[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2860 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 2860

To amend title XVIII of the Social Security Act to protect and preserve 
    access of Medicare beneficiaries in rural areas to health care 
     providers under the Medicare Program, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 2007

   Mr. Pomeroy (for himself, Mr. Walden of Oregon, Mr. Stupak, Mrs. 
Emerson, Mr. Thompson of California, Mr. Moran of Kansas, Mr. Kind, Mr. 
 Peterson of Pennsylvania, Mr. Allen, Mr. Berry, Mr. Camp of Michigan, 
 Ms. Herseth Sandlin, Mr. McIntyre, Mr. Tanner, Mr. Bishop of Georgia, 
 Mr. Boswell, Mr. Boyd of Florida, Mr. Boucher, Mrs. Boyda of Kansas, 
Mr. Braley of Iowa, Mr. Carney, Mr. Davis of Alabama, Mr. Edwards, Mr. 
    Etheridge, Mr. Gilchrest, Mr. Graves, Mr. Hare, Mr. Hastings of 
 Washington, Mr. Hinchey, Ms. Jackson-Lee of Texas, Mr. Jones of North 
   Carolina, Mr. Kanjorski, Mr. LaHood, Mr. Lucas, Mr. Matheson, Mr. 
McHugh, Mrs. McMorris Rodgers, Mr. McNulty, Mr. Melancon, Mr. Oberstar, 
   Mr. Paul, Mr. Pickering, Mr. Rahall, Mr. Rehberg, Mr. Renzi, Mr. 
 Salazar, Mr. Simpson, Mr. Tiahrt, Mr. Welch of Vermont, Mr. Wilson of 
Ohio, Mr. Young of Alaska, Mr. Thornberry, and Mr. Ross) introduced the 
   following bill; which was referred to the Committee on Energy and 
  Commerce, and in addition to the Committee on Ways and Means, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend title XVIII of the Social Security Act to protect and preserve 
    access of Medicare beneficiaries in rural areas to health care 
     providers under the Medicare Program, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Care Access 
and Rural Equity (H-CARE) Act of 2007''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                  TITLE I--MEDICARE HOSPITAL SERVICES

Sec. 101. Fairness in the Medicare disproportionate share hospital 
                            (DSH) adjustment for rural hospitals.
Sec. 102. Treatment of Medicare hospital reclassifications.
Sec. 103. Critical access hospital improvements.
Sec. 104. Rebasing for sole community hospitals.
Sec. 105. Establishment of rural community hospital (RCH) program.
Sec. 106. Hold harmless through 2012 for small rural hospitals and sole 
                            community hospitals under the prospective 
                            payment system for hospital outpatient 
                            department services under the Medicare 
                            program.
                TITLE II--MEDICARE PRACTITIONER SERVICES

Sec. 201. Coverage of marriage and family therapist services and mental 
                            health counselor services under part B of 
                            the Medicare program.
Sec. 202. Permanent treatment of certain physician pathology services 
                            under Medicare.
Sec. 203. Extension of Medicare incentive payment program for physician 
                            scarcity areas.
Sec. 204. Extension of Medicare increase payments for ground ambulance 
                            services in rural areas.
Sec. 205. Extension of floor on Medicare work geographic adjustment.
                  TITLE III--OTHER MEDICARE PROVISIONS

Sec. 301. Ensuring proportional representation of interests of rural 
                            areas on MedPAC.
Sec. 302. Rural health clinic improvements.
Sec. 303. Use of medical conditions for coding ambulance services.
Sec. 304. Improvement in payments to retain emergency and other 
                            capacity for ambulances in rural areas.
Sec. 305. Medicare remote monitoring pilot projects.
Sec. 306. Minimum payment rate by Medicare Advantage organizations for 
                            services furnished by a critical access 
                            hospital and a rural health clinic.
Sec. 307. Prompt payment by Medicare prescription drug plans and MA-PD 
                            plans under part D.
Sec. 308. Extension of Medicare reasonable costs payments for certain 
                            clinical diagnostic laboratory tests 
                            furnished to hospital patients in certain 
                            rural areas.
Sec. 309. Extension of temporary Medicare payment increase for home 
                            health services furnished in a rural area.
                       TITLE IV--OTHER PROVISIONS

Sec. 401. Health information technology grants for rural health care 
                            providers.
Sec. 402. Rural health quality advisory commission and demonstration 
                            projects.
Sec. 403. Rural health care services.
Sec. 404. Community health center collaborative access expansion.
Sec. 405. Facilitating the provision of telehealth services across 
                            State lines.
Sec. 406. Expanded application of the 340B program to drugs provided in 
                            rural hospitals.

                  TITLE I--MEDICARE HOSPITAL SERVICES

SEC. 101. FAIRNESS IN THE MEDICARE DISPROPORTIONATE SHARE HOSPITAL 
              (DSH) ADJUSTMENT FOR RURAL HOSPITALS.

    Section 1886(d)(5)(F)(xiv)(II) of the Social Security Act (42 
U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended--
            (1) by striking ``or, in the case'' and all that follows 
        through ``subparagraph (G)(iv)''; and
            (2) by inserting at the end the following new sentence: 
        ``The preceding sentence shall not apply to any hospital with 
        respect to discharges occurring on or after October 1, 2007.''.

SEC. 102. TREATMENT OF MEDICARE HOSPITAL RECLASSIFICATIONS.

    (a) Extending Certain Medicare Hospital Wage Index 
Reclassifications Through Fiscal Year 2010.--
            (1) In general.--Section 106(a) of the Medicare 
        Improvements and Extension Act of 2006 (division B of public 
        Law 109-432) is amended by striking ``September 30, 2007'' and 
        inserting ``September 30, 2010''.
            (2) Special exception reclassifications.--The Secretary of 
        Health and Human Services shall extend for discharges occurring 
        through September 30, 2013, the special exception 
        reclassification of a sole community hospital located in a 
        State with less than 10 people per square mile, made under the 
        authority of section 1886(d)(5)(I)(i) of the Social Security 
        Act (42 U.S.C. 1395ww(d)(5)(I)(i)) and contained in the final 
        rule promulgated by the Secretary in the Federal Register on 
        August 11, 2004 (69 Fed. Reg. 49107).
    (b) Disregarding Section 508 Hospital Reclassifications for 
Purposes of Group Reclassifications.--Section 508 of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003 (Public 
Law 108-173, 42 U.S.C. 1395ww note) is amended by adding at the end the 
following new subsection:
    ``(g) Disregarding Hospital Reclassifications for Purposes of Group 
Reclassifications.--For purposes of the reclassification of a group of 
hospitals in a geographic area under section 1886(d), a hospital 
reclassified under this section (including any such reclassification 
which is extended under section 106(a) of the Medicare Improvements and 
Extension Act of 2006) shall not be taken into account and shall not 
prevent the other hospitals in such area from establishing such a group 
for such purpose.''.

SEC. 103. CRITICAL ACCESS HOSPITAL IMPROVEMENTS.

    (a) Clarification of Payment for Clinical Laboratory Tests 
Furnished by Critical Access Hospitals.--
            (1) In general.--Section 1834(g)(4) of the Social Security 
        Act (42 U.S.C. 1395m(g)(4)) is amended--
                    (A) in the heading, by striking ``no beneficiary 
                cost-sharing'' and inserting ``treatment of''; and
                    (B) by adding at the end the following new 
                sentence: ``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--
                    ``(A) the individual with respect to whom such 
                services are furnished is physically present in the 
                critical access hospital at the time the specimen is 
                collected;
                    ``(B) such individual is registered as an 
                outpatient on the records of, and receives such 
                services directly from, the critical access hospital; 
                or
                    ``(C) payment is (or, but for this subsection, 
                would be) available for such services under the fee 
                schedule established under section 1833(h).''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to cost reporting periods beginning on or after 
        October 1, 2003.
    (b) Elimination of Isolation Test for Cost-Based Ambulance 
Reimbursement.--
            (1) In general.--Section 1834(l)(8) of the Social Security 
        Act (42 U.S.C. 1395m(l)(8)) is amended--
                    (A) in subparagraph (B)--
                            (i) by striking ``owned and''; and
                            (ii) by inserting ``(including when such 
                        services are provided by the entity under an 
                        arrangement with the hospital)'' after 
                        ``hospital''; and
                    (B) by striking the comma at the end of 
                subparagraph (B) and all that follows and inserting a 
                period.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to services furnished on or after January 1, 2008.
    (c) Provision of a More Flexible Alternative to the CAH Designation 
25 Inpatient Bed Limit Requirement.--
            (1) In general.--Section 1820(c)(2) of the Social Security 
        Act (42 U.S.C. 1395i-4(c)(2)) is amended--
                    (A) in subparagraph (B)(iii), by striking 
                ``provides not more than'' and inserting ``subject to 
                subparagraph (F), provides not more than''; and
                    (B) by adding at the end the following new 
                subparagraph:
                    ``(F) Alternative to 25 inpatient bed limit 
                requirement.--
                            ``(i) In general.--A State may elect to 
                        treat a facility, with respect to the 
                        designation of the facility for a cost 
                        reporting period, as satisfying the requirement 
                        of subparagraph (B)(iii) relating to a maximum 
                        number of acute care inpatient beds if the 
                        facility elects, in accordance with a method 
                        specified by the Secretary and before the 
                        beginning of the cost reporting period, to meet 
                        the requirement under clause (ii).
                            ``(ii) Alternate requirement.--The 
                        requirement under this clause, with respect to 
                        a facility and a cost reporting period, is that 
                        the total number of inpatient bed days 
                        described in subparagraph (B)(iii) during such 
                        period will not exceed 7,300. For purposes of 
                        this subparagraph, an individual who is an 
                        inpatient in a bed in the facility for a single 
                        day shall be counted as one inpatient bed day.
                            ``(iii) Withdrawal of election.--The option 
                        described in clause (i) shall not apply to a 
                        facility for a cost reporting period if the 
                        facility (for any two consecutive cost 
                        reporting periods during the previous 5 cost 
                        reporting periods) was treated under such 
                        option and had a total number of inpatient bed 
                        days for each of such two cost reporting 
                        periods that exceeded the number specified in 
                        such clause.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to cost reporting periods beginning on or after the 
        date of the enactment of this Act.

SEC. 104. REBASING FOR SOLE COMMUNITY HOSPITALS.

