drug plans in a manner
similar to the manner such surveys are conducted for MA
organizations and MA plans under part C.
(e) Electronic Prescription Program.--
(1) Application of standards.--As of such date as the
Secretary may specify, but not later than 1 year after
the date of promulgation of final standards under
paragraph (4)(D), prescriptions and other information
described in paragraph (2)(A) for covered part D drugs
prescribed for part D eligible individuals that are
transmitted electronically shall be transmitted only in
accordance with such standards under an electronic
prescription drug program that meets the requirements
of paragraph (2).
(2) Program requirements.--Consistent with uniform
standards established under paragraph (3)--
(A) Provision of information to prescribing
health care professional and dispensing
pharmacies and pharmacists.--An electronic
prescription drug program shall provide for the
electronic transmittal to the prescribing
health care professional and to the dispensing
pharmacy and pharmacist of the prescription and
information on eligibility and benefits
(including the drugs included in the applicable
formulary, any tiered formulary structure, and
any requirements for prior authorization) and
of the following information with respect to
the prescribing and dispensing of a covered
part D drug:
(i) Information on the drug being
prescribed or dispensed and other drugs
listed on the medication history,
including information on drug-drug
interactions, warnings or cautions,
and, when indicated, dosage
adjustments.
(ii) Information on the availability
of lower cost, therapeutically
appropriate alternatives (if any) for
the drug prescribed.
(B) Application to medical history
information.--Effective on and after such date
as the Secretary specifies and after the
establishment of appropriate standards to carry
out this subparagraph, the program shall
provide for the electronic transmittal in a
manner similar to the manner under subparagraph
(A) of information that relates to the medical
history concerning the individual and related
to a covered part D drug being prescribed or
dispensed, upon request of the professional or
pharmacist involved.
(C) Limitations.--Information shall only be
disclosed under subparagraph (A) or (B) if the
disclosure of such information is permitted
under the Federal regulations (concerning the
privacy of individually identifiable health
information) promulgated under section 264(c)
of the Health Insurance Portability and
Accountability Act of 1996.
(D) Timing.--[To the extent] Except as
provided in subparagraph (F), to the extent
feasible, the information exchanged under this
paragraph shall be on an interactive, real-time
basis.
(E) Electronic prior authorization.--
(i) In general.--Not later than
January 1, 2021, the program shall
provide for the secure electronic
transmission of--
(I) a prior authorization
request from the prescribing
health care professional for
coverage of a covered part D
drug for a part D eligible
individual enrolled in a part D
plan (as defined in section
1860D-23(a)(5)) to the PDP
sponsor or Medicare Advantage
organization offering such
plan; and
(II) a response, in
accordance with this
subparagraph, from such PDP
sponsor or Medicare Advantage
organization, respectively, to
such professional.
(ii) Electronic transmission.--
(I) Exclusions.--For purposes
of this subparagraph, a
facsimile, a proprietary payer
portal that does not meet
standards specified by the
Secretary, or an electronic
form shall not be treated as an
electronic transmission
described in clause (i).
(II) Standards.--In order to
be treated, for purposes of
this subparagraph, as an
electronic transmission
described in clause (i), such
transmission shall comply with
technical standards adopted by
the Secretary in consultation
with the National Council for
Prescription Drug Programs,
other standard setting
organizations determined
appropriate by the Secretary,
and stakeholders including PDP
sponsors, Medicare Advantage
organizations, health care
professionals, and health
information technology software
vendors.
(III) Application.--
Notwithstanding any other
provision of law, for purposes
of this subparagraph, the
Secretary may require the use
of such standards adopted under
subclause (II) in lieu of any
other applicable standards for
an electronic transmission
described in clause (i) for a
covered part D drug for a part
D eligible individual.
(F) Real-time benefit information.--
(i) In general.--Not later than
January 1, 2021, the program shall
implement real-time benefit tools that
are capable of integrating with a
prescribing health care professional's
electronic prescribing or electronic
health record system for the
transmission of formulary and benefit
information in real time to prescribing
health care professionals. With respect
to a covered part D drug, such tools
shall be capable of transmitting such
information specific to an individual
enrolled in a prescription drug plan.
Such information shall include the
following:
(I) A list of any clinically-
appropriate alternatives to
such drug included in the
formulary of such plan.
(II) Cost-sharing information
for such drug and such
alternatives, including a
description of any variance in
cost sharing based on the
pharmacy dispensing such drug
or such alternatives.
(III) Information relating to
whether such drug is included
in the formulary of such plan
and any prior authorization or
other utilization management
requirements applicable to such
drug and such alternatives so
included.
(ii) Electronic transmission.--The
provisions of subclauses (I) and (II)
of clause (ii) of subparagraph (E)
shall apply to an electronic
transmission described in clause (i) in
the same manner as such provisions
apply with respect to an electronic
transmission described in clause (i) of
such subparagraph.
(iii) Special rule for 2021.--The
program shall be deemed to be in
compliance with clause (i) for 2021 if
the program complies with the
provisions of section 423.160(b)(7) of
title 42, Code of Federal Regulations
(or a successor regulation), for such
year.
(3) Standards.--
(A) In general.--The Secretary shall provide
consistent with this subsection for the
promulgation of uniform standards relating to
the requirements for electronic prescription
drug programs under paragraph (2).
(B) Objectives.--Such standards shall be
consistent with the objectives of improving--
(i) patient safety;
(ii) the quality of care provided to
patients; and
(iii) efficiencies, including cost
savings, in the delivery of care.
(C) Design criteria.--Such standards shall--
(i) be designed so that, to the
extent practicable, the standards do
not impose an undue administrative
burden on prescribing health care
professionals and dispensing pharmacies
and pharmacists;
(ii) be compatible with standards
established under part C of title XI,
standards established under subsection
(b)(2)(B)(i), and with general health
information technology standards; and
(iii) be designed so that they permit
electronic exchange of drug labeling
and drug listing information maintained
by the Food and Drug Administration and
the National Library of Medicine.
(D) Permitting use of appropriate
messaging.--Such standards shall allow for the
messaging of information only if it relates to
the appropriate prescribing of drugs, including
quality assurance measures and systems referred
to in subsection (c)(1)(B).
(E) Permitting patient designation of
dispensing pharmacy.--
(i) In general.--Consistent with
clause (ii), such standards shall
permit a part D eligible individual to
designate a particular pharmacy to
dispense a prescribed drug.
(ii) No change in benefits.--Clause
(i) shall not be construed as
affecting--
(I) the access required to be
provided to pharmacies by a
prescription drug plan; or
(II) the application of any
differences in benefits or
payments under such a plan
based on the pharmacy
dispensing a covered part D
drug.
(4) Development, promulgation, and modification of
standards.--
(A) Initial standards.--Not later than
September 1, 2005, the Secretary shall develop,
adopt, recognize, or modify initial uniform
standards relating to the requirements for
electronic prescription drug programs described
in paragraph (2) taking into consideration the
recommendations (if any) from the National
Committee on Vital and Health Statistics (as
established under section 306(k) of the Public
Health Service Act (42 U.S.C. 242k(k))) under
subparagraph (B).
(B) Role of ncvhs.--The National Committee on
Vital and Health Statistics shall develop
recommendations for uniform standards relating
to such requirements in consultation with the
following:
(i) Standard setting organizations
(as defined in section 1171(8))
(ii) Practicing physicians.
(iii) Hospitals.
(iv) Pharmacies.
(v) Practicing pharmacists.
(vi) Pharmacy benefit managers.
(vii) State boards of pharmacy.
(viii) State boards of medicine.
(ix) Experts on electronic
prescribing.
(x) Other appropriate Federal
agencies.
(C) Pilot project to test initial
standards.--
(i) In general.--During the 1-year
period that begins on January 1, 2006,
the Secretary shall conduct a pilot
project to test the initial standards
developed under subparagraph (A) prior
to the promulgation of the final
uniform standards under subparagraph
(D) in order to provide for the
efficient implementation of the
requirements described in paragraph
(2).
(ii) Exception.--Pilot testing of
standards is not required under clause
(i) where there already is adequate
industry experience with such
standards, as determined by the
Secretary after consultation with
effected standard setting organizations
and industry users.
(iii) Voluntary participation of
physicians and pharmacies.--In order to
conduct the pilot project under clause
(i), the Secretary shall enter into
agreements with physicians, physician
groups, pharmacies, hospitals, PDP
sponsors, MA organizations, and other
appropriate entities under which health
care professionals electronically
transmit prescriptions to dispensing
pharmacies and pharmacists in
accordance with such standards.
(iv) Evaluation and report.--
(I) Evaluation.--The
Secretary shall conduct an
evaluation of the pilot project
conducted under clause (i).
(II) Report to congress.--Not
later than April 1, 2007, the
Secretary shall submit to
Congress a report on the
evaluation conducted under
subclause (I).
(D) Final standards.--Based upon the
evaluation of the pilot project under
subparagraph (C)(iv)(I) and not later than
April 1, 2008, the Secretary shall promulgate
uniform standards relating to the requirements
described in paragraph (2).
(5) Relation to state laws.--The standards
promulgated under this subsection shall supersede any
State law or regulation that--
(A) is contrary to the standards or restricts
the ability to carry out this part; and
(B) pertains to the electronic transmission
of medication history and of information on
eligibility, benefits, and prescriptions with
respect to covered part D drugs under this
part.
(6) Establishment of safe harbor.--The Secretary, in
consultation with the Attorney General, shall
promulgate regulations that provide for a safe harbor
from sanctions under paragraphs (1) and (2) of section
1128B(b) and an exception to the prohibition under
subsection (a)(1) of section 1877 with respect to the
provision of nonmonetary remuneration (in the form of
hardware, software, or information technology and
training services) necessary and used solely to receive
and transmit electronic prescription information in
accordance with the standards promulgated under this
subsection--
(A) in the case of a hospital, by the
hospital to members of its medical staff;
(B) in the case of a group practice (as
defined in section 1877(h)(4)), by the practice
to prescribing health care professionals who
are members of such practice; and
(C) in the case of a PDP sponsor or MA
organization, by the sponsor or organization to
pharmacists and pharmacies participating in the
network of such sponsor or organization, and to
prescribing health care professionals.
(7) Requirement of e-prescribing for controlled
substances.--
(A) In general.--Subject to subparagraph (B),
a prescription for a covered part D drug under
a prescription drug plan (or under an MA-PD
plan) for a schedule II, III, IV, or V
controlled substance shall be transmitted by a
health care practitioner electronically in
accordance with an electronic prescription drug
program that meets the requirements of
paragraph (2).
(B) Exception for certain circumstances.--The
Secretary shall, through rulemaking, specify
circumstances and processes by which the
Secretary may waive the requirement under
subparagraph (A), with respect to a covered
part D drug, including in the case of--
(i) a prescription issued when the
practitioner and dispensing pharmacy
are the same entity;
(ii) a prescription issued that
cannot be transmitted electronically
under the most recently implemented
version of the National Council for
Prescription Drug Programs SCRIPT
Standard;
(iii) a prescription issued by a
practitioner who received a waiver or a
renewal thereof for a period of time as
determined by the Secretary, not to
exceed one year, from the requirement
to use electronic prescribing due to
demonstrated economic hardship,
technological limitations that are not
reasonably within the control of the
practitioner, or other exceptional
circumstance demonstrated by the
practitioner;
(iv) a prescription issued by a
practitioner under circumstances in
which, notwithstanding the
practitioner's ability to submit a
prescription electronically as required
by this subsection, such practitioner
reasonably determines that it would be
impractical for the individual involved
to obtain substances prescribed by
electronic prescription in a timely
manner, and such delay would adversely
impact the individual's medical
condition involved;
(v) a prescription issued by a
practitioner prescribing a drug under a
research protocol;
(vi) a prescription issued by a
practitioner for a drug for which the
Food and Drug Administration requires a
prescription to contain elements that
are not able to be included in
electronic prescribing, such as a drug
with risk evaluation and mitigation
strategies that include elements to
assure safe use;
(vii) a prescription issued by a
practitioner--
(I) for an individual who
receives hospice care under
this title; and
(II) that is not covered
under the hospice benefit under
this title; and
(viii) a prescription issued by a
practitioner for an individual who is--
(I) a resident of a nursing
facility (as defined in section
1919(a)); and
(II) dually eligible for
benefits under this title and
title XIX.
(C) Dispensing.--(i) Nothing in this
paragraph shall be construed as requiring a
sponsor of a prescription drug plan under this
part, MA organization offering an MA-PD plan
under part C, or a pharmacist to verify that a
practitioner, with respect to a prescription
for a covered part D drug, has a waiver (or is
otherwise exempt) under subparagraph (B) from
the requirement under subparagraph (A).
(ii) Nothing in this paragraph shall be
construed as affecting the ability of the plan
to cover or the pharmacists' ability to
continue to dispense covered part D drugs from
otherwise valid written, oral, or fax
prescriptions that are consistent with laws and
regulations.
(iii) Nothing in this paragraph shall be
construed as affecting the ability of an
individual who is being prescribed a covered
part D drug to designate a particular pharmacy
to dispense the covered part D drug to the
extent consistent with the requirements under
subsection (b)(1) and under this paragraph.
(D) Enforcement.--The Secretary shall,
through rulemaking, have authority to enforce
and specify appropriate penalties for non-
compliance with the requirement under
subparagraph (A).
(f) Grievance Mechanism.--Each PDP sponsor shall provide
meaningful procedures for hearing and resolving grievances
between the sponsor (including any entity or individual through
which the sponsor provides covered benefits) and enrollees with
prescription drug plans of the sponsor under this part in
accordance with section 1852(f).
(g) Coverage Determinations and Reconsiderations.--
(1) Application of coverage determination and
reconsideration provisions.--A PDP sponsor shall meet
the requirements of paragraphs (1) through (3) of
section 1852(g) with respect to covered benefits under
the prescription drug plan it offers under this part in
the same manner as such requirements apply to an MA
organization with respect to benefits it offers under
an MA plan under part C.
(2) Request for a determination for the treatment of
tiered formulary drug.--In the case of a prescription
drug plan offered by a PDP sponsor that provides for
tiered cost-sharing for drugs included within a
formulary and provides lower cost-sharing for preferred
drugs included within the formulary, a part D eligible
individual who is enrolled in the plan may request an
exception to the tiered cost-sharing structure. Under
such an exception, a nonpreferred drug could be covered
under the terms applicable for preferred drugs if the
prescribing physician determines that the preferred
drug for treatment of the same condition either would
not be as effective for the individual or would have
adverse effects for the individual or both. A PDP
sponsor shall have an exceptions process under this
paragraph consistent with guidelines established by the
Secretary for making a determination with respect to
such a request. Denial of such an exception shall be
treated as a coverage denial for purposes of applying
subsection (h).
(h) Appeals.--
(1) In general.--Subject to paragraph (2), a PDP
sponsor shall meet the requirements of paragraphs (4)
and (5) of section 1852(g) with respect to benefits
(including a determination related to the application
of tiered cost-sharing described in subsection (g)(2))
in a manner similar (as determined by the Secretary) to
the manner such requirements apply to an MA
organization with respect to benefits under the
original medicare fee-for-service program option it
offers under an MA plan under part C. In applying this
paragraph only the part D eligible individual shall be
entitled to bring such an appeal.
(2) Limitation in cases on nonformulary
determinations.--A part D eligible individual who is
enrolled in a prescription drug plan offered by a PDP
sponsor may appeal under paragraph (1) a determination
not to provide for coverage of a covered part D drug
that is not on the formulary under the plan only if the
prescribing physician determines that all covered part
D drugs on any tier of the formulary for treatment of
the same condition would not be as effective for the
individual as the nonformulary drug, would have adverse
effects for the individual, or both.
(3) Treatment of nonformulary determinations.--If a
PDP sponsor determines that a plan provides coverage
for a covered part D drug that is not on the formulary
of the plan, the drug shall be treated as being
included on the formulary for purposes of section
1860D-2(b)(4)(C)(i).
(i) Privacy, Confidentiality, and Accuracy of Enrollee
Records.--The provisions of section 1852(h) shall apply to a
PDP sponsor and prescription drug plan in the same manner as it
applies to an MA organization and an MA plan.
(j) Treatment of Accreditation.--Subparagraph (A) of section
1852(e)(4) (relating to treatment of accreditation) shall apply
to a PDP sponsor under this part with respect to the following
requirements, in the same manner as it applies to an MA
organization with respect to the requirements in subparagraph
(B) (other than clause (vii) thereof) of such section:
(1) Subsection (b) of this section (relating to
access to covered part D drugs).
(2) Subsection (c) of this section (including quality
assurance and medication therapy management).
(3) Subsection (i) of this section (relating to
confidentiality and accuracy of enrollee records).
(k) Public Disclosure of Pharmaceutical Prices for Equivalent
Drugs.--
(1) In general.--A PDP sponsor offering a
prescription drug plan shall provide that each pharmacy
that dispenses a covered part D drug shall inform an
enrollee of any differential between the price of the
drug to the enrollee and the price of the lowest priced
generic covered part D drug under the plan that is
therapeutically equivalent and bioequivalent and
available at such pharmacy.
(2) Timing of notice.--
(A) In general.--Subject to subparagraph (B),
the information under paragraph (1) shall be
provided at the time of purchase of the drug
involved, or, in the case of dispensing by mail
order, at the time of delivery of such drug.
(B) Waiver.--The Secretary may waive
subparagraph (A) in such circumstances as the
Secretary may specify.
(l) Requirements with Respect to Sales and Marketing
Activities.--The following provisions shall apply to a PDP
sponsor (and the agents, brokers, and other third parties
representing such sponsor) in the same manner as such
provisions apply to a Medicare Advantage organization (and the
agents, brokers, and other third parties representing such
organization):
(1) The prohibition under section 1851(h)(4)(C) on
conducting activities described in section 1851(j)(1).
(2) The requirement under section 1851(h)(4)(D) to
conduct activities described in section 1851(j)(2) in
accordance with the limitations established under such
subsection.
(3) The inclusion of the plan type in the plan name
under section 1851(h)(6).
(4) The requirements regarding the appointment of
agents and brokers and compliance with State
information requests under subparagraphs (A) and (B),
respectively, of section 1851(h)(7).
(m) Prohibition on Limiting Certain Information on Drug
Prices.--A PDP sponsor and a Medicare Advantage organization
shall ensure that each prescription drug plan or MA-PD plan
offered by the sponsor or organization does not restrict a
pharmacy that dispenses a prescription drug or biological from
informing, nor penalize such pharmacy for informing, an
enrollee in such plan of any differential between the
negotiated price of, or copayment or coinsurance for, the drug
or biological to the enrollee under the plan and a lower price
the individual would pay for the drug or biological if the
enrollee obtained the drug without using any health insurance
coverage.
(m) Program Integrity Transparency Measures.--For program
integrity transparency measures applied with respect to
prescription drug plan and MA plans, see section 1859(i).
Subpart 2--Prescription Drug Plans; PDP Sponsors; Financing
* * * * * * *
premium and cost-sharing subsidies for low-income individuals
Sec. 1860D-14. (a) Income-Related Subsidies for Individuals
With Income Up to 150 Percent of Poverty Line.--
(1) Individuals with income below 135 percent of
poverty line.--In the case of a subsidy eligible
individual (as defined in paragraph (3)) who is
determined to have income that is below 135 percent of
the poverty line applicable to a family of the size
involved and who meets the resources requirement
described in paragraph (3)(D) or who is covered under
this paragraph under paragraph (3)(B)(i), the
individual is entitled under this section to the
following:
(A) Full premium subsidy.--An income-related
premium subsidy equal to 100 percent of the
amount described in subsection (b)(1), but not
to exceed the premium amount specified in
subsection (b)(2)(B).
(B) Elimination of deductible.--A reduction
in the annual deductible applicable under
section 1860D-2(b)(1) to $0.
(C) Continuation of coverage above the
initial coverage limit.--The continuation of
coverage from the initial coverage limit (under
paragraph (3) of section 1860D-2(b)) for
expenditures incurred through the total amount
of expenditures at which benefits are available
under paragraph (4) of such section, subject to
the reduced cost-sharing described in
subparagraph (D).
(D) Reduction in cost-sharing below out-of-
pocket threshold.--
(i) Institutionalized individuals.--
In the case of an individual who is a
full-benefit dual eligible individual
and who is an institutionalized
individual or couple (as defined in
section 1902(q)(1)(B)) 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,
the elimination of any beneficiary
coinsurance described in section 1860D-
2(b)(2) (for all amounts through the
total amount of expenditures at which
benefits are available under section
1860D-2(b)(4)).
(ii) Lowest income dual eligible
individuals.--In the case of an
individual not described in clause (i)
who is a full-benefit dual eligible
individual and whose income does not
exceed 100 percent of the poverty line
applicable to a family of the size
involved, the substitution for the
beneficiary coinsurance described in
section 1860D-2(b)(2) (for all amounts
through the total amount of
expenditures at which benefits are
available under section 1860D-2(b)(4))
of a copayment amount that does not
exceed $1 for a generic drug or a
preferred drug that is a multiple
source drug (as defined in section
1927(k)(7)(A)(i)) and $3 for any other
drug, or, if less, the copayment amount
applicable to an individual under
clause (iii).
(iii) Other individuals.--In the case
of an individual not described in
clause (i) or (ii), the substitution
for the beneficiary coinsurance
described in section 1860D-2(b)(2) (for
all amounts through the total amount of
expenditures at which benefits are
available under section 1860D-2(b)(4))
of a copayment amount that does not
exceed the copayment amount specified
under section 1860D-2(b)(4)(A)(i)(I)
for the drug and year involved.
(E) Elimination of cost-sharing above annual
out-of-pocket threshold.--The elimination of
any cost-sharing imposed under section 1860D-
2(b)(4)(A).
(2) Other individuals with income below 150 percent
of poverty line.--In the case of a subsidy eligible
individual who is not described in paragraph (1), the
individual is entitled under this section to the
following:
(A) Sliding scale premium subsidy.--An
income-related premium subsidy determined on a
linear sliding scale ranging from 100 percent
of the amount described in paragraph (1)(A) for
individuals with incomes at or below 135
percent of such level to 0 percent of such
amount for individuals with incomes at 150
percent of such level.
(B) Reduction of deductible.--A reduction in
the annual deductible applicable under section
1860D-2(b)(1) to $50.
(C) Continuation of coverage above the
initial coverage limit.--The continuation of
coverage from the initial coverage limit (under
paragraph (3) of section 1860D-2(b)) for
expenditures incurred through the total amount
of expenditures at which benefits are available
under paragraph (4) of such section, subject to
the reduced coinsurance described in
subparagraph (D).
(D) Reduction in cost-sharing below out-of-
pocket threshold.--The substitution for the
beneficiary coinsurance described in section
1860D-2(b)(2) (for all amounts above the
deductible under subparagraph (B) through the
total amount of expenditures at which benefits
are available under section 1860D-2(b)(4)) of
coinsurance of ``15 percent'' instead of
coinsurance of ``25 percent'' in section 1860D-
2(b)(2).
(E) Reduction of cost-sharing above annual
out-of-pocket threshold.--Subject to subsection
(c), the substitution for the cost-sharing
imposed under section 1860D-2(b)(4)(A) of a
copayment or coinsurance not to exceed the
copayment or coinsurance amount specified under
section 1860D-2(b)(4)(A)(i)(I) for the drug and
year involved.
(3) Determination of eligibility.--
(A) Subsidy eligible individual defined.--For
purposes of this part, subject to subparagraph
(F), the term ``subsidy eligible individual''
means a part D eligible individual who--
(i) is enrolled in a prescription
drug plan or MA-PD plan;
(ii) has income below 150 percent of
the poverty line applicable to a family
of the size involved; and
(iii) meets the resources requirement
described in subparagraph (D) or (E).
(B) Determinations.--
(i) In general.--The determination of
whether a part D eligible individual
residing in a State is a subsidy
eligible individual and whether the
individual is described in paragraph
(1) shall be determined under the State
plan under title XIX for the State
under section 1935(a) or by the
Commissioner of Social Security. There
are authorized to be appropriated to
the Social Security Administration such
sums as may be necessary for the
determination of eligibility under this
subparagraph.
(ii) Effective period.--
Determinations under this subparagraph
shall be effective beginning with the
month in which the individual applies
for a determination that the individual
is a subsidy eligible individual and
shall remain in effect for a period
specified by the Secretary, but not to
exceed 1 year.
(iii) Redeterminations and appeals
through medicaid.--Redeterminations and
appeals, with respect to eligibility
determinations under clause (i) made
under a State plan under title XIX,
shall be made in accordance with the
frequency of, and manner in which,
redeterminations and appeals of
eligibility are made under such plan
for purposes of medical assistance
under such title.
(iv) Redeterminations and appeals
through commissioner.--With respect to
eligibility determinations under clause
(i) made by the Commissioner of Social
Security--
(I) redeterminations shall be
made at such time or times as
may be provided by the
Commissioner;
(II) the Commissioner shall
establish procedures for
appeals of such determinations
that are similar to the
procedures described in the
third sentence of section
1631(c)(1)(A); and
(III) judicial review of the
final decision of the
Commissioner made after a
hearing shall be available to
the same extent, and with the
same limitations, as provided
in subsections (g) and (h) of
section 205.
(v) Treatment of medicaid
beneficiaries.--Subject to subparagraph
(F), the Secretary--
(I) shall provide that part D
eligible individuals who are
full-benefit dual eligible
individuals (as defined in
section 1935(c)(6)) or who are
recipients of supplemental
security income benefits under
title XVI shall be treated as
subsidy eligible individuals
described in paragraph (1); and
(II) may provide that part D
eligible individuals not
described in subclause (I) who
are determined for purposes of
the State plan under title XIX
to be eligible for medical
assistance under clause (i),
(iii), or (iv) of section
1902(a)(10)(E) are treated as
being determined to be subsidy
eligible individuals described
in paragraph (1).
Insofar as the Secretary determines
that the eligibility requirements under
the State plan for medical assistance
referred to in subclause (II) are
substantially the same as the
requirements for being treated as a
subsidy eligible individual described
in paragraph (1), the Secretary shall
provide for the treatment described in
such subclause.
(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.
(C) Income determinations.--For purposes of
applying this section--
(i) in the case of a part D eligible
individual who is not treated as a
subsidy eligible individual under
subparagraph (B)(v), income shall be
determined in the manner described in
section 1905(p)(1)(B), without regard
to the application of section
1902(r)(2) and except that support and
maintenance furnished in kind shall not
be counted as income; and
(ii) the term ``poverty line'' has
the meaning given such term in section
673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2)),
including any revision required by such
section.
Nothing in clause (i) shall be construed to
affect the application of section 1902(r)(2)
for the determination of eligibility for
medical assistance under title XIX.
(D) Resource standard applied to full low-
income subsidy to be based on three times ssi
resource standard.--The resources requirement
of this subparagraph is that an individual's
resources (as determined under section 1613 for
purposes of the supplemental security income
program subject to the life insurance policy
exclusion provided under subparagraph (G)) do
not exceed--
(i) for 2006 three times the maximum
amount of resources that an individual
may have and obtain benefits under that
program; and
(ii) for a subsequent year the
resource limitation established under
this clause for the previous year
increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year.
Any resource limitation established under
clause (ii) that is not a multiple of $10 shall
be rounded to the nearest multiple of $10.
(E) Alternative resource standard.--
(i) In general.--The resources
requirement of this subparagraph is
that an individual's resources (as
determined under section 1613 for
purposes of the supplemental security
income program subject to the life
insurance policy exclusion provided
under subparagraph (G)) do not exceed--
(I) for 2006, $10,000 (or
$20,000 in the case of the
combined value of the
individual's assets or
resources and the assets or
resources of the individual's
spouse); and
(II) for a subsequent year
the dollar amounts specified in
this subclause (or subclause
(I)) for the previous year
increased by the annual
percentage increase in the
consumer price index (all
items; U.S. city average) as of
September of such previous
year.
Any dollar amount established under
subclause (II) that is not a multiple
of $10 shall be rounded to the nearest
multiple of $10.
(ii) Use of simplified application
form and process.--The Secretary,
jointly with the Commissioner of Social
Security, shall--
(I) develop a model,
simplified application form and
process consistent with clause
(iii) for the determination and
verification of a part D
eligible individual's assets or
resources under this
subparagraph; and
(II) provide such form to
States.
(iii) Documentation and safeguards.--
Under such process--
(I) the application form
shall consist of an attestation
under penalty of perjury
regarding the level of assets
or resources (or combined
assets and resources in the
case of a married part D
eligible individual) and
valuations of general classes
of assets or resources;
(II) such form shall be
accompanied by copies of recent
statements (if any) from
financial institutions in
support of the application; and
(III) matters attested to in
the application shall be
subject to appropriate methods
of verification.
(iv) Methodology flexibility.--The
Secretary may permit a State in making
eligibility determinations for premium
and cost-sharing subsidies under this
section to use the same asset or
resource methodologies that are used
with respect to eligibility for medical
assistance for medicare cost-sharing
described in section 1905(p) so long as
the Secretary determines that the use
of such methodologies will not result
in any significant differences in the
number of individuals determined to be
subsidy eligible individuals.
(F) Treatment of territorial residents.--In
the case of a part D eligible individual who is
not a resident of the 50 States or the District
of Columbia, the individual is not eligible to
be a subsidy eligible individual under this
section but may be eligible for financial
assistance with prescription drug expenses
under section 1935(e).
(G) Life insurance policy exclusion.--In
determining the resources of an individual (and
the eligible spouse of the individual, if any)
under section 1613 for purposes of
subparagraphs (D) and (E) no part of the value
of any life insurance policy shall be taken
into account.
(4) Indexing dollar amounts.--
(A) Copayment for lowest income dual eligible
individuals.--The dollar amounts applied under
paragraph (1)(D)(ii)--
(i) for 2007 shall be the dollar
amounts specified in such paragraph
increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year; or
(ii) for a subsequent year shall be
the dollar amounts specified in this
clause (or clause (i)) for the previous
year increased by the annual percentage
increase in the consumer price index
(all items; U.S. city average) as of
September of such previous year.
Any amount established under clause (i) or
(ii), that is based on an increase of $1 or $3,
that is not a multiple of 5 cents or 10 cents,
respectively, shall be rounded to the nearest
multiple of 5 cents or 10 cents, respectively.
(B) Reduced deductible.--The dollar amount
applied under paragraph (2)(B)--
(i) for 2007 shall be the dollar
amount specified in such paragraph
increased by the annual percentage
increase described in section 1860D-
2(b)(6) for 2007; or
(ii) for a subsequent year shall be
the dollar amount specified in this
clause (or clause (i)) for the previous
year increased by the annual percentage
increase described in section 1860D-
2(b)(6) for the year involved.
Any amount established under clause (i) or (ii)
that is not a multiple of $1 shall be rounded
to the nearest multiple of $1.
(5) Waiver of de minimis premiums.--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) Premium Subsidy Amount.--
(1) In general.--The premium subsidy amount described
in this subsection for a subsidy eligible individual
residing in a PDP region and enrolled in a prescription
drug plan or MA-PD plan is the low-income benchmark
premium amount (as defined in paragraph (2)) for the
PDP region in which the individual resides or, if
greater, the amount specified in paragraph (3).
(2) Low-income benchmark premium amount defined.--
(A) In general.--For purposes of this
subsection, the term ``low-income benchmark
premium amount'' means, with respect to a PDP
region in which--
(i) all prescription drug plans are
offered by the same PDP sponsor, the
weighted average of the amounts
described in subparagraph (B)(i) for
such plans; or
(ii) there are prescription drug
plans offered by more than one PDP
sponsor, the weighted average of
amounts described in subparagraph (B)
for prescription drug plans and MA-PD
plans described in section
1851(a)(2)(A)(i) offered in such
region.
(B) Premium amounts described.--The premium
amounts described in this subparagraph are, in
the case of--
(i) a prescription drug plan that is
a basic prescription drug plan, the
monthly beneficiary premium for such
plan;
(ii) a prescription drug plan that
provides alternative prescription drug
coverage the actuarial value of which
is greater than that of standard
prescription drug coverage, the portion
of the monthly beneficiary premium that
is attributable to basic prescription
drug coverage; and
(iii) an MA-PD plan, the portion of
the MA monthly prescription drug
beneficiary premium that is
attributable to basic prescription drug
benefits (described in section
1852(a)(6)(B)(ii)) and determined
before the application of the monthly
rebate computed under section
1854(b)(1)(C)(i) for that plan and year
involved and, in the case of a
qualifying plan, before the application
of the increase under section 1853(o)
for that plan and year involved.
The premium amounts described in this
subparagraph do not include any amounts
attributable to late enrollment penalties under
section 1860D-13(b).
(3) Access to 0 premium plan.--In no case shall the
premium subsidy amount under this subsection for a PDP
region be less than the lowest monthly beneficiary
premium for a prescription drug plan that offers basic
prescription drug coverage in the region.
(c) Administration of Subsidy Program.--
(1) In general.--The Secretary shall provide a
process whereby, in the case of a part D eligible
individual who is determined to be a subsidy eligible
individual and who is enrolled in a prescription drug
plan or is enrolled in an MA-PD plan--
(A) the Secretary provides for a notification
of the PDP sponsor or the MA organization
offering the plan involved that the individual
is eligible for a subsidy and the amount of the
subsidy under subsection (a);
(B) the sponsor or organization involved
reduces the premiums or cost-sharing otherwise
imposed by the amount of the applicable subsidy
and submits to the Secretary information on the
amount of such reduction;
(C) the Secretary periodically and on a
timely basis reimburses the sponsor or
organization for the amount of such reductions;
and
(D) the Secretary ensures the confidentiality
of individually identifiable information.
In applying subparagraph (C), the Secretary shall
compute reductions based upon imposition under
subsections (a)(1)(D) and (a)(2)(E) of unreduced
copayment amounts applied under such subsections.
(2) Use of capitated form of payment.--The
reimbursement under this section with respect to cost-
sharing subsidies may be computed on a capitated basis,
taking into account the actuarial value of the
subsidies and with appropriate adjustments to reflect
differences in the risks actually involved.
(d) Facilitation of Reassignments.--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).
(e) Limited Income Newly Eligible Transition Program.--
(1) In general.--Beginning not later than January 1,
2021, the Secretary shall carry out a program to
provide transitional coverage for covered part D drugs
for LI NET eligible individuals in accordance with this
subsection.
(2) LI net eligible individual defined.--For purposes
of this subsection, the term ``LI NET eligible
individual'' means a part D eligible individual who--
(A) meets the requirements of clauses (ii)
and (iii) of subsection (a)(3)(A); and
(B) has not yet enrolled in a prescription
drug plan or an MA-PD plan, or, who has so
enrolled, but with respect to whom coverage
under such plan has not yet taken effect.
(3) Transitional coverage.--For purposes of this
subsection, the term ``transitional coverage'' means
with respect to an LI NET eligible individual--
(A) immediate access to covered part D drugs
at the point of sale during the period that
begins on the first day of the month such
individual is determined to meet the
requirements of clauses (ii) and (iii) of
subsection (a)(3)(A) and ends on the date that
coverage under a prescription drug plan or MA-
PD plan takes effect with respect to such
individual; and
(B) in the case of an LI NET eligible
individual who is a full-benefit dual eligible
individual (as defined in section 1935(c)(6))
or a recipient of supplemental security income
benefits under title XVI, retroactive coverage
(in the form of reimbursement of the amounts
that would have been paid under this part had
such individual been enrolled in a prescription
drug plan or MA-PD plan) of covered part D
drugs purchased by such individual during the
period that begins on the date that is the
later of--
(i) the date that such individual was
first eligible for a low-income subsidy
under this part; or
(ii) the date that is 36 months prior
to the date such individual enrolls in
a prescription drug plan or MA-PD plan,
and ends on the date that coverage under such
plan takes effect.
(4) Program administration.--
(A) Single point of contact.--The Secretary
shall, to the extent feasible, administer the
program under this subsection through a
contract with a single program administrator.
(B) Benefit design.--The Secretary shall
ensure that the transitional coverage provided
to LI NET eligible individuals under this
subsection--
(i) provides access to all covered
part D drugs under an open formulary;
(ii) permits all pharmacies
determined by the Secretary to be in
good standing to process claims under
the program;
(iii) is consistent with such
requirements as the Secretary considers
necessary to improve patient safety and
ensure appropriate dispensing of
medication; and
(iv) meets such other requirements as
the Secretary may establish.
(5) Relationship to other provisions of this title;
waiver authority.--
(A) In general.--The following provisions
shall not apply with respect to the program
under this subsection:
(i) Paragraphs (1) and (3)(B) of
section 1860D-4(a) (relating to
dissemination of general information;
availability of information on changes
in formulary through the internet).
(ii) Subparagraphs (A) and (B) of
section 1860D-4(b)(3) (relating to
requirements on development and
application of formularies; formulary
development).
(iii) Paragraphs (1)(C) and (2) of
section 1860D-4(c) (relating to
medication therapy management program).
(B) Waiver authority.--The Secretary may
waive such other requirements of title XI and
this title as may be necessary to carry out the
purposes of the program established under this
subsection.
[(e)] (f) Relation to Medicaid Program.--For special
provisions under the medicaid program relating to medicare
prescription drug benefits, see section 1935.
* * * * * * *
Part E--Miscellaneous Provisions
* * * * * * *
payment to hospitals for inpatient hospital services
Sec. 1886. (a)(1)(A)(i) The Secretary, in determining the
amount of the payments that may be made under this title with
respect to operating costs of inpatient hospital services (as
defined in paragraph (4)) shall not recognize as reasonable (in
the efficient delivery of health services) costs for the
provision of such services by a hospital for a cost reporting
period to the extent such costs exceed the applicable
percentage (as determined under clause (ii)) of the average of
such costs for all hospitals in the same grouping as such
hospital for comparable time periods.
(ii) For purposes of clause (i), the applicable percentage
for hospital cost reporting periods beginning--
(I) on or after October 1, 1982, and before October
1, 1983, is 120 percent;
(II) on or after October 1, 1983, and before October
1, 1984, is 115 percent; and
(III) on or after October 1, 1984, is 110 percent.
(B)(i) For purposes of subparagraph (A) the Secretary shall
establish case mix indexes for all short- term hospitals, and
shall set limits for each hospital based upon the general mix
of types of medical cases with respect to which such hospital
provides services for which payment may be made under this
title.
(ii) The Secretary shall set such limits for a cost reporting
period of a hospital--
(I) by updating available data for a previous period
to the immediate preceding cost reporting period by the
estimated average rate of change of hospital costs
industry-wide, and
(II) by projecting for the cost reporting period by
the applicable percentage increase (as defined in
subsection (b)(3)(B)).
(C) The limitation established under subparagraph (A) for any
hospital shall in no event be lower than the allowable
operating costs of inpatient hospital services (as defined in
paragraph (4)) recognized under this title for such hospital
for such hospital's last cost reporting period prior to the
hospital's first cost reporting period for which this section
is in effect.
(D) Subparagraph (A) shall not apply to cost reporting
periods beginning on or after October 1, 1983.
(2) The Secretary shall provide for such exemptions from, and
exceptions and adjustments to, the limitation established under
paragraph (1)(A) as he deems appropriate, including those which
he deems necessary to take into account--
(A) the special needs of sole community hospitals, of
new hospitals, of risk based health maintenance
organizations, and of hospitals which provide atypical
services or essential community services, and to take
into account extraordinary circumstances beyond the
hospital's control, medical and paramedical education
costs, significantly fluctuating population in the
service area of the hospital, and unusual labor costs,
(B) the special needs of psychiatric hospitals and of
public or other hospitals that serve a significantly
disproportionate number of patients who have low income
or are entitled to benefits under part A of this title,
and
(C) a decrease in the inpatient hospital services
that a hospital provides and that are customarily
provided directly by similar hospitals which results in
a significant distortion in the operating costs of
inpatient hospital services.
(3) The limitation established under paragraph (1)(A) shall
not apply with respect to any hospital which--
(A) is located outside of a standard metropolitan
statistical area, and
(B)(i) has less than 50 beds, and
(ii) was in operation and had less than 50 beds on
the date of the enactment of this section.
