[House Report 118-891]
[From the U.S. Government Publishing Office]
118th Congress } { Rept. 118-891
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
======================================================================
PRESERVING TELEHEALTH, HOSPITAL, AND AMBULANCE ACCESS ACT
_______
December 17, 2024.--Ordered to be printed
_______
Mr. Smith of Missouri, from the Committee on Ways and Means, submitted
the following
R E P O R T
together with
SUPPLEMENTAL VIEWS
[To accompany H.R. 8261]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 8261) to amend title XVIII of the Social Security
Act to extend certain flexibilities and payment adjustments
under the Medicare program, and for other purposes, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
I. SUMMARY AND BACKGROUND.......................................... 13
A. Purpose and Summary................................. 13
B. Background and Need for Legislation................. 14
C. Legislative History................................. 15
Background......................................... 15
Committee Hearings................................. 15
Committee Action................................... 15
D. Designated Hearing.................................. 16
II. EXPLANATION OF THE BILL......................................... 16
A. Reasons for Change.................................. 16
B. Explanation of Provisions........................... 16
C. Effective Date...................................... 17
III. VOTES OF THE COMMITTEE.......................................... 17
IV. BUDGET EFFECTS OF THE BILL...................................... 19
A. Committee Estimate of Budgetary Effects............. 19
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority...................... 19
C. Cost Estimate Prepared by the Congressional Budget
Office............................................. 19
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE...... 20
A. Committee Oversight Findings and Recommendations.... 20
B. Statement of General Performance Goals and
Objectives......................................... 20
C. Information Relating to Unfunded Mandates........... 20
D. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits............................ 20
E. Duplication of Federal Programs..................... 20
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED........... 20
VII. SUPPLEMENTAL VIEWS............................................. 282
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preserving Telehealth, Hospital, and
Ambulance Access Act''.
TITLE I--PRESERVING PATIENTS' ACCESS TO CARE IN THE HOME
SEC. 101. EXTENSION OF CERTAIN TELEHEALTH FLEXIBILITIES.
(a) Removing Geographic Requirements and Expanding Originating Sites
for Telehealth Services.--Section 1834(m) of the Social Security Act
(42 U.S.C. 1395m(m)) is amended--
(1) in paragraph (2)(B)(iii), by striking ``ending December
31, 2024'' and inserting ``ending December 31, 2026''; and
(2) in paragraph (4)(C)(iii), by striking ``ending on
December 31, 2024'' and inserting ``ending on December 31,
2026''.
(b) Expanding Practitioners Eligible to Furnish Telehealth
Services.--Section 1834(m)(4)(E) of the Social Security Act (42 U.S.C.
1395m(m)(4)(E)) is amended by striking ``ending on December 31, 2024''
and inserting ``ending on December 31, 2026''.
(c) Extending Telehealth Services for Federally Qualified Health
Centers and Rural Health Clinics.--Section 1834(m)(8)(A) of the Social
Security Act (42 U.S.C. 1395m(m)(8)(A)) is amended by striking ``ending
on December 31, 2024'' and inserting ``ending on December 31, 2026''.
(d) Delaying the In-person Requirements Under Medicare for Mental
Health Services Furnished Through Telehealth and Telecommunications
Technology.--
(1) Delay in requirements for mental health services
furnished through telehealth.--Section 1834(m)(7)(B)(i) of the
Social Security Act (42 U.S.C. 1395m(m)(7)(B)(i)) is amended,
in the matter preceding subclause (I), by striking ``on or
after'' and all that follows through ``described in section
1135(g)(1)(B))'' and inserting ``on or after January 1, 2027''.
(2) Mental health visits furnished by rural health clinics.--
Section 1834(y)(2) of the Social Security Act (42 U.S.C.
1395m(y)(2)) is amended by striking ``January 1, 2025'' and all
that follows through the period at the end and inserting
``January 1, 2027.''.
(3) Mental health visits furnished by federally qualified
health centers.--Section 1834(o)(4)(B) of the Social Security
Act (42 U.S.C. 1395m(o)(4)(B)) is amended by striking ``January
1, 2025'' and all that follows through the period at the end
and inserting ``January 1, 2027.''.
(e) Allowing for the Furnishing of Audio-only Telehealth Services.--
Section 1834(m)(9) of the Social Security Act (42 U.S.C. 1395m(m)(9))
is amended by striking ``ending on December 31, 2024'' and inserting
``ending on December 31, 2026''.
(f) Extending Use of Telehealth to Conduct Face-to-face Encounter
Prior to Recertification of Eligibility for Hospice Care.--Section
1814(a)(7)(D)(i)(II) of the Social Security Act (42 U.S.C.
1395f(a)(7)(D)(i)(II)) is amended--
(1) by striking ``ending on December 31, 2024'' and inserting
``ending on December 31, 2026''; and
(2) by inserting ``, except that this subclause shall not
apply in the case of such an encounter with an individual
occurring on or after January 1, 2025, if such individual is
located in an area that is subject to a moratorium on the
enrollment of hospice programs under this title pursuant to
section 1866(j)(7), if such individual is receiving hospice
care from a provider that is subject to enhanced oversight
under this title pursuant to section 1866(j)(3), or if such
encounter is performed by a hospice physician or nurse
practitioner who is not enrolled under section 1866(j) and is
not an opt-out physician or practitioner (as defined in section
1802(b)(6)(D))'' before the semicolon.
(g) Program Instruction Authority.--The Secretary of Health and Human
Services may implement the amendments made by this section through
program instruction or otherwise.
SEC. 102. GUIDANCE ON FURNISHING SERVICES VIA TELEHEALTH TO INDIVIDUALS
WITH LIMITED ENGLISH PROFICIENCY.
(a) In General.--Not later than 1 year after the date of the
enactment of this section, the Secretary of Health and Human Services,
in consultation with 1 or more entities from each of the categories
described in paragraphs (1) through (7) of subsection (b), shall issue
and disseminate, or update and revise as applicable, guidance for the
entities described in such subsection on the following:
(1) Best practices on facilitating and integrating use of
interpreters during a telemedicine appointment.
(2) Best practices on providing accessible instructions on
how to access telecommunications systems (as such term is used
for purposes of section 1834(m) of the Social Security Act (42
U.S.C. 1395m(m)) for individuals with limited English
proficiency.
(3) Best practices on improving access to digital patient
portals for individuals with limited English proficiency.
(4) Best practices on integrating the use of video platforms
that enable multi-person video calls furnished via a
telecommunications system for purposes of providing
interpretation during a telemedicine appointment for an
individual with limited English proficiency.
(5) Best practices for providing patient materials,
communications, and instructions in multiple languages,
including text message appointment reminders and prescription
information.
(b) Entities Described.--For purposes of subsection (a), an entity
described in this subsection is an entity in 1 or more of the following
categories:
(1) Health information technology service providers,
including--
(A) electronic medical record companies;
(B) remote patient monitoring companies; and
(C) telehealth or mobile health vendors and
companies.
(2) Health care providers, including--
(A) physicians; and
(B) hospitals.
(3) Health insurers.
(4) Language service companies.
(5) Interpreter or translator professional associations.
(6) Health and language services quality certification
organizations.
(7) Patient and consumer advocates, including such advocates
that work with individuals with limited English proficiency.
SEC. 103. ESTABLISHMENT OF MODIFIER FOR RECERTIFICATIONS OF HOSPICE
CARE ELIGIBILITY CONDUCTED THROUGH TELEHEALTH.
Section 1814(a)(7)(D)(i)(II) of the Social Security Act (42 U.S.C.
1395f(a)(7)(D)(i)(II)), as amended by section 101(f), is further
amended by inserting ``, provided that, in the case of such an
encounter occurring on or after the date that is 2 years after the date
of the enactment of the `Preserving Telehealth, Hospital, and Ambulance
Access Act', such physician or nurse practitioner includes in any claim
for such encounter one or more modifiers or codes specified by the
Secretary to indicate that such encounter was furnished through
telehealth'' after ``as determined appropriate by the Secretary''.
SEC. 104. EXTENDING ACUTE HOSPITAL CARE AT HOME WAIVER FLEXIBILITIES.
Section 1866G of the Social Security Act (42 U.S.C. 1395cc-7) is
amended--
(1) in subsection (a)(1), by striking ``2024'' and inserting
``2029''; and
(2) in subsection (b)--
(A) in the header, by striking ``Study and Report''
and inserting ``Studies and Reports'';
(B) in paragraph (1)--
(i) in the matter preceding subparagraph (A),
by striking ``The Secretary'' and inserting
``Not later than September 30, 2024, and again
not later than September 30, 2028, the
Secretary'';
(ii) in clause (iv), by striking ``and'' at
the end;
(iii) in clause (v), by striking the period
and inserting ``; and''; and
(iv) by adding at the end the following new
clause:
``(vi) in the case of the second study
conducted under this paragraph, the quality of
care, outcomes, costs, quantity and intensity
of services, and other relevant metrics between
individuals who entered into the Acute Hospital
Care at Home initiative directly from an
emergency department compared with individuals
who entered into the Acute Hospital Care at
Home initiative directly from an existing
inpatient stay in a hospital.''; and
(C) in paragraph (2)--
(i) in the header, by striking ``Report'' and
inserting ``Reports''; and
(ii) by inserting ``and again not later than
September 30, 2028,'' after ``2024,''; and
(iii) by striking ``on the study conducted
under paragraph (1).'' and inserting the
following: ``on--
``(A) with respect to the first report submitted
under this paragraph, the first study conducted under
paragraph (1); and
``(B) with respect to the second report submitted
under this paragraph, the second study conducted under
paragraph (1).''.
SEC. 105. REPORT ON WEARABLE MEDICAL DEVICES.
Not later than 18 months after the date of the enactment of this Act,
the Comptroller General of the United States shall conduct a technology
assessment of, and submit to Congress a report on, the capabilities and
limitations of wearable medical devices used to support clinical
decision-making. Such report shall include a description of--
(1) the potential for such devices to accurately prescribe
treatments;
(2) an examination of the benefits and challenges of
artificial intelligence to augment such capabilities; and
(3) policy options to enhance the benefits and mitigate
potential challenges of developing or using such devices.
SEC. 106. ENHANCING CERTAIN PROGRAM INTEGRITY REQUIREMENTS FOR DME
UNDER MEDICARE.
(a) Durable Medical Equipment.--Section 1834(a) of the Social
Security Act (42 U.S.C. 1395m(a)) is amended by adding at the end the
following new paragraph:
``(23) Master list inclusion and claim review for certain
items.--
``(A) Master list inclusion.--Beginning January 1,
2027, for purposes of the Master List described in
section 414.234(b) of title 42, Code of Federal
Regulations (or any successor regulation), an item for
which payment may be made under this subsection shall
be treated as having aberrant billing patterns (as such
term is used for purposes of such section) if the
Secretary determines that, without explanatory
contributing factors (such as furnishing emergent care
services), a substantial number of claims for such
items under this subsection are from an ordering
physician or practitioner with whom the individual
involved does not have a prior relationship, as
determined on the basis of claims.
``(B) Claim review.--With respect to items furnished
on or after January 1, 2027 that are included on the
Master List pursuant to subparagraph (A), if such an
item is not subject to a determination of coverage in
advance pursuant to paragraph (15)(C), the Secretary
may conduct prepayment review of claims for payment for
such item.''.
(b) Report on Identifying Clinical Diagnostic Laboratory Tests at
High Risk for Fraud and Effective Mitigation Measures.--Not later than
January 1, 2026, the Inspector General of the Department of Health and
Human Services shall submit to Congress a report assessing fraudulent
claims for clinical diagnostic laboratory tests for which payment may
be made under section 1834A of the Social Security Act (42 U.S.C.
1395m-1) and effective tools for reducing such fraudulent claims. The
report shall include--
(1) which, if any, clinical diagnostic laboratory tests are
identified as being at high risk of fraudulent claims, and an
analysis of the factors that contribute to such risk;
(2) with respect to a clinical diagnostic laboratory test
identified under subparagraph (A) as being at high risk of
fraudulent claims--
(A) the amount payable under such section 1834A with
respect to such test;
(B) the number of such tests furnished to individuals
enrolled under part B of title XVIII of the Social
Security Act (42 U.S.C. 1395j et seq.);
(C) whether an order for such a test was more likely
to come from a provider with whom the individual
involved did not have a prior relationship, as
determined on the basis of prior payment experience;
and
(D) the frequency with which a claim for payment
under such section 1834A included the payment modifier
identified by code 59 or 91; and
(3) suggested strategies for reducing the number of
fraudulent claims made with respect to tests so identified as
being at high risk, including--
(A) an analysis of whether the Centers for Medicare &
Medicaid Services can detect aberrant billing patterns
with respect to such tests in a timely manner;
(B) any strategies for identifying and monitoring the
providers who are outliers with respect to the number
of such tests that such providers order; and
(C) targeted education efforts to mitigate improper
billing for such tests.
TITLE II--SUSTAINING ACCESS TO HOSPITAL AND EMERGENCY SERVICES
SEC. 201. EXTENSION OF INCREASED INPATIENT HOSPITAL PAYMENT ADJUSTMENT
FOR CERTAIN LOW-VOLUME HOSPITALS.
(a) In General.--Section 1886(d)(12) of the Social Security Act (42
U.S.C. 1395ww(d)(12)) is amended--
(1) in subparagraph (B), by striking ``during the portion of
fiscal year 2025 beginning on January 1, 2025, and ending on
September 30, 2025, and'';
(2) in subparagraph (C)(i)--
(A) in the matter preceding subclause (I)--
(i) by striking ``or portion of a fiscal
year''; and
(ii) by striking ``2024 and the portion of
fiscal year 2025 beginning on October 1, 2024,
and ending on December 31, 2024'' and inserting
``2025'';
(B) in subclause (III), by striking ``2024 and the
portion of fiscal year 2025 beginning on October 1,
2024, and ending on December 31, 2024'' and inserting
``2025''; and
(C) in subclause (IV), by striking ``the portion of
fiscal year 2025 beginning on January 1, 2025, and
ending on September 30, 2025, and''; and
(3) in subparagraph (D)--
(A) in the matter preceding clause (i), by striking
``2024 or during the portion of fiscal year 2025
beginning on October 1, 2024, and ending on December
31, 2024'' and inserting ``2025''; and
(B) in clause (ii), by striking `` 2024 and the
portion of fiscal year 2025 beginning on October 1,
2024, and ending on December 31, 2024'' and inserting
``2025''.
(b) Implementation.--Notwithstanding any other provision of law, the
Secretary of Health and Human Services may implement the provisions of,
including the amendments made by, this section by program instruction
or otherwise.
SEC. 202. EXTENSION OF THE MEDICARE-DEPENDENT HOSPITAL PROGRAM.
(a) In General.--Section 1886(d)(5)(G) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(G)) is amended--
(1) in clause (i), by striking ``January 1, 2025'' and
inserting ``October 1, 2025''; and
(2) in clause (ii)(II), by striking ``January 1, 2025'' and
inserting ``October 1, 2025''.
(b) Conforming Amendments.--
(1) Extension of target amount.--Section 1886(b)(3)(D) of the
Social Security Act (42 U.S.C. 1395ww(b)(3)(D)) is amended--
(A) in the matter preceding clause (i), by striking
``January 1, 2025'' and inserting ``October 1, 2025'';
and
(B) in clause (iv), by striking ``2024 and the
portion of fiscal year 2025 beginning on October 1,
2024, and ending on December 31, 2024'' and inserting
``2025''.
(2) Permitting hospitals to decline reclassification.--
Section 13501(e)(2) of the Omnibus Budget Reconciliation Act of
1993 (42 U.S.C. 1395ww note) is amended by striking ``2024, or
the portion of fiscal year 2025 beginning on October 1, 2024,
and ending on December 31, 2024'' and inserting ``2025''.
SEC. 203. EXTENSION OF ADD-ON PAYMENTS FOR AMBULANCE SERVICES.
(a) In General.--Section 1834(l) of the Social Security Act (42
U.S.C. 1395m(l)) is amended--
(1) in paragraph (12)(A), by striking ``January 1, 2025'' and
inserting ``October 1, 2025''; and
(2) in paragraph (13), by striking ``January 1, 2025'' in
each place it appears and inserting ``October 1, 2025'' in each
such place.
(b) Program Instruction Authority.--Notwithstanding any other
provision of law, the Secretary of Health and Human Services may
implement the provisions of, including amendments made by, this section
through program instruction or otherwise.
TITLE III--OFFSETS
SEC. 301. REVISING PHASE-IN OF MEDICARE CLINICAL LABORATORY TEST
PAYMENT CHANGES.
(a) Revised Phase-in of Reductions From Private Payor Rate
Implementation.--Section 1834A(b)(3) of the Social Security Act (42
U.S.C. 1395m-1(b)(3)) is amended--
(1) in subparagraph (A), by striking ``2027'' and inserting
``2028''; and
(2) in subparagraph (B)--
(A) in clause (ii), by striking ``2024'' and
inserting ``2025''; and
(B) in clause (iii), by striking ``2025 through
2027'' and inserting ``2026 through 2028''.
(b) Revised Reporting Period for Reporting of Private Sector Payment
Rates for Establishment of Medicare Payment Rates.--Section
1834A(a)(1)(B) of the Social Security Act (42 U.S.C. 1395m-1(a)(1)(B))
is amended--
(1) in clause (i), by striking ``2024'' and inserting
``2025''; and
(2) in clause (ii), by striking ``2025'' each place it
appears and inserting ``2026''.
(c) Implementation.--The Secretary of Health and Human Services may
implement the amendments made by this section by program instruction or
otherwise.
SEC. 302. ARRANGEMENTS WITH PHARMACY BENEFIT MANAGERS WITH RESPECT TO
PRESCRIPTION DRUG PLANS AND MA-PD PLANS.
(a) In General.--
(1) Prescription drug plans.--Section 1860D-12 of the Social
Security Act (42 U.S.C. 1395w-112) is amended by adding at the
end the following new subsection:
``(h) Requirements Relating to Pharmacy Benefit Managers.--For plan
years beginning on or after January 1, 2027:
``(1) Agreements with pharmacy benefit managers.--Each
contract entered into with a PDP sponsor under this part with
respect to a prescription drug plan offered by such sponsor
shall provide that any pharmacy benefit manager acting on
behalf of such sponsor has a written agreement with the PDP
sponsor under which the pharmacy benefit manager, and any
affiliates of such pharmacy benefit manager, as applicable,
agree to meet the following requirements:
``(A) No income other than bona fide service fees.--
``(i) In general.--The pharmacy benefit
manager and any affiliate of such pharmacy
benefit manager shall not derive any
remuneration with respect to any services
provided on behalf of any entity or individual,
in connection with the utilization of covered
part D drugs, from any such entity or
individual other than bona fide service fees,
subject to clauses (ii) and (iii).
``(ii) Incentive payments.--For the purposes
of this subsection, an incentive payment paid
by a PDP sponsor to a pharmacy benefit manager
that is performing services on behalf of such
sponsor shall be deemed a `bona fide service
fee'(even if such payment does not otherwise
meet the definition of such term under
paragraph (7)(B)) if such payment is a flat
dollar amount, is consistent with fair market
value (as specified by the Secretary), is
related to services actually performed by the
pharmacy benefit manager or affiliate of such
pharmacy benefit manager, on behalf of the
entity making such payment, in connection with
the utilization of covered part D drugs, and
meets additional requirements, if any, as
determined appropriate by the Secretary.
``(iii) Clarification on rebates and
discounts used to lower costs for covered part
d drugs.--Rebates, discounts, and other price
concessions received by a pharmacy benefit
manager or an affiliate of a pharmacy benefit
manager from manufacturers, even if such price
concessions are calculated as a percentage of a
drug's price, shall not be considered a
violation of the requirements of clause (i) if
they are fully passed through to a PDP sponsor
and are compliant with all regulatory and
subregulatory requirements related to direct
and indirect remuneration for manufacturer
rebates under this part, including in cases
where a PDP sponsor is acting as a pharmacy
benefit manager on behalf of a prescription
drug plan offered by such PDP sponsor.
``(iv) Evaluation of remuneration
arrangements.--Components of subsets of
remuneration arrangements (such as fees or
other forms of compensation paid to or retained
by the pharmacy benefit manager or affiliate of
such pharmacy benefit manager), as determined
appropriate by the Secretary, between pharmacy
benefit managers or affiliates of such pharmacy
benefit managers, as applicable, and other
entities involved in the dispensing or
utilization of covered part D drugs (including
PDP sponsors, manufacturers, pharmacies, and
other entities as determined appropriate by the
Secretary) shall be subject to review by the
Secretary, in consultation with the Office of
the Inspector General of the Department of
Health and Human Services, as determined
appropriate by the Secretary. The Secretary, in
consultation with the Office of the Inspector
General, shall review whether remuneration
under such arrangements is consistent with fair
market value (as specified by the Secretary)
through reviews and assessments of such
remuneration, as determined appropriate.
``(v) Disgorgement.--The pharmacy benefit
manager shall disgorge any remuneration paid to
such pharmacy benefit manager or an affiliate
of such pharmacy benefit manager in violation
of this subparagraph to the PDP sponsor.
``(vi) Additional requirements.--The pharmacy
benefit manager shall--
``(I) enter into a written agreement
with any affiliate of such pharmacy
benefit manager, under which the
affiliate shall identify and disgorge
any remuneration described in clause
(v) to the pharmacy benefit manager;
and
``(II) attest, subject to any
requirements determined appropriate by
the Secretary, that the pharmacy
benefit manager has entered into a
written agreement described in
subclause (I) with any relevant
affiliate of the pharmacy benefit
manager.
``(B) Transparency regarding guarantees and cost
performance evaluations.--The pharmacy benefit manager
shall--
``(i) define, interpret, and apply, in a
fully transparent and consistent manner for
purposes of calculating or otherwise evaluating
pharmacy benefit manager performance against
pricing guarantees or similar cost performance
measurements related to rebates, discounts,
price concessions, or net costs, terms such
as--
``(I) `generic drug', in a manner
consistent with the definition of the
term under section 423.4 of title 42,
Code of Federal Regulations, or a
successor regulation;
``(II) `brand name drug', in a manner
consistent with the definition of the
term under section 423.4 of title 42,
Code of Federal Regulations, or a
successor regulation;
``(III) `specialty drug';
``(IV) `rebate'; and
``(V) `discount';
``(ii) identify any drugs, claims, or price
concessions excluded from any pricing guarantee
or other cost performance calculation or
evaluation in a clear and consistent manner;
and
``(iii) where a pricing guarantee or other
cost performance measure is based on a pricing
benchmark other than the wholesale acquisition
cost (as defined in section 1847A(c)(6)(B)) of
a drug, calculate and provide a wholesale
acquisition cost-based equivalent to the
pricing guarantee or other cost performance
measure in the written agreement.
``(C) Provision of information.--
``(i) In general.--Not later than July 1 of
each year, beginning in 2027, the pharmacy
benefit manager shall submit to the PDP
sponsor, and to the Secretary, a report, in
accordance with this subparagraph, and shall
make such report available to such sponsor at
no cost to such sponsor in a format specified
by the Secretary under paragraph (5). Each such
report shall include, with respect to such PDP
sponsor and each plan offered by such sponsor,
the following information with respect to the
previous plan year:
``(I) A list of all drugs covered by
the plan that were dispensed including,
with respect to each such drug--
``(aa) the brand name,
generic or non-proprietary
name, and National Drug Code;
``(bb) the number of plan
enrollees for whom the drug was
dispensed, the total number of
prescription claims for the
drug (including original
prescriptions and refills,
counted as separate claims),
and the total number of dosage
units of the drug dispensed;
``(cc) the number of
prescription claims described
in item (bb) by each type of
dispensing channel through
which the drug was dispensed,
including retail, mail order,
specialty pharmacy, long term
care pharmacy, home infusion
pharmacy, or other types of
pharmacies or providers;
``(dd) the average wholesale
acquisition cost, listed as
cost per day's supply, cost per
dosage unit, and cost per
typical course of treatment (as
applicable);
``(ee) the average wholesale
price for the drug, listed as
cost per day's supply, cost per
dosage unit, and cost per
typical course of treatment (as
applicable);
``(ff) the total out-of-
pocket spending by plan
enrollees on such drug after
application of any benefits
under the plan, including plan
enrollee spending through
copayments, coinsurance, and
deductibles;
``(gg) total rebates paid by
the manufacturer on the drug as
reported under the Detailed DIR
Report (or any successor
report) submitted by such
sponsor to the Centers for
Medicare & Medicaid Services;
``(hh) all other direct or
indirect remuneration on the
drug as reported under the
Detailed DIR Report (or any
successor report) submitted by
such sponsor to the Centers for
Medicare & Medicaid Services;
``(ii) the average pharmacy
reimbursement amount paid by
the plan for the drug in the
aggregate and disaggregated by
dispensing channel identified
in item (cc);
``(jj) the average National
Average Drug Acquisition Cost
(NADAC); and
``(kk) total manufacturer-
derived revenue, inclusive of
bona fide service fees,
attributable to the drug and
retained by the pharmacy
benefit manager and any
affiliate of such pharmacy
benefit manager.
``(II) In the case of a pharmacy
benefit manager that has an affiliate
that is a retail, mail order, or
specialty pharmacy, with respect to
drugs covered by such plan that were
dispensed, the following information:
``(aa) The percentage of
total prescriptions that were
dispensed by pharmacies that
are an affiliate of the
pharmacy benefit manager for
each drug.
``(bb) The interquartile
range of the total combined
costs paid by the plan and plan
enrollees, per dosage unit, per
course of treatment, per 30-day
supply, and per 90-day supply
for each drug dispensed by
pharmacies that are not an
affiliate of the pharmacy
benefit manager and that are
included in the pharmacy
network of such plan.
``(cc) The interquartile
range of the total combined
costs paid by the plan and plan
enrollees, per dosage unit, per
course of treatment, per 30-day
supply, and per 90-day supply
for each drug dispensed by
pharmacies that are an
affiliate of the pharmacy
benefit manager and that are
included in the pharmacy
network of such plan.
``(dd) The lowest total
combined cost paid by the plan
and plan enrollees, per dosage
unit, per course of treatment,
per 30-day supply, and per 90-
day supply, for each drug that
is available from any pharmacy
included in the pharmacy
network of such plan.
``(ee) The difference between
the average acquisition cost of
the affiliate, such as a
pharmacy or other entity that
acquires prescription drugs,
that initially acquires the
drug and the amount reported
under subclause (I)(jj) for
each drug.
``(ff) A list inclusive of
the brand name, generic or non-
proprietary name, and National
Drug Code of covered part D
drugs subject to an agreement
with a covered entity under
section 340B of the Public
Health Service Act for which
the pharmacy benefit manager or
an affiliate of the pharmacy
benefit manager had a contract
or other arrangement with such
a covered entity in the service
area of such plan.
``(III) Where a drug approved under
section 505(c) of the Federal Food,
Drug, and Cosmetic Act (referred to in
this subclause as the `listed drug') is
covered by the plan, the following
information:
``(aa) A list of currently
marketed generic drugs approved
under section 505(j) of the
Federal Food, Drug, and
Cosmetic Act pursuant to an
application that references
such listed drug that are not
covered by the plan, are
covered on the same formulary
tier or a formulary tier
typically associated with
higher cost-sharing than the
listed drug, or are subject to
utilization management that the
listed drug is not subject to.
``(bb) The estimated average
beneficiary cost-sharing under
the plan for a 30-day supply of
the listed drug.
``(cc) Where a generic drug
listed under item (aa) is on a
formulary tier typically
associated with higher cost-
sharing than the listed drug,
the estimated average cost-
sharing that a beneficiary
would have paid for a 30-day
supply of each of the generic
drugs described in item (aa),
had the plan provided coverage
for such drugs on the same
formulary tier as the listed
drug.
``(dd) A written
justification for providing
more favorable coverage of the
listed drug than the generic
drugs described in item (aa).
``(ee) The number of
currently marketed generic
drugs approved under section
505(j) of the Federal Food,
Drug, and Cosmetic Act pursuant
to an application that
references such listed drug.
``(IV) Where a reference product (as
defined in section 351(i) of the Public
Health Service Act) is covered by the
plan, the following information:
``(aa) A list of currently
marketed biosimilar biological
products licensed under section
351(k) of the Public Health
Service Act pursuant to an
application that refers to such
reference product that are not
covered by the plan, are
covered on the same formulary
tier or a formulary tier
typically associated with
higher cost-sharing than the
reference product, or are
subject to utilization
management that the reference
product is not subject to.
``(bb) The estimated average
beneficiary cost-sharing under
the plan for a 30-day supply of
the reference product.
``(cc) Where a biosimilar
biological product listed under
item (aa) is on a formulary
tier typically associated with
higher cost-sharing than the
listed drug, the estimated
average cost-sharing that a
beneficiary would have paid for
a 30-day supply of each of the
biosimilar biological products
described in item (aa), had the
plan provided coverage for such
products on the same formulary
tier as the reference product.
``(dd) A written
justification for providing
more favorable coverage of the
reference product than the
biosimilar biological product
described in item (aa).
``(ee) The number of
currently marketed biosimilar
biological products licensed
under section 351(k) of the
Public Health Service Act,
pursuant to an application that
refers to such reference
product.
``(V) Total gross spending on covered
part D drugs by the plan, not net of
rebates, fees, discounts, or other
direct or indirect remuneration.
``(VI) The total amount retained by
the pharmacy benefit manager or an
affiliate of such pharmacy benefit
manager in revenue related to
utilization of covered part D drugs
under that plan, inclusive of bona fide
service fees.
``(VII) The total spending on covered
part D drugs net of rebates, fees,
discounts, or other direct and indirect
remuneration by the plan.
``(VIII) An explanation of any
benefit design parameters under such
plan that encourage plan enrollees to
fill prescriptions at pharmacies that
are an affiliate of such pharmacy
benefit manager, such as mail and
specialty home delivery programs, and
retail and mail auto-refill programs.
``(IX) The following information:
``(aa) A list of all brokers,
consultants, advisors, and
auditors that receive
compensation from the pharmacy
benefit manager or an affiliate
of such pharmacy benefit
manager for referrals,
consulting, auditing, or other
services offered to PDP
sponsors related to pharmacy
benefit management services.
``(bb) The amount of
compensation provided by such
pharmacy benefit manager or
affiliate to each such broker,
consultant, advisor, and
auditor.
``(cc) The methodology for
calculating the amount of
compensation provided by such
pharmacy benefit manager or
affiliate, for each such
broker, consultant, advisor,
and auditor.
``(X) A list of all affiliates of the
pharmacy benefit manager.
``(XI) A summary document submitted
in a standardized template developed by
the Secretary that includes such
information described in subclauses (I)
through (X).
``(ii) Written explanation of contracts or
agreements with drug manufacturers.--
``(I) In general.--The pharmacy
benefit manager shall, not later than
30 days after the finalization of any
contract or agreement between such
pharmacy benefit manager or an
affiliate of such pharmacy benefit
manager and a drug manufacturer (or
subsidiary, agent, or entity affiliated
with such drug manufacturer) that makes
rebates, discounts, payments, or other
financial incentives related to one or
more covered part D drugs or other
prescription drugs, as applicable, of
the manufacturer directly or indirectly
contingent upon coverage, formulary
placement, or utilization management
conditions on any other covered part D
drugs or other prescription drugs, as
applicable, submit to the PDP sponsor a
written explanation of such contract or
agreement.
``(II) Requirements.--A written
explanation under subclause (I) shall--
``(aa) include the
manufacturer subject to the
contract or agreement, all
covered part D drugs and other
prescription drugs, as
applicable, subject to the
contract or agreement and the
manufacturers of such drugs,
and a high-level description of
the terms of such contract or
agreement and how such terms
apply to such drugs; and
``(bb) be certified by the
Chief Executive Officer, Chief
Financial Officer, or General
Counsel of such pharmacy
benefit manager, or affiliate
of such pharmacy benefit
manager, as applicable, or an
individual delegated with the
authority to sign on behalf of
one of these officers, who
reports directly to the
officer.
``(III) Definition of other
prescription drugs.--For purposes of
this clause, the term `other
prescription drugs' means prescription
drugs covered as supplemental benefits
under this part or prescription drugs
paid outside of this part.
``(D) Audit rights.--
``(i) In general.--Not less than once a year,
at the request of the PDP sponsor, the pharmacy
benefit manager shall allow for an audit of the
pharmacy benefit manager to ensure compliance
with all terms and conditions under the written
agreement and the accuracy of information
reported under subparagraph (C).
``(ii) Auditor.--The PDP sponsor shall have
the right to select an auditor. The pharmacy
benefit manager shall not impose any
limitations on the selection of such auditor.
``(iii) Provision of information.--The
pharmacy benefit manager shall make available
to such auditor all records, data, contracts,
and other information necessary to confirm the
accuracy of information provided under
subparagraph (C), subject to reasonable
restrictions on how such information must be
reported to prevent redisclosure of such
information.
``(iv) Timing.--The pharmacy benefit manager
must provide information under clause (iii) and
other information, data, and records relevant
to the audit to such auditor within 6 months of
the initiation of the audit and respond to
requests for additional information from such
auditor within 30 days after the request for
additional information.
``(v) Information from affiliates.--The
pharmacy benefit manager shall be responsible
for providing to such auditor information
required to be reported under subparagraph (C)
that is owned or held by an affiliate of such
pharmacy benefit manager.
``(2) Enforcement.--
``(A) In general.--Each PDP sponsor shall--
``(i) disgorge to the Secretary any amounts
disgorged to the PDP sponsor by a pharmacy
benefit manager under paragraph (1)(A)(v);
``(ii) require, in a written agreement with
any pharmacy benefit manager acting on behalf
of such sponsor or affiliate of such pharmacy
benefit manager, that such pharmacy benefit
manager or affiliate reimburse the PDP sponsor
for any civil money penalty imposed on the PDP
sponsor as a result of the failure of the
pharmacy benefit manager or affiliate to meet
the requirements of paragraph (1) that are
applicable to the pharmacy benefit manager or
affiliate under the agreement; and
``(iii) require, in a written agreement with
any such pharmacy benefit manager acting on
behalf of such sponsor or affiliate of such
pharmacy benefit manager, that such pharmacy
benefit manager or affiliate be subject to
punitive remedies for breach of contract for
failure to comply with the requirements
applicable under paragraph (1).
``(B) Reporting of alleged violations.--The Secretary
shall make available and maintain a mechanism for
manufacturers, PDP sponsors, pharmacies, and other
entities that have contractual relationships with
pharmacy benefit managers or affiliates of such
pharmacy benefit managers to report, on a confidential
basis, alleged violations of paragraph (1)(A) or
subparagraph (C).
``(C) Anti-retaliation and anti-coercion.--Consistent
with applicable Federal or State law, a PDP sponsor
shall not--
``(i) retaliate against an individual or
entity for reporting an alleged violation under
subparagraph (B); or
``(ii) coerce, intimidate, threaten, or
interfere with the ability of an individual or
entity to report any such alleged violations.
``(3) Certification of compliance.--
``(A) In general.--Each PDP sponsor shall furnish to
the Secretary (in a time and manner specified by the
Secretary) an annual certification of compliance with
this subsection, as well as such information as the
Secretary determines necessary to carry out this
subsection.
``(B) Implementation.--Notwithstanding any other
provision of law, the Secretary may implement this
paragraph by program instruction or otherwise.