    (a) Rebasing Permitted.--Section 1886(b)(3) of the Social Security 
Act (42 U.S.C. 1395ww(b)(3)) is amended by adding at the end the 
following new subparagraph:
    ``(K)(i) For cost reporting periods beginning on or after October 
1, 2007, 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--
            ``(I) with respect to discharges occurring in fiscal year 
        2008, 75 percent of the subsection (d)(5)(D)(i) amount (as 
        described in subparagraph (I)(i)(I)) and 25 percent of the 
        subparagraph (K) rebased target amount (as defined in clause 
        (ii));
            ``(II) with respect to discharges occurring in fiscal year 
        2009, 50 percent of the subsection (d)(5)(D)(i) amount and 50 
        percent of the subparagraph (K) rebased target amount;
            ``(III) with respect to discharges occurring in fiscal year 
        2010, 25 percent of the subsection (d)(5)(D)(i) amount and 75 
        percent of the subparagraph (K) rebased target amount; and
            ``(IV) with respect to discharges occurring after fiscal 
        year 2010, 100 percent of the subparagraph (K) rebased target 
        amount.
    ``(ii) For purposes of this subparagraph, the `subparagraph (K) 
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 2002;
            ``(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, 2007; and
            ``(III) the applicable percentage increase shall only be 
        applied under subparagraph (C)(iv) for discharges occurring in 
        fiscal years beginning with fiscal year 2009.''.
    (b) Conforming Amendments.--Section 1886(b)(3) of such Act (42 
U.S.C. 1395ww(b)(3)) is amended--
            (1) in subparagraph (C), by inserting ``and subparagraph 
        (K)'' after ``subject to subparagraph (I)'' in the matter 
        preceding clause (i); and
            (2) in subparagraph (I)(i)--
                    (A) by striking ``For'' in the matter preceding 
                subclause (I) and inserting ``Subject to subparagraph 
                (K), for''; and
                    (B) in subclause (I), by inserting ``and 
                subparagraph (K)'' after ``referred to in this 
                clause''.

SEC. 105. ESTABLISHMENT OF RURAL COMMUNITY HOSPITAL (RCH) PROGRAM.

    (a) In General.--Section 1861 of the Social Security Act (42 U.S.C. 
1395x), as amended by section 201, is amended by adding at the end of 
the following new subsection:

     ``Rural Community Hospital; Rural Community Hospital Services

    ``(ddd)(1) The term `rural community hospital' means a hospital (as 
defined in subsection (e)) that--
            ``(A) is located in a rural area (as defined in section 
        1886(d)(2)(D)) or treated as being so located pursuant to 
        section 1886(d)(8)(E);
            ``(B) subject to paragraph (2), has less than 51 acute care 
        inpatient beds, as reported in its most recent cost report;
            ``(C) makes available 24-hour emergency care services;
            ``(D) subject to paragraph (3), has a provider agreement in 
        effect with the Secretary and is open to the public as of 
        January 1, 2008; and
            ``(E) applies to the Secretary for such designation.
    ``(2) For purposes of paragraph (1)(B), beds in a psychiatric or 
rehabilitation unit of the hospital which is a distinct part of the 
hospital shall not be counted.
    ``(3) Subparagraph (1)(D) shall not be construed to prohibit any of 
the following from qualifying as a rural community hospital:
            ``(A) A replacement facility (as defined by the Secretary 
        in regulations in effect on January 1, 2008) with the same 
        service area (as defined by the Secretary in regulations in 
        effect on such date).
            ``(B) A facility obtaining a new provider number pursuant 
        to a change of ownership.
            ``(C) A facility which has a binding written agreement with 
        an outside, unrelated party for the construction, 
        reconstruction, lease, rental, or financing of a building as of 
        January 1, 2008.
    ``(4) Nothing in this subsection shall be construed as prohibiting 
a critical access hospital from qualifying as a rural community 
hospital if the critical access hospital meets the conditions otherwise 
applicable to hospitals under subsection (e) and section 1866.
    ``(5) Nothing in this subsection shall be construed as prohibiting 
a rural community hospital participating in the demonstration program 
under Section 410A of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2313) from 
qualifying as a rural community hospital if the rural community 
hospital meets the conditions otherwise applicable to hospitals under 
subsection (e) and section 1866.''.
    (b) Payment.--
            (1) Inpatient hospital services.--Section 1814 of the 
        Social Security Act (42 U.S.C. 1395f) is amended by adding at 
        the end the following new subsection:

``Payment for Inpatient Services Furnished in Rural Community Hospitals

    ``(m) The amount of payment under this part for inpatient hospital 
services furnished in a rural community hospital, other than such 
services furnished in a psychiatric or rehabilitation unit of the 
hospital which is a distinct part, is, at the election of the hospital 
in the application referred to in section 1861(ddd)(1)(E)--
            ``(1) 101 percent of the reasonable costs of providing such 
        services, without regard to the amount of the customary or 
        other charge, or
            ``(2) the amount of payment provided for under the 
        prospective payment system for inpatient hospital services 
        under section 1886(d).''.
            (2) Outpatient services.--Section 1834 of such Act (42 
        U.S.C. 1395m) is amended by adding at the end the following new 
        subsection:
    ``(n) Payment for Outpatient Services Furnished in Rural Community 
Hospitals.--The amount of payment under this part for outpatient 
services furnished in a rural community hospital is, at the election of 
the hospital in the application referred to in section 
1861(ddd)(1)(E)--
            ``(1) 101 percent of the reasonable costs of providing such 
        services, without regard to the amount of the customary or 
        other charge and any limitation under section 1861(v)(1)(U), or
            ``(2) the amount of payment provided for under the 
        prospective payment system for covered OPD services under 
        section 1833(t).''.
            (3) Exemption from 30-percent reduction in reimbursement 
        for bad debt.--Section 1861(v)(1)(T) of such Act (42 U.S.C. 
        1395x(v)(1)(T)) is amended by inserting ``(other than for a 
        rural community hospital)'' after ``In determining such 
        reasonable costs for hospitals''.
    (c) Beneficiary Cost-Sharing for Outpatient Services.--Section 
1834(n) of such Act (as added by subsection (b)(2)) is amended--
            (1) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively;
            (2) by inserting ``(1)'' after ``(n)''; and
            (3) by adding at the end the following:
    ``(2) The amounts of beneficiary cost-sharing for outpatient 
services furnished in a rural community hospital under this part shall 
be as follows:
            ``(A) For items and services that would have been paid 
        under section 1833(t) if provided by a hospital, the amount of 
        cost-sharing determined under paragraph (8) of such section.
            ``(B) For items and services that would have been paid 
        under section 1833(h) if furnished by a provider or supplier, 
        no cost-sharing shall apply.
            ``(C) For all other items and services, the amount of cost-
        sharing that would apply to the item or service under the 
        methodology that would be used to determine payment for such 
        item or service if provided by a physician, provider, or 
        supplier, as the case may be.''.
    (d) Conforming Amendments.--
            (1) Part a payment.--Section 1814(b) of such Act (42 U.S.C. 
        1395f(b)) is amended in the matter preceding paragraph (1) by 
        inserting ``other than inpatient hospital services furnished by 
        a rural community hospital,'' after ``critical access hospital 
        services,''.
            (2) Part b payment.--Section 1833(a) of such Act (42 U.S.C. 
        1395l(a)) is amended--
                    (A) in paragraph (2), in the matter before 
                subparagraph (A), by striking ``and (I)'' and inserting 
                ``(I), and (K)'';
                    (B) by striking ``and'' at the end of paragraph 
                (8);
                    (C) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                    (D) by adding at the end the following:
            ``(10) in the case of outpatient services furnished by a 
        rural community hospital, the amounts described in section 
        1834(n).''.
            (3) Technical amendments.--
                    (A) Consultation with state agencies.--Section 1863 
                of such Act (42 U.S.C. 1395z) is amended by striking 
                ``and (dd)(2)'' and inserting ``(dd)(2), (mm)(1), and 
                (ddd)(1)''.
                    (B) Provider agreements.--Section 1866(a)(2)(A) of 
                such Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by 
                inserting ``section 1834(n)(2),'' after ``section 
                1833(b),''.
    (e) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after October 1, 2007.

SEC. 106. HOLD HARMLESS THROUGH 2012 FOR SMALL RURAL HOSPITALS AND SOLE 
              COMMUNITY HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM 
              FOR HOSPITAL OUTPATIENT DEPARTMENT SERVICES UNDER THE 
              MEDICARE PROGRAM.

    Section 1833(t)(7)(D)(i) of the Social Security Act (42 U.S.C. 
1395l(t)(7)(D)) is amended--
            (1) in subclause (II)--
                    (A) by striking ``January 1, 2009'' and inserting 
                ``January 1, 2008'';
                    (B) by striking ``2006, 2007, or 2008'' and 
                inserting ``2006 or 2007''; and
                    (C) by striking ``95 percent, 90 percent, and 85 
                percent'' and inserting ``95 percent and 90 percent''; 
                and
            (2) by adding at the end the following new subclause:
                            ``(III) In the case of a hospital located 
                        in a rural area and that has not more than 100 
                        beds or a sole community hospital (as defined 
                        in section 1886(d)(5)(D)(iii)), for covered OPD 
                        services furnished after December 31, 2007, and 
                        before January 1, 2013, for which the PPS 
                        amount is less than the pre-BBA amount, the 
                        amount of payment under this subsection shall 
                        be increased by the amount of such 
                        difference.''.

                TITLE II--MEDICARE PRACTITIONER SERVICES

SEC. 201. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES AND MENTAL 
              HEALTH COUNSELOR SERVICES UNDER PART B OF THE MEDICARE 
              PROGRAM.

    (a) Coverage of Services.--
            (1) In general.--Section 1861(s)(2) of the Social Security 
        Act (42 U.S.C. 1395x(s)(2)) is amended--
                    (A) in subparagraph (Z), by striking ``and'' at the 
                end;
                    (B) in subparagraph (AA), by inserting ``and'' at 
                the end; and
                    (C) by adding at the end the following new 
                subparagraph:
            ``(BB) marriage and family therapist services (as defined 
        in subsection (ccc)(1)) and mental health counselor services 
        (as defined in subsection (ccc)(3));''.
            (2) Definitions.--Section 1861 of such Act (42 U.S.C. 
        1395x) is amended by adding at the end the following new 
        subsection:

     ``Marriage and Family Therapist Services; Marriage and Family 
  Therapist; Mental Health Counselor Services; Mental Health Counselor