(4) For purposes of this section, the term ``operating costs
of inpatient hospital services'' includes all routine operating
costs, ancillary service operating costs, and special care unit
operating costs with respect to inpatient hospital services as
such costs are determined on an average per admission or per
discharge basis (as determined by the Secretary), and includes
the costs of all services for which payment may be made under
this title that are provided by the hospital (or by an entity
wholly owned or operated by the hospital) to the patient during
the 3 days (or, in the case of a hospital that is not a
subsection (d) hospital, during the 1 day) immediately
preceding the date of the patient's admission if such services
are diagnostic services (including clinical diagnostic
laboratory tests) or are other services related to the
admission (as defined by the Secretary). Such term does not
include costs of approved educational activities, a return on
equity capital, other capital-related costs (as defined by the
Secretary for periods before October 1, 1987), or costs with
respect to administering blood clotting factors to individuals
with hemophilia. In applying the first sentence of this
paragraph, the term ``other services related to the admission''
includes all services that are not diagnostic services (other
than ambulance and maintenance renal dialysis services) for
which payment may be made under this title that are provided by
a hospital (or an entity wholly owned or operated by the
hospital) to a patient--
(A) on the date of the patient's inpatient admission;
or
(B) during the 3 days (or, in the case of a hospital
that is not a subsection (d) hospital, during the 1
day) immediately preceding the date of such admission
unless the hospital demonstrates (in a form and manner,
and at a time, specified by the Secretary) that such
services are not related (as determined by the
Secretary) to such admission.
(b)(1) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, if the operating costs of inpatient
hospital services (as defined in subsection (a)(4)) of a
hospital (other than a subsection (d) hospital, as defined in
subsection (d)(1)(B) and other than a rehabilitation facility
described in subsection (j)(1)) for a cost reporting period
subject to this paragraph--
(A) are less than or equal to the target amount (as
defined in paragraph (3)) for that hospital for that
period, the amount of the payment with respect to such
operating costs payable under part A on a per discharge
or per admission basis (as the case may be) shall be
equal to the amount of such operating costs, plus--
(i) 15 percent of the amount by which the
target amount exceeds the amount of the
operating costs, or
(ii) 2 percent of the target amount,
whichever is less;
(B) are greater than the target amount but do not
exceed 110 percent of the target amount, the amount of
the payment with respect to those operating costs
payable under part A on a per discharge basis shall
equal the target amount; or
(C) are greater than 110 percent of the target
amount, the amount of the payment with respect to such
operating costs payable under part A on a per discharge
or per admission basis (as the case may be) shall be
equal to (i) the target amount, plus (ii) in the case
of cost reporting periods beginning on or after October
1, 1991, an additional amount equal to 50 percent of
the amount by which the operating costs exceed 110
percent of the target amount (except that such
additional amount may not exceed 10 percent of the
target amount) after any exceptions or adjustments are
made to such target amount for the cost reporting
period;
plus the amount, if any, provided under paragraph (2), except
that in no case may the amount payable under this title (other
than on the basis of a DRG prospective payment rate determined
under subsection (d)) with respect to operating costs of
inpatient hospital services exceed the maximum amount payable
with respect to such costs pursuant to subsection (a).
(2)(A) Except as provided in subparagraph (E), in addition to
the payment computed under paragraph (1), in the case of an
eligible hospital (described in subparagraph (B)) for a cost
reporting period beginning on or after October 1, 1997, the
amount of payment on a per discharge basis under paragraph (1)
shall be increased by the lesser of--
(i) 50 percent of the amount by which the operating
costs are less than the expected costs (as defined in
subparagraph (D)) for the period; or
(ii) 1 percent of the target amount for the period.
(B) For purposes of this paragraph, an ``eligible hospital''
means with respect to a cost reporting period, a hospital--
(i) that has received payments under this subsection
for at least 3 full cost reporting periods before that
cost reporting period, and
(ii) whose operating costs for the period are less
than the least of its target amount, its trended costs
(as defined in subparagraph (C)), or its expected costs
(as defined in subparagraph (D)) for the period.
(C) For purposes of subparagraph (B)(ii), the term ``trended
costs'' means for a hospital cost reporting period ending in a
fiscal year--
(i) in the case of a hospital for which its cost
reporting period ending in fiscal year 1996 was its
third or subsequent full cost reporting period for
which it receives payments under this subsection, the
lesser of the operating costs or target amount for that
hospital for its cost reporting period ending in fiscal
year 1996, or
(ii) in the case of any other hospital, the operating
costs for that hospital for its third full cost
reporting period for which it receives payments under
this subsection,
increased (in a compounded manner) for each succeeding fiscal
year (through the fiscal year involved) by the market basket
percentage increase for the fiscal year.
(D) For purposes of this paragraph, the term ``expected
costs'', with respect to the cost reporting period ending in a
fiscal year, means the lesser of the operating costs of
inpatient hospital services or target amount per discharge for
the previous cost reporting period updated by the market basket
percentage increase (as defined in paragraph (3)(B)(iii)) for
the fiscal year.
(E)(i) In the case of an eligible hospital that is a hospital
or unit that is within a class of hospital described in clause
(ii) with a 12-month cost reporting period beginning before the
enactment of this subparagraph, in determining the amount of
the increase under subparagraph (A), the Secretary shall
substitute for the percentage of the target amount applicable
under subparagraph (A)(ii)--
(I) for a cost reporting period beginning on or after
October 1, 2000, and before September 30, 2001, 1.5
percent; and
(II) for a cost reporting period beginning on or
after October 1, 2001, and before September 30, 2002, 2
percent.
(ii) For purposes of clause (i), each of the following shall
be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (iv) of such
subsection.
(3)(A) Except as provided in subparagraph (C) and succeeding
subparagraphs and in paragraph (7)(A)(ii), for purposes of this
subsection, the term ``target amount'' means, with respect to a
hospital for a particular 12-month cost reporting period--
(i) in the case of the first such reporting period
for which this subsection is in effect, the allowable
operating costs of inpatient hospital services (as
defined in subsection (a)(4)) recognized under this
title for such hospital for the preceding 12-month cost
reporting period, and
(ii) in the case of a later reporting period, the
target amount for the preceding 12-month cost reporting
period,
increased by the applicable percentage increase under
subparagraph (B) for that particular cost reporting period.
(B)(i) For purposes of subsection (d) and subsection (j) for
discharges occurring during a fiscal year, the ``applicable
percentage increase'' shall be--
(I) for fiscal year 1986, \1/2\ percent,
(II) for fiscal year 1987, 1.15 percent,
(III) for fiscal year 1988, 3.0 percent for hospitals
located in a rural area, 1.5 percent for hospitals
located in a large urban area (as defined in subsection
(d)(2)(D)), and 1.0 percent for hospitals located in
other urban areas,
(IV) for fiscal year 1989, the market basket
percentage increase minus 1.5 percentage points for
hospitals located in a rural area, the market basket
percentage increase minus 2.0 percentage points for
hospitals located in a large urban area, and the market
basket percentage increase minus 2.5 percentage points
for hospitals located in other urban areas,
(V) for fiscal year 1990, the market basket
percentage increase plus 4.22 percentage points for
hospitals located in a rural area, the market basket
percentage increase plus 0.12 percentage points for
hospitals located in a large urban area, and the market
basket percentage increase minus 0.53 percentage points
for hospitals located in other urban areas,
(VI) for fiscal year 1991, the market basket
percentage increase minus 2.0 percentage points for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.7 percentage
point for hospitals located in a rural area,
(VII) for fiscal year 1992, the market basket
percentage increase minus 1.6 percentage points for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.6 percentage
point for hospitals located in a rural area,
(VIII) for fiscal year 1993, the market basket
percentage increase minus 1.55 percentage point for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.55 for
hospitals located in a rural area,
(IX) for fiscal year 1994, the market basket
percentage increase minus 2.5 percentage points for
hospitals located in a large urban or other urban area,
and the market basket percentage increase minus 1.0
percentage point for hospitals located in a rural area,
(X) for fiscal year 1995, the market basket
percentage increase minus 2.5 percentage points for
hospitals located in a large urban or other urban area,
and such percentage increase for hospitals located in a
rural area as will provide for the average standardized
amount determined under subsection (d)(3)(A) for
hospitals located in a rural area being equal to such
average standardized amount for hospitals located in an
urban area (other than a large urban area),
(XI) for fiscal year 1996, the market basket
percentage increase minus 2.0 percentage points for
hospitals in all areas,
(XII) for fiscal year 1997, the market basket
percentage increase minus 0.5 percentage point for
hospitals in all areas,
(XIII) for fiscal year 1998, 0 percent,
(XIV) for fiscal year 1999, the market basket
percentage increase minus 1.9 percentage points for
hospitals in all areas,
(XV) for fiscal year 2000, the market basket
percentage increase minus 1.8 percentage points for
hospitals in all areas,
(XVI) for fiscal year 2001, the market basket
percentage increase for hospitals in all areas,
(XVII) for fiscal year 2002, the market basket
percentage increase minus 0.55 percentage points for
hospitals in all areas,
(XVIII) for fiscal year 2003, the market basket
percentage increase minus 0.55 percentage points for
hospitals in all areas,
(XIX) for each of fiscal years 2004 through 2006,
subject to clause (vii), the market basket percentage
increase for hospitals in all areas; and
(XX) for each subsequent fiscal year, subject to
clauses (viii), (ix), (xi), and (xii), the market
basket percentage increase for hospitals in all areas.
(ii) For purposes of subparagraphs (A) and (E), the
``applicable percentage increase'' for 12-month cost reporting
periods beginning during--
(I) fiscal year 1986, is 0.5 percent,
(II) fiscal year 1987, is 1.15 percent,
(III) fiscal year 1988, is the market basket
percentage increase minus 2.0 percentage points,
(IV) a subsequent fiscal year ending on or before
September 30, 1993, is the market basket percentage
increase,
(V) fiscal years 1994 through 1997, is the market
basket percentage increase minus the applicable
reduction (as defined in clause (v)(II)), or in the
case of a hospital for a fiscal year for which the
hospital's update adjustment percentage (as defined in
clause (v)(I)) is at least 10 percent, the market
basket percentage increase,
(VI) for fiscal year 1998, is 0 percent,
(VII) for fiscal years 1999 through 2002, is the
applicable update factor specified under clause (vi)
for the fiscal year, and
(VIII) subsequent fiscal years is the market basket
percentage increase.
(iii) For purposes of this subparagraph, the term ``market
basket percentage increase'' means, with respect to cost
reporting periods and discharges occurring in a fiscal year,
the percentage, estimated by the Secretary before the beginning
of the period or fiscal year, by which the cost of the mix of
goods and services (including personnel costs but excluding
nonoperating costs) comprising routine, ancillary, and special
care unit inpatient hospital services, based on an index of
appropriately weighted indicators of changes in wages and
prices which are representative of the mix of goods and
services included in such inpatient hospital services, for the
period or fiscal year will exceed the cost of such mix of goods
and services for the preceding 12-month cost reporting period
or fiscal year.
(iv) For purposes of subparagraphs (C) and (D), the
``applicable percentage increase'' is--
(I) for 12-month cost reporting periods beginning
during fiscal years 1986 through 1993, the applicable
percentage increase specified in clause (ii),
(II) for fiscal year 1994, the market basket
percentage increase minus 2.3 percentage points
(adjusted to exclude any portion of a cost reporting
period beginning during fiscal year 1993 for which the
applicable percentage increase is determined under
subparagraph (I)),
(III) for fiscal year 1995, the market basket
percentage increase minus 2.2 percentage points, and
(IV) for fiscal year 1996 and each subsequent fiscal
year, the applicable percentage increase under clause
(i).
(v) For purposes of clause (ii)(V)--
(I) a hospital's ``update adjustment percentage'' for
a fiscal year is the percentage by which the hospital's
allowable operating costs of inpatient hospital
services recognized under this title for the cost
reporting period beginning in fiscal year 1990 exceeds
the hospital's target amount (as determined under
subparagraph (A)) for such cost reporting period,
increased for each fiscal year (beginning with fiscal
year 1994) by the sum of any of the hospital's
applicable reductions under subclause (V) for previous
fiscal years; and
(II) the ``applicable reduction'' with respect to a
hospital for a fiscal year is the lesser of 1
percentage point or the percentage point difference
between 10 percent and the hospital's update adjustment
percentage for the fiscal year.
(vi) For purposes of clause (ii)(VII) for a fiscal year, if a
hospital's allowable operating costs of inpatient hospital
services recognized under this title for the most recent cost
reporting period for which information is available--
(I) is equal to, or exceeds, 110 percent of the
hospital's target amount (as determined under
subparagraph (A)) for such cost reporting period, the
applicable update factor specified under this clause is
the market basket percentage;
(II) exceeds 100 percent, but is less than 110
percent, of such target amount for the hospital, the
applicable update factor specified under this clause is
0 percent or, if greater, the market basket percentage
minus 0.25 percentage points for each percentage point
by which such allowable operating costs (expressed as a
percentage of such target amount) is less than 110
percent of such target amount;
(III) is equal to, or less than 100 percent, but
exceeds \2/3\ of such target amount for the hospital,
the applicable update factor specified under this
clause is 0 percent or, if greater, the market basket
percentage minus 2.5 percentage points; or
(IV) does not exceed \2/3\ of such target amount for
the hospital, the applicable update factor specified
under this clause is 0 percent.
(vii)(I) For purposes of clause (i)(XIX) for fiscal years
2005 and 2006, in a case of a subsection (d) hospital that does
not submit data to the Secretary in accordance with subclause
(II) with respect to such a fiscal year, the applicable
percentage increase under such clause for such fiscal year
shall be reduced by 0.4 percentage points. Such reduction shall
apply only with respect to the fiscal year involved, and the
Secretary shall not take into account such reduction in
computing the applicable percentage increase under clause
(i)(XIX) for a subsequent fiscal year.
(II) For fiscal years 2005 and 2006, each subsection (d)
hospital shall submit to the Secretary quality data (for a set
of 10 indicators established by the Secretary as of November 1,
2003) that relate to the quality of care furnished by the
hospital in inpatient settings in a form and manner, and at a
time, specified by the Secretary for purposes of this clause,
but with respect to fiscal year 2005, the Secretary shall
provide for a 30-day grace period for the submission of data by
a hospital.
(viii)(I) For purposes of clause (i) for fiscal year 2007 and
each subsequent fiscal year, in the case of a subsection (d)
hospital that does not submit, to the Secretary in accordance
with this clause, data required to be submitted on measures
selected under this clause with respect to such a fiscal year,
the applicable percentage increase under clause (i) for such
fiscal year shall be reduced by 2.0 percentage points (or,
beginning with fiscal year 2015, by one-quarter of such
applicable percentage increase (determined without regard to
clause (ix), (xi), or (xii))). Such reduction shall apply only
with respect to the fiscal year involved and the Secretary
shall not take into account such reduction in computing the
applicable percentage increase under clause (i) for a
subsequent fiscal year, and the Secretary and the Medicare
Payment Advisory Commission shall carry out the requirements
under section 5001(b) of the Deficit Reduction Act of 2005.
(II) Each subsection (d) hospital shall submit data on
measures selected under this clause to the Secretary in a form
and manner, and at a time, specified by the Secretary for
purposes of this clause. 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).
(III) The Secretary shall expand, beyond the measures
specified under clause (vii)(II) and consistent with the
succeeding subclauses, the set of measures that the Secretary
determines to be appropriate for the measurement of the quality
of care (including medication errors) furnished by hospitals in
inpatient settings.
(IV) Effective for payments beginning with fiscal year 2007,
in expanding the number of measures under subclause (III), the
Secretary shall begin to adopt the baseline set of performance
measures as set forth in the November 2005 report by the
Institute of Medicine of the National Academy of Sciences under
section 238(b) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003.
(V) Effective for payments for fiscal years 2008 through
2012, the Secretary shall add other measures that reflect
consensus among affected parties and, to the extent feasible
and practicable, shall include measures set forth by one or
more national consensus building entities.
(VI) For purposes of this clause and clause (vii), the
Secretary may replace any measures or indicators in appropriate
cases, such as where all hospitals are effectively in
compliance or the measures or indicators have been subsequently
shown not to represent the best clinical practice.
(VII) The Secretary shall establish procedures for making
information regarding measures submitted under this clause
available to the public. Such procedures shall ensure that a
hospital has the opportunity to review the data that are to be
made public with respect to the hospital prior to such data
being made public. The Secretary shall report quality measures
of process, structure, outcome, patients' perspectives on care,
efficiency, and costs of care that relate to services furnished
in inpatient settings in hospitals on the Internet website of
the Centers for Medicare & Medicaid Services.
(VIII) 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) 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.
(XII)(aa) With respect to a Hospital Consumer Assessment of
Healthcare Providers and Systems survey (or a successor survey)
conducted on or after January 1, 2020, such survey may not
include questions about communication by hospital staff with an
individual about such individual's pain unless such questions
take into account, as applicable, whether an individual
experiencing pain was informed about risks associated with the
use of opioids and about non-opioid alternatives for the
treatment of pain.
(bb) The Secretary shall not include on the Hospital Compare
internet website any measures based on the questions appearing
on the Hospital Consumer Assessment of Healthcare Providers and
Systems survey in 2018 or 2019 about communication by hospital
staff with an individual about such individual's pain.
(ix)(I) For purposes of clause (i) for fiscal year 2015 and
each subsequent fiscal year, in the case of an eligible
hospital (as defined in subsection (n)(6)(B)) that is not a
meaningful EHR user (as defined in subsection (n)(3)) for an
EHR reporting period for such fiscal year, three-quarters of
the applicable percentage increase otherwise applicable under
clause (i) (determined without regard to clause (viii), (xi),
or (xii)) for such fiscal year shall be reduced by 33\1/3\
percent for fiscal year 2015, 66\2/3\ percent for fiscal year
2016, and 100 percent for fiscal year 2017 and each subsequent
fiscal year. Such reduction shall apply only with respect to
the fiscal year involved and the Secretary shall not take into
account such reduction in computing the applicable percentage
increase under clause (i) for a subsequent fiscal year.
(II) The Secretary may, on a case-by-case basis (and, with
respect to the application of subclause (I) for fiscal year
2017, for categories of subsection (d) hospitals, as
established by the Secretary and posted on the Internet website
of the Centers for Medicare & Medicaid Services prior to
December 15, 2015, an application for which must be submitted
to the Secretary by not later than April 1, 2016), exempt an
eligible hospital from the application of subclause (I) with
respect to a fiscal year if the Secretary determines, subject
to annual renewal, that requiring such hospital to be a
meaningful EHR user during such fiscal year would result in a
significant hardship, such as in the case of a hospital in a
rural area without sufficient Internet access. The Secretary
shall exempt an eligible hospital from the application of the
payment adjustment under subclause (I) with respect to a fiscal
year, subject to annual renewal, if the Secretary determines
that compliance with the requirement for being a meaningful EHR
user is not possible because the certified EHR technology used
by such hospital is decertified under a program kept or
recognized pursuant to section 3001(c)(5) of the Public Health
Service Act. In no case may a hospital be granted an exemption
under this subclause for more than 5 years.
(III) For fiscal year 2015 and each subsequent fiscal year, a
State in which hospitals are paid for services under section
1814(b)(3) shall adjust the payments to each subsection (d)
hospital in the State that is not a meaningful EHR user (as
defined in subsection (n)(3)) in a manner that is designed to
result in an aggregate reduction in payments to hospitals in
the State that is equivalent to the aggregate reduction that
would have occurred if payments had been reduced to each
subsection (d) hospital in the State in a manner comparable to
the reduction under the previous provisions of this clause. The
State shall report to the Secretary the methodology it will use
to make the payment adjustment under the previous sentence.
(IV) For purposes of this clause, the term ``EHR reporting
period'' means, with respect to a fiscal year, any period (or
periods) as specified by the Secretary.
(x)(I) 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.
(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;
(II) for each of fiscal years 2012 and 2013, by 0.1
percentage point;
(III) for fiscal year 2014, by 0.3 percentage point;
(IV) for each of fiscal years 2015 and 2016, by 0.2
percentage point; and
(V) for each of fiscal years 2017, 2018, and 2019, by
0.75 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.
(C) In the case of a hospital that is a sole community
hospital (as defined in subsection (d)(5)(D)(iii)), subject to
subparagraphs (I) and (L), the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the applicable percentage increases
applied to such hospital under this paragraph
for cost reporting periods after the base cost
reporting period and up to and including such
first 12-month cost reporting period,
(ii) with respect to a later cost reporting period
beginning before fiscal year 1994, the target amount
for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under
subparagraph (B)(iv) for discharges occurring in the
fiscal year in which that later cost reporting period
begins,
(iii) with respect to discharges occurring in fiscal
year 1994, the target amount for the cost reporting
period beginning in fiscal year 1993 increased by the
applicable percentage increase under subparagraph
(B)(iv), or
(iv) with respect to discharges occurring in fiscal
year 1995 and each subsequent fiscal year, the target
amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(D) For cost reporting periods ending on or before September
30, 1994, and for cost reporting periods occurring on or after
October 1, 1997, and before October 1, 2022, in the case of a
hospital that is a medicare-dependent, small rural hospital (as
defined in subsection (d)(5)(G)), subject to subparagraph (K),
the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the applicable percentage increases
applied to such hospital under this paragraph
for cost reporting periods after the base cost
reporting period and up to and including such
first 12-month cost reporting period, or
(ii) with respect to a later cost reporting period
beginning before fiscal year 1994, the target amount
for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under
subparagraph (B)(iv) for discharges occurring in the
fiscal year in which that later cost reporting period
begins,
(iii) with respect to discharges occurring in fiscal
year 1994, the target amount for the cost reporting
period beginning in fiscal year 1993 increased by the
applicable percentage increase under subparagraph
(B)(iv), and
(iv) with respect to discharges occurring during
fiscal year 1998 through fiscal year 2022, the target
amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(E) In the case of a hospital described in clause (v) of
subsection (d)(1)(B), the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the sum of the applicable percentage
increases applied to such hospital under this
paragraph for cost reporting periods after the
base cost reporting period and up to and
including such first 12-month cost reporting
period, or
(ii) with respect to a later cost reporting period,
the target amount for the preceding 12-month cost
reporting period, increased by the applicable
percentage increase under subparagraph (B)(ii) for that
later cost reporting period.
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(F)(i) In the case of a hospital (or unit described in the
matter following clause (v) of subsection (d)(1)(B)) that
received payment under this subsection for inpatient hospital
services furnished during cost reporting periods beginning
before October 1, 1990, that is within a class of hospital
described in clause (iii), and that elects (in a form and
manner determined by the Secretary) this subparagraph to apply
to the hospital, the target amount for the hospital's 12-month
cost reporting period beginning during fiscal year 1998 is
equal to the average described in clause (ii).
(ii) The average described in this clause for a hospital or
unit shall be determined by the Secretary as follows:
(I) The Secretary shall determine the allowable
operating costs for inpatient hospital services for the
hospital or unit for each of the 5 cost reporting
periods for which the Secretary has the most recent
settled cost reports as of the date of the enactment of
this subparagraph.
(II) The Secretary shall increase the amount
determined under subclause (I) for each cost reporting
period by the applicable percentage increase under
subparagraph (B)(ii) for each subsequent cost reporting
period up to the cost reporting period described in
clause (i).
(III) The Secretary shall identify among such 5 cost
reporting periods the cost reporting periods for which
the amount determined under subclause (II) is the
highest, and the lowest.
(IV) The Secretary shall compute the averages of the
amounts determined under subclause (II) for the 3 cost
reporting periods not identified under subclause (III).
(iii) For purposes of this subparagraph, each of the
following shall be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(III) Hospitals described in clause (iii) of such
subsection.
(IV) Hospitals described in clause (iv) of such
subsection.
(V) Hospitals described in clause (v) of such
subsection.
(G)(i) In the case of a qualified long-term care hospital (as
defined in clause (ii)) that elects (in a form and manner
determined by the Secretary) this subparagraph to apply to the
hospital, the target amount for the hospital's 12-month cost
reporting period beginning during fiscal year 1998 is equal to
the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
beginning during fiscal year 1996, increased by the applicable
percentage increase for the cost reporting period beginning
during fiscal year 1997.
(ii) In clause (i), a ``qualified long-term care hospital''
means, with respect to a cost reporting period, a hospital
described in clause (iv) of subsection (d)(1)(B) during each of
the 2 cost reporting periods for which the Secretary has the
most recent settled cost reports as of the date of the
enactment of this subparagraph for each of which--
(I) the hospital's allowable operating costs of
inpatient hospital services recognized under this title
exceeded 115 percent of the hospital's target amount,
and
(II) the hospital would have a disproportionate
patient percentage of at least 70 percent (as
determined by the Secretary under subsection
(d)(5)(F)(vi)) if the hospital were a subsection (d)
hospital.
(H)(i) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), for a cost
reporting period beginning during fiscal years 1998 through
2002, the target amount for such a hospital or unit may not
exceed the amount as updated up to or for such cost reporting
period under clause (ii).
(ii)(I) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), the Secretary shall
estimate the 75th percentile of the target amounts for such
hospitals within such class for cost reporting periods ending
during fiscal year 1996, as adjusted under clause (iii).
(II) The Secretary shall update the amount determined under
subclause (I), for each cost reporting period after the cost
reporting period described in such subclause and up to the
first cost reporting period beginning on or after October 1,
1997, by a factor equal to the market basket percentage
increase.
(III) For cost reporting periods beginning during each of
fiscal years 1999 through 2002, subject to subparagraph (J),
the Secretary shall update such amount by a factor equal to the
market basket percentage increase.
(iii) In applying clause (ii)(I) in the case of a hospital or
unit, the Secretary shall provide for an appropriate adjustment
to the labor-related portion of the amount determined under
such subparagraph to take into account differences between
average wage-related costs in the area of the hospital and the
national average of such costs within the same class of
hospital.
(iv) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(III) Hospitals described in clause (iv) of such
subsection.
(I)(i) Subject to subparagraph (L), for cost reporting
periods beginning on or after October 1, 2000, in the case of a
sole community hospital there shall be substituted for the
amount otherwise determined under subsection (d)(5)(D)(i), if
such substitution results in a greater amount of payment under
this section for the hospital--
(I) with respect to discharges occurring in fiscal
year 2001, 75 percent of the amount otherwise
applicable to the hospital under subsection
(d)(5)(D)(i) (referred to in this clause as the
``subsection (d)(5)(D)(i) amount'') and 25 percent of
the rebased target amount (as defined in clause (ii));
(II) with respect to discharges occurring in fiscal
year 2002, 50 percent of the subsection (d)(5)(D)(i)
amount and 50 percent of the rebased target amount;
(III) with respect to discharges occurring in fiscal
year 2003, 25 percent of the subsection (d)(5)(D)(i)
amount and 75 percent of the rebased target amount; and
(IV) with respect to discharges occurring after
fiscal year 2003, 100 percent of the rebased target
amount.
(ii) For purposes of this subparagraph, the ``rebased target
amount'' has the meaning given the term ``target amount'' in
subparagraph (C) except that--
(I) there shall be substituted for the base cost
reporting period the 12-month cost reporting period
beginning during fiscal year 1996;
(II) any reference in subparagraph (C)(i) to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after October 1, 2000;
and
(III) applicable increase percentage shall only be
applied under subparagraph (C)(iv) for discharges
occurring in fiscal years beginning with fiscal year
2002.
(iii) In no case shall a hospital be denied treatment as a
sole community hospital or payment (on the basis of a target
rate as such as a hospital) because data are unavailable for
any cost reporting period due to changes in ownership, changes
in fiscal intermediaries, or other extraordinary circumstances,
so long as data for at least one applicable base cost reporting
period is available.
(J) For cost reporting periods beginning during fiscal year
2001, for a hospital described in subsection (d)(1)(B)(iv)--
(i) the limiting or cap amount otherwise determined
under subparagraph (H) shall be increased by 2 percent;
and
(ii) the target amount otherwise determined under
subparagraph (A) shall be increased by 25 percent
(subject to the limiting or cap amount determined under
subparagraph (H), as increased by clause (i)).
(K)(i) With respect to discharges occurring on or after
October 1, 2006, in the case of a medicare-dependent, small
rural hospital, for purposes of applying subparagraph (D)--
(I) there shall be substituted for the base cost
reporting period described in subparagraph (D)(i) the
12-month cost reporting period beginning during fiscal
year 2002; and
(II) any reference in such subparagraph to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after October 1, 2006.
(ii) This subparagraph shall only apply to a hospital if the
substitution described in clause (i)(I) results in an increase
in the target amount under subparagraph (D) for the hospital.
(L)(i) For cost reporting periods beginning on or after
January 1, 2009, in the case of a sole community hospital there
shall be substituted for the amount otherwise determined under
subsection (d)(5)(D)(i) of this section, if such substitution
results in a greater amount of payment under this section for
the hospital, the subparagraph (L) rebased target amount.
(ii) For purposes of this subparagraph, the term
``subparagraph (L) rebased target amount'' has the meaning
given the term ``target amount'' in subparagraph (C), except
that--
(I) there shall be substituted for the base cost
reporting period the 12-month cost reporting period
beginning during fiscal year 2006;
(II) any reference in subparagraph (C)(i) to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after January 1, 2009;
and
(III) the applicable percentage increase shall only
be applied under subparagraph (C)(iv) for discharges
occurring on or after January 1, 2009.
(4)(A)(i) The Secretary shall provide for an exception and
adjustment to (and in the case of a hospital described in
subsection (d)(1)(B)(iii), may provide an exemption from) the
method under this subsection for determining the amount of
payment to a hospital where events beyond the hospital's
control or extraordinary circumstances, including changes in
the case mix of such hospital, create a distortion in the
increase in costs for a cost reporting period (including any
distortion in the costs for the base period against which such
increase is measured). The Secretary may provide for such other
exemptions from, and exceptions and adjustments to, such method
as the Secretary deems appropriate, including the assignment of
a new base period which is more representative, as determined
by the Secretary, of the reasonable and necessary cost of
inpatient services and including those which he deems necessary
to take into account a decrease in the inpatient hospital
services that a hospital provides and that are customarily
provided directly by similar hospitals which results in a
significant distortion in the operating costs of inpatient
hospital services. The Secretary shall announce a decision on
any request for an exemption, exception, or adjustment under
this paragraph not later than 180 days after receiving a
completed application from the intermediary for such exemption,
exception, or adjustment, and shall include in such decision a
detailed explanation of the grounds on which such request was
approved or denied.
(ii) The payment reductions under paragraph (3)(B)(ii)(V)
shall not be considered by the Secretary in making adjustments
pursuant to clause (i). In making such reductions, the
Secretary shall treat the applicable update factor described in
paragraph (3)(B)(vi) for a fiscal year as being equal to the
market basket percentage for that year.
(B) In determining under subparagraph (A) whether to assign a
new base period which is more representative of the reasonable
and necessary cost to a hospital of providing inpatient
services, the Secretary shall take into consideration--
(i) changes in applicable technologies and medical
practices, or differences in the severity of illness
among patients, that increase the hospital's costs;
(ii) whether increases in wages and wage-related
costs for hospitals located in the geographic area in
which the hospital is located exceed the average of the
increases in such costs paid by hospitals in the United
States; and
(iii) such other factors as the Secretary considers
appropriate in determining increases in the hospital's
costs of providing inpatient services.
(C) Paragraph (1) shall not apply to payment of hospitals
which is otherwise determined under paragraph (3) of section
1814(b).
(5) In the case of any hospital having any cost reporting
period of other than a 12-month period, the Secretary shall
determine the 12-month period which shall be used for purposes
of this section.
(6) In the case of any hospital which becomes subject to the
taxes under section 3111 of the Internal Revenue Code of 1954,
with respect to any or all of its employees, for part or all of
a cost reporting period, and was not subject to such taxes with
respect to any or all of its employees for all or part of the
12-month base cost reporting period referred to in subsection
(b)(3)(A)(i), the Secretary shall provide for an adjustment by
increasing the base period amount described in such subsection
for such hospital by an amount equal to the amount of such
taxes which would have been paid or accrued by such hospital
for such base period if such hospital had been subject to such
taxes for all of such base period with respect to all its
employees, minus the amount of any such taxes actually paid or
accrued for such base period.
(7)(A) Notwithstanding paragraph (1), in the case of a
hospital or unit that is within a class of hospital described
in subparagraph (B) which first receives payments under this
section on or after October 1, 1997--
(i) for each of the first 2 cost reporting periods
for which the hospital has a settled cost report, the
amount of the payment with respect to operating costs
described in paragraph (1) under part A on a per
discharge or per admission basis (as the case may be)
is equal to the lesser of--
(I) the amount of operating costs for such
respective period, or
(II) 110 percent of the national median (as
estimated by the Secretary) of the target
amount for hospitals in the same class as the
hospital for cost reporting periods ending
during fiscal year 1996, updated by the
hospital market basket increase percentage to
the fiscal year in which the hospital first
received payments under this section, as
adjusted under subparagraph (C); and
(ii) for purposes of computing the target amount for
the subsequent cost reporting period, the target amount
for the preceding cost reporting period is equal to the
amount determined under clause (i) for such preceding
period.
(B) For purposes of this paragraph, each of the following
shall be treated as a separate class of hospital:
(i) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(ii) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(iii) Hospitals described in clause (iv) of such
subsection.
(C) In applying subparagraph (A)(i)(II) in the case of a
hospital or unit, the Secretary shall provide for an
appropriate adjustment to the labor-related portion of the
amount determined under such subparagraph to take into account
differences between average wage-related costs in the area of
the hospital and the national average of such costs within the
same class of hospital.
(c)(1) The Secretary may provide, in his discretion, that
payment with respect to services provided by a hospital in a
State may be made in accordance with a hospital reimbursement
control system in a State, rather than in accordance with the
other provisions of this title, if the chief executive officer
of the State requests such treatment and if--
(A) the Secretary determines that the system, if
approved under this subsection, will apply (i) to
substantially all non- Federal acute care hospitals (as
defined by the Secretary) in the State and (ii) to the
review of at least 75 percent of all revenues or
expenses in the State for inpatient hospital services
and of revenues or expenses for inpatient hospital
services provided under the State's plan approved under
title XIX;
(B) the Secretary has been provided satisfactory
assurances as to the equitable treatment under the
system of all entities (including Federal and State
programs) that pay hospitals for inpatient hospital
services, of hospital employees, and of hospital
patients;
(C) the Secretary has been provided satisfactory
assurances that under the system, over 36-month periods
(the first such period beginning with the first month
in which this subsection applies to that system in the
State), the amount of payments made under this title
under such system will not exceed the amount of
payments which would otherwise have been made under
this title not using such system;
(D) the Secretary determines that the system will not
preclude an eligible organization (as defined in
section 1876(b)) from negotiating directly with
hospitals with respect to the organization's rate of
payment for inpatient hospital services; and
(E) the Secretary determines that the system requires
hospitals to meet the requirement of section
1866(a)(1)(G) and the system provides for the exclusion
of certain costs in accordance with section 1862(a)(14)
(except for such waivers thereof as the Secretary
provides by regulation).
The Secretary cannot deny the application of a State under this
subsection on the ground that the State's hospital
reimbursement control system is based on a payment methodology
other than on the basis of a diagnosis-related group or on the
ground that the amount of payments made under this title under
such system must be less than the amount of payments which
would otherwise have been made under this title not using such
system. If the Secretary determines that the conditions
described in subparagraph (C) are based on maintaining payment
amounts at no more than a specified percentage increase above
the payment amounts in a base period, the State has the option
of applying such test (for inpatient hospital services under
part A) on an aggregate payment basis or on the basis of the
amount of payment per inpatient discharge or admission. If the
Secretary determines that the conditions described in
subparagraph (C) are based on maintaining aggregate payment
amounts below a national average percentage increase in total
payments under part A for inpatient hospital services, the
Secretary cannot deny the application of a State under this
subsection on the ground that the State's rate of increase in
such payments for such services must be less than such national
average rate of increase.
(2) In determining under paragraph (1)(C) the amount of
payment which would otherwise have been made under this title
for a State, the Secretary may provide for appropriate
adjustment of such amount to take into account previous
reductions effected in the amount of payments made under this
title in the State due to the operation of the hospital
reimbursement control system in the State if the system has
resulted in an aggregate rate of increase in operating costs of
inpatient hospital services (as defined in subsection (a)(4))
under this title for hospitals in the State which is less than
the aggregate rate of increase in such costs under this title
for hospitals in the United States.
(3) The Secretary shall discontinue payments under a system
described in paragraph (1) if the Secretary--
(A) determines that the system no longer meets the
requirements of subparagraphs (A), (D), and (E) of
paragraph (1) and, if applicable, the requirements of
paragraph (5), or
(B) has reason to believe that the assurances
described in subparagraph (B) or (C) of paragraph (1)
(or, if applicable, in paragraph (5)) are not being (or
will not be) met.
(4) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if--
(A) the requirements of subparagraphs (A), (B), (C),
(D), and (E) of paragraph (1) have been met with
respect to the system, and
(B) with respect to that system a waiver of certain
requirements of title XVIII of the Social Security Act
has been approved on or before (and which is in effect
as of) the date of the enactment of the Social Security
Amendments of 1983, pursuant to section 402(a) of the
Social Security Amendments of 1967 or section 222(a) of
the Social Security Amendments of 1972.
With respect to a State system described in this paragraph, the
Secretary shall judge the effectiveness of such system on the
basis of its rate of increase or inflation in inpatient
hospital payments for individuals under this title, as compared
to the national rate of increase or inflation for such
payments, with the State retaining the option to have the test
applied on the basis of the aggregate payments under the State
system as compared to aggregate payments which would have been
made under the national system since October 1, 1984, to the
most recent date for which annual data are available.
(5) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if--
(A) the requirements of subparagraphs (A), (B), (C),
(D), and (E) of paragraph (1) have been met with
respect to the system;
(B) the Secretary determines that the system--
(i) is operated directly by the State or by
an entity designated pursuant to State law,
(ii) provides for payment of hospitals
covered under the system under a methodology
(which sets forth exceptions and adjustments,
as well as any method for changes in the
methodology) by which rates or amounts to be
paid for hospital services during a specified
period are established under the system prior
to the defined rate period, and
(iii) hospitals covered under the system will
make such reports (in lieu of cost and other
reports, identified by the Secretary, otherwise
required under this title) as the Secretary may
require in order to properly monitor assurances
provided under this subsection;
(C) the State has provided the Secretary with
satisfactory assurances that operation of the system
will not result in any change in hospital admission
practices which result in--
(i) a significant reduction in the proportion
of patients (receiving hospital services
covered under the system) who have no third-
party coverage and who are unable to pay for
hospital services,
(ii) a significant reduction in the
proportion of individuals admitted to hospitals
for inpatient hospital services for which
payment is (or is likely to be) less than the
anticipated charges for or costs of such
services,
(iii) the refusal to admit patients who would
be expected to require unusually costly or
prolonged treatment for reasons other than
those related to the appropriateness of the
care available at the hospital, or
(iv) the refusal to provide emergency
services to any person who is in need of
emergency services if the hospital provides
such services;
(D) any change by the State in the system which has
the effect of materially reducing payments to hospitals
can only take effect upon 60 days notice to the
Secretary and to the hospitals the payment to which is
likely to be materially affected by the change; and
(E) the State has provided the Secretary with
satisfactory assurances that in the development of the
system the State has consulted with local governmental
officials concerning the impact of the system on public
hospitals.
The Secretary shall respond to requests of States under this
paragraph within 60 days of the date the request is submitted
to the Secretary.
(6) If the Secretary determines that the assurances described
in paragraph (1)(C) have not been met with respect to any 36-
month period, the Secretary may reduce payments under this
title to hospitals under the system in an amount equal to the
amount by which the payment under this title under such system
for such period exceeded the amount of payments which would
otherwise have been made under this title not using such
system.
(7) In the case of a State which made a request under
paragraph (5) before December 31, 1984, for the approval of a
State hospital reimbursement control system and which request
was approved--
(A) in applying paragraphs (1)(C) and (6), a
reference to a ``36-month period'' is deemed a
reference to a ``48-month period'', and
(B) in order to allow the State the opportunity to
provide the assurances described in paragraph (1)(C)
for a 48-month period, the Secretary may not
discontinue payments under the system, under the
authority of paragraph (3)(A) because the Secretary has
reason to believe that such assurances are not being
(or will not be) met, before July 1, 1986.
