AN ACTTo amend title XVIII of the Social Security Act to provide for a voluntary program for prescription drug coverage under the Medicare Program, to modernize the Medicare Program, to amend the Internal Revenue Code of 1986 to allow a deduction to individuals for amounts contributed to health savings security accounts and health savings accounts, to provide for the disposition of unused health benefits in cafeteria plans and flexible spending arrangements, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; REFERENCES TO BIPA AND SECRETARY; TABLE OF CONTENTS. (a) [42 U.S.C. 1305 note] Short Title.—This Act may be cited as the “Medicare Prescription Drug, Improvement, and Modernization Act of 2003”. (b) Amendments to Social Security Act.—Except as otherwise specifically provided, whenever in division A of this Act an amendment is expressed in 1301terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. (c) [42 U.S.C. 1301 note] BIPA; Secretary.—In this Act: (1) BIPA.—The term “BIPA” means the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, as enacted into law by section 1(a)(6) of Public Law 106-554. (2) Secretary.—The term “Secretary” means the Secretary of Health and Human Services. (d) Table of Contents.—The table of contents for this Act is as follows: Sec. 1. Short title; amendments to Social Security Act; references to BIPA and Secretary; table of contents. TITLE I—MEDICARE PRESCRIPTION DRUG BENEFIT Sec. 101. Medicare prescription drug benefit. Sec. 102. Medicare Advantage conforming amendments. Sec. 103. Medicaid amendments. Sec. 104. Medigap amendments. Sec. 105. Additional provisions relating to medicare prescription drug discount card and transitional assistance program. Sec. 106. State Pharmaceutical Assistance Transition Commission. Sec. 107. Studies and reports. Sec. 108. Grants to physicians to implement electronic prescription drug programs. Sec. 109. Expanding the work of medicare Quality Improvement Organizations to include parts C and D. Sec. 110. Conflict of interest study. Sec. 111. Study on employment-based retiree health coverage. TITLE II—MEDICARE ADVANTAGE Subtitle A—Implementation of Medicare Advantage Program Sec. 201. Implementation of Medicare Advantage program. Subtitle B—Immediate Improvements Sec. 211. Immediate improvements. Subtitle C—Offering of Medicare Advantage (MA) Regional Plans; Medicare Advantage Competition Sec. 221. Establishment of MA regional plans. Sec. 222. Competition program beginning in 2006. Sec. 223. Effective date. Subtitle D—Additional Reforms Sec. 231. Specialized MA plans for special needs individuals. Sec. 232. Avoiding duplicative State regulation. Sec. 233. Medicare MSAs. Sec. 234. Extension of reasonable cost contracts. Sec. 235. Two-year extension of municipal health service demonstration projects. Sec. 236. Payment by PACE providers for medicare and medicaid services furnished by noncontract providers. Sec. 237. Reimbursement for federally qualified health centers providing services under MA plans. Sec. 238. Institute of Medicine evaluation and report on health care performance measures. Subtitle E—Comparative Cost Adjustment (CCA) Program Sec. 241. Comparative Cost Adjustment (CCA) program. TITLE III—COMBATTING WASTE, FRAUD, AND ABUSE Sec. 301. Medicare secondary payor (MSP) provisions. Sec. 302. Payment for durable medical equipment; competitive acquisition of certain items and services. Sec. 303. Payment reform for covered outpatient drugs and biologicals. Sec. 304. Extension of application of payment reform for covered outpatient drugs and biologicals to other physician specialties. Sec. 305. Payment for inhalation drugs. Sec. 306. Demonstration project for use of recovery audit contractors. Sec. 307. Pilot program for national and State background checks on direct patient access employees of long-term care facilities or providers. TITLE IV—RURAL PROVISIONS Subtitle A—Provisions Relating to Part A Only Sec. 401. Equalizing urban and rural standardized payment amounts under the medicare inpatient hospital prospective payment system. Sec. 402. Enhanced disproportionate share hospital (DSH) treatment for rural hospitals and urban hospitals with fewer than 100 beds. Sec. 403. Adjustment to the medicare inpatient hospital prospective payment system wage index to revise the labor-related share of such index. Sec. 404. More frequent update in weights used in hospital market basket. Sec. 405. Improvements to critical access hospital program. Sec. 406. Medicare inpatient hospital payment adjustment for low-volume hospitals. Sec. 407. Treatment of missing cost reporting periods for sole community hospitals. Sec. 408. Recognition of attending nurse practitioners as attending physicians to serve hospice patients. Sec. 409. Rural hospice demonstration project. Sec. 410. Exclusion of certain rural health clinic and federally qualified health center services from the prospective payment system for skilled nursing facilities. Sec. 410A. Rural community hospital demonstration program. Subtitle B—Provisions Relating to Part B Only Sec. 411. Two-year extension of hold harmless provisions for small rural hospitals and sole community hospitals under the prospective payment system for hospital outpatient department services. Sec. 412. Establishment of floor on work geographic adjustment. Sec. 413. Medicare incentive payment program improvements for physician scarcity. Sec. 414. Payment for rural and urban ambulance services. Sec. 415. Providing appropriate coverage of rural air ambulance services. Sec. 416. Treatment of certain clinical diagnostic laboratory tests furnished to hospital outpatients in certain rural areas. Sec. 417. Extension of telemedicine demonstration project. Sec. 418. Report on demonstration project permitting skilled nursing facilities to be originating telehealth sites; authority to implement. Subtitle C—Provisions Relating to Parts A and B Sec. 421. One-year increase for home health services furnished in a rural area. Sec. 422. Redistribution of unused resident positions. Subtitle D—Other Provisions Sec. 431. Providing safe harbor for certain collaborative efforts that benefit medically underserved populations. Sec. 432. Office of Rural Health Policy improvements. Sec. 433. MedPAC study on rural hospital payment adjustments. Sec. 434. Frontier extended stay clinic demonstration project. TITLE V—PROVISIONS RELATING TO PART A Subtitle A—Inpatient Hospital Services Sec. 501. Revision of acute care hospital payment updates. Sec. 502. Revision of the indirect medical education (IME) adjustment percentage. Sec. 503. Recognition of new medical technologies under inpatient hospital prospective payment system. Sec. 504. Increase in Federal rate for hospitals in Puerto Rico. Sec. 505. Wage index adjustment reclassification reform. Sec. 506. Limitation on charges for inpatient hospital contract health services provided to Indians by medicare participating hospitals. Sec. 507. Clarifications to certain exceptions to medicare limits on physician referrals. Sec. 508. One-time appeals process for hospital wage index classification. Subtitle B—Other Provisions Sec. 511. Payment for covered skilled nursing facility services. Sec. 512. Coverage of hospice consultation services. Sec. 513. Study on portable diagnostic ultrasound services for beneficiaries in skilled nursing facilities. TITLE VI—PROVISIONS RELATING TO PART B Subtitle A—Provisions Relating to Physicians’ Services Sec. 601. Revision of updates for physicians’ services. Sec. 602. Treatment of physicians’ services furnished in Alaska. Sec. 603. Inclusion of podiatrists, dentists, and optometrists under private contracting authority. Sec. 604. GAO study on access to physicians’ services. Sec. 605. Collaborative demonstration-based review of physician practice expense geographic adjustment data. Sec. 606. MedPAC report on payment for physicians’ services. Subtitle B—Preventive Services Sec. 611. Coverage of an initial preventive physical examination. Sec. 612. Coverage of cardiovascular screening blood tests. Sec. 613. Coverage of diabetes screening tests. Sec. 614. Improved payment for certain mammography services. Subtitle C—Other Provisions Sec. 621. Hospital outpatient department (HOPD) payment