    ``(ccc)(1) The term `marriage and family therapist services' means 
services performed by a marriage and family therapist (as defined in 
paragraph (2)) for the diagnosis and treatment of mental illnesses, 
which the marriage and family therapist is legally authorized to 
perform under State law (or the State regulatory mechanism provided by 
State law) of the State in which such services are performed, as would 
otherwise be covered if furnished by a physician or as an incident to a 
physician's professional service, but only if no facility or other 
provider charges or is paid any amounts with respect to the furnishing 
of such services.
    ``(2) The term `marriage and family therapist' means an individual 
who--
            ``(A) possesses a master's or doctoral degree which 
        qualifies for licensure or certification as a marriage and 
        family therapist pursuant to State law;
            ``(B) after obtaining such degree has performed at least 2 
        years of clinical supervised experience in marriage and family 
        therapy; and
            ``(C) in the case of an individual performing services in a 
        State that provides for licensure or certification of marriage 
        and family therapists, is licensed or certified as a marriage 
        and family therapist in such State.
    ``(3) The term `mental health counselor services' means services 
performed by a mental health counselor (as defined in paragraph (4)) 
for the diagnosis and treatment of mental illnesses which the mental 
health counselor is legally authorized to perform under State law (or 
the State regulatory mechanism provided by the State law) of the State 
in which such services are performed, as would otherwise be covered if 
furnished by a physician or as incident to a physician's professional 
service, but only if no facility or other provider charges or is paid 
any amounts with respect to the furnishing of such services.
    ``(4) The term `mental health counselor' means an individual who--
            ``(A) possesses a master's or doctor's degree in mental 
        health counseling or a related field;
            ``(B) after obtaining such a degree has performed at least 
        2 years of supervised mental health counselor practice; and
            ``(C) in the case of an individual performing services in a 
        State that provides for licensure or certification of mental 
        health counselors or professional counselors, is licensed or 
        certified as a mental health counselor or professional 
        counselor in such State.''.
            (3) Provision for payment under part b.--Section 
        1832(a)(2)(B) of such Act (42 U.S.C. 1395k(a)(2)(B)) is amended 
        by adding at the end the following new clause:
                            ``(v) marriage and family therapist 
                        services and mental health counselor 
                        services;''.
            (4) Amount of payment.--Section 1833(a)(1) of such Act (42 
        U.S.C. 1395l(a)(1)) is amended--
                    (A) by striking ``and (V)'' and inserting ``(V)''; 
                and
                    (B) by inserting before the semicolon at the end 
                the following: ``, and (W) with respect to marriage and 
                family therapist services and mental health counselor 
                services under section 1861(s)(2)(BB), the amounts paid 
                shall be 80 percent of the lesser of the actual charge 
                for the services or 75 percent of the amount determined 
                for payment of a psychologist under subparagraph (L)''.
            (5) Exclusion of marriage and family therapist services and 
        mental health counselor services from skilled nursing facility 
        prospective payment system.--Section 1888(e)(2)(A)(ii) of such 
        Act (42 U.S.C. 1395yy(e)(2)(A)(ii)) is amended by inserting 
        ``marriage and family therapist services (as defined in section 
        1861(ccc)(1)), mental health counselor services (as defined in 
        section 1861(ccc)(3)),'' after ``qualified psychologist 
        services,''.
            (6) Inclusion of marriage and family therapists and mental 
        health counselors as practitioners for assignment of claims.--
        Section 1842(b)(18)(C) of such Act (42 U.S.C. 1395u(b)(18)(C)) 
        is amended by adding at the end the following new clauses:
            ``(vii) A marriage and family therapist (as defined in 
        section 1861(ccc)(2)).
            ``(viii) A mental health counselor (as defined in section 
        1861(ccc)(4)).''.
    (b) Coverage of Certain Mental Health Services Provided in Certain 
Settings.--
            (1) Rural health clinics and federally qualified health 
        centers.--Section 1861(aa)(1)(B) of the Social Security Act (42 
        U.S.C. 1395x(aa)(1)(B)) is amended by striking ``or by a 
        clinical social worker (as defined in subsection (hh)(1)),'' 
        and inserting ``, by a clinical social worker (as defined in 
        subsection (hh)(1)), by a marriage and family therapist (as 
        defined in subsection (ccc)(2)), or by a mental health 
        counselor (as defined in subsection (ccc)(4)),''.
            (2) Hospice programs.--Section 1861(dd)(2)(B)(i)(III) of 
        such Act (42 U.S.C. 1395x(dd)(2)(B)(i)(III)) is amended by 
        inserting ``or one marriage and family therapist (as defined in 
        subsection (ccc)(2))'' after ``social worker''.
    (c) Authorization of Marriage and Family Therapists To Develop 
Discharge Plans for Post-Hospital Services.--Section 1861(ee)(2)(G) of 
the Social Security Act (42 U.S.C. 1395x(ee)(2)(G)) is amended by 
inserting ``marriage and family therapist (as defined in subsection 
(ccc)(2)),'' after ``social worker,''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to services furnished on or after January 1, 2008.

SEC. 202. PERMANENT TREATMENT OF CERTAIN PHYSICIAN PATHOLOGY SERVICES 
              UNDER MEDICARE.

    Section 1848(i) of the Social Security Act (42 U.S.C. 1395w-4(i)) 
is amended by adding at the end the following new paragraph:
            ``(4) Treatment of certain physician pathology services.--
                    ``(A) In general.--With respect to services 
                furnished on or after January 1, 2008, if an 
                independent laboratory furnishes the technical 
                component of a physician pathology service to a fee-
                for-service Medicare beneficiary who is an inpatient or 
                outpatient of a covered hospital, the Secretary shall 
                treat such component as a service for which payment 
                shall be made to the laboratory under this section and 
                not as an inpatient hospital service for which payment 
                is made to the hospital under section 1886(d) or as a 
                hospital outpatient service for which payment is made 
                to the hospital under section 1833(t).
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Covered hospital.--
                                    ``(I) In general.--The term 
                                `covered hospital' means, with respect 
                                to an inpatient or outpatient, a 
                                hospital that had an arrangement with 
                                an independent laboratory that was in 
                                effect as of July 22, 1999, under which 
                                a laboratory furnished the technical 
                                component of physician pathology 
                                services to fee-for-service Medicare 
                                beneficiaries who were hospital 
                                inpatients or outpatients, 
                                respectively, and submitted claims for 
                                payment for such component to a carrier 
                                with a contract under section 1842 and 
                                not to the hospital.
                                    ``(II) Change in ownership does not 
                                affect determination.--A change in 
                                ownership with respect to a hospital on 
                                or after the date referred to in 
                                subclause (I) shall not affect the 
                                determination of whether such hospital 
                                is a covered hospital for purposes of 
                                such subclause.
                            ``(ii) Fee-for-service medicare 
                        beneficiary.--The term `fee-for-service 
                        Medicare beneficiary' means an individual who 
                        is entitled to (or enrolled for) benefits under 
                        part A, or enrolled under this part, or both, 
                        but who is not enrolled in any of the 
                        following:
                                    ``(I) A Medicare Advantage plan 
                                under part C.
                                    ``(II) A plan offered by an 
                                eligible organization under section 
                                1876.
                                    ``(III) A program of all-inclusive 
                                care for the elderly (PACE) under 
                                section 1894.
                                    ``(IV) A social health maintenance 
                                organization (SHMO) demonstration 
                                project established under section 
                                4018(b) of the Omnibus Budget 
                                Reconciliation Act of 1987 (Public Law 
                                100-203).
                    ``(C) Reference.--For the provision related to the 
                treatment of certain services furnished prior to 
                January 1, 2008, see section 542 of the Medicare, 
                Medicaid, and SCHIP Benefits Improvement and Protection 
                Act of 2000, as amended by section 732 of the Medicare 
                Prescription Drug, Improvement, and Modernization Act 
                of 2003 and section 104 of the Medicare Improvements 
                and Extension Act of 2006 (division B of Public Law 
                109-432).''.

SEC. 203. EXTENSION OF MEDICARE INCENTIVE PAYMENT PROGRAM FOR PHYSICIAN 
              SCARCITY AREAS.

    Section 1833(u)(1) of the Social Security Act (42 U.S.C. 
1395l(u)(1)) is amended by striking ``2008'' and inserting ``2013''.

SEC. 204. EXTENSION OF MEDICARE INCREASE PAYMENTS FOR GROUND AMBULANCE 
              SERVICES IN RURAL AREAS.

    Section 1834(l)(13) of the Social Security Act (42 U.S.C. 
1395m(l)(13)) is amended--
            (1) in subparagraph (A)--
                    (A) in the matter before clause (i), by striking 
                ``furnished on or after July 1, 2004, and before 
                January 1, 2007,'';
                    (B) in clause (i), by inserting ``for services 
                furnished on or after July 1, 2004, and before January 
                1, 2012,'' after ``in such paragraph,''; and
                    (C) in clause (ii), by inserting ``for services 
                furnished on or after July 1, 2004, and before January 
                1, 2007,'' after ``in clause (i),''; and
            (2) in subparagraph (B)--
                    (A) in the heading, by striking ``after 2006'' and 
                inserting ``for subsequent periods'';
                    (B) by inserting ``clauses (i) and (ii) of'' before 
                ``subparagraph (A)''; and
                    (C) by striking ``in such subparagraph'' and 
                inserting ``in the respective clause''.

SEC. 205. EXTENSION OF FLOOR ON MEDICARE WORK GEOGRAPHIC ADJUSTMENT.

    Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 1395w-
4(e)(1)(E)) is amended by striking ``2008'' and inserting ``2012''.

                  TITLE III--OTHER MEDICARE PROVISIONS

SEC. 301. ENSURING PROPORTIONAL REPRESENTATION OF INTERESTS OF RURAL 
              AREAS ON MEDPAC.

    (a) In General.--Section 1805(c)(2) of the Social Security Act (42 
U.S.C. 1395b-6(c)(2)) is amended--
            (1) in subparagraph (A), by inserting ``consistent with 
        subparagraph (E)'' after ``rural representatives''; and
            (2) by adding at the end the following new subparagraph:
                    ``(E) Proportional representation of interests of 
                rural areas.--In order to provide a balance between 
                urban and rural representatives under subparagraph (A), 
                the proportion of members who represent the interests 
                of health care providers and Medicare beneficiaries 
                located in rural areas shall be no less than the 
                proportion, of the total number of Medicare 
                beneficiaries, who reside in rural areas.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to appointments made to the Medicare Payment 
Advisory Commission after the date of the enactment of this Act.

SEC. 302. RURAL HEALTH CLINIC IMPROVEMENTS.

    Section 1833(f) of the Social Security Act (42 U.S.C. 1395l(f)) is 
amended--
            (1) in paragraph (1), by striking ``, and'' at the end and 
        inserting a semicolon;
            (2) in paragraph (2)--
                    (A) by inserting ``(before 2008)'' after ``in a 
                subsequent year''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (3) by adding at the end the following new paragraphs:
            ``(3) in 2008, at $92 per visit; and
            ``(4) in a subsequent year, at the limit established under 
        this subsection for the previous year increased by the 
        percentage increase in the MEI (as so defined) applicable to 
        primary care services (as so defined) furnished as of the first 
        day of that year.''.

SEC. 303. USE OF MEDICAL CONDITIONS FOR CODING AMBULANCE SERVICES.

    Section 1834(l)(7) of the Social Security Act (42 U.S.C. 
1395m(l)(7)) is amended to read as follows:
            ``(7) Coding system.--
                    ``(A) In general.--The Secretary shall, in 
                accordance with section 1173(c)(1)(B) and not later 
                than January 1, 2008, establish a mandatory system or 
                systems for the coding of claims for ambulance services 
                for which payment is made under this subsection, 
                including a code set specifying the medical condition 
                of the individual who is transported and the level of 
                service that is appropriate for the transportation of 
                an individual with that medical condition.
                    ``(B) Medical conditions.--The code set established 
                under subparagraph (A) shall take into account the list 
                of medical conditions developed in the course of the 
                negotiated rulemaking process conducted under paragraph 
                (1).''.