(d)(1)(A) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, the amount of the payment with
respect to the operating costs of inpatient hospital services
(as defined in subsection (a)(4)) of a subsection (d) hospital
(as defined in subparagraph (B)) for inpatient hospital
discharges in a cost reporting period or in a fiscal year--
(i) beginning on or after October 1, 1983, and before
October 1, 1984, is equal to the sum of--
(I) the target percentage (as defined in
subparagraph (C)) of the hospital's target
amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined
without the application of subsection (a)), and
(II) the DRG percentage (as defined in
subparagraph (C)) of the regional adjusted DRG
prospective payment rate determined under
paragraph (2) for such discharges;
(ii) beginning on or after October 1, 1984, and
before October 1, 1987, is equal to the sum of--
(I) the target percentage (as defined in
subparagraph (C)) of the hospital's target
amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined
without the application of subsection (a)), and
(II) the DRG percentage (as defined in
subparagraph (C)) of the applicable combined
adjusted DRG prospective payment rate
determined under subparagraph (D) for such
discharges; or
(iii) beginning on or after April 1, 1988, is equal
to
(I) the national adjusted DRG prospective
payment rate determined under paragraph (3) for
such discharges, or
(II) for discharges occurring during a fiscal
year ending on or before September 30, 1996,
the sum of 85 percent of the national adjusted
DRG prospective payment rate determined under
paragraph (3) for such discharges and 15
percent of the regional adjusted DRG
prospective payment rate determined under such
paragraph, but only if the average standardized
amount (described in clause (i)(I) or clause
(ii)(I) of paragraph (3)(D)) for hospitals
within the region of, and in the same large
urban or other area (or, for discharges
occurring during a fiscal year ending on or
before September 30, 1994, the same rural,
large urban, or other urban area) as, the
hospital is greater than the average
standardized amount (described in the
respective clause) for hospitals within the
United States in that type of area for
discharges occurring during such fiscal year.
(B) As used in this section, the term ``subsection (d)
hospital'' means a hospital located in one of the fifty States
or the District of Columbia other than--
(i) a psychiatric hospital (as defined in section
1861(f)),
(ii) a rehabilitation hospital (as defined by the
Secretary),
(iii) a hospital whose inpatients are predominantly
individuals under 18 years of age,
(iv) a hospital which has an average inpatient length
of stay (as determined by the Secretary) of greater
than 25 days,
(v)(I) a hospital that the Secretary has classified,
at any time on or before December 31, 1990, (or, in the
case of a hospital that, as of the date of the
enactment of this clause, is located in a State
operating a demonstration project under section
1814(b), on or before December 31, 1991) for purposes
of applying exceptions and adjustments to payment
amounts under this subsection, as a hospital involved
extensively in treatment for or research on cancer,
(II) a hospital that was recognized as a
comprehensive cancer center or clinical cancer research
center by the National Cancer Institute of the National
Institutes of Health as of April 20, 1983, that is
located in a State which, as of December 19, 1989, was
not operating a demonstration project under section
1814(b), that applied and was denied, on or before
December 31, 1990, for classification as a hospital
involved extensively in treatment for or research on
cancer under this clause (as in effect on the day
before the date of the enactment of this subclause),
that as of the date of the enactment of this subclause,
is licensed for less than 50 acute care beds, and that
demonstrates for the 4-year period ending on December
31, 1996, that at least 50 percent of its total
discharges have a principal finding of neoplastic
disease, as defined in subparagraph (E), or
(III) a hospital that was recognized as a clinical
cancer research center by the National Cancer Institute
of the National Institutes of Health as of February 18,
1998, that has never been reimbursed for inpatient
hospital services pursuant to a reimbursement system
under a demonstration project under section 1814(b),
that is a freestanding facility organized primarily for
treatment of and research on cancer and is not a unit
of another hospital, that as of the date of the
enactment of this subclause, is licensed for 162 acute
care beds, and that demonstrates for the 4-year period
ending on June 30, 1999, that at least 50 percent of
its total discharges have a principal finding of
neoplastic disease, as defined in subparagraph (E), or
(vi) a hospital that first received payment under
this subsection in 1986 which has an average inpatient
length of stay (as determined by the Secretary) of
greater than 20 days and that has 80 percent or more of
its annual medicare inpatient discharges with a
principal diagnosis that reflects a finding of
neoplastic disease in the 12-month cost reporting
period ending in fiscal year 1997;
and, in accordance with regulations of the Secretary, does not
include a psychiatric or rehabilitation unit of the hospital
which is a distinct part of the hospital (as defined by the
Secretary). A hospital that was classified by the Secretary on
or before September 30, 1995, as a hospital described in clause
(iv) (as in effect as of such date) shall continue to be so
classified (or, in the case of a hospital described in clause
(iv)(II), as so in effect, shall be classified under clause
(vi) on and after the effective date of such clause (vi) and
for cost reporting periods beginning on or after January 1,
2015, shall not be subject to subsection (m) as of the date of
such classification) notwithstanding that it is located in the
same building as, or on the same campus as, another hospital.
(C) For purposes of this subsection, for cost reporting
periods beginning--
(i) on or after October 1, 1983, and before October
1, 1984, the ``target percentage'' is 75 percent and
the ``DRG percentage'' is 25 percent;
(ii) on or after October 1, 1984, and before October
1, 1985, the ``target percentage'' is 50 percent and
the ``DRG percentage'' is 50 percent;
(iii) on or after October 1, 1985, and before October
1, 1986, the ``target percentage'' is 45 percent and
the ``DRG percentage'' is 55 percent; and
(iv) on or after October 1, 1986, and before October
1, 1987, the ``target percentage'' is 25 percent and
the ``DRG percentage'' is 75 percent.
(D) For purposes of subparagraph (A)(ii)(II), the
``applicable combined adjusted DRG prospective payment rate''
for discharges occurring--
(i) on or after October 1, 1984, and before October
1, 1986, is a combined rate consisting of 25 percent of
the national adjusted DRG prospective payment rate, and
75 percent of the regional adjusted DRG prospective
payment rate, determined under paragraph (3) for such
discharges; and
(ii) on or after October 1, 1986, and before October
1, 1987, is a combined rate consisting of 50 percent of
the national adjusted DRG prospective payment rate, and
50 percent of the regional adjusted DRG prospective
payment rate, determined under paragraph (3) for such
discharges.
(E) For purposes of subclauses (II) and (III) of subparagraph
(B)(v) only, the term ``principal finding of neoplastic
disease'' means the condition established after study to be
chiefly responsible for occasioning the admission of a patient
to a hospital, except that only discharges with ICD-9-CM
principal diagnosis codes of 140 through 239, V58.0, V58.1,
V66.1, V66.2, or 990 will be considered to reflect such a
principal diagnosis.
(2) The Secretary shall determine a national adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1984 involving inpatient hospital services of a
subsection (d) hospital in the United States, and shall
determine a regional adjusted DRG prospective payment rate for
such discharges in each region, for which payment may be made
under part A of this title. Each such rate shall be determined
for hospitals located in urban or rural areas within the United
States or within each such region, respectively, as follows:
(A) Determining allowable individual hospital costs
for base period.--The Secretary shall determine the
allowable operating costs per discharge of inpatient
hospital services for the hospital for the most recent
cost reporting period for which data are available.
(B) Updating for fiscal year 1984.--The Secretary
shall update each amount determined under subparagraph
(A) for fiscal year 1984 by--
(i) updating for fiscal year 1983 by the
estimated average rate of change of hospital
costs industry-wide between the cost reporting
period used under such subparagraph and fiscal
year 1983 and the most recent case-mix data
available, and
(ii) projecting for fiscal year 1984 by the
applicable percentage increase (as defined in
subsection (b)(3)(B)) for fiscal year 1984.
(C) Standardizing amounts.--The Secretary shall
standardize the amount updated under subparagraph (B)
for each hospital by--
(i) excluding an estimate of indirect medical
education costs (taking into account, for
discharges occurring after September 30, 1986,
the amendments made by section 9104(a) of the
Medicare and Medicaid Budget Reconciliation
Amendments of 1985), except that the Secretary
shall not take into account any reduction in
the amount of additional payments under
paragraph (5)(B)(ii) resulting from the
amendment made by section 4621(a)(1) of the
Balanced Budget Act of 1997 or any additional
payments under such paragraph resulting from
the application of section 111 of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999, of section 302 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, or the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003,
(ii) adjusting for variations among hospitals
by area in the average hospital wage level,
(iii) adjusting for variations in case mix
among hospitals, and
(iv) for discharges occurring on or after
October 1, 1986, excluding an estimate of the
additional payments to certain hospitals to be
made under paragraph (5)(F), except that the
Secretary shall not exclude additional payments
under such paragraph made as a result of the
enactment of section 6003(c) of the Omnibus
Budget Reconciliation Act of 1989, the
enactment of section 4002(b) of the Omnibus
Budget Reconciliation Act of 1990, the
enactment of section 303 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, or the enactment of
section 402(a)(1) of the Medicare Prescription
Drug, Improvement, and Modernization Act of
2003.
(D) Computing urban and rural averages.--The
Secretary shall compute an average of the standardized
amounts determined under subparagraph (C) for the
United States and for each region--
(i) for all subsection (d) hospitals located
in an urban area within the United States or
that region, respectively, and
(ii) for all subsection (d) hospitals located
in a rural area within the United States or
that region, respectively.
For purposes of this subsection, the term ``region''
means one of the nine census divisions, comprising the
fifty States and the District of Columbia, established
by the Bureau of the Census for statistical and
reporting purposes; the term ``urban area'' means an
area within a Metropolitan Statistical Area (as defined
by the Office of Management and Budget) or within such
similar area as the Secretary has recognized under
subsection (a) by regulation; the term ``large urban
area'' means, with respect to a fiscal year, such an
urban area which the Secretary determines (in the
publications described in subsection (e)(5) before the
fiscal year) has a population of more than 1,000,000
(as determined by the Secretary based on the most
recent available population data published by the
Bureau of the Census); and the term ``rural area''
means any area outside such an area or similar area. A
hospital located in a Metropolitan Statistical Area
shall be deemed to be located in the region in which
the largest number of the hospitals in the same
Metropolitan Statistical Area are located, or, at the
option of the Secretary, the region in which the
majority of the inpatient discharges (with respect to
which payments are made under this title) from
hospitals in the same Metropolitan Statistical Area are
made.
(E) Reducing for value of outlier payments.--The
Secretary shall reduce each of the average standardized
amounts determined under subparagraph (D) by a
proportion equal to the proportion (estimated by the
Secretary) of the amount of payments under this
subsection based on DRG prospective payment rates which
are additional payments described in paragraph (5)(A)
(relating to outlier payments).
(F) Maintaining budget neutrality.--The Secretary
shall adjust each of such average standardized amounts
as may be required under subsection (e)(1)(B) for that
fiscal year.
(G) Computing drg-specific rates for urban and rural
hospitals in the united states and in each region.--For
each discharge classified within a diagnosis-related
group, the Secretary shall establish a national DRG
prospective payment rate and shall establish a regional
DRG prospective payment rate for each region, each of
which is equal--
(i) for hospitals located in an urban area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (D),
reduced under subparagraph (E), and
adjusted under subparagraph (F)) for
hospitals located in an urban area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group; and
(ii) for hospitals located in a rural area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (D),
reduced under subparagraph (E), and
adjusted under subparagraph (F)) for
hospitals located in a rural area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group.
(H) Adjusting for different area wage levels.--The
Secretary shall adjust the proportion, (as estimated by
the Secretary from time to time) of hospitals' costs
which are attributable to wages and wage-related costs,
of the national and regional DRG prospective payment
rates computed under subparagraph (G) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the national average hospital wage
level.
(3) The Secretary shall determine a national adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in a fiscal year after fiscal year 1984 involving inpatient
hospital services of a subsection (d) hospital in the United
States, and shall determine, for fiscal years before fiscal
year 1997, a regional adjusted DRG prospective payment rate for
such discharges in each region for which payment may be made
under part A of this title. Each such rate shall be determined
for hospitals located in large urban, other urban, or rural
areas within the United States and within each such region,
respectively, as follows:
(A) Updating previous standardized amounts.--(i) For
discharges occurring in a fiscal year beginning before
October 1, 1987, the Secretary shall compute an average
standardized amount for hospitals located in an urban
area and for hospitals located in a rural area within
the United States and for hospitals located in an urban
area and for hospitals located in a rural area within
each region, equal to the respective average
standardized amount computed for the previous fiscal
year under paragraph (2)(D) or under this subparagraph,
increased for the fiscal year involved by the
applicable percentage increase under subsection
(b)(3)(B). With respect to discharges occurring on or
after October 1, 1987, the Secretary shall compute
urban and rural averages on the basis of discharge
weighting rather than hospital weighting, making
appropriate adjustments to ensure that computation on
such basis does not result in total payments under this
section that are greater or less than the total
payments that would have been made under this section
but for this sentence, and making appropriate changes
in the manner of determining the reductions under
subparagraph (C)(ii).
(ii) For discharges occurring in a fiscal year
beginning on or after October 1, 1987, and ending on or
before September 30, 1994, the Secretary shall compute
an average standardized amount for hospitals located in
a large urban area, for hospitals located in a rural
area, and for hospitals located in other urban areas,
within the United States and within each region, equal
to the respective average standardized amount computed
for the previous fiscal year under this subparagraph
increased by the applicable percentage increase under
subsection (b)(3)(B)(i) with respect to hospitals
located in the respective areas for the fiscal year
involved.
(iii) For discharges occurring in the fiscal year
beginning on October 1, 1994, the average standardized
amount for hospitals located in a rural area shall be
equal to the average standardized amount for hospitals
located in an urban area. For discharges occurring on
or after October 1, 1994, the Secretary shall adjust
the ratio of the labor portion to non-labor portion of
each average standardized amount to equal such ratio
for the national average of all standardized amounts.
(iv)(I) Subject to subclause (II), for discharges
occurring in a fiscal year beginning on or after
October 1, 1995, the Secretary shall compute an average
standardized amount for hospitals located in a large
urban area and for hospitals located in other areas
within the United States and within each region equal
to the respective average standardized amount computed
for the previous fiscal year under this subparagraph
increased by the applicable percentage increase under
subsection (b)(3)(B)(i) with respect to hospitals
located in the respective areas for the fiscal year
involved.
(II) For discharges occurring in a fiscal year
(beginning with fiscal year 2004), the Secretary shall
compute a standardized amount for hospitals located in
any area within the United States and within each
region equal to the standardized amount computed for
the previous fiscal year under this subparagraph for
hospitals located in a large urban area (or, beginning
with fiscal year 2005, for all hospitals in the
previous fiscal year) increased by the applicable
percentage increase under subsection (b)(3)(B)(i) for
the fiscal year involved.
(v) Average standardized amounts computed under this
paragraph shall be adjusted to reflect the most recent
case-mix data available.
(vi) Insofar as the Secretary determines that the
adjustments under paragraph (4)(C)(i) for a previous
fiscal year (or estimates that such adjustments for a
future fiscal year) did (or are likely to) result in a
change in aggregate payments under this subsection
during the fiscal year that are a result of changes in
the coding or classification of discharges that do not
reflect real changes in case mix, the Secretary may
adjust the average standardized amounts computed under
this paragraph for subsequent fiscal years so as to
eliminate the effect of such coding or classification
changes.
(B) Reducing for value of outlier payments.--The
Secretary shall reduce each of the average standardized
amounts determined under subparagraph (A) by a factor
equal to the proportion of payments under this
subsection (as estimated by the Secretary) based on DRG
prospective payment amounts which are additional
payments described in paragraph (5)(A) (relating to
outlier payments).
(C)(i) Maintaining budget neutrality for fiscal year
1985.--For discharges occurring in fiscal year 1985,
the Secretary shall adjust each of such average
standardized amounts as may be required under
subsection (e)(1)(B) for that fiscal year.
(ii) Reducing for savings from amendment to indirect
teaching adjustment for discharges after September 30,
1986.--For discharges occurring after September 30,
1986, the Secretary shall further reduce each of the
average standardized amounts (in a proportion which
takes into account the differing effects of the
standardization effected under paragraph (2)(C)(i)) so
as to provide for a reduction in the total of the
payments (attributable to this paragraph) made for
discharges occurring on or after October 1, 1986, of an
amount equal to the estimated reduction in the payment
amounts under paragraph (5)(B) that would have resulted
from the enactment of the amendments made by section
9104 of the Medicare and Medicaid Budget Reconciliation
Amendments of 1985 and by section 4003(a)(1) of the
Omnibus Budget Reconciliation Act of 1987 if the factor
described in clause (ii)(II) of paragraph (5)(B)
(determined without regard to amendments made by the
Omnibus Budget Reconciliation Act of 1990) were applied
for discharges occurring on or after such date instead
of the factor described in clause (ii) of that
paragraph.
(D) Computing drg-specific rates for hospitals.--For
each discharge classified within a diagnosis-related
group, the Secretary shall establish for the fiscal
year a national DRG prospective payment rate and shall
establish, for fiscal years before fiscal year 1997, a
regional DRG prospective payment rate for each region
which is equal--
(i) for fiscal years before fiscal year 2004,
for hospitals located in a large urban area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (A),
reduced under subparagraph (B), and
adjusted or reduced under subparagraph
(C)) for the fiscal year for hospitals
located in such a large urban area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group;
(ii) for fiscal years before fiscal year
2004, for hospitals located in other areas in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (A),
reduced under subparagraph (B), and
adjusted or reduced under subparagraph
(C)) for the fiscal year for hospitals
located in other areas in the United
States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group; and
(iii) for a fiscal year beginning after
fiscal year 2003, for hospitals located in all
areas, to the product of--
(I) the applicable standardized
amount (computed under subparagraph
(A)), reduced under subparagraph (B),
and adjusted or reduced under
subparagraph (C) for the fiscal year;
and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group.
(E) Adjusting for different area wage levels.--
(i) In general.--Except as provided in clause
(ii) or (iii), the Secretary shall adjust the
proportion, (as estimated by the Secretary from
time to time) of hospitals' costs which are
attributable to wages and wage-related costs,
of the DRG prospective payment rates computed
under subparagraph (D) for area differences in
hospital wage levels by a factor (established
by the Secretary) reflecting the relative
hospital wage level in the geographic area of
the hospital compared to the national average
hospital wage level. Not later than October 1,
1990, and October 1, 1993 (and at least every
12 months thereafter), the Secretary shall
update the factor under the preceding sentence
on the basis of a survey conducted by the
Secretary (and updated as appropriate) of the
wages and wage-related costs of subsection (d)
hospitals in the United States. Not less often
than once every 3 years the Secretary (through
such survey or otherwise) shall measure the
earnings and paid hours of employment by
occupational category and shall exclude data
with respect to the wages and wage-related
costs incurred in furnishing skilled nursing
facility services. Any adjustments or updates
made under this subparagraph for a fiscal year
(beginning with fiscal year 1991) shall be made
in a manner that assures that the aggregate
payments under this subsection in the fiscal
year are not greater or less than those that
would have been made in the year without such
adjustment. The Secretary shall apply the
previous sentence for any period as if the
amendments made by section 403(a)(1) of the
Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 and the amendments
made by section 10324(a)(1) of the Patient
Protection and Affordable Care Act had not been
enacted.
(ii) Alternative proportion to be adjusted
beginning in fiscal year 2005.--For discharges
occurring on or after October 1, 2004, the
Secretary shall substitute ``62 percent'' for
the proportion described in the first sentence
of clause (i), unless the application of this
clause would result in lower payments to a
hospital than would otherwise be made.
(iii) Floor on area wage index for hospitals
in frontier states.--
(I) In general.--Subject to subclause
(IV), for discharges occurring on or
after October 1, 2010, the area wage
index applicable under this
subparagraph to any hospital which is
located in a frontier State (as defined
in subclause (II)) may not be less than
1.00.
(II) Frontier state defined.--In this
clause, the term ``frontier State''
means a State in which at least 50
percent of the counties in the State
are frontier counties.
(III) Frontier county defined.--In
this clause, the term ``frontier
county'' means a county in which the
population per square mile is less than
6.
(IV) Limitation.--This clause shall
not apply to any hospital located in a
State that receives a non-labor related
share adjustment under paragraph
(5)(H).
(4)(A) The Secretary shall establish a classification of
inpatient hospital discharges by diagnosis-related groups and a
methodology for classifying specific hospital discharges within
these groups.
(B) For each such diagnosis-related group the Secretary shall
assign an appropriate weighting factor which reflects the
relative hospital resources used with respect to discharges
classified within that group compared to discharges classified
within other groups.
(C)(i) The Secretary shall adjust the classifications and
weighting factors established under subparagraphs (A) and (B),
for discharges in fiscal year 1988 and at least annually
thereafter, to reflect changes in treatment patterns,
technology (including a new medical service or technology under
paragraph (5)(K)), and other factors which may change the
relative use of hospital resources.
(ii) For discharges in fiscal year 1990, the Secretary shall
reduce the weighting factor for each diagnosis-related group by
1.22 percent.
(iii) Any such adjustment under clause (i) for discharges in
a fiscal year (beginning with fiscal year 1991) shall be made
in a manner that assures that the aggregate payments under this
subsection for discharges in the fiscal year are not greater or
less than those that would have been made for discharges in the
year without such adjustment.
(D)(i) For discharges occurring on or after October 1, 2008,
the diagnosis-related group to be assigned under this paragraph
for a discharge described in clause (ii) shall be a diagnosis-
related group that does not result in higher payment based on
the presence of a secondary diagnosis code described in clause
(iv).
(ii) A discharge described in this clause is a discharge
which meets the following requirements:
(I) The discharge includes a condition identified by
a diagnosis code selected under clause (iv) as a
secondary diagnosis.
(II) But for clause (i), the discharge would have
been classified to a diagnosis-related group that
results in a higher payment based on the presence of a
secondary diagnosis code selected under clause (iv).
(III) At the time of admission, no code selected
under clause (iv) was present.
(iii) As part of the information required to be reported by a
hospital with respect to a discharge of an individual in order
for payment to be made under this subsection, for discharges
occurring on or after October 1, 2007, the information shall
include the secondary diagnosis of the individual at admission.
(iv) By not later than October 1, 2007, the Secretary shall
select diagnosis codes associated with at least two conditions,
each of which codes meets all of the following requirements (as
determined by the Secretary):
(I) Cases described by such code have a high cost or
high volume, or both, under this title.
(II) The code results in the assignment of a case to
a diagnosis-related group that has a higher payment
when the code is present as a secondary diagnosis.
(III) The code describes such conditions that could
reasonably have been prevented through the application
of evidence-based guidelines.
The Secretary may from time to time revise (through addition or
deletion of codes) the diagnosis codes selected under this
clause so long as there are diagnosis codes associated with at
least two conditions selected for discharges occurring during
any fiscal year.
(v) In selecting and revising diagnosis codes under clause
(iv), the Secretary shall consult with the Centers for Disease
Control and Prevention and other appropriate entities.
(vi) Any change resulting from the application of this
subparagraph shall not be taken into account in adjusting the
weighting factors under subparagraph (C)(i) or in applying
budget neutrality under subparagraph (C)(iii).
(5)(A)(i) For discharges occurring during fiscal years ending
on or before September 30, 1997, the Secretary shall provide
for an additional payment for a subsection (d) hospital for any
discharge in a diagnosis-related group, the length of stay of
which exceeds the mean length of stay for discharges within
that group by a fixed number of days, or exceeds such mean
length of stay by some fixed number of standard deviations,
whichever is the fewer number of days.
(ii) For cases which are not included in clause (i), a
subsection (d) hospital may request additional payments in any
case where charges, adjusted to cost, exceed a fixed multiple
of the applicable DRG prospective payment rate, or exceed such
other fixed dollar amount, whichever is greater, or for
discharges in fiscal years beginning on or after October 1,
1994, exceed the sum of the applicable DRG prospective payment
rate plus any amounts payable under subparagraphs (B) and (F)
plus a fixed dollar amount determined by the Secretary.
(iii) The amount of such additional payment under clauses (i)
and (ii) shall be determined by the Secretary and shall (except
as payments under clause (i) are required to be reduced to take
into account the requirements of clause (v)) approximate the
marginal cost of care beyond the cutoff point applicable under
clause (i) or (ii).
(iv) The total amount of the additional payments made under
this subparagraph for discharges in a fiscal year may not be
less than 5 percent nor more than 6 percent of the total
payments projected or estimated to be made based on DRG
prospective payment rates for discharges in that year.
(v) The Secretary shall provide that--
(I) the day outlier percentage for fiscal year 1995
shall be 75 percent of the day outlier percentage for
fiscal year 1994;
(II) the day outlier percentage for fiscal year 1996
shall be 50 percent of the day outlier percentage for
fiscal year 1994; and
(III) the day outlier percentage for fiscal year 1997
shall be 25 percent of the day outlier percentage for
fiscal year 1994.
(vi) For purposes of this subparagraph the term ``day outlier
percentage'' means, for a fiscal year, the percentage of the
total additional payments made by the Secretary under this
subparagraph for discharges in that fiscal year which are
additional payments under clause (i).
(B) The Secretary shall provide for an additional payment
amount for subsection (d) hospitals with indirect costs of
medical education, in an amount computed in the same manner as
the adjustment for such costs under regulations (in effect as
of January 1, 1983) under subsection (a)(2), except as follows:
(i) The amount of such additional payment shall be
determined by multiplying (I) the sum of the amount
determined under paragraph (1)(A)(ii)(II) (or, if
applicable, the amount determined under paragraph
(1)(A)(iii)) and, for cases qualifying for additional
payment under subparagraph (A)(i), the amount paid to
the hospital under subparagraph (A), by (II) the
indirect teaching adjustment factor described in clause
(ii).
(ii) For purposes of clause (i)(II), the indirect
teaching adjustment factor is equal to c
(((1+r) to the nth power) - 1), where ``r'' is the
ratio of the hospital's full-time equivalent interns
and residents to beds and ``n'' equals .405. Subject to
clause (ix), for discharges occurring--
(I) on or after October 1, 1988, and before
October 1, 1997, ``c'' is equal to 1.89;
(II) during fiscal year 1998, ``c'' is equal
to 1.72;
(III) during fiscal year 1999, ``c'' is equal
to 1.6;
(IV) during fiscal year 2000, ``c'' is equal
to 1.47;
(V) during fiscal year 2001, ``c'' is equal
to 1.54;
(VI) during fiscal year 2002, ``c'' is equal
to 1.6;
(VII) on or after October 1, 2002, and before
April 1, 2004, ``c'' is equal to 1.35;
(VIII) on or after April 1, 2004, and before
October 1, 2004, ``c'' is equal to 1.47;
(IX) during fiscal year 2005, ``c'' is equal
to 1.42;
(X) during fiscal year 2006, ``c'' is equal
to 1.37;
(XI) during fiscal year 2007, ``c'' is equal
to 1.32; and
(XII) on or after October 1, 2007, ``c'' is
equal to 1.35.
(iii) In determining such adjustment the Secretary
shall not distinguish between those interns and
residents who are employees of a hospital and those
interns and residents who furnish services to a
hospital but are not employees of such hospital.
(iv)(I) Effective for discharges occurring on or
after October 1, 1997, and before July 1, 2010, all the
time spent by an intern or resident in patient care
activities under an approved medical residency training
program at an entity in a nonhospital setting shall be
counted towards the determination of full-time
equivalency if the hospital incurs all, or
substantially all, of the costs for the training
program in that setting.
(II) Effective for discharges occurring on or after
July 1, 2010, all the time spent by an intern or
resident in patient care activities in a nonprovider
setting shall be counted towards the determination of
full-time equivalency if a hospital incurs the costs of
the stipends and fringe benefits of the intern or
resident during the time the intern or resident spends
in that setting. If more than one hospital incurs these
costs, either directly or through a third party, such
hospitals shall count a proportional share of the time,
as determined by written agreement between the
hospitals, that a resident spends training in that
setting.
(v) In determining the adjustment with respect to a
hospital for discharges occurring on or after October
1, 1997, the total number of full-time equivalent
interns and residents in the fields of allopathic and
osteopathic medicine in either a hospital or
nonhospital setting may not exceed the number (or, 130
percent of such number in the case of a hospital
located in a rural area) of such full-time equivalent
interns and residents in the hospital with respect to
the hospital's most recent cost reporting period ending
on or before December 31, 1996. Rules similar to the
rules of subsection (h)(4)(F)(ii) shall apply for
purposes of this clause. The provisions of subsections
(h)(4)(H)(vi), (h)(7), and (h)(8) shall apply with
respect to the first sentence of this clause in the
same manner as they apply with respect to subsection
(h)(4)(F)(i).
(vi) For purposes of clause (ii)--
(I) ``r'' may not exceed the ratio of the
number of interns and residents, subject to the
limit under clause (v), with respect to the
hospital for its most recent cost reporting
period to the hospital's available beds (as
defined by the Secretary) during that cost
reporting period, and
(II) for the hospital's cost reporting
periods beginning on or after October 1, 1997,
subject to the limits described in clauses (iv)
and (v), the total number of full-time
equivalent residents for payment purposes shall
equal the average of the actual full-time
equivalent resident count for the cost
reporting period and the preceding two cost
reporting periods.
In the case of the first cost reporting period
beginning on or after October 1, 1997, subclause (II)
shall be applied by using the average for such period
and the preceding cost reporting period.
(vii) If any cost reporting period beginning on or
after October 1, 1997, is not equal to twelve months,
the Secretary shall make appropriate modifications to
ensure that the average full-time equivalent residency
count pursuant to subclause (II) of clause (vi) is
based on the equivalent of full twelve-month cost
reporting periods.
(viii) Rules similar to the rules of [subsection
(h)(4)(H)] paragraphs (2)(F)(iv) and (4)(H) of
subsection (h) shall apply for purposes of clauses (v)
and (vi).
(ix) For discharges occurring on or after July 1,
2005, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
redistributed to a hospital under subsection (h)(7)(B),
in computing the indirect teaching adjustment factor
under clause (ii) the adjustment shall be computed in a
manner as if ``c'' were equal to 0.66 with respect to
such resident positions.
(x) For discharges occurring on or after July 1,
2011, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
distributed to a hospital under subsection (h)(8)(B),
the indirect teaching adjustment factor shall be
computed in the same manner as provided under clause
(ii) with respect to such resident positions.
(x)(I) The provisions of subparagraph (K) of
subsection (h)(4) shall apply under this subparagraph
in the same manner as they apply under such subsection.
(II) In determining the hospital's
number of full-time equivalent
residents for purposes of this
subparagraph, all the time spent by an
intern or resident in an approved
medical residency training program in
non-patient care activities, such as
didactic conferences and seminars, as
such time and activities are defined by
the Secretary, that occurs in the
hospital shall be counted toward the
determination of full-time equivalency
if the hospital--
(aa) is recognized as a
subsection (d) hospital;
(bb) is recognized as a
subsection (d) Puerto Rico
hospital;
(cc) is reimbursed under a
reimbursement system authorized
under section 1814(b)(3); or
(dd) is a provider-based
hospital outpatient department.
(III) In determining the hospital's
number of full-time equivalent
residents for purposes of this
subparagraph, all the time spent by an
intern or resident in an approved
medical residency training program in
research activities that are not
associated with the treatment or
diagnosis of a particular patient, as
such time and activities are defined by
the Secretary, shall not be counted
toward the determination of full-time
equivalency.
(C)(i) The Secretary shall provide for such exceptions and
adjustments to the payment amounts established under this
subsection (other than under paragraph (9)) as the Secretary
deems appropriate to take into account the special needs of
regional and national referral centers (including those
hospitals of 275 or more beds located in rural areas). A
hospital which is classified as a rural hospital may appeal to
the Secretary to be classified as a rural referral center under
this clause on the basis of criteria (established by the
Secretary) which shall allow the hospital to demonstrate that
it should be so reclassified by reason of certain of its
operating characteristics being similar to those of a typical
urban hospital located in the same census region and which
shall not require a rural osteopathic hospital to have more
than 3,000 discharges in a year in order to be classified as a
rural referral center. Such characteristics may include wages,
scope of services, service area, and the mix of medical
specialties. The Secretary shall publish the criteria not later
than August 17, 1984, for implementation by October 1, 1984. An
appeal allowed under this clause must be submitted to the
Secretary (in such form and manner as the Secretary may
prescribe) during the quarter before the first quarter of the
hospital's cost reporting period (or, in the case of a cost
reporting period beginning during October 1984, during the
first quarter of that period), and the Secretary must make a
final determination with respect to such appeal within 60 days
after the date the appeal was submitted. Any payment
adjustments necessitated by a reclassification based upon the
appeal shall be effective at the beginning of such cost
reporting period.
(ii) The Secretary shall provide, under clause (i), for the
classification of a rural hospital as a regional referral
center if the hospital has a case mix index equal to or greater
than the median case mix index for hospitals (other than
hospitals with approved teaching programs) located in an urban
area in the same region (as defined in paragraph (2)(D)), has
at least 5,000 discharges a year or, if less, the median number
of discharges in urban hospitals in the region in which the
hospital is located (or, in the case of a rural osteopathic
hospital, meets the criterion established by the Secretary
under clause (i) with respect to the annual number of
discharges for such hospitals), and meets any other criteria
established by the Secretary under clause (i).
(D)(i) For any cost reporting period beginning on or after
April 1, 1990, with respect to a subsection (d) hospital which
is a sole community hospital, payment under paragraph (1)(A)
shall be--
(I) an amount based on 100 percent of the hospital's
target amount for the cost reporting period, as defined
in subsection (b)(3)(C), or
(II) the amount determined under paragraph
(1)(A)(iii),
whichever results in greater payment to the hospital.
(ii) In the case of a sole community hospital that
experiences, in a cost reporting period compared to the
previous cost reporting period, a decrease of more than 5
percent in its total number of inpatient cases due to
circumstances beyond its control, the Secretary shall provide
for such adjustment to the payment amounts under this
subsection (other than under paragraph (9)) as may be necessary
to fully compensate the hospital for the fixed costs it incurs
in the period in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core
staff and services.
(iii) For purposes of this title, the term ``sole community
hospital'' means any hospital--
(I) that the Secretary determines is located more
than 35 road miles from another hospital,
(II) that, by reason of factors such as the time
required for an individual to travel to the nearest
alternative source of appropriate inpatient care (in
accordance with standards promulgated by the
Secretary), location, weather conditions, travel
conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of
inpatient hospital services reasonably available to
individuals in a geographic area who are entitled to
benefits under part A, or
(III) that is located in a rural area and designated
by the Secretary as an essential access community
hospital under section 1820(i)(1) as in effect on
September 30, 1997.
(iv) The Secretary shall promulgate a standard for
determining whether a hospital meets the criteria for
classification as a sole community hospital under clause
(iii)(II) because of the time required for an individual to
travel to the nearest alternative source of appropriate
inpatient care.
(v) If the Secretary determines that, in the case of a
hospital located in a rural area and designated by the
Secretary as an essential access community hospital under
section 1820(i)(1) as in effect on September 30, 1997, the
hospital has incurred increases in reasonable costs during a
cost reporting period as a result of becoming a member of a
rural health network (as defined in section 1820(d)) in the
State in which it is located, and in incurring such increases,
the hospital will increase its costs for subsequent cost
reporting periods, the Secretary shall increase the hospital's
target amount under subsection (b)(3)(C) to account for such
incurred increases.
(E)(i) The Secretary shall estimate the amount of
reimbursement made for services described in section
1862(a)(14) with respect to which payment was made under part B
in the base reporting periods referred to in paragraph (2)(A)
and with respect to which payment is no longer being made.
(ii) The Secretary shall provide for an adjustment to the
payment for subsection (d) hospitals in each fiscal year so as
appropriately to reflect the net amount described in clause
(i).
(F)(i) Subject to subsection (r), for discharges occurring on
or after May 1, 1986, the Secretary shall provide, in
accordance with this subparagraph, for an additional payment
amount for each subsection (d) hospital which--
(I) serves a significantly disproportionate number of
low-income patients (as defined in clause (v)), or
(II) is located in an urban area, has 100 or more
beds, and can demonstrate that its net inpatient care
revenues (excluding any of such revenues attributable
to this title or State plans approved under title XIX),
during the cost reporting period in which the
discharges occur, for indigent care from State and
local government sources exceed 30 percent of its total
of such net inpatient care revenues during the period.
(ii) Subject to clause (ix), the amount of such payment for
each discharge shall be determined by multiplying (I) the sum
of the amount determined under paragraph (1)(A)(ii)(II) (or, if
applicable, the amount determined under paragraph (1)(A)(iii))
and, for cases qualifying for additional payment under
subparagraph (A)(i), the amount paid to the hospital under
subparagraph (A) for that discharge, by (II) the
disproportionate share adjustment percentage established under
clause (iii) or (iv) for the cost reporting period in which the
discharge occurs.
(iii) The disproportionate share adjustment percentage for a
cost reporting period for a hospital described in clause
(i)(II) is equal to 35 percent.
(iv) The disproportionate share adjustment percentage for a
cost reporting period for a hospital that is not described in
clause (i)(II) and that--
(I) is located in an urban area and has 100 or more
beds or is described in the second sentence of clause
(v), is equal to the percent determined in accordance
with the applicable formula described in clause (vii);
(II) is located in an urban area and has less than
100 beds, is equal to 5 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (xiii);
(III) is located in a rural area and is not described
in subclause (IV) or (V) or in the second sentence of
clause (v), is equal to 4 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (xii);
(IV) is located in a rural area, is classified as a
rural referral center under subparagraph (C), and is
classified as a sole community hospital under
subparagraph (D), is equal to 10 percent or, if
greater, the percent determined in accordance with the
applicable formula described in clause (viii) or,
subject to clause (xiv) and for discharges occurring on
or after April 1, 2001, the greater of the percentages
determined under clause (x) or (xi);
(V) is located in a rural area, is classified as a
rural referral center under subparagraph (C), and is
not classified as a sole community hospital under
subparagraph (D), is equal to the percent determined in
accordance with the applicable formula described in
clause (viii) or, subject to clause (xiv) and for
discharges occurring on or after April 1, 2001, is
equal to the percent determined in accordance with
clause (xi); or
(VI) is located in a rural area, is classified as a
sole community hospital under subparagraph (D), and is
not classified as a rural referral center under
subparagraph (C), is 10 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (x).
(v) In this subparagraph, a hospital ``serves a significantly
disproportionate number of low income patients'' for a cost
reporting period if the hospital has a disproportionate patient
percentage (as defined in clause (vi)) for that period which
equals, or exceeds--
(I) 15 percent, if the hospital is located in an
urban area and has 100 or more beds,
(II) 30 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in a rural area and has more than 100 beds,
or is located in a rural area and is classified as a
sole community hospital under subparagraph (D),
(III) 40 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in an urban area and has less than 100 beds,
or
(IV) 45 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in a rural area and is not described in
subclause (II).
A hospital located in a rural area and with 500 or more beds
also ``serves a significantly disproportionate number of low
income patients'' for a cost reporting period if the hospital
has a disproportionate patient percentage (as defined in clause
(vi)) for that period which equals or exceeds a percentage
specified by the Secretary.
(vi) In this subparagraph, the term ``disproportionate
patient percentage'' means, with respect to a cost reporting
period of a hospital, the sum of--
(I) the fraction (expressed as a percentage), the
numerator of which is the number of such hospital's
patient days for such period which were made up of
patients who (for such days) were entitled to benefits
under part A of this title and were entitled to
supplementary security income benefits (excluding any
State supplementation) under title XVI of this Act, and
the denominator of which is the number of such
hospital's patient days for such fiscal year which were
made up of patients who (for such days) were entitled
to benefits under part A of this title, and
(II) the fraction (expressed as a percentage), the
numerator of which is the number of the hospital's
patient days for such period which consist of patients
who (for such days) were eligible for medical
assistance under a State plan approved under title XIX,
but who were not entitled to benefits under part A of
this title, and the denominator of which is the total
number of the hospital's patient days for such period.
In determining under subclause (II) the number of the
hospital's patient days for such period which consist of
patients who (for such days) were eligible for medical
assistance under a State plan approved under title XIX, the
Secretary may, to the extent and for the period the Secretary
determines appropriate, include patient days of patients not so
eligible but who are regarded as such because they receive
benefits under a demonstration project approved under title XI.