``(4) Rule of construction.--Nothing in this subsection shall
be construed as prohibiting payments related to reimbursement
for ingredient costs to any entity that acquires prescription
drugs, such as a pharmacy or wholesaler.
``(5) Standard formats.--
``(A) In general.--Not later than June 1, 2026, the
Secretary shall specify standard, machine-readable
formats for pharmacy benefit managers to submit annual
reports required under paragraph (1)(C)(i).
``(B) Implementation.--Notwithstanding any other
provision of law, the Secretary may implement this
paragraph by program instruction or otherwise.
``(6) Confidentiality.--
``(A) In general.--Information disclosed by a
pharmacy benefit manager, an affiliate of a pharmacy
benefit manager, a PDP sponsor, or a pharmacy under
this subsection that is not otherwise publicly
available or available for purchase shall not be
disclosed by the Secretary or a PDP sponsor receiving
the information, except that the Secretary may disclose
the information for the following purposes:
``(i) As the Secretary determines necessary
to carry out this part.
``(ii) To permit the Comptroller General to
review the information provided.
``(iii) To permit the Director of the
Congressional Budget Office to review the
information provided.
``(iv) To permit the Executive Director of
the Medicare Payment Advisory Commission to
review the information provided.
``(v) To the Attorney General for the
purposes of conducting oversight and
enforcement under this title.
``(vi) To the Inspector General of the
Department of Health and Human Services in
accordance with its authorities under the
Inspector General Act of 1978 (section 406 of
title 5, United States Code), and other
applicable statutes.
``(B) Restriction on use of information.--The
Secretary, the Comptroller General, the Director of the
Congressional Budget Office, and the Executive Director
of the Medicare Payment Advisory Commission shall not
report on or disclose information disclosed pursuant to
subparagraph (A) to the public in a manner that would
identify--
``(i) a specific pharmacy benefit manager,
affiliate, pharmacy, manufacturer, wholesaler,
PDP sponsor, or plan; or
``(ii) contract prices, rebates, discounts,
or other remuneration for specific drugs in a
manner that may allow the identification of
specific contracting parties or of such
specific drugs.
``(7) Definitions.--For purposes of this subsection:
``(A) Affiliate.--The term `affiliate' means any
entity that is owned by, controlled by, or related
under a common ownership structure with a pharmacy
benefit manager or PDP sponsor, or that acts as a
contractor or agent to such pharmacy benefit manager or
PDP sponsor, insofar as such contractor or agent
performs any of the functions described under
subparagraph (C).
``(B) Bona fide service fee.--The term `bona fide
service fee' means a fee that is reflective of the fair
market value (as specified by the Secretary) for a bona
fide, itemized service actually performed on behalf of
an entity, that the entity would otherwise perform (or
contract for) in the absence of the service arrangement
and that is not passed on in whole or in part to a
client or customer, whether or not the entity takes
title to the drug. Such fee must be a flat dollar
amount and shall not be directly or indirectly based
on, or contingent upon--
``(i) drug price, such as wholesale
acquisition cost or drug benchmark price (such
as average wholesale price);
``(ii) the amount of discounts, rebates,
fees, or other direct or indirect remuneration
with respect to covered part D drugs dispensed
to enrollees in a prescription drug plan,
except as permitted pursuant to paragraph
(1)(A)(ii);
``(iii) coverage or formulary placement
decisions or the volume or value of any
referrals or business generated between the
parties to the arrangement; or
``(iv) any other amounts or methodologies
prohibited by the Secretary.
``(C) Pharmacy benefit manager.--The term `pharmacy
benefit manager' means any person or entity that,
either directly or through an intermediary, acts as a
price negotiator or group purchaser on behalf of a PDP
sponsor or prescription drug plan, or manages the
prescription drug benefits provided by such sponsor or
plan, including the processing and payment of claims
for prescription drugs, the performance of drug
utilization review, the processing of drug prior
authorization requests, the adjudication of appeals or
grievances related to the prescription drug benefit,
contracting with network pharmacies, controlling the
cost of covered part D drugs, or the provision of
related services. Such term includes any person or
entity that carries out one or more of the activities
described in the preceding sentence, irrespective of
whether such person or entity calls itself a `pharmacy
benefit manager'.''.
(2) MA-PD plans.--Section 1857(f)(3) of the Social Security
Act (42 U.S.C. 1395w-27(f)(3)) is amended by adding at the end
the following new subparagraph:
``(F) Requirements relating to pharmacy benefit
managers.--For plan years beginning on or after January
1, 2027, section 1860D-12(h).''.
(3) Nonapplication of paperwork reduction act.--Chapter 35 of
title 44, United States Code, shall not apply to the
implementation of this subsection.
(4) Funding.--
(A) Secretary.--In addition to amounts otherwise
available, there is appropriated to the Centers for
Medicare & Medicaid Services Program Management
Account, out of any money in the Treasury not otherwise
appropriated, $113,000,000 for fiscal year 2025, to
remain available until expended, to carry out this
subsection.
(B) OIG.--In addition to amounts otherwise available,
there is appropriated to the Inspector General of the
Department of Health and Human Services, out of any
money in the Treasury not otherwise appropriated,
$20,000,000 for fiscal year 2025, to remain available
until expended, to carry out this subsection.
(b) GAO Study and Report on Certain Reporting Requirements.--
(1) Study.--The Comptroller General of the United States (in
this subsection referred to as the ``Comptroller General'')
shall conduct a study on Federal and State reporting
requirements for health plans and pharmacy benefit managers
related to the transparency of prescription drug costs and
prices. Such study shall include an analysis of the following:
(A) Federal statutory and regulatory reporting
requirements for health plans and pharmacy benefit
managers related to prescription drug costs and prices.
(B) Selected States' statutory and regulatory
reporting requirements for health plans and pharmacy
benefit managers related to prescription drug costs and
prices.
(C) The extent to which the statutory and regulatory
reporting requirements identified in subparagraphs (A)
and (B) overlap and conflict.
(D) The resources required by health plans and
pharmacy benefit managers to comply with the reporting
requirements described in subparagraphs (A) and (B).
(E) Other items determined appropriate by the
Comptroller General.
(2) Report.--Not later than 2 years after the date on which
information is first required to be reported under section
1860D-12(h)(1)(C) of the Social Security Act, as added by
subsection (a)(1), the Comptroller General shall submit to
Congress a report containing the results of the study conducted
under paragraph (1), together with recommendations for
legislation and administrative actions that would streamline
and reduce the burden associated with the reporting
requirements for health plans and pharmacy benefit managers
described in paragraph (1).
(c) MedPAC Reports on Agreements With Pharmacy Benefit Managers With
Respect to Prescription Drug Plans and MA-PD Plans.--The Medicare
Payment Advisory Commission shall submit to Congress the following
reports:
(1) Not later than March 31, 2028, a report regarding
agreements with pharmacy benefit managers with respect to
prescription drug plans and MA-PD plans. Such report shall
include--
(A) a description of trends and patterns, including
relevant averages, totals, and other figures for each
of the types of information submitted;
(B) an analysis of any differences in agreements and
their effects on plan enrollee out-of-pocket spending
and average pharmacy reimbursement, and any other
impacts; and
(C) any recommendations the Commission determines
appropriate.
(2) Not later than March 31, 2030, a report describing any
changes with respect to the information described in paragraph
(1) over time, together with any recommendations the Commission
determines appropriate.
SEC. 303. EXTENDING THE ADJUSTMENT TO THE CALCULATION OF HOSPICE CAP
AMOUNTS UNDER THE MEDICARE PROGRAM.
Section 1814(i)(2)(B) of the Social Security Act (42 U.S.C.
1395f(i)(2)(B)) is amended--
(1) in clause (ii), by striking ``2033'' and inserting
``2034''; and
(2) in clause (iii), by striking ``2033'' and inserting
``2034''.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
Various Medicare policies and designations are scheduled to
expire by December 31, 2024. The policy would extend current
telehealth flexibilities in fee-for-service Medicare through
December 31, 2026; ambulance add-on payments, the Medicare-
Dependent Hospital designation, and Low-Volume Adjustment
through September 30, 2025; and the Acute Hospital at Home
program through December 31, 2029.
B. Background and Need for Legislation
Medicare has reimbursed for certain telehealth services to
be provided to beneficiaries located in health professional
shortage areas (HPSAs) since 1999. Over time, Congress and the
Centers for Medicare & Medicaid Services (CMS) expanded
beneficiary eligibility and the number of reimbursable
services. Prior to the COVID-19 Public Health Emergency (PHE),
access to telehealth services was statutorily limited to
beneficiaries living in counties outside of metropolitan
statistical areas or HPSAs. Congress extended certain
telehealth waivers during the PHE, and most recently in the
Consolidated Appropriations Act, 2023, which extended
telehealth flexibilities through December 31, 2024.
Generally, to participate in the Medicare program,
hospitals must comply with Medicare's basic health and safety
rules, called Conditions of Participation (CoPs). In 2020, as
part of the response to the COVID-19 PHE, the Trump
Administration launched the Hospital Without Walls Initiative
and its constituent part, the Acute Hospital at Home Program,
designed to provide hospitals needed flexibility to increase
hospital capacity. To do this, the Initiative leveraged Section
1135 of the Social Security Act to waive Medicare CoPs,
enabling hospitals to provide inpatient care in beneficiaries'
homes. The Acute Hospital at Home Program was due to end upon
the expiration of the COVID-19 PHE, but Congress extended the
waivers through December 31, 2024, requiring the Secretary of
Health and Human Services to submit to Congress a report on the
program's status by the conclusion of Fiscal Year 2024.
Legislation is needed to extend the Acute Hospital at Home
waivers past December 31, 2024.
In the Omnibus Budget Reconciliation Act of 1989, Congress
created the Medicare Dependent Hospital (MDH) designation to
provide additional Medicare reimbursement to certain hospitals
that disproportionately rely on Medicare to remain viable. MDH
eligibility is limited to rural hospitals with 100 or fewer
beds, and 60 percent or more of their inpatient days must be
attributable to Medicare. MDHs are eligible for additional
Medicare reimbursement, which is the higher of their historic
costs updated for inflation or the normal Inpatient Prospective
Payment System payment. The MDH designation has been extended
several times, most recently through December 31, 2024.
Legislation is needed to extend the MDH designation past that
date.
In the Medicare Prescription Drug, Improvement and
Modernization Act of 2003, Congress created the Medicare Low-
Volume Adjustment (LVA) to provide additional Medicare
reimbursement to certain IPPS hospitals that experience low
patient volumes. LVA eligibility has changed over time, but
under current law, eligibility is limited to hospitals located
15 road miles from the nearest hospital, with less than 3,800
discharges. The amount of the adjustment is inversely related
to a hospital's volume, from 25 percent for hospitals with 500
or fewer discharges, down to zero percent for those exceeding
3,800 discharges. This enhanced eligibility is due to expire
December 31, 2024. Legislation is needed to extend the enhanced
eligibility levels past that date.
Coverage of ambulance services under Medicare Part B was
established under Section 1861 of the Social Security Act.
Initially, Part B only covered ambulance services to a
hospital, nursing home, or the beneficiary's home, and ``. . .
only if other means of transportation would endanger the
beneficiary's health.'' At the time, Medicare paid ambulance
providers based on a complex ``reasonable charge methodology,''
based on bills from ambulance operators, with a base rate for
each trip, and additional charges allowed for mileage, oxygen,
waiting time, night, and emergency trips. Under this system of
payment, from 1974 to 1985, Part B annual expenditures grew by
a power of ten from $34 million to $350 million, with ambulance
expenditures increasing at an average annual rate of more than
20 percent. This led to the creation of the Medicare Ambulance
Fee Schedule through the Balanced Budget Act of 1997. While the
new fee schedule stabilized growing Part B ambulance
expenditures, it failed to account for cost challenges created
by furnishing services in different geographic contexts--
specifically in rural America. To mitigate inadequacies in the
fee schedule, through the Medicare Prescription Drug,
Improvement, and Modernization Act (MMA) of 2003, Congress
established three Medicare ambulance add-on payments (urban,
rural, and super-rural) to accommodate both distance traveled
and population density more effectively through the fee
schedule. Since then, Congress has extended the three add-on
payments several times, with payments currently scheduled to
expire after December 31, 2024.
The Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 created the Medicare Part D drug
benefit for coverage of outpatient drugs. Under Medicare Part
D, pharmacy benefit managers (PBMs) contract with PDP sponsors
to design drug formularies for Medicare beneficiaries. PBMs
contract with pharmaceutical manufacturers for formulary
access, oftentimes using price concessions as a tool to
negotiate formulary placement. PDPs must report price
concessions to CMS. Under current law, PDPs and PBMs have
contracting flexibility to determine how such contracts are
structured, how reimbursements are able to be taken, and what
amounts are charged, but CMS has limited visibility into the
contracts in practice.
C. Legislative History
Background
H.R. 8261 was introduced on May 8, 2024, and was referred
to the Committee on Ways and Means and the Committee on Energy
and Commerce.
Committee Hearings
The Committee on Ways and Means held the following hearing
concerning the policy in H.R. 8261:
On Tuesday, March 12, 2024, the Committee on Ways and Means
held a hearing titled, ``Enhancing Access to Care at Home in
Rural and Underserved Communities'' to explore how telehealth
flexibilities have allowed for care delivery innovations that
particularly help hard-to-reach patients.
Committee Action
The Committee on Ways and Means marked up H.R. 8261, the
``Preserving Telehealth, Hospital, and Ambulance Access Act''
on May 8, 2024, and favorably reported the bill, as amended, to
the House of Representatives (with quorum being present).
D. Designated Hearing
Pursuant to clause 3(c)(6) of rule XIII, the following
hearing was used to develop and consider H.R. 8261:
On Tuesday, March 12, 2024, the Committee on Ways and Means
held a hearing titled, ``Enhancing Access to Care at Home in
Rural and Underserved Communities.''
II. EXPLANATION OF THE BILL
A. Reasons for Change
The Consolidated Appropriations Act of 2023 extended
Medicare telehealth flexibilities, ambulance add-on payments,
and the Acute Hospital at Home Program, through December 31,
2024.
The MDH designation and enhanced LVA eligibility will both
expire after December 31, 2024, absent congressional action.
Under current law, PDPs and MA-PDs are not permitted to
collect rebates that are based on the list price of a
prescription drug. With current authority, CMS is limited in
their ability to monitor PDP and MA-PD rebating practices and
enforce prohibition of certain rebating practices on such
entities.
B. Explanation of Provisions
With respect to Medicare telehealth services, this policy
amends section 1834(m) of the Social Security Act by extending
the following telehealth flexibilities for two years through
December 31, 2026.
Removing geographic restrictions and expanding
originating sites.
Expanding practitioners able to bill Medicare for
telehealth services to include physical therapists,
occupational therapists, audiologists and speech language
pathologists.
Allowing Federally Qualified Health Centers and
Rural Health Clinics to bill Medicare for telehealth services.
Delaying the in-person visit requirements for
mental health telehealth eligibility.
Allowing reimbursement for certain services to be
provided via audio-only telehealth visits.
Allowing hospice providers (except for hospices in
areas with moratoria or hospices in the provisional period of
enhanced oversight for new providers) to use telehealth to
conduct the face-to-face visit required for hospice
recertification.
Telehealth (me)
This policy extends the waivers that comprise the Acute
Hospital at Home Program through 2029 and requires an
additional report on the Program's status no later than
September 30, 2028.
The policy extends the MDH Program and the enhanced LVA
eligibility until October 1, 2025.
With respect to the Medicare ambulance add-on payments,
this policy amends section 1834(l) of the Social Security Act
to extend the three add-on payments under the Medicare
ambulance fee schedule through September 30, 2025. The urban
add-on payment will continue to provide a 2 percent increase in
both the base payment and the mileage rate under the fee
schedule. The rural add-on payment will continue to provide a 3
percent increase in both the base payment and the mileage rate
under the fee schedule. The super-rural add-on payment will
continue to provide a 22.6 percent increase in the base
payment, in addition to the 3 percent increase in the mileage
rate that applies to rural areas as a part of the rural add-on
payment.
Beginning in 2027, any PDP or MA-PD plan that contracts
with a PBM must meet the requirements outlined below.
PBMs will be required to use Bona Fide Service fees, a flat
dollar amount that is charged per item. Bona Fide Service Fees
are not allowed to be based off of a drug's price or other
variable factors. PBMs will have new transparency standards for
contracts with PDPs and will be required to report the below
data to the Department of Health and Human Services:
Lists of all drugs covered; Information about
dispensing of such drugs; Information about enrollee
cost-sharing and access to generics and biosimilars if
plans cover the brand-name drugs or biologic reference
products; Information on other financial relationships
between the PBM and other entities in the drug pricing
supply chain; Information related to net and gross
prices and total drug spending; and Information about
the PBM's affiliates.
C. Effective Date
The bill would become effective upon enactment.
III. VOTES OF THE COMMITTEE
In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 8261, the ``Preserving Telehealth,
Hospital, and Ambulance Access Act''.
The vote on the amendment offered by Mr. Doggett to the
amendment in the nature of a substitute to H.R. 8261, which
would require prepayment review of Medicare billing claims for
certain durable medical equipment and clinical diagnostic
laboratory tests at high risk of fraud when such claims have
aberrant billing patterns was not agreed to by a roll call vote
of 17 yeas to 23 nays (with a quorum being present). The vote
was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)................ ........ X ......... Mr. Neal........ X ......... .........
Mr. Buchanan.................. ........ X ......... Mr. Doggett..... X ......... .........
Mr. Smith (NE)................ ........ X ......... Mr. Thompson.... X ......... .........
Mr. Kelly..................... ........ X ......... Mr. Larson...... ........ ......... .........
Mr. Schweikert................ ........ X ......... Mr. Blumenauer.. X ......... .........
Mr. LaHood.................... ........ X ......... Mr. Pascrell.... X ......... .........
Dr. Wenstrup.................. ........ X ......... Mr. Davis....... X ......... .........
Mr. Arrington................. ........ ......... ......... Ms. Sanchez..... X ......... .........
Dr. Ferguson.................. ........ X ......... Ms. Sewell...... X ......... .........
Mr. Estes..................... ........ X ......... Ms. DelBene..... X ......... .........
Mr. Smucker................... ........ X ......... Ms. Chu......... X ......... .........
Mr. Hern...................... ........ ......... ......... Ms. Moore....... X ......... .........
Ms. Miller.................... ........ X ......... Mr. Kildee...... X ......... .........
Dr. Murphy.................... ........ X ......... Mr. Beyer....... X ......... .........
Mr. Kustoff................... ........ X ......... Mr. Evans....... X ......... .........
Mr. Fitzpatrick............... ........ X ......... Mr. Schneider... X ......... .........
Mr. Steube.................... ........ X ......... Mr. Panetta..... X ......... .........
Ms. Tenney.................... ........ X ......... Mr. Gomez....... X ......... .........
Mrs. Fischbach................ ........ X .........
Mr. Moore..................... ........ X .........
Mrs. Steel.................... ........ X .........
Ms. Van Duyne................. ........ X .........
Mr. Feenstra.................. ........ X .........
Ms. Malliotakis............... ........ X .........
Mr. Carey..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
VOTES OF THE COMMITTEE
In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 8261, the ``Preserving Telehealth,
Hospital, and Ambulance Access Act,'' on May 8, 2024.
The vote on the amendment offered by Ms. Sewell to the
amendment in the nature of a substitute to H.R. 8261, which
would extend the ground ambulance, low volume, and Medicare
dependent hospitals for two years was not agreed to by a roll
call vote of 17 yeas to 23 nays (with a quorum being present).
The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)................ ........ X ......... Mr. Neal........ X ......... .........
Mr. Buchanan.................. ........ X ......... Mr. Doggett..... ........ ......... .........
Mr. Smith (NE)................ ........ X ......... Mr. Thompson.... X ......... .........
Mr. Kelly..................... ........ X ......... Mr. Larson...... X ......... .........
Mr. Schweikert................ ........ X ......... Mr. Blumenauer.. X ......... .........
Mr. LaHood.................... ........ X ......... Mr. Pascrell.... X ......... .........
Dr. Wenstrup.................. ........ X ......... Mr. Davis....... X ......... .........
Mr. Arrington................. ........ ......... ......... Ms. Sanchez..... X ......... .........
Dr. Ferguson.................. ........ X ......... Ms. Sewell...... X ......... .........
Mr. Estes..................... ........ X ......... Ms. DelBene..... X ......... .........
Mr. Smucker................... ........ X ......... Ms. Chu......... X ......... .........
Mr. Hern...................... ........ ......... ......... Ms. Moore....... X ......... .........
Ms. Miller.................... ........ X ......... Mr. Kildee...... X ......... .........
Dr. Murphy.................... ........ X ......... Mr. Beyer....... X ......... .........
Mr. Kustoff................... ........ X ......... Mr. Evans....... X ......... .........
Mr. Fitzpatrick............... ........ X ......... Mr. Schneider... X ......... .........
Mr. Steube.................... ........ X ......... Mr. Panetta..... X ......... .........
Ms. Tenney.................... ........ X ......... Mr. Gomez....... X ......... .........
Mrs. Fischbach................ ........ X .........
Mr. Moore..................... ........ X .........
Mrs. Steel.................... ........ X .........
Ms. Van Duyne................. ........ X .........
Mr. Feenstra.................. ........ X .........
Ms. Malliotakis............... ........ X .........
Mr. Carey..................... ........ X .........
----------------------------------------------------------------------------------------------------------------
VOTES OF THE COMMITTEE
In compliance with the Rules of the House of
Representatives, the following statement is made concerning the
vote of the Committee on Ways and Means during the markup
consideration of H.R. 8261, the ``Preserving Telehealth,
Hospital, and Ambulance Access Act,'' on May 8, 2024.
H.R. 8261 was ordered favorably reported to the House of
Representatives as amended by a roll call vote of 41 yeas to 0
nays (with a quorum being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Smith (MO)................ X ......... ......... Mr. Neal........ X ......... .........
Mr. Buchanan.................. X ......... ......... Mr. Doggett..... X ......... .........
Mr. Smith (NE)................ X ......... ......... Mr. Thompson.... X ......... .........
Mr. Kelly..................... X ......... ......... Mr. Larson...... X ......... .........
Mr. Schweikert................ X ......... ......... Mr. Blumenauer.. X ......... .........
Mr. LaHood.................... X ......... ......... Mr. Pascrell.... X ......... .........
Dr. Wenstrup.................. X ......... ......... Mr. Davis....... X ......... .........
Mr. Arrington................. ........ ......... ......... Ms. Sanchez..... X ......... .........
Dr. Ferguson.................. X ......... ......... Ms. Sewell...... X ......... .........
Mr. Estes..................... X ......... ......... Ms. DelBene..... X ......... .........
Mr. Smucker................... X ......... ......... Ms. Chu......... X ......... .........
Mr. Hern...................... ........ ......... ......... Ms. Moore....... X ......... .........
Ms. Miller.................... X ......... ......... Mr. Kildee...... X ......... .........
Dr. Murphy.................... X ......... ......... Mr. Beyer....... X ......... .........
Mr. Kustoff................... X ......... ......... Mr. Evans....... X ......... .........
Mr. Fitzpatrick............... X ......... ......... Mr. Schneider... X ......... .........
Mr. Steube.................... X ......... ......... Mr. Panetta..... X ......... .........
Ms. Tenney.................... X ......... ......... Mr. Gomez....... X ......... .........
Mrs. Fischbach................ X ......... .........
Mr. Moore..................... X ......... .........
Mrs. Steel.................... X ......... .........
Ms. Van Duyne................. X ......... .........
Mr. Feenstra.................. X ......... .........
Ms. Malliotakis............... X ......... .........
Mr. Carey..................... X ......... .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
With respect to clause 3(d) of rule XIII of the Rules of
the House of Representatives, a cost estimate provided by the
Congressional Budget Office pursuant to section 402 of the
Congressional Budget Act of 1974 was not made available to the
Committee in time for the filing of this report.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involved no new or increased budget authority. The
Committee states further that the bill involves no new or
increased tax expenditures.
C. Cost Estimate Prepared by the Congressional Budget Office
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has requested
but not received a cost estimate for this bill from the
Director of Congressional Budget Office. The Chairman of the
Committee shall cause such estimate and statement to be printed
in the Congressional Record upon its receipt by the Committee.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives, the Committee made findings and
recommendations that are reflected in this report.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill does not authority funding, so no statement of general
performance goals and objectives is required.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
D. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill, and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
E. Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, and existing law in which no
change is proposed is shown in roman):
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part A--Hospital Insurance Benefits for the Aged and Disabled
* * * * * * *
CONDITIONS OF AND LIMITATIONS ON PAYMENT FOR SERVICES
Requirement of Requests and Certifications
Sec. 1814. (a) Except as provided in subsections (d) and (g)
and in section 1876, payment for services furnished an
individual may be made only to providers of services which are
eligible therefor under section 1866 and only if--
(1) written request, signed by such individual,
except in cases in which the Secretary finds it
impracticable for the individual to do so, is filed for
such payment in such form, in such manner, and by such
person or persons as the Secretary may by regulation
prescribe, no later than the close of the period ending
1 calendar year after the date of service;
(2) a physician, or, in the case of services
described in subparagraph (B), a physician, or a nurse
practitioner, a clinical nurse specialist, or a
physician assistant (as those terms are defined in
section 1861(aa)(5)) who does not have a direct or
indirect employment relationship with the facility but
is working in collaboration with a physician,, or, in
the case of services described in subparagraph (C), a
physician, a nurse practitioner or clinical nurse
specialist (as such terms are defined in section
1861(aa)(5)) who is working in accordance with State
law, or a physician assistant (as defined in section
1861(aa)(5)) who is working in accordance with State
law, who is enrolled under section 1866(j), certifies
(and recertifies, where such services are furnished
over a period of time, in such cases, with such
frequency, and accompanied by such supporting material,
appropriate to the case involved, as may be provided by
regulations, except that the first of such
recertifications shall be required in each case of
inpatient hospital services not later than the 20th day
of such period) that--
(A) in the case of inpatient psychiatric
hospital services, such services are or were
required to be given on an inpatient basis, by
or under the supervision of a physician, for
the psychiatric treatment of an individual; and
(i) such treatment can or could reasonably be
expected to improve the condition for which
such treatment is or was necessary or (ii)
inpatient diagnostic study is or was medically
required and such services are or were
necessary for such purposes;
(B) in the case of post-hospital extended
care services, such services are or were
required to be given because the individual
needs or needed on a daily basis skilled
nursing care (provided directly by or requiring
the supervision of skilled nursing personnel)
or other skilled rehabilitation services, which
as a practical matter can only be provided in a
skilled nursing facility on an inpatient basis,
for any of the conditions with respect to which
he was receiving inpatient hospital services
(or services which would constitute inpatient
hospital services if the institution met the
requirements of paragraphs (6) and (9) of
section 1861(e)) prior to transfer to the
skilled nursing facility or for a condition
requiring such extended care services which
arose after such transfer and while he was
still in the facility for treatment of the
condition or conditions for which he was
receiving such inpatient hospital services;
(C) in the case of home health services, such
services are or were required because the
individual is or was confined to his home
(except when receiving items and services
referred to in section 1861(m)(7)) and needs or
needed skilled nursing care (other than solely
venipuncture for the purpose of obtaining a
blood sample) on an intermittent basis or
physical or speech therapy or, in the case of
an individual who has been furnished home
health services based on such a need and who no
longer has such a need for such care or
therapy, continues or continued to need
occupational therapy; a plan for furnishing
such services to such individual has been
established and is periodically reviewed by a
physician, a nurse practitioner, a clinical
nurse specialist, or a physician assistant (as
the case may be); such services are or were
furnished while the individual was under the
care of a physician, a nurse practitioner, a
clinical nurse specialist, or a physician
assistant (as the case may be), and, in the
case of a certification made by a physician
after January 1, 2010, or by a nurse
practitioner, clinical nurse specialist, or
physician assistant (as the case may be) after
a date specified by the Secretary (but in no
case later than the date that is 6 months after
the date of the enactment of the CARES Act),
prior to making such certification a physician,
nurse practitioner, clinical nurse specialist,
or physician assistant must document that a
physician, nurse practitioner, clinical nurse
specialist, certified nurse-midwife (as defined
in section 1861(gg)) as authorized by State
law, or physician assistant has had a face-to-
face encounter (including through use of
telehealth, subject to the requirements in
section 1834(m), and other than with respect to
encounters that are incident to services
involved) with the individual within a
reasonable timeframe as determined by the
Secretary; or
(D) in the case of inpatient hospital
services in connection with the care,
treatment, filling, removal, or replacement of
teeth or structures directly supporting teeth,
the individual, because of his underlying
medical condition and clinical status or
because of the severity of the dental
procedure, requires hospitalization in
connection with the provision of such services;
(3) with respect to inpatient hospital services
(other than inpatient psychiatric hospital services)
which are furnished over a period of time, a physician
certifies that such services are required to be given
on an inpatient basis for such individual's medical
treatment, or that inpatient diagnostic study is
medically required and such services are necessary for
such purpose, except that (A) such certification shall
be furnished only in such cases, with such frequency,
and accompanied by such supporting material,
appropriate to the cases involved, as may be provided
by regulations, and (B) the first such certification
required in accordance with clause (A) shall be
furnished no later than the 20th day of such period;
(4) in the case of inpatient psychiatric hospital
services, the services are those which the records of
the hospital indicate were furnished to the individual
during periods when he was receiving (A) intensive
treatment services, (B) admission and related services
necessary for a diagnostic study, or (C) equivalent
services;
(5) with respect to inpatient hospital services
furnished such individual after the 20th day of a
continuous period of such services, there was not in
effect, at the time of admission of such individual to
the hospital, a decision under section 1866(d) (based
on a finding that utilization review of long-stay cases
is not being made in such hospital);
(6) with respect to inpatient hospital services or
post-hospital extended care services furnished such
individual during a continuous period, a finding has
not been made (by the physician members of the
committee or group, as described in section 1861(k)(4),
including any finding made in the course of a sample or
other review of admissions to the institution) pursuant
to the system of utilization review that further
inpatient hospital services or further post-hospital
extended care services, as the case may be, are not
medically necessary; except that, if such a finding has
been made, payment may be made for such services
furnished before the 4th day after the day on which the
hospital or skilled nursing facility, as the case may
be, received notice of such finding;
(7) in the case of hospice care provided an
individual--
(A)(i) in the first 90-day period--
(I) the individual's attending
physician (as defined in section
1861(dd)(3)(B)) (which for purposes of
this subparagraph does not include a
nurse practitioner or a physician
assistant), and
(II) the medical director (or
physician member of the
interdisciplinary group described in
section 1861(dd)(2)(B)) of the hospice
program providing (or arranging for)
the care,
each certify in writing at the beginning of the
period, that the individual is terminally ill
(as defined in section 1861(dd)(3)(A)) based on
the physician's or medical director's clinical
judgment regarding the normal course of the
individual's illness, and
(ii) in a subsequent 90- or 60-day period,
the medical director or physician described in
clause (i)(II) recertifies at the beginning of
the period that the individual is terminally
ill based on such clinical judgment;
(B) a written plan for providing hospice care
with respect to such individual has been
established (before such care is provided by,
or under arrangements made by, that hospice
program) and is periodically reviewed by the
individual's attending physician and by the
medical director (and the interdisciplinary
group described in section 1861(dd)(2)(B)) of
the hospice program;
(C) such care is being or was provided
pursuant to such plan of care;
(D) on and after January 1, 2011 (and, in the
case of clause (ii), before the date of
enactment of subparagraph (E))--
(i)(I) subject to subclause (II), a
hospice physician or nurse practitioner
has a face-to-face encounter with the
individual to determine continued
eligibility of the individual for
hospice care prior to the 180th-day
recertification and each subsequent
recertification under subparagraph
(A)(ii) and attests that such visit
took place (in accordance with
procedures established by the
Secretary); and
(II) during the emergency period
described in section 1135(g)(1)(B),
and, in the case that such emergency
period ends before December 31, 2024,
during the period beginning on the
first day after the end of such
emergency period described in such
section 1135(g)(1)(B) and [ending on
December 31, 2024] ending on December
31, 2026, a hospice physician or nurse
practitioner may conduct a face-to-face
encounter required under this clause
via telehealth, as determined
appropriate by the Secretary, provided
that, in the case of such an encounter
occurring on or after the date that is
2 years after the date of the enactment
of the ``Preserving Telehealth,
Hospital, and Ambulance Access Act'',
such physician or nurse practitioner
includes in any claim for such
encounter one or more modifiers or
codes specified by the Secretary to
indicate that such encounter was
furnished through telehealth, except
that this subclause shall not apply in
the case of such an encounter with an
individual occurring on or after
January 1, 2025, if such individual is
located in an area that is subject to a
moratorium on the enrollment of hospice
programs under this title pursuant to
section 1866(j)(7), if such individual
is receiving hospice care from a
provider that is subject to enhanced
oversight under this title pursuant to
section 1866(j)(3), or if such
encounter is performed by a hospice
physician or nurse practitioner who is
not enrolled under section 1866(j) and
is not an opt-out physician or
practitioner (as defined in section
1802(b)(6)(D)); and
(ii) in the case of hospice care
provided an individual for more than
180 days by a hospice program for which
the number of such cases for such
program comprises more than a percent
(specified by the Secretary) of the
total number of such cases for all
programs under this title, the hospice
care provided to such individual is
medically reviewed (in accordance with
procedures established by the
Secretary); and
(E) on and after the date of enactment of
this subparagraph, in the case of hospice care
provided an individual for more than 180 days
by a hospice program for which the number of
such cases for such program comprises more than
a percent (specified by the Secretary) of the
total number of all cases of individuals
provided hospice care by the program under this
title, the hospice care provided to such
individual is medically reviewed (in accordance
with procedures established by the Secretary);
and
(8) in the case of inpatient critical access hospital
services, a physician certifies that the individual may
reasonably be expected to be discharged or transferred
to a hospital within 96 hours after admission to the
critical access hospital.