SEC. 304. IMPROVEMENT IN PAYMENTS TO RETAIN EMERGENCY AND OTHER 
              CAPACITY FOR AMBULANCES IN RURAL AREAS.

    (a) In General.--Section 1834(l) of the Social Security Act (42 
U.S.C. 1395m(l)) is amended by adding at the end the following new 
paragraph:
            ``(15) Additional payments for providers furnishing 
        ambulance services in rural areas.--
                    ``(A) In general.--In the case of ground ambulance 
                services furnished on or after January 1, 2008, for 
                which the transportation originates in a rural area (as 
                determined under subparagraph (B)), the Secretary shall 
                provide for a percent increase in the base rate of the 
                fee schedule for a trip identified under this 
                subsection.
                    ``(B) Identification of rural areas.--The 
                Secretary, in consultation with the Office of Rural 
                Health Policy, shall use the Rural-Urban Commuting 
                Areas (RUCA) coding system, adopted by that Office, to 
                designate rural areas for the purposes of this 
                paragraph. A rural area is any area in RUCA levels 2 
                through 10 and any unclassified area.
                    ``(C) Tiering of rural areas.--The Secretary shall 
                designate 4 tiers of rural areas, using a ZIP Code 
                population-based methodology generated by the RUCA 
                coding system, as follows:
                            ``(i) Tier 1.--A rural area that is a high 
                        metropolitan commuting area, in which 30 
                        percent or more of the commuting flow is to an 
                        urban area, as designated by the Bureau of the 
                        Census (RUCA level 2).
                            ``(ii) Tier 2.--A rural area that is a low 
                        metropolitan commuting area, in which less than 
                        30 percent of the commuting flow is to an urban 
                        area or to a large town, as designated by the 
                        Bureau of the Census (RUCA levels 3-6).
                            ``(iii) Tier 3.--A rural area that is a 
                        small town core, as designated by the Bureau of 
                        the Census, in which no significant portion of 
                        the commuting flow is to an area of population 
                        greater than 10,000 people (RUCA levels 7-9).
                            ``(iv) Tier 4.--A rural area in which there 
                        is no dominant commuting flow (RUCA level 10) 
                        and any unclassified area.
                The Secretary shall consult with the Office of Rural 
                Health Policy not less often than every 2 years to 
                update the designation of rural areas in accordance 
                with any changes that are made to the RUCA system.
                    ``(D) Payment adjustments for trips in rural 
                areas.--The Secretary shall adjust the payment rate 
                under this section for ambulance trips that originate 
                in each of the tiers established in subparagraph (C) 
                according to the national average cost of full-cost 
                providers for providing ambulance services in each such 
                tier.''.
    (b) Review of Payments for Rural Ambulance Services and Report to 
Congress.--
            (1) Review.--Not later than July 1, 2009, the Secretary of 
        Health and Human Services shall review the system for adjusting 
        payments for rural ambulance services under section 1834(l)(15) 
        of the Social Security Act, as added by subsection (a), to 
        determine the adequacy and appropriateness of such adjustments. 
        In conducting such review, the Secretary shall consult with 
        providers and suppliers affected by such adjustments and with 
        representatives of the ambulance industry generally to 
        determine--
                    (A) whether such adjustments adequately cover the 
                additional costs incurred in serving areas of low 
                population density; and
                    (B) whether the tiered structure for making such 
                adjustments appropriately reflects the difference in 
                costs of providing services in different types of rural 
                areas.
            (2) Report.--Not later than January 1, 2011, the Secretary 
        shall submit to Congress a report on the review conducted under 
        paragraph (1) together with any recommendations for revision to 
        the systems for adjusting payments for ambulance services in 
        rural areas that the Secretary of Health and Human Services 
        determines appropriate.
    (c) Conforming Amendments.--(1) Section 1834(l) of the Social 
Security Act (42 U.S.C. 1395m(l)), as amended by subsection (a), is 
amended by adding at the end the following new paragraph:
            ``(16) Designation of rural areas for mileage payment 
        purposes.--In establishing any differential in the amount of 
        payment for mileage between rural and urban areas in the fee 
        schedule established under paragraph (1), the Secretary shall, 
        in the case of ambulance services furnished on or after January 
        1, 2008, identify rural areas in the same manner as provided in 
        paragraph (15)(B).''.
    (2) Section 1834(l)(12)(A) of such Act (42 U.S.C. 1395m(l)(12)(A)) 
is amended by striking ``January 1, 2010'' and inserting ``January 1, 
2008''.
    (3) Section 1834(l)(13)(A)(i) of such Act (42 U.S.C. 
1395m(l)(13)(A)(i)) is amended--
            (A) by inserting ``(or in the case of such services 
        furnished in 2008, in a rural area identified by the Secretary 
        under paragraph (15)(B))'' after ``such paragraph''; and
            (B) by striking ``paragraphs (11) and (12)'' and inserting 
        ``paragraphs (11), (12), and (15)''.

SEC. 305. MEDICARE REMOTE MONITORING PILOT PROJECTS.

    (a) Pilot Projects.--
            (1) In general.--Not later than 9 months after the date of 
        enactment of this Act, the Secretary of Health and Human 
        Services (in this section referred to as the ``Secretary'') 
        shall conduct pilot projects under title XVIII of the Social 
        Security Act for the purpose of providing incentives to home 
        health agencies to utilize home monitoring and communications 
        technologies that--
                    (A) enhance health outcomes for Medicare 
                beneficiaries; and
                    (B) reduce expenditures under such title.
            (2) Site requirements.--
                    (A) Urban and rural.--The Secretary shall conduct 
                the pilot projects under this section in both urban and 
                rural areas.
                    (B) Site in a small state.--The Secretary shall 
                conduct at least 3 of the pilot projects in a State 
                with a population of less than 1,000,000.
            (3) Definition of home health agency.--In this section, the 
        term ``home health agency'' has the meaning given that term in 
        section 1861(o) of the Social Security Act (42 U.S.C. 
        1395x(o)).
    (b) Medicare Beneficiaries Within the Scope of Projects.--The 
Secretary shall specify the criteria for identifying those Medicare 
beneficiaries who shall be considered within the scope of the pilot 
projects under this section for purposes of the application of 
subsection (c) and for the assessment of the effectiveness of the home 
health agency in achieving the objectives of this section. Such 
criteria may provide for the inclusion in the projects of Medicare 
beneficiaries who begin receiving home health services under title 
XVIII of the Social Security Act after the date of the implementation 
of the projects.
    (c) Incentives.--
            (1) Performance targets.--The Secretary shall establish for 
        each home health agency participating in a pilot project under 
        this section a performance target using one of the following 
        methodologies, as determined appropriate by the Secretary:
                    (A) Adjusted historical performance target.--The 
                Secretary shall establish for the agency--
                            (i) a base expenditure amount equal to the 
                        average total payments made to the agency under 
                        parts A and B of title XVIII of the Social 
                        Security Act for Medicare beneficiaries 
                        determined to be within the scope of the pilot 
                        project in a base period determined by the 
                        Secretary; and
                            (ii) an annual per capita expenditure 
                        target for such beneficiaries, reflecting the 
                        base expenditure amount adjusted for risk and 
                        adjusted growth rates.
                    (B) Comparative performance target.--The Secretary 
                shall establish for the agency a comparative 
                performance target equal to the average total payments 
                under such parts A and B during the pilot project for 
                comparable individuals in the same geographic area that 
                are not determined to be within the scope of the pilot 
                project.
            (2) Incentive.--Subject to paragraph (3), the Secretary 
        shall pay to each participating home care agency an incentive 
        payment for each year under the pilot project equal to a 
        portion of the Medicare savings realized for such year relative 
        to the performance target under paragraph (1).
            (3) Limitation on expenditures.--The Secretary shall limit 
        incentive payments under this section in order to ensure that 
        the aggregate expenditures under title XVIII of the Social 
        Security Act (including incentive payments under this 
        subsection) do not exceed the amount that the Secretary 
        estimates would have been expended if the pilot projects under 
        this section had not been implemented.
    (d) Waiver Authority.--The Secretary may waive such provisions of 
titles XI and XVIII of the Social Security Act as the Secretary 
determines to be appropriate for the conduct of the pilot projects 
under this section.
    (e) Report to Congress.--Not later than 5 years after the date that 
the first pilot project under this section is implemented, the 
Secretary shall submit to Congress a report on the pilot projects. Such 
report shall contain a detailed description of issues related to the 
expansion of the projects under subsection (f) and recommendations for 
such legislation and administrative actions as the Secretary considers 
appropriate.
    (f) Expansion.--If the Secretary determines that any of the pilot 
projects under this section enhance health outcomes for Medicare 
beneficiaries and reduce expenditures under title XVIII of the Social 
Security Act, the Secretary may initiate comparable projects in 
additional areas.
    (g) Incentive Payments Have No Effect on Other Medicare Payments to 
Agencies.--An incentive payment under this section--
            (1) shall be in addition to the payments that a home health 
        agency would otherwise receive under title XVIII of the Social 
        Security Act for the provision of home health services; and
            (2) shall have no effect on the amount of such payments.

SEC. 306. MINIMUM PAYMENT RATE BY MEDICARE ADVANTAGE ORGANIZATIONS FOR 
              SERVICES FURNISHED BY A CRITICAL ACCESS HOSPITAL AND A 
              RURAL HEALTH CLINIC.

    (a) In General.--Section 1857(e) of the Social Security Act (42 
U.S.C. 1395w-27(e)) is amended by adding at the end the following:
            ``(4) Minimum payment rate for services furnished by a 
        critical access hospital and a rural health clinic.--A contract 
        under this section between an MA organization and the Secretary 
        for the offering of an MA plan shall require the organization 
        to provide for a payment rate under the plan for inpatient and 
        outpatient critical access hospital services and rural health 
        clinic services furnished to enrollees of the plan and for 
        extended care services furnished by a critical access hospital 
        under an agreement entered into under section 1883 to such 
        enrollees (whether or not the services are furnished pursuant 
        to an agreement between such organization and a critical access 
        hospital or a rural health clinic) that is not less than--
                    ``(A) the applicable payment rate established under 
                part A or part B (which includes the payment of an 
                interim rate and a subsequent cost reconciliation) with 
                respect to the critical access hospital for such 
                inpatient, outpatient, and extended care services or 
                the rural health clinic for such rural health clinic 
                services; or
                    ``(B) if the critical access hospital or the rural 
                health clinic determines appropriate, 103 percent of 
                the applicable interim payment rate established under 
                part A or part B with respect to the critical access 
                hospital for such inpatient, outpatient, and extended 
                care services or the rural health clinic for such rural 
                health clinic services.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to Medicare Advantage contract years beginning on or after 
January 1, 2008.