(vii) The formula used to determine the disproportionate
share adjustment percentage for a cost reporting period for a
hospital described in clause (iv)(I) is--
(I) in the case of such a hospital with a
disproportionate patient percentage (as defined in
clause (vi)) greater than 20.2--
(a) for discharges occurring on or after
April 1, 1990, and on or before December 31,
1990, (P-20.2)(.65) + 5.62,
(b) for discharges occurring on or after
January 1, 1991, and on or before September 30,
1993, (P-20.2)(.7) + 5.62,
(c) for discharges occurring on or after
October 1, 1993, and on or before September 30,
1994, (P-20.2)(.8) + 5.88, and
(d) for discharges occurring on or after
October 1, 1994, (P-20.2)(.825) + 5.88; or
(II) in the case of any other such hospital--
(a) for discharges occurring on or after
April 1, 1990, and on or before December 31,
1990, (P-15)(.6) + 2.5,
(b) for discharges occurring on or after
January 1, 1991, and on or before September 30,
1993, (P-15)(.6) + 2.5,
(c) for discharges occurring on or after
October 1, 1993, (P-15)(.65) + 2.5,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(viii) Subject to clause (xiv), the formula used to determine
the disproportionate share adjustment percentage for a cost
reporting period for a hospital described in clause (iv)(IV) or
(iv)(V) is the percentage determined in accordance with the
following formula:(P-30)(.6) + 4.0, where ``P'' is the
hospital's disproportionate patient percentage (as defined in
clause (vi)).
(ix) In the case of discharges occurring--
(I) during fiscal year 1998, the additional payment
amount otherwise determined under clause (ii) shall be
reduced by 1 percent;
(II) during fiscal year 1999, such additional payment
amount shall be reduced by 2 percent;
(III) during fiscal years 2000 and 2001, such
additional payment amount shall be reduced by 3 percent
and 2 percent, respectively;
(IV) during fiscal year 2002, such additional payment
amount shall be reduced by 3 percent; and
(V) during fiscal year 2003 and each subsequent
fiscal year, such additional payment amount shall be
reduced by 0 percent.
(x) Subject to clause (xiv), for purposes of clause (iv)(VI)
(relating to sole community hospitals), in the case of a
hospital for a cost reporting period with a disproportionate
patient percentage (as defined in clause (vi)) that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5;
(II) is equal to or exceeds 19.3, but is less than
30.0, such adjustment percentage is equal to 5.25
percent; or
(III) is equal to or exceeds 30, such adjustment
percentage is equal to 10 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xi) Subject to clause (xiv), for purposes of clause (iv)(V)
(relating to rural referral centers), in the case of a hospital
for a cost reporting period with a disproportionate patient
percentage (as defined in clause (vi)) that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5;
(II) is equal to or exceeds 19.3, but is less than
30.0, such adjustment percentage is equal to 5.25
percent; or
(III) is equal to or exceeds 30, such adjustment
percentage is determined in accordance with the
following formula: (P-30)(.6) + 5.25,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xii) Subject to clause (xiv), for purposes of clause
(iv)(III) (relating to small rural hospitals generally), in the
case of a hospital for a cost reporting period with a
disproportionate patient percentage (as defined in clause (vi))
that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5; or
(II) is equal to or exceeds 19.3, such adjustment
percentage is equal to 5.25 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xiii) Subject to clause (xiv), for purposes of clause
(iv)(II) (relating to urban hospitals with less than 100 beds),
in the case of a hospital for a cost reporting period with a
disproportionate patient percentage (as defined in clause (vi))
that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5; or
(II) is equal to or exceeds 19.3, such adjustment
percentage is equal to 5.25 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xiv)(I) In the case of discharges occurring on or after
April 1, 2004, subject to subclause (II), there shall be
substituted for the disproportionate share adjustment
percentage otherwise determined under clause (iv) (other than
subclause (I)) or under clause (viii), (x), (xi), (xii), or
(xiii), the disproportionate share adjustment percentage
determined under clause (vii) (relating to large, urban
hospitals).
(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 12 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C) or, in the case of discharges occurring
on or after October 1, 2006, as a medicare-dependent, small
rural hospital under subparagraph (G)(iv).
(G)(i) For any cost reporting period beginning on or after
April 1, 1990, and before October 1, 1994, or discharges
occurring on or after October 1, 1997, and before October 1,
2022, in the case of a subsection (d) hospital which is a
medicare-dependent, small rural hospital, payment under
paragraph (1)(A) shall be equal to the sum of the amount
determined under clause (ii) and the amount determined under
paragraph (1)(A)(iii).
(ii) The amount determined under this clause is--
(I) for discharges occurring during the 36-month
period beginning with the first day of the cost
reporting period that begins on or after April 1, 1990,
the amount by which the hospital's target amount for
the cost reporting period (as defined in subsection
(b)(3)(D)) exceeds the amount determined under
paragraph (1)(A)(iii); and
(II) for discharges occurring during any subsequent
cost reporting period (or portion thereof) and before
October 1, 1994, or discharges occurring on or after
October 1, 1997, and before October 1, 2022, 50 percent
(or 75 percent in the case of discharges occurring on
or after October 1, 2006) of the amount by which the
hospital's target amount for the cost reporting period
or for discharges in the fiscal year (as defined in
subsection (b)(3)(D)) exceeds the amount determined
under paragraph (1)(A)(iii).
(iii) In the case of a medicare dependent, small rural
hospital that experiences, in a cost reporting period compared
to the previous cost reporting period, a decrease of more than
5 percent in its total number of inpatient cases due to
circumstances beyond its control, the Secretary shall provide
for such adjustment to the payment amounts under this
subsection (other than under paragraph (9)) as may be necessary
to fully compensate the hospital for the fixed costs it incurs
in the period in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core
staff and services.
(iv) The term ``medicare-dependent, small rural hospital''
means, with respect to any cost reporting period to which
clause (i) applies, any hospital--
(I) that is located in--
(aa) a rural area; or
(bb) a State with no rural area (as defined
in paragraph (2)(D)) and satisfies any of the
criteria in subclause (I), (II), or (III) of
paragraph (8)(E)(ii),
(II) that has not more than 100 beds,
(III) that is not classified as a sole community
hospital under subparagraph (D), and
(IV) for which not less than 60 percent of its
inpatient days or discharges during the cost reporting
period beginning in fiscal year 1987, or two of the
three 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.
Subclause (I)(bb) shall apply for purposes of payment under
clause (ii) only for discharges of a hospital occurring on or
after the effective date of a determination of medicare-
dependent small rural hospital status made by the Secretary
with respect to the hospital after the date of the enactment of
this sentence. For purposes of applying subclause (II) of
paragraph (8)(E)(ii) under subclause (I)(bb), such subclause
(II) shall be applied by inserting ``as of January 1, 2018,''
after ``such State'' each place it appears.
(H) The Secretary may provide for such adjustments to the
payment amounts under this subsection as the Secretary deems
appropriate to take into account the unique circumstances of
hospitals located in Alaska and Hawaii.
(I)(i) The Secretary shall provide by regulation for such
other exceptions and adjustments to such payment amounts under
this subsection as the Secretary deems appropriate.
(ii) In making adjustments under clause (i) for transfer
cases (as defined by the Secretary) in a fiscal year, not
taking in account the effect of subparagraph (J), the Secretary
may make adjustments to each of the average standardized
amounts determined under paragraph (3) to assure that the
aggregate payments made under this subsection for such fiscal
year are not greater or lesser than those that would have
otherwise been made in such fiscal year.
(J)(i) The Secretary shall treat the term ``transfer case''
(as defined in subparagraph (I)(ii)) as including the case of a
qualified discharge (as defined in clause (ii)), which is
classified within a diagnosis-related group described in clause
(iii), and which occurs on or after October 1, 1998. In the
case of a qualified discharge for which a substantial portion
of the costs of care are incurred in the early days of the
inpatient stay (as defined by the Secretary), in no case may
the payment amount otherwise provided under this subsection
exceed an amount equal to the sum of--
(I) 50 percent of the amount of payment under this
subsection for transfer cases (as established under
subparagraph (I)(i)), and
(II) 50 percent of the amount of payment which would
have been made under this subsection with respect to
the qualified discharge if no transfer were involved.
(ii) For purposes of clause (i), subject to clause (iii), the
term ``qualified discharge'' means a discharge classified with
a diagnosis-related group (described in clause (iii)) of an
individual from a subsection (d) hospital, if upon such
discharge the individual--
(I) is admitted as an inpatient to a hospital or
hospital unit that is not a subsection (d) hospital for
the provision of inpatient hospital services;
(II) is admitted to a skilled nursing facility;
(III) is provided home health services from a home
health agency, if such services relate to the condition
or diagnosis for which such individual received
inpatient hospital services from the subsection (d)
hospital, and if such services are provided within an
appropriate period (as determined by the Secretary);
(IV) for discharges occurring on or after October 1,
2018, is provided hospice care by a hospice program; or
(V) for discharges occurring on or after October 1,
2000, the individual receives post discharge services
described in clause (iv)(I).
(iii) Subject to clause (iv), a diagnosis-related group
described in this clause is--
(I) 1 of 10 diagnosis-related groups selected by the
Secretary based upon a high volume of discharges
classified within such groups and a disproportionate
use of post discharge services described in clause
(ii); and
(II) a diagnosis-related group specified by the
Secretary under clause (iv)(II).
(iv) The Secretary shall include in the proposed rule
published under subsection (e)(5)(A) for fiscal year 2001, a
description of the effect of this subparagraph. The Secretary
shall include in the proposed rule published for fiscal year
2019, a description of the effect of clause (ii)(IV). The
Secretary may include in the proposed rule (and in the final
rule published under paragraph (6)) for fiscal year 2001 or a
subsequent fiscal year, a description of--
(I) post-discharge services not described in
subclauses (I), (II), (III), and, in the case of
proposed and final rules for fiscal year 2019 and
subsequent fiscal years, (IV) of clause (ii), the
receipt of which results in a qualified discharge; and
(II) diagnosis-related groups described in clause
(iii)(I) in addition to the 10 selected under such
clause.
(K)(i) Effective for discharges beginning on or after October
1, 2001, the Secretary shall establish a mechanism to recognize
the costs of new medical services and technologies under the
payment system established under this subsection. Such
mechanism shall be established after notice and opportunity for
public comment (in the publications required by subsection
(e)(5) for a fiscal year or otherwise). Such mechanism shall be
modified to meet the requirements of clause (viii).
(ii) The mechanism established pursuant to clause (i) shall--
(I) apply to a new medical service or technology if,
based on the estimated costs incurred with respect to
discharges involving such service or technology, the
DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate
(applying a threshold specified by the Secretary that
is the lesser of 75 percent of the standardized amount
(increased to reflect the difference between cost and
charges) or 75 percent of one standard deviation for
the diagnosis-related group involved);
(II) provide for the collection of data with respect
to the costs of a new medical service or technology
described in subclause (I) for a period of not less
than two years and not more than three years beginning
on the date on which an inpatient hospital code is
issued with respect to the service or technology;
(III) provide for additional payment to be made under
this subsection with respect to discharges involving a
new medical service or technology described in
subclause (I) that occur during the period described in
subclause (II) in an amount that adequately reflects
the estimated average cost of such service or
technology; and
(IV) provide that discharges involving such a service
or technology that occur after the close of the period
described in subclause (II) will be classified within a
new or existing diagnosis-related group with a
weighting factor under paragraph (4)(B) that is derived
from cost data collected with respect to discharges
occurring during such period.
(iii) For purposes of clause (ii)(II), the term ``inpatient
hospital code'' means any code that is used with respect to
inpatient hospital services for which payment may be made under
this subsection and includes an alphanumeric code issued under
the International Classification of Diseases, 9th Revision,
Clinical Modification (``ICD-9-CM'') and its subsequent
revisions.
(iv) For purposes of clause (ii)(III), the term ``additional
payment'' means, with respect to a discharge for a new medical
service or technology described in clause (ii)(I), an amount
that exceeds the prospective payment rate otherwise applicable
under this subsection to discharges involving such service or
technology that would be made but for this subparagraph.
(v) The requirement under clause (ii)(III) for an additional
payment may be satisfied by means of a new-technology group
(described in subparagraph (L)), an add-on payment, a payment
adjustment, or any other similar mechanism for increasing the
amount otherwise payable with respect to a discharge under this
subsection. The Secretary may not establish a separate fee
schedule for such additional payment for such services and
technologies, by utilizing a methodology established under
subsection (a) or (h) of section 1834 to determine the amount
of such additional payment, or by other similar mechanisms or
methodologies.
(vi) For purposes of this subparagraph and subparagraph (L),
a medical service or technology will be considered a ``new
medical service or technology'' if the service or technology
meets criteria established by the Secretary after notice and an
opportunity for public comment.
(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under this
subsection until the fiscal year that begins after such date.
(viii) The mechanism established pursuant to clause (i) shall
be adjusted to provide, before publication of a proposed rule,
for public input regarding whether a new service or technology
represents an advance in medical technology that substantially
improves the diagnosis or treatment of individuals entitled to
benefits under part A as follows:
(I) The Secretary shall make public and periodically
update a list of all the services and technologies for
which an application for additional payment under this
subparagraph is pending.
(II) The Secretary shall accept comments,
recommendations, and data from the public regarding
whether the service or technology represents a
substantial improvement.
(III) The Secretary shall provide for a meeting at
which organizations representing hospitals, physicians,
such individuals, manufacturers, and any other
interested party may present comments, recommendations,
and data to the clinical staff of the Centers for
Medicare & Medicaid Services before publication of a
notice of proposed rulemaking regarding whether service
or technology represents a substantial improvement.
(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. No add-on payment under this
subparagraph shall be made with respect to such new technology
and this clause shall not affect the application of paragraph
(4)(C)(iii).
(L)(i) In establishing the mechanism under subparagraph (K),
the Secretary may establish new-technology groups into which a
new medical service or technology will be classified if, based
on the estimated average costs incurred with respect to
discharges involving such service or technology, the DRG
prospective payment rate otherwise applicable to such
discharges under this subsection is inadequate.
(ii) Such groups--
(I) shall not be based on the costs associated with a
specific new medical service or technology; but
(II) shall, in combination with the applicable
standardized amounts and the weighting factors assigned
to such groups under paragraph (4)(B), reflect such
cost cohorts as the Secretary determines are
appropriate for all new medical services and
technologies that are likely to be provided as
inpatient hospital services in a fiscal year.
(iii) The methodology for classifying specific hospital
discharges within a diagnosis-related group under paragraph
(4)(A) or a new-technology group shall provide that a specific
hospital discharge may not be classified within both a
diagnosis-related group and a new-technology group.
(6) The Secretary shall provide for publication in the
Federal Register, on or before the August 1 before each fiscal
year (beginning with fiscal year 1984), of a description of the
methodology and data used in computing the adjusted DRG
prospective payment rates under this subsection, including any
adjustments required under subsection (e)(1)(B).
(7) There shall be no administrative or judicial review under
section 1878 or otherwise of--
(A) the determination of the requirement, or the
proportional amount, of any adjustment effected
pursuant to subsection (e)(1) or the determination of
the applicable percentage increase under paragraph
(12)(A)(ii),
(B) the establishment of diagnosis-related groups, of
the methodology for the classification of discharges
within such groups, and of the appropriate weighting
factors thereof under paragraph (4), including the
selection and revision of codes under paragraph (4)(D),
and
(C) the determination of whether services provided
prior to a patient's inpatient admission are related to
the admission (as described in subsection (a)(4)).
(8)(A) In the case of any hospital which is located in an
area which is, at any time after April 20, 1983, reclassified
from an urban to a rural area, payments to such hospital for
the first two cost reporting periods for which such
reclassification is effective shall be made as follows:
(i) For the first such cost reporting period, payment
shall be equal to the amount payable to such hospital
for such reporting period on the basis of the rural
classification, plus an amount equal to two-thirds of
the amount (if any) by which--
(I) the amount which would have been payable
to such hospital for such reporting period on
the basis of an urban classification, exceeds
(II) the amount payable to such hospital for
such reporting period on the basis of the rural
classification.
(ii) For the second such cost reporting period,
payment shall be equal to the amount payable to such
hospital for such reporting period on the basis of the
rural classification, plus an amount equal to one-third
of the amount (if any) by which--
(I) the amount which would have been payable
to such hospital for such reporting period on
the basis of an urban classification, exceeds
(II) the amount payable to such hospital for
such reporting period on the basis of the rural
classification.
(B)(i) For purposes of this subsection, the Secretary shall
treat a hospital located in a rural county adjacent to one or
more urban areas as being located in the urban metropolitan
statistical area to which the greatest number of workers in the
county commute, if the rural county would otherwise be
considered part of an urban area, under the standards for
designating Metropolitan Statistical Areas (and for designating
New England County Metropolitan Areas) described in clause
(ii), if the commuting rates used in determining outlying
counties (or, for New England, similar recognized areas) were
determined on the basis of the aggregate number of resident
workers who commute to (and, if applicable under the standards,
from) the central county or counties of all contiguous
Metropolitan Statistical Areas (or New England County
Metropolitan Areas).
(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year--
(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3, 1980,
or, at the election of the hospital with respect to
fiscal years 2001 and 2002, standards so published on
March 30, 1990; and
(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the most
recent available decennial population data.
Subparagraphs (C) and (D) shall not apply with respect to the
application of subclause (I).
(C)(i) If the application of subparagraph (B) or a decision
of the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10), by treating hospitals located
in a rural county or counties as being located in an urban
area, or by treating hospitals located in one urban area as
being located in another urban area--
(I) reduces the wage index for that urban area (as
applied under this subsection) by 1 percentage point or
less, the Secretary, in calculating such wage index
under this subsection, shall exclude those hospitals so
treated, or
(II) reduces the wage index for that urban area by
more than 1 percentage point (as applied under this
subsection), the Secretary shall calculate and apply
such wage index under this subsection separately to
hospitals located in such urban area (excluding all the
hospitals so treated) and to the hospitals so treated
(as if such hospitals were located in such urban area).
(ii) If the application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10), by treating hospitals located
in a rural county or counties as not being located in the rural
area in a State, reduces the wage index for that rural area (as
applied under this subsection), the Secretary shall calculate
and apply such wage index under this subsection as if the
hospitals so treated had not been excluded from calculation of
the wage index for that rural area.
(iii) The application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10) may not result in the reduction
of any county's wage index to a level below the wage index for
rural areas in the State in which the county is located.
(iv) The application of subparagraph (B) or a decision of the
Medicare Geographic Classification Review Board or of the
Secretary under paragraph (10) may not result in a reduction in
an urban area's wage index if--
(I) the urban area has a wage index below the wage
index for rural areas in the State in which it is
located; or
(II) the urban area is located in a State that is
composed of a single urban area.
(v) This subparagraph shall apply with respect to discharges
occurring in a fiscal year only if the Secretary uses a method
for making adjustments to the DRG prospective payment rate for
area differences in hospital wage levels under paragraph (3)(E)
for the fiscal year that is based on the use of Metropolitan
Statistical Area classifications.
(D) The Secretary shall make a proportional adjustment in the
standardized amounts determined under paragraph (3) to assure
that the provisions of subparagraphs (B) and (C) or a decision
of the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10) do not result in aggregate
payments under this section that are greater or less than those
that would otherwise be made.
(E)(i) For purposes of this subsection, not later than 60
days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital
described in clause (ii), the Secretary shall treat the
hospital as being located in the rural area (as defined in
paragraph (2)(D)) of the State in which the hospital is
located.
(ii) For purposes of clause (i), a subsection (d) hospital
described in this clause is a subsection (d) hospital that is
located in an urban area (as defined in paragraph (2)(D)) and
satisfies any of the following criteria:
(I) The hospital is located in a rural census tract
of a metropolitan statistical area (as determined under
the most recent modification of the Goldsmith
Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)).
(II) The hospital is located in an area designated by
any law or regulation of such State as a rural area (or
is designated by such State as a rural hospital).
(III) The hospital would qualify as a rural,
regional, or national referral center under paragraph
(5)(C) or as a sole community hospital under paragraph
(5)(D) if the hospital were located in a rural area.
(IV) The hospital meets such other criteria as the
Secretary may specify.
(9)(A) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, the amount of the payment with
respect to the operating costs of inpatient hospital services
of a subsection (d) Puerto Rico hospital for inpatient hospital
discharges is equal to the sum of--
(i) the applicable Puerto Rico percentage (specified
in subparagraph (E)) of the Puerto Rico adjusted DRG
prospective payment rate (determined under subparagraph
(B) or (C)) for such discharges,
(ii) the applicable Federal percentage (specified in
subparagraph (E)) of--
(I) for discharges beginning in a fiscal year
beginning on or after October 1, 1997, and
before October 1, 2003, the discharge-weighted
average of--
(aa) the national adjusted DRG
prospective payment rate (determined
under paragraph (3)(D)) for hospitals
located in a large urban area,
(bb) such rate for hospitals located
in other urban areas, and
(cc) such rate for hospitals located
in a rural area,
for such discharges, adjusted in the manner
provided in paragraph (3)(E) for different area
wage levels; and
(II) for discharges in a fiscal year
beginning on or after October 1, 2003, the
national DRG prospective payment rate
determined under paragraph (3)(D)(iii) for
hospitals located in any area for such
discharges, adjusted in the manner provided in
paragraph (3)(E) for different area wage
levels.
As used in this section, the term ``subsection (d) Puerto Rico
hospital'' means a hospital that is located in Puerto Rico and
that would be a subsection (d) hospital (as defined in
paragraph (1)(B)) if it were located in one of the 50 States.
(B) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1988 involving inpatient hospital services of a
subsection (d) Puerto Rico hospital for which payment may be
made under part A of this title. Such rate shall be determined
for such hospitals located in urban or rural areas within
Puerto Rico, as follows:
(i) The Secretary shall determine the target amount
(as defined in subsection (b)(3)(A)) for the hospital
for the cost reporting period beginning in fiscal year
1987 and increase such amount by prorating the
applicable percentage increase (as defined in
subsection (b)(3)(B)) to update the amount to the
midpoint in fiscal year 1988.
(ii) The Secretary shall standardize the amount
determined under clause (i) for each hospital by--
(I) excluding an estimate of indirect medical
education costs,
(II) adjusting for variations among hospitals
by area in the average hospital wage level,
(III) adjusting for variations in case mix
among hospitals, and
(IV) excluding an estimate of the additional
payments to certain subsection (d) Puerto Rico
hospitals to be made under subparagraph
(D)(iii) (relating to disproportionate share
payments).
(iii) The Secretary shall compute a discharge
weighted average of the standardized amounts determined
under clause (ii) for all hospitals located in an urban
area and for all hospitals located in a rural area (as
such terms are defined in paragraph (2)(D)).
(iv) The Secretary shall reduce the average
standardized amount by a proportion equal to the
proportion (estimated by the Secretary) of the amount
of payments under this paragraph which are additional
payments described in subparagraph (D)(i) (relating to
outlier payments).
(v) For each discharge classified within a diagnosis-
related group for hospitals located in an urban or
rural area, respectively, the Secretary shall establish
a Puerto Rico DRG prospective payment rate equal to the
product of--
(I) the average standardized amount (computed
under clause (iii) and reduced under clause
(iv)) for hospitals located in an urban or
rural area, respectively, and
(II) the weighting factor (determined under
paragraph (4)(B)) for that diagnosis-related
group.
(vi) The Secretary shall adjust the proportion (as
estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and
wage-related costs, of the Puerto Rico DRG prospective
payment rate computed under clause (v) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the Puerto Rican average hospital
wage level.
(C) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
after fiscal year 1988 involving inpatient hospital services of
a subsection (d) Puerto Rico hospital for which payment may be
made under part A of this title. Such rate shall be determined
for hospitals located in urban or rural areas within Puerto
Rico as follows:
(i)(I) For discharges in a fiscal year after fiscal
year 1988 and before fiscal year 2004, the Secretary
shall compute an average standardized amount for
hospitals located in an urban area and for hospitals
located in a rural area equal to the respective average
standardized amount computed for the previous fiscal
year under subparagraph (B)(iii) or under this clause,
increased for fiscal year 1989 by the applicable
percentage increase under subsection (b)(3)(B), and
adjusted for subsequent fiscal years in accordance with
the final determination of the Secretary under
subsection (e)(4), and adjusted to reflect the most
recent case-mix data available.
(II) For discharges occurring in a fiscal year
(beginning with fiscal year 2004), the Secretary shall
compute an average standardized amount for hospitals
located in any area of Puerto Rico that is equal to the
average standardized amount computed under subclause
(I) for fiscal year 2003 for hospitals in a large urban
area (or, beginning with fiscal year 2005, for all
hospitals in the previous fiscal year) increased by the
applicable percentage increase under subsection
(b)(3)(B) for the fiscal year involved.
(ii) The Secretary shall reduce each of the average
standardized amounts (or for fiscal year 2004 and
thereafter, the average standardized amount) by a
proportion equal to the proportion (estimated by the
Secretary) of the amount of payments under this
paragraph which are additional payments described in
subparagraph (D)(i) (relating to outlier payments).
(iii) For each discharge classified within a
diagnosis-related group for hospitals located in an
urban or rural area, respectively, the Secretary shall
establish a Puerto Rico DRG prospective payment rate
equal to the product of--
(I) the average standardized amount (computed
under clause (i) and reduced under clause
(ii)), and
(II) the weighting factor (determined under
paragraph (4)(B)) for that diagnosis-related
group.
(iv)(I) The Secretary shall adjust the proportion (as
estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and
wage-related costs, of the Puerto Rico DRG prospective
payment rate computed under clause (iii) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the Puerto Rico average hospital
wage level. The second and third sentences of paragraph
(3)(E)(i) shall apply to subsection (d) Puerto Rico
hospitals under this clause in the same manner as they
apply to subsection (d) hospitals under such paragraph
and, for purposes of this clause, any reference in such
paragraph to a subsection (d) hospital is deemed a
reference to a subsection (d) Puerto Rico hospital.
(II) For discharges occurring on or after October 1,
2004, the Secretary shall substitute ``62 percent'' for
the proportion described in the first sentence of
clause (i), unless the application of this subclause
would result in lower payments to a hospital than would
otherwise be made.
(D) The following provisions of paragraph (5) shall apply to
subsection (d) Puerto Rico hospitals receiving payment under
this paragraph in the same manner and to the extent as they
apply to subsection (d) hospitals receiving payment under this
subsection:
(i) Subparagraph (A) (relating to outlier payments).
(ii) Subparagraph (B) (relating to payments for
indirect medical education costs), except that for this
purpose the sum of the amount determined under
subparagraph (A) of this paragraph and the amount paid
to the hospital under clause (i) of this subparagraph
shall be substituted for the sum referred to in
paragraph (5)(B)(i)(I).
(iii) Subparagraph (F) (relating to disproportionate
share payments), except that for this purpose the sum
described in clause (ii) of this subparagraph shall be
substituted for the sum referred to in paragraph
(5)(F)(ii)(I).
(iv) Subparagraph (H) (relating to exceptions and
adjustments).
(E) For purposes of subparagraph (A), for discharges
occurring--
(i) on or after October 1, 1987, and before October
1, 1997, the applicable Puerto Rico percentage is 75
percent and the applicable Federal percentage is 25
percent;
(ii) on or after October 1, 1997, and before April 1,
2004, the applicable Puerto Rico percentage is 50
percent and the applicable Federal percentage is 50
percent;
(iii) on or after April 1, 2004, and before October
1, 2004, the applicable Puerto Rico percentage is 37.5
percent and the applicable Federal percentage is 62.5
percent;
(iv) on or after October 1, 2004, and before January
1, 2016, the applicable Puerto Rico percentage is 25
percent and the applicable Federal percentage is 75
percent; and
(v) on or after January 1, 2016, the applicable
Puerto Rico percentage is 0 percent and the applicable
Federal percentage is 100 percent.
(10)(A) There is hereby established the Medicare Geographic
Classification Review Board (hereinafter in this paragraph
referred to as the ``Board'').
(B)(i) The Board shall be composed of 5 members appointed by
the Secretary without regard to the provisions of title 5,
United States Code, governing appointments in the competitive
service. Two of such members shall be representative of
subsection (d) hospitals located in a rural area under
paragraph (2)(D). At least 1 member shall be knowledgeable in
the field of analyzing costs with respect to the provision of
inpatient hospital services.
(ii) The Secretary shall make initial appointments to the
Board as provided in this paragraph within 180 days after the
date of the enactment of this paragraph.
(C)(i) The Board shall consider the application of any
subsection (d) hospital requesting that the Secretary change
the hospital's geographic classification for purposes of
determining for a fiscal year--
(I) the hospital's average standardized amount under
paragraph (2)(D), or
(II) the factor used to adjust the DRG prospective
payment rate for area differences in hospital wage
levels that applies to such hospital under paragraph
(3)(E).
(ii) A hospital requesting a change in geographic
classification under clause (i) for a fiscal year shall submit
its application to the Board not later than the first day of
the 13-month period ending on September 30 of the preceding
fiscal year.
(iii)(I) The Board shall render a decision on an application
submitted under clause (i) not later than 180 days after the
deadline referred to in clause (ii).
(II) Appeal of decisions of the Board shall be subject to the
provisions of section 557b of title 5, United States Code. The
Secretary shall issue a decision on such an appeal not later
than 90 days after the date on which the appeal is filed. The
decision of the Secretary shall be final and shall not be
subject to judicial review.
(D)(i) The Secretary shall publish guidelines to be utilized
by the Board in rendering decisions on applications submitted
under this paragraph, and shall include in such guidelines the
following:
(I) Guidelines for comparing wages, taking into
account (to the extent the Secretary determines
appropriate) occupational mix, in the area in which the
hospital is classified and the area in which the
hospital is applying to be classified.
(II) Guidelines for determining whether the county in
which the hospital is located should be treated as
being a part of a particular Metropolitan Statistical
Area.
(III) Guidelines for considering information provided
by an applicant with respect to the effects of the
hospital's geographic classification on access to
inpatient hospital services by medicare beneficiaries.
(IV) Guidelines for considering the appropriateness
of the criteria used to define New England County
Metropolitan Areas.
(ii) Notwithstanding clause (i), if the Secretary uses a
method for making adjustments to the DRG prospective payment
rate for area differences in hospital wage levels under
paragraph (3)(E) that is not based on the use of Metropolitan
Statistical Area classifications, the Secretary may revise the
guidelines published under clause (i) to the extent such
guidelines are used to determine the appropriateness of the
geographic area in which the hospital is determined to be
located for purposes of making such adjustments.
(iii) Under the guidelines published by the Secretary under
clause (i), in the case of a hospital which has ever been
classified by the Secretary as a rural referral center under
paragraph (5)(C), the Board may not reject the application of
the hospital under this paragraph on the basis of any
comparison between the average hourly wage of the hospital and
the average hourly wage of hospitals in the area in which it is
located.
(iv) The Secretary shall publish the guidelines described in
clause (i) by July 1, 1990.
(v) Any decision of the Board to reclassify a subsection (d)
hospital for purposes of the adjustment factor described in
subparagraph (C)(i)(II) for fiscal year 2001 or any fiscal year
thereafter shall be effective for a period of 3 fiscal years,
except that the Secretary shall establish procedures under
which a subsection (d) hospital may elect to terminate such
reclassification before the end of such period.
(vi) Such guidelines shall provide that, in making decisions
on applications for reclassification for the purposes described
in clause (v) for fiscal year 2003 and any succeeding fiscal
year, the Board shall base any comparison of the average hourly
wage for the hospital with the average hourly wage for
hospitals in an area on--
(I) an average of the average hourly wage amount for
the hospital from the most recently published hospital
wage survey data of the Secretary (as of the date on
which the hospital applies for reclassification) and
such amount from each of the two immediately preceding
surveys; and
(II) an average of the average hourly wage amount for
hospitals in such area from the most recently published
hospital wage survey data of the Secretary (as of the
date on which the hospital applies for
reclassification) and such amount from each of the two
immediately preceding surveys.
(E)(i) The Board shall have full power and authority to make
rules and establish procedures, not inconsistent with the
provisions of this title or regulations of the Secretary, which
are necessary or appropriate to carry out the provisions of
this paragraph. In the course of any hearing the Board may
administer oaths and affirmations. The provisions of
subsections (d) and (e) of section 205 with respect to subpenas
shall apply to the Board to the same extent as such provisions
apply to the Secretary with respect to title II.
(ii) The Board is authorized to engage such technical
assistance and to receive such information as may be required
to carry out its functions, and the Secretary shall, in
addition, make available to the Board such secretarial,
clerical, and other assistance as the Board may require to
carry out its functions.
(F)(i) Each member of the Board who is not an officer or
employee of the Federal Government shall be compensated at a
rate equal to the daily equivalent of the annual rate of basic
pay prescribed for grade GS-18 of the General Schedule under
section 5332 of title 5, United States Code, for each day
(including travel time) during which such member is engaged in
the performance of the duties of the Board. Each member of the
Board who is an officer or employee of the United States shall
serve without compensation in addition to that received for
service as an officer or employee of the United States.
(ii) Members of the Board 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.
(11) Additional payments for managed care
enrollees.--
(A) In general.--For portions of cost
reporting periods occurring on or after January
1, 1998, the Secretary shall provide for an
additional payment amount for each applicable
discharge of any subsection (d) hospital that
has an approved medical residency training
program.
(B) Applicable discharge.--For purposes of
this paragraph, the term ``applicable
discharge'' means the discharge of any
individual who is enrolled under a risk-sharing
contract with an eligible organization under
section 1876 and who is entitled to benefits
under part A or any individual who is enrolled
with a Medicare+Choice organization under part
C.
(C) Determination of amount.--The amount of
the payment under this paragraph with respect
to any applicable discharge shall be equal to
the applicable percentage (as defined in
subsection (h)(3)(D)(ii)) of the estimated
average per discharge amount that would
otherwise have been paid under paragraph (5)(B)
if the individuals had not been enrolled as
described in subparagraph (B).
(D) Special rule for hospitals under
reimbursement system.--The Secretary shall
establish rules for the application of this
paragraph to a hospital reimbursed under a
reimbursement system authorized under section
1814(b)(3) in the same manner as it would apply
to the hospital if it were not reimbursed under
such section.
(12) Payment adjustment for low-volume hospitals.--
(A) In general.--In addition to any payments
calculated under this section for a subsection
(d) hospital, for discharges occurring during a
fiscal year (beginning with fiscal year 2005),
the Secretary shall provide for an additional
payment amount to each low-volume hospital (as
defined in subparagraph (C)(i)) for discharges
occurring during that fiscal year that is equal
to the applicable percentage increase
(determined under subparagraph (B) or (D) for
the hospital involved) in the amount paid to
such hospital under this section for such
discharges (determined without regard to this
paragraph).
(B) Applicable percentage increase.--For
discharges occurring in fiscal years 2005
through 2010 and for discharges occurring in
fiscal year 2023 and subsequent fiscal years,
the Secretary shall determine an applicable
percentage increase for purposes of
subparagraph (A) as follows:
(i) The Secretary shall determine the
empirical relationship for subsection
(d) hospitals between the standardized
cost-per-case for such hospitals and
the total number of discharges of such
hospitals and the amount of the
additional incremental costs (if any)
that are associated with such number of
discharges.
(ii) The applicable percentage
increase shall be determined based upon
such relationship in a manner that
reflects, based upon the number of such
discharges for a subsection (d)
hospital, such additional incremental
costs.
(iii) In no case shall the applicable
percentage increase exceed 25 percent.
(C) Definitions.--
(i) Low-volume hospital.--For
purposes of this paragraph, the term
``low-volume hospital'' means, for a
fiscal year, a subsection (d) hospital
(as defined in paragraph (1)(B)) that
the Secretary determines is located
more than 25 road miles (or, with
respect to fiscal years 2011 through
2022, 15 road miles) from another
subsection (d) hospital and has--
(I) with respect to each of
fiscal years 2005 through 2010,
less than 800 discharges during
the fiscal year;
(II) with respect to each of
fiscal years 2011 through 2018,
less than 1,600 discharges of
individuals entitled to, or
enrolled for, benefits under
part A during the fiscal year
or portion of fiscal year;
(III) with respect to each of
fiscal years 2019 through 2022,
less than 3,800 discharges
during the fiscal year; and
(IV) with respect to fiscal
year 2023 and each subsequent
fiscal year, less than 800
discharges during the fiscal
year.
(ii) Discharge.--For purposes of
subparagraphs (B) and (D) and clause
(i), the term ``discharge'' means an
inpatient acute care discharge of an
individual regardless (except as
provided in clause (i)(II) and
subparagraph (D)(i)) of whether the
individual is entitled to benefits
under part A.
(iii) Treatment of indian health service and
non-indian health service facilities.--For
purposes of determining whether--
(I) a subsection (d) hospital of the
Indian Health Service (whether operated
by such Service or by an Indian tribe
or tribal organization (as those terms
are defined in section 4 of the Indian
Health Care Improvement Act)), or
(II) a subsection (d) hospital other
than a hospital of the Indian Health
Service meets the mileage criterion
under clause (i) with respect to fiscal
year 2011 or a succeeding fiscal year,
the Secretary shall apply the policy
described in the regulation at part
412.101(e) of title 42, Code of Federal
Regulations (as in effect on the date
of enactment of this clause).
(D) Temporary applicable percentage
increase.--For discharges occurring in fiscal
years 2011 through 2022, 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--
(i) with respect to each of fiscal
years 2011 through 2018, with 200 or
fewer discharges of individuals
entitled to, or enrolled for, benefits
under part A in the fiscal year or the
portion of fiscal year to 0 percent for
low-volume hospitals with greater than
1,600 discharges of such individuals in
the fiscal yearor portion of fiscal
year; and
(ii) with respect to each of fiscal
years 2019 through 2022, with 500 or
fewer discharges in the fiscal year to
0 percent for low-volume hospitals with
greater than 3,800 discharges in the
fiscal year.
(13)(A) In order to recognize commuting patterns among
geographic areas, the Secretary shall establish a process
through application or otherwise for an increase of the wage
index applied under paragraph (3)(E) for subsection (d)
hospitals located in a qualifying county described in
subparagraph (B) in the amount computed under subparagraph (D)
based on out-migration of hospital employees who reside in that
county to any higher wage index area.
(B) The Secretary shall establish criteria for a qualifying
county under this subparagraph based on the out-migration
referred to in subparagraph (A) and differences in the area
wage indices. Under such criteria the Secretary shall,
utilizing such data as the Secretary determines to be
appropriate, establish--
(i) a threshold percentage, established by the
Secretary, of the weighted average of the area wage
index or indices for the higher wage index areas
involved;
(ii) a threshold (of not less than 10 percent) for
minimum out-migration to a higher wage index area or
areas; and
(iii) a requirement that the average hourly wage of
the hospitals in the qualifying county equals or
exceeds the average hourly wage of all the hospitals in
the area in which the qualifying county is located.
(C) For purposes of this paragraph, the term ``higher wage
index area'' means, with respect to a county, an area with a
wage index that exceeds that of the county.
(D) The increase in the wage index under subparagraph (A) for
a qualifying county shall be equal to the percentage of the
hospital employees residing in the qualifying county who are
employed in any higher wage index area multiplied by the sum of
the products, for each higher wage index area of--
(i) the difference between--
(I) the wage index for such higher wage index
area, and
(II) the wage index of the qualifying county;
and
(ii) the number of hospital employees residing in the
qualifying county who are employed in such higher wage
index area divided by the total number of hospital
employees residing in the qualifying county who are
employed in any higher wage index area.
(E) The process under this paragraph may be based upon the
process used by the Medicare Geographic Classification Review
Board under paragraph (10). As the Secretary determines to be
appropriate to carry out such process, the Secretary may
require hospitals (including subsection (d) hospitals and other
hospitals) and critical access hospitals, as required under
section 1866(a)(1)(T), to submit data regarding the location of
residence, or the Secretary may use data from other sources.
(F) A wage index increase under this paragraph shall be
effective for a period of 3 fiscal years, except that the
Secretary shall establish procedures under which a subsection
(d) hospital may elect to waive the application of such wage
index increase.
(G) A hospital in a county that has a wage index increase
under this paragraph for a period and that has not waived the
application of such an increase under subparagraph (F) is not
eligible for reclassification under paragraph (8) or (10)
during that period.
(H) Any increase in a wage index under this paragraph for a
county shall not be taken into account for purposes of--
(i) computing the wage index for portions of the wage
index area (not including the county) in which the
county is located; or
(ii) applying any budget neutrality adjustment with
respect to such index under paragraph (8)(D).
