Provides for gradual elimination of copayment rates for Medicare psychiatric services.

Places prohibitions and limitations on certain sales and marketing activities under Medicare Advantage (MA) plans and prescription drug plans.

Requires offering of a range of Medicare supplemental policies.

Extends the qualifying individual program.

Provides for application of a full low-income subsidy assets test under the Medicare Savings Program.

Eliminates Medicare part D (Voluntary Prescription Drug Benefit Program) late enrollment penalties paid by subsidy-eligible individuals.

Directs the Secretary of Health and Human Services to make grants to states for state health insurance assistance programs, area agencies on aging, and aging and disability resource centers.

Authorizes the Secretary to award grants to states for increasing the delivery of mental health services or other health care services to meet the needs of veterans of Operation Iraqi Freedom and Operation Enduring Freedom living in rural areas.

Permits rebasing for sole community hospitals.

Directs the Secretary to establish a demonstration project for development and testing of new community health integration models in certain rural counties.

Amends the Tax Relief and Health Care Act of 2006, as amended by the Medicare, Medicaid, and SCHIP Extension Act of 2007, to extend through FY2009 the reclassification of certain hospitals.

Increases physicians' payments. Revises requirements for and extends the quality reporting system, including incentive payments.

Directs the Secretary to establish a Physician Feedback Program.

Provides for: (1) incentives for electronic prescribing of medicine; (2) expanded access to primary care services; (3) extension of the floor on Medicare work geographic adjustment under the Medicare physician fee schedule; and (4) an accreditation requirement for advanced diagnostic imaging services.

Revises requirements for Medicare anesthesia teaching programs.

Makes permanent the exception to the 60-day limit on Medicare reciprocal billing arrangements between two physicians over a longer continuous period during all of which one of them is ordered to active duty as a member of a reserve component of the armed forces.

Provides for coverage of pulmonary and cardiac rehabilitation.

Revises payment rules for power-driven wheelchairs.

Extends increased Medicare payments for ground ambulance services.

Amends the Public Health Services Act to direct the Secretary to establish pilot projects with respect to chronic kidney disease.

Revises requirements for renal dialysis.

Provides for phase-out of indirect costs of medical education from capitation rates.

Revises requirements for MA private fee-for-service plans as well as MA plans for special needs individuals.

Modifies requirements for quality improvement programs.

Requires prompt payment of clean claims by prescription drug plans and MA-Prescription Drug plans under Medicare part D.

Revises the definition of medically accepted indication for drugs.

Directs the Secretary to: (1) contract with a consensus-based entity for certain activities relating to health care performance measurement; and (2) evaluate and report to Congress on approaches for the collection of data regarding health care disparities.

Creates the Medicare Improvement Fund.

Extends the transitional medical assistance (TMA), the abstinence education program, and allotments for disproportionate share hospitals (DSHs) under SSA title XIX (Medicaid).

Amends the Deficit Reduction Act of 2005 to extend supplemental grants under SSA title IV part D (Temporary Assistance for Needy Families) (TANF).

Amends the Public Health Service Act to extend special diabetes grant programs.