SEC. 307. PROMPT PAYMENT BY MEDICARE PRESCRIPTION DRUG PLANS AND MA-PD 
              PLANS UNDER PART D.

    (a) Application to Prescription Drug Plans.--Section 1860D-12(b) of 
the Social Security Act (42 U.S.C. 1395w-112(b)) is amended by adding 
at the end the following new paragraph:
            ``(4) Prompt payment of clean claims.--
                    ``(A) Prompt payment.--Each contract entered into 
                with a PDP sponsor under this subsection with respect 
                to a prescription drug plan offered by such sponsor 
                shall provide that payment shall be issued, mailed, or 
                otherwise transmitted with respect to all clean claims 
                submitted under this part within the applicable number 
                of calendar days after the date on which the claim is 
                received.
                    ``(B) Definitions.--In this paragraph:
                            ``(i) Clean claim.--The term `clean claim' 
                        means a claim, with respect to a covered part D 
                        drug, that has no apparent defect or 
                        impropriety (including any lack of any required 
                        substantiating documentation) or particular 
                        circumstance requiring special treatment that 
                        prevents timely payment from being made on the 
                        claim under this part.
                            ``(ii) Applicable number of calendar 
                        days.--The term `applicable number of calendar 
                        days' means--
                                    ``(I) with respect to claims 
                                submitted electronically, 14 calendar 
                                days; and
                                    ``(II) with respect to claims 
                                submitted otherwise, 30 calendar days.
                    ``(C) Interest payment.--If payment is not issued, 
                mailed, or otherwise transmitted within the applicable 
                number of calendar days (as defined in subparagraph 
                (B)) after a clean claim is received, interest shall be 
                paid at a rate used for purposes of section 3902(a) of 
                title 31, United States Code (relating to interest 
                penalties for failure to make prompt payments), for the 
                period beginning on the day after the required payment 
                date and ending on the date on which payment is made.
                    ``(D) Procedures involving claims.--
                            ``(i) Claims deemed to be clean claims.--
                                    ``(I) In general.--A claim for a 
                                covered part D drug shall be deemed to 
                                be a clean claim for purposes of this 
                                paragraph if the PDP sponsor involved 
                                does not provide a notification of 
                                deficiency to the claimant by the 10th 
                                day that begins after the date on which 
                                the claim is submitted.
                                    ``(II) Notification of 
                                deficiency.--For purposes of subclause 
                                (II), the term `notification of 
                                deficiency' means a notification that 
                                specifies all defects or improprieties 
                                in the claim involved and that lists 
                                all additional information or documents 
                                necessary for the proper processing and 
                                payment of the claim.
                            ``(ii) Payment of clean portions of 
                        claims.--A PDP sponsor shall, as appropriate, 
                        pay any portion of a claim for a covered part D 
                        drug that would be a clean claim but for a 
                        defect or impropriety in a separate portion of 
                        the claim in accordance with subparagraph (A).
                            ``(iii) Obligation to pay.--A claim for a 
                        covered part D drug submitted to a PDP sponsor 
                        that is not paid or contested by the provider 
                        within the applicable number of calendar days 
                        (as defined in subparagraph (B)) shall be 
                        deemed to be a clean claim and shall be paid by 
                        the PDP sponsor in accordance with subparagraph 
                        (A).
                            ``(iv) Date of payment of claim.--Payment 
                        of a clean claim under subparagraph (A) is 
                        considered to have been made on the date on 
                        which full payment is received by the provider.
                    ``(E) Electronic transfer of funds.--A PDP sponsor 
                shall pay all clean claims submitted electronically by 
                an electronic funds transfer mechanism.''.
    (b) Application to MA-PD Plans.--Section 1857(f) of such Act (42 
U.S.C. 1395w-27) is amended by adding at the end the following new 
paragraph:
            ``(3) Incorporation of certain prescription drug plan 
        contract requirements.--The provisions of section 1860D-
        12(b)(4) shall apply to contracts with a Medicare Advantage 
        organization in the same manner as they apply to contracts with 
        a PDP sponsor offering a prescription drug plan under part 
        D.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contracts entered into or renewed on or after the date of the 
enactment of this Act.

SEC. 308. EXTENSION OF MEDICARE REASONABLE COSTS PAYMENTS FOR CERTAIN 
              CLINICAL DIAGNOSTIC LABORATORY TESTS FURNISHED TO 
              HOSPITAL PATIENTS IN CERTAIN RURAL AREAS.

    Section 416(b) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (Public Law 108-173; 117 Stat. 2282; 42 
U.S.C. 1395l-4(b)) is amended by striking ``2-year'' and inserting ``8-
year''.

SEC. 309. EXTENSION OF TEMPORARY MEDICARE PAYMENT INCREASE FOR HOME 
              HEALTH SERVICES FURNISHED IN A RURAL AREA.

    (a) In General.--Section 421 of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (Public Law 108-173; 117 
Stat. 2283; 42 U.S.C. 1395fff note), as amended by section 5201(b) of 
the Deficit Reduction Act of 2005, is amended--
            (1) in the heading, by striking ``one-year'' and inserting 
        ``temporary''; and
            (2) in subsection (a) by striking ``before April 1, 2005, 
        and episodes and visits beginning on or after January 1, 2006, 
        and before January 1, 2007'' and inserting ``before December 
        31, 2012''.
    (b) Application to Certain Home Health Services Furnished Prior to 
Date of Enactment.--For episodes and visits for home health services 
furnished on or after January 1, 2007, and before the date of the 
enactment of this Act, the Secretary of Health and Human Services shall 
provide for a lump sum payment, not later than 60 days after such 
enactment, of amounts due under the amendment made by subsection 
(a)(2).
    (c) Effective Date.--The amendments made by subsection (a) shall 
apply to episodes and visits on or after April 1, 2005.

                       TITLE IV--OTHER PROVISIONS

SEC. 401. HEALTH INFORMATION TECHNOLOGY GRANTS FOR RURAL HEALTH CARE 
              PROVIDERS.

    Title II of the Public Health Service Act is amended by adding at 
the end the following new part:

             ``PART D--HEALTH INFORMATION TECHNOLOGY GRANTS

``SEC. 271. GRANTS TO FACILITATE THE WIDESPREAD ADOPTION OF 
              INTEROPERABLE HEALTH INFORMATION TECHNOLOGY IN RURAL 
              AREAS.

    ``(a) Competitive Grants to Eligible Entities in Rural Areas.--
            ``(1) In general.--The Secretary may award competitive 
        grants to eligible entities in rural areas to facilitate the 
        purchase and enhance the utilization of qualified health 
        information technology systems to improve the quality and 
        efficiency of health care.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        paragraph (1) an entity shall--
                    ``(A) submit to the Secretary an application at 
                such time, in such manner, and containing such 
                information as the Secretary may require;
                    ``(B) submit to the Secretary a strategic plan for 
                the implementation of data sharing and interoperability 
                measures;
                    ``(C) be a rural health care provider;
                    ``(D) adopt any applicable core interoperability 
                guidelines (endorsed under other provisions of law);
                    ``(E) agree to notify patients if their 
                individually identifiable health information is 
                wrongfully disclosed;
                    ``(F) demonstrate significant financial need; and
                    ``(G) provide matching funds in accordance with 
                paragraph (4).
            ``(3) Use of funds.--Amounts received under a grant under 
        this subsection shall be used to facilitate the purchase and 
        enhance the utilization of qualified health information 
        technology systems and training personnel in the use of such 
        technology.
            ``(4) Matching requirement.--To be eligible for a grant 
        under this subsection an entity shall contribute non-Federal 
        contributions to the costs of carrying out the activities for 
        which the grant is awarded in an amount equal to $1 for each $3 
        of Federal funds provided under the grant.
            ``(5) Limit on grant amount.--In no case shall the payment 
        amount under this subsection with respect to the purchase or 
        enhanced utilization of qualified health information technology 
        for a rural health care provider, in addition to the amount of 
        any loan made to the provider from a grant to a State under 
        subsection (b) for such purpose, exceed 100 percent of the 
        provider's costs for such purchase or enhanced utilization 
        (taking into account costs for training, implementation, and 
        maintenance).
            ``(6) Preference in awarding grants.--In awarding grants to 
        eligible entities under this subsection, the Secretary shall 
        give preference to each of the following types of applicants:
                    ``(A) An entity that is located in a frontier or 
                other rural underserved area as determined by the 
                Secretary.
                    ``(B) An entity that will link, to the extent 
                practicable, the qualified health information system to 
                a local or regional health information plan or plans.
                    ``(C) A rural health care provider that is a 
                nonprofit hospital or a Federally qualified health 
                center.
                    ``(D) A rural health care provider that is an 
                individual practice or group practice.
    ``(b) Authorization of Appropriations.--
            ``(1) In general.--For the purpose of carrying out this 
        section, there is authorized to be appropriated $20,000,000 for 
        fiscal year 2008, $30,000,000 for fiscal year 2009, and such 
        sums as may be necessary, but not to exceed $30,000,000 for 
        each of fiscal years 2010 through 2012.
            ``(2) Availability.--Amounts appropriated under paragraph 
        (1) shall remain available through fiscal year 2011.
    ``(c) Definitions.--In this section:
            ``(1) Federally qualified health center.--The term 
        `Federally qualified health center' has the meaning given that 
        term in section 1861(aa)(4) of the Social Security Act (42 
        U.S.C. 1395x(aa)(4)).
            ``(2) Group practice.--The term `group practice' has the 
        meaning given that term in section 1877(h)(4) of the Social 
        Security Act (42 U.S.C. 1395nn(h)(4)).
            ``(3) Health care provider.--The term `health care 
        provider' means a hospital, skilled nursing facility, home 
        health agency (as defined in subsection (o) of section 1861 of 
        the Social Security Act, 42 U.S.C. 1395x), health care clinic, 
        rural health clinic, Federally qualified health center, group 
        practice, a pharmacist, a pharmacy, a laboratory, a physician 
        (as defined in subsection (r) of such section), a practitioner 
        (as defined in section 1842(b)(18)(CC) of such Act, 42 U.S.C. 
        1395u(b)(18)(CC)), a health facility operated by or pursuant to 
        a contract with the Indian Health Service, and any other 
        category of facility or clinician determined appropriate by the 
        Secretary.
            ``(4) Health information; individually identifiable health 
        information.--The terms `health information' and `individually 
        identifiable health information' have the meanings given those 
        terms in paragraphs (4) and (6), respectively, of section 1171 
        of the Social Security Act (42 U.S.C. 1320d).
            ``(5) Laboratory.--The term `laboratory' has the meaning 
        given that term in section 353.
            ``(6) Pharmacist.--The term `pharmacist' has the meaning 
        given that term in section 804(a)(2) of the Federal Food, Drug, 
        and Cosmetic Act (21 U.S.C. 384(a)(2)).
            ``(7) Qualified health information technology.--The term 
        `qualified health information technology' means a system or 
        components of health information technology that meet any 
        applicable core interoperability guidelines (endorsed under 
        applicable provisions of law) when in use or that use interface 
        software that allows for interoperability in accordance with 
        such guidelines.
            ``(8) Rural area.--The term `rural area' has the meaning 
        given such term for purposes of section 1886(d)(2)(D) of the 
        Social Security Act (42 U.S.C. 1395ww(d)(2)(D)).
            ``(9) Rural health care provider.--The term `rural health 
        care provider' means a health care provider that is located in 
        a rural area.
            ``(10) State.--The term `State' means each of the several 
        States, the District of Columbia, Puerto Rico, the Virgin 
        Islands, Guam, American Samoa, and the Northern Mariana 
        Islands.''.