(I) The thresholds described in subparagraph (B), data on
hospital employees used under this paragraph, and any
determination of the Secretary under the process described in
subparagraph (E) shall be final and shall not be subject to
judicial review.
(e)(1)(A) For cost reporting periods of hospitals beginning
in fiscal year 1984 or fiscal year 1985, the Secretary shall
provide for such proportional adjustment in the applicable
percentage increase (otherwise applicable to the periods under
subsection (b)(3)(B)) as may be necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsection (d)(1)(A)(i)(I) for that fiscal year
for operating costs of inpatient hospital services of
hospitals (excluding payments made under section
1866(a)(1)(F)),
are not greater or less than--
(ii) the target percentage (as defined in subsection
(d)(1)(C)) of the payment amounts which would have been
payable for such services for those same hospitals for
that fiscal year under this section under the law as in
effect before the date of the enactment of the Social
Security Amendments of 1983 (excluding payments made
under section 1866(a)(1)(F));
except that the adjustment made under this subparagraph shall
apply only to subsection (d) hospitals and shall not apply for
purposes of making computations under subsection (d)(2)(B)(ii)
or subsection (d)(3)(A).
(B) For discharges occurring in fiscal year 1984 or fiscal
year 1985, the Secretary shall provide under subsections
(d)(2)(F) and (d)(3)(C) for such equal proportional adjustment
in each of the average standardized amounts otherwise computed
for that fiscal year as may be necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsection (d)(1)(A)(i)(II) and (d)(5) for that
fiscal year for operating costs of inpatient hospital
services of hospitals (excluding payments made under
section 1866(a)(1)(F)),
are not greater or less than--
(ii) the DRG percentage (as defined in subsection
(d)(1)(C)) of the payment amounts which would have been
payable for such services for those same hospitals for
that fiscal year under this section under the law as in
effect before the date of the enactment of the Social
Security Amendments of 1983 (excluding payments made
under section 1866(a)(1)(F)).
(C) For discharges occurring in fiscal year 1988, the
Secretary shall provide for such equal proportional adjustment
in each of the average standardized amounts otherwise computed
under subsection (d)(3) for that fiscal year as may be
necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsections (d)(1)(A)(iii), (d)(5), and (d)(9)
for that fiscal year for operating costs of inpatient
hospital services of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals,
are not greater or less than--
(ii) the payment amounts that would have been payable
for such services for those same hospitals for that
fiscal year but for the enactment of the amendments
made by section 9304 of the Omnibus Budget
Reconciliation Act of 1986.
(4)(A) Taking into consideration the recommendations of the
Commission, the Secretary shall recommend for each fiscal year
(beginning with fiscal year 1988) an appropriate change factor
for inpatient hospital services for discharges in that fiscal
year which will take into account amounts necessary for the
efficient and effective delivery of medically appropriate and
necessary care of high quality. The appropriate change factor
may be different for all large urban subsection (d) hospitals,
other urban subsection (d) hospitals, urban subsection (d)
Puerto Rico hospitals, rural subsection (d) hospitals, and
rural subsection (d) Puerto Rico hospitals, and all other
hospitals and units not paid under subsection (d), and may vary
among such other hospitals and units.
(B) In addition to the recommendation made under subparagraph
(A), the Secretary shall, taking into consideration the
recommendations of the Commission under paragraph (2)(B),
recommend for each fiscal year (beginning with fiscal year
1992) other appropriate changes in each existing reimbursement
policy under this title under which payments to an institution
are based upon prospectively determined rates.
(5) The Secretary shall cause to have published in the
Federal Register, not later than--
(A) the April 1 before each fiscal year (beginning
with fiscal year 1986), the Secretary's proposed
recommendations under paragraph (4) for that fiscal
year for public comment, and
(B) the August 1 before such fiscal year after such
consideration of public comment on the proposal as is
feasible in the time available, the Secretary's final
recommendations under such paragraph for that year.
The Secretary shall include in the publication referred to in
subparagraph (A) for a fiscal year the report of the
Commission's recommendations submitted under paragraph (3) for
that fiscal year. To the extent that the Secretary's
recommendations under paragraph (4) differ from the
Commission's recommendations for that fiscal year, the
Secretary shall include in the publication referred to in
subparagraph (A) an explanation of the Secretary's grounds for
not following the Commission's recommendations.
(f)(1)(A) The Secretary shall maintain a system for the
reporting of costs of hospitals receiving payments computed
under subsection (d).
(B)(i) Subject to clause (ii), the Secretary shall place into
effect a standardized electronic cost reporting format for
hospitals under this title.
(ii) The Secretary may delay or waive the implementation of
such format in particular instances where such implementation
would result in financial hardship (in particular with respect
to hospitals with a small percentage of inpatients entitled to
benefits under this title).
(2) If the Secretary determines, based upon information
supplied by a quality improvement organization under part B of
title XI, that a hospital, in order to circumvent the payment
method established under subsection (b) or (d) of this section,
has taken an action that results in the admission of
individuals entitled to benefits under part A unnecessarily,
unnecessary multiple admissions of the same such individuals,
or other inappropriate medical or other practices with respect
to such individuals, the Secretary may--
(A) deny payment (in whole or in part) under part A
with respect to inpatient hospital services provided
with respect to such an unnecessary admission (or
subsequent admission of the same individual), or
(B) require the hospital to take other corrective
action necessary to prevent or correct the
inappropriate practice.
(3) The provisions of subsections (c) through (g) of section
1128 shall apply to determinations made under paragraph (2) in
the same manner as they apply to exclusions effected under
section 1128(b)(13).
(g)(1)(A) Notwithstanding section 1861(v), instead of any
amounts that are otherwise payable under this title with
respect to the reasonable costs of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals for capital-related costs
of inpatient hospital services, the Secretary shall, for
hospital cost reporting periods beginning on or after October
1, 1991, provide for payments for such costs in accordance with
a prospective payment system established by the Secretary.
Aggregate payments made under subsection (d) and this
subsection during fiscal years 1992 through 1995 shall be
reduced in a manner that results in a reduction (as estimated
by the Secretary) in the amount of such payments equal to a 10
percent reduction in the amount of payments attributable to
capital-related costs that would otherwise have been made
during such fiscal year had the amount of such payments been
based on reasonable costs (as defined in section 1861(v)). For
discharges occurring after September 30, 1993, the Secretary
shall reduce by 7.4 percent the unadjusted standard Federal
capital payment rate (as described in 42 CFR 412.308(c), as in
effect on the date of the enactment of the Omnibus Budget
Reconciliation Act of 1993) and shall (for hospital cost
reporting periods beginning on or after October 1, 1993)
redetermine which payment methodology is applied to the
hospital under such system to take into account such reduction.
In addition to the reduction described in the preceding
sentence, for discharges occurring on or after October 1, 1997,
the Secretary shall apply the budget neutrality adjustment
factor used to determine the Federal capital payment rate in
effect on September 30, 1995 (as described in section 412.352
of title 42 of the Code of Federal Regulations), to (i) the
unadjusted standard Federal capital payment rate (as described
in section 412.308(c) of that title, as in effect on September
30, 1997), and (ii) the unadjusted hospital-specific rate (as
described in section 412.328(e)(1) of that title, as in effect
on September 30, 1997), and, for discharges occurring on or
after October 1, 1997, and before October 1, 2002, reduce the
rates described in clauses (i) and (ii) by 2.1 percent.
(B) Such system--
(i) shall provide for (I) a payment on a per
discharge basis, and (II) an appropriate weighting of
such payment amount as relates to the classification of
the discharge;
(ii) may provide for an adjustment to take into
account variations in the relative costs of capital and
construction for the different types of facilities or
areas in which they are located;
(iii) may provide for such exceptions (including
appropriate exceptions to reflect capital obligations)
as the Secretary determines to be appropriate, and
(iv) may provide for suitable adjustment to reflect
hospital occupancy rate.
(C) In this paragraph, the term ``capital-related costs'' has
the meaning given such term by the Secretary under subsection
(a)(4) as of September 30, 1987, and does not include a return
on equity capital.
(2)(A) The Secretary shall provide that the amount which is
allowable, with respect to reasonable costs of inpatient
hospital services for which payment may be made under this
title, for a return on equity capital for hospitals shall, for
cost reporting periods beginning on or after the date of the
enactment of this subsection, be equal to amounts otherwise
allowable under regulations in effect on March 1, 1983, except
that the rate of return to be recognized shall be equal to the
applicable percentage (described in subparagraph (B)) of the
average of the rates of interest, for each of the months any
part of which is included in the reporting period, on
obligations issued for purchase by the Federal Hospital
Insurance Trust Fund.
(B) In this paragraph, the ``applicable percentage'' is--
(i) 75 percent, for cost reporting periods beginning
during fiscal year 1987,
(ii) 50 percent, for cost reporting periods beginning
during fiscal year 1988,
(iii) 25 percent, for cost reporting periods
beginning during fiscal year 1989, and
(iv) 0 percent, for cost reporting periods beginning
on or after October 1, 1989.
(3)(A) Except as provided in subparagraph (B), in determining
the amount of the payments that may be made under this title
with respect to all the capital-related costs of inpatient
hospital services of a subsection (d) hospital and a subsection
(d) Puerto Rico hospital, the Secretary shall reduce the
amounts of such payments otherwise established under this title
by--
(i) 3.5 percent for payments attributable to portions
of cost reporting periods occurring during fiscal year
1987,
(ii) 7 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during fiscal year 1988 on or after
October 1, 1987, and before January 1, 1988,
(iii) 12 percent for payments attributable to
portions of cost reporting periods or discharges (as
the case may be) in fiscal year 1988, occurring on or
after January 1, 1988,
(iv) 15 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during fiscal year 1989, and
(v) 15 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during the period beginning January
1, 1990, and ending September 30, 1991.
(B) Subparagraph (A) shall not apply to payments with respect
to the capital-related costs of any hospital that is a sole
community hospital (as defined in subsection (d)(5)(D)(iii)) or
a critical access hospital (as defined in section 1861(mm)(1)).
(4) In determining the amount of the payments that are
attributable to portions of cost reporting periods occurring
during fiscal years 1998 through 2002 and that may be made
under this title with respect to capital-related costs of
inpatient hospital services of a hospital which is described in
clause (i), (ii), or (iv) of subsection (d)(1)(B) or a unit
described in the matter after clause (v) of such subsection,
the Secretary shall reduce the amounts of such payments
otherwise determined under this title by 15 percent.
(h) Payments for Direct Graduate Medical Education Costs.--
(1) Substitution of special payment rules.--
Notwithstanding section 1861(v), instead of any amounts
that are otherwise payable under this title with
respect to the reasonable costs of hospitals for direct
graduate medical education costs, the Secretary shall
provide for payments for such costs in accordance with
paragraph (3) of this subsection. In providing for such
payments, the Secretary shall provide for an allocation
of such payments between part A and part B (and the
trust funds established under the respective parts) as
reasonably reflects the proportion of direct graduate
medical education costs of hospitals associated with
the provision of services under each respective part.
(2) Determination of hospital-specific approved fte
resident amounts.--The Secretary shall determine, for
each hospital with an approved medical residency
training program, an approved FTE resident amount for
each cost reporting period beginning on or after July
1, 1985, as follows:
(A) Determining allowable average cost per
fte resident in a hospital's base period.--The
Secretary shall determine, for the hospital's
cost reporting period that began during fiscal
year 1984, the average amount recognized as
reasonable under this title for direct graduate
medical education costs of the hospital for
each full-time-equivalent resident.
(B) Updating to the first cost reporting
period.--
(i) In general.--The Secretary shall
update each average amount determined
under subparagraph (A) by the
percentage increase in the consumer
price index during the 12-month cost
reporting period described in such
subparagraph.
(ii) Exception.--The Secretary shall
not perform an update under clause (i)
in the case of a hospital if the
hospital's reporting period, described
in subparagraph (A), began on or after
July 1, 1984, and before October 1,
1984.
(C) Amount for first cost reporting period.--
For the first cost reporting period of the
hospital beginning on or after July 1, 1985,
the approved FTE resident amount for the
hospital is equal to the amount determined
under subparagraph (B) increased by 1 percent.
(D) Amount for subsequent cost reporting
periods.--
(i) In general.--Except as provided
in a subsequent clause, for each
subsequent cost reporting period, the
approved FTE resident amount for the
hospital is equal to the approved FTE
resident amount determined under this
paragraph for the previous cost
reporting period updated, through the
midpoint of the period, by projecting
the estimated percentage change in the
consumer price index during the 12-
month period ending at that midpoint,
with appropriate adjustments to reflect
previous under-or over-estimations
under this subparagraph in the
projected percentage change in the
consumer price index.
(ii) Freeze in update for fiscal
years 1994 and 1995.--For cost
reporting periods beginning during
fiscal year 1994 or fiscal year 1995,
the approved FTE resident amount for a
hospital shall not be updated under
clause (i) for a resident who is not a
primary care resident (as defined in
paragraph (5)(H)) or a resident
enrolled in an approved medical
residency training program in
obstetrics and gynecology.
(iii) Floor for locality adjusted
national average per resident amount.--
The approved FTE resident amount for a
hospital for the cost reporting period
beginning during fiscal year 2001 shall
not be less than 70 percent, and for
the cost reporting period beginning
during fiscal year 2002 shall not be
less than 85 percent, of the locality
adjusted national average per resident
amount computed under subparagraph (E)
for the hospital and period.
(iv) Adjustment in rate of increase
for hospitals with fte approved amount
above 140 percent of locality adjusted
national average per resident amount.--
(I) Freeze for fiscal years
2001 and 2002 and 2004 through
2013.--For a cost reporting
period beginning during fiscal
year 2001 or fiscal year 2002
or during the period beginning
with fiscal year 2004 and
ending with fiscal year 2013,
if the approved FTE resident
amount for a hospital for the
preceding cost reporting period
exceeds 140 percent of the
locality adjusted national
average per resident amount
computed under subparagraph (E)
for that hospital and period,
subject to subclause (III), the
approved FTE resident amount
for the period involved shall
be the same as the approved FTE
resident amount for the
hospital for such preceding
cost reporting period.
(II) 2 percent decrease in
update for fiscal years 2003,
2004, and 2005.--For the cost
reporting period beginning
during fiscal year 2003, if the
approved FTE resident amount
for a hospital for the
preceding cost reporting period
exceeds 140 percent of the
locality adjusted national
average per resident amount
computed under subparagraph (E)
for that hospital and preceding
period, the approved FTE
resident amount for the period
involved shall be updated in
the manner described in
subparagraph (D)(i) except
that, subject to subclause
(III), the consumer price index
applied for a 12-month period
shall be reduced (but not below
zero) by 2 percentage points.
(III) No adjustment below 140
percent.--In no case shall
subclause (I) or (II) reduce an
approved FTE resident amount
for a hospital for a cost
reporting period below 140
percent of the locality
adjusted national average per
resident amount computed under
subparagraph (E) for such
hospital and period.
(E) Determination of locality adjusted
national average per resident amount.--The
Secretary shall determine a locality adjusted
national average per resident amount with
respect to a cost reporting period of a
hospital beginning during a fiscal year as
follows:
(i) Determining hospital single per
resident amount.--The Secretary shall
compute for each hospital operating an
approved graduate medical education
program a single per resident amount
equal to the average (weighted by
number of full-time equivalent
residents, as determined under
paragraph (4)) of the primary care per
resident amount and the non-primary
care per resident amount computed under
paragraph (2) for cost reporting
periods ending during fiscal year 1997.
(ii) Standardizing per resident
amounts.--The Secretary shall compute a
standardized per resident amount for
each such hospital by dividing the
single per resident amount computed
under clause (i) by an average of the 3
geographic index values (weighted by
the national average weight for each of
the work, practice expense, and
malpractice components) as applied
under section 1848(e) for 1999 for the
fee schedule area in which the hospital
is located.
(iii) Computing of weighted
average.--The Secretary shall compute
the average of the standardized per
resident amounts computed under clause
(ii) for such hospitals, with the
amount for each hospital weighted by
the average number of full-time
equivalent residents at such hospital
(as determined under paragraph (4)).
(iv) Computing national average per
resident amount.--The Secretary shall
compute the national average per
resident amount, for a hospital's cost
reporting period that begins during
fiscal year 2001, equal to the weighted
average computed under clause (iii)
increased by the estimated percentage
increase in the consumer price index
for all urban consumers during the
period beginning with the month that
represents the midpoint of the cost
reporting periods described in clause
(i) and ending with the midpoint of the
hospital's cost reporting period that
begins during fiscal year 2001.
(v) Adjusting for locality.--The
Secretary shall compute the product
of--
(I) the national average per
resident amount computed under
clause (iv) for the hospital,
and
(II) the geographic index
value average (described and
applied under clause (ii)) for
the fee schedule area in which
the hospital is located.
(vi) Computing locality adjusted
amount.--The locality adjusted national
per resident amount for a hospital
for--
(I) the cost reporting period
beginning during fiscal year
2001 is the product computed
under clause (v); or
(II) each subsequent cost
reporting period is equal to
the locality adjusted national
per resident amount for the
hospital for the previous cost
reporting period (as determined
under this clause) updated,
through the midpoint of the
period, by projecting the
estimated percentage change in
the consumer price index for
all urban consumers during the
12-month period ending at that
midpoint.
(F) Treatment of certain hospitals.--(i) In
the case of a hospital that did not have an
approved medical residency training program or
was not participating in the program under this
title for a cost reporting period beginning
during fiscal year 1984, the Secretary shall,
for the first such period for which it has such
a residency training program and is
participating under this title, provide for
such approved FTE resident amount as the
Secretary determines to be appropriate, based
on approved FTE resident amounts for comparable
programs.
(ii) In applying this subparagraph in the
case of a hospital that trains residents and
has not entered into a GME affiliation
agreement (as defined by the Secretary for
purposes of paragraph (4)(H)(ii)), on or after
the date of the enactment of this clause, the
Secretary shall not establish an FTE resident
amount until such time as the Secretary
determines that the hospital has trained at
least 1.0 full-time-equivalent resident in an
approved medical residency training program in
a cost reporting period.
(iii) In applying this subparagraph for cost
reporting periods beginning on or after the
date of enactment of this clause, in the case
of a hospital that, as of such date of
enactment, has an approved FTE resident amount
based on the training in an approved medical
residency program or programs of--
(I) less than 1.0 full-time-
equivalent resident in any cost
reporting period beginning before
October 1, 1997, as determined by the
Secretary; or
(II) no more than 3.0 full-time-
equivalent residents in any cost
reporting period beginning on or after
October 1, 1997, and before the date of
the enactment of this clause, as
determined by the Secretary,
in lieu of such FTE resident amount the
Secretary shall, in accordance with the
methodology described in section 413.77(e) of
title 42 of the Code of Federal Regulations (or
any successor regulation), establish a new FTE
resident amount if the hospital trains at least
1.0 full-time-equivalent resident (in the case
of a hospital described in subclause (I)) or
more than 3.0 full-time-equivalent residents
(in the case of a hospital described in
subclause (II)) in a cost reporting period
beginning on or after such date of enactment
and before the date that is 5 years after such
date of enactment.
(iv) For purposes of carrying out this
subparagraph for cost reporting periods
beginning on or after the date of the enactment
of this clause, a hospital shall report full-
time-equivalent residents on its cost report
for a cost reporting period if the hospital
trains at least 1.0 full-time-equivalent
residents in an approved medical residency
training program or programs in such period.
(v) As appropriate, the Secretary may
consider information from any cost reporting
period necessary to establish a new FTE
resident amount as described in clause (iii).
(3) Hospital payment amount per resident.--
(A) In general.--The payment amount, for a
hospital cost reporting period beginning on or
after July 1, 1985, is equal to the product
of--
(i) the aggregate approved amount (as
defined in subparagraph (B)) for that
period, and
(ii) the hospital's medicare patient
load (as defined in subparagraph (C))
for that period.
(B) Aggregate approved amount.--As used in
subparagraph (A), the term ``aggregate approved
amount'' means, for a hospital cost reporting
period, the product of--
(i) the hospital's approved FTE
resident amount (determined under
paragraph (2)) for that period, and
(ii) the weighted average number of
full-time-equivalent residents (as
determined under paragraph (4)) in the
hospital's approved medical residency
training programs in that period.
The Secretary shall reduce the aggregate approved
amount to the extent payment is made under subsection
(k) for residents included in the hospital's count of
full-time equivalent residents.
(C) Medicare patient load.--As used in
subparagraph (A), the term ``medicare patient
load'' means, with respect to a hospital's cost
reporting period, the fraction of the total
number of inpatient-bed-days (as established by
the Secretary) during the period which are
attributable to patients with respect to whom
payment may be made under part A.
(D) Payment for managed care enrollees.--
(i) In general.--For portions of cost
reporting periods occurring on or after
January 1, 1998, the Secretary shall
provide for an additional payment
amount under this subsection for
services furnished to individuals who
are enrolled under a risk-sharing
contract with an eligible organization
under section 1876 and who are entitled
to part A or with a Medicare+Choice
organization under part C. The amount
of such a payment shall equal, subject
to clause (iii), the applicable
percentage of the product of--
(I) the aggregate approved
amount (as defined in
subparagraph (B)) for that
period; and
(II) the fraction of the
total number of inpatient-bed
days (as established by the
Secretary) during the period
which are attributable to such
enrolled individuals.
(ii) Applicable percentage.--For
purposes of clause (i), the applicable
percentage is--
(I) 20 percent in 1998,
(II) 40 percent in 1999,
(III) 60 percent in 2000,
(IV) 80 percent in 2001, and
(V) 100 percent in 2002 and
subsequent years.
(iii) Proportional reduction for
nursing and allied health education.--
The Secretary shall estimate a
proportional adjustment in payments to
all hospitals determined under clauses
(i) and (ii) for portions of cost
reporting periods beginning in a year
(beginning with 2000) such that the
proportional adjustment reduces
payments in an amount for such year
equal to the total additional payment
amounts for nursing and allied health
education determined under subsection
(l) for portions of cost reporting
periods occurring in that year.
(iv) Special rule for hospitals under
reimbursement system.--The Secretary
shall establish rules for the
application of this subparagraph to a
hospital reimbursed under a
reimbursement system authorized under
section 1814(b)(3) in the same manner
as it would apply to the hospital if it
were not reimbursed under such section.
(4) Determination of full-time-equivalent
residents.--
(A) Rules.--The Secretary shall establish
rules consistent with this paragraph for the
computation of the number of full-time-
equivalent residents in an approved medical
residency training program.
(B) Adjustment for part-year or part-time
residents.--Such rules shall take into account
individuals who serve as residents for only a
portion of a period with a hospital or
simultaneously with more than one hospital.
(C) Weighting factors for certain
residents.--Subject to subparagraph (D), such
rules shall provide, in calculating the number
of full-time-equivalent residents in an
approved residency program--
(i) before July 1, 1986, for each
resident the weighting factor is 1.00,
(ii) on or after July 1, 1986, for a
resident who is in the resident's
initial residency period (as defined in
paragraph (5)(F)), the weighting factor
is 1.00,
(iii) on or after July 1, 1986, and
before July 1, 1987, for a resident who
is not in the resident's initial
residency period (as defined in
paragraph (5)(F)), the weighting factor
is .75, and
(iv) on or after July 1, 1987, for a
resident who is not in the resident's
initial residency period (as defined in
paragraph (5)(F)), the weighting factor
is .50.
(D) Foreign medical graduates required to
pass fmgems examination.--
(i) In general.--Except as provided
in clause (ii), such rules shall
provide that, in the case of an
individual who is a foreign medical
graduate (as defined in paragraph
(5)(D)), the individual shall not be
counted as a resident on or after July
1, 1986, unless--
(I) the individual has passed
the FMGEMS examination (as
defined in paragraph (5)(E)),
or
(II) the individual has
previously received
certification from, or has
previously passed the
examination of, the Educational
Commission for Foreign Medical
Graduates.
(ii) Transition for current fmgs.--On
or after July 1, 1986, but before July
1, 1987, in the case of a foreign
medical graduate who--
(I) has served as a resident
before July 1, 1986, and is
serving as a resident after
that date, but
(II) has not passed the
FMGEMS examination or a
previous examination of the
Educational Commission for
Foreign Medical Graduates
before July 1, 1986,
the individual shall be counted as a
resident at a rate equal to one-half of
the rate at which the individual would
otherwise be counted.
(E) Counting time spent in outpatient
settings.--Subject to subparagraphs (J) and
(K), such rules shall provide that only time
spent in activities relating to patient care
shall be counted and that--
(i) effective for cost reporting
periods beginning before July 1, 2010,
all the time;
(ii) effective for cost reporting
periods beginning on or after July 1,
2010, all the time so spent by a
resident shall be counted towards the
determination of full-time equivalency,
without regard to the setting in which
the activities are performed, if a
hospital incurs the costs of the
stipends and fringe benefits of the
resident during the time the resident
spends in that setting. If more than
one hospital incurs these costs, either
directly or through a third party, such
hospitals shall count a proportional
share of the time, as determined by
written agreement between the
hospitals, that a resident spends
training in that setting.
so spent by a resident under an approved
medical residency training program shall be
counted towards the determination of full-time
equivalency, without regard to the setting in
which the activities are performed, if the
hospital incurs all, or substantially all, of
the costs for the training program in that
setting.
Any hospital claiming under this subparagraph
for time spent in a nonprovider setting shall
maintain and make available to the Secretary
records regarding the amount of such time and
such amount in comparison with amounts of such
time in such base year as the Secretary shall
specify.
(F) Limitation on number of residents in
allopathic and osteopathic medicine.--
(i) In general.--Such rules shall
provide that for purposes of a cost
reporting period beginning on or after
October 1, 1997, subject to paragraphs
(7) and (8), the total number of full-
time equivalent residents before
application of weighting factors (as
determined under this paragraph) with
respect to a hospital's approved
medical residency training program in
the fields of allopathic medicine and
osteopathic medicine may not exceed the
number (or, 130 percent of such number
in the case of a hospital located in a
rural area) of such full-time
equivalent residents for the hospital's
most recent cost reporting period
ending on or before December 31, 1996.
(ii) Counting primary care residents
on certain approved leaves of absence
in base year fte count.--
(I) In general.--In
determining the number of such
full-time equivalent residents
for a hospital's most recent
cost reporting period ending on
or before December 31, 1996,
for purposes of clause (i), the
Secretary shall count an
individual to the extent that
the individual would have been
counted as a primary care
resident for such period but
for the fact that the
individual, as determined by
the Secretary, was on maternity
or disability leave or a
similar approved leave of
absence.
(II) Limitation to 3 fte
residents for any hospital.--
The total number of individuals
counted under subclause (I) for
a hospital may not exceed 3
full-time equivalent residents.
(G) Counting interns and residents for fy
1998 and subsequent years.--
(i) In general.--For cost reporting
periods beginning during fiscal years
beginning on or after October 1, 1997,
subject to the limit described in
subparagraph (F), the total number of
full-time equivalent residents for
determining a hospital's graduate
medical education payment shall equal
the average of the actual full-time
equivalent resident counts for the cost
reporting period and the preceding two
cost reporting periods.
(ii) Adjustment for short periods.--
If any cost reporting period beginning
on or after October 1, 1997, is not
equal to twelve months, the Secretary
shall make appropriate modifications to
ensure that the average full-time
equivalent resident counts pursuant to
clause (i) are based on the equivalent
of full twelve-month cost reporting
periods.
(iii) Transition rule for 1998.--In
the case of a hospital's first cost
reporting period beginning on or after
October 1, 1997, clause (i) shall be
applied by using the average for such
period and the preceding cost reporting
period.
(H) Special rules for application of
subparagraphs (f) and (g).--
(i) New facilities.--(I) The
Secretary shall, consistent with the
principles of subparagraphs (F) and (G)
and subject to paragraphs (7) and (8),
prescribe rules for the application of
such subparagraphs in the case of
medical residency training programs
established on or after January 1,
1995. In promulgating such rules for
purposes of subparagraph (F), the
Secretary shall give special
consideration to facilities that meet
the needs of underserved rural areas.
(II) In applying this clause in the
case of a hospital that, on or after
the date of the enactment of this
subclause, begins training residents in
a new approved medical residency
training program or programs (as
defined by the Secretary), the
Secretary shall not determine a
limitation applicable to the hospital
under subparagraph (F) until such time
as the Secretary determines that the
hospital has trained at least 1.0 full-
time-equivalent resident in such new
approved medical residency training
program or programs in a cost reporting
period.
(III) In applying this clause in the
case of a hospital that, as of the date
of the enactment of this subclause, has
a limitation under subparagraph (F),
based on a cost reporting period
beginning before October 1, 1997, of
less than 1.0 full-time-equivalent
resident, the Secretary shall adjust
the limitation in the manner applicable
to a new approved medical residency
training program if the Secretary
determines the hospital begins training
at least 1.0 full-time-equivalent
residents in a program year beginning
on or after such date of enactment and
before the date that is 5 years after
such date of enactment.
(IV) In applying this clause in the
case of a hospital that, as of the date
of the enactment of this subclause, has
a limitation under subparagraph (F),
based on a cost reporting period
beginning on or after October 1, 1997,
and before such date of enactment, of
no more than 3.0 full-time-equivalent
residents, the Secretary shall adjust
the limitation in the manner applicable
to a new approved medical residency
training program if the Secretary
determines the hospital begins training
more than 3.0 full-time-equivalent
residents in a program year beginning
on or after such date of enactment and
before the date that is 5 years after
such date of enactment.
(V) An adjustment to the limitation
applicable to a hospital made pursuant
to subclause (III) or (IV) shall be
made in a manner consistent with the
methodology, as appropriate, in section
413.79(e) of title 42, Code of Federal
Regulations (or any successor
regulation). As appropriate, the
Secretary may consider information from
any cost reporting periods necessary to
make such an adjustment to the
limitation.
(ii) Aggregation.--The Secretary may
prescribe rules which allow
institutions which are members of the
same affiliated group (as defined by
the Secretary) to elect to apply the
limitation of subparagraph (F) on an
aggregate basis.
(iii) Data collection.--The Secretary
may require any entity that operates a
medical residency training program and
to which subparagraphs (F) and (G)
apply to submit to the Secretary such
additional information as the Secretary
considers necessary to carry out such
subparagraphs.
(iv) Nonrural hospitals operating
training programs in rural areas.--In
the case of a hospital that is not
located in a rural area but establishes
separately accredited approved medical
residency training programs (or rural
tracks) in [an rural area] a rural area
or has an accredited training program
with an integrated rural track, the
Secretary shall adjust the limitation
under subparagraph (F) in an
appropriate manner insofar as it
applies to such programs in such rural
areas in order to encourage the
training of physicians in rural areas.
(v) Special provider agreement.--If
an entity enters into a provider
agreement pursuant to section 1866(a)
to provide hospital services on the
same physical site previously used by
Medicare Provider No. 05-0578--
(I) the limitation on the
number of total full time
equivalent residents under
subparagraph (F) and clauses
(v) and (vi)(I) of subsection
(d)(5)(B) applicable to such
provider shall be equal to the
limitation applicable under
such provisions to Provider No.
05-0578 for its cost reporting
period ending on June 30, 2006;
and
(II) the provisions of
subparagraph (G) and subsection
(d)(5)(B)(vi)(II) shall not be
applicable to such provider for
the first three cost reporting
years in which such provider
trains residents under any
approved medical residency
training program.
(vi) Redistribution of residency
slots after a hospital closes.--
(I) In general.--Subject to
the succeeding provisions of
this clause, the Secretary
shall, by regulation, establish
a process under which, in the
case where a hospital (other
than a hospital described in
clause (v)) with an approved
medical residency program
closes on or after a date that
is 2 years before the date of
enactment of this clause, the
Secretary shall increase the
otherwise applicable resident
limit under this paragraph for
other hospitals in accordance
with this clause.
(II) Priority for hospitals
in certain areas.--Subject to
the succeeding provisions of
this clause, in determining for
which hospitals the increase in
the otherwise applicable
resident limit is provided
under such process, the
Secretary shall distribute the
increase to hospitals in the
following priority order (with
preference given within each
category to hospitals that are
members of the same affiliated
group (as defined by the
Secretary under clause (ii)) as
the closed hospital):
(aa) First, to
hospitals located in
the same core-based
statistical area as, or
a core-based
statistical area
contiguous to, the
hospital that closed.
(bb) Second, to
hospitals located in
the same State as the
hospital that closed.
(cc) Third, to
hospitals located in
the same region of the
country as the hospital
that closed.
(dd) Fourth, only if
the Secretary is not
able to distribute the
increase to hospitals
described in item (cc),
to qualifying hospitals
in accordance with the
provisions of paragraph
(8).
(III) Requirement hospital
likely to fill position within
certain time period.--The
Secretary may only increase the
otherwise applicable resident
limit of a hospital under such
process if the Secretary
determines the hospital has
demonstrated a likelihood of
filling the positions made
available under this clause
within 3 years.
(IV) Limitation.--The
aggregate number of increases
in the otherwise applicable
resident limits for hospitals
under this clause shall be
equal to the number of resident
positions in the approved
medical residency programs that
closed on or after the date
described in subclause (I).
(V) Administration.--Chapter
35 of title 44, United States
Code, shall not apply to the
implementation of this clause.
(J) Treatment of certain nonprovider and
didactic activities.--Such rules shall provide
that all time spent by an intern or resident in
an approved medical residency training program
in a nonprovider setting that is primarily
engaged in furnishing patient care (as defined
in paragraph (5)(K)) in non-patient care
activities, such as didactic conferences and
seminars, but not including research not
associated with the treatment or diagnosis of a
particular patient, as such time and activities
are defined by the Secretary, shall be counted
toward the determination of full-time
equivalency.
(K) Treatment of certain other activities.--
In determining the hospital's number of full-
time equivalent residents for purposes of this
subsection, all the time that is spent by an
intern or resident in an approved medical
residency training program on vacation, sick
leave, or other approved leave, as such time is
defined by the Secretary, and that does not
prolong the total time the resident is
participating in the approved program beyond
the normal duration of the program shall be
counted toward the determination of full-time
equivalency.
(5) Definitions and special rules.--As used in this
subsection:
(A) Approved medical residency training
program.--The term ``approved medical residency
training program'' means a residency or other
postgraduate medical training program
participation in which may be counted toward
certification in a specialty or subspecialty
and includes formal postgraduate training
programs in geriatric medicine approved by the
Secretary.
(B) Consumer price index.--The term
``consumer price index'' refers to the Consumer
Price Index for All Urban Consumers (United
States city average), as published by the
Secretary of Commerce.
(C) Direct graduate medical education
costs.--The term ``direct graduate medical
education costs'' means direct costs of
approved educational activities for approved
medical residency training programs.
(D) Foreign medical graduate.--The term
``foreign medical graduate'' means a resident
who is not a graduate of--
(i) a school of medicine accredited
by the Liaison Committee on Medical
Education of the American Medical
Association and the Association of
American Medical Colleges (or approved
by such Committee as meeting the
standards necessary for such
accreditation),
(ii) a school of osteopathy
accredited by the American Osteopathic
Association, or approved by such
Association as meeting the standards
necessary for such accreditation, or
(iii) a school of dentistry or
podiatry which is accredited (or meets
the standards for accreditation) by an
organization recognized by the
Secretary for such purpose.
(E) FMGEMS examination.--The term ``FMGEMS
examination'' means parts I and II of the
Foreign Medical Graduate Examination in the
Medical Sciences or any successor examination
recognized by the Secretary for this purpose.
(F) Initial residency period.--The term
``initial residency period'' means the period
of board eligibility, except that--
(i) except as provided in clause
(ii), in no case shall the initial
period of residency exceed an aggregate
period of formal training of more than
five years for any individual, and
(ii) a period, of not more than two
years, during which an individual is in
a geriatric residency or fellowship
program or a preventive medicine
residency or fellowship program which
meets such criteria as the Secretary
may establish, shall be treated as part
of the initial residency period, but
shall not be counted against any
limitation on the initial residency
period.
Subject to subparagraph (G)(v), the initial
residency period shall be determined, with
respect to a resident, as of the time the
resident enters the residency training program.
(G) Period of board eligibility.--
(i) General rule.--Subject to clauses
(ii), (iii), (iv), and (v), the term
``period of board eligibility'' means,
for a resident, the minimum number of
years of formal training necessary to
satisfy the requirements for initial
board eligibility in the particular
specialty for which the resident is
training.
(ii) Application of 1985-1986
directory.--Except as provided in
clause (iii), the period of board
eligibility shall be such period
specified in the 1985-1986 Directory of
Residency Training Programs published
by the Accreditation Council on
Graduate Medical Education.
(iii) Changes in period of board
eligibility.--On or after July 1, 1989,
if the Accreditation Council on
Graduate Medical Education, in its
Directory of Residency Training
Programs--
(I) increases the minimum
number of years of formal
training necessary to satisfy
the requirements for a
specialty, above the period
specified in its 1985-1986
Directory, the Secretary may
increase the period of board
eligibility for that specialty,
but not to exceed the period of
board eligibility specified in
that later Directory, or
(II) decreases the minimum
number of years of formal
training necessary to satisfy
the requirements for a
specialty, below the period
specified in its 1985-1986
Directory, the Secretary may
decrease the period of board
eligibility for that specialty,
but not below the period of
board eligibility specified in
that later Directory.
(iv) Special rule for certain primary
care combined residency programs.--(I)
In the case of a resident enrolled in a
combined medical residency training
program in which all of the individual
programs (that are combined) are for
training a primary care resident (as
defined in subparagraph (H)), the
period of board eligibility shall be
the minimum number of years of formal
training required to satisfy the
requirements for initial board
eligibility in the longest of the
individual programs plus one additional
year.
(II) A resident enrolled in a
combined medical residency training
program that includes an obstetrics and
gynecology program shall qualify for
the period of board eligibility under
subclause (I) if the other programs
such resident combines with such
obstetrics and gynecology program are
for training a primary care resident.
(v) Child neurology training
programs.--In the case of a resident
enrolled in a child neurology residency
training program, the period of board
eligibility and the initial residency
period shall be the period of board
eligibility for pediatrics plus 2
years.
(H) Primary care resident.--The term
``primary care resident'' means a resident
enrolled in an approved medical residency
training program in family medicine, general
internal medicine, general pediatrics,
preventive medicine, geriatric medicine, or
osteopathic general practice.
(I) Resident.--The term ``resident'' includes
an intern or other participant in an approved
medical residency training program.
(J) Adjustments for certain family practice
residency programs.--
(i) In general.--In the case of an
approved medical residency training
program (meeting the requirements of
clause (ii)) of a hospital which
received funds from the United States,
a State, or a political subdivision of
a State or an instrumentality of such a
State or political subdivision (other
than payments under this title or a
State plan under title XIX) for the
program during the cost reporting
period that began during fiscal year
1984, the Secretary shall--
(I) provide for an average
amount under paragraph (2)(A)
that takes into account the
Secretary's estimate of the
amount that would have been
recognized as reasonable under
this title if the hospital had
not received such funds, and
(II) reduce the payment
amount otherwise provided under
this subsection in an amount
equal to the proportion of such
program funds received during
the cost reporting period
involved that is allocable to
this title.
(ii) Additional requirements.--A
hospital's approved medical residency
program meets the requirements of this
clause if--
(I) the program is limited to
training for family and
community medicine;
(II) the program is the only
approved medical residency
program of the hospital; and
(III) the average amount
determined under paragraph
(2)(A) for the hospital (as
determined without regard to
the increase in such amount
described in clause (i)(I))
does not exceed $10,000.
(K) Nonprovider setting that is primarily
engaged in furnishing patient care.--The term
``nonprovider setting that is primarily engaged
in furnishing patient care'' means a
nonprovider setting in which the primary
activity is the care and treatment of patients,
as defined by the Secretary.
(6) Incentive payment under plans for voluntary
reduction in number of residents.--
(A) In general.--In the case of a voluntary
residency reduction plan for which an
application is approved under subparagraph (B),
subject to subparagraph (F), each hospital
which is part of the qualifying entity
submitting the plan shall be paid an applicable
hold harmless percentage (as specified in
subparagraph (E)) of the sum of--
(i) the amount (if any) by which--
(I) the amount of payment
which would have been made
under this subsection if there
had been a 5-percent reduction
in the number of full-time
equivalent residents in the
approved medical education
training programs of the
hospital as of June 30, 1997,
exceeds
(II) the amount of payment
which is made under this
subsection, taking into account
the reduction in such number
effected under the reduction
plan; and
(ii) the amount of the reduction in
payment under subsection (d)(5)(B) for
the hospital that is attributable to
the reduction in number of residents
effected under the plan below 95
percent of the number of full-time
equivalent residents in such programs
of the hospital as of June 30, 1997.