reform. Sec. 622. Limitation of application of functional equivalence standard. Sec. 623. Payment for renal dialysis services. Sec. 624. Two-year moratorium on therapy caps; provisions relating to reports. Sec. 625. Waiver of part B late enrollment penalty for certain military retirees; special enrollment period. Sec. 626. Payment for services furnished in ambulatory surgical centers. Sec. 627. Payment for certain shoes and inserts under the fee schedule for orthotics and prosthetics. Sec. 628. Payment for clinical diagnostic laboratory tests. Sec. 629. Indexing part B deductible to inflation. Sec. 630. Five-year authorization of reimbursement for all medicare part B services furnished by certain Indian hospitals and clinics. Subtitle D—Additional Demonstrations, Studies, and Other Provisions Sec. 641. Demonstration project for coverage of certain prescription drugs and biologicals. Sec. 642. Extension of coverage of Intravenous Immune Globulin (IVIG) for the treatment of primary immune deficiency diseases in the home. Sec. 643. MedPAC study of coverage of surgical first assisting services of certified registered nurse first assistants. Sec. 644. MedPAC study of payment for cardio-thoracic surgeons. Sec. 645. Studies relating to vision impairments. Sec. 646. Medicare health care quality demonstration programs. Sec. 647. MedPAC study on direct access to physical therapy services. Sec. 648. Demonstration project for consumer-directed chronic outpatient services. Sec. 649. Medicare care management performance demonstration. Sec. 650. GAO study and report on the propagation of concierge care. Sec. 651. Demonstration of coverage of chiropractic services under medicare. TITLE VII—PROVISIONS RELATING TO PARTS A AND B Subtitle A—Home Health Services Sec. 701. Update in home health services. Sec. 702. Demonstration project to clarify the definition of homebound. Sec. 703. Demonstration project for medical adult day care services. Sec. 704. Temporary suspension of OASIS requirement for collection of data on non-medicare and non-medicaid patients. Sec. 705. MedPAC study on medicare margins of home health agencies. Sec. 706. Coverage of religious nonmedical health care institution services furnished in the home. Subtitle B—Graduate Medical Education Sec. 711. Extension of update limitation on high cost programs. Sec. 712. Exception to initial residency period for geriatric residency or fellowship programs. Sec. 713. Treatment of volunteer supervision. Subtitle C—Chronic Care Improvement Sec. 721. Voluntary chronic care improvement under traditional fee-for-service. Sec. 722. Medicare Advantage quality improvement programs. Sec. 723. Chronically ill medicare beneficiary research, data, demonstration strategy. Subtitle D—Other Provisions Sec. 731. Improvements in national and local coverage determination process to respond to changes in technology. Sec. 732. Extension of treatment of certain physician pathology services under medicare. Sec. 733. Payment for pancreatic islet cell investigational transplants for medicare beneficiaries in clinical trials. Sec. 734. Restoration of medicare trust funds. Sec. 735. Modifications to Medicare Payment Advisory Commission (MedPAC). Sec. 736. Technical amendments. TITLE VIII—COST CONTAINMENT Subtitle A—Cost Containment Sec. 801. Inclusion in annual report of medicare trustees of information on status of medicare trust funds. Sec. 802. Presidential submission of legislation. Sec. 803. Procedures in the House of Representatives. Sec. 804. Procedures in the Senate. Subtitle B—Income-Related Reduction in Part B Premium Subsidy Sec. 811. Income-related reduction in part B premium subsidy. TITLE IX—ADMINISTRATIVE IMPROVEMENTS, REGULATORY REDUCTION, AND CONTRACTING REFORM Sec. 900. Administrative improvements within the Centers for Medicare & Medicaid Services (CMS). Subtitle A—Regulatory Reform Sec. 901. Construction; definition of supplier. Sec. 902. Issuance of regulations. Sec. 903. Compliance with changes in regulations and policies. Sec. 904. Reports and studies relating to regulatory reform. Subtitle B—Contracting Reform Sec. 