SEC. 402. RURAL HEALTH QUALITY ADVISORY COMMISSION AND DEMONSTRATION 
              PROJECTS.

    (a) Rural Health Quality Advisory Commission.--
            (1) Establishment.--Not later than 6 months after the date 
        of the enactment of this section, the Secretary of Health and 
        Human Services (in this section referred to as the 
        ``Secretary'') shall establish a commission to be known as the 
        Rural Health Quality Advisory Commission (in this section 
        referred to as the ``Commission'').
            (2) Duties of commission.--
                    (A) National plan.--The Commission shall develop, 
                coordinate, and facilitate implementation of a national 
                plan for rural health quality improvement. The national 
                plan shall--
                            (i) identify objectives for rural health 
                        quality improvement;
                            (ii) identify strategies to eliminate known 
                        gaps in rural health system capacity and 
                        improve rural health quality; and
                            (iii) provide for Federal programs to 
                        identify opportunities for strengthening and 
                        aligning policies and programs to improve rural 
                        health quality.
                    (B) Demonstration projects.--The Commission shall 
                design demonstration projects to test alternative 
                models for rural health quality improvement, including 
                with respect to both personal and population health.
                    (C) Monitoring.--The Commission shall monitor 
                progress toward the objectives identified pursuant to 
                paragraph (1)(A).
            (3) Membership.--
                    (A) Number.--The Commission shall be composed of 11 
                members appointed by the Secretary.
                    (B) Selection.--The Secretary shall select the 
                members of the Commission from among individuals with 
                significant rural health care and health care quality 
                expertise, including expertise in clinical health care, 
                health care quality research, population or public 
                health, or purchaser organizations.
            (4) Contracting authority.--Subject to the availability of 
        funds, the Commission may enter into contracts and make other 
        arrangements, as may be necessary to carry out the duties 
        described in paragraph (2).
            (5) Staff.--Upon the request of the Commission, the 
        Secretary may detail, on a reimbursable basis, any of the 
        personnel of the Office of Rural Health Policy of the Health 
        Resources and Services Administration, the Agency for Health 
        Care Quality and Research, or the Centers for Medicare & 
        Medicaid Services to the Commission to assist in carrying out 
        this subsection.
            (6) Reports to congress.--Not later than 1 year after the 
        establishment of the Commission, and annually thereafter, the 
        Commission shall submit a report to the Congress on rural 
        health quality. Each such report shall include the following:
                    (A) An inventory of relevant programs and 
                recommendations for improved coordination and 
                integration of policy and programs.
                    (B) An assessment of achievement of the objectives 
                identified in the national plan developed under 
                paragraph (2) and recommendations for realizing such 
                objectives.
                    (C) Recommendations on Federal legislation, 
                regulations, or administrative policies to enhance 
                rural health quality and outcomes.
    (b) Rural Health Quality Demonstration Projects.--
            (1) In general.--Not later than 270 days after the date of 
        the enactment of this section, the Secretary, in consultation 
        with the Rural Health Quality Advisory Commission, the Office 
        of Rural Health Policy of the Health Resources and Services 
        Administration, the Agency for Healthcare Research and Quality, 
        and the Centers for Medicare & Medicaid Services, shall make 
        grants to eligible entities for 5 demonstration projects to 
        implement and evaluate methods for improving the quality of 
        health care in rural communities. Each such demonstration 
        project shall include--
                    (A) alternative community models that--
                            (i) will achieve greater integration of 
                        personal and population health services; and
                            (ii) address safety, effectiveness, 
                        patient- or community-centeredness, timeliness, 
                        efficiency, and equity (the six aims identified 
                        by the Institute of Medicine of the National 
                        Academies in its report entitled ``Crossing the 
                        Quality Chasm: A New Health System for the 21st 
                        Century'' released on March 1, 2001);
                    (B) innovative approaches to the financing and 
                delivery of health services to achieve rural health 
                quality goals; and
                    (C) development of quality improvement support 
                structures to assist rural health systems and 
                professionals (such as workforce support structures, 
                quality monitoring and reporting, clinical care 
                protocols, and information technology applications).
            (2) Eligible entities.--In this subsection, the term 
        ``eligible entity'' means a consortium that--
                    (A) shall include--
                            (i) at least one health care provider or 
                        health care delivery system located in a rural 
                        area; and
                            (ii) at least one organization representing 
                        multiple community stakeholders; and
                    (B) may include other partners such as rural 
                research centers.
            (3) Consultation.--In developing the program for awarding 
        grants under this subsection, the Secretary shall consult with 
        the Administrator of the Agency for Healthcare Research and 
        Quality, rural health care providers, rural health care 
        researchers, and private and non-profit groups (including 
        national associations) which are undertaking similar efforts.
            (4) Expedited waivers.--The Secretary shall expedite the 
        processing of any waiver that--
                    (A) is authorized under title XVIII or XIX of the 
                Social Security Act (42 U.S.C. 1395 et seq.); and
                    (B) is necessary to carry out a demonstration 
                project under this subsection.
            (5) Demonstration project sites.--The Secretary shall 
        ensure that the 5 demonstration projects funded under this 
        subsection are conducted at a variety of sites representing the 
        diversity of rural communities in the Nation.
            (6) Duration.--Each demonstration project under this 
        subsection shall be for a period of 4 years.
            (7) Independent evaluation.--The Secretary shall enter into 
        an arrangement with an entity that has experience working 
        directly with rural health systems for the conduct of an 
        independent evaluation of the program carried out under this 
        subsection.
            (8) Report.--Not later than one year after the conclusion 
        of all of the demonstration projects funded under this 
        subsection, the Secretary shall submit a report to the Congress 
        on the results of such projects. The report shall include--
                    (A) an evaluation of patient access to care, 
                patient outcomes, and an analysis of the cost 
                effectiveness of each such project; and
                    (B) recommendations on Federal legislation, 
                regulations, or administrative policies to enhance 
                rural health quality and outcomes.
    (c) Appropriation.--
            (1) In general.--Out of funds in the Treasury not otherwise 
        appropriated, there are appropriated to the Secretary to carry 
        out this section $30,000,000 for the period of fiscal years 
        2008 through 2012.
            (2) Availability.--
                    (A) In general.--Funds appropriated under paragraph 
                (1) shall remain available for expenditure through 
                fiscal year 2012.
                    (B) Report.--For purposes of carrying out 
                subsection (b)(8), funds appropriated under paragraph 
                (1) shall remain available for expenditure through 
                fiscal year 2013.
            (3) Reservation.--Of the amount appropriated under 
        paragraph (1), the Secretary shall reserve--
                    (A) $5,000,000 to carry out subsection (a); and
                    (B) $25,000,000 to carry out subsection (b), of 
                which--
                            (i) 2 percent shall be for the provision of 
                        technical assistance to grant recipients; and
                            (ii) 5 percent shall be for independent 
                        evaluation under subsection (b)(7).

SEC. 403. RURAL HEALTH CARE SERVICES.

    Section 330A of the Public Health Service Act (42 U.S.C. 254c) is 
amended to read as follows:

``SEC. 330A. RURAL HEALTH CARE SERVICES OUTREACH, RURAL HEALTH NETWORK 
              DEVELOPMENT, DELTA RURAL DISPARITIES AND HEALTH SYSTEMS 
              DEVELOPMENT, AND SMALL RURAL HEALTH CARE PROVIDER QUALITY 
              IMPROVEMENT GRANT PROGRAMS.