To the extent provided by regulations, the certification and
recertification requirements of paragraph (2) shall be deemed
satisfied where, at a later date, a physician, nurse
practitioner, clinical nurse specialist, or physician assistant
(as the case may be) makes certification of the kind provided
in subparagraph (A), (B), (C), or (D) of paragraph (2)
(whichever would have applied), but only where such
certification is accompanied by such medical and other evidence
as may be required by such regulations. With respect to the
certification required by paragraph (2) for home health
services furnished to any individual by a home health agency
(other than an agency which is a governmental entity) and with
respect to the establishment and review of a plan for such
services, the Secretary shall prescribe regulations which shall
become effective no later than July 1, 1981 (or in the case of
regulations to implement the amendments made by section 3708 of
the CARES Act, the Secretary shall prescribe regulations, which
shall become effective no later than 6 months after the date of
the enactment of such Act), and which prohibit a physician,
nurse practitioner, clinical nurse specialist, or physician
assistant who has a significant ownership interest in, or a
significant financial or contractual relationship with, such
home health agency from performing such certification and from
establishing or reviewing such plan, except that such
prohibition shall not apply with respect to a home health
agency which is a sole community home health agency (as
determined by the Secretary). For purposes of the preceding
sentence, service by a physician, nurse practitioner, clinical
nurse specialist, or physician assistant as an uncompensated
officer or director of a home health agency shall not
constitute having a significant ownership interest in, or a
significant financial or contractual relationship with, such
agency. For purposes of documentation for physician
certification and recertification made under paragraph (2) on
or after January 1, 2019 or no later than 6 months after the
date of the enactment of the CARES Act for purposes of
documentation for certification and recertification made under
paragraph (2) by a nurse practitioner, clinical nurse
specialist, or physician assistant,, and made with respect to
home health services furnished by a home health agency, in
addition to using documentation in the medical record of the
physician, nurse practitioner, clinical nurse specialist, or
physician assistant who so certifies or the medical record of
the acute or post-acute care facility (in the case that home
health services were furnished to an individual who was
directly admitted to the home health agency from such a
facility), the Secretary may use documentation in the medical
record of the home health agency as supporting material, as
appropriate to the case involved. For purposes of paragraph
(2)(C), an individual shall be considered to be ``confined to
his home'' if the individual has a condition, due to an illness
or injury, that restricts the ability of the individual to
leave his or her home except with the assistance of another
individual or the aid of a supportive device (such as crutches,
a cane, a wheelchair, or a walker), or if the individual has a
condition such that leaving his or her home is medically
contraindicated. While an individual does not have to be
bedridden to be considered ``confined to his home'', the
condition of the individual should be such that there exists a
normal inability to leave home and that leaving home requires a
considerable and taxing effort by the individual. Any absence
of an individual from the home attributable to the need to
receive health care treatment, including regular absences for
the purpose of participating in therapeutic, psychosocial, or
medical treatment in an adult day-care program that is licensed
or certified by a State, or accredited, to furnish adult day-
care services in the State shall not disqualify an individual
from being considered to be ``confined to his home''. Any other
absence of an individual from the home shall not so disqualify
an individual if the absence is of infrequent or of relatively
short duration. For purposes of the preceding sentence, any
absence for the purpose of attending a religious service shall
be deemed to be an absence of infrequent or short duration. In
applying paragraph (1), the Secretary may specify exceptions to
the 1 calendar year period specified in such paragraph.
Amount Paid to Providers
(b) The amount paid to any provider of services (other than a
hospice program providing hospice care, other than a critical
access hospital providing inpatient critical access hospital
services, and other than a home health agency with respect to
durable medical equipment) with respect to services for which
payment may be made under this part shall, subject to the
provisions of sections 1813, 1886, and 1895, be--
(1) except as provided in paragraph (3), the lesser
of (A) the reasonable cost of such services, as
determined under section 1861(v) and as further limited
by section 1881(b)(2)(B), or (B) the customary charges
with respect to such services;
(2) if such services are furnished by a public
provider of services, or by another provider which
demonstrates to the satisfaction of the Secretary that
a significant portion of its patients are low-income
(and requests that payment be made under this
paragraph), free of charge or at nominal charges to the
public, the amount determined on the basis of those
items (specified in regulations prescribed by the
Secretary) included in the determination of such
reasonable cost which the Secretary finds will provide
fair compensation to such provider for such services;
or
(3) if some or all of the hospitals in a State have
been reimbursed for services (for which payment may be
made under this part) pursuant to a reimbursement
system approved as a demonstration project under
section 402 of the Social Security Amendments of 1967
or section 222 of the Social Security Amendments of
1972, if the rate of increase in such hospitals in
their costs per hospital inpatient admission of
individuals entitled to benefits under this part over
the duration of such project was equal to or less than
such rate of increase for admissions of such
individuals with respect to all hospitals in the United
States during such period, and if either the State has
legislative authority to operate such system and the
State elects to have reimbursement to such hospitals
made in accordance with this paragraph or the system is
operated through a voluntary agreement of hospitals and
such hospitals elect to have reimbursement to those
hospitals made in accordance with this paragraph, then,
subject to section 1886(d)(3)(B)(ix)(III), the
Secretary may provide for continuation of reimbursement
to such hospitals under such system until the Secretary
determines that--
(A) a third-party payor reimburses such a
hospital on a basis other than under such
system, or
(B) the aggregate rate of increase from
January 1, 1981, to the most recent date for
which annual data are available in such
hospitals in costs per hospital inpatient
admission of individuals entitled to benefits
under this part is greater than such rate of
increase for admissions of such individuals
with respect to all hospitals in the United
States for such period.
In the case of any State which has had such a demonstration
project reimbursement system in continuous operation since July
1, 1977, the Secretary shall provide under paragraph (3) for
continuation of reimbursement to hospitals in the State under
such system until the first day of the 37th month beginning
after the date the Secretary determines and notifies the
Governor of the State that either of the conditions described
in subparagraph (A) or (B) of such paragraph has occurred. If,
by the end of such 36-month period, the Secretary determines,
based on evidence submitted by the Governor of the State, that
neither of the conditions described in subparagraph (A) or (B)
of paragraph (3) continues to apply, the Secretary shall
continue without interruption payment to hospitals in the State
under the State's system. If, by the end of such 36-month
period, the Secretary determines, based on such evidence, that
either of the conditions described in subparagraph (A) or (B)
of such paragraph continues to apply, the Secretary shall (i)
collect any net excess reimbursement to hospitals in the State
during such 36-month period (basing such net excess
reimbursement on the net difference, if any, in the rate of
increase in costs per hospital inpatient admission under the
State system compared to the rate of increase in such costs
with respect to all hospitals in the United States over the 36-
month period, as measured by including the cumulative savings
under the State system based on the difference in the rate of
increase in costs per hospital inpatient admission under the
State system as compared to the rate of increase in such costs
with respect to all hospitals in the United States between
January 1, 1981, and the date of the Secretary's initial
notice), and (ii) provide a reasonable period, not to exceed 2
years, for transition from the State system to the national
payment system. For purposes of applying paragraph (3), there
shall be taken into account incentive payments, and payment
adjustments under subsection (b)(3)(B)(ix) or (n) of section
1886.
No Payments to Federal Providers of Services
(c) Subject to section 1880, no payment may be made under
this part (except under subsection (d) or subsection (h)) to
any Federal provider of services, except a provider of services
which the Secretary determines is providing services to the
public generally as a community institution or agency; and no
such payment may be made to any provider of services for any
item or service which such provider is obligated by a law of,
or a contract with, the United States to render at public
expense.
Payments for Emergency Hospital Services
(d)(1) Payments shall also be made to any hospital for
inpatient hospital services furnished in a calendar year, by
the hospital or under arrangements (as defined in section
1861(w)) with it, to an individual entitled to hospital
insurance benefits under section 226 even though such hospital
does not have an agreement in effect under this title if (A)
such services were emergency services, (B) the Secretary would
be required to make such payment if the hospital had such an
agreement in effect and otherwise met the conditions of payment
hereunder, and (C) such hospital has elected to claim payments
for all such inpatient emergency services and for the emergency
outpatient services referred to in section 1835(b) furnished
during such year. Such payments shall be made only in the
amounts provided under subsection (b) and then only if such
hospital agrees to comply, with respect to the emergency
services provided, with the provisions of section 1866(a).
(2) Payment may be made on the basis of an itemized bill to
an individual entitled to hospital insurance benefits under
section 226 for services described in paragraph (1) which are
emergency services if (A) payment cannot be made under
paragraph (1) solely because the hospital does not elect to
claim such payment, and (B) such individual files application
(submitted within such time and in such form and manner and by
such person, and containing and supported by such information
as the Secretary shall by regulations prescribe) for
reimbursement.
(3) The amounts payable under the preceding paragraph with
respect to services described therein shall, subject to the
provisions of section 1813, be equal to 60 percent of the
hospital's reasonable charges for routine services furnished in
the accommodations occupied by the individual or in semiprivate
accommodations (as defined in section 1861(v)(4)), whichever is
less, plus 80 percent of the hospital's reasonable charges for
ancillary services. If separate charges for routine and
ancillary services are not made by the hospital, reimbursement
may be based on two-thirds of the hospital's reasonable charges
for the services received but not to exceed the charges which
would have been made if the patient had occupied semiprivate
accommodations. For purposes of the preceding provisions of
this paragraph, the term ``routine services'' shall mean the
regular room, dietary, and nursing services, minor medical and
surgical supplies and the use of equipment and facilities for
which a separate charge is not customarily made; the term
``ancillary services'' shall mean those special services for
which charges are customarily made in addition to routine
services.
Payment for Inpatient Hospital Services Prior to Notification of
Noneligibility
(e) Notwithstanding that an individual is not entitled to
have payment made under this part for inpatient hospital
services furnished by any hospital, payment shall be made to
such hospital (unless it elects not to receive such payment or,
if payment has already been made by or on behalf of such
individual, fails to refund such payment within the time
specified by the Secretary) for such services which are
furnished to the individual prior to notification to such
hospital from the Secretary of his lack of entitlement, if such
payments are precluded only by reason of section 1812 and if
such hospital complies with the requirements of and regulations
under this title with respect to such payments, has acted in
good faith and without knowledge of such lack of entitlement,
and has acted reasonably in assuming entitlement existed.
Payment under the preceding sentence may not be made for
services furnished an individual pursuant to any admission
after the 6th elapsed day (not including as an elapsed day
Saturday, Sunday, or a legal holiday) after the day on which
such admission occurred.
Payment for Certain Inpatient Hospital Services Furnished Outside the
United States
(f)(1) Payment shall be made for inpatient hospital services
furnished to an individual entitled to hospital insurance
benefits under section 226 by a hospital located outside the
United States, or under arrangements (as defined in section
1861(w)) with it, if--
(A) such individual is a resident of the United
States, and
(B) such hospital was closer to, or substantially
more accessible from, the residence of such individual
than the nearest hospital within the United States
which was adequately equipped to deal with, and was
available for the treatment of, such individual's
illness or injury.
(2) Payment may also be made for emergency inpatient hospital
services furnished to an individual entitled to hospital
insurance benefits under section 226 by a hospital located
outside the United States if--
(A) such individual was physically present--
(i) in a place within the United States; or
(ii) at a place within Canada while traveling
without unreasonable delay by the most direct
route (as determined by the Secretary) between
Alaska and another State;
at the time the emergency which necessitated such
inpatient hospital services occurred, and
(B) such hospital was closer to, or substantially
more accessible from, such place than the nearest
hospital within the United States which was adequately
equipped to deal with, and was available for the
treatment of, such individual's illness or injury.
(3) Payment shall be made in the amount provided under
subsection (b) to any hospital for the inpatient hospital
services described in paragraph (1) or (2) furnished to an
individual by the hospital or under arrangements (as defined in
section 1861(w)) with it if (A) the Secretary would be required
to make such payment if the hospital had an agreement in effect
under this title and otherwise met the conditions of payment
hereunder, (B) such hospital elects to claim such payment, and
(C) such hospital agrees to comply, with respect to such
services, with the provisions of section 1866(a).
(4) Payment for the inpatient hospital services described in
paragraph (1) or (2) furnished to an individual entitled to
hospital insurance benefits under section 226 may be made on
the basis of an itemized bill to such individual if (A) payment
for such services cannot be made under paragraph (3) solely
because the hospital does not elect to claim such payment, and
(B) such individual files application (submitted within such
time and in such form and manner and by such person, and
continuing and supported by such information as the Secretary
shall by regulations prescribe) for reimbursement. The amount
payable with respect to such services shall, subject to the
provisions of section 1813, be equal to the amount which would
be payable under subsection (d)(3).
Payment for Services of a Physician Rendered in a Teaching Hospital
(g) For purposes of services for which the reasonable cost
thereof is determined under section 1861(v)(1)(D) (or would be
if section 1886 did not apply), payment under this part shall
be made to such fund as may be designated by the organized
medical staff of the hospital in which such services were
furnished or, if such services were furnished in such hospital
by the faculty of a medical school, to such fund as may be
designated by such faculty, but only if--
(1) such hospital has an agreement with the Secretary
under section 1866, and
(2) the Secretary has received written assurances
that (A) such payment will be used by such fund solely
for the improvement of care of hospital patients or for
educational or charitable purposes and (B) the
individuals who were furnished such services or any
other persons will not be charged for such services (or
if charged, provision will be made for return of any
moneys incorrectly collected).
Payment for Certain Hospital Services Provided in Department of
Veterans Affairs Hospitals
(h)(1) Payments shall also be made to any hospital operated
by the Department of Veterans Affairs for inpatient hospital
services furnished in a calendar year by the hospital, or under
arrangements (as defined in section 1861(w)) with it, to an
individual entitled to hospital benefits under section 226 even
though the hospital is a Federal provider of services if (A)
the individual was not entitled to have the services furnished
to him free of charge by the hospital, (B) the individual was
admitted to the hospital in the reasonable belief on the part
of the admitting authorities that the individual was a person
who was entitled to have the services furnished to him free of
charge, (C) the authorities of the hospital, in admitting the
individual, and the individual, acted in good faith, and (D)
the services were furnished during a period ending with the
close of the day on which the authorities operating the
hospital first became aware of the fact that the individual was
not entitled to have the services furnished to him by the
hospital free of charge, or (if later) ending with the first
day on which it was medically feasible to remove the individual
from the hospital by discharging him therefrom or transferring
him to a hospital which has in effect an agreement under this
title.
(2) Payment for services described in paragraph (1) shall be
in an amount equal to the charge imposed by the Secretary of
Veterans Affairs for such services, or (if less) the amount
that would be payable for such services under subsection (b)
and section 1886 (as estimated by the Secretary). Any such
payment shall be made to the entity to which payment for the
services involved would have been payable, if payment for such
services had been made by the individual receiving the services
involved (or by another private person acting on behalf of such
individual).
Payment for Hospice Care
(i)(1)(A) Subject to the limitation under paragraph (2) and
the provisions of section 1813(a)(4) and except as otherwise
provided in this paragraph, the amount paid to a hospice
program with respect to hospice care for which payment may be
made under this part shall be an amount equal to the costs
which are reasonable and related to the cost of providing
hospice care or which are based on such other tests of
reasonableness as the Secretary may prescribe in regulations
(including those authorized under section 1861(v)(1)(A)),
except that no payment may be made for bereavement counseling
and no reimbursement may be made for other counseling services
(including nutritional and dietary counseling) as separate
services.
(B) Notwithstanding subparagraph (A), for hospice care
furnished on or after April 1, 1986, the daily rate of payment
per day for routine home care shall be $63.17 and the daily
rate of payment for other services included in hospice care
shall be the daily rate of payment recognized under
subparagraph (A) as of July 1, 1985, increased by $10.
(C)(i) With respect to routine home care and other services
included in hospice care furnished on or after January 1, 1990,
and on or before September 30, 1990, the payment rates for such
care and services shall be 120 percent of such rates in effect
as of September 30, 1989.
(ii) With respect to routine home care and other services
included in hospice care furnished during a subsequent fiscal
year (before the first fiscal year in which the payment
revisions described in paragraph (6)(D) are implemented), the
payment rates for such care and services shall be the payment
rates in effect under this subparagraph during the previous
fiscal year increased by--
(I) for a fiscal year ending on or before September
30, 1993, the market basket percentage increase (as
defined in section 1886(b)(3)(B)(iii)) for the fiscal
year;
(II) for fiscal year 1994, the market basket
percentage increase for the fiscal year minus 2.0
percentage points;
(III) for fiscal year 1995, the market basket
percentage increase for the fiscal year minus 1.5
percentage points;
(IV) for fiscal year 1996, the market basket
percentage increase for the fiscal year minus 1.5
percentage points;
(V) for fiscal year 1997, the market basket
percentage increase for the fiscal year minus 0.5
percentage point;
(VI) for each of fiscal years 1998 through 2002, the
market basket percentage increase for the fiscal year
involved minus 1.0 percentage points, plus, in the case
of fiscal year 2001, 5.0 percentage points; and
(VII) for a subsequent fiscal year (before the first
fiscal year in which the payment revisions described in
paragraph (6)(D) are implemented), subject to clauses
(iv) and (vi), the market basket percentage increase
for the fiscal year.
(iii) With respect to routine home care and other
services included in hospice care furnished during
fiscal years subsequent to the first fiscal year in
which payment revisions described in paragraph (6)(D)
are implemented, the payment rates for such care and
services shall be the payment rates in effect under
this clause during the preceding fiscal year increased
by, subject to clauses (iv) and (vi), the market basket
percentage increase (as defined in section
1886(b)(3)(B)(iii)) for the fiscal year.
(iv) Subject to clause (vi), after determining the market
basket percentage increase under clause (ii)(VII) or (iii), as
applicable, with respect to fiscal year 2013 and each
subsequent fiscal year, the Secretary shall reduce such
percentage--
(I) for 2013 and each subsequent fiscal year, by the
productivity adjustment described in section
1886(b)(3)(B)(xi)(II); and
(II) subject to clause (v), for each of fiscal years
2013 through 2019, by 0.3 percentage point.
The application of this clause may result in the market basket
percentage increase under clause (ii)(VII) or (iii), as
applicable, being less than 0.0 for a fiscal year, and may
result in payment rates under this subsection for a fiscal year
being less than such payment rates for the preceding fiscal
year.
(v) Clause (iv)(II) shall be applied with respect to any of
fiscal years 2014 through 2019 by substituting ``0.0 percentage
points'' for ``0.3 percentage point'', if for such fiscal
year--
(I) the excess (if any) of--
(aa) the total percentage of the non-elderly
insured population for the preceding fiscal
year (based on the most recent estimates
available from the Director of the
Congressional Budget Office before a vote in
either House on the Patient Protection and
Affordable Care Act that, if determined in the
affirmative, would clear such Act for
enrollment); over
(bb) the total percentage of the non-elderly
insured population for such preceding fiscal
year (as estimated by the Secretary); exceeds
(II) 5 percentage points.
(vi) For fiscal year 2018, the market basket percentage
increase under clause (ii)(VII) or (iii), as applicable, after
application of clause (iv), shall be 1 percent.
(2)(A) The amount of payment made under this part for hospice
care provided by (or under arrangements made by) a hospice
program for an accounting year may not exceed the ``cap
amount'' for the year (computed under subparagraph (B))
multiplied by the number of medicare beneficiaries in the
hospice program in that year (determined under subparagraph
(C)).
(B) (i) Except as provided in clause (ii), for purposes of
subparagraph (A), the ``cap amount'' for a year is $6,500,
increased or decreased, for accounting years that end after
October 1, 1984, by the same percentage as the percentage
increase or decrease, respectively, in the medical care
expenditure category of the Consumer Price Index for All Urban
Consumers (United States city average), published by the Bureau
of Labor Statistics, from March 1984 to the fifth month of the
accounting year.
(ii) For purposes of subparagraph (A) for accounting years
that end after September 30, 2016, and before October 1, [2033]
2034, the ``cap amount'' is the cap amount under this
subparagraph for the preceding accounting year updated by the
percentage update to payment rates for hospice care under
paragraph (1)(C) for services furnished during the fiscal year
beginning on the October 1 preceding the beginning of the
accounting year (including the application of any productivity
or other adjustment under clause (iv) of that paragraph).
(iii) For accounting years that end after September 30,
[2033] 2034, the cap amount shall be computed under clause (i)
as if clause (ii) had never applied.
(C) For purposes of subparagraph (A), the ``number of
medicare beneficiaries'' in a hospice program in an accounting
year is equal to the number of individuals who have made an
election under subsection (d) with respect to the hospice
program and have been provided hospice care by (or under
arrangements made by) the hospice program under this part in
the accounting year, such number reduced to reflect the
proportion of hospice care that each such individual was
provided in a previous or subsequent accounting year or under a
plan of care established by another hospice program.
(D) A hospice program shall submit claims for payment for
hospice care furnished in an individual's home under this title
only on the basis of the geographic location at which the
service is furnished, as determined by the Secretary.
(3) Hospice programs providing hospice care for which payment
is made under this subsection shall submit to the Secretary
such data with respect to the costs for providing such care for
each fiscal year, beginning with fiscal year 1999, as the
Secretary determines necessary.
(4) The amount paid to a hospice program with respect to the
services under section 1812(a)(5) for which payment may be made
under this part shall be equal to an amount established for an
office or other outpatient visit for evaluation and management
associated with presenting problems of moderate severity and
requiring medical decisionmaking of low complexity under the
fee schedule established under section 1848(b), other than the
portion of such amount attributable to the practice expense
component.
(5) Quality reporting.--
(A) Reduction in update for failure to
report.--
(i) In general.--For purposes of
fiscal year 2014 and each subsequent
fiscal year, in the case of a hospice
program that does not submit data to
the Secretary in accordance with
subparagraph (C) with respect to such a
fiscal year, after determining the
market basket percentage increase under
paragraph (1)(C)(ii)(VII) or paragraph
(1)(C)(iii), as applicable, and after
application of clauses (iv) and (vi) of
paragraph (1)(C), with respect to the
fiscal year, the Secretary shall reduce
such market basket percentage increase
by 2 percentage points (or, for fiscal
year 2024 and each subsequent fiscal
year, 4 percentage points).
(ii) Special rule.--The application
of this subparagraph may result in the
market basket percentage increase under
paragraph (1)(C)(ii)(VII) or paragraph
(1)(C)(iii), as applicable, being less
than 0.0 for a fiscal year, and may
result in payment rates under this
subsection for a fiscal year being less
than such payment rates for the
preceding fiscal year.
(B) Noncumulative application.--Any reduction
under subparagraph (A) shall apply only with
respect to the fiscal year involved and the
Secretary shall not take into account such
reduction in computing the payment amount under
this subsection for a subsequent fiscal year.
(C) Submission of quality data.--For fiscal
year 2014 and each subsequent fiscal year, each
hospice program shall submit to the Secretary
data on quality measures specified under
subparagraph (D). Such data shall be submitted
in a form and manner, and at a time, specified
by the Secretary for purposes of this
subparagraph.
(D) Quality measures.--
(i) In general.--Subject to clause
(ii), any measure specified by the
Secretary under this subparagraph must
have been endorsed by the entity with a
contract under section 1890(a).
(ii) Exception.--In the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a), the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.
(iii) Time frame.--Not later than
October 1, 2012, the Secretary shall
publish the measures selected under
this subparagraph that will be
applicable with respect to fiscal year
2014.
(E) Public availability of data submitted.--
The Secretary shall establish procedures for
making data submitted under subparagraph (C)
available to the public. Such procedures shall
ensure that a hospice program has the
opportunity to review the data that is to be
made public with respect to the hospice program
prior to such data being made public. The
Secretary shall report quality measures that
relate to hospice care provided by hospice
programs on the Internet website of the Centers
for Medicare & Medicaid Services.
(6)(A) The Secretary shall collect additional data
and information as the Secretary determines appropriate
to revise payments for hospice care under this
subsection pursuant to subparagraph (D) and for other
purposes as determined appropriate by the Secretary.
The Secretary shall begin to collect such data by not
later than January 1, 2011.
(B) The additional data and information to be
collected under subparagraph (A) may include data and
information on--
(i) charges and payments;
(ii) the number of days of hospice care which
are attributable to individuals who are
entitled to, or enrolled for, benefits under
part A; and
(iii) with respect to each type of service
included in hospice care--
(I) the number of days of hospice
care attributable to the type of
service;
(II) the cost of the type of service;
and
(III) the amount of payment for the
type of service;
(iv) charitable contributions and other
revenue of the hospice program;
(v) the number of hospice visits;
(vi) the type of practitioner providing the
visit; and
(vii) the length of the visit and other basic
information with respect to the visit.
(C) The Secretary may collect the additional data and
information under subparagraph (A) on cost reports,
claims, or other mechanisms as the Secretary determines
to be appropriate.
(D)(i) Notwithstanding the preceding paragraphs of
this subsection, not earlier than October 1, 2013, the
Secretary shall, by regulation, implement revisions to
the methodology for determining the payment rates for
routine home care and other services included in
hospice care under this part, as the Secretary
determines to be appropriate. Such revisions may be
based on an analysis of data and information collected
under subparagraph (A). Such revisions may include
adjustments to per diem payments that reflect changes
in resource intensity in providing such care and
services during the course of the entire episode of
hospice care.
(ii) Revisions in payment implemented pursuant to
clause (i) shall result in the same estimated amount of
aggregate expenditures under this title for hospice
care furnished in the fiscal year in which such
revisions in payment are implemented as would have been
made under this title for such care in such fiscal year
if such revisions had not been implemented.
(E) The Secretary shall consult with hospice programs
and the Medicare Payment Advisory Commission regarding
the additional data and information to be collected
under subparagraph (A) and the payment revisions under
subparagraph (D).
(7) In the case of hospice care provided by a hospice program
under arrangements under section 1861(dd)(5)(D) made by another
hospice program, the hospice program that made the arrangements
shall bill and be paid for the hospice care.
Elimination of Lesser-of-Cost-or-Charges Provision
(j)(1) The lesser-of-cost-or-charges provisions (described in
paragraph (2)) will not apply in the case of services provided
by a class of provider of services if the Secretary determines
and certifies to Congress that the failure of such provisions
to apply to the services provided by that class of providers
will not result in any increase in the amount of payments made
for those services under this title. Such change will take
effect with respect to services furnished, or cost reporting
periods of providers, on or after such date as the Secretary
shall provide in the certification. Such change for a class of
provider shall be discontinued if the Secretary determines and
notifies Congress that such change has resulted in an increase
in the amount of payments made under this title for services
provided by that class of provider.
(2) The lesser-of-cost-or-charges provisions referred to in
paragraph (1) are as follows:
(A) Clause (B) of paragraph (1) and paragraph (2) of
subsection (b).
(B) Section 1834(a)(1)(B).
(C) So much of subparagraph (A) of section 1833(a)(2)
as provides for payment other than of the reasonable
cost of such services, as determined under section
1861(v).
(D) Subclause (II) of clause (i) and clause (ii) of
section 1833(a)(2)(B).
Payments to Home Health Agencies for Durable Medical Equipment
(k) The amount paid to any home health agency with respect to
durable medical equipment for which payment may be made under
this part shall be the amount described in section 1834(a)(1).
Payment for Inpatient Critical Access Hospital Services
(l)(1) Except as provided in the subsequent paragraphs of
this subsection, the amount of payment under this part for
inpatient critical access hospital services is equal to 101
percent of the reasonable costs of the critical access hospital
in providing such services.
(2) In the case of a distinct part psychiatric or
rehabilitation unit of a critical access hospital described in
section 1820(c)(2)(E), the amount of payment for inpatient
critical access hospital services of such unit shall be equal
to the amount of the payment that would otherwise be made if
such services were inpatient hospital services of a distinct
part psychiatric or rehabilitation unit, respectively,
described in the matter following clause (v) of section
1886(d)(1)(B).
(3)(A) The following rules shall apply in determining payment
and reasonable costs under paragraph (1) for costs described in
subparagraph (C) for a critical access hospital that would be a
meaningful EHR user (as would be determined under paragraph (3)
of section 1886(n)) for an EHR reporting period for a cost
reporting period beginning during a payment year if such
critical access hospital was treated as an eligible hospital
under such section:
(i) The Secretary shall compute reasonable costs by
expensing such costs in a single payment year and not
depreciating such costs over a period of years (and
shall include as costs with respect to cost reporting
periods beginning during a payment year costs from
previous cost reporting periods to the extent they have
not been fully depreciated as of the period involved).
(ii) There shall be substituted for the Medicare
share that would otherwise be applied under paragraph
(1) a percent (not to exceed 100 percent) equal to the
sum of--
(I) the Medicare share (as would be specified
under paragraph (2)(D) of section 1886(n)) for
such critical access hospital if such critical
access hospital was treated as an eligible
hospital under such section; and
(II) 20 percentage points.
(B) The payment under this paragraph with respect to a
critical access hospital shall be paid through a prompt interim
payment (subject to reconciliation) after submission and review
of such information (as specified by the Secretary) necessary
to make such payment, including information necessary to apply
this paragraph. In no case may payment under this paragraph be
made with respect to a cost reporting period beginning during a
payment year after 2015 and in no case may a critical access
hospital receive payment under this paragraph with respect to
more than 4 consecutive payment years.
(C) The costs described in this subparagraph are costs for
the purchase of certified EHR technology to which purchase
depreciation (excluding interest) would apply if payment was
made under paragraph (1) and not under this paragraph.
(D) For purposes of this paragraph, paragraph (4), and
paragraph (5), the terms ``certified EHR technology'',
``eligible hospital'', ``EHR reporting period'', and ``payment
year'' have the meanings given such terms in sections 1886(n).
(4)(A) Subject to subparagraph (C), for cost reporting
periods beginning in fiscal year 2015 or a subsequent fiscal
year, in the case of a critical access hospital that is not a
meaningful EHR user (as would be determined under paragraph (3)
of section 1886(n) if such critical access hospital was treated
as an eligible hospital under such section) for an EHR
reporting period with respect to such fiscal year, paragraph
(1) shall be applied by substituting the applicable percent
under subparagraph (B) for the percent described in such
paragraph (1).
(B) The percent described in this subparagraph is--
(i) for fiscal year 2015, 100.66 percent;
(ii) for fiscal year 2016, 100.33 percent; and
(iii) for fiscal year 2017 and each subsequent fiscal
year, 100 percent.
(C) The provisions of subclause (II) of section
1886(b)(3)(B)(ix) shall apply with respect to subparagraph (A)
for a critical access hospital with respect to a cost reporting
period beginning in a fiscal year in the same manner as such
subclause applies with respect to subclause (I) of such section
for a subsection (d) hospital with respect to such fiscal year.
(5) There shall be no administrative or judicial review under
section 1869, section 1878, or otherwise, of--
(A) the methodology and standards for determining the
amount of payment and reasonable cost under paragraph
(3) and payment adjustments under paragraph (4),
including selection of periods under section 1886(n)(2)
for determining, and making estimates or using proxies
of, inpatient-bed-days, hospital charges, charity
charges, and Medicare share under subparagraph (D) of
section 1886(n)(2);
(B) the methodology and standards for determining a
meaningful EHR user under section 1886(n)(3) as would
apply if the hospital was treated as an eligible
hospital under section 1886(n), and the hardship
exception under paragraph (4)(C);
(C) the specification of EHR reporting periods under
section 1886(n)(6)(B) as applied under paragraphs (3)
and (4); and
(D) the identification of costs for purposes of
paragraph (3)(C).
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
SPECIAL PAYMENT RULES FOR PARTICULAR ITEMS AND SERVICES
Sec. 1834. (a) Payment for Durable Medical Equipment.--
(1) General rule for payment.--
(A) In general.--With respect to a covered
item (as defined in paragraph (13)) for which
payment is determined under this subsection,
payment shall be made in the frequency
specified in paragraphs (2) through (7) and in
an amount equal to 80 percent of the payment
basis described in subparagraph (B).
(B) Payment basis.--Subject to subparagraph
(F)(i), the payment basis described in this
subparagraph is the lesser of--
(i) the actual charge for the item,
or
(ii) the payment amount recognized
under paragraphs (2) through (7) of
this subsection for the item;
except that clause (i) shall not apply if the
covered item is furnished by a public home
health agency (or by another home health agency
which demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(C) Exclusive payment rule.--Subject to
subparagraph (F)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for covered items under this
part or under part A to a home health agency.
(D) Reduction in fee schedules for certain
items.--With respect to a seat-lift chair or
transcutaneous electrical nerve stimulator
furnished on or after April 1, 1990, the
Secretary shall reduce the payment amount
applied under subparagraph (B)(ii) for such an
item by 15 percent, and, in the case of a
transcutaneous electrical nerve stimulator
furnished on or after January 1, 1991, the
Secretary shall further reduce such payment
amount (as previously reduced) by 45 percent.
(E) Clinical conditions for coverage.--
(i) In general.--The Secretary shall
establish standards for clinical
conditions for payment for covered
items under this subsection.
(ii) Requirements.--The standards
established under clause (i) shall
include the specification of types or
classes of covered items that require,
as a condition of payment under this
subsection, a face-to-face examination
of the individual by a physician (as
defined in section 1861(r)), a
physician assistant, nurse
practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) and a
prescription for the item.
(iii) Priority of establishment of
standards.--In establishing the
standards under this subparagraph, the
Secretary shall first establish
standards for those covered items for
which the Secretary determines there
has been a proliferation of use,
consistent findings of charges for
covered items that are not delivered,
or consistent findings of falsification
of documentation to provide for payment
of such covered items under this part.
(iv) Standards for power
wheelchairs.--Effective on the date of
the enactment of this subparagraph, in
the case of a covered item consisting
of a motorized or power wheelchair for
an individual, payment may not be made
for such covered item unless a
physician (as defined in section
1861(r)(1)), a physician assistant,
nurse practitioner, or a clinical nurse
specialist (as those terms are defined
in section 1861(aa)(5)) has conducted a
face-to-face examination of the
individual and written a prescription
for the item.
(v) Limitation on payment for covered
items.--Payment may not be made for a
covered item under this subsection
unless the item meets any standards
established under this subparagraph for
clinical condition of coverage.
(F) Application of competitive acquisition;
limitation of inherent reasonableness
authority.--In the case of covered items
furnished on or after January 1, 2011, subject
to subparagraphs (G) and (H), that are included
in a competitive acquisition program in a
competitive acquisition area under section
1847(a)--
(i) the payment basis under this
subsection for such items and services
furnished in such area shall be the
payment basis determined under such
competitive acquisition program;
(ii) the Secretary may (and, in the
case of covered items furnished on or
after January 1, 2016, subject to
clause (iii), shall) use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847 and
in the case of such adjustment,
paragraph (10)(B) shall not be applied;
and
(iii) in the case of covered items
furnished on or after January 1, 2016,
the Secretary shall continue to make
such adjustments described in clause
(ii) as, under such competitive
acquisition programs, additional
covered items are phased in or
information is updated as contracts
under section 1847 are recompeted in
accordance with section 1847(b)(3)(B).
(G) Use of information on competitive bid
rates.--The Secretary shall specify by
regulation the methodology to be used in
applying the provisions of subparagraph (F)(ii)
and subsection (h)(1)(H)(ii). In promulgating
such regulation, the Secretary shall consider
the costs of items and services in areas in
which such provisions would be applied compared
to the payment rates for such items and
services in competitive acquisition areas.In
the case of items and services furnished on or
after January 1, 2019, in making any
adjustments under clause (ii) or (iii) of
subparagraph (F), under subsection
(h)(1)(H)(ii), or under section 1842(s)(3)(B),
the Secretary shall--
(i) solicit and take into account
stakeholder input; and
(ii) take into account the highest
amount bid by a winning supplier in a
competitive acquisition area and a
comparison of each of the following
with respect to non-competitive
acquisition areas and competitive
acquisition areas:
(I) The average travel
distance and cost associated
with furnishing items and
services in the area.
(II) The average volume of
items and services furnished by
suppliers in the area.
(III) The number of suppliers
in the area.
(H) Diabetic supplies.--
(i) In general.--On or after the date
described in clause (ii), the payment
amount under this part for diabetic
supplies, including testing strips,
that are non-mail order items (as
defined by the Secretary) shall be
equal to the single payment amounts
established under the national mail
order competition for diabetic supplies
under section 1847.
(ii) Date described.--The date
described in this clause is the date of
the implementation of the single
payment amounts under the national mail
order competition for diabetic supplies
under section 1847.
(I) Treatment of vacuum erection systems.--
Effective for items and services furnished on
and after July 1, 2015, vacuum erection systems
described as prosthetic devices described in
section 1861(s)(8) shall be treated in the same
manner as erectile dysfunction drugs are
treated for purposes of section 1860D-
2(e)(2)(A).