The determination of the amounts under clauses
(i) and (ii) for any year shall be made on the
basis of the provisions of this title in effect
on the application deadline date for the first
calendar year to which the reduction plan
applies.
(B) Approval of plan applications.--The
Secretary may not approve the application of an
qualifying entity unless--
(i) the application is submitted in a
form and manner specified by the
Secretary and by not later than
November 1, 1999,
(ii) the application provides for the
operation of a plan for the reduction
in the number of full-time equivalent
residents in the approved medical
residency training programs of the
entity consistent with the requirements
of subparagraph (D);
(iii) the entity elects in the
application the period of residency
training years (not greater than 5)
over which the reduction will occur;
(iv) the entity will not reduce the
proportion of its residents in primary
care (to the total number of residents)
below such proportion as in effect as
of the applicable time described in
subparagraph (D)(v); and
(v) the Secretary determines that the
application and the entity and such
plan meet such other requirements as
the Secretary specifies in regulations.
(C) Qualifying entity.--For purposes of this
paragraph, any of the following may be a
qualifying entity:
(i) Individual hospitals operating
one or more approved medical residency
training programs.
(ii) Two or more hospitals that
operate such programs and apply for
treatment under this paragraph as a
single qualifying entity.
(iii) A qualifying consortium (as
described in section 4628 of the
Balanced Budget Act of 1997).
(D) Residency reduction requirements.--
(i) Individual hospital applicants.--
In the case of a qualifying entity
described in subparagraph (C)(i), the
number of full-time equivalent
residents in all the approved medical
residency training programs operated by
or through the entity shall be reduced
as follows:
(I) If the base number of
residents exceeds 750
residents, by a number equal to
at least 20 percent of such
base number.
(II) Subject to subclause
(IV), if the base number of
residents exceeds 600 but is
less than 750 residents, by 150
residents.
(III) Subject to subclause
(IV), if the base number of
residents does not exceed 600
residents, by a number equal to
at least 25 percent of such
base number.
(IV) In the case of a
qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
(ii) Joint applicants.--In the case
of a qualifying entity described in
subparagraph (C)(ii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
as follows:
(I) Subject to subclause
(II), by a number equal to at
least 25 percent of the base
number.
(II) In the case of such a
qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
(iii) Consortia.--In the case of a
qualifying entity described in
subparagraph (C)(iii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
by a number equal to at least 20
percent of the base number.
(iv) Manner of reduction.--The
reductions specified under the
preceding provisions of this
subparagraph for a qualifying entity
shall be below the base number of
residents for that entity and shall be
fully effective not later than the 5th
residency training year in which the
application under subparagraph (B) is
effective.
(v) Entities providing assurance of
increase in primary care residents.--An
entity is described in this clause if--
(I) the base number of
residents for the entity is
less than 750 or the entity is
described in subparagraph
(C)(ii); and
(II) the entity represents in
its application under
subparagraph (B) that it will
increase the number of full-
time equivalent residents in
primary care by at least 20
percent (from such number
included in the base number of
residents) by not later than
the 5th residency training year
in which the application under
subparagraph (B) is effective.
If a qualifying entity fails to comply
with the representation described in
subclause (II) by the end of such 5th
residency training year, the entity
shall be subject to repayment of all
amounts paid under this paragraph, in
accordance with procedures established
to carry out subparagraph (F).
(vi) Base number of residents
defined.--For purposes of this
paragraph, the term ``base number of
residents'' means, with respect to a
qualifying entity (or its participating
hospitals) operating approved medical
residency training programs, the number
of full-time equivalent residents in
such programs (before application of
weighting factors) of the entity as of
the most recent residency training year
ending before June 30, 1997, or, if
less, for any subsequent residency
training year that ends before the date
the entity makes application under this
paragraph.
(E) Applicable hold harmless percentage.--For
purposes of subparagraph (A), the ``applicable
hold harmless percentage'' for the--
(i) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
(ii) third such year, 75 percent,
(iii) fourth such year, 50 percent,
and
(iv) fifth such year, 25 percent.
(F) Penalty for noncompliance.--
(i) In general.--No payment may be
made under this paragraph to a hospital
for a residency training year if the
hospital has failed to reduce the
number of full-time equivalent
residents (in the manner required under
subparagraph (D)) to the number agreed
to by the Secretary and the qualifying
entity in approving the application
under this paragraph with respect to
such year.
(ii) Increase in number of residents
in subsequent years.--If payments are
made under this paragraph to a
hospital, and if the hospital increases
the number of full-time equivalent
residents above the number of such
residents permitted under the reduction
plan as of the completion of the plan,
then, as specified by the Secretary,
the entity is liable for repayment to
the Secretary of the total amounts paid
under this paragraph to the entity.
(G) Treatment of rotating residents.--In
applying this paragraph, the Secretary shall
establish rules regarding the counting of
residents who are assigned to institutions the
medical residency training programs in which
are not covered under approved applications
under this paragraph.
(7) Redistribution of unused resident positions.--
(A) Reduction in limit based on unused
positions.--
(i) Programs subject to reduction.--
(I) In general.--Except as
provided in subclause (II), if
a hospital's reference resident
level (specified in clause
(ii)) is less than the
otherwise applicable resident
limit (as defined in
subparagraph (C)(ii)),
effective for portions of cost
reporting periods occurring on
or after July 1, 2005, the
otherwise applicable resident
limit shall be reduced by 75
percent of the difference
between such otherwise
applicable resident limit and
such reference resident level.
(II) Exception for small
rural hospitals.--This
subparagraph shall not apply to
a hospital located in a rural
area (as defined in subsection
(d)(2)(D)(ii)) with fewer than
250 acute care inpatient beds.
(ii) Reference resident level.--
(I) In general.--Except as
otherwise provided in
subclauses (II) and (III), the
reference resident level
specified in this clause for a
hospital is the resident level
for the most recent cost
reporting period of the
hospital ending on or before
September 30, 2002, for which a
cost report has been settled
(or, if not, submitted (subject
to audit)), as determined by
the Secretary.
(II) Use of most recent
accounting period to recognize
expansion of existing
programs.--If a hospital
submits a timely request to
increase its resident level due
to an expansion of an existing
residency training program that
is not reflected on the most
recent settled cost report,
after audit and subject to the
discretion of the Secretary,
the reference resident level
for such hospital is the
resident level for the cost
reporting period that includes
July 1, 2003, as determined by
the Secretary.
(III) Expansions under newly
approved programs.--Upon the
timely request of a hospital,
the Secretary shall adjust the
reference resident level
specified under subclause (I)
or (II) to include the number
of medical residents that were
approved in an application for
a medical residency training
program that was approved by an
appropriate accrediting
organization (as determined by
the Secretary) before January
1, 2002, but which was not in
operation during the cost
reporting period used under
subclause (I) or (II), as the
case may be, as determined by
the Secretary.
(iii) Affiliation.--The provisions of
clause (i) shall be applied to
hospitals which are members of the same
affiliated group (as defined by the
Secretary under paragraph (4)(H)(ii))
as of July 1, 2003.
(B) Redistribution.--
(i) In general.--The Secretary is
authorized to increase the otherwise
applicable resident limit for each
qualifying hospital that submits a
timely application under this
subparagraph by such number as the
Secretary may approve for portions of
cost reporting periods occurring on or
after July 1, 2005. The aggregate
number of increases in the otherwise
applicable resident limits under this
subparagraph may not exceed the
Secretary's estimate of the aggregate
reduction in such limits attributable
to subparagraph (A).
(ii) Considerations in
redistribution.--In determining for
which hospitals the increase in the
otherwise applicable resident limit is
provided under clause (i), the
Secretary shall take into account the
demonstrated likelihood of the hospital
filling the positions within the first
3 cost reporting periods beginning on
or after July 1, 2005, made available
under this subparagraph, as determined
by the Secretary.
(iii) Priority for rural and small
urban areas.--In determining for which
hospitals and residency training
programs an increase in the otherwise
applicable resident limit is provided
under clause (i), the Secretary shall
distribute the increase to programs of
hospitals located in the following
priority order:
(I) First, to hospitals
located in rural areas (as
defined in subsection
(d)(2)(D)(ii)).
(II) Second, to hospitals
located in urban areas that are
not large urban areas (as
defined for purposes of
subsection (d)).
(III) Third, to other
hospitals in a State if the
residency training program
involved is in a specialty for
which there are not other
residency training programs in
the State.
Increases of residency limits within
the same priority category under this
clause shall be determined by the
Secretary.
(iv) Limitation.--In no case shall
more than 25 full-time equivalent
additional residency positions be made
available under this subparagraph with
respect to any hospital.
(v) Application of locality adjusted
national average per resident amount.--
With respect to additional residency
positions in a hospital attributable to
the increase provided under this
subparagraph, notwithstanding any other
provision of this subsection, the
approved FTE resident amount is deemed
to be equal to the locality adjusted
national average per resident amount
computed under paragraph (4)(E) for
that hospital.
(vi) Construction.--Nothing in this
subparagraph shall be construed as
permitting the redistribution of
reductions in residency positions
attributable to voluntary reduction
programs under paragraph (6), under a
demonstration project approved as of
October 31, 2003, under the authority
of section 402 of Public Law 90-248, or
as affecting the ability of a hospital
to establish new medical residency
training programs under paragraph
(4)(H).
(C) Resident level and limit defined.--In
this paragraph:
(i) Resident level.--The term
``resident level'' means, with respect
to a hospital, the total number of
full-time equivalent residents, before
the application of weighting factors
(as determined under paragraph (4)), in
the fields of allopathic and
osteopathic medicine for the hospital.
(ii) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph.
(D) Adjustment based on settled cost
report.--In the case of a hospital with a dual
accredited osteopathic and allopathic family
practice program for which--
(i) the otherwise applicable resident
limit was reduced under subparagraph
(A)(i)(I); and
(ii) such reduction was based on a
reference resident level that was
determined using a cost report and
where a revised or corrected notice of
program reimbursement was issued for
such cost report between September 1,
2006 and September 15, 2006, whether as
a result of an appeal or otherwise, and
the reference resident level under such
settled cost report is higher than the
level used for the reduction under
subparagraph (A)(i)(I);
the Secretary shall apply subparagraph
(A)(i)(I) using the higher resident reference
level and make any necessary adjustments to
such reduction. Any such necessary adjustments
shall be effective for portions of cost
reporting periods occurring on or after July 1,
2005.
(E) Judicial review.--There shall be no
administrative or judicial review under section
1869, 1878, or otherwise, with respect to
determinations made [under this this paragraph,
paragraph (8), or paragraph (4)(H)(vi).] under
this paragraph, paragraph (8), clause (i),
(ii), (iii), or (v) of paragraph (2)(F), or
clause (i) or (vi) of paragraph (4)(H).
(8) Distribution of additional residency positions.--
(A) Reductions in limit based on unused
positions.--
(i) In general.--Except as provided
in clause (ii), if a hospital's
reference resident level (as defined in
subparagraph (H)(i)) is less than the
otherwise applicable resident limit (as
defined in subparagraph (H)(iii)),
effective for portions of cost
reporting periods occurring on or after
July 1, 2011, the otherwise applicable
resident limit shall be reduced by 65
percent of the difference between such
otherwise applicable resident limit and
such reference resident level.
(ii) Exceptions.--This subparagraph
shall not apply to--
(I) a hospital located in a
rural area (as defined in
subsection (d)(2)(D)(ii)) with
fewer than 250 acute care
inpatient beds;
(II) a hospital that was part
of a qualifying entity which
had a voluntary residency
reduction plan approved under
paragraph (6)(B) or under the
authority of section 402 of
Public Law 90-248, if the
hospital demonstrates to the
Secretary that it has a
specified plan in place for
filling the unused positions by
not later than 2 years after
the date of enactment of this
paragraph; or
(III) a hospital described in
paragraph (4)(H)(v).
(B) Distribution.--
(i) In general.--The Secretary shall
increase the otherwise applicable
resident limit for each qualifying
hospital that submits an application
under this subparagraph by such number
as the Secretary may approve for
portions of cost reporting periods
occurring on or after July 1, 2011. The
aggregate number of increases in the
otherwise applicable resident limit
under this subparagraph shall be equal
to the aggregate reduction in such
limits attributable to subparagraph (A)
(as estimated by the Secretary).
(ii) Requirements.--Subject to clause
(iii), a hospital that receives an
increase in the otherwise applicable
resident limit under this subparagraph
shall ensure, during the 5-year period
beginning on the date of such increase,
that--
(I) the number of full-time
equivalent primary care
residents, as defined in
paragraph (5)(H) (as determined
by the Secretary), excluding
any additional positions under
subclause (II), is not less
than the average number of
full-time equivalent primary
care residents (as so
determined) during the 3 most
recent cost reporting periods
ending prior to the date of
enactment of this paragraph;
and
(II) not less than 75 percent
of the positions attributable
to such increase are in a
primary care or general surgery
residency (as determined by the
Secretary).
The Secretary may determine whether a
hospital has met the requirements under
this clause during such 5-year period
in such manner and at such time as the
Secretary determines appropriate,
including at the end of such 5-year
period.
(iii) Redistribution of positions if
hospital no longer meets certain
requirements.--In the case where the
Secretary determines that a hospital
described in clause (ii) does not meet
either of the requirements under
subclause (I) or (II) of such clause,
the Secretary shall--
(I) reduce the otherwise
applicable resident limit of
the hospital by the amount by
which such limit was increased
under this paragraph; and
(II) provide for the
distribution of positions
attributable to such reduction
in accordance with the
requirements of this paragraph.
(C) Considerations in redistribution.--In
determining for which hospitals the increase in
the otherwise applicable resident limit is
provided under subparagraph (B), the Secretary
shall take into account--
(i) the demonstration likelihood of
the hospital filling the positions made
available under this paragraph within
the first 3 cost reporting periods
beginning on or after July 1, 2011, as
determined by the Secretary; and
(ii) whether the hospital has an
accredited rural training track (as
described in paragraph (4)(H)(iv)).
(D) Priority for certain areas.--In
determining for which hospitals the increase in
the otherwise applicable resident limit is
provided under subparagraph (B), subject to
subparagraph (E), the Secretary shall
distribute the increase to hospitals based on
the following factors:
(i) Whether the hospital is located
in a State with a resident-to-
population ratio in the lowest quartile
(as determined by the Secretary).
(ii) Whether the hospital is located
in a State, a territory of the United
States, or the District of Columbia
that is among the top 10 States,
territories, or Districts in terms of
the ratio of--
(I) the total population of
the State, territory, or
District living in an area
designated (under such section
332(a)(1)(A)) as a health
professional shortage area (as
of the date of enactment of
this paragraph); to
(II) the total population of
the State, territory, or
District (as determined by the
Secretary based on the most
recent available population
data published by the Bureau of
the Census).
(iii) Whether the hospital is located
in a rural area (as defined in
subsection (d)(2)(D)(ii)).
(E) Reservation of positions for certain
hospitals.--
(i) In general.--Subject to clause
(ii), the Secretary shall reserve the
positions available for distribution
under this paragraph as follows:
(I) 70 percent of such
positions for distribution to
hospitals described in clause
(i) of subparagraph (D).
(II) 30 percent of such
positions for distribution to
hospitals described in clause
(ii) and (iii) of such
subparagraph.
(ii) Exception if positions not
redistributed by july 1, 2011.--In the
case where the Secretary does not
distribute positions to hospitals in
accordance with clause (i) by July 1,
2011, the Secretary shall distribute
such positions to other hospitals in
accordance with the considerations
described in subparagraph (C) and the
priority described in subparagraph (D).
(F) Limitation.--A hospital may not receive
more than 75 full-time equivalent additional
residency positions under this paragraph.
(G) Application of per resident amounts for
primary care and nonprimary care.--With respect
to additional residency positions in a hospital
attributable to the increase provided under
this paragraph, the approved FTE per resident
amounts are deemed to be equal to the hospital
per resident amounts for primary care and
nonprimary care computed under paragraph (2)(D)
for that hospital.
(H) Definitions.--In this paragraph:
(i) Reference resident level.--The
term ``reference resident level''
means, with respect to a hospital, the
highest resident level for any of the 3
most recent cost reporting periods
(ending before the date of the
enactment of this paragraph) of the
hospital for which a cost report has
been settled (or, if not, submitted
(subject to audit)), as determined by
the Secretary.
(ii) Resident level.--The term
``resident level'' has the meaning
given such term in paragraph (7)(C)(i).
(iii) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph but taking into account
paragraph (7)(A).
(I) Affiliation.--The provisions of this
paragraph shall be applied to hospitals which
are members of the same affiliated group (as
defined by the Secretary under paragraph
(4)(H)(ii)) and the reference resident level
for each such hospital shall be the reference
resident level with respect to the cost
reporting period that results in the smallest
difference between the reference resident level
and the otherwise applicable resident limit.
(i) Avoiding Duplicative Payments to Hospitals Participating
in Rural Demonstration Programs.--The Secretary shall reduce
any payment amounts otherwise determined under this section to
the extent necessary to avoid duplication of any payment made
under section 4005(e) of the Omnibus Budget Reconciliation Act
of 1987.
(j) Prospective Payment for Inpatient Rehabilitation
Services.--
(1) Payment during transition period.--
(A) In general.--Notwithstanding section
1814(b), but subject to the provisions of
section 1813, the amount of the payment with
respect to the operating and capital costs of
inpatient hospital services of a rehabilitation
hospital or a rehabilitation unit (in this
subsection referred to as a ``rehabilitation
facility''), other than a facility making an
election under subparagraph (F) in a cost
reporting period beginning on or after October
1, 2000, and before October 1, 2002, is equal
to the sum of--
(i) the TEFRA percentage (as defined
in subparagraph (C)) of the amount that
would have been paid under part A with
respect to such costs if this
subsection did not apply, and
(ii) the prospective payment
percentage (as defined in subparagraph
(C)) of the product of (I) the per unit
payment rate established under this
subsection for the fiscal year in which
the payment unit of service occurs, and
(II) the number of such payment units
occurring in the cost reporting period.
(B) Fully implemented system.--
Notwithstanding section 1814(b), but subject to
the provisions of section 1813, the amount of
the payment with respect to the operating and
capital costs of inpatient hospital services of
a rehabilitation facility for a payment unit in
a cost reporting period beginning on or after
October 1, 2002, or, in the case of a facility
making an election under subparagraph (F), for
any cost reporting period described in such
subparagraph, is equal to the per unit payment
rate established under this subsection for the
fiscal year in which the payment unit of
service occurs.
(C) TEFRA and prospective payment percentages
specified.--For purposes of subparagraph (A),
for a cost reporting period beginning--
(i) on or after October 1, 2000, and
before October 1, 2001, the ``TEFRA
percentage'' is 66\2/3\ percent and the
``prospective payment percentage'' is
33\1/3\ percent; and
(ii) on or after October 1, 2001, and
before October 1, 2002, the ``TEFRA
percentage'' is 33\1/3\ percent and the
``prospective payment percentage'' is
66\2/3\ percent.
(D) Payment unit.--For purposes of this
subsection, the term ``payment unit'' means a
discharge.
(E) Construction relating to transfer
authority.--Nothing in this subsection shall be
construed as preventing the Secretary from
providing for an adjustment to payments to take
into account the early transfer of a patient
from a rehabilitation facility to another site
of care.
(F) Election to apply full prospective
payment system.--A rehabilitation facility may
elect, not later than 30 days before its first
cost reporting period for which the payment
methodology under this subsection applies to
the facility, to have payment made to the
facility under this subsection under the
provisions of subparagraph (B) (rather than
subparagraph (A)) for each cost reporting
period to which such payment methodology
applies.
(2) Patient case mix groups.--
(A) Establishment.--The Secretary shall
establish--
(i) classes of patient discharges of
rehabilitation facilities by
functional-related groups (each in this
subsection referred to as a ``case mix
group''), based on impairment, age,
comorbidities, and functional
capability of the patient and such
other factors as the Secretary deems
appropriate to improve the explanatory
power of functional independence
measure-function related groups; and
(ii) a method of classifying specific
patients in rehabilitation facilities
within these groups.
(B) Weighting factors.--For each case mix
group the Secretary shall assign an appropriate
weighting which reflects the relative facility
resources used with respect to patients
classified within that group compared to
patients classified within other groups.
(C) Adjustments for case mix.--
(i) In general.--The Secretary shall
from time to time adjust the
classifications and weighting factors
established under this paragraph as
appropriate to reflect changes in
treatment patterns, technology, case
mix, number of payment units for which
payment is made under this title, and
other factors which may affect the
relative use of resources. Such
adjustments shall be made in a manner
so that changes in aggregate payments
under the classification system are a
result of real changes and are not a
result of changes in coding that are
unrelated to real changes in case mix.
(ii) Adjustment.--Insofar as the
Secretary determines that such
adjustments for a previous fiscal year
(or estimates that such adjustments for
a future fiscal year) did (or are
likely to) result in a change in
aggregate payments under the
classification system during the fiscal
year that are a result of changes in
the coding or classification of
patients that do not reflect real
changes in case mix, the Secretary
shall adjust the per payment unit
payment rate for subsequent years so as
to eliminate the effect of such coding
or classification changes.
(D) Data collection.--The Secretary is
authorized to require rehabilitation facilities
that provide inpatient hospital services to
submit such data as the Secretary deems
necessary to establish and administer the
prospective payment system under this
subsection.
(3) Payment rate.--
(A) In general.--The Secretary shall
determine a prospective payment rate for each
payment unit for which such rehabilitation
facility is entitled to receive payment under
this title. Subject to subparagraph (B), such
rate for payment units occurring during a
fiscal year shall be based on the average
payment per payment unit under this title for
inpatient operating and capital costs of
rehabilitation facilities using the most recent
data available (as estimated by the Secretary
as of the date of establishment of the system)
adjusted--
(i) by updating such per-payment-unit
amount to the fiscal year involved by
the weighted average of the applicable
percentage increases provided under
subsection (b)(3)(B)(ii) (for cost
reporting periods beginning during the
fiscal year) covering the period from
the midpoint of the period for such
data through the midpoint of fiscal
year 2000 and by an increase factor
(described in subparagraph (C))
specified by the Secretary for
subsequent fiscal years up to the
fiscal year involved;
(ii) by reducing such rates by a
factor equal to the proportion of
payments under this subsection (as
estimated by the Secretary) based on
prospective payment amounts which are
additional payments described in
paragraph (4) (relating to outlier and
related payments);
(iii) for variations among
rehabilitation facilities by area under
paragraph (6);
(iv) by the weighting factors
established under paragraph (2)(B); and
(v) by such other factors as the
Secretary determines are necessary to
properly reflect variations in
necessary costs of treatment among
rehabilitation facilities.
(B) Budget neutral rates.--The Secretary
shall establish the prospective payment amounts
under this subsection for payment units during
fiscal years 2001 and 2002 at levels such that,
in the Secretary's estimation, the amount of
total payments under this subsection for such
fiscal years (including any payment adjustments
pursuant to paragraphs (4) and (6) but not
taking into account any payment adjustment
resulting from an election permitted under
paragraph (1)(F)) shall be equal to 98 percent
for fiscal year 2001 and 100 percent for fiscal
year 2002 of the amount of payments that would
have been made under this title during the
fiscal years for operating and capital costs of
rehabilitation facilities had this subsection
not been enacted. In establishing such payment
amounts, the Secretary shall consider the
effects of the prospective payment system
established under this subsection on the total
number of payment units from rehabilitation
facilities and other factors described in
subparagraph (A).
(C) Increase factor.--
(i) In general.--For purposes of this
subsection for payment units in each
fiscal year (beginning with fiscal year
2001), the Secretary shall establish an
increase factor subject to clauses (ii)
and (iii). Such factor shall be based
on an appropriate percentage increase
in a market basket of goods and
services comprising services for which
payment is made under this subsection,
which may be the market basket
percentage increase described in
subsection (b)(3)(B)(iii). The increase
factor to be applied under this
subparagraph for each of fiscal years
2008 and 2009 shall be 0 percent.
(ii) Productivity and other
adjustment.--Subject to clause (iii),
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.
(iii) Special rule for fiscal year
2018.--The increase factor to be
applied under this subparagraph for
fiscal year 2018, after the application
of clause (ii), shall be 1 percent.
(D) Other adjustment.--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;
(ii) for each of fiscal years 2012
and 2013, 0.1 percentage point;
(iii) for fiscal year 2014, 0.3
percentage point;
(iv) for each of fiscal years 2015
and 2016, 0.2 percentage point; and
(v) for each of fiscal years 2017,
2018, and 2019, 0.75 percentage point.
(4) Outlier and special payments.--
(A) Outliers.--
(i) In general.--The Secretary may
provide for an additional payment to a
rehabilitation facility for patients in
a case mix group, based upon the
patient being classified as an outlier
based on an unusual length of stay,
costs, or other factors specified by
the Secretary.
(ii) Payment based on marginal cost
of care.--The amount of such additional
payment under clause (i) shall be
determined by the Secretary and shall
approximate the marginal cost of care
beyond the cutoff point applicable
under clause (i).
(iii) Total payments.--The total
amount of the additional payments made
under this subparagraph for payment
units in a fiscal year may not exceed 5
percent of the total payments projected
or estimated to be made based on
prospective payment rates for payment
units in that year.
(B) Adjustment.--The Secretary may provide
for such adjustments to the payment amounts
under this subsection as the Secretary deems
appropriate to take into account the unique
circumstances of rehabilitation facilities
located in Alaska and Hawaii.
(5) Publication.--The Secretary shall provide for
publication in the Federal Register, on or before
August 1 before each fiscal year (beginning with fiscal
year 2001), of the classification and weighting factors
for case mix groups under paragraph (2) for such fiscal
year and a description of the methodology and data used
in computing the prospective payment rates under this
subsection for that fiscal year.
(6) Area wage adjustment.--The Secretary shall adjust
the proportion (as estimated by the Secretary from time
to time) of rehabilitation facilities' costs which are
attributable to wages and wage-related costs, of the
prospective payment rates computed under paragraph (3)
for area differences in wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
rehabilitation facility compared to the national
average wage level for such facilities. Not later than
October 1, 2001 (and at least every 36 months
thereafter), the Secretary shall update the factor
under the preceding sentence on the basis of
information available to the Secretary (and updated as
appropriate) of the wages and wage-related costs
incurred in furnishing rehabilitation services. Any
adjustments or updates made under this paragraph for a
fiscal year shall be made in a manner that assures that
the aggregated payments under this subsection in the
fiscal year are not greater or less than those that
would have been made in the year without such
adjustment.
(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 subparagraphs (C) and
(F) with respect to such a fiscal year,
after determining the increase factor
described in paragraph (3)(C), and
after application of subparagraphs
(C)(iii) and (D) of paragraph (3), 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.--Subject to
subparagraph (G), for fiscal year 2014 and each
subsequent fiscal 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.--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.--
The Secretary shall establish procedures for
making data submitted under subparagraph (C)
and subparagraph (F)(i) available to the
public. Such 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. 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.
(F) Submission of additional data.--
(i) In general.--For the fiscal year
beginning on the specified application
date (as defined in subsection
(a)(2)(E) of section 1899B), as
applicable with respect to inpatient
rehabilitation facilities and quality
measures under subsection (c)(1) of
such section and measures under
subsection (d)(1) of such section, and
each subsequent fiscal year, in
addition to such data on the quality
measures described in subparagraph (C),
each rehabilitation facility shall
submit to the Secretary data on the
quality measures under such subsection
(c)(1) and any necessary data specified
by the Secretary under such subsection
(d)(1).
(ii) Standardized patient assessment
data.--For fiscal year 2019 and each
subsequent fiscal year, in addition to
such data described in clause (i), each
rehabilitation facility shall submit to
the Secretary standardized patient
assessment data required under
subsection (b)(1) of section 1899B.
(iii) Submission.--Such data shall be
submitted in the form and manner, and
at the time, specified by the Secretary
for purposes of this subparagraph.
(G) Non-duplication.--To the extent data
submitted under subparagraph (F) duplicates
other data required to be submitted under
subparagraph (C), the submission of such data
under subparagraph (F) shall be in lieu of the
submission of such data under subparagraph (C).
The previous sentence shall not apply insofar
as the Secretary determines it is necessary to
avoid a delay in the implementation of section
1899B, taking into account the different
specified application dates under subsection
(a)(2)(E) of such section.
(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of the establishment of--
(A) case mix groups, of the methodology for
the classification of patients within such
groups, and of the appropriate weighting
factors thereof under paragraph (2),
(B) the prospective payment rates under
paragraph (3),
(C) outlier and special payments under
paragraph (4), and
(D) area wage adjustments under paragraph
(6).
(k) Payment to Nonhospital Providers.--
(1) In general.--For cost reporting periods beginning
on or after October 1, 1997, the Secretary may
establish rules for payment to qualified nonhospital
providers for their direct costs of medical education,
if those costs are incurred in the operation of an
approved medical residency training program described
in subsection (h). Such rules shall specify the
amounts, form, and manner in which such payments will
be made and the portion of such payments that will be
made from each of the trust funds under this title.
(2) Qualified nonhospital providers.--For purposes of
this subsection, the term ``qualified nonhospital
providers'' means--
(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
(B) a rural health clinic, as defined in
section 1861(aa)(2);
(C) Medicare+Choice organizations; and
(D) such other providers (other than
hospitals) as the Secretary determines to be
appropriate.
(l) Payment for Nursing and Allied Health Education for
Managed Care Enrollees.--
(1) In general.--For portions of cost reporting
periods occurring in a year (beginning with 2000), the
Secretary shall provide for an additional payment
amount for any hospital that receives payments for the
costs of approved educational activities for nurse and
allied health professional training under section
1861(v)(1).
(2) Payment amount.--The additional payment amount
under this subsection for each hospital for portions of
cost reporting periods occurring in a year shall be an
amount specified by the Secretary in a manner
consistent with the following:
(A) Determination of managed care enrollee
payment ratio for graduate medical education
payments.--The Secretary shall estimate the
ratio of payments for all hospitals for
portions of cost reporting periods occurring in
the year under subsection (h)(3)(D) to total
direct graduate medical education payments
estimated for such portions of periods under
subsection (h)(3).
(B) Application to fee-for-service nursing
and allied health education payments.--Such
ratio shall be applied to the Secretary's
estimate of total payments for nursing and
allied health education determined under
section 1861(v) for portions of cost reporting
periods occurring in the year to determine a
total amount of additional payments for nursing
and allied health education to be distributed
to hospitals under this subsection for portions
of cost reporting periods occurring in the
year; except that in no case shall such total
amount exceed $60,000,000 in any year.
(C) Application to hospital.--The amount of
payment under this subsection to a hospital for
portions of cost reporting periods occurring in
a year is equal to the total amount of payments
determined under subparagraph (B) for the year
multiplied by the ratio of--
(i) the product of (I) the
Secretary's estimate of the ratio of
the amount of payments made under
section 1861(v) to the hospital for
nursing and allied health education
activities for the hospital's cost
reporting period ending in the second
preceding fiscal year, to the
hospital's total inpatient days for
such period, and (II) the total number
of inpatient days (as established by
the Secretary) for such period which
are attributable to services furnished
to individuals who are enrolled under a
risk sharing contract with an eligible
organization under section 1876 and who
are entitled to benefits under part A
or who are enrolled with a
Medicare+Choice organization under part
C; to
(ii) the sum of the products
determined under clause (i) for such
cost reporting periods.
(m) Prospective Payment for Long-Term Care 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 a long-term care hospital
described in subsection (d)(1)(B)(iv), see section 123
of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 and section 307(b) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000.
(2) Update for rate year 2008.--In implementing the
system described in paragraph (1) for discharges
occurring during the rate year ending in 2008 for a
hospital, the base rate for such discharges for the
hospital shall be the same as the base rate for
discharges for the hospital occurring during the rate
year ending in 2007.
(3) Implementation for rate year 2010 and subsequent
years.--
(A) In general.--Subject to subparagraph (C),
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.
(C) Additional special rule.--For fiscal year
2018, the annual update under subparagraph (A)
for the fiscal year, after application of
clauses (i) and (ii) of subparagraph (A), shall
be 1 percent.
(4) Other adjustment.--For purposes of paragraph
(3)(A)(ii), the other adjustment described in this
paragraph is--
(A) for rate year 2010, 0.25 percentage
point;
(B) for rate year 2011, 0.50 percentage
point;
(C) for each of the rate years beginning in
2012 and 2013, 0.1 percentage point;
(D) for rate year 2014, 0.3 percentage point;
(E) for each of rate years 2015 and 2016, 0.2
percentage point; and
(F) for each of rate years 2017, 2018, and
2019, 0.75 percentage point.
(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
subparagraphs (C) and (F) 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.--Subject to
subparagraph (G), 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.
(iv) Additional quality measures.--
Not later than October 1, 2015, the
Secretary shall establish a functional
status quality measure for change in
mobility among inpatients requiring
ventilator support.
(E) Public availability of data submitted.--
The Secretary shall establish procedures for
making data submitted under subparagraph (C)
and subparagraph (F)(i) available to the
public. Such 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. 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.
(F) Submission of additional data.--
(i) In general.--For the rate year
beginning on the specified application
date (as defined in subsection
(a)(2)(E) of section 1899B), as
applicable with respect to long-term
care hospitals and quality measures
under subsection (c)(1) of such section
and measures under subsection (d)(1) of
such section, and each subsequent rate
year, in addition to the data on the
quality measures described in
subparagraph (C), each long-term care
hospital (other than a hospital
classified under subsection
(d)(1)(B)(vi)) shall submit to the
Secretary data on the quality measures
under such subsection (c)(1) and any
necessary data specified by the
Secretary under such subsection (d)(1).
(ii) Standardized patient assessment
data.--For rate year 2019 and each
subsequent rate year, in addition to
such data described in clause (i), each
long-term care hospital (other than a
hospital classified under subsection
(d)(1)(B)(vi)) shall submit to the
Secretary standardized patient
assessment data required under
subsection (b)(1) of section 1899B.
(iii) Submission.--Such data shall be
submitted in the form and manner, and
at the time, specified by the Secretary
for purposes of this subparagraph.
(G) Non-duplication.--To the extent data
submitted under subparagraph (F) duplicates
other data required to be submitted under
subparagraph (C), the submission of such data
under subparagraph (F) shall be in lieu of the
submission of such data under subparagraph (C).
The previous sentence shall not apply insofar
as the Secretary determines it is necessary to
avoid a delay in the implementation of section
1899B, taking into account the different
specified application dates under subsection
(a)(2)(E) of such section.
(6) Application of site neutral ipps payment rate in
certain cases.--
(A) General application of site neutral ipps
payment amount for discharges failing to meet
applicable criteria.--
(i) In general.--For a discharge in
cost reporting periods beginning on or
after October 1, 2015, except as
provided in clause (ii) and
subparagraphs (C), (E), (F), and (G),
payment under this title to a long-term
care hospital for inpatient hospital
services shall be made at the
applicable site neutral payment rate
(as defined in subparagraph (B)).
(ii) Exception for certain discharges
meeting criteria.--Clause (i) shall not
apply (and payment shall be made to a
long-term care hospital without regard
to this paragraph) for a discharge if--
(I) the discharge meets the
ICU criterion under clause
(iii) or the ventilator
criterion under clause (iv);
and
(II) the discharge does not
have a principal diagnosis
relating to a psychiatric
diagnosis or to rehabilitation.
(iii) Intensive care unit (icu)
criterion.--
(I) In general.--The
criterion specified in this
clause (in this paragraph
referred to as the ``ICU
criterion''), for a discharge
from a long-term care hospital,
is that the stay in the long-
term care hospital ending with
such discharge was immediately
preceded by a discharge from a
stay in a subsection (d)
hospital that included at least
3 days in an intensive care
unit (ICU), as determined by
the Secretary.
(II) Determining icu days.--
In determining intensive care
unit days under subclause (I),
the Secretary shall use data
from revenue center codes 020x
or 021x (or such successor
codes as the Secretary may
establish).
(iv) Ventilator criterion.--The
criterion specified in this clause (in
this paragraph referred to as the
``ventilator criterion''), for a
discharge from a long-term care
hospital, is that--
(I) the stay in the long-term
care hospital ending with such
discharge was immediately
preceded by a discharge from a
stay in a subsection (d)
hospital; and
(II) the individual
discharged was assigned to a
Medicare-Severity-Long-Term-
Care-Diagnosis-Related-Group
(MS-LTC-DRG) based on the
receipt of ventilator services
of at least 96 hours.
(B) Applicable site neutral payment rate
defined.--
(i) In general.--In this paragraph,
the term ``applicable site neutral
payment rate'' means--
(I) for discharges in cost
reporting periods beginning
during fiscal years 2016
through 2019, the blended
payment rate specified in
clause (iii); and
(II) for discharges in cost
reporting periods beginning
during fiscal year 2020 or a
subsequent fiscal year, the
site neutral payment rate (as
defined in clause (ii)).
(ii) Site neutral payment rate
defined.--Subject to clause (iv), in
this paragraph, the term ``site neutral
payment rate'' means the lower of--
(I) the IPPS comparable per
diem amount determined under
paragraph (d)(4) of section
412.529 of title 42, Code of
Federal Regulations, including
any applicable outlier payments
under section 412.525 of such
title; or
(II) 100 percent of the
estimated cost for the services
involved.
(iii) Blended payment rate.--The
blended payment rate specified in this
clause, for a long-term care hospital
for inpatient hospital services for a
discharge, is comprised of--
(I) half of the site neutral
payment rate (as defined in
clause (ii)) for the discharge;
and
(II) half of the payment rate
that would otherwise be
applicable to such discharge
without regard to this
paragraph, as determined by the
Secretary.
(iv) Adjustment.--For each of fiscal
years 2018 through 2026, the amount
that would otherwise apply under clause
(ii)(I) for the year (determined
without regard to this clause) shall be
reduced by 4.6 percent.
(C) Limiting payment for all hospital
discharges to site neutral payment rate for
hospitals failing to meet applicable ltch
discharge thresholds.--
(i) Notice of ltch discharge payment
percentage.--For cost reporting periods
beginning during or after fiscal year
2016, the Secretary shall inform each
long-term care hospital of its LTCH
discharge payment percentage (as
defined in clause (iv)) for such
period.
(ii) Limitation.--For cost reporting
periods beginning during or after
fiscal year 2020, if the Secretary
determines for a long-term care
hospital that its LTCH discharge
payment percentage for the period is
not at least 50 percent--
(I) the Secretary shall
inform the hospital of such
fact; and
(II) subject to clause (iii),
for all discharges in the
hospital in each succeeding
cost reporting period, the
payment amount under this
subsection shall be the payment
amount that would apply under
subsection (d) for the
discharge if the hospital were
a subsection (d) hospital.
(iii) Process for reinstatement.--The
Secretary shall establish a process
whereby a long-term care hospital may
seek to and have the provisions of
subclause (II) of clause (ii)
discontinued with respect to that
hospital.
(iv) LTCH discharge payment
percentage.--In this subparagraph, the
term ``LTCH discharge payment
percentage'' means, with respect to a
long-term care hospital for a cost
reporting period beginning during or
after fiscal year 2020, the ratio
(expressed as a percentage) of--
(I) the number of Medicare
fee-for-service discharges for
such hospital and period for
which payment is not made at
the site neutral payment rate,
to
(II) the total number of
Medicare fee-for-service
discharges for such hospital
and period.
(D) Inclusion of subsection (d) puerto rico
hospitals.--In this paragraph, any reference in
this paragraph to a subsection (d) hospital
shall be deemed to include a reference to a
subsection (d) Puerto Rico hospital.
(E) Temporary exception for certain severe
wound discharges from certain long-term care
hospitals.--
(i) In general.--In the case of a
discharge occurring prior to January 1,
2017, subparagraph (A)(i) shall not
apply (and payment shall be made to a
long-term care hospital without regard
to this paragraph) if such discharge--
(I) is from a long-term care
hospital that is--
(aa) identified by
the last sentence of
subsection (d)(1)(B);
and
(bb) located in a
rural area (as defined
in subsection
(d)(2)(D)) or treated
as being so located
pursuant to subsection
(d)(8)(E); and
(II) the individual
discharged has a severe wound.