    ``(a) Purpose.--The purpose of this section is to provide for 
grants--
            ``(1) under subsection (b), to promote rural health care 
        services outreach;
            ``(2) under subsection (c), to provide for the planning and 
        implementation of integrated health care networks in rural 
        areas;
            ``(3) under subsection (d), to assist rural communities in 
        the Delta Region to reduce health disparities and to promote 
        and enhance health system development; and
            ``(4) under subsection (e), to provide for the planning and 
        implementation of small rural health care provider quality 
        improvement activities.
    ``(b) Rural Health Care Services Outreach Grants.--
            ``(1) Grants.--The Director of the Office of Rural Health 
        Policy of the Health Resources and Services Administration may 
        award grants to eligible entities to promote rural health care 
        services outreach by expanding the delivery of health care 
        services to include new and enhanced services in rural areas. 
        The Director may award the grants for periods of not more than 
        3 years.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        this subsection for a project, an entity--
                    ``(A) shall be a rural public or rural nonprofit 
                private entity, a facility that qualifies as a rural 
                health clinic under title XVIII of the Social Security 
                Act, a public or nonprofit entity existing exclusively 
                to provide services to migrant and seasonal farm 
                workers in rural areas, or a tribal government whose 
                grant-funded activities will be conducted within 
                federally recognized tribal areas;
                    ``(B) shall represent a consortium composed of 
                members--
                            ``(i) that include 3 or more independently-
                        owned health care entities; and
                            ``(ii) that may be nonprofit or for-profit 
                        entities; and
                    ``(C) shall not previously have received a grant 
                under this subsection for the same or a similar 
                project, unless the entity is proposing to expand the 
                scope of the project or the area that will be served 
                through the project.
            ``(3) Applications.--To be eligible to receive a grant 
        under this subsection, an eligible entity shall prepare and 
        submit to the Director an application at such time, in such 
        manner, and containing such information as the Director may 
        require, including--
                    ``(A) a description of the project that the 
                eligible entity will carry out using the funds provided 
                under the grant;
                    ``(B) a description of the manner in which the 
                project funded under the grant will meet the health 
                care needs of rural populations in the local community 
                or region to be served;
                    ``(C) a plan for quantifying how health care needs 
                will be met through identification of the target 
                population and benchmarks of service delivery or health 
                status, such as--
                            ``(i) quantifiable measurements of health 
                        status improvement for projects focusing on 
                        health promotion; or
                            ``(ii) benchmarks of increased access to 
                        primary care, including tracking factors such 
                        as the number and type of primary care visits, 
                        identification of a medical home, or other 
                        general measures of such access;
                    ``(D) a description of how the local community or 
                region to be served will be involved in the development 
                and ongoing operations of the project;
                    ``(E) a plan for sustaining the project after 
                Federal support for the project has ended;
                    ``(F) a description of how the project will be 
                evaluated;
                    ``(G) the administrative capacity to submit annual 
                performance data electronically as specified by the 
                Director; and
                    ``(H) other such information as the Director 
                determines to be appropriate.
    ``(c) Rural Health Network Development Grants.--
            ``(1) Grants.--
                    ``(A) In general.--The Director may award rural 
                health network development grants to eligible entities 
                to promote, through planning and implementation, the 
                development of integrated health care networks that 
                have combined the functions of the entities 
                participating in the networks in order to--
                            ``(i) achieve efficiencies and economies of 
                        scale;
                            ``(ii) expand access to, coordinate, and 
                        improve the quality of the health care delivery 
                        system through development of organizational 
                        efficiencies;
                            ``(iii) implement health information 
                        technology to achieve efficiencies, reduce 
                        medical errors, and improve quality;
                            ``(iv) coordinate care and manage chronic 
                        illness; and
                            ``(v) strengthen the rural health care 
                        system as a whole in such a manner as to show a 
                        quantifiable return on investment to the 
                        participants in the network.
                    ``(B) Grant periods.--The Director may award such a 
                rural health network development grant--
                            ``(i) for a period of 3 years for 
                        implementation activities; or
                            ``(ii) for a period of 1 year for planning 
                        activities to assist in the initial development 
                        of an integrated health care network, if the 
                        proposed participants in the network do not 
                        have a history of collaborative efforts and a 
                        3-year grant would be inappropriate.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        this subsection, an entity--
                    ``(A) shall be a rural public or rural nonprofit 
                private entity, a facility that qualifies as a rural 
                health clinic under title XVIII of the Social Security 
                Act, a public or nonprofit entity existing exclusively 
                to provide services to migrant and seasonal farm 
                workers in rural areas, or a tribal government whose 
                grant-funded activities will be conducted within 
                federally recognized tribal areas;
                    ``(B) shall represent a network composed of 
                participants--
                            ``(i) that include 3 or more independently-
                        owned health care entities; and
                            ``(ii) that may be nonprofit or for-profit 
                        entities; and
                    ``(C) shall not previously have received a grant 
                under this subsection (other than a 1-year grant for 
                planning activities) for the same or a similar project.
            ``(3) Applications.--To be eligible to receive a grant 
        under this subsection, an eligible entity, in consultation with 
        the appropriate State office of rural health or another 
        appropriate State entity, shall prepare and submit to the 
        Director an application at such time, in such manner, and 
        containing such information as the Director may require, 
        including--
                    ``(A) a description of the project that the 
                eligible entity will carry out using the funds provided 
                under the grant;
                    ``(B) an explanation of the reasons why Federal 
                assistance is required to carry out the project;
                    ``(C) a description of--
                            ``(i) the history of collaborative 
                        activities carried out by the participants in 
                        the network;
                            ``(ii) the degree to which the participants 
                        are ready to integrate their functions; and
                            ``(iii) how the local community or region 
                        to be served will benefit from and be involved 
                        in the activities carried out by the network;
                    ``(D) a description of how the local community or 
                region to be served will experience increased access to 
                quality health care services across the continuum of 
                care as a result of the integration activities carried 
                out by the network, including a description of--
                            ``(i) return on investment for the 
                        community and the network members; and
                            ``(ii) other quantifiable performance 
                        measures that show the benefit of the network 
                        activities;
                    ``(E) a plan for sustaining the project after 
                Federal support for the project has ended;
                    ``(F) a description of how the project will be 
                evaluated;
                    ``(G) the administrative capacity to submit annual 
                performance data electronically as specified by the 
                Director; and
                    ``(H) other such information as the Director 
                determines to be appropriate.
    ``(d) Delta Rural Disparities and Health Systems Development 
Grants.--
            ``(1) Grants.--The Director may award grants to eligible 
        entities to support reduction of health disparities, improve 
        access to health care, and enhance rural health system 
        development in the Delta Region.
            ``(2) Eligibility.--To be eligible to receive a grant under 
        this subsection, an entity shall be a rural public or rural 
        nonprofit private entity, a facility that qualifies as a rural 
        health clinic under title XVIII of the Social Security Act, a 
        public or nonprofit entity existing exclusively to provide 
        services to migrant and seasonal farm workers in rural areas, 
        or a tribal government whose grant-funded activities will be 
        conducted within federally recognized tribal areas.
            ``(3) Applications.--To be eligible to receive a grant 
        under this subsection, an eligible entity shall prepare and 
        submit to the Director an application at such time, in such 
        manner, and containing such information as the Director may 
        require, including--
                    ``(A) a description of the project that the 
                eligible entity will carry out using the funds provided 
                under the grant;
                    ``(B) an explanation of the reasons why Federal 
                assistance is required to carry out the project;
                    ``(C) a description of the manner in which the 
                project funded under the grant will meet the health 
                care needs of the Delta Region;
                    ``(D) a description of how the local community or 
                region to be served will experience increased access to 
                quality health care services as a result of the 
                activities carried out by the entity;
                    ``(E) a description of how health disparities will 
                be reduced or the health system will be improved;
                    ``(F) a plan for sustaining the project after 
                Federal support for the project has ended;
                    ``(G) a description of how the project will be 
                evaluated including process and outcome measures 
                related to the quality of care provided or how the 
                health care system improves its performance;
                    ``(H) a description of how the grantee will develop 
                an advisory group made up of representatives of the 
                communities to be served to provide guidance to the 
                grantee to best meet community need; and
                    ``(I) other such information as the Director 
                determines to be appropriate.
    ``(e) Small Rural Health Care Provider Quality Improvement 
Grants.--
            ``(1) Grants.--The Director may award grants to provide for 
        the planning and implementation of small rural health care 
        provider quality improvement activities. The Director may award 
        the grants for periods of 1 to 3 years.
            ``(2) Eligibility.--To be eligible for a grant under this 
        subsection, an entity--
                    ``(A) shall be--
                            ``(i) a rural public or rural nonprofit 
                        private health care provider or provider of 
                        health care services, such as a rural health 
                        clinic; or
                            ``(ii) another rural provider or network of 
                        small rural providers identified by the 
                        Director as a key source of local care; and
                    ``(B) shall not previously have received a grant 
                under this subsection for the same or a similar 
                project.
            ``(3) Preference.--In awarding grants under this 
        subsection, the Director shall give preference to facilities 
        that qualify as rural health clinics under title XVIII of the 
        Social Security Act.
            ``(4) Applications.--To be eligible to receive a grant 
        under this subsection, an eligible entity shall prepare and 
        submit to the Director an application at such time, in such 
        manner, and containing such information as the Director may 
        require, including--
                    ``(A) a description of the project that the 
                eligible entity will carry out using the funds provided 
                under the grant;
                    ``(B) an explanation of the reasons why Federal 
                assistance is required to carry out the project;
                    ``(C) a description of the manner in which the 
                project funded under the grant will assure continuous 
                quality improvement in the provision of services by the 
                entity;
                    ``(D) a description of how the local community or 
                region to be served will experience increased access to 
                quality health care services as a result of the 
                activities carried out by the entity;
                    ``(E) a plan for sustaining the project after 
                Federal support for the project has ended;
                    ``(F) a description of how the project will be 
                evaluated including process and outcome measures 
                related to the quality of care provided; and
                    ``(G) other such information as the Director 
                determines to be appropriate.
    ``(f) General Requirements.--
            ``(1) Prohibited uses of funds.--An entity that receives a 
        grant under this section may not use funds provided through the 
        grant--
                    ``(A) to build or acquire real property; or
                    ``(B) for construction.
            ``(2) Coordination with other agencies.--The Director shall 
        coordinate activities carried out under grant programs 
        described in this section, to the extent practicable, with 
        Federal and State agencies and nonprofit organizations that are 
        operating similar grant programs, to maximize the effect of 
        public dollars in funding meritorious proposals.
    ``(g) Report.--Not later than September 30, 2010, the Secretary 
shall prepare and submit to the appropriate committees of Congress a 
report on the progress and accomplishments of the grant programs 
described in subsections (b), (c), (d), and (e).
    ``(h) Definitions.--In this section:
            ``(1) The term `Delta Region' has the meaning given to the 
        term `region' in section 382A of the Consolidated Farm and 
        Rural Development Act (7 U.S.C. 2009aa).
            ``(2) The term `Director' means the Director of the Office 
        of Rural Health Policy of the Health Resources and Services 
        Administration.
    ``(i) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $40,000,000 for fiscal year 
2008, and such sums as may be necessary for each of fiscal years 2009 
through 2012.''.

SEC. 404. COMMUNITY HEALTH CENTER COLLABORATIVE ACCESS EXPANSION.

    Section 330 of the Public Health Service Act (42 U.S.C. 254b) is 
amended by adding at the end the following:
    ``(s) Miscellaneous Provisions.--
            ``(1) Rule of construction with respect to rural health 
        clinics.--
                    ``(A) In general.--Nothing in this section shall be 
                construed to prevent a community health center from 
                contracting with a federally certified rural health 
                clinic (as defined by section 1861(aa)(2) of the Social 
                Security Act) for the delivery of primary health care 
                services that are available at the rural health clinic 
                to individuals who would otherwise be eligible for free 
                or reduced cost care if that individual were able to 
                obtain that care at the community health center. Such 
                services may be limited in scope to those primary 
                health care services available in that rural health 
                clinic.
                    ``(B) Assurances.--In order for a rural health 
                clinic to receive funds under this section through a 
                contract with a community health center under paragraph 
                (1), such rural health clinic shall establish policies 
                to ensure--
                            ``(i) nondiscrimination based upon the 
                        ability of a patient to pay; and
                            ``(ii) the establishment of a sliding fee 
                        scale for low-income patients.''.

SEC. 405. FACILITATING THE PROVISION OF TELEHEALTH SERVICES ACROSS 
              STATE LINES.

    (a) In General.--For purposes of expediting the provision of 
telehealth services, for which payment is made under the Medicare 
program, across State lines, the Secretary of Health and Human Services 
shall, in consultation with representatives of States, physicians, 
health care practitioners, and patient advocates, encourage and 
facilitate the adoption of provisions allowing for multistate 
practitioner practice across State lines.
    (b) Definitions.--In subsection (a):
            (1) Telehealth service.--The term ``telehealth service'' 
        has the meaning given that term in subparagraph (F) of section 
        1834(m)(4) of the Social Security Act (42 U.S.C. 1395m(m)(4)).
            (2) Physician, practitioner.--The terms ``physician'' and 
        ``practitioner'' have the meaning given those terms in 
        subparagraphs (D) and (E), respectively, of such section.
            (3) Medicare program.--The term ``Medicare program'' means 
        the program of health insurance administered by the Secretary 
        of Health and Human Services under title XVIII of the Social 
        Security Act (42 U.S.C. 1395 et seq.).