(2) Payment for inexpensive and other routinely
purchased durable medical equipment.--
(A) In general.--Payment for an item of
durable medical equipment (as defined in
paragraph (13))--
(i) the purchase price of which does
not exceed $150,
(ii) which the Secretary determines
is acquired at least 75 percent of the
time by purchase,
(iii) which is an accessory used in
conjunction with a nebulizer,
aspirator, or a ventilator excluded
under paragraph (3)(A), or
(iv) in the case of devices furnished
on or after October 1, 2015, which
serves as a speech generating device or
which is an accessory that is needed
for the individual to effectively
utilize such a device,
shall be made on a rental basis or in a lump-
sum amount for the purchase of the item. The
payment amount recognized for purchase or
rental of such equipment is the amount
specified in subparagraph (B) for purchase or
rental, except that the total amount of
payments with respect to an item may not exceed
the payment amount specified in subparagraph
(B) with respect to the purchase of the item.
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to the purchase or
rental of an item furnished in a carrier
service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the purchase or rental,
respectively, of the item for the 12-
month period ending on June 30, 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year
(reduced by 10 percent, in the case of
a blood glucose testing strip furnished
after 1997 for an individual with
diabetes).
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(3) Payment for items requiring frequent and
substantial servicing.--
(A) In general.--Payment for a covered item
(such as IPPB machines and ventilators,
excluding ventilators that are either
continuous airway pressure devices or
intermittent assist devices with continuous
airway pressure devices) for which there must
be frequent and substantial servicing in order
to avoid risk to the patient's health shall be
made on a monthly basis for the rental of the
item and the amount recognized is the amount
specified in subparagraph (B).
(B) Payment amount.--For purposes of
subparagraph (A), the amount specified in this
subparagraph, with respect to an item or device
furnished in a carrier service area--
(i) in 1989 and in 1990 is the
average reasonable charge in the area
for the rental of the item or device
for the 12-month period ending with
June 1987, increased by the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 6-month period ending
with December 1987;
(ii) in 1991 is the sum of (I) 67
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(I) for 1991, and
(II) 33 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1991;
(iii) in 1992 is the sum of (I) 33
percent of the local payment amount for
the item or device computed under
subparagraph (C)(i)(II) for 1992, and
(II) 67 percent of the national limited
payment amount for the item or device
computed under subparagraph (C)(ii) for
1992; and
(iv) in 1993 and each subsequent year
is the national limited payment amount
for the item or device computed under
subparagraph (C)(ii) for that year.
(C) Computation of local payment amount and
national limited payment amount.--For purposes
of subparagraph (B)--
(i) the local payment amount for an
item or device for a year is equal to--
(I) for 1991, the amount
specified in subparagraph
(B)(i) for 1990 increased by
the covered item update for
1991, and
(II) for 1992, 1993, and 1994
the amount determined under
this clause for the preceding
year increased by the covered
item update for the year; and
(ii) the national limited payment
amount for an item or device for a year
is equal to--
(I) for 1991, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the weighted
average of all local payment
amounts determined under such
clause for such item for that
year and may not be less than
85 percent of the weighted
average of all local payment
amounts determined under such
clause for such item,
(II) for 1992 and 1993, the
amount determined under this
clause for the preceding year
increased by the covered item
update for such subsequent
year,
(III) for 1994, the local
payment amount determined under
clause (i) for such item or
device for that year, except
that the national limited
payment amount may not exceed
100 percent of the median of
all local payment amounts
determined under such clause
for such item for that year and
may not be less than 85 percent
of the median of all local
payment amounts determined
under such clause for such item
or device for that year, and
(IV) for each subsequent
year, the amount determined
under this clause for the
preceding year increased by the
covered item update for such
subsequent year.
(4) Payment for certain customized items.--Payment
with respect to a covered item that is uniquely
constructed or substantially modified to meet the
specific needs of an individual patient, and for that
reason cannot be grouped with similar items for
purposes of payment under this title, shall be made in
a lump-sum amount (A) for the purchase of the item in a
payment amount based upon the carrier's individual
consideration for that item, and (B) for the reasonable
and necessary maintenance and servicing for parts and
labor not covered by the supplier's or manufacturer's
warranty, when necessary during the period of medical
need, and the amount recognized for such maintenance
and servicing shall be paid on a lump-sum, as needed
basis based upon the carrier's individual consideration
for that item. In the case of a wheelchair furnished on
or after January 1, 1992, the wheelchair shall be
treated as a customized item for purposes of this
paragraph if the wheelchair has been measured, fitted,
or adapted in consideration of the patient's body size,
disability, period of need, or intended use, and has
been assembled by a supplier or ordered from a
manufacturer who makes available customized features,
modifications, or components for wheelchairs that are
intended for an individual patient's use in accordance
with instructions from the patient's physician.
(5) Payment for oxygen and oxygen equipment.--
(A) In general.--Payment for oxygen and
oxygen equipment shall be made on a monthly
basis in the monthly payment amount recognized
under paragraph (9) for oxygen and oxygen
equipment (other than portable oxygen
equipment), subject to subparagraphs (B), (C),
(E), and (F).
(B) Add-on for portable oxygen equipment.--
When portable oxygen equipment is used, but
subject to subparagraph (D), the payment amount
recognized under subparagraph (A) shall be
increased by the monthly payment amount
recognized under paragraph (9) for portable
oxygen equipment.
(C) Volume adjustment.--When the attending
physician prescribes an oxygen flow rate--
(i) exceeding 4 liters per minute,
the payment amount recognized under
subparagraph (A), subject to
subparagraph (D), shall be increased by
50 percent, or
(ii) of less than 1 liter per minute,
the payment amount recognized under
subparagraph (A) shall be decreased by
50 percent.
(D) Limit on adjustment.--When portable
oxygen equipment is used and the attending
physician prescribes an oxygen flow rate
exceeding 4 liters per minute, there shall only
be an increase under either subparagraph (B) or
(C), whichever increase is larger, and not
under both such subparagraphs.
(E) Recertification for patients receiving
home oxygen therapy.--In the case of a patient
receiving home oxygen therapy services who, at
the time such services are initiated, has an
initial arterial blood gas value at or above a
partial pressure of 56 or an arterial oxygen
saturation at or above 89 percent (or such
other values, pressures, or criteria as the
Secretary may specify) no payment may be made
under this part for such services after the
expiration of the 90-day period that begins on
the date the patient first receives such
services unless the patient's attending
physician certifies that, on the basis of a
follow-up test of the patient's arterial blood
gas value or arterial oxygen saturation
conducted during the final 30 days of such 90-
day period, there is a medical need for the
patient to continue to receive such services.
(F) Rental Cap.--
(i) In general.--Payment for oxygen
equipment (including portable oxygen
equipment) under this paragraph may not
extend over a period of continuous use
(as determined by the Secretary) of
longer than 36 months.
(ii) Payments and rules after rental
cap.--After the 36th continuous month
during which payment is made for the
equipment under this paragraph--
(I) the supplier furnishing
such equipment under this
subsection shall continue to
furnish the equipment during
any period of medical need for
the remainder of the reasonable
useful lifetime of the
equipment, as determined by the
Secretary;
(II) payments for oxygen
shall continue to be made in
the amount recognized for
oxygen under paragraph (9) for
the period of medical need; and
(III) maintenance and
servicing payments shall, if
the Secretary determines such
payments are reasonable and
necessary, be made (for parts
and labor not covered by the
supplier's or manufacturer's
warranty, as determined by the
Secretary to be appropriate for
the equipment), and such
payments shall be in an amount
determined to be appropriate by
the Secretary.
(6) Payment for other covered items (other than
durable medical equipment).--Payment for other covered
items (other than durable medical equipment and other
covered items described in paragraph (3), (4), or (5))
shall be made in a lump-sum amount for the purchase of
the item in the amount of the purchase price recognized
under paragraph (8).
(7) Payment for other items of durable medical
equipment.--
(A) Payment.--In the case of an item of
durable medical equipment not described in
paragraphs (2) through (6), the following rules
shall apply:
(i) Rental.--
(I) In general.--Except as
provided in clause (iii),
payment for the item shall be
made on a monthly basis for the
rental of the item during the
period of medical need (but
payments under this clause may
not extend over a period of
continuous use (as determined
by the Secretary) of longer
than 13 months).
(II) Payment amount.--Subject
to subclause (III) and
subparagraph (B), the amount
recognized for the item, for
each of the first 3 months of
such period, is 10 percent of
the purchase price recognized
under paragraph (8) with
respect to the item, and, for
each of the remaining months of
such period, is 7.5 percent of
such purchase price.
(III) Special rule for power-
driven wheelchairs.--For
purposes of payment for power-
driven wheelchairs, subclause
(II) shall be applied by
substituting ``15 percent'' and
``6 percent'' for ``10
percent'' and ``7.5 percent'',
respectively.
(ii) Ownership after rental.--On the
first day that begins after the 13th
continuous month during which payment
is made for the rental of an item under
clause (i), the supplier of the item
shall transfer title to the item to the
individual.
(iii) Purchase agreement option for
complex, rehabilitative power-driven
wheelchairs.--In the case of a complex,
rehabilitative power-driven wheelchair,
at the time the supplier furnishes the
item, the supplier shall offer the
individual the option to purchase the
item, and payment for such item shall
be made on a lump-sum basis if the
individual exercises such option.
(iv) Maintenance and servicing.--
After the supplier transfers title to
the item under clause (ii) or in the
case of a power-driven wheelchair for
which a purchase agreement has been
entered into under clause (iii),
maintenance and servicing payments
shall, if the Secretary determines such
payments are reasonable and necessary,
be made (for parts and labor not
covered by the supplier's or
manufacturer's warranty, as determined
by the Secretary to be appropriate for
the particular type of durable medical
equipment), and such payments shall be
in an amount determined to be
appropriate by the Secretary.
(B) Range for rental amounts.--
(i) For 1989.--For items furnished
during 1989, the payment amount
recognized under subparagraph (A)(i)
shall not be more than 115 percent, and
shall not be less than 85 percent, of
the prevailing charge established for
rental of the item in January 1987,
increased by the percentage increase in
the consumer price index for all urban
consumers (U.S. city average) for the
6-month period ending with December
1987.
(ii) For 1990.--For items furnished
during 1990, clause (i) shall apply in
the same manner as it applies to items
furnished during 1989.
(C) Replacement of items.--
(i) Establishment of reasonable
useful lifetime.--In accordance with
clause (iii), the Secretary shall
determine and establish a reasonable
useful lifetime for items of durable
medical equipment for which payment may
be made under this paragraph.
(ii) Payment for replacement items.--
If the reasonable lifetime of such an
item, as so established, has been
reached during a continuous period of
medical need, or the carrier determines
that the item is lost or irreparably
damaged, the patient may elect to have
payment for an item serving as a
replacement for such item made--
(I) on a monthly basis for
the rental of the replacement
item in accordance with
subparagraph (A); or
(II) in the case of an item
for which a purchase agreement
has been entered into under
subparagraph (A)(iii), in a
lump-sum amount for the
purchase of the item.
(iii) Length of reasonable useful
lifetime.--The reasonable useful
lifetime of an item of durable medical
equipment under this subparagraph shall
be equal to 5 years, except that, if
the Secretary determines that, on the
basis of prior experience in making
payments for such an item under this
title, a reasonable useful lifetime of
5 years is not appropriate with respect
to a particular item, the Secretary
shall establish an alternative
reasonable lifetime for such item.
(8) Purchase price recognized for miscellaneous
devices and items.--For purposes of paragraphs (6) and
(7), the amount that is recognized under this paragraph
as the purchase price for a covered item is the amount
described in subparagraph (C) of this paragraph,
determined as follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price, for each item
described--
(I) in paragraph (6) equal to
the average reasonable charge
in the locality for the
purchase of the item for the
12-month period ending with
June 1987, or
(II) in paragraph (7) equal
to the average of the purchase
prices on the claims submitted
on an assignment-related basis
for the unused item supplied
during the 6-month period
ending with December 1986.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(U.S. city average) for the 6-
month period ending with
December 1987,
(II) in 1991, equal to the
local purchase price computed
under this clause for the
previous year, increased by the
covered item update for 1991,
and decreased by the percentage
by which the average of the
reasonable charges for claims
paid for all items described in
paragraph (7) is lower than the
average of the purchase prices
submitted for such items during
the final 9 months of 1988; or
(III) in 1992, 1993, and 1994
equal to the local purchase
price computed under this
clause for the previous year
increased by the covered item
update for the year.
(B) Computation of national limited purchase
price.--With respect to the furnishing of a
particular item in a year, the Secretary shall
compute a national limited purchase price--
(i) for 1991, equal to the local
purchase price computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited purchase price may not exceed
100 percent of the weighted average of
all local purchase prices for the item
computed under such subparagraph for
the year, and may not be less than 85
percent of the weighted average of all
local purchase prices for the item
computed under such subparagraph for
the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local purchase
price computed under subparagraph
(A)(ii) for the item for the year,
except that such national limited
purchase price may not exceed 100
percent of the median of all local
purchase prices computed for the item
under such subparagraph for the year
and may not be less than 85 percent of
the median of all local purchase prices
computed under such subparagraph for
the item for the year; and
(iv) for each subsequent year, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year.
(C) Purchase price recognized.--For purposes
of paragraphs (6) and (7), the amount that is
recognized under this paragraph as the purchase
price for each item furnished--
(i) in 1989 or 1990, is 100 percent
of the local purchase price computed
under subparagraph (A)(ii)(I);
(ii) in 1991, is the sum of (I) 67
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1991, and (II) 33 percent of the
national limited purchase price
computed under subparagraph (B) for
1991;
(iii) in 1992, is the sum of (I) 33
percent of the local purchase price
computed under subparagraph
(A)(ii)(III) for 1992, and (II) 67
percent of the national limited
purchase price computed under
subparagraph (B) for 1992; and
(iv) in 1993 or a subsequent year, is
the national limited purchase price
computed under subparagraph (B) for
that year.
(9) Monthly payment amount recognized with respect to
oxygen and oxygen equipment.--For purposes of paragraph
(5), the amount that is recognized under this paragraph
for payment for oxygen and oxygen equipment is the
monthly payment amount described in subparagraph (C) of
this paragraph. Such amount shall be computed
separately (i) for all items of oxygen and oxygen
equipment (other than portable oxygen equipment) and
(ii) for portable oxygen equipment (each such group
referred to in this paragraph as an ``item'').
(A) Computation of local monthly payment
rate.--Each carrier under this section shall
compute a base local payment rate for each item
as follows:
(i) The carrier shall compute a base
local average monthly payment rate per
beneficiary as an amount equal to (I)
the total reasonable charges for the
item during the 12-month period ending
with December 1986, divided by (II) the
total number of months for all
beneficiaries receiving the item in the
area during the 12-month period for
which the carrier made payment for the
item under this title.
(ii) The carrier shall compute a
local average monthly payment rate for
the item applicable--
(I) to 1989 and 1990, equal
to 95 percent of the base local
average monthly payment rate
computed under clause (i) for
the item increased by the
percentage increase in the
consumer price index for all
urban consumers (U.S. city
average) for the 6-month period
ending with December 1987, or
(II) to 1991, 1992, 1993, and
1994 equal to the local average
monthly payment rate computed
under this clause for the item
for the previous year increased
by the covered item increase
for the year.
(B) Computation of national limited monthly
payment rate.--With respect to the furnishing
of an item in a year, the Secretary shall
compute a national limited monthly payment rate
equal to--
(i) for 1991, the local monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year, and may not
be less than 85 percent of the weighted
average of all local monthly payment
rates computed for the item under such
subparagraph for the year;
(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the
covered item update for such subsequent
year;
(iii) for 1994, the local monthly
payment rate computed under
subparagraph (A)(ii) for the item for
the year, except that such national
limited monthly payment rate may not
exceed 100 percent of the median of all
local monthly payment rates computed
for the item under such subparagraph
for the year and may not be less than
85 percent of the median of all local
monthly payment rates computed for the
item under such subparagraph for the
year;
(iv) for 1995, 1996, and 1997, equal
to the amount determined under this
subparagraph for the preceding year
increased by the covered item update
for such subsequent year;
(v) for 1998, 75 percent of the
amount determined under this
subparagraph for 1997; and
(vi) for 1999 and each subsequent
year, 70 percent of the amount
determined under this subparagraph for
1997.
(C) Monthly payment amount recognized.--For
purposes of paragraph (5), the amount that is
recognized under this paragraph as the base
monthly payment amount for each item
furnished--
(i) in 1989 and in 1990, is 100
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii) for the item;
(ii) in 1991, is the sum of (I) 67
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1991, and (II) 33 percent of the
national limited monthly payment rate
computed under subparagraph (B)(i) for
the item for 1991;
(iii) in 1992, is the sum of (I) 33
percent of the local average monthly
payment rate computed under
subparagraph (A)(ii)(II) for the item
for 1992, and (II) 67 percent of the
national limited monthly payment rate
computed under subparagraph (B)(ii) for
the item for 1992; and
(iv) in a subsequent year, is the
national limited monthly payment rate
computed under subparagraph (B) for the
item for that year.
(D) Authority to create classes.--
(i) In general.--Subject to clause
(ii), the Secretary may establish
separate classes for any item of oxygen
and oxygen equipment and separate
national limited monthly payment rates
for each of such classes.
(ii) Budget neutrality.--The
Secretary may take actions under clause
(i) only to the extent such actions do
not result in expenditures for any year
to be more or less than the
expenditures which would have been made
if such actions had not been taken. The
requirement of the preceding sentence
shall not apply beginning with the
second calendar quarter beginning on or
after the date of the enactment of this
sentence.
(10) Exceptions and adjustments.--
(A) Areas outside continental united
states.--Exceptions to the amounts recognized
under the previous provisions of this
subsection shall be made to take into account
the unique circumstances of covered items
furnished in Alaska, Hawaii, or Puerto Rico.
(B) Adjustment for inherent reasonableness.--
The Secretary is authorized to apply the
provisions of paragraphs (8) and (9) of section
1842(b) to covered items and suppliers of such
items and payments under this subsection in an
area and with respect to covered items and
services for which the Secretary does not make
a payment amount adjustment under paragraph
(1)(F).
(C) Transcutaneous electrical nerve
stimulator (tens).--In order to permit an
attending physician time to determine whether
the purchase of a transcutaneous electrical
nerve stimulator is medically appropriate for a
particular patient, the Secretary may determine
an appropriate payment amount for the initial
rental of such item for a period of not more
than 2 months. If such item is subsequently
purchased, the payment amount with respect to
such purchase is the payment amount determined
under paragraph (2).
(11) Improper billing and requirement of physician
order.--
(A) Improper billing for certain rental
items.--Notwithstanding any other provision of
this title, a supplier of a covered item for
which payment is made under this subsection and
which is furnished on a rental basis shall
continue to supply the item without charge
(other than a charge provided under this
subsection for the maintenance and servicing of
the item) after rental payments may no longer
be made under this subsection. If a supplier
knowingly and willfully violates the previous
sentence, the Secretary may apply sanctions
against the supplier under section 1842(j)(2)
in the same manner such sanctions may apply
with respect to a physician.
(B) Requirement of physician order.--
(i) In general.--The Secretary is
authorized to require, for specified
covered items, that payment may be made
under this subsection with respect to
the item only if a physician enrolled
under section 1866(j) or an eligible
professional under section
1848(k)(3)(B) that is enrolled under
section 1866(j) has communicated to the
supplier, before delivery of the item,
a written order for the item.
(ii) Requirement for face to face
encounter.--The Secretary shall require
that such an order be written pursuant
to a physician, a physician assistant,
a nurse practitioner, or a clinical
nurse specialist (as those terms are
defined in section 1861(aa)(5))
documenting such physician, physician
assistant, practitioner, or specialist
has had a face-to-face encounter
(including through use of telehealth
under subsection (m) and other than
with respect to encounters that are
incident to services involved) with the
individual involved during the 6-month
period preceding such written order, or
other reasonable timeframe as
determined by the Secretary.
(12) Regional carriers.--The Secretary may designate,
by regulation under section 1842, one carrier for one
or more entire regions to process all claims within the
region for covered items under this section.
(13) Covered item.--In this subsection, the term
``covered item'' means durable medical equipment (as
defined in section 1861(n)), including such equipment
described in section 1861(m)(5), but not including
implantable items for which payment may be made under
section 1833(t).
(14) Covered item update.--In this subsection, the
term ``covered item update'' means, with respect to a
year--
(A) for 1991 and 1992, the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-
month period ending with June of the previous
year reduced by 1 percentage point;
(B) for 1993, 1994, 1995, 1996, and 1997, the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year;
(C) for each of the years 1998 through 2000,
0 percentage points;
(D) for 2001, the percentage increase in the
consumer price index for all urban consumers
(U.S. city average) for the 12-month period
ending with June 2000;
(E) for 2002, 0 percentage points;
(F) for 2003, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of 2002;
(G) for 2004 through 2006--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) for the year involved;
and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(H) for 2007--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage change determined by the
Secretary to be appropriate taking into
account recommendations contained in
the report of the Comptroller General
of the United States under section
302(c)(1)(B) of the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003; and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(I) for 2008--
(i) subject to clause (ii), in the
case of class III medical devices
described in section 513(a)(1)(C) of
the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 360(c)(1)(C)), the
percentage increase described in
subparagraph (B) (as applied to the
payment amount for 2007 determined
after the application of the percentage
change under subparagraph (H)(i)); and
(ii) in the case of covered items not
described in clause (i), 0 percentage
points;
(J) for 2009--
(i) in the case of items and services
furnished in any geographic area, if
such items or services were selected
for competitive acquisition in any area
under the competitive acquisition
program under section
1847(a)(1)(B)(i)(I) before July 1,
2008, including related accessories but
only if furnished with such items and
services selected for such competition
and diabetic supplies but only if
furnished through mail order, - 9.5
percent; or
(ii) in the case of other items and
services, the percentage increase in
the consumer price index for all urban
consumers (U.S. urban average) for the
12-month period ending with June 2008;
(K) for 2010, the percentage increase in the
consumer price index for all urban consumers
(U.S. urban average) for the 12-month period
ending with June of the previous year; and
(L) for 2011 and each subsequent year--
(i) the percentage increase in the
consumer price index for all urban
consumers (United States city average)
for the 12-month period ending with
June of the previous year, reduced by--
(ii) the productivity adjustment
described in section
1886(b)(3)(B)(xi)(II).
The application of subparagraph (L)(ii) may result in
the covered item update under this paragraph being less
than 0.0 for a year, and may result in payment rates
under this subsection for a year being less than such
payment rates for the preceding year.
(15) Advance determinations of coverage for certain
items.--
(A) Development of lists of items by
secretary.--The Secretary may develop and
periodically update a list of items for which
payment may be made under this subsection that
the Secretary determines, on the basis of prior
payment experience, are frequently subject to
unnecessary utilization throughout a carrier's
entire service area or a portion of such area.
(B) Development of lists of suppliers by
secretary.--The Secretary may develop and
periodically update a list of suppliers of
items for which payment may be made under this
subsection with respect to whom--
(i) the Secretary has found that a
substantial number of claims for
payment under this part for items
furnished by the supplier have been
denied on the basis of the application
of section 1862(a)(1); or
(ii) the Secretary has identified a
pattern of overutilization resulting
from the business practice of the
supplier.
(C) Determinations of coverage in advance.--A
carrier shall determine in advance of delivery
of an item whether payment for the item may not
be made because the item is not covered or
because of the application of section
1862(a)(1) if--
(i) the item is included on the list
developed by the Secretary under
subparagraph (A);
(ii) the item is furnished by a
supplier included on the list developed
by the Secretary under subparagraph
(B); or
(iii) the item is a customized item
(other than inexpensive items specified
by the Secretary) and the patient to
whom the item is to be furnished or the
supplier requests that such advance
determination be made.
(16) Disclosure of information and surety bond.--The
Secretary shall not provide for the issuance (or
renewal) of a provider number for a supplier of durable
medical equipment, for purposes of payment under this
part for durable medical equipment furnished by the
supplier, unless the supplier provides the Secretary on
a continuing basis--
(A) with--
(i) full and complete information as
to the identity of each person with an
ownership or control interest (as
defined in section 1124(a)(3)) in the
supplier or in any subcontractor (as
defined by the Secretary in
regulations) in which the supplier
directly or indirectly has a 5 percent
or more ownership interest; and
(ii) to the extent determined to be
feasible under regulations of the
Secretary, the name of any disclosing
entity (as defined in section
1124(a)(2)) with respect to which a
person with such an ownership or
control interest in the supplier is a
person with such an ownership or
control interest in the disclosing
entity; and
(B) with a surety bond in a form specified by
the Secretary and in an amount that is not less
than $50,000 that the Secretary determines is
commensurate with the volume of the billing of
the supplier.
The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that
provides a comparable surety bond under State law. The
Secretary, at the Secretary's discretion, may impose
the requirements of the first sentence with respect to
some or all providers of items or services under part A
or some or all suppliers or other persons (other than
physicians or other practitioners, as defined in
section 1842(b)(18)(C)) who furnish items or services
under this part.
(17) Prohibition against unsolicited telephone
contacts by suppliers.--
(A) In general.--A supplier of a covered item
under this subsection may not contact an
individual enrolled under this part by
telephone regarding the furnishing of a covered
item to the individual unless 1 of the
following applies:
(i) The individual has given written
permission to the supplier to make
contact by telephone regarding the
furnishing of a covered item.
(ii) The supplier has furnished a
covered item to the individual and the
supplier is contacting the individual
only regarding the furnishing of such
covered item.
(iii) If the contact is regarding the
furnishing of a covered item other than
a covered item already furnished to the
individual, the supplier has furnished
at least 1 covered item to the
individual during the 15-month period
preceding the date on which the
supplier makes such contact.
(B) Prohibiting payment for items furnished
subsequent to unsolicited contacts.--If a
supplier knowingly contacts an individual in
violation of subparagraph (A), no payment may
be made under this part for any item
subsequently furnished to the individual by the
supplier.
(C) Exclusion from program for suppliers
engaging in pattern of unsolicited contacts.--
If a supplier knowingly contacts individuals in
violation of subparagraph (A) to such an extent
that the supplier's conduct establishes a
pattern of contacts in violation of such
subparagraph, the Secretary shall exclude the
supplier from participation in the programs
under this Act, in accordance with the
procedures set forth in subsections (c), (f),
and (g) of section 1128.
(18) Refund of amounts collected for certain
disallowed items.--
(A) In general.--If a nonparticipating
supplier furnishes to an individual enrolled
under this part a covered item for which no
payment may be made under this part by reason
of paragraph (17)(B), the supplier shall refund
on a timely basis to the patient (and shall be
liable to the patient for) any amounts
collected from the patient for the item,
unless--
(i) the supplier establishes that the
supplier did not know and could not
reasonably have been expected to know
that payment may not be made for the
item by reason of paragraph (17)(B), or
(ii) before the item was furnished,
the patient was informed that payment
under this part may not be made for
that item and the patient has agreed to
pay for that item.
(B) Sanctions.--If a supplier knowingly and
willfully fails to make refunds in violation of
subparagraph (A), the Secretary may apply
sanctions against the supplier in accordance
with section 1842(j)(2).
(C) Notice.--Each carrier with a contract in
effect under this part with respect to
suppliers of covered items shall send any
notice of denial of payment for covered items
by reason of paragraph (17)(B) and for which
payment is not requested on an assignment-
related basis to the supplier and the patient
involved.
(D) Timely basis defined.--A refund under
subparagraph (A) is considered to be on a
timely basis only if--
(i) in the case of a supplier who
does not request reconsideration or
seek appeal on a timely basis, the
refund is made within 30 days after the
date the supplier receives a denial
notice under subparagraph (C), or
(ii) in the case in which such a
reconsideration or appeal is taken, the
refund is made within 15 days after the
date the supplier receives notice of an
adverse determination on
reconsideration or appeal.
(19) Certain upgraded items.--
(A) Individual's right to choose upgraded
item.--Notwithstanding any other provision of
this title, the Secretary may issue regulations
under which an individual may purchase or rent
from a supplier an item of upgraded durable
medical equipment for which payment would be
made under this subsection if the item were a
standard item.
(B) Payments to supplier.--In the case of the
purchase or rental of an upgraded item under
subparagraph (A)--
(i) the supplier shall receive
payment under this subsection with
respect to such item as if such item
were a standard item; and
(ii) the individual purchasing or
renting the item shall pay the supplier
an amount equal to the difference
between the supplier's charge and the
amount under clause (i).
In no event may the supplier's charge for an
upgraded item exceed the applicable fee
schedule amount (if any) for such item.
(C) Consumer protection safeguards.--Any
regulations under subparagraph (A) shall
provide for consumer protection standards with
respect to the furnishing of upgraded equipment
under subparagraph (A). Such regulations shall
provide for--
(i) determination of fair market
prices with respect to an upgraded
item;
(ii) full disclosure of the
availability and price of standard
items and proof of receipt of such
disclosure information by the
beneficiary before the furnishing of
the upgraded item;
(iii) conditions of participation for
suppliers in the billing arrangement;
(iv) sanctions of suppliers who are
determined to engage in coercive or
abusive practices, including exclusion;
and
(v) such other safeguards as the
Secretary determines are necessary.
(20) Identification of quality standards.--
(A) In general.--Subject to subparagraph (C),
the Secretary shall establish and implement
quality standards for suppliers of items and
services described in subparagraph (D) to be
applied by recognized independent accreditation
organizations (as designated under subparagraph
(B)) and with which such suppliers shall be
required to comply in order to--
(i) furnish any such item or service
for which payment is made under this
part; and
(ii) receive or retain a provider or
supplier number used to submit claims
for reimbursement for any such item or
service for which payment may be made
under this title.
(B) Designation of independent accreditation
organizations.--Not later than the date that is
1 year after the date on which the Secretary
implements the quality standards under
subparagraph (A), notwithstanding section
1865(a), the Secretary shall designate and
approve one or more independent accreditation
organizations for purposes of such
subparagraph.
(C) Quality standards.--The quality standards
described in subparagraph (A) may not be less
stringent than the quality standards that would
otherwise apply if this paragraph did not apply
and shall include consumer services standards.
(D) Items and services described.--The items
and services described in this subparagraph are
the following items and services, as the
Secretary determines appropriate:
(i) Covered items (as defined in
paragraph (13)) for which payment may
otherwise be made under this
subsection.
(ii) Prosthetic devices and orthotics
and prosthetics described in section
1834(h)(4).
(iii) Items and services described in
section 1842(s)(2).
(iv) Lymphedema compression treatment
items (as defined in section
1861(mmm)).
(E) Implementation.--The Secretary may
establish by program instruction or otherwise
the quality standards under this paragraph,
including subparagraph (F), after consultation
with representatives of relevant parties. Such
standards shall be applied prospectively and
shall be published on the Internet website of
the Centers for Medicare & Medicaid Services.
(F) Application of accreditation
requirement.--In implementing quality standards
under this paragraph--
(i) subject to clause (ii) and
subparagraph (G), the Secretary shall
require suppliers furnishing items and
services described in subparagraph (D)
on or after October 1, 2009, directly
or as a subcontractor for another
entity, to have submitted to the
Secretary evidence of accreditation by
an accreditation organization
designated under subparagraph (B) as
meeting applicable quality standards,
except that the Secretary shall not
require under this clause pharmacies to
obtain such accreditation before
January 1, 2010, except that the
Secretary shall not require a pharmacy
to have submitted to the Secretary such
evidence of accreditation prior to
January 1, 2011; and
(ii) in applying such standards and
the accreditation requirement of clause
(i) with respect to eligible
professionals (as defined in section
1848(k)(3)(B)), and including such
other persons, such as orthotists and
prosthetists, as specified by the
Secretary, furnishing such items and
services--
(I) such standards and
accreditation requirement shall
not apply to such professionals
and persons unless the
Secretary determines that the
standards being applied are
designed specifically to be
applied to such professionals
and persons; and
(II) the Secretary may exempt
such professionals and persons
from such standards and
requirement if the Secretary
determines that licensing,
accreditation, or other
mandatory quality requirements
apply to such professionals and
persons with respect to the
furnishing of such items and
services.
(G) Application of accreditation requirement
to certain pharmacies.--
(i) In general.--With respect to
items and services furnished on or
after January 1, 2011, in implementing
quality standards under this
paragraph--
(I) subject to subclause
(II), in applying such
standards and the accreditation
requirement of subparagraph
(F)(i) with respect to
pharmacies described in clause
(ii) furnishing such items and
services, such standards and
accreditation requirement shall
not apply to such pharmacies;
and
(II) the Secretary may apply
to such pharmacies an
alternative accreditation
requirement established by the
Secretary if the Secretary
determines such alternative
accreditation requirement is
more appropriate for such
pharmacies.
(ii) Pharmacies described.--A
pharmacy described in this clause is a
pharmacy that meets each of the
following criteria:
(I) The total billings by the
pharmacy for such items and
services under this title are
less than 5 percent of total
pharmacy sales, as determined
based on the average total
pharmacy sales for the previous
3 calendar years, 3 fiscal
years, or other yearly period
specified by the Secretary.
(II) The pharmacy has been
enrolled under section 1866(j)
as a supplier of durable
medical equipment, prosthetics,
orthotics, and supplies, has
been issued (which may include
the renewal of) a provider
number for at least 5 years,
and for which a final adverse
action (as defined in section
424.57(a) of title 42, Code of
Federal Regulations) has not
been imposed in the past 5
years.
(III) The pharmacy submits to
the Secretary an attestation,
in a form and manner, and at a
time, specified by the
Secretary, that the pharmacy
meets the criteria described in
subclauses (I) and (II). Such
attestation shall be subject to
section 1001 of title 18,
United States Code.
(IV) The pharmacy agrees to
submit materials as requested
by the Secretary, or during the
course of an audit conducted on
a random sample of pharmacies
selected annually, to verify
that the pharmacy meets the
criteria described in
subclauses (I) and (II).
Materials submitted under the
preceding sentence shall
include a certification by an
accountant on behalf of the
pharmacy or the submission of
tax returns filed by the
pharmacy during the relevant
periods, as requested by the
Secretary.
(21) Special payment rule for specified items and
supplies.--
(A) In general.--Notwithstanding the
preceding provisions of this subsection, for
specified items and supplies (described in
subparagraph (B)) furnished during 2005, the
payment amount otherwise determined under this
subsection for such specified items and
supplies shall be reduced by the percentage
difference between--
(i) the amount of payment otherwise
determined for the specified item or
supply under this subsection for 2002,
and
(ii) the amount of payment for the
specified item or supply under chapter
89 of title 5, United States Code, as
identified in the column entitled
``Median FEHP Price'' in the table
entitled ``SUMMARY OF MEDICARE PRICES
COMPARED TO VA, MEDICAID, RETAIL, AND
FEHP PRICES FOR 16 ITEMS'' included in
the Testimony of the Inspector General
before the Senate Committee on
Appropriations, June 12, 2002, or any
subsequent report by the Inspector
General.
(B) Specified item or supply described.--For
purposes of subparagraph (A), a specified item
or supply means oxygen and oxygen equipment,
standard wheelchairs (including standard power
wheelchairs), nebulizers, diabetic supplies
consisting of lancets and testing strips,
hospital beds, and air mattresses, but only if
the HCPCS code for the item or supply is
identified in a table referred to in
subparagraph (A)(ii).