(ii) Severe wound defined.--In this
subparagraph, the term ``severe wound''
means a stage 3 wound, stage 4 wound,
unstageable wound, non-healing surgical
wound, infected wound, fistula,
osteomyelitis, or wound with morbid
obesity, as identified in the claim
from the long-term care hospital.
(F) Temporary exception for certain spinal
cord specialty hospitals.--For discharges in
cost reporting periods beginning during fiscal
years 2018 and 2019, subparagraph (A)(i) shall
not apply (and payment shall be made to a long-
term care hospital without regard to this
paragraph) if such discharge is from a long-
term care hospital that meets each of the
following requirements:
(i) Not-for-profit.--The long-term
care hospital was a not-for-profit
long-term care hospital on June 1,
2014, as determined by cost report
data.
(ii) Primarily providing treatment
for catastrophic spinal cord or
acquired brain injuries or other
paralyzing neuromuscular conditions.--
Of the discharges in calendar year 2013
from the long-term care hospital for
which payment was made under this
section, at least 50 percent were
classified under MS-LTCH-DRGs 28, 29,
52, 57, 551, 573, and 963.
(iii) Significant out-of-state
admissions.--
(I) In general.--The long-
term care hospital discharged
inpatients (including both
individuals entitled to, or
enrolled for, benefits under
this title and individuals not
so entitled or enrolled) during
fiscal year 2014 who had been
admitted from at least 20 of
the 50 States, determined by
the States of residency of such
inpatients and based on such
data submitted by the hospital
to the Secretary as the
Secretary may require.
(II) Implementation.--
Notwithstanding any other
provision of law, the Secretary
may implement subclause (I) by
program instruction or
otherwise.
(III) Non-application of
paperwork reduction act.--
Chapter 35 of title 44, United
States Code, shall not apply to
data collected under this
clause.
(G) Additional temporary exception for
certain severe wound discharges from certain
long-term care hospitals.--
(i) In general.--For a discharge
occurring in a cost reporting period
beginning during fiscal year 2018,
subparagraph (A)(i) shall not apply
(and payment shall be made to a long-
term care hospital without regard to
this paragraph) if such discharge--
(I) is from a long-term care
hospital identified by the last
sentence of subsection
(d)(1)(B);
(II) is classified under MS-
LTCH-DRG 602, 603, 539, or 540;
and
(III) is with respect to an
individual treated by a long-
term care hospital for a severe
wound.
(ii) Severe wound defined.--In this
subparagraph, the term ``severe wound''
means a wound which is a stage 3 wound,
stage 4 wound, unstageable wound, non-
healing surgical wound, or fistula as
identified in the claim from the long-
term care hospital.
(iii) Wound defined.--In this
subparagraph, the term ``wound'' means
an injury involving division of tissue
or rupture of the integument or mucous
membrane with exposure to the external
environment.
(7) Treatment of high cost outlier payments.--
(A) Adjustment to the standard federal
payment rate for estimated high cost outlier
payments.--Under the system described in
paragraph (1), for fiscal years beginning on or
after October 1, 2017, the Secretary shall
reduce the standard Federal payment rate as if
the estimated aggregate amount of high cost
outlier payments for standard Federal payment
rate discharges for each such fiscal year would
be equal to 8 percent of estimated aggregate
payments for standard Federal payment rate
discharges for each such fiscal year.
(B) Limitation on high cost outlier payment
amounts.--Notwithstanding subparagraph (A), the
Secretary shall set the fixed loss amount for
high cost outlier payments such that the
estimated aggregate amount of high cost outlier
payments made for standard Federal payment rate
discharges for fiscal years beginning on or
after October 1, 2017, shall be equal to
99.6875 percent of 8 percent of estimated
aggregate payments for standard Federal payment
rate discharges for each such fiscal year.
(C) Waiver of budget neutrality.--Any
reduction in payments resulting from the
application of subparagraph (B) shall not be
taken into account in applying any budget
neutrality provision under such system.
(D) No effect on site neutral high cost
outlier payment rate.--This paragraph shall not
apply with respect to the computation of the
applicable site neutral payment rate under
paragraph (6).
(n) Incentives for Adoption and Meaningful Use of Certified
EHR Technology.--
(1) In general.--Subject to the succeeding provisions
of this subsection, with respect to inpatient hospital
services furnished by an eligible hospital during a
payment year (as defined in paragraph (2)(G)), if the
eligible hospital is a meaningful EHR user (as
determined under paragraph (3)) for the EHR reporting
period with respect to such year, in addition to the
amount otherwise paid under this section, there also
shall be paid to the eligible hospital, from the
Federal Hospital Insurance Trust Fund established under
section 1817, an amount equal to the applicable amount
specified in paragraph (2)(A) for the hospital for such
payment year.
(2) Payment amount.--
(A) In general.--Subject to the succeeding
subparagraphs of this paragraph, the applicable
amount specified in this subparagraph for an
eligible hospital for a payment year is equal
to the product of the following:
(i) Initial amount.--The sum of--
(I) the base amount specified
in subparagraph (B); plus
(II) the discharge related
amount specified in
subparagraph (C) for a 12-month
period selected by the
Secretary with respect to such
payment year.
(ii) Medicare share.--The Medicare
share as specified in subparagraph (D)
for the eligible hospital for a period
selected by the Secretary with respect
to such payment year.
(iii) Transition factor.--The
transition factor specified in
subparagraph (E) for the eligible
hospital for the payment year.
(B) Base amount.--The base amount specified
in this subparagraph is $2,000,000.
(C) Discharge related amount.--The discharge
related amount specified in this subparagraph
for a 12-month period selected by the Secretary
shall be determined as the sum of the amount,
estimated based upon total discharges for the
eligible hospital (regardless of any source of
payment) for the period, for each discharge up
to the 23,000th discharge as follows:
(i) For the first through 1,149th
discharge, $0.
(ii) For the 1,150th through the
23,000th discharge, $200.
(iii) For any discharge greater than
the 23,000th, $0.
(D) Medicare share.--The Medicare share
specified under this subparagraph for an
eligible hospital for a period selected by the
Secretary for a payment year is equal to the
fraction--
(i) the numerator of which is the sum
(for such period and with respect to
the eligible hospital) of--
(I) the estimated number of
inpatient-bed-days (as
established by the Secretary)
which are attributable to
individuals with respect to
whom payment may be made under
part A; and
(II) the estimated number of
inpatient-bed-days (as so
established) which are
attributable to individuals who
are enrolled with a Medicare
Advantage organization under
part C; and
(ii) the denominator of which is the
product of--
(I) the estimated total
number of inpatient-bed-days
with respect to the eligible
hospital during such period;
and
(II) the estimated total
amount of the eligible
hospital's charges during such
period, not including any
charges that are attributable
to charity care (as such term
is used for purposes of
hospital cost reporting under
this title), divided by the
estimated total amount of the
hospital's charges during such
period.
Insofar as the Secretary determines that data
are not available on charity care necessary to
calculate the portion of the formula specified
in clause (ii)(II), the Secretary shall use
data on uncompensated care and may adjust such
data so as to be an appropriate proxy for
charity care including a downward adjustment to
eliminate bad debt data from uncompensated care
data. In the absence of the data necessary,
with respect to a hospital, for the Secretary
to compute the amount described in clause
(ii)(II), the amount under such clause shall be
deemed to be 1. In the absence of data, with
respect to a hospital, necessary to compute the
amount described in clause (i)(II), the amount
under such clause shall be deemed to be 0.
(E) Transition factor specified.--
(i) In general.--Subject to clause
(ii), the transition factor specified
in this subparagraph for an eligible
hospital for a payment year is as
follows:
(I) For the first payment
year for such hospital, 1.
(II) For the second payment
year for such hospital, \3/4\.
(III) For the third payment
year for such hospital, \1/2\.
(IV) For the fourth payment
year for such hospital, \1/4\.
(V) For any succeeding
payment year for such hospital,
0.
(ii) Phase down for eligible
hospitals first adopting ehr after
2013.--If the first payment year for an
eligible hospital is after 2013, then
the transition factor specified in this
subparagraph for a payment year for
such hospital is the same as the amount
specified in clause (i) for such
payment year for an eligible hospital
for which the first payment year is
2013. If the first payment year for an
eligible hospital is after 2015 then
the transition factor specified in this
subparagraph for such hospital and for
such year and any subsequent year shall
be 0.
(F) Form of payment.--The payment under this
subsection for a payment year may be in the
form of a single consolidated payment or in the
form of such periodic installments as the
Secretary may specify.
(G) Payment year defined.--
(i) In general.--For purposes of this
subsection, the term ``payment year''
means a fiscal year beginning with
fiscal year 2011.
(ii) First, second, etc. payment
year.--The term ``first payment year''
means, with respect to inpatient
hospital services furnished by an
eligible hospital, the first fiscal
year for which an incentive payment is
made for such services under this
subsection. The terms ``second payment
year'', ``third payment year'', and
``fourth payment year'' mean, with
respect to an eligible hospital, each
successive year immediately following
the first payment year for that
hospital.
(3) Meaningful ehr user.--
(A) In general.--For purposes of paragraph
(1), an eligible hospital shall be treated as a
meaningful EHR user for an EHR reporting period
for a payment year (or, for purposes of
subsection (b)(3)(B)(ix), for an EHR reporting
period under such subsection for a fiscal year)
if each of the following requirements are met:
(i) Meaningful use of certified ehr
technology.--The eligible hospital
demonstrates to the satisfaction of the
Secretary, in accordance with
subparagraph (C)(i), that during such
period the hospital is using certified
EHR technology in a meaningful manner.
(ii) Information exchange.--The
eligible hospital demonstrates to the
satisfaction of the Secretary, in
accordance with subparagraph (C)(i),
that during such period such certified
EHR technology is connected in a manner
that provides, in accordance with law
and standards applicable to the
exchange of information, for the
electronic exchange of health
information to improve the quality of
health care, such as promoting care
coordination, and the hospital
demonstrates (through a process
specified by the Secretary, such as the
use of an attestation) that the
hospital has not knowingly and
willfully taken action (such as to
disable functionality) to limit or
restrict the compatibility or
interoperability of the certified EHR
technology.
(iii) Reporting on measures using
ehr.--Subject to subparagraph (B)(ii)
and using such certified EHR
technology, the eligible hospital
submits information for such period, in
a form and manner specified by the
Secretary, on such clinical quality
measures and such other measures as
selected by the Secretary under
subparagraph (B)(i).
The Secretary shall seek to improve the use of
electronic health records and health care
quality over time.
(B) Reporting on measures.--
(i) Selection.--The Secretary shall
select measures for purposes of
subparagraph (A)(iii) but only
consistent with the following:
(I) The Secretary shall
provide preference to clinical
quality measures that have been
selected for purposes of
applying subsection
(b)(3)(B)(viii) or that have
been endorsed by the entity
with a contract with the
Secretary under section
1890(a).
(II) Prior to any measure
(other than a clinical quality
measure that has been selected
for purposes of applying
subsection (b)(3)(B)(viii))
being selected under this
subparagraph, the Secretary
shall publish in the Federal
Register such measure and
provide for a period of public
comment on such measure.
(ii) Limitations.--The Secretary may
not require the electronic reporting of
information on clinical quality
measures under subparagraph (A)(iii)
unless the Secretary has the capacity
to accept the information
electronically, which may be on a pilot
basis.
(iii) Coordination of reporting of
information.--In selecting such
measures, and in establishing the form
and manner for reporting measures under
subparagraph (A)(iii), the Secretary
shall seek to avoid redundant or
duplicative reporting with reporting
otherwise required, including reporting
under subsection (b)(3)(B)(viii).
(C) Demonstration of meaningful use of
certified ehr technology and information
exchange.--
(i) In general.--An eligible hospital
may satisfy the demonstration
requirement of clauses (i) and (ii) of
subparagraph (A) through means
specified by the Secretary, which may
include--
(I) an attestation;
(II) the submission of claims
with appropriate coding (such
as a code indicating that
inpatient care was documented
using certified EHR
technology);
(III) a survey response;
(IV) reporting under
subparagraph (A)(iii); and
(V) other means specified by
the Secretary.
(ii) Use of part d data.--
Notwithstanding sections 1860D-
15(d)(2)(B) and 1860D-15(f)(2), the
Secretary may use data regarding drug
claims submitted for purposes of
section 1860D-15 that are necessary for
purposes of subparagraph (A).
(4) Application.--
(A) Limitations on review.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise, of--
(i) the methodology and standards for
determining payment amounts under this
subsection and payment adjustments
under subsection (b)(3)(B)(ix),
including selection of periods under
paragraph (2) for determining, and
making estimates or using proxies of,
discharges under paragraph (2)(C) and
inpatient-bed-days, hospital charges,
charity charges, and Medicare share
under paragraph (2)(D);
(ii) the methodology and standards
for determining a meaningful EHR user
under paragraph (3), including
selection of measures under paragraph
(3)(B), specification of the means of
demonstrating meaningful EHR use under
paragraph (3)(C), and the hardship
exception under subsection
(b)(3)(B)(ix)(II); and
(iii) the specification of EHR
reporting periods under paragraph
(6)(B) and the selection of the form of
payment under paragraph (2)(F).
(B) Posting on website.--The Secretary shall
post on the Internet website of the Centers for
Medicare & Medicaid Services, in an easily
understandable format, a list of the names of
the eligible hospitals that are meaningful EHR
users under this subsection or subsection
(b)(3)(B)(ix) (and a list of the names of
critical access hospitals to which paragraph
(3) or (4) of section 1814(l) applies), and
other relevant data as determined appropriate
by the Secretary. The Secretary shall ensure
that an eligible hospital (or critical access
hospital) has the opportunity to review the
other relevant data that are to be made public
with respect to the hospital (or critical
access hospital) prior to such data being made
public.
(5) Certified ehr technology defined.--The term
``certified EHR technology'' has the meaning given such
term in section 1848(o)(4).
(6) Definitions.--For purposes of this subsection:
(A) EHR reporting period.--The term ``EHR
reporting period'' means, with respect to a
payment year, any period (or periods) as
specified by the Secretary.
(B) Eligible hospital.--The term ``eligible
hospital'' means a hospital that is a
subsection (d) hospital or a subsection (d)
Puerto Rico hospital.
(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, other than measures of readmissions,
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.
(iii) HCAHPS pain questions.--The
Secretary may not include under
subparagraph (A) a measure that is
based on the questions appearing on the
Hospital Consumer Assessment of
Healthcare Providers and Systems survey
in 2018 or 2019 about communication by
hospital staff with an individual about
the individual's pain.
(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) 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 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.--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.--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).
(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) 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) 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.--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) 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.--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).
(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 make payments (in addition to the
payments described in paragraph (2)(A)(ii)) for such a
discharge to such hospital under subsection (d) (or
section 1814(b)(3), as the case may be) in 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.--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.--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), subject to subparagraph (D), 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.
(D) Transitional adjustment for dual
eligibles.--
(i) In general.--In determining a
hospital's adjustment factor under this
paragraph for purposes of making
payments for discharges occurring
during and after fiscal year 2019, and
before the application of clause (i) of
subparagraph (E), the Secretary shall
assign hospitals to groups (as defined
by the Secretary under clause (ii)) and
apply the applicable provisions of this
subsection using a methodology in a
manner that allows for separate
comparison of hospitals within each
such group, as determined by the
Secretary.
(ii) Defining groups.--For purposes
of this subparagraph, the Secretary
shall define groups of hospitals, based
on their overall proportion, of the
inpatients who are entitled to, or
enrolled for, benefits under part A,
and who are full-benefit dual eligible
individuals (as defined in section
1935(c)(6)). In defining groups, the
Secretary shall consult the Medicare
Payment Advisory Commission and may
consider the analysis done by such
Commission in preparing the portion of
its report submitted to Congress in
June 2013 relating to readmissions.
(iii) Minimizing reporting burden on
hospitals.--In carrying out this
subparagraph, the Secretary shall not
impose any additional reporting
requirements on hospitals.
(iv) Budget neutral design
methodology.--The Secretary shall
design the methodology to implement
this subparagraph so that the estimated
total amount of reductions in payments
under this subsection equals the
estimated total amount of reductions in
payments that would otherwise occur
under this subsection if this
subparagraph did not apply.
(E) Changes in risk adjustment.--
(i) Consideration of recommendations
in impact reports.--The Secretary may
take into account the studies conducted
and the recommendations made by the
Secretary under section 2(d)(1) of the
IMPACT Act of 2014 (Public Law 113-185;
42 U.S.C. 1395lll note) with respect to
the application under this subsection
of risk adjustment methodologies.
Nothing in this clause shall be
construed as precluding consideration
of the use of groupings of hospitals.
(ii) Consideration of exclusion of
patient cases based on v or other
appropriate codes.--In promulgating
regulations to carry out this
subsection with respect to discharges
occurring after fiscal year 2018, the
Secretary may consider the use of V or
other ICD-related codes for removal of
a readmission. The Secretary may
consider modifying measures under this
subsection to incorporate V or other
ICD-related codes at the same time as
other changes are being made under this
subparagraph.
(iii) Removal of certain
readmissions.--In promulgating
regulations to carry out this
subsection, with respect to discharges
occurring after fiscal year 2018, the
Secretary may consider removal as a
readmission of an admission that is
classified within one or more of the
following: transplants, end-stage renal
disease, burns, trauma, psychosis, or
substance abuse. The Secretary may
consider modifying measures under this
subsection to remove readmissions at
the same time as other changes are
being made under this subparagraph.
(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.--
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.--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.--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.
(r) Adjustments to Medicare DSH Payments.--
(1) Empirically justified dsh payments.--For fiscal
year 2014 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 2014 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 2014, 2015, 2016,
and 2017.--For each of fiscal years
2014, 2015, 2016, and 2017, a factor
equal to 1 minus the percent change 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
2013, 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 the Health Care
and Education Reconciliation
Act of 2010 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),
minus 0.1 percentage points for fiscal
year 2014 and minus 0.2 percentage
points for each of fiscal years 2015,
2016, and 2017.
(ii) 2018 and subsequent years.--For
fiscal year 2018 and each subsequent
fiscal year, a factor equal to 1 minus
the percent change in the percent of
individuals who are uninsured, as
determined by comparing the percent of
individuals--
(I) who are uninsured in 2013
(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),
minus 0.2 percentage points for each of
fiscal years 2018 and 2019.
(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.
(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--
(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.--For purposes of paragraph
(2)(A)(ii), the other adjustment described in this
paragraph is--
(A) for each of the rate years beginning in
2010 and 2011, 0.25 percentage point;
(B) for each of the rate years beginning in
2012 and 2013, 0.1 percentage point;
(C) for the rate year beginning in 2014, 0.3
percentage point;
(D) for each of the rate years beginning in
2015 and 2016, 0.2 percentage point; and
(E) for each of the rate years beginning in
2017, 2018, and 2019, 0.75 percentage point.
(4) 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 psychiatric
hospital or psychiatric unit 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 (2), 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
psychiatric hospital and psychiatric unit 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.--
The Secretary shall establish procedures for
making data submitted under subparagraph (C)
available to the public. Such procedures shall
ensure that a psychiatric hospital and a
psychiatric unit has the opportunity to review
the data that is to be made public with respect
to the hospital or unit prior to such data
being made public. The Secretary shall report
quality measures that relate to services
furnished in inpatient settings in psychiatric
hospitals and psychiatric units on the Internet
website of the Centers for Medicare & Medicaid
Services.
(t) Relating Similar Inpatient and Outpatient Hospital
Services.--
(1) Development of hcpcs version of ms-drg codes.--
Not later than January 1, 2018, the Secretary shall
develop HCPCS versions for MS-DRGs that are similar to
the ICD-10-PCS for such MS-DRGs such that, to the
extent possible, the MS-DRG assignment shall be similar
for a claim coded with the HCPCS version as an
identical claim coded with a ICD-10-PCS code.
(2) Coverage of surgical ms-drgs.--In carrying out
paragraph (1), the Secretary shall develop HCPCS
versions of MS-DRG codes for not fewer than 10 surgical
MS-DRGs.
(3) Publication and dissemination of the hcpcs
versions of ms-drgs.--
(A) In general.--The Secretary shall develop
a HCPCS MS-DRG definitions manual and software
that is similar to the definitions manual and
software for ICD-10-PCS codes for such MS-DRGs.
The Secretary shall post the HCPCS MS-DRG
definitions manual and software on the Internet
website of the Centers for Medicare & Medicaid
Services. The HCPCS MS-DRG definitions manual
and software shall be in the public domain and
available for use and redistribution without
charge.
(B) Use of previous analysis done by
medpac.--In developing the HCPCS MS-DRG
definitions manual and software under
subparagraph (A), the Secretary shall consult
with the Medicare Payment Advisory Commission
and shall consider the analysis done by such
Commission in translating outpatient surgical
claims into inpatient surgical MS-DRGs in
preparing chapter 7 (relating to hospital
short-stay policy issues) of its ``Medicare and
the Health Care Delivery System'' report
submitted to Congress in June 2015.
(4) Definition and reference.--In this subsection:
(A) HCPCS.--The term ``HCPCS'' means, with
respect to hospital items and services, the
code under the Healthcare Common Procedure
Coding System (HCPCS) (or a successor code) for
such items and services.
(B) ICD-10-pcs.--The term ``ICD-10-PCS''
means the International Classification of
Diseases, 10th Revision, Procedure Coding
System, and includes any subsequent revision of
such International Classification of Diseases,
Procedure Coding System.
* * * * * * *
payment to skilled nursing facilities for routine service costs
Sec. 1888. (a) The Secretary, in determining the amount of
the payments which may be made under this title with respect to
routine service costs of extended care services shall not
recognize as reasonable (in the efficient delivery of health
services) per diem costs of such services to the extent that
such per diem costs exceed the following per diem limits,
except as otherwise provided in this section:
(1) With respect to freestanding skilled nursing
facilities located in urban areas, the limit shall be
equal to 112 percent of the mean per diem routine
service costs for freestanding skilled nursing
facilities located in urban areas.
(2) With respect to freestanding skilled nursing
facilities located in rural areas, the limit shall be
equal to 112 percent of the mean per diem routine
service costs for freestanding skilled nursing
facilities located in rural areas.
(3) With respect to hospital-based skilled nursing
facilities located in urban areas, the limit shall be
equal to the sum of the limit for freestanding skilled
nursing facilities located in urban areas, plus 50
percent of the amount by which 112 percent of the mean
per diem routine service costs for hospital-based
skilled nursing facilities located in urban areas
exceeds the limit for freestanding skilled nursing
facilities located in urban areas.
(4) With respect to hospital-based skilled nursing
facilities located in rural areas, the limit shall be
equal to the sum of the limit for freestanding skilled
nursing facilities located in rural areas, plus 50
percent of the amount by which 112 percent of the mean
per diem routine service costs for hospital-based
skilled nursing facilities located in rural areas
exceeds the limit for freestanding skilled nursing
facilities located in rural areas.
In applying this subsection the Secretary shall make
appropriate adjustments to the labor related portion of the
costs based upon an appropriate wage index, and shall, for cost
reporting periods beginning on or after October 1, 1992, on or
after October 1, 1995, and every 2 years thereafter, provide
for an update to the per diem cost limits described in this
subsection, except that the limits effective for cost reporting
periods beginning on or after October 1, 1997, shall be based
on the limits effective for cost reporting periods beginning on
or after October 1, 1996.
(b) With respect to a hospital-based skilled nursing
facility, the Secretary may not recognize as reasonable the
portion of the cost differences between hospital-based and
freestanding skilled nursing facilities attributable to excess
overhead allocations.
(c) The Secretary may make adjustments in the limits set
forth in subsection (a) with respect to any skilled nursing
facility to the extent the Secretary deems appropriate, based
upon case mix or circumstances beyond the control of the
facility. The Secretary shall publish the data and criteria to
be used for purposes of this subsection on an annual basis.
(d)(1) Subject to subsection (e), any skilled nursing
facility may choose to be paid under this subsection on the
basis of a prospective payment for all routine service costs
(including the costs of services required to attain or maintain
the highest practicable physical, mental, and psychosocial
well-being of each resident eligible for benefits under this
title) and capital-related costs of extended care services
provided in a cost reporting period if such facility had, in
the preceding cost reporting period, fewer than 1,500 patient
days with respect to which payments were made under this title.
Such prospective payment shall be in lieu of payments which
would otherwise be made for routine service costs pursuant to
section 1861(v) and subsections (a) through (c) of this section
and capital-related costs pursuant to section 1861(v). This
subsection shall not apply to a facility for any cost reporting
period immediately following a cost reporting period in which
such facility had 1,500 or more patient days with respect to
which payments were made under this title, without regard to
whether payments were made under this subsection during such
preceding cost reporting period.
(2)(A) The amount of the payment under this section shall be
determined on a per diem basis.
(B) Subject to the limitations of subparagraph (C), for
skilled nursing facilities located--
(i) in an urban area, the amount shall be equal to
105 percent of the mean of the per diem reasonable
routine service and capital-related costs of extended
care services for skilled nursing facilities in urban
areas within the same region, determined without regard
to the limitations of subsection (a) and adjusted for
different area wage levels, and
(ii) in a rural area the amount shall be equal to 105
percent of the mean of the per diem reasonable routine
service and capital-related costs of extended care
services for skilled nursing facilities in rural areas
within the same region, determined without regard to
the limitations of subsection (a) and adjusted for
different area wage levels.
(C) The per diem amounts determined under subparagraph (B)
shall not exceed the limit on routine service costs determined
under subsection (a) with respect to the facility, adjusted to
take into account average capital-related costs with respect to
the type and location of the facility.
(3) For purposes of this subsection, urban and rural areas
shall be determined in the same manner as for purposes of
subsection (a), and the term ``region'' shall have the same
meaning as under section 1886(d)(2)(D).
(4) The Secretary shall establish the prospective payment
amounts for cost reporting periods beginning in a fiscal year
at least 90 days prior to the beginning of such fiscal year, on
the basis of the most recent data available for a 12-month
period. A skilled nursing facility must notify the Secretary of
its intention to be paid pursuant to this subsection for a cost
reporting period no later than 30 days before the beginning of
that period.
(5) The Secretary shall provide for a simplified cost report
to be filed by facilities being paid pursuant to this
subsection, which shall require only the cost information
necessary for determining prospective payment amounts pursuant
to paragraph (2) and reasonable costs of ancillary services.
(6) In lieu of payment on a cost basis for ancillary services
provided by a facility which is being paid pursuant to this
subsection, the Secretary may pay for such ancillary services
on a reasonable charge basis if the Secretary determines that
such payment basis will provide an equitable level of
reimbursement and will ease the reporting burden of the
facility.
(7) In computing the rates of payment to be made under this
subsection, there shall be taken into account the costs
described in the last sentence of section 1861(v)(1)(E)
(relating to compliance with nursing facility requirements and
of conducting nurse aide training and competency evaluation
programs and competency evaluation programs).
(e) Prospective Payment.--
(1) Payment provision.--Notwithstanding any other
provision of this title, subject to paragraphs (7),
(11), and (12), the amount of the payment for all costs
(as defined in paragraph (2)(B)) of covered skilled
nursing facility services (as defined in paragraph
(2)(A)) for each day of such services furnished--
(A) in a cost reporting period during the
transition period (as defined in paragraph
(2)(E)), is equal to the sum of--
(i) the non-Federal percentage of the
facility-specific per diem rate
(computed under paragraph (3)), and
(ii) the Federal percentage of the
adjusted Federal per diem rate
(determined under paragraph (4))
applicable to the facility; and
(B) after the transition period is equal to
the adjusted Federal per diem rate applicable
to the facility.
(2) Definitions.--For purposes of this subsection:
(A) Covered skilled nursing facility
services.--
(i) In general.--The term ``covered
skilled nursing facility services''--
(I) means post-hospital
extended care services as
defined in section 1861(i) for
which benefits are provided
under part A; and
(II) includes all items and
services (other than items and
services described in clauses
(ii), (iii), and (iv)) for
which payment may be made under
part B and which are furnished
to an individual who is a
resident of a skilled nursing
facility during the period in
which the individual is
provided covered post-hospital
extended care services.
(ii) Services excluded.--Services
described in this clause are
physicians' services, services
described by clauses (i) and (ii) of
section 1861(s)(2)(K), certified nurse-
midwife services, qualified
psychologist services, services of a
certified registered nurse anesthetist,
items and services described in
subparagraphs (F) and (O) of section
1861(s)(2), telehealth services
furnished under section
1834(m)(4)(C)(ii)(VII), and, only with
respect to services furnished during
1998, the transportation costs of
electrocardiogram equipment for
electrocardiogram test services (HCPCS
Code R0076). Services described in this
clause do not include any physical,
occupational, or speech-language
therapy services regardless of whether
or not the services are furnished by,
or under the supervision of, a
physician or other health care
professional.
(iii) Exclusion of certain additional
items and services.--Items and services
described in this clause are the
following:
(I) Ambulance services
furnished to an individual in
conjunction with renal dialysis
services described in section
1861(s)(2)(F).
(II) Chemotherapy items
(identified as of July 1, 1999,
by HCPCS codes J9000-J9020;
J9040-J9151; J9170-J9185;
J9200-J9201; J9206-J9208;
J9211; J9230-J9245; and J9265-
J9600 (and as subsequently
modified by the Secretary)) and
any additional chemotherapy
items identified by the
Secretary.
(III) Chemotherapy
administration services
(identified as of July 1, 1999,
by HCPCS codes 36260-36262;
36489; 36530-36535; 36640;
36823; and 96405-96542 (and as
subsequently modified by the
Secretary)) and any additional
chemotherapy administration
services identified by the
Secretary.
(IV) Radioisotope services
(identified as of July 1, 1999,
by HCPCS codes 79030-79440 (and
as subsequently modified by the
Secretary)) and any additional
radioisotope services
identified by the Secretary.
(V) Customized prosthetic
devices (commonly known as
artificial limbs or components
of artificial limbs) under the
following HCPCS codes (as of
July 1, 1999 (and as
subsequently modified by the
Secretary)), and any additional
customized prosthetic devices
identified by the Secretary, if
delivered to an inpatient for
use during the stay in the
skilled nursing facility and
intended to be used by the
individual after discharge from
the facility: L5050-L5340;
L5500-L5611; L5613-L5986;
L5988; L6050-L6370; L6400-
L6880; L6920-L7274; and L7362-
7366.
(iv) Exclusion of certain rural
health clinic and federally qualified
health center services.--Services
described in this clause are--
(I) rural health clinic
services (as defined in
paragraph (1) of section
1861(aa)); and
(II) federally qualified
health center services (as
defined in paragraph (3) of
such section);
that would be described in clause (ii)
if such services were furnished by an
individual not affiliated with a rural
health clinic or a federally qualified
health center.
(B) All costs.--The term ``all costs'' means
routine service costs, ancillary costs, and
capital-related costs of covered skilled
nursing facility services, but does not include
costs associated with approved educational
activities.
(C) Non-federal percentage; federal
percentage.--For--
(i) the first cost reporting period
(as defined in subparagraph (D)) of a
facility, the ``non-Federal
percentage'' is 75 percent and the
``Federal percentage'' is 25 percent;
(ii) the next cost reporting period
of such facility, the ``non-Federal
percentage'' is 50 percent and the
``Federal percentage'' is 50 percent;
and
(iii) the subsequent cost reporting
period of such facility, the ``non-
Federal percentage'' is 25 percent and
the ``Federal percentage'' is 75
percent.
(D) First cost reporting period.--The term
``first cost reporting period'' means, with
respect to a skilled nursing facility, the
first cost reporting period of the facility
beginning on or after July 1, 1998.
(E) Transition period.--
(i) In general.--The term
``transition period'' means, with
respect to a skilled nursing facility,
the 3 cost reporting periods of the
facility beginning with the first cost
reporting period.
(ii) Treatment of new skilled nursing
facilities.--In the case of a skilled
nursing facility that first received
payment for services under this title
on or after October 1, 1995, payment
for such services shall be made under
this subsection as if all services were
furnished after the transition period.
(3) Determination of facility specific per diem
rates.--The Secretary shall determine a facility-
specific per diem rate for each skilled nursing
facility not described in paragraph (2)(E)(ii) for a
cost reporting period as follows:
(A) Determining base payments.--The Secretary
shall determine, on a per diem basis, the total
of--
(i) the allowable costs of extended
care services for the facility for cost
reporting periods beginning in fiscal
year 1995, including costs associated
with facilities described in subsection
(d), with appropriate adjustments (as
determined by the Secretary) to non-
settled cost reports or, in the case of
a facility participating in the Nursing
Home Case-Mix and Quality Demonstration
(RUGS-III), the RUGS-III rate received
by the facility during the cost
reporting period beginning in 1997, and
(ii) an estimate of the amounts that
would be payable under part B
(disregarding any applicable
deductibles, coinsurance, and
copayments) for covered skilled nursing
facility services described in
paragraph (2)(A)(i)(II) furnished
during the applicable cost reporting
period described in clause (i) to an
individual who is a resident of the
facility, regardless of whether or not
the payment was made to the facility or
to another entity.
In making appropriate adjustments under clause
(i), the Secretary shall take into account
exceptions and shall take into account
exemptions but, with respect to exemptions,
only to the extent that routine costs do not
exceed 150 percent of the routine cost limits
otherwise applicable but for the exemption.
(B) Update to first cost reporting period.--
The Secretary shall update the amount
determined under subparagraph (A), for each
cost reporting period after the applicable cost
reporting period described in subparagraph
(A)(i) and up to the first cost reporting
period by a factor equal to the skilled nursing
facility market basket percentage increase
minus 1.0 percentage point.
(C) Updating to applicable cost reporting
period.--The Secretary shall update the amount
determined under subparagraph (B) for each cost
reporting period beginning with the first cost
reporting period and up to and including the
cost reporting period involved by a factor
equal to the facility-specific update factor.
(D) Facility-specific update factor.--For
purposes of this paragraph, the ``facility-
specific update factor'' for cost reporting
periods beginning during--
(i) during each of fiscal years 1998
and 1999, is equal to the skilled
nursing facility market basket
percentage increase for such fiscal
year minus 1 percentage point, and
(ii) during each subsequent fiscal
year is equal to the skilled nursing
facility market basket percentage
increase for such fiscal year.
(4) Federal per diem rate.--
(A) Determination of historical per diem for
facilities.--For each skilled nursing facility
that received payments for post-hospital
extended care services during a cost reporting
period beginning in fiscal year 1995 and that
was subject to (and not exempted from) the per
diem limits referred to in paragraph (1) or (2)
of subsection (a) (and facilities described in
subsection (d)), the Secretary shall estimate,
on a per diem basis for such cost reporting
period, the total of--
(i) the allowable costs of extended
care services (excluding exceptions
payments) for the facility for cost
reporting periods beginning in 1995
with appropriate adjustments (as
determined by the Secretary) to non-
settled cost reports, and
(ii) an estimate of the amounts that
would be payable under part B
(disregarding any applicable
deductibles, coinsurance, and
copayments) for covered skilled nursing
facility services described in
paragraph (2)(A)(i)(II) furnished
during such period to an individual who
is a resident of the facility,
regardless of whether or not the
payment was made to the facility or to
another entity.
(B) Update to first fiscal year.--The
Secretary shall update the amount determined
under subparagraph (A), for each cost reporting
period after the cost reporting period
described in subparagraph (A)(i) and up to the
first cost reporting period by a factor equal
to the skilled nursing facility market basket
percentage increase reduced (on an annualized
basis) by 1 percentage point.
(C) Computation of standardized per diem
rate.--The Secretary shall standardize the
amount updated under subparagraph (B) for each
facility by--
(i) adjusting for variations among
facilities by area in the average
facility wage level per diem, and
(ii) adjusting for variations in case
mix per diem among facilities.
(D) Computation of weighted average per diem
rates.--
(i) All facilities.--The Secretary
shall compute a weighted average per
diem rate for all facilities by
computing an average of the
standardized amounts computed under
subparagraph (C), weighted for each
facility by the number of days of
extended care services furnished during
the cost reporting period referred to
in subparagraph (A).
(ii) Freestanding facilities.--The
Secretary shall compute a weighted
average per diem rate for freestanding
facilities by computing an average of
the standardized amounts computed under
subparagraph (C) only for such
facilities, weighted for each facility
by the number of days of extended care
services furnished during the cost
reporting period referred to in
subparagraph (A).
(iii) Separate computation.--The
Secretary may compute and apply such
averages separately for facilities
located in urban and rural areas (as
defined in section 1886(d)(2)(D)).
(E) Updating.--
(i) Initial period.--For the initial
period beginning on July 1, 1998, and
ending on September 30, 1999, the
Secretary shall compute for skilled
nursing facilities an unadjusted
Federal per diem rate equal to the
average of the weighted average per
diem rates computed under clauses (i)
and (ii) of subparagraph (D), increased
by skilled nursing facility market
basket percentage change for such
period minus 1 percentage point.
(ii) Subsequent fiscal years.--The
Secretary shall compute an unadjusted
Federal per diem rate equal to the
Federal per diem rate computed under
this subparagraph--
(I) for fiscal year 2000, the
rate computed for the initial
period described in clause (i),
increased by the skilled
nursing facility market basket
percentage change for the
initial period minus 1
percentage point;
(II) for fiscal year 2001,
the rate computed for the
previous fiscal year increased
by the skilled nursing facility
market basket percentage change
for the fiscal year;
(III) for each of fiscal
years 2002 and 2003, the rate
computed for the previous
fiscal year increased by the
skilled nursing facility market
basket percentage change for
the fiscal year involved minus
0.5 percentage points; and
(IV) for each subsequent
fiscal year, the rate computed
for the previous fiscal year
increased by the skilled
nursing facility market basket
percentage change for the
fiscal year involved.
(F) Adjustment for case mix creep.--Insofar
as the Secretary determines that the
adjustments under subparagraph (G)(i) for a
previous fiscal year (or estimates that such
adjustments for a future fiscal year) did (or
are likely to) result in a change in aggregate
payments under this subsection during the
fiscal year that are a result of changes in the
coding or classification of residents that do
not reflect real changes in case mix, the
Secretary may adjust unadjusted Federal per
diem rates for subsequent fiscal years so as to
eliminate the effect of such coding or
classification changes.
(G) Determination of federal rate.--The
Secretary shall compute for each skilled
nursing facility for each fiscal year
(beginning with the initial period described in
subparagraph (E)(i)) an adjusted Federal per
diem rate equal to the unadjusted Federal per
diem rate determined under subparagraph (E), as
adjusted under subparagraph (F), and as further
adjusted as follows:
(i) Adjustment for case mix.--The
Secretary shall provide for an
appropriate adjustment to account for
case mix. Such adjustment shall be
based on a resident classification
system, established by the Secretary,
that accounts for the relative resource
utilization of different patient types.
The case mix adjustment shall be based
on resident assessment data and other
data that the Secretary considers
appropriate.
(ii) Adjustment for geographic
variations in labor costs.--The
Secretary shall adjust the portion of
such per diem rate attributable to
wages and wage-related costs for the
area in which the facility is located
compared to the national average of
such costs using an appropriate wage
index as determined by the Secretary.
Such adjustment shall be done in a
manner that does not result in
aggregate payments under this
subsection that are greater or less
than those that would otherwise be made
if such adjustment had not been made.
(iii) Adjustment for exclusion of
certain additional items and
services.--The Secretary shall provide
for an appropriate proportional
reduction in payments so that beginning
with fiscal year 2001, the aggregate
amount of such reductions is equal to
the aggregate increase in payments
attributable to the exclusion effected
under clause (iii) of paragraph (2)(A).
(H) Publication of information on per diem
rates.--The Secretary shall provide for
publication in the Federal Register, before May
1, 1998 (with respect to fiscal period
described in subparagraph (E)(i)) and before
the August 1 preceding each succeeding fiscal
year (with respect to that succeeding fiscal
year), of--
(i) the unadjusted Federal per diem
rates to be applied to days of covered
skilled nursing facility services
furnished during the fiscal year,
(ii) the case mix classification
system to be applied under subparagraph
(G)(i) with respect to such services
during the fiscal year, and
(iii) the factors to be applied in
making the area wage adjustment under
subparagraph (G)(ii) with respect to
such services.