SEC. 406. EXPANDED APPLICATION OF THE 340B PROGRAM TO DRUGS PROVIDED IN 
              RURAL HOSPITALS.

    (a) Expanded Participation in 340B Program to Certain Rural 
Hospitals.--Section 340B(a)(4) of the Public Health Service Act (42 
U.S.C. 256b(a)(4)) is amended by adding at the end the following new 
subparagraphs:
                    ``(M) An entity that is a critical access hospital 
                (as determined under section 1820(c)(2) of the Social 
                Security Act (42 U.S.C. 1395i-4(c)(2)).
                    ``(N) An entity that is a Medicare-dependent, small 
                rural hospital (as defined in section 1886(d)(5)(G)(iv) 
                of the Social Security Act).
                    ``(O) An entity that is a sole community hospital 
                (as defined in section 1886(d)(5)(D)(iii) of the Social 
                Security Act).
                    ``(P) An entity that is classified as a rural 
                referral center under section 1886(d)(5)(C) of the 
                Social Security Act.''.
    (b) Extension of Discounts to Inpatient Drugs.--
            (1) In general.--Section 340B of the Public Health Service 
        Act (42 U.S.C. 256b) is amended--
                    (A) in subsection (b)--
                            (i) by designating the matter beginning 
                        ``In this section'' as a paragraph (1) with the 
                        heading ``In general'' ; and
                            (ii) by adding at the end the following new 
                        paragraph:
            ``(2) Covered drug.--In this section, the term `covered 
        drug'--
                    ``(A) means a covered outpatient drug (as defined 
                in section 1927(k)(2) of the Social Security Act); and
                    ``(B) includes, notwithstanding the section 
                1927(k)(3)(A) of such Act, a drug used in connection 
                with an inpatient or outpatient service provided by a 
                hospital described in subparagraph (M), (N), (O), or 
                (P) of subsection (a)(4) that is enrolled to 
                participate in the drug discount program under this 
                section.''; and
                    (B) in paragraphs (5), (7), and (9), by striking 
                ``outpatient'' each place it appears.
            (2) Medicaid credits on inpatient drugs.--Subsection (c) of 
        section 340B of the Public Health Service Act (42 U.S.C. 
        256b(c)) is amended to read as follows:
    ``(c) Medicaid Credits on Inpatient Drugs.--
            ``(1) In general.--For the cost reporting period covered by 
        the most recently filed Medicare cost report under title XVIII 
        of the Social Security Act, a hospital described in 
        subparagraph (M), (N), (O), or (P) of subsection (a)(4) and 
        enrolled to participate in the drug discount program under this 
        section shall provide to each State under its plan under title 
        XIX of such Act --
                    ``(A) a credit on the estimated annual costs to 
                such hospital of single source and innovator multiple 
                source drugs provided to Medicaid recipients for 
                inpatient use; and
                    ``(B) a credit on the estimated annual costs to 
                such hospital of noninnovator multiple source drugs 
                provided to Medicaid recipients for inpatient use.
            ``(2) Calculation of credits.--
                    ``(A) Single source and innovator multiple source 
                drugs.--For purposes of paragraph (1)(A)--
                            ``(i) the credit under such paragraph shall 
                        be equal to the product of--
                                    ``(I) the estimated annual costs of 
                                single source and innovator multiple 
                                source drugs provided by the hospital 
                                to Medicaid recipients for inpatient 
                                use;
                                    ``(II) the average manufacturer 
                                price adjustment; and
                                    ``(III) the minimum rebate 
                                percentage described in section 
                                1927(c)(1)(B) of the Social Security 
                                Act;
                            ``(ii) the estimated annual costs of single 
                        source drugs and innovator multiple source 
                        drugs provided by the hospital to Medicaid 
                        recipients for inpatient use under clause 
                        (i)(I) shall be equal to the product of--
                                    ``(I) the hospital's actual 
                                acquisition costs of all drugs 
                                purchased during the cost reporting 
                                period for inpatient use;
                                    ``(II) the Medicaid inpatient drug 
                                charges as reported on the hospital's 
                                most recently filed Medicare cost 
                                report divided by total inpatient drug 
                                charges reported on the cost report; 
                                and
                                    ``(III) the percent of the 
                                hospital's annual inpatient drug costs 
                                described in subclause (I) arising out 
                                of the purchase of single source and 
                                innovator multiple source drugs;
                            ``(iii) the average manufacturer price 
                        adjustment referenced in clause (i)(II) shall 
                        be determined annually by the Secretary for 
                        single source and innovator multiple source 
                        drugs by dividing on an aggregate basis the 
                        average manufacturer price as defined in 
                        section 1927(k)(1)(D) of the Social Security 
                        Act, averaged across all covered drugs reported 
                        to the Secretary pursuant to section 1927(b)(3) 
                        of such Act by the average 340B ceiling price 
                        for covered drugs calculated pursuant to 
                        subsection (a)(1); and
                            ``(iv) the terms `single source drug' and 
                        `innovator multiple source drug' have the 
                        meanings given such terms in section 1927(k)(7) 
                        of the Social Security Act.
                    ``(B) Noninnovator multiple source drugs.--For 
                purposes of subparagraph (1)(B)--
                            ``(i) the credit under such paragraph shall 
                        be calculated by multiplying--
                                    ``(I) the estimated annual costs to 
                                the hospital of noninnovator multiple 
                                source drugs provided to Medicaid 
                                recipients for inpatient use,
                                    ``(II) the average manufacturer 
                                price adjustment, and
                                    ``(III) the applicable percentage 
                                as defined in section 1927(c)(3)(B) of 
                                the Social Security Act;
                            ``(ii) the estimated annual costs to a 
                        hospital of noninnovator multiple source drugs 
                        provided to Medicaid recipients for inpatient 
                        use under clause (i)(I) shall be equal to the 
                        product of--
                                    ``(I) the hospital's actual 
                                acquisition cost of all drugs purchased 
                                during the cost reporting period for 
                                inpatient use;
                                    ``(II) the Medicaid inpatient drug 
                                charges as reported on the hospital's 
                                most recently filed Medicare cost 
                                report divided by total inpatient drug 
                                charges reported on the cost report;
                                    ``(III) the percent of the 
                                hospital's annual inpatient drug costs 
                                described in subclause (I) arising out 
                                of the purchase of noninnovator 
                                multiple source drugs;
                            ``(iii) the average manufacturer price 
                        adjustment referenced in clause (i)(II) shall 
                        be determined annually by the Secretary for 
                        noninnovator multiple source drugs by dividing 
                        on an aggregate basis the average manufacturer 
                        price as defined in Section 1927(k)(1)(D) of 
                        the Social Security Act, averaged across all 
                        covered drugs reported to the Secretary 
                        pursuant to Section 1927(b)(3) of such Act by 
                        the average 340B ceiling price for covered 
                        drugs calculated pursuant to section 340B(a)(1) 
                        of the Public Health Service Act; and
                            ``(iv) the term `noninnovator multiple 
                        source drug' has the meaning given such term in 
                        section 1927(k)(7) of the Social Security Act.
            ``(3) Payment deadline.--The credits provided by a hospital 
        under paragraph (1) shall be paid within 90 days of the filing 
        of the hospital's most recently filed Medicare cost report.
            ``(4) Opt out.--A hospital shall not be required to provide 
        the Medicaid credit required under paragraph (1) if--
                    ``(A) it can demonstrate to the State that the 
                amount of the credit would not exceed the loss of 
                reimbursement under the State plan resulting from the 
                extension of discounts to inpatient drugs under 
                subsection (b)(2); or
                    ``(B) the hospital and State agree to an 
                alternative arrangement.
        Any dispute between the hospital and the State under this 
        paragraph shall be adjudicated through the administrative 
        dispute resolution process under this section.
            ``(5) Offset against medical assistance.--Amounts received 
        by a State under this subsection in any quarter shall be 
        considered to be a reduction in the amount expended under the 
        State plan in the quarter for medical assistance for purposes 
        of section 1903(a)(1) of the Social Security Act.
            ``(6) References to social security act provisions.--
        Notwithstanding any other provision of law, all references to 
        provisions of the Social Security Act in this section shall be 
        deemed to be references to the Social Security Act as in effect 
        on the effective date specified in section 406(c)(1) of the 
        Health Care Access and Rural Equity (H-CARE) Act of 2007.''.
            (3) Conforming amendments.--Section 1927 of the Social 
        Security Act (42 U.S.C. 1396r-8), is amended--
                    (A) in subsection (a)(5)(A), by striking ``covered 
                outpatient drugs'' and inserting ``covered drugs (as 
                defined in section 340B(b)(2) of the Public Health 
                Service Act)'';
                    (B) in subsection (a)(5)(D), by striking ``title VI 
                of the Veterans Health Care Act of 1992'' and inserting 
                the ``Health Care Access and Rural Equity (H-CARE) Act 
                of 2007'';
                    (C) in subsection (c)(1)(C)(i), by redesignating 
                subclauses (II) through (IV) as subclauses (III) 
                through (V), respectively and by inserting after 
                subclause (I) the following new subclause:
                                    ``(II) any prices charged for a 
                                covered drug as defined in section 
                                340B(b)(2) of the Public Health Service 
                                Act;''; and
                    (D) in subsection (k)(1)--
                            (i) in subparagraph (A), by striking 
                        ``subparagraph (B)'' and inserting 
                        ``subparagraph (B) and (D)''; and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(D) Calculation for covered drugs.--With respect 
                to a covered drug (as defined in section 340B(b)(2) of 
                the Public Health Service Act), the average 
                manufacturer price is the average price paid to the 
                manufacturer for the drug in the United States by 
                wholesalers for drugs distributed to both the retail 
                pharmacy and acute care classes of trade, after 
                deducting customary prompt pay discounts.''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        take effect on January 1, 2008, and shall apply to drugs 
        purchased on or after January 1, 2008.
            (2) General conforming reference.--Section 340B(d) of the 
        Public Health Service Act (42 U.S.C. 256b(d)) is amended by 
        striking ``Veterans Health Care Act of 1992'' and inserting 
        ``the effective date specified in section 406(c)(1) of the 
        Health Care Access and Rural Equity (H-CARE) Act of 2007''.
            (3) Effectiveness.--The amendments made by this section 
        shall be effective, and shall be taken into account in 
        determining whether a manufacturer is deemed to meet the 
        requirements of section 340B(a) of the Public Health Service 
        Act (42 U.S.C. 256b(a)) and of section 1927(a)(5) of the Social 
        Security Act (42 U.S.C. 1396r-8(a)(5)), notwithstanding any 
        other provision of law.
                                 <all>