(C) Application of update to special payment
amount.--The covered item update under
paragraph (14) for specified items and supplies
for 2006 and each subsequent year shall be
applied to the payment amount under
subparagraph (A) unless payment is made for
such items and supplies under section 1847.
(22) Special payment rule for diabetic supplies.--
Notwithstanding the preceding provisions of this
subsection, for purposes of determining the payment
amount under this subsection for diabetic supplies
furnished on or after the first day of the calendar
quarter during 2013 that is at least 30 days after the
date of the enactment of this paragraph and before the
date described in paragraph (1)(H)(ii), the Secretary
shall recalculate and apply the covered item update
under paragraph (14) as if subparagraph (J)(i) of such
paragraph was amended by striking ``but only if
furnished through mail order''.
(23) Master list inclusion and claim review for
certain items.--
(A) Master list inclusion.--Beginning January
1, 2027, for purposes of the Master List
described in section 414.234(b) of title 42,
Code of Federal Regulations (or any successor
regulation), an item for which payment may be
made under this subsection shall be treated as
having aberrant billing patterns (as such term
is used for purposes of such section) if the
Secretary determines that, without explanatory
contributing factors (such as furnishing
emergent care services), a substantial number
of claims for such items under this subsection
are from an ordering physician or practitioner
with whom the individual involved does not have
a prior relationship, as determined on the
basis of claims.
(B) Claim review.--With respect to items
furnished on or after January 1, 2027 that are
included on the Master List pursuant to
subparagraph (A), if such an item is not
subject to a determination of coverage in
advance pursuant to paragraph (15)(C), the
Secretary may conduct prepayment review of
claims for payment for such item.
(b) Fee Schedules for Radiologist Services.--
(1) Development.--The Secretary shall develop--
(A) a relative value scale to serve as the
basis for the payment for radiologist services
under this part, and
(B) using such scale and appropriate
conversion factors and subject to subsection
(c)(1)(A), fee schedules (on a regional,
statewide, locality, or carrier service area
basis) for payment for radiologist services
under this part, to be implemented for such
services furnished during 1989.
(2) Consultation.--In carrying out paragraph (1), the
Secretary shall regularly consult closely with the
Physician Payment Review Commission, the American
College of Radiology, and other organizations
representing physicians or suppliers who furnish
radiologist services and shall share with them the data
and data analysis being used to make the determinations
under paragraph (1), including data on variations in
current medicare payments by geographic area, and by
service and physician specialty.
(3) Considerations.--In developing the relative value
scale and fee schedules under paragraph (1), the
Secretary--
(A) shall take into consideration variations
in the cost of furnishing such services among
geographic areas and among different sites
where services are furnished, and
(B) may also take into consideration such
other factors respecting the manner in which
physicians in different specialties furnish
such services as may be appropriate to assure
that payment amounts are equitable and designed
to promote effective and efficient provision of
radiologist services by physicians in the
different specialties.
(4) Savings.--
(A) Budget neutral fee schedules.--The
Secretary shall develop preliminary fee
schedules for 1989, which are designed to
result in the same amount of aggregate payments
(net of any coinsurance and deductibles under
sections 1833(a)(1)(J) and 1833(b)) for
radiologist services furnished in 1989 as would
have been made if this subsection had not been
enacted.
(B) Initial savings.--The fee schedules
established for payment purposes under this
subsection for services furnished in 1989 shall
be 97 percent of the amounts permitted under
these preliminary fee schedules developed under
subparagraph (A).
(C) 1990 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1990, after
March 31 of such year, the conversion factors
used under this subsection shall be 96 percent
of the conversion factors that applied under
this subsection as of December 31, 1989.
(D) 1991 fee schedules.--For radiologist
services (other than portable X-ray services)
furnished under this part during 1991, the
conversion factors used in a locality under
this subsection shall, subject to clause (vii),
be reduced to the adjusted conversion factor
for the locality determined as follows:
(i) National weighted average
conversion factor.--The Secretary shall
estimate the national weighted average
of the conversion factors used under
this subsection for services furnished
during 1990 beginning on April 1, using
the best available data.
(ii) Reduced national weighted
average.--The national weighted average
estimated under clause (i) shall be
reduced by 13 percent.
(iii) Computation of 1990 locality
index relative to national average.--
The Secretary shall establish an index
which reflects, for each locality, the
ratio of the conversion factor used in
the locality under this subsection to
the national weighted average estimated
under clause (i).
(iv) Adjusted conversion factor.--The
adjusted conversion factor for the
professional or technical component of
a service in a locality is the sum of
\1/2\ of the locally-adjusted amount
determined under clause (v) and \1/2\
of the GPCI-adjusted amount determined
under clause (vi).
(v) Locally-adjusted amount.--For
purposes of clause (iv), the locally
adjusted amount determined under this
clause is the product of (I) the
national weighted average conversion
factor computed under clause (ii), and
(II) the index value established under
clause (iii) for the locality.
(vi) GPCI-adjusted amount.--For
purposes of clause (iv), the GPCI-
adjusted amount determined under this
clause is the sum of--
(I) the product of (a) the
portion of the reduced national
weighted average conversion
factor computed under clause
(ii) which is attributable to
physician work and (b) the
geographic work index value for
the locality (specified in
Addendum C to the Model Fee
Schedule for Physician Services
(published on September 4,
1990, 55 Federal Register pp.
36238-36243)); and
(II) the product of (a) the
remaining portion of the
reduced national weighted
average conversion factor
computed under clause (ii), and
(b) the geographic practice
cost index value specified in
section 1842(b)(14)(C)(iv) for
the locality.
In applying this clause with respect to
the professional component of a
service, 80 percent of the conversion
factor shall be considered to be
attributable to physician work and with
respect to the technical component of
the service, 0 percent shall be
considered to be attributable to
physician work.
(vii) Limits on conversion factor.--
The conversion factor to be applied to
a locality to the professional or
technical component of a service shall
not be reduced under this subparagraph
by more than 9.5 percent below the
conversion factor applied in the
locality under subparagraph (C) to such
component, but in no case shall the
conversion factor be less than 60
percent of the national weighted
average of the conversion factors
(computed under clause (i)).
(E) Rule for certain scanning services.--In
the case of the technical components of
magnetic resonance imaging (MRI) services and
computer assisted tomography (CAT) services
furnished after December 31, 1990, the amount
otherwise payable shall be reduced by 10
percent.
(F) Subsequent updating.--For radiologist
services furnished in subsequent years, the fee
schedules shall be the schedules for the
previous year updated by the percentage
increase in the MEI (as defined in section
1842(i)(3)) for the year.
(G) Nonparticipating physicians and
suppliers.--Each fee schedule so established
shall provide that the payment rate recognized
for nonparticipating physicians and suppliers
is equal to the appropriate percent (as defined
in section 1842(b)(4)(A)(iv)) of the payment
rate recognized for participating physicians
and suppliers.
(5) Limiting charges of nonparticipating physicians
and suppliers.--
(A) In general.--In the case of radiologist
services furnished after January 1, 1989, for
which payment is made under a fee schedule
under this subsection, if a nonparticipating
physician or supplier furnishes the service to
an individual entitled to benefits under this
part, the physician or supplier may not charge
the individual more than the limiting charge
(as defined in subparagraph (B)).
(B) Limiting charge defined.--In subparagraph
(A), the term ``limiting charge'' means, with
respect to a service furnished--
(i) in 1989, 125 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1),
(ii) in 1990, 120 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1), and
(iii) after 1990, 115 percent of the
amount specified for the service in the
appropriate fee schedule established
under paragraph (1).
(C) Enforcement.--If a physician or supplier
knowingly and willfully bills in violation of
subparagraph (A), the Secretary may apply
sanctions against such physician or supplier in
accordance with section 1842(j)(2) in the same
manner as such sanctions may apply to a
physician.
(6) Radiologist services defined.--For the purposes
of this subsection and section 1833(a)(1)(J), the term
``radiologist services'' only includes radiology
services performed by, or under the direction or
supervision of, a physician--
(A) who is certified, or eligible to be
certified, by the American Board of Radiology,
or
(B) for whom radiology services account for
at least 50 percent of the total amount of
charges made under this part.
(c) Payment and Standards for Screening Mammography.--
(1) In general.--With respect to expenses incurred
for screening mammography (as defined in section
1861(jj)), payment may be made only--
(A) for screening mammography conducted
consistent with the frequency permitted under
paragraph (2); and
(B) if the screening mammography is conducted
by a facility that has a certificate (or
provisional certificate) issued under section
354 of the Public Health Service Act.
(2) Frequency covered.--
(A) In general.--Subject to revision by the
Secretary under subparagraph (B)--
(i) no payment may be made under this
part for screening mammography
performed on a woman under 35 years of
age;
(ii) payment may be made under this
part for only one screening mammography
performed on a woman over 34 years of
age, but under 40 years of age; and
(iii) in the case of a woman over 39
years of age, payment may not be made
under this part for screening
mammography performed within 11 months
following the month in which a previous
screening mammography was performed.
(B) Revision of frequency.--
(i) Review.--The Secretary, in
consultation with the Director of the
National Cancer Institute, shall review
periodically the appropriate frequency
for performing screening mammography,
based on age and such other factors as
the Secretary believes to be pertinent.
(ii) Revision of frequency.--The
Secretary, taking into consideration
the review made under clause (i), may
revise from time to time the frequency
with which screening mammography may be
paid for under this subsection.
(d) Frequency Limits and Payment for Colorectal Cancer
Screening Tests.--
(1) Screening fecal-occult blood tests.--
(A) Payment amount.--The payment amount for
colorectal cancer screening tests consisting of
screening fecal-occult blood tests is equal to
the payment amount established for diagnostic
fecal-occult blood tests under section 1833(h).
(B) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening fecal-
occult blood test--
(i) if the individual is under 50
years of age; or
(ii) if the test is performed within
the 11 months after a previous
screening fecal-occult blood test.
(2) Screening flexible sigmoidoscopies.--
(A) Fee schedule.--With respect to colorectal
cancer screening tests consisting of screening
flexible sigmoidoscopies, payment under section
1848 shall be consistent with payment under
such section for similar or related services.
(B) Payment limit.--In the case of screening
flexible sigmoidoscopy services, payment under
this part shall not exceed such amount as the
Secretary specifies, based upon the rates
recognized for diagnostic flexible
sigmoidoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
flexible sigmoidoscopy services
furnished on or after January 1, 1999,
that--
(I) in accordance with
regulations, may be performed
in an ambulatory surgical
center and for which the
Secretary permits ambulatory
surgical center payments under
this part, and
(II) are performed in an
ambulatory surgical center or
hospital outpatient department,
payment under this part shall be based
on the lesser of the amount under the
fee schedule that would apply to such
services if they were performed in a
hospital outpatient department in an
area or the amount under the fee
schedule that would apply to such
services if they were performed in an
ambulatory surgical center in the same
area.
(ii) Limitation on coinsurance.--
Subject to section 1833(a)(1)(Y), but
notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable copayment,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--
Subject to section 1833(a)(1)(Y), if during the
course of such screening flexible
sigmoidoscopy, a lesion or growth is detected
which results in a biopsy or removal of the
lesion or growth, payment under this part shall
not be made for the screening flexible
sigmoidoscopy but shall be made for the
procedure classified as a flexible
sigmoidoscopy with such biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
flexible sigmoidoscopy--
(i) if the individual is under 50
years of age; or
(ii) if the procedure is performed
within the 47 months after a previous
screening flexible sigmoidoscopy or, in
the case of an individual who is not at
high risk for colorectal cancer, if the
procedure is performed within the 119
months after a previous screening
colonoscopy.
(3) Screening colonoscopy.--
(A) Fee schedule.--With respect to colorectal
cancer screening test consisting of a screening
colonoscopy, payment under section 1848 shall
be consistent with payment amounts under such
section for similar or related services.
(B) Payment limit.--In the case of screening
colonoscopy services, payment under this part
shall not exceed such amount as the Secretary
specifies, based upon the rates recognized for
diagnostic colonoscopy services.
(C) Facility payment limit.--
(i) In general.--Notwithstanding
subsections (i)(2)(A) and (t) of
section 1833, in the case of screening
colonoscopy services furnished on or
after January 1, 1999, that are
performed in an ambulatory surgical
center or a hospital outpatient
department, payment under this part
shall be based on the lesser of the
amount under the fee schedule that
would apply to such services if they
were performed in a hospital outpatient
department in an area or the amount
under the fee schedule that would apply
to such services if they were performed
in an ambulatory surgical center in the
same area.
(ii) Limitation on coinsurance.--
Subject to section 1833(a)(1)(Y), but
notwithstanding any other provision of
this title, in the case of a
beneficiary who receives the services
described in clause (i)--
(I) in computing the amount
of any applicable coinsurance,
the computation of such
coinsurance shall be based upon
the fee schedule under which
payment is made for the
services, and
(II) the amount of such
coinsurance is equal to 25
percent of the payment amount
under the fee schedule
described in subclause (I).
(D) Special rule for detected lesions.--
Subject to section 1833(a)(1)(Y), if during the
course of such screening colonoscopy, a lesion
or growth is detected which results in a biopsy
or removal of the lesion or growth, payment
under this part shall not be made for the
screening colonoscopy but shall be made for the
procedure classified as a colonoscopy with such
biopsy or removal.
(E) Frequency limit.--No payment may be made
under this part for a colorectal cancer
screening test consisting of a screening
colonoscopy for individuals at high risk for
colorectal cancer if the procedure is performed
within the 23 months after a previous screening
colonoscopy or for other individuals if the
procedure is performed within the 119 months
after a previous screening colonoscopy or
within 47 months after a previous screening
flexible sigmoidoscopy.
(e) Accreditation Requirement for Advanced Diagnostic Imaging
Services.--
(1) In general.--
(A) In general.--Beginning with January 1,
2012, with respect to the technical component
of advanced diagnostic imaging services for
which payment is made under the fee schedule
established under section 1848(b) and that are
furnished by a supplier, payment may only be
made if such supplier is accredited by an
accreditation organization designated by the
Secretary under paragraph (2)(B)(i).
(B) Advanced diagnostic imaging services
defined.--In this subsection, the term
``advanced diagnostic imaging services''
includes--
(i) diagnostic magnetic resonance
imaging, computed tomography, and
nuclear medicine (including positron
emission tomography); and
(ii) such other diagnostic imaging
services, including services described
in section 1848(b)(4)(B) (excluding X-
ray, ultrasound, and fluoroscopy), as
specified by the Secretary in
consultation with physician specialty
organizations and other stakeholders.
(C) Supplier defined.--In this subsection,
the term ``supplier'' has the meaning given
such term in section 1861(d).
(2) Accreditation organizations.--
(A) Factors for designation of accreditation
organizations.--The Secretary shall consider
the following factors in designating
accreditation organizations under subparagraph
(B)(i) and in reviewing and modifying the list
of accreditation organizations designated
pursuant to subparagraph (C):
(i) The ability of the organization
to conduct timely reviews of
accreditation applications.
(ii) Whether the organization has
established a process for the timely
integration of new advanced diagnostic
imaging services into the
organization's accreditation program.
(iii) Whether the organization uses
random site visits, site audits, or
other strategies for ensuring
accredited suppliers maintain adherence
to the criteria described in paragraph
(3).
(iv) The ability of the organization
to take into account the capacities of
suppliers located in a rural area (as
defined in section 1886(d)(2)(D)).
(v) Whether the organization has
established reasonable fees to be
charged to suppliers applying for
accreditation.
(vi) Such other factors as the
Secretary determines appropriate.
(B) Designation.--Not later than January 1,
2010, the Secretary shall designate
organizations to accredit suppliers furnishing
the technical component of advanced diagnostic
imaging services. The list of accreditation
organizations so designated may be modified
pursuant to subparagraph (C).
(C) Review and modification of list of
accreditation organizations.--
(i) In general.--The Secretary shall
review the list of accreditation
organizations designated under
subparagraph (B) taking into account
the factors under subparagraph (A).
Taking into account the results of such
review, the Secretary may, by
regulation, modify the list of
accreditation organizations designated
under subparagraph (B).
(ii) Special rule for accreditations
done prior to removal from list of
designated accreditation
organizations.--In the case where the
Secretary removes an organization from
the list of accreditation organizations
designated under subparagraph (B), any
supplier that is accredited by the
organization during the period
beginning on the date on which the
organization is designated as an
accreditation organization under
subparagraph (B) and ending on the date
on which the organization is removed
from such list shall be considered to
have been accredited by an organization
designated by the Secretary under
subparagraph (B) for the remaining
period such accreditation is in effect.
(3) Criteria for accreditation.--The Secretary shall
establish procedures to ensure that the criteria used
by an accreditation organization designated under
paragraph (2)(B) to evaluate a supplier that furnishes
the technical component of advanced diagnostic imaging
services for the purpose of accreditation of such
supplier is specific to each imaging modality. Such
criteria shall include--
(A) standards for qualifications of medical
personnel who are not physicians and who
furnish the technical component of advanced
diagnostic imaging services;
(B) standards for qualifications and
responsibilities of medical directors and
supervising physicians, including standards
that recognize the considerations described in
paragraph (4);
(C) procedures to ensure that equipment used
in furnishing the technical component of
advanced diagnostic imaging services meets
performance specifications;
(D) standards that require the supplier have
procedures in place to ensure the safety of
persons who furnish the technical component of
advanced diagnostic imaging services and
individuals to whom such services are
furnished;
(E) standards that require the establishment
and maintenance of a quality assurance and
quality control program by the supplier that is
adequate and appropriate to ensure the
reliability, clarity, and accuracy of the
technical quality of diagnostic images produced
by such supplier; and
(F) any other standards or procedures the
Secretary determines appropriate.
(4) Recognition in standards for the evaluation of
medical directors and supervising physicians.--The
standards described in paragraph (3)(B) shall recognize
whether a medical director or supervising physician--
(A) in a particular specialty receives
training in advanced diagnostic imaging
services in a residency program;
(B) has attained, through experience, the
necessary expertise to be a medical director or
a supervising physician;
(C) has completed any continuing medical
education courses relating to such services; or
(D) has met such other standards as the
Secretary determines appropriate.
(5) Rule for accreditations made prior to
designation.--In the case of a supplier that is
accredited before January 1, 2010, by an accreditation
organization designated by the Secretary under
paragraph (2)(B) as of January 1, 2010, such supplier
shall be considered to have been accredited by an
organization designated by the Secretary under such
paragraph as of January 1, 2012, for the remaining
period such accreditation is in effect.
(f) Reduction in Payments for Physician Pathology Services
During 1991.--
(1) In general.--For physician pathology services
furnished under this part during 1991, the prevailing
charges used in a locality under this part shall be 7
percent below the prevailing charges used in the
locality under this part in 1990 after March 31.
(2) Limitation.--The prevailing charge for the
technical and professional components of an physician
pathology service furnished by a physician through an
independent laboratory shall not be reduced pursuant to
paragraph (1) to the extent that such reduction would
reduce such prevailing charge below 115 percent of the
prevailing charge for the professional component of
such service when furnished by a hospital-based
physician in the same locality. For purposes of the
preceding sentence, an independent laboratory is a
laboratory that is independent of a hospital and
separate from the attending or consulting physicians'
office.
(g) Payment for Outpatient Critical Access Hospital
Services.--
(1) In general.--The amount of payment for outpatient
critical access hospital services of a critical access
hospital is equal to 101 percent of the reasonable
costs of the hospital in providing such services,
unless the hospital makes the election under paragraph
(2).
(2) Election of cost-based hospital outpatient
service payment plus fee schedule for professional
services.--A critical access hospital may elect to be
paid for outpatient critical access hospital services
amounts equal to the sum of the following, less the
amount that such hospital may charge as described in
section 1866(a)(2)(A):
(A) Facility fee.--With respect to facility
services, not including any services for which
payment may be made under subparagraph (B), 101
percent of the reasonable costs of the critical
access hospital in providing such services.
(B) Fee schedule for professional services.--
With respect to professional services otherwise
included within outpatient critical access
hospital services, 115 percent of such amounts
as would otherwise be paid under this part if
such services were not included in outpatient
critical access hospital services. Subsections
(x) and (y) of section 1833 shall not be taken
into account in determining the amounts that
would otherwise be paid pursuant to the
preceding sentence.
The Secretary may not require, as a condition for
applying subparagraph (B) with respect to a critical
access hospital, that each physician or other
practitioner providing professional services in the
hospital must assign billing rights with respect to
such services, except that such subparagraph shall not
apply to those physicians and practitioners who have
not assigned such billing rights.
(3) Disregarding charges.--The payment amounts under
this subsection shall be determined without regard to
the amount of the customary or other charge.
(4) Treatment of clinical diagnostic laboratory
services.--No coinsurance, deductible, copayment, or
other cost-sharing otherwise applicable under this part
shall apply with respect to clinical diagnostic
laboratory services furnished as an outpatient critical
access hospital service. Nothing in this title shall be
construed as providing for payment for clinical
diagnostic laboratory services furnished as part of
outpatient critical access hospital services, other
than on the basis described in this subsection. For
purposes of the preceding sentence and section
1861(mm)(3), clinical diagnostic laboratory services
furnished by a critical access hospital shall be
treated as being furnished as part of outpatient
critical access services without regard to whether the
individual with respect to whom such services are
furnished is physically present in the critical access
hospital, or in a skilled nursing facility or a clinic
(including a rural health clinic) that is operated by a
critical access hospital, at the time the specimen is
collected.
(5) Coverage of costs for certain emergency room on-
call providers.--In determining the reasonable costs of
outpatient critical access hospital services under
paragraphs (1) and (2)(A), the Secretary shall
recognize as allowable costs, amounts (as defined by
the Secretary) for reasonable compensation and related
costs for physicians, physician assistants, nurse
practitioners, and clinical nurse specialists who are
on-call (as defined by the Secretary) to provide
emergency services but who are not present on the
premises of the critical access hospital involved, and
are not otherwise furnishing services covered under
this title and are not on-call at any other provider or
facility.
(h) Payment for Prosthetic Devices and Orthotics and
Prosthetics.--
(1) General rule for payment.--
(A) In general.--Payment under this
subsection for prosthetic devices and orthotics
and prosthetics shall be made in a lump-sum
amount for the purchase of the item in an
amount equal to 80 percent of the payment basis
described in subparagraph (B).
(B) Payment basis.--Except as provided in
subparagraphs (C), (E), and (H)(i), the payment
basis described in this subparagraph is the
lesser of--
(i) the actual charge for the item;
or
(ii) the amount recognized under
paragraph (2) as the purchase price for
the item.
(C) Exception for certain public home health
agencies.--Subparagraph (B)(i) shall not apply
to an item furnished by a public home health
agency (or by another home health agency which
demonstrates to the satisfaction of the
Secretary that a significant portion of its
patients are low income) free of charge or at
nominal charges to the public.
(D) Exclusive payment rule.--Subject to
subparagraph (H)(ii), this subsection shall
constitute the exclusive provision of this
title for payment for prosthetic devices,
orthotics, and prosthetics under this part or
under part A to a home health agency.
(E) Exception for certain items.--Payment for
ostomy supplies, tracheostomy supplies, and
urologicals shall be made in accordance with
subparagraphs (B) and (C) of section
1834(a)(2).
(F) Special payment rules for certain
prosthetics and custom-fabricated orthotics.--
(i) In general.--No payment shall be
made under this subsection for an item
of custom-fabricated orthotics
described in clause (ii) or for an item
of prosthetics unless such item is--
(I) furnished by a qualified
practitioner; and
(II) fabricated by a
qualified practitioner or a
qualified supplier at a
facility that meets such
criteria as the Secretary
determines appropriate.
(ii) Description of custom-fabricated
item.--
(I) In general.--An item
described in this clause is an
item of custom-fabricated
orthotics that requires
education, training, and
experience to custom-fabricate
and that is included in a list
established by the Secretary in
subclause (II). Such an item
does not include shoes and shoe
inserts.
(II) List of items.--The
Secretary, in consultation with
appropriate experts in
orthotics (including national
organizations representing
manufacturers of orthotics),
shall establish and update as
appropriate a list of items to
which this subparagraph
applies. No item may be
included in such list unless
the item is individually
fabricated for the patient over
a positive model of the
patient.
(iii) Qualified practitioner
defined.--In this subparagraph, the
term ``qualified practitioner'' means a
physician or other individual who--
(I) is a qualified physical
therapist or a qualified
occupational therapist;
(II) in the case of a State
that provides for the licensing
of orthotics and prosthetics,
is licensed in orthotics or
prosthetics by the State in
which the item is supplied; or
(III) in the case of a State
that does not provide for the
licensing of orthotics and
prosthetics, is specifically
trained and educated to provide
or manage the provision of
prosthetics and custom-designed
or -fabricated orthotics, and
is certified by the American
Board for Certification in
Orthotics and Prosthetics, Inc.
or by the Board for Orthotist/
Prosthetist Certification, or
is credentialed and approved by
a program that the Secretary
determines, in consultation
with appropriate experts in
orthotics and prosthetics, has
training and education
standards that are necessary to
provide such prosthetics and
orthotics.
(iv) Qualified supplier defined.--In
this subparagraph, the term ``qualified
supplier'' means any entity that is
accredited by the American Board for
Certification in Orthotics and
Prosthetics, Inc. or by the Board for
Orthotist/Prosthetist Certification, or
accredited and approved by a program
that the Secretary determines has
accreditation and approval standards
that are essentially equivalent to
those of such Board.
(G) Replacement of prosthetic devices and
parts.--
(i) In general.--Payment shall be
made for the replacement of prosthetic
devices which are artificial limbs, or
for the replacement of any part of such
devices, without regard to continuous
use or useful lifetime restrictions if
an ordering physician determines that
the provision of a replacement device,
or a replacement part of such a device,
is necessary because of any of the
following:
(I) A change in the
physiological condition of the
patient.
(II) An irreparable change in
the condition of the device, or
in a part of the device.
(III) The condition of the
device, or the part of the
device, requires repairs and
the cost of such repairs would
be more than 60 percent of the
cost of a replacement device,
or, as the case may be, of the
part being replaced.
(ii) Confirmation may be required if
device or part being replaced is less
than 3 years old.--If a physician
determines that a replacement device,
or a replacement part, is necessary
pursuant to clause (i)--
(I) such determination shall
be controlling; and
(II) such replacement device
or part shall be deemed to be
reasonable and necessary for
purposes of section
1862(a)(1)(A);
except that if the device, or part,
being replaced is less than 3 years old
(calculated from the date on which the
beneficiary began to use the device or
part), the Secretary may also require
confirmation of necessity of the
replacement device or replacement part,
as the case may be.
(H) Application of competitive acquisition to
orthotics; limitation of inherent
reasonableness authority.--In the case of
orthotics described in paragraph (2)(C) of
section 1847(a) furnished on or after January
1, 2011, subject to subsection (a)(1)(G), that
are included in a competitive acquisition
program in a competitive acquisition area under
such section--
(i) the payment basis under this
subsection for such orthotics furnished
in such area shall be the payment basis
determined under such competitive
acquisition program; and
(ii) subject to subsection (a)(1)(G),
the Secretary may use information on
the payment determined under such
competitive acquisition programs to
adjust the payment amount otherwise
recognized under subparagraph (B)(ii)
for an area that is not a competitive
acquisition area under section 1847,
and in the case of such adjustment,
paragraphs (8) and (9) of section
1842(b) shall not be applied.
(2) Purchase price recognized.--For purposes of
paragraph (1), the amount that is recognized under this
paragraph as the purchase price for prosthetic devices,
orthotics, and prosthetics is the amount described in
subparagraph (C) of this paragraph, determined as
follows:
(A) Computation of local purchase price.--
Each carrier under section 1842 shall compute a
base local purchase price for the item as
follows:
(i) The carrier shall compute a base
local purchase price for each item
equal to the average reasonable charge
in the locality for the purchase of the
item for the 12-month period ending
with June 1987.
(ii) The carrier shall compute a
local purchase price, with respect to
the furnishing of each particular
item--
(I) in 1989 and 1990, equal
to the base local purchase
price computed under clause (i)
increased by the percentage
increase in the consumer price
index for all urban consumers
(United States city average)
for the 6-month period ending
with December 1987, or
(II) in 1991, 1992 or 1993,
equal to the local purchase
price computed under this
clause for the previous year
increased by the applicable
percentage increase for the
year.
(B) Computation of regional purchase price.--
With respect to the furnishing of a particular
item in each region (as defined by the
Secretary), the Secretary shall compute a
regional purchase price--
(i) for 1992, equal to the average
(weighted by relative volume of all
claims among carriers) of the local
purchase prices for the carriers in the
region computed under subparagraph
(A)(ii)(II) for the year, and
(ii) for each subsequent year, equal
to the regional purchase price computed
under this subparagraph for the
previous year increased by the
applicable percentage increase for the
year.
(C) Purchase price recognized.--For purposes
of paragraph (1) and subject to subparagraph
(D), the amount that is recognized under this
paragraph as the purchase price for each item
furnished--
(i) in 1989, 1990, or 1991, is 100
percent of the local purchase price
computed under subparagraph (A)(ii);
(ii) in 1992, is the sum of (I) 75
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1992, and (II) 25 percent of the
regional purchase price computed under
subparagraph (B) for 1992;
(iii) in 1993, is the sum of (I) 50
percent of the local purchase price
computed under subparagraph (A)(ii)(II)
for 1993, and (II) 50 percent of the
regional purchase price computed under
subparagraph (B) for 1993; and
(iv) in 1994 or a subsequent year, is
the regional purchase price computed
under subparagraph (B) for that year.
(D) Range on amount recognized.--The amount
that is recognized under subparagraph (C) as
the purchase price for an item furnished--
(i) in 1992, may not exceed 125
percent, and may not be lower than 85
percent, of the average of the purchase
prices recognized under such
subparagraph for all the carrier
service areas in the United States in
that year; and
(ii) in a subsequent year, may not
exceed 120 percent, and may not be
lower than 90 percent, of the average
of the purchase prices recognized under
such subparagraph for all the carrier
service areas in the United States in
that year.
(3) Applicability of certain provisions relating to
durable medical equipment.--Paragraphs (12) and (17)
and subparagraphs (A) and (B) of paragraph (10) and
paragraph (11) of subsection (a) shall apply to
prosthetic devices, orthotics, and prosthetics in the
same manner as such provisions apply to covered items
under such subsection.
(4) Definitions.--In this subsection--
(A) the term ``applicable percentage
increase'' means--
(i) for 1991, 0 percent;
(ii) for 1992 and 1993, the
percentage increase in the consumer
price index for all urban consumers
(United States city average) for the
12-month period ending with June of the
previous year;
(iii) for 1994 and 1995, 0 percent;
(iv) for 1996 and 1997, the
percentage increase in the consumer
price index for all urban consumers
(United States city average) for the
12-month period ending with June of the
previous year;
(v) for each of the years 1998
through 2000, 1 percent;
(vi) for 2001, the percentage
increase in the consumer price index
for all urban consumers (U.S. city
average) for the 12-month period ending
with June 2000;
(vii) for 2002, 1 percent;
(viii) for 2003, the percentage
increase in the consumer price index
for all urban consumers (United States
city average) for the 12-month period
ending with June of the previous year;
(ix) for 2004, 2005, and 2006, 0
percent;
(x) for for each of 2007 through
2010, the percentage increase in the
consumer price index for all urban
consumers (United States city average)
for the 12-month period ending with
June of the previous year; and
(xi) for 2011 and each subsequent
year--
(I) the percentage increase
in the consumer price index for
all urban consumers (United
States city average) for the
12-month period ending with
June of the previous year,
reduced by--
(II) the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II).
(B) the term ``prosthetic devices'' has the
meaning given such term in section 1861(s)(8),
except that such term does not include
parenteral and enteral nutrition nutrients,
supplies, and equipment and does not include an
implantable item for which payment may be made
under section 1833(t); and
(C) the term ``orthotics and prosthetics''
has the meaning given such term in section
1861(s)(9) (and includes shoes described in
section 1861(s)(12)), but does not include
intraocular lenses or medical supplies
(including catheters, catheter supplies, ostomy
bags, and supplies related to ostomy care)
furnished by a home health agency under section
1861(m)(5).
The application of subparagraph (A)(xi)(II) may result
in the applicable percentage increase under
subparagraph (A) being less than 0.0 for a year, and
may result in payment rates under this subsection for a
year being less than such payment rates for the
preceding year.
(5) Documentation created by orthotists and
prosthetists.--For purposes of determining the
reasonableness and medical necessity of orthotics and
prosthetics, documentation created by an orthotist or
prosthetist shall be considered part of the
individual's medical record to support documentation
created by eligible professionals described in section
1848(k)(3)(B).
(i) Payment for Surgical Dressings.--
(1) In general.--Payment under this subsection for
surgical dressings (described in section 1861(s)(5))
shall be made in a lump sum amount for the purchase of
the item in an amount equal to 80 percent of the lesser
of--
(A) the actual charge for the item; or
(B) a payment amount determined in accordance
with the methodology described in subparagraphs
(B) and (C) of subsection (a)(2) (except that
in applying such methodology, the national
limited payment amount referred to in such
subparagraphs shall be initially computed based
on local payment amounts using average
reasonable charges for the 12-month period
ending December 31, 1992, increased by the
covered item updates described in such
subsection for 1993 and 1994).
(2) Exceptions.--Paragraph (1) shall not apply to
surgical dressings that are--
(A) furnished as an incident to a physician's
professional service; or
(B) furnished by a home health agency.
(j) Requirements for Suppliers of Medical Equipment and
Supplies.--
(1) Issuance and renewal of supplier number.--
(A) Payment.--Except as provided in
subparagraph (C), no payment may be made under
this part after the date of the enactment of
the Social Security Act Amendments of 1994 for
items furnished by a supplier of medical
equipment and supplies unless such supplier
obtains (and renews at such intervals as the
Secretary may require) a supplier number.
(B) Standards for possessing a supplier
number.--A supplier may not obtain a supplier
number unless--
(i) for medical equipment and
supplies furnished on or after the date
of the enactment of the Social Security
Act Amendments of 1994 and before
January 1, 1996, the supplier meets
standards prescribed by the Secretary
in regulations issued on June 18, 1992;
and
(ii) for medical equipment and
supplies furnished on or after January
1, 1996, the supplier meets revised
standards prescribed by the Secretary
(in consultation with representatives
of suppliers of medical equipment and
supplies, carriers, and consumers) that
shall include requirements that the
supplier--
(I) comply with all
applicable State and Federal
licensure and regulatory
requirements;
(II) maintain a physical
facility on an appropriate
site;
(III) have proof of
appropriate liability
insurance; and
(IV) meet such other
requirements as the Secretary
may specify.
(C) Exception for items furnished as incident
to a physician's service.--Subparagraph (A)
shall not apply with respect to medical
equipment and supplies furnished incident to a
physician's service.
(D) Prohibition against multiple supplier
numbers.--The Secretary may not issue more than
one supplier number to any supplier of medical
equipment and supplies unless the issuance of
more than one number is appropriate to identify
subsidiary or regional entities under the
supplier's ownership or control.
(E) Prohibition against delegation of
supplier determinations.--The Secretary may not
delegate (other than by contract under section
1842) the responsibility to determine whether
suppliers meet the standards necessary to
obtain a supplier number.