911. Increased flexibility in medicare administration. Sec. 912. Requirements for information security for medicare administrative contractors. Subtitle C—Education and Outreach Sec. 921. Provider education and technical assistance. Sec. 922. Small provider technical assistance demonstration program. Sec. 923. Medicare Beneficiary Ombudsman. Sec. 924. Beneficiary outreach demonstration program. Sec. 925. Inclusion of additional information in notices to beneficiaries about skilled nursing facility benefits. Sec. 926. Information on medicare-certified skilled nursing facilities in hospital discharge plans. Subtitle D—Appeals and Recovery Sec. 931. Transfer of responsibility for medicare appeals. Sec. 932. Process for expedited access to review. Sec. 933. Revisions to medicare appeals process. Sec. 934. Prepayment review. Sec. 935. Recovery of overpayments. Sec. 936. Provider enrollment process; right of appeal. Sec. 937. Process for correction of minor errors and omissions without pursuing appeals process. Sec. 938. Prior determination process for certain items and services; advance beneficiary notices. Sec. 939. Appeals by providers when there is no other party available. Sec. 940. Revisions to appeals timeframes and amounts. Sec. 940A. Mediation process for local coverage determinations. Subtitle E—Miscellaneous Provisions Sec. 941. Policy development regarding evaluation and management (E & M) documentation guidelines. Sec. 942. Improvement in oversight of technology and coverage. Sec. 943. Treatment of hospitals for certain services under medicare secondary payor (MSP) provisions. Sec. 944. EMTALA improvements. Sec. 945. Emergency Medical Treatment and Labor Act (EMTALA) Technical Advisory Group. Sec. 946. Authorizing use of arrangements to provide core hospice services in certain circumstances. Sec. 947. Application of OSHA bloodborne pathogens standard to certain hospitals. Sec. 948. BIPA-related technical amendments and corrections. Sec. 949. Conforming authority to waive a program exclusion. Sec. 950. Treatment of certain dental claims. Sec. 951. Furnishing hospitals with information to compute DSH formula. Sec. 952. Revisions to reassignment provisions. Sec. 953. Other provisions. TITLE X—MEDICAID AND MISCELLANEOUS PROVISIONS Subtitle A—Medicaid Provisions Sec. 1001. Medicaid disproportionate share hospital (DSH) payments. Sec. 1002. Clarification of inclusion of inpatient drug prices charged to certain public hospitals in the best price exemptions for the medicaid drug rebate program. Sec. 1003. Extension of moratorium. Subtitle B—Miscellaneous Provisions Sec. 1011. Federal reimbursement of emergency health services furnished to undocumented aliens. Sec. 1012. Commission on Systemic Interoperability. Sec. 1013. Research on outcomes of health care items and services. Sec. 1014. Health care that works for all Americans: Citizens Health Care Working Group. Sec. 1015. Funding start-up administrative costs for medicare reform. Sec. 1016. Health care infrastructure improvement program. TITLE XI—ACCESS TO AFFORDABLE PHARMACEUTICALS Subtitle A—Access to Affordable Pharmaceuticals Sec. 1101. Thirty-month stay-of-effectiveness period. Sec. 1102. Forfeiture of 180-day exclusivity period. Sec. 1103. Bioavailability and bioequivalence. Sec. 1104. Conforming amendments. Subtitle B—Federal Trade Commission Review Sec. 1111. Definitions. Sec. 1112. Notification of agreements. Sec. 1113. Filing deadlines. Sec. 1114. Disclosure exemption. Sec. 1115. Enforcement. Sec. 1116. Rulemaking. Sec. 1117. Savings clause. Sec. 1118. Effective date. Subtitle C—Importation of Prescription Drugs Sec. 1121. Importation of prescription drugs. Sec. 1122. Study and report on importation of drugs. Sec. 1123. Study and report on trade in pharmaceuticals. TITLE XII—TAX INCENTIVES FOR HEALTH AND RETIREMENT SECURITY Sec. 1201. Health savings accounts. Sec. 1202. Exclusion from gross income of certain Federal subsidies for prescription drug plans. Sec. 1203. Exception to information reporting requirements related to certain health arrangements.

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