(5) Skilled nursing facility market basket index and
percentage.--For purposes of this subsection:
(A) Skilled nursing facility market basket
index.--The Secretary shall establish a skilled
nursing facility market basket index that
reflects changes over time in the prices of an
appropriate mix of goods and services included
in covered skilled nursing facility services.
(B) Skilled nursing facility market basket
percentage.--
(i) In general.--Subject to clauses
(ii), (iii), and (iv), the term
``skilled nursing facility market
basket percentage'' means, for a fiscal
year or other annual period and as
calculated by the Secretary, the
percentage change in the skilled
nursing facility market basket index
(established under subparagraph (A))
from the midpoint of the prior fiscal
year (or period) to the midpoint of the
fiscal year (or other period) involved.
(ii) Adjustment.--For fiscal year
2012 and each subsequent fiscal year,
subject to clauses (iii) and (iv),
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.
(iii) Special rule for fiscal year
2018.--For fiscal year 2018 (or other
similar annual period specified in
clause (i)), the skilled nursing
facility market basket percentage,
after application of clause (ii), is
equal to 1 percent.
(iv) Special rule for fiscal year
2019.--For fiscal year 2019 (or other
similar annual period specified in
clause (i)), the skilled nursing
facility market basket percentage,
after application of clause (ii), is
equal to 2.4 percent.
(6) Reporting of assessment and quality data.--
(A) Reduction in update for failure to
report.--
(i) In general.--For fiscal years
beginning with fiscal year 2018, in the
case of a skilled nursing facility that
does not submit data, as applicable, in
accordance with subclauses (II) and
(III) of subparagraph (B)(i) with
respect to such a fiscal year, after
determining the percentage described in
paragraph (5)(B)(i), and after
application of clauses (ii) and (iii)
of paragraph (5)(B), the Secretary
shall reduce such percentage for
payment rates during such fiscal year
by 2 percentage points.
(ii) Special rule.--The application
of this subparagraph may result in the
percentage described in paragraph
(5)(B)(i), after application of clauses
(ii) and (iii) of paragraph (5)(B),
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.
(iii) Noncumulative application.--Any
reduction under clause (i) 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.
(B) Assessment and measure data.--
(i) In general.--A skilled nursing
facility, or a facility (other than a
critical access hospital) described in
paragraph (7)(B), shall submit to the
Secretary, in a manner and within the
timeframes prescribed by the
Secretary--
(I) subject to clause (iii),
the resident assessment data
necessary to develop and
implement the rates under this
subsection;
(II) for fiscal years
beginning on or after the
specified application date (as
defined in subsection (a)(2)(E)
of section 1899B), as
applicable with respect to
skilled nursing facilities and
quality measures under
subsection (c)(1) of such
section and measures under
subsection (d)(1) of such
section, data on such quality
measures under such subsection
(c)(1) and any necessary data
specified by the Secretary
under such subsection (d)(1);
and
(III) for fiscal years
beginning on or after October
1, 2018, standardized patient
assessment data required under
subsection (b)(1) of section
1899B.
(ii) Use of standard instrument.--For
purposes of meeting the requirement
under clause (i), a skilled nursing
facility, or a facility (other than a
critical access hospital) described in
paragraph (7)(B), may submit the
resident assessment data required under
section 1819(b)(3), using the standard
instrument designated by the State
under section 1819(e)(5).
(iii) Non-duplication.--To the extent
data submitted under subclause (II) or
(III) of clause (i) duplicates other
data required to be submitted under
clause (i)(I), the submission of such
data under such a subclause shall be in
lieu of the submission of such data
under clause (i)(I). The previous
sentence shall not apply insofar as the
Secretary determines it is necessary to
avoid a delay in the implementation of
section 1899B, taking into account the
different specified application dates
under subsection (a)(2)(E) of such
section.
(7) Treatment of medicare swing bed hospitals.--
(A) Transition.--Subject to subparagraph (C),
the Secretary shall determine an appropriate
manner in which to apply this subsection to the
facilities described in subparagraph (B) (other
than critical access hospitals), taking into
account the purposes of this subsection, and
shall provide that at the end of the transition
period (as defined in paragraph (2)(E)) such
facilities shall be paid only under this
subsection. Payment shall not be made under
this subsection to such facilities for cost
reporting periods beginning before such date
(not earlier than July 1, 1999) as the
Secretary specifies.
(B) Facilities described.--The facilities
described in this subparagraph are facilities
that have in effect an agreement described in
section 1883.
(C) Exemption from pps of swing-bed services
furnished in critical access hospitals.--The
prospective payment system established under
this subsection shall not apply to services
furnished by a critical access hospital
pursuant to an agreement under section 1883.
(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of--
(A) the establishment of Federal per diem
rates under paragraph (4), including the
computation of the standardized per diem rates
under paragraph (4)(C), adjustments and
corrections for case mix under paragraphs
(4)(F) and (4)(G)(i), adjustments for
variations in labor-related costs under
paragraph (4)(G)(ii), and adjustments under
paragraph (4)(G)(iii);
(B) the establishment of facility specific
rates before July 1, 1999 (except any
determination of costs paid under part A of
this title); and
(C) the establishment of transitional amounts
under paragraph (7).
(9) Payment for certain services.--In the case of an
item or service furnished to a resident of a skilled
nursing facility or a part of a facility that includes
a skilled nursing facility (as determined under
regulations) for which payment would (but for this
paragraph) be made under part B in an amount determined
in accordance with section 1833(a)(2)(B), the amount of
the payment under such part shall be the amount
provided under the fee schedule for such item or
service. In the case of an item or service described in
clause (iii) of paragraph (2)(A) that would be payable
under part A but for the exclusion of such item or
service under such clause, payment shall be made for
the item or service, in an amount otherwise determined
under part B of this title for such item or service,
from the Federal Hospital Insurance Trust Fund under
section 1817 (rather than from the Federal
Supplementary Medical Insurance Trust Fund under
section 1841).
(10) Required coding.--No payment may be made under
part B for items and services (other than services
described in paragraph (2)(A)(ii)) furnished to an
individual who is a resident of a skilled nursing
facility or of a part of a facility that includes a
skilled nursing facility (as determined under
regulations), unless the claim for such payment
includes a code (or codes) under a uniform coding
system specified by the Secretary that identifies the
items or services furnished.
(11) Permitting facilities to waive 3-year
transition.--Notwithstanding paragraph (1)(A), a
facility may elect to have the amount of the payment
for all costs of covered skilled nursing facility
services for each day of such services furnished in
cost reporting periods beginning no earlier than 30
days before the date of such election determined
pursuant to paragraph (1)(B).
(12) Adjustment for residents with aids.--
(A) In general.--Subject to subparagraph (B),
in the case of a resident of a skilled nursing
facility who is afflicted with acquired immune
deficiency syndrome (AIDS), the per diem amount
of payment otherwise applicable (determined
without regard to any increase under section
101 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999, or
under section 314(a) of Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act
of 2000), shall be increased by 128 percent to
reflect increased costs associated with such
residents.
(B) Sunset.--Subparagraph (A) shall not apply
on and after such date as the Secretary
certifies that there is an appropriate
adjustment in the case mix under paragraph
(4)(G)(i) to compensate for the increased costs
associated with residents described in such
subparagraph.
(f) Reporting of Direct Care Expenditures.--
(1) In general.--For cost reports submitted under
this title for cost reporting periods beginning on or
after the date that is 2 years after the date of the
enactment of this subsection, skilled nursing
facilities shall separately report expenditures for
wages and benefits for direct care staff (breaking out
(at a minimum) registered nurses, licensed professional
nurses, certified nurse assistants, and other medical
and therapy staff).
(2) Modification of form.--The Secretary, in
consultation with private sector accountants
experienced with Medicare and Medicaid nursing facility
home cost reports, shall redesign such reports to meet
the requirement of paragraph (1) not later than 1 year
after the date of the enactment of this subsection.
(3) Categorization by functional accounts.--Not later
than 30 months after the date of the enactment of this
subsection, the Secretary, working in consultation with
the Medicare Payment Advisory Commission, the Medicaid
and CHIP Payment and Access Commission, the Inspector
General of the Department of Health and Human Services,
and other expert parties the Secretary determines
appropriate, shall take the expenditures listed on cost
reports, as modified under paragraph (1), submitted by
skilled nursing facilities and categorize such
expenditures, regardless of any source of payment for
such expenditures, for each skilled nursing facility
into the following functional accounts on an annual
basis:
(A) Spending on direct care services
(including nursing, therapy, and medical
services).
(B) Spending on indirect care (including
housekeeping and dietary services).
(C) Capital assets (including building and
land costs).
(D) Administrative services costs.
(4) Availability of information submitted.--The
Secretary shall establish procedures to make
information on expenditures submitted under this
subsection readily available to interested parties upon
request, subject to such requirements as the Secretary
may specify under the procedures established under this
paragraph.
(g) Skilled Nursing Facility Readmission Measure.--
(1) Readmission measure.--Not later than October 1,
2015, the Secretary shall specify a skilled nursing
facility all-cause all-condition hospital readmission
measure (or any successor to such a measure).
(2) Resource use measure.--Not later than October 1,
2016, the Secretary shall specify a measure to reflect
an all-condition risk-adjusted potentially preventable
hospital readmission rate for skilled nursing
facilities.
(3) Measure adjustments.--When specifying the
measures under paragraphs (1) and (2), the Secretary
shall devise a methodology to achieve a high level of
reliability and validity, especially for skilled
nursing facilities with a low volume of readmissions.
(4) Pre-rulemaking process (measure application
partnership process).--The application of the
provisions of section 1890A shall be optional in the
case of a measure specified under paragraph (1) and a
measure specified under paragraph (2).
(5) Feedback reports to skilled nursing
facilities.--Beginning October 1, 2016, and every
quarter thereafter, the Secretary shall provide
confidential feedback reports to skilled nursing
facilities on the performance of such facilities with
respect to a measure specified under paragraph (1) or
(2).
(6) Public reporting of skilled nursing facilities.--
(A) In general.--Subject to subparagraphs (B)
and (C), the Secretary shall establish
procedures for making available to the public
by posting on the Nursing Home Compare Medicare
website (or a successor website) described in
section 1819(i) information on the performance
of skilled nursing facilities with respect to a
measure specified under paragraph (1) and a
measure specified under paragraph (2).
(B) Opportunity to review.--The procedures
under subparagraph (A) shall ensure that a
skilled nursing facility has the opportunity to
review and submit corrections to the
information that is to be made public with
respect to the facility prior to such
information being made public.
(C) Timing.--Such procedures shall provide
that the information described in subparagraph
(A) is made publicly available beginning not
later than October 1, 2017.
(7) Non-application of paperwork reduction act.--
Chapter 35 of title 44, United States Code (commonly
referred to as the `Paperwork Reduction Act of 1995')
shall not apply to this subsection.
(h) Skilled Nursing Facility Value-Based Purchasing
Program.--
(1) Establishment.--
(A) In general.--Subject to the succeeding
provisions of this subsection, the Secretary
shall establish a skilled nursing facility
value-based purchasing program (in this
subsection referred to as the ``SNF VBP
Program'') under which value-based incentive
payments are made in a fiscal year to skilled
nursing facilities.
(B) Program to begin in fiscal year 2019.--
The SNF VBP Program shall apply to payments for
services furnished on or after October 1, 2018.
(C) Exclusions.--With respect to payments for
services furnished on or after October 1, 2021,
this subsection shall not apply to a facility
for which there are not a minimum number (as
determined by the Secretary) of--
(i) cases for the measures that apply
to the facility for the performance
period for the applicable fiscal year;
or
(ii) measures that apply to the
facility for the performance period for
the applicable fiscal year.
(2) Application of measures.--
(A) In general.--[The Secretary shall apply]
The Secretary--
(i) shall apply the measure specified
under subsection (g)(1) for purposes of
the SNF VBP Program[.]; and
(ii) may, with respect to payments
for services furnished on or after
October 1, 2022, apply additional
measures determined appropriate by the
Secretary, which may include measures
of functional status, patient safety,
care coordination, or patient
experience.
Subject to the succeeding sentence, in the case
that the Secretary applies additional measures
under clause (ii), the Secretary shall consider
and apply, as appropriate, quality measures
specified under section 1899B(c)(1). In no case
may the Secretary apply more than 10 measures
under this subparagraph.
(B) Replacement.--For purposes of the SNF VBP
Program, the Secretary shall apply the measure
specified under (g)(2) instead of the measure
specified under (g)(1) as soon as practicable.
(3) Performance standards.--
(A) Establishment.--The Secretary shall
establish performance standards with respect to
the [measure] measures applied under paragraph
(2) for a performance period for a fiscal year.
(B) Higher of achievement and improvement.--
The performance standards established under
subparagraph (A) shall include levels of
achievement and improvement. In calculating the
SNF performance score under paragraph (4), the
Secretary shall use the higher of either
improvement or achievement.
(C) Timing.--The Secretary shall establish
and announce the performance standards
established under subparagraph (A) not later
than 60 days prior to the beginning of the
performance period for the fiscal year
involved.
(4) SNF performance score.--
(A) In general.--The Secretary shall develop
a methodology for assessing the total
performance of each skilled nursing facility
based on performance standards established
under paragraph (3) with respect to the
[measure] measures applied under paragraph (2).
Using such methodology, the Secretary shall
provide for an assessment (in this subsection
referred to as the ``SNF performance score'')
for each skilled nursing facility for each such
performance period.
(B) Ranking of snf performance scores.--The
Secretary shall, for the performance period for
each fiscal year, rank the SNF performance
scores determined under subparagraph (A) from
low to high.
(5) Calculation of value-based incentive payments.--
(A) In general.--With respect to a skilled
nursing facility, based on the ranking under
paragraph (4)(B) for a performance period for a
fiscal year, the Secretary shall increase the
adjusted Federal per diem rate determined under
subsection (e)(4)(G) otherwise applicable to
such skilled nursing facility (and after
application of paragraph (6)) for services
furnished by such facility during such fiscal
year by the value-based incentive payment
amount under subparagraph (B).
(B) Value-based incentive payment amount.--
The value-based incentive payment amount for
services furnished by a skilled nursing
facility in a fiscal year shall be equal to the
product of--
(i) the adjusted Federal per diem
rate determined under subsection
(e)(4)(G) otherwise applicable to such
skilled nursing facility for such
services furnished by the skilled
nursing facility during such fiscal
year; and
(ii) the value-based incentive
payment percentage specified under
subparagraph (C) for the skilled
nursing facility 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 skilled nursing
facility for a fiscal year which may
include a zero percentage.
(ii) Requirements.--In specifying the
value-based incentive payment
percentage for each skilled nursing
facility for a fiscal year under clause
(i), the Secretary shall ensure that--
(I) such percentage is based
on the SNF performance score of
the skilled nursing facility
provided under paragraph (4)
for the performance period for
such fiscal year;
(II) the application of all
such percentages in such fiscal
year results in an appropriate
distribution of value-based
incentive payments under
subparagraph (B) such that--
(aa) skilled nursing
facilities with the
highest rankings under
paragraph (4)(B)
receive the highest
value-based incentive
payment amounts under
subparagraph (B);
(bb) skilled nursing
facilities with the
lowest rankings under
paragraph (4)(B)
receive the lowest
value-based incentive
payment amounts under
subparagraph (B); and
(cc) in the case of
skilled nursing
facilities in the
lowest 40 percent of
the ranking under
paragraph (4)(B), the
payment rate under
subparagraph (A) for
services furnished by
such facility during
such fiscal year shall
be less than the
payment rate for such
services for such
fiscal year that would
otherwise apply under
subsection (e)(4)(G)
without application of
this subsection; and
(III) the total amount of
value-based incentive payments
under this paragraph for all
skilled nursing facilities in
such fiscal year shall be
greater than or equal to 50
percent, but not greater than
70 percent, of the total amount
of the reductions to payments
for such fiscal year under
paragraph (6), as estimated by
the Secretary.
(6) Funding for value-based incentive payments.--
(A) In general.--The Secretary shall reduce
the adjusted Federal per diem rate determined
under subsection (e)(4)(G) otherwise applicable
to a skilled nursing facility for services
furnished by such facility during a fiscal year
(beginning with fiscal year 2019) by the
applicable percent (as defined in subparagraph
(B)). The Secretary shall make such reductions
for all skilled nursing facilities in the
fiscal year involved, regardless of whether or
not the skilled nursing facility has been
determined by the Secretary to have earned a
value-based incentive payment under paragraph
(5) for such fiscal year.
(B) Applicable percent.--For purposes of
subparagraph (A), the term ``applicable
percent'' means, with respect to fiscal year
2019 and succeeding fiscal years, 2 percent.
(7) Announcement of net result of adjustments.--Under
the SNF VBP Program, the Secretary shall, not later
than 60 days prior to the fiscal year involved, inform
each skilled nursing facility of the adjustments to
payments to the skilled nursing facility for services
furnished by such facility during the fiscal year under
paragraphs (5) and (6).
(8) No effect in subsequent fiscal years.--The value-
based incentive payment under paragraph (5) and the
payment reduction under paragraph (6) 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 skilled nursing facility under this
section in a subsequent fiscal year.
(9) Public reporting.--
(A) SNF specific information.--The Secretary
shall make available to the public, by posting
on the Nursing Home Compare Medicare website
(or a successor website) described in section
1819(i) in an easily understandable format,
information regarding the performance of
individual skilled nursing facilities under the
SNF VBP Program, with respect to a fiscal year,
including--
(i) the SNF performance score of the
skilled nursing facility for such
fiscal year; and
(ii) the ranking of the skilled
nursing facility under paragraph (4)(B)
for the performance period for such
fiscal year.
(B) Aggregate information.--The Secretary
shall periodically post on the Nursing Home
Compare Medicare website (or a successor
website) described in section 1819(i) aggregate
information on the SNF VBP Program, including--
(i) the range of SNF performance
scores provided under paragraph (4)(A);
and
(ii) the number of skilled nursing
facilities receiving value-based
incentive payments under paragraph (5)
and the range and total amount of such
value-based incentive payments.
(10) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the following:
(A) The methodology used to determine the
value-based incentive payment percentage and
the amount of the value-based incentive payment
under paragraph (5).
(B) The determination of the amount of
funding available for such value-based
incentive payments under paragraph
(5)(C)(ii)(III) and the payment reduction under
paragraph (6).
(C) The establishment of the performance
standards under paragraph (3) and the
performance period.
(D) The methodology developed under paragraph
(4) that is used to calculate SNF performance
scores and the calculation of such scores.
(E) The ranking determinations under
paragraph (4)(B).
(11) Funding for program management.--The Secretary
shall provide for the one time transfer from the
Federal Hospital Insurance Trust Fund established under
section 1817 to the Centers for Medicare & Medicaid
Services Program Management Account of--
(A) for purposes of subsection (g)(2),
$2,000,000; and
(B) for purposes of implementing this
subsection, $10,000,000.
Such funds shall remain available until expended.
(12) Validation.--
(A) In general.--The Secretary shall apply to
the measures applied under this subsection and
the data submitted under subsection (e)(6) a
process to validate such measures and data, as
appropriate, which may be similar to the
process specified in section
1886(b)(3)(B)(viii)(XI) for validating
inpatient hospital measures.
(B) Funding.--For purposes of carrying out
this paragraph, the Secretary shall provide for
the transfer, from the Federal Hospital
Insurance Trust Fund established under section
1817, of $5,000,000 to the Centers for Medicare
& Medicaid Services Program Management Account
for each of fiscal years 2022 through 2024.
* * * * * * *
contract with a consensus-based entity regarding performance
measurement
Sec. 1890. (a) Contract.--
(1) In general.--For purposes of activities conducted
under this Act, the Secretary shall identify and have
in effect a contract with a consensus-based entity,
such as the National Quality Forum, that meets the
requirements described in subsection (c). Such contract
shall provide that the entity will perform the duties
described in subsection (b).
(2) Timing for first contract.--As soon as
practicable after the date of the enactment of this
subsection, the Secretary shall enter into the first
contract under paragraph (1).
(3) Period of contract.--A contract under paragraph
(1) shall be for a period of 4 years (except as may be
renewed after a subsequent bidding process).
(4) Competitive procedures.--Competitive procedures
(as defined in section 4(5) of the Office of Federal
Procurement Policy Act (41 U.S.C. 403(5))) shall be
used to enter into a contract under paragraph (1).
(b) Duties.--The duties described in this subsection are the
following:
(1) Priority setting process.--The entity shall
synthesize evidence and convene key stakeholders to
make recommendations, with respect to activities
conducted under this Act, on an integrated national
strategy and priorities for health care performance
measurement in all applicable settings. In making such
recommendations, the entity shall--
(A) ensure that priority is given to
measures--
(i) that address the health care
provided to patients with prevalent,
high-cost chronic diseases;
(ii) with the greatest potential for
improving the quality, efficiency, and
patient-centeredness of health care;
and
(iii) that may be implemented rapidly
due to existing evidence, standards of
care, or other reasons; and
(B) take into account measures that--
(i) may assist consumers and patients
in making informed health care
decisions;
(ii) address health disparities
across groups and areas; and
(iii) address the continuum of care a
patient receives, including services
furnished by multiple health care
providers or practitioners and across
multiple settings.
(2) Endorsement of measures.--The entity shall
provide for the endorsement of standardized health care
performance measures. The endorsement process under the
preceding sentence shall consider whether a measure--
(A) is evidence-based, reliable, valid,
verifiable, relevant to enhanced health
outcomes, actionable at the caregiver level,
feasible to collect and report, and responsive
to variations in patient characteristics, such
as health status, language capabilities, race
or ethnicity, and income level; and
(B) is consistent across types of health care
providers, including hospitals and physicians.
(3) Maintenance of measures.--The entity shall
establish and implement a process to ensure that
measures endorsed under paragraph (2) are updated (or
retired if obsolete) as new evidence is developed.
(4) Removal of measures.--The entity may provide
input to the Secretary on quality and efficiency
measures described in paragraph (7)(B) that could be
considered for removal.
(5) Annual report to congress and the secretary;
secretarial publication and comment.--
(A) Annual report.--By not later than March 1
of each year (beginning with 2009), the entity
shall submit to Congress and the Secretary a
report containing the following:
(i) A description of--
(I) the implementation of
quality measurement initiatives
under this Act and the
coordination of such
initiatives with quality
initiatives implemented by
other payers;
(II) the recommendations made
under paragraph (1);
(III) the performance by the
entity of the duties required
under the contract entered into
with the Secretary under
subsection (a);
(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).
(ii) An itemization of financial
information for the fiscal year ending
September 30 of the preceding year,
including--
(I) annual revenues of the
entity (including any
government funding, private
sector contributions, grants,
membership revenues, and
investment revenue);
(II) annual expenses of the
entity (including grants paid,
benefits paid, salaries or
other compensation, fundraising
expenses, and overhead costs);
and
(III) a breakdown of the
amount awarded per contracted
task order and the specific
projects funded in each task
order assigned to the entity.
(iii) Any updates or modifications of
internal policies and procedures of the
entity as they relate to the duties of
the entity under this section,
including--
(I) specifically identifying
any modifications to the
disclosure of interests and
conflicts of interests for
committees, work groups, task
forces, and advisory panels of
the entity; and
(II) information on external
stakeholder participation in
the duties of the entity under
this section (including
complete rosters for all
committees, work groups, task
forces, and advisory panels
funded through government
contracts, descriptions of
relevant interests and any
conflicts of interest for
members of all committees, work
groups, task forces, and
advisory panels, and the total
percentage by health care
sector of all convened
committees, work groups, task
forces, and advisory panels.
(B) Secretarial review and publication of
annual report.--Not later than 6 months after
receiving a report under subparagraph (A) for a
year, the Secretary shall--
(i) review such report; and
(ii) publish such report in the
Federal Register, together with any
comments of the Secretary on such
report.
(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.
(7) Convening multi-stakeholder groups.--
(A) In general.--The entity shall convene
multi-stakeholder groups to provide input on--
(i) the selection of quality and
efficiency 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 and efficiency
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 and efficiency
measures described in this subparagraph
are quality and efficiency 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), 1886(s)(4)(D), 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 and
efficiency 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 and efficiency 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 and efficiency
measure, a voluntary collaborative of
organizations representing a broad group of
stakeholders interested in or affected by the
use of such quality and efficiency measure.
(8) Transmission of multi-stakeholder input.--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).
(9) Prioritization of measure endorsement.--The
entity--
(A) during the period beginning on the date
of the enactment of this paragraph and ending
on December 31, 2023, shall prioritize the
endorsement of measures relating to maternal
morbidity and mortality by the entity with a
contract under subsection (a) in connection
with endorsement of measures described in
paragraph (2); and
(B) on and after January 1, 2024, may
prioritize the endorsement of such measures by
such entity.
(c) Requirements Described.--The requirements described in
this subsection are the following:
(1) Private nonprofit.--The entity is a private
nonprofit entity governed by a board.
(2) Board membership.--The members of the board of
the entity include--
(A) representatives of health plans and
health care providers and practitioners or
representatives of groups representing such
health plans and health care providers and
practitioners;
(B) health care consumers or representatives
of groups representing health care consumers;
and
(C) representatives of purchasers and
employers or representatives of groups
representing purchasers or employers.
(3) Entity membership.--The membership of the entity
includes persons who have experience with--
(A) urban health care issues;
(B) safety net health care issues;
(C) rural and frontier health care issues;
and
(D) health care quality and safety issues.
(4) Open and transparent.--With respect to matters
related to the contract with the Secretary under
subsection (a), the entity conducts its business in an
open and transparent manner and provides the
opportunity for public comment on its activities.
(5) Voluntary consensus standards setting
organization.--The entity operates as a voluntary
consensus standards setting organization as defined for
purposes of section 12(d) of the National Technology
Transfer and Advancement Act of 1995 (Public Law 104-
113) and Office of Management and Budget Revised
Circular A-119 (published in the Federal Register on
February 10, 1998).
(6) Experience.--The entity has at least 4 years of
experience in establishing national consensus
standards.
(7) Membership fees.--If the entity requires a
membership fee for participation in the functions of
the entity, such fees shall be reasonable and adjusted
based on the capacity of the potential member to pay
the fee. In no case shall membership fees pose a
barrier to the participation of individuals or groups
with low or nominal resources to participate in the
functions of the entity.
(d) Funding.--(1) For purposes of carrying out this section,
the Secretary shall provide for the transfer, from the Federal
Hospital Insurance Trust Fund under section 1817 and the
Federal Supplementary Medical Insurance Trust Fund under
section 1841 (in such proportion as the Secretary determines
appropriate), of $10,000,000 to the Centers for Medicare &
Medicaid Services Program Management Account for each of fiscal
years 2009 through 2013. Amounts transferred under the
preceding sentence shall remain available until expended.
(2) For purposes of carrying out this section and section
1890A (other than subsections (e) and (f)), the Secretary shall
provide for the transfer, from the Federal Hospital Insurance
Trust Fund under section 1817 and the Federal Supplementary
Medical Insurance Trust Fund under section 1841, in such
proportion as the Secretary determines appropriate, to the
Centers for Medicare & Medicaid Services Program Management
Account of $5,000,000 for fiscal year 2014, $30,000,000 for
each of fiscal years 2015 through 2017, [and $7,500,000]
$7,500,000 for each of fiscal years 2018 [and 2019.] and 2019,
and $30,000,000 for each of fiscal years 2020 through 2022.
Amounts transferred under the preceding sentence shall remain
available until expended. Amounts transferred for each of
fiscal years 2018 and 2019 shall be in addition to any
unobligated funds transferred for a preceding fiscal year that
are available under the preceding sentence.
(e) Annual Report by Secretary to Congress.--By not later
than March 1 of each year (beginning with 2019), the Secretary
shall submit to Congress a report containing the following:
(1) A comprehensive plan that identifies the quality
measurement needs of programs and initiatives of the
Secretary and provides a strategy for using the entity
with a contract under subsection (a) and any other
entity the Secretary has contracted with or may
contract with to perform work associated with section
1890A to help meet those needs, specifically with
respect to the programs under this title and title XIX.
In years after the first plan under this paragraph is
submitted, the requirements of this paragraph may be
met by providing an update to the plan.
(2) The amount of funding provided under subsection
(d) for purposes of carrying out this section and
section 1890A that has been obligated by the Secretary,
the amount of funding provided that has been expended,
and the amount of funding provided that remains
unobligated.
(3) With respect to the activities described under
this section or section 1890A, a description of how the
funds described in paragraph (2) have been obligated or
expended, including how much of that funding has been
obligated or expended for work performed by the
Secretary, the entity with a contract under subsection
(a), and any other entity the Secretary has contracted
with to perform work.
(4) A description of the activities for which the
funds described in paragraph (2) were used, including
task orders and activities assigned to the entity with
a contract under subsection (a), activities performed
by the Secretary, and task orders and activities
assigned to any other entity the Secretary has
contracted with to perform work related to carrying out
section 1890A.
(5) The amount of funding described in paragraph (2)
that has been obligated or expended for each of the
activities described in paragraph (4).
(6) Estimates for, and descriptions of, obligations
and expenditures that the Secretary anticipates will be
needed in the succeeding two year period to carry out
each of the quality measurement activities required
under this section and section 1890A, including any
obligations that will require funds to be expended in a
future year.
* * * * * * *
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MEDICARE IMPROVEMENTS FOR PATIENTS AND PROVIDERS ACT OF 2008
* * * * * * *
TITLE I--MEDICARE
Subtitle A--Beneficiary Improvements
* * * * * * *
PART II--LOW-INCOME PROGRAMS
* * * * * * *
SEC. 119. MEDICARE ENROLLMENT ASSISTANCE.
(a) Additional Funding for State Health Insurance Assistance
Programs.--
(1) Grants.--
(A) In general.--The Secretary of Health and
Human Services (in this section referred to as
the ``Secretary'') shall use amounts made
available under subparagraph (B) to make grants
to States for State health insurance assistance
programs receiving assistance under section
4360 of the Omnibus Budget Reconciliation Act
of 1990.
(B) Funding.--For purposes of making grants
under this subsection, the Secretary shall
provide for the transfer, from the Federal
Hospital Insurance Trust Fund under section
1817 of the Social Security Act (42 U.S.C.
1395i) and the Federal Supplementary Medical
Insurance Trust Fund under section 1841 of such
Act (42 U.S.C. 1395t), in the same proportion
as the Secretary determines under section
1853(f) of such Act (42 U.S.C. 1395w-23(f)), to
the Centers for Medicare & Medicaid Services
Program Management Account--
(i) for fiscal year 2009, of
$7,500,000;
(ii) for the period of fiscal years
2010 through 2012, of $15,000,000;
(iii) for fiscal year 2013, of
$7,500,000;
(iv) for fiscal year 2014, of
$7,500,000;
(v) for fiscal year 2015, of
$7,500,000;
(vi) for fiscal year 2016, of
$13,000,000;
(vii) for fiscal year 2017, of
$13,000,000; [and]
(viii) for fiscal year 2018, of
$13,000,000; [and]
(ix) for fiscal year 2019, of
$13,000,000[.]; and
(x) for each of fiscal years 2020
through 2022, of $15,000,000.
Amounts appropriated under this subparagraph
shall remain available until expended.
(2) Amount of grants.--The amount of a grant to a
State under this subsection from the total amount made
available under paragraph (1) shall be equal to the sum
of the amount allocated to the State under paragraph
(3)(A) and the amount allocated to the State under
subparagraph (3)(B).
(3) Allocation to states.--
(A) Allocation based on percentage of low-
income beneficiaries.--The amount allocated to
a State under this subparagraph from \2/3\ of
the total amount made available under paragraph
(1) shall be based on the number of individuals
who meet the requirement under subsection
(a)(3)(A)(ii) of section 1860D-14 of the Social
Security Act (42 U.S.C. 1395w-114) but who have
not enrolled to receive a subsidy under such
section 1860D-14 relative to the total number
of individuals who meet the requirement under
such subsection (a)(3)(A)(ii) in each State, as
estimated by the Secretary.
(B) Allocation based on percentage of rural
beneficiaries.--The amount allocated to a State
under this subparagraph from \1/3\ of the total
amount made available under paragraph (1) shall
be based on the number of part D eligible
individuals (as defined in section 1860D-
1(a)(3)(A) of such Act (42 U.S.C. 1395w-
101(a)(3)(A))) residing in a rural area
relative to the total number of such
individuals in each State, as estimated by the
Secretary.
(4) Portion of grant based on percentage of low-
income beneficiaries to be used to provide outreach to
individuals who may be subsidy eligible individuals or
eligible for the medicare savings program.--Each grant
awarded under this subsection with respect to amounts
allocated under paragraph (3)(A) shall be used to
provide outreach to individuals who may be subsidy
eligible individuals (as defined in section 1860D-
14(a)(3)(A) of the Social Security Act (42 U.S.C.
1395w-114(a)(3)(A)) or eligible for the Medicare
Savings Program (as defined in subsection (f)).
(b) Additional Funding for Area Agencies on Aging.--
(1) Grants.--
(A) In general.--The Secretary, acting
through the Assistant Secretary for Aging,
shall make grants to States for area agencies
on aging (as defined in section 102 of the
Older Americans Act of 1965 (42 U.S.C. 3002))
and Native American programs carried out under
the Older Americans Act of 1965 (42 U.S.C. 3001
et seq.).
(B) Funding.--For purposes of making grants
under this subsection, the Secretary shall
provide for the transfer, from the Federal
Hospital Insurance Trust Fund under section
1817 of the Social Security Act (42 U.S.C.
1395i) and the Federal Supplementary Medical
Insurance Trust Fund under section 1841 of such
Act (42 U.S.C. 1395t), in the same proportion
as the Secretary determines under section
1853(f) of such Act (42 U.S.C. 1395w-23(f)), to
the Administration on Aging--
(i) for fiscal year 2009, of
$7,500,000;
(ii) for the period of fiscal years
2010 through 2012, of $15,000,000;
(iii) for fiscal year 2013, of
$7,500,000;
(iv) for fiscal year 2014, of
$7,500,000;
(v) for fiscal year 2015, of
$7,500,000;
(vi) for fiscal year 2016, of
$7,500,000;
(vii) for fiscal year 2017, of
$7,500,000; [and]
(viii) for fiscal year 2018, of
$7,500,000; [and]
(ix) for fiscal year 2019, of
$7,500,000[.]; and
(x) for each of fiscal years 2020
through 2022, of $15,000,000.
Amounts appropriated under this subparagraph
shall remain available until expended.
(2) Amount of grant and allocation to states based on
percentage of low-income and rural beneficiaries.--The
amount of a grant to a State under this subsection from
the total amount made available under paragraph (1)
shall be determined in the same manner as the amount of
a grant to a State under subsection (a), from the total
amount made available under paragraph (1) of such
subsection, is determined under paragraph (2) and
subparagraphs (A) and (B) of paragraph (3) of such
subsection.
(3) Required use of funds.--
(A) All funds.--Subject to subparagraph (B),
each grant awarded under this subsection shall
be used to provide outreach to eligible
Medicare beneficiaries regarding the benefits
available under title XVIII of the Social
Security Act.
(B) Outreach to individuals who may be
subsidy eligible individuals or eligible for
the medicare savings program.--Subsection
(a)(4) shall apply to each grant awarded under
this subsection in the same manner as it
applies to a grant under subsection (a).
(c) Additional Funding for Aging and Disability Resource
Centers.--
(1) Grants.--
(A) In general.--The Secretary shall make
grants to Aging and Disability Resource Centers
under the Aging and Disability Resource Center
grant program that are established centers
under such program on the date of the enactment
of this Act.
(B) Funding.--For purposes of making grants
under this subsection, the Secretary shall
provide for the transfer, from the Federal
Hospital Insurance Trust Fund under section
1817 of the Social Security Act (42 U.S.C.
1395i) and the Federal Supplementary Medical
Insurance Trust Fund under section 1841 of such
Act (42 U.S.C. 1395t), in the same proportion
as the Secretary determines under section
1853(f) of such Act (42 U.S.C. 1395w-23(f)), to
the Administration on Aging--
(i) for fiscal year 2009, of
$5,000,000;
(ii) for the period of fiscal years
2010 through 2012, of $10,000,000;
(iii) for fiscal year 2013, of
$5,000,000;
(iv) for fiscal year 2014, of
$5,000,000;
(v) for fiscal year 2015, of
$5,000,000;
(vi) for fiscal year 2016, of
$5,000,000;
(vii) for fiscal year 2017, of
$5,000,000; [and]
(viii) for fiscal year 2018, of
$5,000,000; [and]
(ix) for fiscal year 2019, of
$5,000,000[.]; and
(x) for each of fiscal years 2020
through 2022, of $5,000,000.
Amounts appropriated under this subparagraph
shall remain available until expended.
(2) Required use of funds.--Each grant awarded under
this subsection shall be used to provide outreach to
individuals regarding the benefits available under the
Medicare prescription drug benefit under part D of
title XVIII of the Social Security Act and under the
Medicare Savings Program.
(d) Coordination of Efforts To Inform Older Americans About
Benefits Available Under Federal and State Programs.--
(1) In general.--The Secretary, acting through the
Assistant Secretary for Aging, in cooperation with
related Federal agency partners, shall make a grant to,
or enter into a contract with, a qualified, experienced
entity under which the entity shall--
(A) maintain and update web-based decision
support tools, and integrated, person-centered
systems, designed to inform older individuals
(as defined in section 102 of the Older
Americans Act of 1965 (42 U.S.C. 3002)) about
the full range of benefits for which the
individuals may be eligible under Federal and
State programs;
(B) utilize cost-effective strategies to find
older individuals with the greatest economic
need (as defined in such section 102) and
inform the individuals of the programs;
(C) develop and maintain an information
clearinghouse on best practices and the most
cost-effective methods for finding older
individuals with greatest economic need and
informing the individuals of the programs; and
(D) provide, in collaboration with related
Federal agency partners administering the
Federal programs, training and technical
assistance on the most effective outreach,
screening, and follow-up strategies for the
Federal and State programs.
(2) Funding.--For purposes of making a grant or
entering into a contract under paragraph (1), the
Secretary shall provide for the transfer, from the
Federal Hospital Insurance Trust Fund under section
1817 of the Social Security Act (42 U.S.C. 1395i) and
the Federal Supplementary Medical Insurance Trust Fund
under section 1841 of such Act (42 U.S.C. 1395t), in
the same proportion as the Secretary determines under
section 1853(f) of such Act (42 U.S.C. 1395w-23(f)), to
the Administration on Aging--
(i) for fiscal year 2009, of
$5,000,000;
(ii) for the period of fiscal years
2010 through 2012, of $5,000,000;
(iii) for fiscal year 2013, of
$5,000,000;
(iv) for fiscal year 2014, of
$5,000,000;
(v) for fiscal year 2015, of
$5,000,000;
(vi) for fiscal year 2016, of
$12,000,000;
(vii) for fiscal year 2017, of
$12,000,000; [and]
(viii) for fiscal year 2018, of
$12,000,000; [and]
(ix) for fiscal year 2019, of
$12,000,000[.]; and
(x) for each of fiscal years 2020
through 2022, of $15,000,000.
Amounts appropriated under this subparagraph
shall remain available until expended.
(e) Reprogramming Funds From Medicare, Medicaid, and SCHIP
Extension Act of 2007.--The Secretary shall only use the
$5,000,000 in funds allocated to make grants to States for Area
Agencies on Aging and Aging Disability and Resource Centers for
the period of fiscal years 2008 through 2009 under section 118
of the Medicare, Medicaid, and SCHIP Extension Act of 2007
(Public Law 110-173) for the sole purpose of providing outreach
to individuals regarding the benefits available under the
Medicare prescription drug benefit under part D of title XVIII
of the Social Security Act. The Secretary shall republish the
request for proposals issued on April 17, 2008, in order to
comply with the preceding sentence.
(f) Medicare Savings Program Defined.--For purposes of this
section, the term ``Medicare Savings Program'' means the
program of medical assistance for payment of the cost of
medicare cost-sharing under the Medicaid program pursuant to
sections 1902(a)(10)(E) and 1933 of the Social Security Act (42
U.S.C. 1396a(a)(10)(E), 1396u-3).
(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.
* * * * * * *
[all]