(2) Certificates of medical necessity.--
(A) Limitation on information provided by
suppliers on certificates of medical
necessity.--
(i) In general.--Effective 60 days
after the date of the enactment of the
Social Security Act Amendments of 1994,
a supplier of medical equipment and
supplies may distribute to physicians,
or to individuals entitled to benefits
under this part, a certificate of
medical necessity for commercial
purposes which contains no more than
the following information completed by
the supplier:
(I) An identification of the
supplier and the beneficiary to
whom such medical equipment and
supplies are furnished.
(II) A description of such
medical equipment and supplies.
(III) Any product code
identifying such medical
equipment and supplies.3
(IV) Any other administrative
information (other than
information relating to the
beneficiary's medical
condition) identified by the
Secretary.
(ii) Information on payment amount
and charges.--If a supplier distributes
a certificate of medical necessity
containing any of the information
permitted to be supplied under clause
(i), the supplier shall also list on
the certificate of medical necessity
the fee schedule amount and the
supplier's charge for the medical
equipment or supplies being furnished
prior to distribution of such
certificate to the physician.
(iii) Penalty.--Any supplier of
medical equipment and supplies who
knowingly and willfully distributes a
certificate of medical necessity in
violation of clause (i) or fails to
provide the information required under
clause (ii) is subject to a civil money
penalty in an amount not to exceed
$1,000 for each such certificate of
medical necessity so distributed. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to
civil money penalties under this
subparagraph in the same manner as they
apply to a penalty or proceeding under
section 1128A(a).
(B) Definition.--For purposes of this
paragraph, the term ``certificate of medical
necessity'' means a form or other document
containing information required by the carrier
to be submitted to show that an item is
reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve
the functioning of a malformed body member.
(3) Coverage and review criteria.--The Secretary
shall annually review the coverage and utilization of
items of medical equipment and supplies to determine
whether such items should be made subject to coverage
and utilization review criteria, and if appropriate,
shall develop and apply such criteria to such items.
(4) Limitation on patient liability.--If a supplier
of medical equipment and supplies (as defined in
paragraph (5))--
(A) furnishes an item or service to a
beneficiary for which no payment may be made by
reason of paragraph (1);
(B) furnishes an item or service to a
beneficiary for which payment is denied in
advance under subsection (a)(15); or
(C) furnishes an item or service to a
beneficiary for which payment is denied under
section 1862(a)(1);
any expenses incurred for items and services furnished
to an individual by such a supplier not on an assigned
basis shall be the responsibility of such supplier. The
individual shall have no financial responsibility for
such expenses and the supplier shall refund on a timely
basis to the individual (and shall be liable to the
individual for) any amounts collected from the
individual for such items or services. The provisions
of subsection (a)(18) shall apply to refunds required
under the previous sentence in the same manner as such
provisions apply to refunds under such subsection.
(5) Definition.--The term ``medical equipment and
supplies'' means--
(A) durable medical equipment (as defined in
section 1861(n));
(B) prosthetic devices (as described in
section 1861(s)(8));
(C) orthotics and prosthetics (as described
in section 1861(s)(9));
(D) surgical dressings (as described in
section 1861(s)(5));
(E) items and services related to the
administration of intravenous immune globulin
furnished on or after January 1, 2024, as
described in section 1861(zz);
(E) lymphedema compression treatment items
(as defined in section 1861(mmm));
(F) such other items as the Secretary may
determine; and
(G) for purposes of paragraphs (1) and (3)--
(i) home dialysis supplies and
equipment (as described in section
1861(s)(2)(F)),
(ii) immunosuppressive drugs (as
described in section 1861(s)(2)(J)),
(iii) therapeutic shoes for diabetics
(as described in section 1861(s)(12)),
(iv) oral drugs prescribed for use as
an anticancer therapeutic agent (as
described in section 1861(s)(2)(Q)),
and
(v) self-administered erythropoetin
(as described in section
1861(s)(2)(P)).
(k) Payment for Outpatient Therapy Services and Comprehensive
Outpatient Rehabilitation Services.--
(1) In general.--With respect to services described
in section 1833(a)(8) or 1833(a)(9) for which payment
is determined under this subsection, the payment basis
shall be--
(A) for services furnished during 1998, the
amount determined under paragraph (2); or
(B) for services furnished during a
subsequent year, 80 percent of the lesser of--
(i) the actual charge for the
services, or
(ii) the applicable fee schedule
amount (as defined in paragraph (3))
for the services.
(2) Payment in 1998 based upon adjusted reasonable
costs.--The amount under this paragraph for services is
the lesser of--
(A) the charges imposed for the services, or
(B) the adjusted reasonable costs (as defined
in paragraph (4)) for the services,
less 20 percent of the amount of the charges imposed
for such services.
(3) Applicable fee schedule amount.--In this
subsection, the term ``applicable fee schedule amount''
means, with respect to services furnished in a year,
the amount determined under the fee schedule
established under section 1848 for such services
furnished during the year or, if there is no such fee
schedule established for such services, the amount
determined under the fee schedule established for such
comparable services as the Secretary specifies.
(4) Adjusted reasonable costs.--In paragraph (2), the
term ``adjusted reasonable costs'' means, with respect
to any services, reasonable costs determined for such
services, reduced by 10 percent. The 10-percent
reduction shall not apply to services described in
section 1833(a)(8)(B) (relating to services provided by
hospitals).
(5) Uniform coding.--For claims for services
submitted on or after April 1, 1998, for which the
amount of payment is determined under this subsection,
the claim shall include a code (or codes) under a
uniform coding system specified by the Secretary that
identifies the services furnished.
(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to therapy services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
(7) Adjustment in discount for certain multiple
therapy services.--In the case of therapy services
furnished on or after April 1, 2013, and for which
payment is made under this subsection pursuant to the
applicable fee schedule amount (as defined in paragraph
(3)), instead of the 25 percent multiple procedure
payment reduction specified in the final rule published
by the Secretary in the Federal Register on November
29, 2010, the reduction percentage shall be 50 percent.
(l) Establishment of Fee Schedule for Ambulance Services.--
(1) In general.--The Secretary shall establish a fee
schedule for payment for ambulance services whether
provided directly by a supplier or provider or under
arrangement with a provider under this part through a
negotiated rulemaking process described in title 5,
United States Code, and in accordance with the
requirements of this subsection.
(2) Considerations.--In establishing such fee
schedule, the Secretary shall--
(A) establish mechanisms to control increases
in expenditures for ambulance services under
this part;
(B) establish definitions for ambulance
services which link payments to the type of
services provided;
(C) consider appropriate regional and
operational differences;
(D) consider adjustments to payment rates to
account for inflation and other relevant
factors; and
(E) phase in the application of the payment
rates under the fee schedule in an efficient
and fair manner consistent with paragraph (11),
except that such phase-in shall provide for
full payment of any national mileage rate for
ambulance services provided by suppliers that
are paid by carriers in any of the 50 States
where payment by a carrier for such services
for all such suppliers in such State did not,
prior to the implementation of the fee
schedule, include a separate amount for all
mileage within the county from which the
beneficiary is transported.
(3) Savings.--In establishing such fee schedule, the
Secretary shall--
(A) ensure that the aggregate amount of
payments made for ambulance services under this
part during 2000 does not exceed the aggregate
amount of payments which would have been made
for such services under this part during such
year if the amendments made by section 4531(a)
of the Balanced Budget Act of 1997 continued in
effect, except that in making such
determination the Secretary shall assume an
update in such payments for 2002 equal to
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year reduced in the case of 2002 by
1.0 percentage points;
(B) set the payment amounts provided under
the fee schedule for services furnished in 2001
and each subsequent year at amounts equal to
the payment amounts under the fee schedule for
services furnished during the previous year,
increased, subject to subparagraph (C) and the
succeeding sentence of this paragraph, by the
percentage increase in the consumer price index
for all urban consumers (U.S. city average) for
the 12-month period ending with June of the
previous year reduced in the case of 2002 by
1.0 percentage points; and
(C) for 2011 and each subsequent year, after
determining the percentage increase under
subparagraph (B) for the year, reduce such
percentage increase by the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II).
The application of subparagraph (C) may result in the
percentage increase under subparagraph (B) being less
than 0.0 for a year, and may result in payment rates
under the fee schedule under this subsection for a year
being less than such payment rates for the preceding
year.
(4) Consultation.--In establishing the fee schedule
for ambulance services under this subsection, the
Secretary shall consult with various national
organizations representing individuals and entities who
furnish and regulate ambulance services and share with
such organizations relevant data in establishing such
schedule.
(5) Limitation on review.--There shall be no
administrative or judicial review under section 1869 or
otherwise of the amounts established under the fee
schedule for ambulance services under this subsection,
including matters described in paragraph (2).
(6) Restraint on billing.--The provisions of
subparagraphs (A) and (B) of section 1842(b)(18) shall
apply to ambulance services for which payment is made
under this subsection in the same manner as they apply
to services provided by a practitioner described in
section 1842(b)(18)(C).
(7) Coding system.--The Secretary may require the
claim for any services for which the amount of payment
is determined under this subsection to include a code
(or codes) under a uniform coding system specified by
the Secretary that identifies the services furnished.
(8) Services furnished by critical access
hospitals.--Notwithstanding any other provision of this
subsection, the Secretary shall pay 101 percent of the
reasonable costs incurred in furnishing ambulance
services if such services are furnished--
(A) by a critical access hospital (as defined
in section 1861(mm)(1)), or
(B) by an entity that is owned and operated
by a critical access hospital,
but only if the critical access hospital or entity is
the only provider or supplier of ambulance services
that is located within a 35-mile drive of such critical
access hospital.
(9) Transitional assistance for rural providers.--In
the case of ground ambulance services furnished on or
after July 1, 2001, and before January 1, 2004, for
which the transportation originates in a rural area (as
defined in section 1886(d)(2)(D)) or in a rural census
tract of a metropolitan statistical area (as determined
under the most recent modification of the Goldsmith
Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)), the
fee schedule established under this subsection shall
provide that, with respect to the payment rate for
mileage for a trip above 17 miles, and up to 50 miles,
the rate otherwise established shall be increased by
not less than \1/2\ of the additional payment per mile
established for the first 17 miles of such a trip
originating in a rural area.
(10) Phase-in providing floor using blend of fee
schedule and regional fee schedules.--In carrying out
the phase-in under paragraph (2)(E) for each level of
ground service furnished in a year, the portion of the
payment amount that is based on the fee schedule shall
be the greater of the amount determined under such fee
schedule (without regard to this paragraph) or the
following blended rate of the fee schedule under
paragraph (1) and of a regional fee schedule for the
region involved:
(A) For 2004 (for services furnished on or
after July 1, 2004), the blended rate shall be
based 20 percent on the fee schedule under
paragraph (1) and 80 percent on the regional
fee schedule.
(B) For 2005, the blended rate shall be based
40 percent on the fee schedule under paragraph
(1) and 60 percent on the regional fee
schedule.
(C) For 2006, the blended rate shall be based
60 percent on the fee schedule under paragraph
(1) and 40 percent on the regional fee
schedule.
(D) For 2007, 2008, and 2009, the blended
rate shall be based 80 percent on the fee
schedule under paragraph (1) and 20 percent on
the regional fee schedule.
(E) For 2010 and each succeeding year, the
blended rate shall be based 100 percent on the
fee schedule under paragraph (1).
For purposes of this paragraph, the Secretary shall
establish a regional fee schedule for each of the nine
census divisions (referred to in section 1886(d)(2))
using the methodology (used in establishing the fee
schedule under paragraph (1)) to calculate a regional
conversion factor and a regional mileage payment rate
and using the same payment adjustments and the same
relative value units as used in the fee schedule under
such paragraph.
(11) Adjustment in payment for certain long trips.--
In the case of ground ambulance services furnished on
or after July 1, 2004, and before January 1, 2009,
regardless of where the transportation originates, the
fee schedule established under this subsection shall
provide that, with respect to the payment rate for
mileage for a trip above 50 miles the per mile rate
otherwise established shall be increased by \1/4\ of
the payment per mile otherwise applicable to miles in
excess of 50 miles in such trip.
(12) Assistance for rural providers furnishing
services in low population density areas.--
(A) In general.--In the case of ground
ambulance services furnished on or after July
1, 2004, and before [January 1, 2025] October
1, 2025, for which the transportation
originates in a qualified rural area
(identified under subparagraph (B)(iii)), the
Secretary shall provide for a percent increase
in the base rate of the fee schedule for a trip
established under this subsection. In
establishing such percent increase, the
Secretary shall estimate the average cost per
trip for such services (not taking into account
mileage) in the lowest quartile as compared to
the average cost per trip for such services
(not taking into account mileage) in the
highest quartile of all rural county
populations.
(B) Identification of qualified rural
areas.--
(i) Determination of population
density in area.--Based upon data from
the United States decennial census for
the year 2000, the Secretary shall
determine, for each rural area, the
population density for that area.
(ii) Ranking of areas.--The Secretary
shall rank each such area based on such
population density.
(iii) Identification of qualified
rural areas.--The Secretary shall
identify those areas (in subparagraph
(A) referred to as ``qualified rural
areas'') with the lowest population
densities that represent, if each such
area were weighted by the population of
such area (as used in computing such
population densities), an aggregate
total of 25 percent of the total of the
population of all such areas.
(iv) Rural area.--For purposes of
this paragraph, the term ``rural area''
has the meaning given such term in
section 1886(d)(2)(D). If feasible, the
Secretary shall treat a rural census
tract of a metropolitan statistical
area (as determined under the most
recent modification of the Goldsmith
Modification, originally published in
the Federal Register on February 27,
1992 (57 Fed. Reg. 6725) as a rural
area for purposes of this paragraph.
(v) Judicial review.--There shall be
no administrative or judicial review
under section 1869, 1878, or otherwise,
respecting the identification of an
area under this subparagraph.
(13) Temporary increase for ground ambulance
services.--
(A) In general.--After computing the rates
with respect to ground ambulance services under
the other applicable provisions of this
subsection, in the case of such services
furnished on or after July 1, 2004, and before
January 1, 2007, and for such services
furnished on or after July 1, 2008, and before
[January 1, 2025] October 1, 2025, for which
the transportation originates in--
(i) a rural area described in
paragraph (9) or in a rural census
tract described in such paragraph, the
fee schedule established under this
section shall provide that the rate for
the service otherwise established,
after the application of any increase
under paragraphs (11) and (12), shall
be increased by 2 percent (or 3 percent
if such service is furnished on or
after July 1, 2008, and before [January
1, 2025] October 1, 2025); and
(ii) an area not described in clause
(i), the fee schedule established under
this subsection shall provide that the
rate for the service otherwise
established, after the application of
any increase under paragraph (11),
shall be increased by 1 percent (or 2
percent if such service is furnished on
or after July 1, 2008, and before
[January 1, 2025] October 1, 2025).
(B) Application of increased payments after
applicable period.--The increased payments
under subparagraph (A) shall not be taken into
account in calculating payments for services
furnished after the applicable period specified
in such subparagraph.
(14) Providing appropriate coverage of rural air
ambulance services.--
(A) In general.--The regulations described in
section 1861(s)(7) shall provide, to the extent
that any ambulance services (whether ground or
air) may be covered under such section, that a
rural air ambulance service (as defined in
subparagraph (C)) is reimbursed under this
subsection at the air ambulance rate if the air
ambulance service--
(i) is reasonable and necessary based
on the health condition of the
individual being transported at or
immediately prior to the time of the
transport; and
(ii) complies with equipment and crew
requirements established by the
Secretary.
(B) Satisfaction of requirement of medically
necessary.--The requirement of subparagraph
(A)(i) is deemed to be met for a rural air
ambulance service if--
(i) subject to subparagraph (D), such
service is requested by a physician or
other qualified medical personnel (as
specified by the Secretary) who
certifies or reasonably determines that
the individual's condition is such that
the time needed to transport the
individual by land or the instability
of transportation by land poses a
threat to the individual's survival or
seriously endangers the individual's
health; or
(ii) such service is furnished
pursuant to a protocol that is
established by a State or regional
emergency medical service (EMS) agency
and recognized or approved by the
Secretary under which the use of an air
ambulance is recommended, if such
agency does not have an ownership
interest in the entity furnishing such
service.
(C) Rural air ambulance service defined.--For
purposes of this paragraph, the term ``rural
air ambulance service'' means fixed wing and
rotary wing air ambulance service in which the
point of pick up of the individual occurs in a
rural area (as defined in section
1886(d)(2)(D)) or in a rural census tract of a
metropolitan statistical area (as determined
under the most recent modification of the
Goldsmith Modification, originally published in
the Federal Register on February 27, 1992 (57
Fed. Reg. 6725)).
(D) Limitation.--
(i) In general.--Subparagraph (B)(i)
shall not apply if there is a financial
or employment relationship between the
person requesting the rural air
ambulance service and the entity
furnishing the ambulance service, or an
entity under common ownership with the
entity furnishing the air ambulance
service, or a financial relationship
between an immediate family member of
such requester and such an entity.
(ii) Exception.--Where a hospital and
the entity furnishing rural air
ambulance services are under common
ownership, clause (i) shall not apply
to remuneration (through employment or
other relationship) by the hospital of
the requester or immediate family
member if the remuneration is for
provider-based physician services
furnished in a hospital (as described
in section 1887) which are reimbursed
under part A and the amount of the
remuneration is unrelated directly or
indirectly to the provision of rural
air ambulance services.
(15) Payment adjustment for non-emergency ambulance
transports for esrd beneficiaries.--The fee schedule
amount otherwise applicable under the preceding
provisions of this subsection shall be reduced by 10
percent for ambulance services furnished during the
period beginning on October 1, 2013, and ending on
September 30, 2018, and by 23 percent for such services
furnished on or after October 1, 2018, consisting of
non-emergency basic life support services involving
transport of an individual with end-stage renal disease
for renal dialysis services (as described in section
1881(b)(14)(B)) furnished other than on an emergency
basis by a provider of services or a renal dialysis
facility.
(16) Prior authorization for repetitive scheduled
non-emergent ambulance transports.--
(A) In general.--Beginning January 1, 2017,
if the expansion to all States of the model of
prior authorization described in paragraph (2)
of section 515(a) of the Medicare Access and
CHIP Reauthorization Act of 2015 meets the
requirements described in paragraphs (1)
through (3) of section 1115A(c), then the
Secretary shall expand such model to all
States.
(B) Funding.--The Secretary shall use funds
made available under section 1893(h)(10) to
carry out this paragraph.
(C) Clarification regarding budget
neutrality.--Nothing in this paragraph may be
construed to limit or modify the application of
section 1115A(b)(3)(B) to models described in
such section, including with respect to the
model described in subparagraph (A) and
expanded beginning on January 1, 2017, under
such subparagraph.
(17) Submission of cost and other information.--
(A) Development of data collection system.--
The Secretary shall develop a data collection
system (which may include use of a cost survey)
to collect cost, revenue, utilization, and
other information determined appropriate by the
Secretary with respect to providers of services
(in this paragraph referred to as
``providers'') and suppliers of ground
ambulance services. Such system shall be
designed to collect information--
(i) needed to evaluate the extent to
which reported costs relate to payment
rates under this subsection;
(ii) on the utilization of capital
equipment and ambulance capacity,
including information consistent with
the type of information described in
section 1121(a); and
(iii) on different types of ground
ambulance services furnished in
different geographic locations,
including rural areas and low
population density areas described in
paragraph (12).
(B) Specification of data collection
system.--
(i) In general.--The Secretary
shall--
(I) not later than December
31, 2019, specify the data
collection system under
subparagraph (A); and
(II) identify the providers
and suppliers of ground
ambulance services that would
be required to submit
information under such data
collection system, including
the representative sample
described in clause (ii).
(ii) Determination of representative
sample.--
(I) In general.--Not later
than December 31, 2019, with
respect to the data collection
for the first year under such
system, and for each subsequent
year through 2024, the
Secretary shall determine a
representative sample to submit
information under the data
collection system.
(II) Requirements.--The
sample under subclause (I)
shall be representative of the
different types of providers
and suppliers of ground
ambulance services (such as
those providers and suppliers
that are part of an emergency
service or part of a government
organization) and the
geographic locations in which
ground ambulance services are
furnished (such as urban,
rural, and low population
density areas).
(III) Limitation.--The
Secretary shall not include an
individual provider or supplier
of ground ambulance services in
the sample under subclause (I)
in 2 consecutive years, to the
extent practicable.
(C) Reporting of cost information.--For each
year, a provider or supplier of ground
ambulance services identified by the Secretary
under subparagraph (B)(i)(II) as being required
to submit information under the data collection
system with respect to a period for the year
shall submit to the Secretary information
specified under the system. Such information
shall be submitted in a form and manner, and at
a time, specified by the Secretary for purposes
of this subparagraph.
(D) Payment reduction for failure to
report.--
(i) In general.--Beginning January 1,
2022, subject to clause (ii), a 10
percent reduction to payments under
this subsection shall be made for the
applicable period (as defined in clause
(ii)) to a provider or supplier of
ground ambulance services that--
(I) is required to submit
information under the data
collection system with respect
to a period under subparagraph
(C); and
(II) does not sufficiently
submit such information, as
determined by the Secretary.
(ii) Applicable period defined.--For
purposes of clause (i), the term
``applicable period'' means, with
respect to a provider or supplier of
ground ambulance services, a year
specified by the Secretary not more
than 2 years after the end of the
period with respect to which the
Secretary has made a determination
under clause (i)(II) that the provider
or supplier of ground ambulance
services failed to sufficiently submit
information under the data collection
system.
(iii) Hardship exemption.--The
Secretary may exempt a provider or
supplier from the payment reduction
under clause (i) with respect to an
applicable period in the event of
significant hardship, such as a natural
disaster, bankruptcy, or other similar
situation that the Secretary determines
interfered with the ability of the
provider or supplier of ground
ambulance services to submit such
information in a timely manner for the
specified period.
(iv) Informal review.--The Secretary
shall establish a process under which a
provider or supplier of ground
ambulance services may seek an informal
review of a determination that the
provider or supplier is subject to the
payment reduction under clause (i).
(E) Ongoing data collection.--
(i) Revision of data collection
system.--The Secretary may, as the
Secretary determines appropriate and,
if available, taking into consideration
the report (or reports) under
subparagraph (F), revise the data
collection system under subparagraph
(A).
(ii) Subsequent data collection.--In
order to continue to evaluate the
extent to which reported costs relate
to payment rates under this subsection
and for other purposes the Secretary
deems appropriate, the Secretary shall
require providers and suppliers of
ground ambulance services to submit
information for years after 2024 as the
Secretary determines appropriate, but
in no case less often than once every 3
years.
(F) Ground ambulance data collection system
study.--
(i) In general.--Not later than the
second June 15th following the date on
which the Secretary transmits data for
the first representative sample of
providers and suppliers of ground
ambulance services to the Medicare
Payment Advisory Commission, and as
determined necessary by such Commission
thereafter,, such Commission shall
assess, and submit to Congress a report
on, information submitted by providers
and suppliers of ground ambulance
services through the data collection
system under subparagraph (A), the
adequacy of payments for ground
ambulance services under this
subsection, and geographic variations
in the cost of furnishing such
services.
(ii) Contents.--A report under clause
(i) shall contain the following:
(I) An analysis of
information submitted through
the data collection system.
(II) An analysis of any
burden on providers and
suppliers of ground ambulance
services associated with the
data collection system.
(III) A recommendation as to
whether information should
continue to be submitted
through such data collection
system or if such system should
be revised under subparagraph
(E)(i).
(IV) Other information
determined appropriate by the
Commission.
(G) Public availability.--The Secretary shall
post information on the results of the data
collection under this paragraph on the Internet
website of the Centers for Medicare & Medicaid
Services, as determined appropriate by the
Secretary.
(H) Implementation.--The Secretary shall
implement this paragraph through notice and
comment rulemaking.
(I) Administration.--Chapter 35 of title 44,
United States Code, shall not apply to the
collection of information required under this
subsection.
(J) Limitations on review.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise of the data
collection system or identification of
respondents under this paragraph.
(K) Funding for implementation.--For purposes
of carrying out subparagraph (A), the Secretary
shall provide for the transfer, from the
Federal Supplementary Medical Insurance Trust
Fund under section 1841, of $15,000,000 to the
Centers for Medicare & Medicaid Services
Program Management Account for fiscal year
2018. Amounts transferred under this
subparagraph shall remain available until
expended.
(m) Payment for Telehealth Services.--
(1) In general.--Subject to paragraphs (8) and (9),
the Secretary shall pay for telehealth services that
are furnished via a telecommunications system by a
physician (as defined in section 1861(r)) or a
practitioner (as defined in paragraph (4)(E)) to an
eligible telehealth individual enrolled under this part
notwithstanding that the individual physician or
practitioner providing the telehealth service is not at
the same location as the beneficiary. For purposes of
the preceding sentence, in the case of any Federal
telemedicine demonstration program conducted in Alaska
or Hawaii, the term ``telecommunications system''
includes store-and-forward technologies that provide
for the asynchronous transmission of health care
information in single or multimedia formats.
(2) Payment amount.--
(A) Distant site.--Subject to paragraph (8),
the Secretary shall pay to a physician or
practitioner located at a distant site that
furnishes a telehealth service to an eligible
telehealth individual an amount equal to the
amount that such physician or practitioner
would have been paid under this title had such
service been furnished without the use of a
telecommunications system.
(B) Facility fee for originating site.--
(i) In general.--Subject to clauses
(ii) and (iii) and paragraph (6)(C),
with respect to a telehealth service,
subject to section 1833(a)(1)(U), there
shall be paid to the originating site a
facility fee equal to--
(I) for the period beginning
on October 1, 2001, and ending
on December 31, 2001, and for
2002, $20; and
(II) for a subsequent year,
the facility fee specified in
subclause (I) or this subclause
for the preceding year
increased by the percentage
increase in the MEI (as defined
in section 1842(i)(3)) for such
subsequent year.
(ii) No facility fee if originating
site is the home.--No facility fee
shall be paid under this subparagraph
to an originating site described in
paragraph (4)(C)(ii)(X).
(iii) No facility fee for new
sites.--In the case that the emergency
period described in section
1135(g)(1)(B) ends before December 31,
2024, with respect to telehealth
services identified in paragraph
(4)(F)(i) as of the date of the
enactment of this clause that are
furnished during the period beginning
on the first day after the end of such
emergency period and [ending December
31, 2024] ending December 31, 2026, a
facility fee shall only be paid under
this subparagraph to an originating
site that is described in paragraph
(4)(C)(ii) (other than subclause (X) of
such paragraph).
(C) Telepresenter not required.--Nothing in
this subsection shall be construed as requiring
an eligible telehealth individual to be
presented by a physician or practitioner at the
originating site for the furnishing of a
service via a telecommunications system, unless
it is medically necessary (as determined by the
physician or practitioner at the distant site).
(3) Limitation on beneficiary charges.--
(A) Physician and practitioner.--The
provisions of section 1848(g) and subparagraphs
(A) and (B) of section 1842(b)(18) shall apply
to a physician or practitioner receiving
payment under this subsection in the same
manner as they apply to physicians or
practitioners under such sections.
(B) Originating site.--The provisions of
section 1842(b)(18) shall apply to originating
sites receiving a facility fee in the same
manner as they apply to practitioners under
such section.
(4) Definitions.--For purposes of this subsection:
(A) Distant site.--Subject to paragraph (8),
the term``distant site'' means the site at
which the physician or practitioner is located
at the time the service is provided via a
telecommunications system.
(B) Eligible telehealth individual.--The term
``eligible telehealth individual'' means an
individual enrolled under this part who
receives a telehealth service furnished at an
originating site.
(C) Originating site.--
(i) In general.--Except as provided
in clause (iii) and paragraphs (5),
(6), and (7), the term``originating
site'' means only those sites described
in clause (ii) at which the eligible
telehealth individual is located at the
time the service is furnished via a
telecommunications system and only if
such site is located--
(I) in an area that is
designated as a rural health
professional shortage area
under section 332(a)(1)(A) of
the Public Health Service Act
(42 U.S.C. 254e(a)(1)(A));
(II) in a county that is not
included in a Metropolitan
Statistical Area; or
(III) from an entity that
participates in a Federal
telemedicine demonstration
project that has been approved
by (or receives funding from)
the Secretary of Health and
Human Services as of December
31, 2000.
(ii) Sites described.--The sites
referred to in clause (i) are the
following sites:
(I) The office of a physician
or practitioner.
(II) A critical access
hospital (as defined in section
1861(mm)(1)).
(III) A rural health clinic
(as defined in section
1861(aa)(2)).
(IV) A Federally qualified
health center (as defined in
section 1861(aa)(4)).
(V) A hospital (as defined in
section 1861(e)).
(VI) A hospital-based or
critical access hospital-based
renal dialysis center
(including satellites).
(VII) A skilled nursing
facility (as defined in section
1819(a)).
(VIII) A community mental
health center (as defined in
section 1861(ff)(3)(B)).
(IX) A renal dialysis
facility, but only for purposes
of section 1881(b)(3)(B).
(X) The home of an
individual, but only for
purposes of section
1881(b)(3)(B) or telehealth
services described in paragraph
(7).
(XI) A rural emergency
hospital (as defined in section
1861(kkk)(2)).
(iii) Expanding access to telehealth
services.--In the case that the
emergency period described in section
1135(g)(1)(B) ends before December 31,
2024, with respect to telehealth
services identified in subparagraph
(F)(i) as of the date of the enactment
of this clause that are furnished
during the period beginning on the
first day after the end of such
emergency period and [ending on
December 31, 2024] ending on December
31, 2026, the term ``originating site''
means any site in the United States at
which the eligible telehealth
individual is located at the time the
service is furnished via a
telecommunications system, including
the home of an individual.
(D) Physician.--The term ``physician'' has
the meaning given that term in section 1861(r).
(E) Practitioner.--The term ``practitioner''
has the meaning given that term in section
1842(b)(18)(C) and, in the case that the
emergency period described in section
1135(g)(1)(B) ends before December 31, 2024,
for the period beginning on the first day after
the end of such emergency period and [ending on
December 31, 2024] ending on December 31, 2026,
shall include a qualified occupational
therapist (as such term is used in section
1861(g)), a qualified physical therapist (as
such term is used in section 1861(p)), a
qualified speech-language pathologist (as
defined in section 1861(ll)(4)(A)), and a
qualified audiologist (as defined in section
1861(ll)(4)(B)).
(F) Telehealth service.--
(i) In general.--Subject to paragraph
(8), the term``telehealth service''
means professional consultations,
office visits, and office psychiatry
services (identified as of July 1,
2000, by HCPCS codes 99241-99275,
99201-99215, 90804-90809, and 90862
(and as subsequently modified by the
Secretary)), and any additional service
specified by the Secretary.
(ii) Yearly update.--The Secretary
shall establish a process that
provides, on an annual basis, for the
addition or deletion of services (and
HCPCS codes), as appropriate, to those
specified in clause (i) for authorized
payment under paragraph (1).
(5) Treatment of home dialysis monthly esrd-related
visit.--The geographic requirements described in
paragraph (4)(C)(i) shall not apply with respect to
telehealth services furnished on or after January 1,
2019, for purposes of section 1881(b)(3)(B), at an
originating site described in subclause (VI), (IX), or
(X) of paragraph (4)(C)(ii).
(6) Treatment of stroke telehealth services.--
(A) Non-application of originating site
requirements.--The requirements described in
paragraph (4)(C) shall not apply with respect
to telehealth services furnished on or after
January 1, 2019, for purposes of diagnosis,
evaluation, or treatment of symptoms of an
acute stroke, as determined by the Secretary.
(B) Inclusion of certain sites.--With respect
to telehealth services described in
subparagraph (A), the term ``originating site''
shall include any hospital (as defined in
section 1861(e)) or critical access hospital
(as defined in section 1861(mm)(1)), any mobile
stroke unit (as defined by the Secretary), or
any other site determined appropriate by the
Secretary, at which the eligible telehealth
individual is located at the time the service
is furnished via a telecommunications system.
(C) No originating site facility fee for new
sites.--No facility fee shall be paid under
paragraph (2)(B) to an originating site with
respect to a telehealth service described in
subparagraph (A) if the originating site does
not otherwise meet the requirements for an
originating site under paragraph (4)(C).
(7) Treatment of substance use disorder services and
mental health services furnished through telehealth.--
(A) In general.--The geographic requirements
described in paragraph (4)(C)(i) shall not
apply with respect to telehealth services
furnished on or after July 1, 2019, to an
eligible telehealth individual with a substance
use disorder diagnosis for purposes of
treatment of such disorder or co-occurring
mental health disorder, as determined by the
Secretary, or, on or after the first day after
the end of the emergency period described in
section 1135(g)(1)(B), subject to subparagraph
(B), to an eligible telehealth individual for
purposes of diagnosis, evaluation, or treatment
of a mental health disorder, as determined by
the Secretary, at an originating site described
in paragraph (4)(C)(ii) (other than an
originating site described in subclause (IX) of
such paragraph) or, for the period for which
clause (iii) of paragraph (4)(C) applies, at
any site described in such clause.
(B) Requirements for mental health services
furnished through telehealth.--
(i) In general.--Payment may not be
made under this paragraph for
telehealth services furnished [on or
after the day that is the 152nd day
after the end of the emergency period
described in section 1135(g)(1)(B))] on
or after January 1, 2027 by a physician
or practitioner to an eligible
telehealth individual for purposes of
diagnosis, evaluation, or treatment of
a mental health disorder unless such
physician or practitioner furnishes an
item or service in person, without the
use of telehealth, for which payment is
made under this title (or would have
been made under this title if such
individual were entitled to, or
enrolled for, benefits under this title
at the time such item or service is
furnished)--
(I) within the 6-month period
prior to the first time such
physician or practitioner
furnishes such a telehealth
service to the eligible
telehealth individual; and
(II) during subsequent
periods in which such physician
or practitioner furnishes such
telehealth services to the
eligible telehealth individual,
at such times as the Secretary
determines appropriate.
(ii) Clarification.--This
subparagraph shall not apply if payment
would otherwise be allowed--
(I) under this paragraph
(with respect to telehealth
services furnished to an
eligible telehealth individual
with a substance use disorder
diagnosis for purposes of
treatment of such disorder or
co-occurring mental health
disorder); or
(II) under this subsection
without application of this
paragraph.
(8) Enhancing telehealth services for federally
qualified health centers and rural health clinics.--
(A) In general.--During the emergency period
described in section 1135(g)(1)(B) and, in the
case that such emergency period ends before
December 31, 2024, during the period beginning
on the first day after the end of such
emergency period and [ending on December 31,
2024] ending on December 31, 2026--
(i) the Secretary shall pay for
telehealth services that are furnished
via a telecommunications system by a
Federally qualified health center or a
rural health clinic to an eligible
telehealth individual enrolled under
this part notwithstanding that the
Federally qualified health center or
rural clinic providing the telehealth
service is not at the same location as
the beneficiary;
(ii) the amount of payment to a
Federally qualified health center or
rural health clinic that serves as a
distant site for such a telehealth
service shall be determined under
subparagraph (B); and
(iii) for purposes of this
subsection--
(I) the term ``distant site''
includes a Federally qualified
health center or rural health
clinic that furnishes a
telehealth service to an
eligible telehealth individual;
and
(II) the term ``telehealth
services'' includes a rural
health clinic service or
Federally qualified health
center service that is
furnished using telehealth to
the extent that payment codes
corresponding to services
identified by the Secretary
under clause (i) or (ii) of
paragraph (4)(F) are listed on
the corresponding claim for
such rural health clinic
service or Federally qualified
health center service.
(B) Special payment rule.--
(i) In general.--The Secretary shall
develop and implement payment methods
that apply under this subsection to a
Federally qualified health center or
rural health clinic that serves as a
distant site that furnishes a
telehealth service to an eligible
telehealth individual during the
periods for which subparagraph (A)
applies. Such payment methods shall be
based on payment rates that are similar
to the national average payment rates
for comparable telehealth services
under the physician fee schedule under
section 1848. Notwithstanding any other
provision of law, the Secretary may
implement such payment methods through
program instruction or otherwise.
(ii) Exclusion from fqhc pps
calculation and rhc air calculation.--
Costs associated with telehealth
services shall not be used to determine
the amount of payment for Federally
qualified health center services under
the prospective payment system under
section 1834(o) or for rural health
clinic services under the methodology
for all-inclusive rates (established by
the Secretary) under section
1833(a)(3).
(9) Treatment of telehealth services furnished using
audio-only telecommunications technology.--In the case
that the emergency period described in section
1135(g)(1)(B) ends before December 31, 2024, the
Secretary shall continue to provide coverage and
payment under this part for telehealth services
identified in paragraph (4)(F)(i) as of the date of the
enactment of this paragraph that are furnished via an
audio-only communications system during the period
beginning on the first day after the end of such
emergency period and [ending on December 31, 2024]
ending on December 31, 2026. For purposes of the
previous sentence, the term ``telehealth service''
means a telehealth service identified as of the date of
the enactment of this paragraph by a HCPCS code (and
any succeeding codes) for which the Secretary has not
applied the requirements of paragraph (1) and the first
sentence of section 410.78(a)(3) of title 42, Code of
Federal Regulations, during such emergency period.
(n) Authority To Modify or Eliminate Coverage of Certain
Preventive Services.--Notwithstanding any other provision of
this title, effective beginning on January 1, 2010, if the
Secretary determines appropriate, the Secretary may--
(1) modify--
(A) the coverage of any preventive service
described in subparagraph (A) of section
1861(ddd)(3) to the extent that such
modification is consistent with the
recommendations of the United States Preventive
Services Task Force; and
(B) the services included in the initial
preventive physical examination described in
subparagraph (B) of such section; and
(2) provide that no payment shall be made under this
title for a preventive service described in
subparagraph (A) of such section that has not received
a grade of A, B, C, or I by such Task Force.
(o) Development and Implementation of Prospective Payment
System.--
(1) Development.--
(A) In general.--The Secretary shall develop
a prospective payment system for payment for
Federally qualified health center services
furnished by Federally qualified health centers
under this title. Such system shall include a
process for appropriately describing the
services furnished by Federally qualified
health centers and shall establish payment
rates for specific payment codes based on such
appropriate descriptions of services. Such
system shall be established to take into
account the type, intensity, and duration of
services furnished by Federally qualified
health centers. Such system may include
adjustments, including geographic adjustments,
determined appropriate by the Secretary.
(B) Collection of data and evaluation.--By
not later than January 1, 2011, the Secretary
shall require Federally qualified health
centers to submit to the Secretary such
information as the Secretary may require in
order to develop and implement the prospective
payment system under this subsection, including
the reporting of services using HCPCS codes.
(2) Implementation.--
(A) In general.--Notwithstanding section
1833(a)(3)(A), the Secretary shall provide, for
cost reporting periods beginning on or after
October 1, 2014, for payments of prospective
payment rates for Federally qualified health
center services furnished by Federally
qualified health centers under this title in
accordance with the prospective payment system
developed by the Secretary under paragraph (1).
(B) Payments.--
(i) Initial payments.--The Secretary
shall implement such prospective
payment system so that the estimated
aggregate amount of prospective payment
rates (determined prior to the
application of section 1833(a)(1)(Z))
under this title for Federally
qualified health center services in the
first year that such system is
implemented is equal to 100 percent of
the estimated amount of reasonable
costs (determined without the
application of a per visit payment
limit or productivity screen and prior
to the application of section
1866(a)(2)(A)(ii)) that would have
occurred for such services under this
title in such year if the system had
not been implemented.
(ii) Payments in subsequent years.--
Payment rates in years after the year
of implementation of such system shall
be the payment rates in the previous
year increased--
(I) in the first year after
implementation of such system,
by the percentage increase in
the MEI (as defined in section
1842(i)(3)) for the year
involved; and
(II) in subsequent years, by
the percentage increase in a
market basket of Federally
qualified health center goods
and services as promulgated
through regulations, or if such
an index is not available, by
the percentage increase in the
MEI (as defined in section
1842(i)(3)) for the year
involved.
(C) Preparation for pps implementation.--
Notwithstanding any other provision of law, the
Secretary may establish and implement by
program instruction or otherwise the payment
codes to be used under the prospective payment
system under this section.
(3) Additional payments for certain fqhcs with
physicians or other practitioners receiving data 2000
waivers.--
(A) In general.--In the case of a Federally
qualified health center with respect to which,
beginning on or after January 1, 2019,
Federally qualified health center services (as
defined in section 1861(aa)(3)) are furnished
for the treatment of opioid use disorder by a
physician or practitioner who meets the
requirements described in subparagraph (C), the
Secretary shall, subject to availability of
funds under subparagraph (D), make a payment
(at such time and in such manner as specified
by the Secretary) to such Federally qualified
health center after receiving and approving an
application submitted by such Federally
qualified health center under subparagraph (B).
Such a payment shall be in an amount determined
by the Secretary, based on an estimate of the
average costs of training for purposes of
receiving a waiver described in subparagraph
(C)(ii). Such a payment may be made only one
time with respect to each such physician or
practitioner.
(B) Application.--In order to receive a
payment described in subparagraph (A), a
Federally qualified health center shall submit
to the Secretary an application for such a
payment at such time, in such manner, and
containing such information as specified by the
Secretary. A Federally qualified health center
may apply for such a payment for each physician
or practitioner described in subparagraph (A)
furnishing services described in such
subparagraph at such center.
(C) Requirements.--For purposes of
subparagraph (A), the requirements described in
this subparagraph, with respect to a physician
or practitioner, are the following:
(i) The physician or practitioner is
employed by or working under contract
with a Federally qualified health
center described in subparagraph (A)
that submits an application under
subparagraph (B).
(ii) The physician or practitioner
first receives a waiver under section
303(h) of the Controlled Substances Act
on or after January 1, 2019.
(D) Funding.--For purposes of making payments
under this paragraph, there are appropriated,
out of amounts in the Treasury not otherwise
appropriated, $6,000,000, which shall remain
available until expended.
(4) Payment for certain services furnished by
federally qualified health centers.--
(A) Attending physician services for hospice
patients.--In the case of services described in
section?1812(d)(2)(A)(ii) furnished on or after
January 1, 2022, by an attending physician (as
defined in section 1861(dd)(3)(B), other than a
physician or practitioner who is employed by a
hospice program) who is employed by or working
under contract with a Federally qualified
health center, a Federally qualified health
center shall be paid for such services under
the prospective payment system under this
subsection.
(B) Mental health visits furnished via
telecommunications technology.--In the case of
mental health visits furnished via interactive,
real-time, audio and video telecommunications
technology or audio-only interactions, the in-
person mental health visit requirements
established under section 405.2463(b)(3) of
title 42 of the Code of Federal Regulations (or
a successor regulation) shall not apply prior
to [January 1, 2025 (or, if later, the first
day after the end of the emergency period
described in section 1135(g)(1)(B)).] January
1, 2027.
(5) Special payment rule for intensive outpatient
services.--
(A) In general.--In the case of intensive
outpatient services furnished by a Federally
qualified health center, the payment amount for
such services shall be equal to the amount that
would have been paid under this title for such
services had such services been covered OPD
services furnished by a hospital.
(B) Exclusion.--Costs associated with
intensive outpatient services shall not be used
to determine the amount of payment for
Federally qualified health center services
under the prospective payment system under this
subsection.
(p) Quality Incentives To Promote Patient Safety and Public
Health in Computed Tomography.--
(1) Quality incentives.--In the case of an applicable
computed tomography service (as defined in paragraph
(2)) for which payment is made under an applicable
payment system (as defined in paragraph (3)) and that
is furnished on or after January 1, 2016, using
equipment that is not consistent with the CT equipment
standard (described in paragraph (4)), the payment
amount for such service shall be reduced by the
applicable percentage (as defined in paragraph (5)).
(2) Applicable computed tomography services
defined.--In this subsection, the term ``applicable
computed tomography service'' means a service billed
using diagnostic radiological imaging codes for
computed tomography (identified as of January 1, 2014,
by HCPCS codes 70450-70498, 71250-71275, 72125-72133,
72191-72194, 73200-73206, 73700-73706, 74150-74178,
74261-74263, and 75571-75574 (and any succeeding
codes).
(3) Applicable payment system defined.--In this
subsection, the term ``applicable payment system''
means the following:
(A) The technical component and the technical
component of the global fee under the fee
schedule established under section 1848(b).
(B) The prospective payment system for
hospital outpatient department services under
section 1833(t).
(4) Consistency with ct equipment standard.--In this
subsection, the term ``not consistent with the CT
equipment standard'' means, with respect to an
applicable computed tomography service, that the
service was furnished using equipment that does not
meet each of the attributes of the National Electrical
Manufacturers Association (NEMA) Standard XR-29-2013,
entitled ``Standard Attributes on CT Equipment Related
to Dose Optimization and Management''. Through
rulemaking, the Secretary may apply successor
standards.
(5) Applicable percentage defined.--In this
subsection, the term ``applicable percentage'' means--
(A) for 2016, 5 percent; and
(B) for 2017 and subsequent years, 15
percent.
(6) Implementation.--
(A) Information.--The Secretary shall require
that information be provided and attested to by
a supplier and a hospital outpatient department
that indicates whether an applicable computed
tomography service was furnished that was not
consistent with the CT equipment standard
(described in paragraph (4)). Such information
may be included on a claim and may be a
modifier. Such information shall be verified,
as appropriate, as part of the periodic
accreditation of suppliers under section
1834(e) and hospitals under section 1865(a).
(B) Administration.--Chapter 35 of title 44,
United States Code, shall not apply to
information described in subparagraph (A).
(q) Recognizing Appropriate Use Criteria for Certain Imaging
Services.--
(1) Program established.--
(A) In general.--The Secretary shall
establish a program to promote the use of
appropriate use criteria (as defined in
subparagraph (B)) for applicable imaging
services (as defined in subparagraph (C))
furnished in an applicable setting (as defined
in subparagraph (D)) by ordering professionals
and furnishing professionals (as defined in
subparagraphs (E) and (F), respectively).
(B) Appropriate use criteria defined.--In
this subsection, the term ``appropriate use
criteria'' means criteria, only developed or
endorsed by national professional medical
specialty societies or other provider-led
entities, to assist ordering professionals and
furnishing professionals in making the most
appropriate treatment decision for a specific
clinical condition for an individual. To the
extent feasible, such criteria shall be
evidence-based.
(C) Applicable imaging service defined.--In
this subsection, the term ``applicable imaging
service'' means an advanced diagnostic imaging
service (as defined in subsection (e)(1)(B))
for which the Secretary determines--
(i) one or more applicable
appropriate use criteria specified
under paragraph (2) apply;
(ii) there are one or more qualified
clinical decision support mechanisms
listed under paragraph (3)(C); and
(iii) one or more of such mechanisms
is available free of charge.
(D) Applicable setting defined.--In this
subsection, the term ``applicable setting''
means a physician's office, a hospital
outpatient department (including an emergency
department), an ambulatory surgical center, and
any other provider-led outpatient setting
determined appropriate by the Secretary.
(E) Ordering professional defined.--In this
subsection, the term ``ordering professional''
means a physician (as defined in section
1861(r)) or a practitioner described in section
1842(b)(18)(C) who orders an applicable imaging
service.
(F) Furnishing professional defined.--In this
subsection, the term ``furnishing
professional'' means a physician (as defined in
section 1861(r)) or a practitioner described in
section 1842(b)(18)(C) who furnishes an
applicable imaging service.
(2) Establishment of applicable appropriate use
criteria.--
(A) In general.--Not later than November 15,
2015, the Secretary shall through rulemaking,
and in consultation with physicians,
practitioners, and other stakeholders, specify
applicable appropriate use criteria for
applicable imaging services only from among
appropriate use criteria developed or endorsed
by national professional medical specialty
societies or other provider-led entities.
(B) Considerations.--In specifying applicable
appropriate use criteria under subparagraph
(A), the Secretary shall take into account
whether the criteria--
(i) have stakeholder consensus;
(ii) are scientifically valid and
evidence based; and
(iii) are based on studies that are
published and reviewable by
stakeholders.
(C) Revisions.--The Secretary shall review,
on an annual basis, the specified applicable
appropriate use criteria to determine if there
is a need to update or revise (as appropriate)
such specification of applicable appropriate
use criteria and make such updates or revisions
through rulemaking.
(D) Treatment of multiple applicable
appropriate use criteria.--In the case where
the Secretary determines that more than one
appropriate use criterion applies with respect
to an applicable imaging service, the Secretary
shall apply one or more applicable appropriate
use criteria under this paragraph for the
service.
(3) Mechanisms for consultation with applicable
appropriate use criteria.--
(A) Identification of mechanisms to consult
with applicable appropriate use criteria.--
(i) In general.--The Secretary shall
specify qualified clinical decision
support mechanisms that could be used
by ordering professionals to consult
with applicable appropriate use
criteria for applicable imaging
services.
(ii) Consultation.--The Secretary
shall consult with physicians,
practitioners, health care technology
experts, and other stakeholders in
specifying mechanisms under this
paragraph.
(iii) Inclusion of certain
mechanisms.--Mechanisms specified under
this paragraph may include any or all
of the following that meet the
requirements described in subparagraph
(B)(ii):
(I) Use of clinical decision
support modules in certified
EHR technology (as defined in
section 1848(o)(4)).
(II) Use of private sector
clinical decision support
mechanisms that are independent
from certified EHR technology,
which may include use of
clinical decision support
mechanisms available from
medical specialty
organizations.
(III) Use of a clinical
decision support mechanism
established by the Secretary.
(B) Qualified clinical decision support
mechanisms.--
(i) In general.--For purposes of this
subsection, a qualified clinical
decision support mechanism is a
mechanism that the Secretary determines
meets the requirements described in
clause (ii).
(ii) Requirements.--The requirements
described in this clause are the
following:
(I) The mechanism makes
available to the ordering
professional applicable
appropriate use criteria
specified under paragraph (2)
and the supporting
documentation for the
applicable imaging service
ordered.
(II) In the case where there
is more than one applicable
appropriate use criterion
specified under such paragraph
for an applicable imaging
service, the mechanism
indicates the criteria that it
uses for the service.
(III) The mechanism
determines the extent to which
an applicable imaging service
ordered is consistent with the
applicable appropriate use
criteria so specified.
(IV) The mechanism generates
and provides to the ordering
professional a certification or
documentation that documents
that the qualified clinical
decision support mechanism was
consulted by the ordering
professional.
(V) The mechanism is updated
on a timely basis to reflect
revisions to the specification
of applicable appropriate use
criteria under such paragraph.
(VI) The mechanism meets
privacy and security standards
under applicable provisions of
law.
(VII) The mechanism performs
such other functions as
specified by the Secretary,
which may include a requirement
to provide aggregate feedback
to the ordering professional.
(C) List of mechanisms for consultation with
applicable appropriate use criteria.--
(i) Initial list.--Not later than
April 1, 2016, the Secretary shall
publish a list of mechanisms specified
under this paragraph.
(ii) Periodic updating of list.--The
Secretary shall identify on an annual
basis the list of qualified clinical
decision support mechanisms specified
under this paragraph.
(4) Consultation with applicable appropriate use
criteria.--
(A) Consultation by ordering professional.--
Beginning with January 1, 2017, subject to
subparagraph (C), with respect to an applicable
imaging service ordered by an ordering
professional that would be furnished in an
applicable setting and paid for under an
applicable payment system (as defined in
subparagraph (D)), an ordering professional
shall--
(i) consult with a qualified decision
support mechanism listed under
paragraph (3)(C); and
(ii) provide to the furnishing
professional the information described
in clauses (i) through (iii) of
subparagraph (B).
(B) Reporting by furnishing professional.--
Beginning with January 1, 2017, subject to
subparagraph (C), with respect to an applicable
imaging service furnished in an applicable
setting and paid for under an applicable
payment system (as defined in subparagraph
(D)), payment for such service may only be made
if the claim for the service includes the
following:
(i) Information about which qualified
clinical decision support mechanism was
consulted by the ordering professional
for the service.
(ii) Information regarding--
(I) whether the service
ordered would adhere to the
applicable appropriate use
criteria specified under
paragraph (2);
(II) whether the service
ordered would not adhere to
such criteria; or
(III) whether such criteria
was not applicable to the
service ordered.
(iii) The national provider
identifier of the ordering professional
(if different from the furnishing
professional).
(C) Exceptions.--The provisions of
subparagraphs (A) and (B) and paragraph (6)(A)
shall not apply to the following:
(i) Emergency services.--An
applicable imaging service ordered for
an individual with an emergency medical
condition (as defined in section
1867(e)(1)).
(ii) Inpatient services.--An
applicable imaging service ordered for
an inpatient and for which payment is
made under part A.
(iii) Significant hardship.--An
applicable imaging service ordered by
an ordering professional who the
Secretary may, on a case-by-case basis,
exempt from the application of such
provisions if the Secretary determines,
subject to annual renewal, that
consultation with applicable
appropriate use criteria would result
in a significant hardship, such as in
the case of a professional who
practices in a rural area without
sufficient Internet access.
(D) Applicable payment system defined.--In
this subsection, the term ``applicable payment
system'' means the following:
(i) The physician fee schedule
established under section 1848(b).
(ii) The prospective payment system
for hospital outpatient department
services under section 1833(t).
(iii) The ambulatory surgical center
payment systems under section 1833(i).
(5) Identification of outlier ordering
professionals.--
(A) In general.--With respect to applicable
imaging services furnished beginning with 2017,
the Secretary shall determine, on an annual
basis, no more than five percent of the total
number of ordering professionals who are
outlier ordering professionals.
(B) Outlier ordering professionals.--The
determination of an outlier ordering
professional shall--
(i) be based on low adherence to
applicable appropriate use criteria
specified under paragraph (2), which
may be based on comparison to other
ordering professionals; and
(ii) include data for ordering
professionals for whom prior
authorization under paragraph (6)(A)
applies.
(C) Use of two years of data.--The Secretary
shall use two years of data to identify outlier
ordering professionals under this paragraph.
(D) Process.--The Secretary shall establish a
process for determining when an outlier
ordering professional is no longer an outlier
ordering professional.
(E) Consultation with stakeholders.--The
Secretary shall consult with physicians,
practitioners and other stakeholders in
developing methods to identify outlier ordering
professionals under this paragraph.
(6) Prior authorization for ordering professionals
who are outliers.--
(A) In general.--Beginning January 1, 2020,
subject to paragraph (4)(C), with respect to
services furnished during a year, the Secretary
shall, for a period determined appropriate by
the Secretary, apply prior authorization for
applicable imaging services that are ordered by
an outlier ordering professional identified
under paragraph (5).
(B) Appropriate use criteria in prior
authorization.--In applying prior authorization
under subparagraph (A), the Secretary shall
utilize only the applicable appropriate use
criteria specified under this subsection.
(C) Funding.--For purposes of carrying out
this paragraph, the Secretary shall provide for
the transfer, from the Federal Supplementary
Medical Insurance Trust Fund under section
1841, of $5,000,000 to the Centers for Medicare
& Medicaid Services Program Management Account
for each of fiscal years 2019 through 2021.
Amounts transferred under the preceding
sentence shall remain available until expended.
(7) Construction.--Nothing in this subsection shall
be construed as granting the Secretary the authority to
develop or initiate the development of clinical
practice guidelines or appropriate use criteria.
(r) Payment for Renal Dialysis Services for Individuals With
Acute Kidney Injury.--
(1) Payment rate.--In the case of renal dialysis
services (as defined in subparagraph (B) of section
1881(b)(14)) furnished under this part by a renal
dialysis facility or provider of services paid under
such section during a year (beginning with 2017) to an
individual with acute kidney injury (as defined in
paragraph (2)), the amount of payment under this part
for such services shall be the base rate for renal
dialysis services determined for such year under such
section, as adjusted by any applicable geographic
adjustment factor applied under subparagraph
(D)(iv)(II) of such section and may be adjusted by the
Secretary (on a budget neutral basis for payments under
this paragraph) by any other adjustment factor under
subparagraph (D) of such section.
(2) Individual with acute kidney injury defined.--In
this subsection, the term ``individual with acute
kidney injury'' means an individual who has acute loss
of renal function and does not receive renal dialysis
services for which payment is made under section
1881(b)(14).
(s) Payment for Applicable Disposable Devices.--
(1) Separate payment.--The Secretary shall make a
payment (separate from the payments otherwise made
under section 1895) in the amount established under
paragraph (3) to a home health agency for an applicable
disposable device (as defined in paragraph (2)) when
furnished on or after January 1, 2017, to an individual
who receives home health services for which payment is
made under section 1895(b).
(2) Applicable disposable device.--In this
subsection, the term applicable disposable device means
a disposable device that, as determined by the
Secretary, is--
(A) a disposable negative pressure wound
therapy device that is an integrated system
comprised of a non-manual vacuum pump, a
receptacle for collecting exudate, and
dressings for the purposes of wound therapy;
and
(B) a substitute for, and used in lieu of, a
negative pressure wound therapy durable medical
equipment item that is an integrated system of
a negative pressure vacuum pump, a separate
exudate collection canister, and dressings that
would otherwise be covered for individuals for
such wound therapy.
(3) Payment.--
(A) In general.--The separate payment amount
established under this paragraph for an
applicable disposable device for a year shall
be equal to--
(i) for a year before 2024, the
amount of the payment that would be
made under section 1833(t) (relating to
payment for covered OPD services) for
the year for the Level I Healthcare
Common Procedure Coding System (HCPCS)
code for which the description for a
professional service includes the
furnishing of such device;
(ii) for 2024, the supply price used
to determine the relative value for the
service under the fee schedule under
section 1848 (as of January 1, 2022)
for the applicable disposable device,
updated by the specified adjustment
described in subparagraph (B) for such
year; and
(iii) for 2025 and each subsequent
year, the payment amount established
under this paragraph for such device
for the previous year, updated by the
specified adjustment described in
subparagraph (B) for such year.
(B) Specified adjustment.--
(i) In general.--For purposes of
subparagraph (A), the specified
adjustment described in this
subparagraph for a year is equal to--
(I) the percentage increase
in the consumer price index for
all urban consumers (United
States city average) for the
12-month period ending in June
of the previous year; minus
(II) the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II) for such
year.
(ii) Clarification on application of
the productivity adjustment.--The
application of clause (i)(II) may
result in a specified adjustment of
less than 0.0 for a year, and may
result in the separate payment amount
under this subsection for an applicable
device for a year being less than such
separate payment amount for such device
for the preceding year.
(C) Exclusion of nursing and therapy services
from separate payment.--With respect to
applicable devices furnished on or after
January 1, 2024, the separate payment amount
determined under this paragraph shall not
include payment for nursing or therapy services
described in section 1861(m). Payment for such
nursing or therapy services shall be made under
the prospective payment system established
under section 1895 and shall not be separately
billable.
(4) Implementation.--As part of submitting claims for
the separate payment established under this subsection,
beginning with 2024, the Secretary shall accept and
process claims submitted using the type of bill that is
most commonly used by home health agencies to bill
services under a home health plan of care.
(t) Site-of-Service Price Transparency.--
(1) In general.--In order to facilitate price
transparency with respect to items and services for
which payment may be made either to a hospital
outpatient department or to an ambulatory surgical
center under this title, the Secretary shall, for 2018
and each year thereafter, make available to the public
via a searchable Internet website, with respect to an
appropriate number of such items and services--
(A) the estimated payment amount for the item
or service under the outpatient department fee
schedule under subsection (t) of section 1833
and the ambulatory surgical center payment
system under subsection (i) of such section;
and
(B) the estimated amount of beneficiary
liability applicable to the item or service.
(2) Calculation of estimated beneficiary liability.--
For purposes of paragraph (1)(B), the estimated amount
of beneficiary liability, with respect to an item or
service, is the amount for such item or service for
which an individual who does not have coverage under a
Medicare supplemental policy certified under section
1882 or any other supplemental insurance coverage is
responsible.
(3) Implementation.--In carrying out this subsection,
the Secretary--
(A) shall include in the notice described in
section 1804(a) a notification of the
availability of the estimated amounts made
available under paragraph (1); and
(B) may utilize mechanisms in existence on
the date of enactment of this subsection, such
as the portion of the Internet website of the
Centers for Medicare & Medicaid Services on
which information comparing physician
performance is posted (commonly referred to as
the Physician Compare Internet website), to
make available such estimated amounts under
such paragraph.
(4) Funding.--For purposes of implementing this
subsection, the Secretary shall provide for the
transfer, from the Federal Supplementary Medical
Insurance Trust Fund under section 1841 to the Centers
for Medicare & Medicaid Services Program Management
Account, of $6,000,000 for fiscal year 2017, to remain
available until expended.
(u) Payment and Related Requirements for Home Infusion
Therapy.--
(1) Payment.--
(A) Single payment.--
(i) In general.--Subject to clause
(iii) and subparagraphs (B) and (C),
the Secretary shall implement a payment
system under which a single payment is
made under this title to a qualified
home infusion therapy supplier for
items and services described in
subparagraphs (A) and (B) of section
1861(iii)(2)) furnished by a qualified
home infusion therapy supplier (as
defined in section 1861(iii)(3)(D)) in
coordination with the furnishing of
home infusion drugs (as defined in
section 1861(iii)(3)(C)) under this
part.
(ii) Unit of single payment.--A unit
of single payment under the payment
system implemented under this
subparagraph is for each infusion drug
administration calendar day in the
individual's home. The Secretary shall,
as appropriate, establish single
payment amounts for types of infusion
therapy, including to take into account
variation in utilization of nursing
services by therapy type.
(iii) Limitation.--The single payment
amount determined under this
subparagraph after application of
subparagraph (B) and paragraph (3)
shall not exceed the amount determined
under the fee schedule under section
1848 for infusion therapy services
furnished in a calendar day if
furnished in a physician office
setting, except such single payment
shall not reflect more than 5 hours of
infusion for a particular therapy in a
calendar day.
(B) Required adjustments.--The Secretary
shall adjust the single payment amount
determined under subparagraph (A) for home
infusion therapy services under section
1861(iii)(1) to reflect other factors such as--
(i) a geographic wage index and other
costs that may vary by region; and
(ii) patient acuity and complexity of
drug administration.
(C) Discretionary adjustments.--
(i) In general.--Subject to clause
(ii), the Secretary may adjust the
single payment amount determined under
subparagraph (A) (after application of
subparagraph (B)) to reflect outlier
situations and other factors as the
Secretary determines appropriate.
(ii) Requirement of budget
neutrality.--Any adjustment under this
subparagraph shall be made in a budget
neutral manner.
(2) Considerations.--In developing the payment system
under this subsection, the Secretary may consider the
costs of furnishing infusion therapy in the home,
consult with home infusion therapy suppliers, consider
payment amounts for similar items and services under
this part and part A, and consider payment amounts
established by Medicare Advantage plans under part C
and in the private insurance market for home infusion
therapy (including average per treatment day payment
amounts by type of home infusion therapy).
(3) Annual updates.--
(A) In general.--Subject to subparagraph (B),
the Secretary shall update the single payment
amount under this subsection from year to year
beginning in 2022 by increasing the single
payment amount from the prior year by the
percentage increase in the Consumer Price Index
for all urban consumers (United States city
average) for the 12-month period ending with
June of the preceding year.
(B) Adjustment.--For each year, the Secretary
shall reduce the percentage increase described
in subparagraph (A) by the productivity
adjustment described in section
1886(b)(3)(B)(xi)(II). The application of the
preceding sentence may result in a percentage
being less than 0.0 for a year, and may result
in payment being less than such payment rates
for the preceding year.
(4) Authority to apply prior authorization.--The
Secretary may, as determined appropriate by the
Secretary, apply prior authorization for home infusion
therapy services under section 1861(iii)(1).
(5) Accreditation of qualified home infusion therapy
suppliers.--
(A) Factors for designation of accreditation
organizations.--The Secretary shall consider
the following factors in designating
accreditation organizations under subparagraph
(B) and in reviewing and modifying the list of
accreditation organizations designated pursuant
to subparagraph (C):
(i) The ability of the organization
to conduct timely reviews of
accreditation applications.
(ii) The ability of the organization
to take into account the capacities of
suppliers located in a rural area (as
defined in section 1886(d)(2)(D)).
(iii) Whether the organization has
established reasonable fees to be
charged to suppliers applying for
accreditation.
(iv) Such other factors as the
Secretary determines appropriate.
(B) Designation.--Not later than January 1,
2021, the Secretary shall designate
organizations to accredit suppliers furnishing
home infusion therapy. The list of
accreditation organizations so designated may
be modified pursuant to subparagraph (C).
(C) Review and modification of list of
accreditation organizations.--
(i) In general.--The Secretary shall
review the list of accreditation
organizations designated under
subparagraph (B) taking into account
the factors under subparagraph (A).
Taking into account the results of such
review, the Secretary may, by
regulation, modify the list of
accreditation organizations designated
under subparagraph (B).
(ii) Special rule for accreditations
done prior to removal from list of
designated accreditation
organizations.--In the case where the
Secretary removes an organization from
the list of accreditation organizations
designated under subparagraph (B), any
supplier that is accredited by the
organization during the period
beginning on the date on which the
organization is designated as an
accreditation organization under
subparagraph (B) and ending on the date
on which the organization is removed
from such list shall be considered to
have been accredited by an organization
designated by the Secretary under
subparagraph (B) for the remaining
period such accreditation is in effect.
(D) Rule for accreditations made prior to
designation.--In the case of a supplier that is
accredited before January 1, 2021, by an
accreditation organization designated by the
Secretary under subparagraph (B) as of January
1, 2019, such supplier shall be considered to
have been accredited by an organization
designated by the Secretary under such
paragraph as of January 1, 2023, for the
remaining period such accreditation is in
effect.
(6) Notification of infusion therapy options
available prior to furnishing home infusion therapy.--
Prior to the furnishing of home infusion therapy to an
individual, the physician who establishes the plan
described in section 1861(iii)(1) for the individual
shall provide notification (in a form, manner, and
frequency determined appropriate by the Secretary) of
the options available (such as home, physician's
office, hospital outpatient department) for the
furnishing of infusion therapy under this part.
(7) Home infusion therapy services temporary
transitional payment.--
(A) Temporary transitional payment.--
(i) In general.--The Secretary shall,
in accordance with the payment
methodology described in subparagraph
(B) and subject to the provisions of
this paragraph, provide a home infusion
therapy services temporary transitional
payment under this part to an eligible
home infusion supplier (as defined in
subparagraph (F)) for items and
services described in subparagraphs (A)
and (B) of section 1861(iii)(2))
furnished during the period specified
in clause (ii) by such supplier in
coordination with the furnishing of
transitional home infusion drugs (as
defined in clause (iii)).
(ii) Period specified.--For purposes
of clause (i), the period specified in
this clause is the period beginning on
January 1, 2019, and ending on the day
before the date of the implementation
of the payment system under paragraph
(1)(A).
(iii) Transitional home infusion drug
defined.--For purposes of this
paragraph, the term ``transitional home
infusion drug'' has the meaning given
to the term ``home infusion drug''
under section 1861(iii)(3)(C)), except
that clause (ii) of such section shall
not apply if a drug described in such
clause is identified in clauses (i),
(ii), (iii) or (iv) of subparagraph (C)
as of the date of the enactment of this
paragraph.
(B) Payment methodology.--For purposes of
this paragraph, the Secretary shall establish a
payment methodology, with respect to items and
services described in subparagraph (A)(i).
Under such payment methodology the Secretary
shall--
(i) create the three payment
categories described in clauses (i),
(ii), and (iii) of subparagraph (C);
(ii) assign drugs to such categories,
in accordance with such clauses;
(iii) assign appropriate Healthcare
Common Procedure Coding System (HCPCS)
codes to each payment category; and
(iv) establish a single payment
amount for each such payment category,
in accordance with subparagraph (D),
for each infusion drug administration
calendar day in the individual's home
for drugs assigned to such category.
(C) Payment categories.--
(i) Payment category 1.--The
Secretary shall create a payment
category 1 and assign to such category
drugs which are covered under the Local
Coverage Determination on External
Infusion Pumps (LCD number L33794) and
billed with the following HCPCS codes
(as identified as of January 1, 2018,
and as subsequently modified by the
Secretary): J0133, J0285, J0287, J0288,
J0289, J0895, J1170, J1250, J1265,
J1325, J1455, J1457, J1570, J2175,
J2260, J2270, J2274, J2278, J3010, or
J3285.
(ii) Payment category 2.--The
Secretary shall create a payment
category 2 and assign to such category
drugs which are covered under such
local coverage determination and billed
with the following HCPCS codes (as
identified as of January 1, 2018, and
as subsequently modified by the
Secretary): J1555 JB, J1559 JB, J1561
JB, J1562 JB, J1569 JB, or J1575 JB.
(iii) Payment category 3.--The
Secretary shall create a payment
category 3 and assign to such category
drugs which are covered under such
local coverage determination and billed
with the following HCPCS codes (as
identified as of January 1, 2018, and
as subsequently modified by the
Secretary): J9000, J9039, J9040, J9065,
J9100, J9190, J9200, J9360, or J9370.
(iv) Infusion drugs not otherwise
included.--With respect to drugs that
are not included in payment category 1,
2, or 3 under clause (i), (ii), or
(iii), respectively, the Secretary
shall assign to the most appropriate of
such categories, as determined by the
Secretary, drugs which are--
(I) covered under such local
coverage determination and
billed under HCPCS codes J7799
or J7999 (as identified as of
July 1, 2017, and as
subsequently modified by the
Secretary); or
(II) billed under any code
that is implemented after the
date of the enactment of this
paragraph and included in such
local coverage determination or
included in subregulatory
guidance as a home infusion
drug described in subparagraph
(A)(i).
(D) Payment amounts.--
(i) In general.--Under the payment
methodology, the Secretary shall pay
eligible home infusion suppliers, with
respect to items and services described
in subparagraph (A)(i) furnished during
the period described in subparagraph
(A)(ii) by such supplier to an
individual, at amounts equal to the
amounts determined under the physician
fee schedule established under section
1848 for services furnished during the
year for codes and units of such codes
described in clauses (ii), (iii), and
(iv) with respect to drugs included in
the payment category under subparagraph
(C) specified in the respective clause,
determined without application of the
geographic adjustment under subsection
(e) of such section.
(ii) Payment amount for category 1.--
For purposes of clause (i), the codes
and units described in this clause,
with respect to drugs included in
payment category 1 described in
subparagraph (C)(i), are one unit of
HCPCS code 96365 plus three units of
HCPCS code 96366 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(iii) Payment amount for category
2.--For purposes of clause (i), the
codes and units described in this
clause, with respect to drugs included
in payment category 2 described in
subparagraph (C)(i), are one unit of
HCPCS code 96369 plus three units of
HCPCS code 96370 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(iv) Payment amount for category 3.--
For purposes of clause (i), the codes
and units described in this clause,
with respect to drugs included in
payment category 3 described in
subparagraph (C)(i), are one unit of
HCPCS code 96413 plus three units of
HCPCS code 96415 (as identified as of
January 1, 2018, and as subsequently
modified by the Secretary).
(E) Clarifications.--
(i) Infusion drug administration
day.--For purposes of this subsection,
with respect to the furnishing of
transitional home infusion drugs or
home infusion drugs to an individual by
an eligible home infusion supplier or a
qualified home infusion therapy
supplier, a reference to payment to
such supplier for an infusion drug
administration calendar day in the
individual's home shall refer to
payment only for the date on which
professional services (as described in
section 1861(iii)(2)(A)) were furnished
to administer such drugs to such
individual. For purposes of the
previous sentence, an infusion drug
administration calendar day shall
include all such drugs administered to
such individual on such day.
(ii) Treatment of multiple drugs
administered on same infusion drug
administration day.--In the case that
an eligible home infusion supplier,
with respect to an infusion drug
administration calendar day in an
individual's home, furnishes to such
individual transitional home infusion
drugs which are not all assigned to the
same payment category under
subparagraph (C), payment to such
supplier for such infusion drug
administration calendar day in the
individual's home shall be a single
payment equal to the amount of payment
under this paragraph for the drug,
among all such drugs so furnished to
such individual during such calendar
day, for which the highest payment
would be made under this paragraph.
(F) Eligible home infusion suppliers.--In
this paragraph, the term ``eligible home
infusion supplier'' means a supplier that is
enrolled under this part as a pharmacy that
provides external infusion pumps and external
infusion pump supplies and that maintains all
pharmacy licensure requirements in the State in
which the applicable infusion drugs are
administered.
(G) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(v) Payment for Outpatient Physical Therapy Services and
Outpatient Occupational Therapy Services Furnished by a Therapy
Assistant.--
(1) In general.--In the case of an outpatient
physical therapy service or outpatient occupational
therapy service furnished on or after January 1, 2022,
for which payment is made under section 1848 or
subsection (k), that is furnished in whole or in part
by a therapy assistant (as defined by the Secretary),
the amount of payment for such service shall be an
amount equal to 85 percent of the amount of payment
otherwise applicable for the service under this part.
Nothing in the preceding sentence shall be construed to
change applicable requirements with respect to such
services.
(2) Use of modifier.--
(A) Establishment.--Not later than January 1,
2019, the Secretary shall establish a modifier
to indicate (in a form and manner specified by
the Secretary), in the case of an outpatient
physical therapy service or outpatient
occupational therapy service furnished in whole
or in part by a therapy assistant (as so
defined), that the service was furnished by a
therapy assistant.
(B) Required use.--Each request for payment,
or bill submitted, for an outpatient physical
therapy service or outpatient occupational
therapy service furnished in whole or in part
by a therapy assistant (as so defined) on or
after January 1, 2020, shall include the
modifier established under subparagraph (A) for
each such service.
(3) Implementation.--The Secretary shall implement
this subsection through notice and comment rulemaking.
(w) Opioid Use Disorder Treatment Services.--
(1) In general.--The Secretary shall pay to an opioid
treatment program (as defined in paragraph (2) of
section 1861(jjj)) an amount that is equal to 100
percent of a bundled payment under this part for opioid
use disorder treatment services (as defined in
paragraph (1) of such section) that are furnished by
such program to an individual during an episode of care
(as defined by the Secretary) beginning on or after
January 1, 2020. The Secretary shall ensure, as
determined appropriate by the Secretary, that no
duplicative payments are made under this part or part D
for items and services furnished by an opioid treatment
program.
(2) Considerations.--The Secretary may implement this
subsection through one or more bundles based on the
type of medication provided (such as buprenorphine,
methadone, naltrexone, or a new innovative drug), the
frequency of services, the scope of services furnished,
characteristics of the individuals furnished such
services, or other factors as the Secretary determine
appropriate. In developing such bundles, the Secretary
may consider payment rates paid to opioid treatment
programs for comparable services under State plans
under title XIX or under the TRICARE program under
chapter 55 of title 10 of the United States Code.
(3) Annual updates.--The Secretary shall provide an
update each year to the bundled payment amounts under
this subsection.
(x) Payment Rules Relating to Rural Emergency Hospitals.--
(1) Payment for rural emergency hospital services.--
In the case of rural emergency hospital services (as
defined in section 1861(kkk)(1)), furnished by a rural
emergency hospital (as defined in section 1861(kkk)(2))
on or after January 1, 2023, the amount of payment for
such services shall be equal to the amount of payment
that would otherwise apply under section 1833(t) for
covered OPD services (as defined in section
1833(t)(1)(B) (other than clause (ii) of such
section)), increased by 5 percent to reflect the higher
costs incurred by such hospitals, and shall include the
application of any copayment amount determined under
section 1833(t)(8) as if such increase had not
occurred.
(2) Additional facility payment.--
(A) In general.--The Secretary shall make
monthly payments to a rural emergency hospital
in an amount that is equal to \1/12\ of the
annual additional facility payment specified in
subparagraph (B).
(B) Annual additional facility payment
amount.--The annual additional facility payment
amount specified in this subparagraph is--
(i) for 2023, a Medicare subsidy
amount determined under subparagraph
(C); and
(ii) for 2024 and each subsequent
year, the amount determined under this
subparagraph for the preceding year,
increased by the hospital market basket
percentage increase.
(C) Determination of medicare subsidy
amount.--For purposes of subparagraph (B)(i),
the Medicare subsidy amount determined under
this subparagraph is an amount equal to--
(i) the excess (if any) of--
(I) the total amount that the
Secretary determines was paid
under this title to all
critical access hospitals in
2019; over
(II) the estimated total
amount that the Secretary
determines would have been paid
under this title to such
hospitals in 2019 if payment
were made for inpatient
hospital, outpatient hospital,
and skilled nursing facility
services under the applicable
prospective payment systems for
such services during such year;
divided by
(ii) the total number of such
hospitals in 2019.
(D) Reporting on use of the additional
facility payment.--A rural emergency hospital
receiving the additional facility payment under
this paragraph shall maintain detailed
information as specified by the Secretary as to
how the facility has used the additional
facility payments. Such information shall be
made available to the Secretary upon request.
(3) Payment for ambulance services.--For provisions
relating to payment for ambulance services furnished by
an entity owned and operated by a rural emergency
hospital, see section 1834(l).
(4) Payment for post-hospital extended care
services.--For provisions relating to payment for post-
hospital extended care services furnished by a rural
emergency hospital that has a unit that is a distinct
part licensed as a skilled nursing facility, see
section 1888(e).
(5) Source of payments.--
(A) In general.--Except as provided in
subparagraph (B), payments under this
subsection shall be made from the Federal
Supplementary Medical Insurance Trust Fund
under section 1841.
(B) Additional facility payment and post-
hospital extended care services.--Payments
under paragraph (2) shall be made from the
Federal Hospital Insurance Trust Fund under
section 1817.
(y) Payment for Certain Services Furnished by Rural Health
Clinics.--
(1) Attending physician services for hospice
patients.--In the case of services described in section
1812(d)(2)(A)(ii) furnished on or after January 1,
2022, by an attending physician (as defined in section
1861(dd)(3)(B), other than a physician or practitioner
who is employed by a hospice program) who is employed
by or working under contract with a rural health
clinic, a rural health clinic shall be paid for such
services under the methodology for all-inclusive rates
(established by the Secretary) under section
1833(a)(3), subject to the limits described in section
1833(f).
(2) Mental health visits furnished via
telecommunications technology.--In the case of mental
health visits furnished via interactive, real-time,
audio and video telecommunications technology or audio-
only interactions, the in-person mental health visit
requirements established under section 405.2463(b)(3)
of title 42 of the Code of Federal Regulations (or a
successor regulation) shall not apply prior to [January
1, 2025 (or, if later, the first day after the end of
the emergency period described in section
1135(g)(1)(B)).] January 1, 2027.
(3) Special payment rule for intensive outpatient
services.--
(A) In general.--In the case of intensive
outpatient services furnished by a rural health
clinic, the payment amount for such services
shall be equal to the amount that would have
been paid under this title for such services
had such services been covered OPD services
furnished by a hospital.
(B) Exclusion.--Costs associated with
intensive outpatient services shall not be used
to determine the amount of payment for rural
health clinic services under the methodology
for all-inclusive rates (established by the
Secretary) under section 1833(a)(3).
(z) Payment for Lymphedema Compression Treatment Items.--
(1) In general.--The Secretary shall determine an
appropriate payment basis for lymphedema compression
treatment items (as defined in section 1861(mmm)). In
making such a determination, the Secretary may take
into account payment rates for such items under State
plans (or waivers of such plans) under title XIX, the
Veterans Health Administration, and group health plans
and health insurance coverage (as such terms are
defined in section 2791 of the Public Health Service
Act), and such other information as the Secretary
determines appropriate.
(2) Frequency limitation.--No payment may be made
under this part for lymphedema compression treatment
items furnished other than at such frequency as the
Secretary may establish.
(3) Application of competitive acquisition.--In the
case of lymphedema compression treatment items that are
included in a competitive acquisition program in a
competitive acquisition area under section 1847(a)--
(A) the payment basis under this subsection
for such items furnished in such area shall be
the payment basis determined under such
competitive acquisition program; and
(B) the Secretary may use information on the
payment determined under such competitive
acquisition programs to adjust the payment
amount otherwise determined under this
subsection for an area that is not a
competitive acquisition area under section
1847, and in the case of such adjustment,
paragraphs (8) and (9) of section 1842(b) shall
not be applied.
SEC. 1834A. IMPROVING POLICIES FOR CLINICAL DIAGNOSTIC LABORATORY
TESTS.
(a) Reporting of Private Sector Payment Rates for
Establishment of Medicare Payment Rates.--
(1) In general.--
(A) General reporting requirements.--Subject
to subparagraph (B), beginning January 1, 2016,
and every 3 years thereafter (or, annually, in
the case of reporting with respect to an
advanced diagnostic laboratory test, as defined
in subsection (d)(5)), an applicable laboratory
(as defined in paragraph (2)) shall report to
the Secretary, at a time specified by the
Secretary (referred to inthis subsection as the
``reporting period''), applicable information
(as defined in paragraph (3)) for a data
collection period (as defined in paragraph (4))
for each clinical diagnostic laboratory test
that the laboratory furnishes during such
period for which payment is made under this
part.
(B) Revised reporting period.--In the case of
reporting with respect to clinical diagnostic
laboratory tests that are not advanced
diagnostic laboratory tests, the Secretary
shall revise the reporting period under
subparagraph (A) such that--
(i) no reporting is required during
the period beginning January 1, 2020,
and ending December 31, [2024] 2025;
(ii) reporting is required during the
period beginning January 1, [2025]
2026, and ending March 31, [2025] 2026;
and
(iii) reporting is required every
three years after the period described
in clause (ii).
(2) Definition of applicable laboratory.--In this
section, the term ``applicable laboratory'' means a
laboratory that, with respect to its revenues under
this title, a majority of such revenues are from this
section, section 1833(h), or section 1848. The
Secretary may establish a low volume or low expenditure
threshold for excluding a laboratory from the
definition of applicable laboratory under this
paragraph, as the Secretary determines appropriate.
(3) Applicable information defined.--
(A) In general.--In this section, subject to
subparagraph (B), the term ``applicable
information'' means, with respect to a
laboratory test for a data collection period,
the following:
(i) The payment rate (as determined
in accordance with paragraph (5)) that
was paid by each private payor for the
test during the period.
(ii) The volume of such tests for
each such payor for the period.
(B) Exception for certain contractual
arrangements.--Such term shall not include
information with respect to a laboratory test
for which payment is made on a capitated basis
or other similar payment basis during the data
collection period.
(4) Data collection period defined.--
(A) In general.--Subject to subparagraph (B),
in this section, the term ``data collection
period'' means a period of time, such as a
previous 12 month period, specified by the
Secretary.
(B) Exception.--In the case of the reporting
period described in paragraph (1)(B)(ii) with
respect to clinical diagnostic laboratory tests
that are not advanced diagnostic laboratory
tests, the term ``data collection period''
means the period beginning January 1, 2019, and
ending June 30, 2019.
(5) Treatment of discounts.--The payment rate
reported by a laboratory under this subsection shall
reflect all discounts, rebates, coupons, and other
price concessions, including those described in section
1847A(c)(3).
(6) Ensuring complete reporting.--In the case where
an applicable laboratory has more than one payment rate
for the same payor for the same test or more than one
payment rate for different payors for the same test,
the applicable laboratory shall report each such
payment rate and the volume for the test at each such
rate under this subsection. Beginning with January 1,
2019, the Secretary may establish rules to aggregate
reporting with respect to the situations described in
the preceding sentence.
(7) Certification.--An officer of the laboratory
shall certify the accuracy and completeness of the
information reported under this subsection.
(8) Private payor defined.--In this section, the term
``private payor'' means the following:
(A) A health insurance issuer and a group
health plan (as such terms are defined in
section 2791 of the Public Health Service Act).
(B) A Medicare Advantage plan under part C.
(C) A medicaid managed care organization (as
defined in section 1903(m)).
(9) Civil money penalty.--
(A) In general.--If the Secretary determines
that an applicable laboratory has failed to
report or made a misrepresentation or omission
in reporting information under this subsection
with respect to a clinical diagnostic
laboratory test, the Secretary may apply a
civil money penalty in an amount of up to
$10,000 per day for each failure to report or
each such misrepresentation or omission.
(B) Application.--The provisions of section
1128A (other than subsections (a) and (b))
shall apply to a civil money penalty under this
paragraph in the same manner as they apply to a
civil money penalty or proceeding under section
1128A(a).
(10) Confidentiality of information.--Notwithstanding
any other provision of law, information disclosed by a
laboratory under this subsection is confidential and
shall not be disclosed by the Secretary or a Medicare
contractor in a form that discloses the identity of a
specific payor or laboratory, or prices charged or
payments made to any such laboratory, except--
(A) as the Secretary determines to be
necessary to carry out this section;
(B) to permit the Comptroller General to
review the information provided;
(C) to permit the Director of the
Congressional Budget Office to review the
information provided; and
(D) to permit the Medicare Payment Advisory
Commission to review the information provided.
(11) Protection from public disclosure.--A payor
shall not be identified on information reported under
this subsection. The name of an applicable laboratory
under this subsection shall be exempt from disclosure
under section 552(b)(3) of title 5, United States Code.
(12) Regulations.--Not later than June 30, 2015, the
Secretary shall establish through notice and comment
rulemaking parameters for data collection under this
subsection.
(b) Payment for Clinical Diagnostic Laboratory Tests.--
(1) Use of private payor rate information to
determine medicare payment rates.--
(A) In general.--Subject to paragraph (3) and
subsections (c) and (d), in the case of a
clinical diagnostic laboratory test furnished
on or after January 1, 2017, the payment amount
under this section shall be equal to the
weighted median determined for the test under
paragraph (2) for the most recent data
collection period.
(B) Application of payment amounts to
hospital laboratories.--The payment amounts
established under this section shall apply to a
clinical diagnostic laboratory test furnished
by a hospital laboratory if such test is paid
for separately, and not as part of a bundled
payment under section 1833(t).
(2) Calculation of weighted median.--For each
laboratory test with respect to which information is
reported under subsection (a) for a data collection
period, the Secretary shall calculate a weighted median
for the test for the period, by arraying the
distribution of all payment rates reported for the
period for each test weighted by volume for each payor
and each laboratory.
(3) Phase-in of reductions from private payor rate
implementation.--
(A) In general.--Payment amounts determined
under this subsection for a clinical diagnostic
laboratory test for each of 2017 through [2027]
2028 shall not result in a reduction in
payments for a clinical diagnostic laboratory
test for the year of greater than the
applicable percent (as defined in subparagraph
(B)) of the amount of payment for the test for
the preceding year.
(B) Applicable percent defined.--In this
paragraph, the term ``applicable percent''
means--
(i) for each of 2017 through 2020, 10
percent;
(ii) for each of 2021 through [2024]
2025, 0 percent; and
(iii) for each of [2025 through 2027]
2026 through 2028, 15 percent.
(C) No application to new tests.--This
paragraph shall not apply to payment amounts
determined under this section for either of the
following.
(i) A new test under subsection (c).
(ii) A new advanced diagnostic test
(as defined in subsection (d)(5)) under
subsection (d).
(4) Application of market rates.--
(A) In general.--Subject to paragraph (3),
once established for a year following a data
collection period, the payment amounts under
this subsection shall continue to apply until
the year following the next data collection
period.
(B) Other adjustments not applicable.--The
payment amounts under this section shall not be
subject to any adjustment (including any
geographic adjustment, budget neutrality
adjustment, annual update, or other
adjustment).
(5) Sample collection fee.--In the case of a sample
collected from an individual in a skilled nursing
facility or by a laboratory on behalf of a home health
agency, the nominal fee that would otherwise apply
under section 1833(h)(3)(A) shall be increased by $2.
(c) Payment for New Tests that are not Advanced Diagnostic
Laboratory Tests.--
(1) Payment during initial period.--In the case of a
clinical diagnostic laboratory test that is assigned a
new or substantially revised HCPCS code on or after the
date of enactment of this section, and which is not an
advanced diagnostic laboratory test (as defined in
subsection (d)(5)), during an initial period until
payment rates under subsection (b) are established for
the test, payment for the test shall be determined--
(A) using cross-walking (as described in
section 414.508(a) of title 42, Code of Federal
Regulations, or any successor regulation) to
the most appropriate existing test under the
fee schedule under this section during that
period; or
(B) if no existing test is comparable to the
new test, according to the gapfilling process
described in paragraph (2).
(2) Gapfilling process described.--The gapfilling
process described in this paragraph shall take into
account the following sources of information to
determine gapfill amounts, if available:
(A) Charges for the test and routine
discounts to charges.
(B) Resources required to perform the test.
(C) Payment amounts determined by other
payors.
(D) Charges, payment amounts, and resources
required for other tests that may be comparable
or otherwise relevant.
(E) Other criteria the Secretary determines
appropriate.
(3) Additional consideration.--In determining the
payment amount under crosswalking or gapfilling
processes under this subsection, the Secretary shall
consider recommendations from the panel established
under subsection (f)(1).
(4) Explanation of payment rates.--In the case of a
clinical diagnostic laboratory test for which payment
is made under this subsection, the Secretary shall make
available to the public an explanation of the payment
rate for the test, including an explanation of how the
criteria described in paragraph (2) and paragraph (3)
are applied.
(d) Payment for New Advanced Diagnostic Laboratory Tests.--
(1) Payment during initial period.--
(A) In general.--In the case of an advanced
diagnostic laboratory test for which payment
has not been made under the fee schedule under
section 1833(h) prior to the date of enactment
of this section, during an initial period of
three quarters, the payment amount for the test
for such period shall be based on the actual
list charge for the laboratory test.
(B) Actual list charge.--For purposes of
subparagraph (A), the term ``actual list
charge'', with respect to a laboratory test
furnished during such period, means the
publicly available rate on the first day at
which the test is available for purchase by a
private payor.
(2) Special rule for timing of initial reporting.--
With respect to an advanced diagnostic laboratory test
described in paragraph (1)(A), an applicable laboratory
shall initially be required to report under subsection
(a) not later than the last day of the second quarter
of the initial period under such paragraph.
(3) Application of market rates after initial
period.--Subject to paragraph (4), data reported under
paragraph (2) shall be used to establish the payment
amount for an advanced diagnostic laboratory test after
the initial period under paragraph (1)(A) using the
methodology described in subsection (b). Such payment
amount shall continue to apply until the year following
the next data collection period.
(4) Recoupment if actual list charge exceeds market
rate.--With respect to the initial period described in
paragraph (1)(A), if, after such period, the Secretary
determines that the payment amount for an advanced
diagnostic laboratory test under paragraph (1)(A) that
was applicable during the period was greater than 130
percent of the payment amount for the test established
using the methodology described in subsection (b) that
is applicable after such period, the Secretary shall
recoup the difference between such payment amounts for
tests furnished during such period.
(5) Advanced diagnostic laboratory test defined.--In
this subsection, the term ``advanced diagnostic
laboratory test'' means a clinical diagnostic
laboratory test covered under this part that is offered
and furnished only by a single laboratory and not sold
for use by a laboratory other than the original
developing laboratory (or a successor owner) and meets
one of the following criteria:
(A) The test is an analysis of multiple
biomarkers of DNA, RNA, or proteins combined
with a unique algorithm to yield a single
patient-specific result.
(B) The test is cleared or approved by the
Food and Drug Administration.
(C) The test meets other similar criteria
established by the Secretary.
(e) Coding.--
(1) Temporary codes for certain new tests.--
(A) In general.--The Secretary shall adopt
temporary HCPCS codes to identify new advanced
diagnostic laboratory tests (as defined in
subsection (d)(5)) and new laboratory tests
that are cleared or approved by the Food and
Drug Administration.
(B) Duration.--
(i) In general.--Subject to clause
(ii), the temporary code shall be
effective until a permanent HCPCS code
is established (but not to exceed 2
years).
(ii) Exception.--The Secretary may
extend the temporary code or establish
a permanent HCPCS code, as the
Secretary determines appropriate.
(2) Existing tests.--Not later than January 1, 2016,
for each existing advanced diagnostic laboratory test
(as so defined) and each existing clinical diagnostic
laboratory test that is cleared or approved by the Food
and Drug Administration for which payment is made under
this part as of the date of enactment of this section,
if such test has not already been assigned a unique
HCPCS code, the Secretary shall--
(A) assign a unique HCPCS code for the test;
and
(B) publicly report the payment rate for the
test.
(3) Establishment of unique identifier for certain
tests.--For purposes of tracking and monitoring, if a
laboratory or a manufacturer requests a unique
identifier for an advanced diagnostic laboratory test
(as so defined) or a laboratory test that is cleared or
approved by the Food and Drug Administration, the
Secretary shall utilize a means to uniquely track such
test through a mechanism such as a HCPCS code or
modifier.
(f) Input From Clinicians and Technical Experts.--
(1) In general.--The Secretary shall consult with an
expert outside advisory panel, established by the
Secretary not later than July 1, 2015, composed of an
appropriate selection of individuals with expertise,
which may include molecular pathologists, researchers,
and individuals with expertise in laboratory science or
health economics, in issues related to clinical
diagnostic laboratory tests, which may include the
development, validation, performance, and application
of such tests, to provide--
(A) input on--
(i) the establishment of payment
rates under this section for new
clinical diagnostic laboratory tests,
including whether to use crosswalking
or gapfilling processes to determine
payment for a specific new test; and
(ii) the factors used in determining
coverage and payment processes for new
clinical diagnostic laboratory tests;
and
(B) recommendations to the Secretary under
this section.
(2) Compliance with chapter 10 of title 5, united
states code.--The panel shall be subject to chapter 10
of title 5, United States Code.
(3) Continuation of annual meeting.--The Secretary
shall continue to convene the annual meeting described
in section 1833(h)(8)(B)(iii) after the implementation
of this section for purposes of receiving comments and
recommendations (and data on which the recommendations
are based) as described in such section on the
establishment of payment amounts under this section.
(g) Coverage.--
(1) Issuance of coverage policies.--
(A) In general.--A medicare administrative
contractor shall only issue a coverage policy
with respect to a clinical diagnostic
laboratory test in accordance with the process
for making a local coverage determination (as
defined in section 1869(f)(2)(B)), including
the appeals and review process for local
coverage determinations under part 426 of title
42, Code of Federal Regulations (or successor
regulations).
(B) No effect on national coverage
determination process.--This paragraph shall
not apply to the national coverage
determination process (as defined in section
1869(f)(1)(B)).
(C) Effective date.--This paragraph shall
apply to coverage policies issued on or after
January 1, 2015.
(2) Designation of one or more medicare
administrative contractors for clinical diagnostic
laboratory tests.--The Secretary may designate one or
more (not to exceed 4) medicare administrative
contractors to either establish coverage policies or
establish coverage policies and process claims for
payment for clinical diagnostic laboratory tests, as
determined appropriate by the Secretary.
(h) Implementation.--
(1) Implementation.--There shall be no administrative
or judicial review under section 1869, section 1878, or
otherwise, of the establishment of payment amounts
under this section.
(2) Administration.--Chapter 35 of title 44, United
States Code, shall not apply to information collected
under this section.
(3) Funding.--For purposes of implementing this
section, the Secretary shall provide for the transfer,
from the Federal Supplementary Medical Insurance Trust
Fund under section 1841, to the Centers for Medicare &
Medicaid Services Program Management Account, for each
of fiscal years 2014 through 2018, $4,000,000, and for
each of fiscal years 2019 through 2023, $3,000,000.
Amounts transferred under the preceding sentence shall
remain available until expended.
(i) Transitional Rule.--During the period beginning on the
date of enactment of this section and ending on December 31,
2016, with respect to advanced diagnostic laboratory tests
under this part, the Secretary shall use the methodologies for
pricing, coding, and coverage in effect on the day before such
date of enactment, which may include cross-walking or
gapfilling methods.
* * * * * * *
Part C--Medicare+Choice Program
* * * * * * *
contracts with medicare+choice organizations
Sec. 1857. (a) In General.--The Secretary shall not permit
the election under section 1851 of a Medicare+Choice plan
offered by a Medicare+Choice organization under this part, and
no payment shall be made under section 1853 to an organization,
unless the Secretary has entered into a contract under this
section with the organization with respect to the offering of
such plan. Such a contract with an organization may cover more
than 1 Medicare+Choice plan. Such contract shall provide that
the organization agrees to comply with the applicable
requirements and standards of this part and the terms and
conditions of payment as provided for in this part.
(b) Minimum Enrollment Requirements.--
(1) In general.--Subject to paragraph (2), the
Secretary may not enter into a contract under this
section with a Medicare+Choice organization unless the
organization has--
(A) at least 5,000 individuals (or 1,500
individuals in the case of an organization that
is a provider-sponsored organization) who are
receiving health benefits through the
organization, or
(B) at least 1,500 individuals (or 500
individuals in the case of an organization that
is a provider-sponsored organization) who are
receiving health benefits through the
organization if the organization primarily
serves individuals residing outside of
urbanized areas.
(2) Application to msa plans.--In applying paragraph
(1) in the case of a Medicare+Choice organization that
is offering an MSA plan, paragraph (1) shall be applied
by substituting covered lives for individuals.
(3) Allowing transition.--The Secretary may waive the
requirement of paragraph (1) during the first 3
contract years with respect to an organization.
(c) Contract Period and Effectiveness.--
(1) Period.--Each contract under this section shall
be for a term of at least 1 year, as determined by the
Secretary, and may be made automatically renewable from
term to term in the absence of notice by either party
of intention to terminate at the end of the current
term.
(2) Termination authority.--In accordance with
procedures established under subsection (h), the
Secretary may at any time terminate any such contract
if the Secretary determines that the organization--
(A) has failed substantially to carry out the
contract;
(B) is carrying out the contract in a manner
inconsistent with the efficient and effective
administration of this part; or
(C) no longer substantially meets the
applicable conditions of this part.
(3) Effective date of contracts.--The effective date
of any contract executed pursuant to this section shall
be specified in the contract, except that in no case
shall a contract under this section which provides for
coverage under an MSA plan be effective before January
1999 with respect to such coverage.
(4) Previous terminations.--
(A) In general.--The Secretary may not enter
into a contract with a Medicare+Choice
organization if a previous contract with that
organization under this section was terminated
at the request of the organization within the
preceding 2-year period, except as provided in
subparagraph (B) and except in such other
circumstances which warrant special
consideration, as determined by the Secretary.
(B) Earlier re-entry permitted where change
in payment policy.--Subparagraph (A) shall not
apply with respect to the offering by a
Medicare+Choice organization of a
Medicare+Choice plan in a Medicare+Choice
payment area if during the 6-month period
beginning on the date the organization notified
the Secretary of the intention to terminate the
most recent previous contract, there was a
legislative change enacted (or a regulatory
change adopted) that has the effect of
increasing payment amounts under section 1853
for that Medicare+Choice payment area.
(5) Contracting authority.--The authority vested in
the Secretary by this part may be performed without
regard to such provisions of law or regulations
relating to the making, performance, amendment, or
modification of contracts of the United States as the
Secretary may determine to be inconsistent with the
furtherance of the purpose of this title.
(d) Protections Against Fraud and Beneficiary Protections.--
(1) Periodic auditing.--The Secretary shall provide
for the annual auditing of the financial records
(including data relating to medicare utilization and
costs, including allowable costs under section 1858(c))
of at least one-third of the Medicare+Choice
organizations offering Medicare+Choice plans under this
part. The Comptroller General shall monitor auditing
activities conducted under this subsection.
(2) Inspection and audit.--Each contract under this
section shall provide that the Secretary, or any person
or organization designated by the Secretary--
(A) shall have the right to timely inspect or
otherwise evaluate (i) the quality,
appropriateness, and timeliness of services
performed under the contract, and (ii) the
facilities of the organization when there is
reasonable evidence of some need for such
inspection, and
(B) shall have the right to timely audit and
inspect any books and records of the
Medicare+Choice organization that pertain (i)
to the ability of the organization to bear the
risk of potential financial losses, or (ii) to
services performed or determinations of amounts
payable under the contract.
(3) Enrollee notice at time of termination.--Each
contract under this section shall require the
organization to provide (and pay for) written notice in
advance of the contract's termination, as well as a
description of alternatives for obtaining benefits
under this title, to each individual enrolled with the
organization under this part.
(4) Disclosure.--
(A) In general.--Each Medicare+Choice
organization shall, in accordance with
regulations of the Secretary, report to the
Secretary financial information which shall
include the following:
(i) Such information as the Secretary
may require demonstrating that the
organization has a fiscally sound
operation.
(ii) A copy of the report, if any,
filed with the Secretary containing the
information required to be reported
under section 1124 by disclosing
entities.
(iii) A description of transactions,
as specified by the Secretary, between
the organization and a party in
interest. Such transactions shall
include--
(I) any sale or exchange, or
leasing of any property between
the organization and a party in
interest;
(II) any furnishing for
consideration of goods,
services (including management
services), or facilities
between the organization and a
party in interest, but not
including salaries paid to
employees for services provided
in the normal course of their
employment and health services
provided to members by
hospitals and other providers
and by staff, medical group (or
groups), individual practice
association (or associations),
or any combination thereof; and
(III) any lending of money or
other extension of credit
between an organization and a
party in interest.
The Secretary may require that information
reported respecting an organization which
controls, is controlled by, or is under common
control with, another entity be in the form of
a consolidated financial statement for the
organization and such entity.
(B) Party in interest defined.--For the
purposes of this paragraph, the term ``party in
interest'' means--
(i) any director, officer, partner,
or employee responsible for management
or administration of a Medicare+Choice
organization, any person who is
directly or indirectly the beneficial
owner of more than 5 percent of the
equity of the organization, any person
who is the beneficial owner of a
mortgage, deed of trust, note, or other
interest secured by, and valuing more
than 5 percent of the organization,
and, in the case of a Medicare+Choice
organization organized as a nonprofit
corporation, an incorporator or member
of such corporation under applicable
State corporation law;
(ii) any entity in which a person
described in clause (i)--
(I) is an officer or
director;
(II) is a partner (if such
entity is organized as a
partnership);
(III) has directly or
indirectly a beneficial
interest of more than 5 percent
of the equity; or
(IV) has a mortgage, deed of
trust, note, or other interest
valuing more than 5 percent of
the assets of such entity;
(iii) any person directly or
indirectly controlling, controlled by,
or under common control with an
organization; and
(iv) any spouse, child, or parent of
an individual described in clause (i).
(C) Access to information.--Each
Medicare+Choice organization shall make the
information reported pursuant to subparagraph
(A) available to its enrollees upon reasonable
request.
(5) Loan information.--The contract shall require the
organization to notify the Secretary of loans and other
special financial arrangements which are made between
the organization and subcontractors, affiliates, and
related parties.
(6) Review to ensure compliance with care management
requirements for specialized medicare advantage plans
for special needs individuals.--In conjunction with the
periodic audit of a specialized Medicare Advantage plan
for special needs individuals under paragraph (1), the
Secretary shall conduct a review to ensure that such
organization offering the plan meets the requirements
described in section 1859(f)(5).
(e) Additional Contract Terms.--
(1) In general.--The contract shall contain such
other terms and conditions not inconsistent with this
part (including requiring the organization to provide
the Secretary with such information) as the Secretary
may find necessary and appropriate.
(2) Cost-sharing in enrollment-related costs.--
(A) In general.--A Medicare+Choice
organization and a PDP sponsor under part D
shall pay the fee established by the Secretary
under subparagraph (B).
(B) Authorization.--The Secretary is
authorized to charge a fee to each
Medicare+Choice organization with a contract
under this part and each PDP sponsor with a
contract under part D that is equal to the
organization' or sponsor's pro rata share (as
determined by the Secretary) of the aggregate
amount of fees which the Secretary is directed
to collect in a fiscal year. Any amounts
collected shall be available without further
appropriation to the Secretary for the purpose
of carrying out section 1851 (relating to
enrollment and dissemination of information),
section 1860D-1(c), and section 4360 of the
Omnibus Budget Reconciliation Act of 1990
(relating to the health insurance counseling
and assistance program).
(C) Authorization of appropriations.--There
are authorized to be appropriated for the
purposes described in subparagraph (B) for each
fiscal year beginning with fiscal year 2001 and
ending with fiscal year 2005 an amount equal to
$100,000,000, and for each fiscal year
beginning with fiscal year 2006 an amount equal
to $200,000,000, reduced by the amount of fees
authorized to be collected under this paragraph
and section 1860D-12(b)(3)(D) for the fiscal
year.
(D) Limitation.--In any fiscal year the fees
collected by the Secretary under subparagraph
(B) shall not exceed the lesser of--
(i) the estimated costs to be
incurred by the Secretary in the fiscal
year in carrying out the activities
described in section 1851 and section
1860D-1(c) and section 4360 of the
Omnibus Budget Reconciliation Act of
1990; or
(ii)(I) $200,000,000 in fiscal year
1998;
(II) $150,000,000 in fiscal year
1999;
(III) $100,000,000 in fiscal year
2000;
(IV) the Medicare+Choice portion (as
defined in subparagraph (E)) of
$100,000,000 in fiscal year 2001 and
each succeeding fiscal year before
fiscal year 2006; and
(V) the applicable portion (as
defined in subparagraph (F)) of
$200,000,000 in fiscal year 2006 and
each succeeding fiscal year.
(E) Medicare+choice portion defined.--In this
paragraph, the term ``Medicare+Choice portion''
means, for a fiscal year, the ratio, as
estimated by the Secretary, of--
(i) the average number of individuals
enrolled in Medicare+Choice plans
during the fiscal year, to
(ii) the average number of
individuals entitled to benefits under
part A, and enrolled under part B,
during the fiscal year.
(F) Applicable portion defined.--In this
paragraph, the term ``applicable portion''
means, for a fiscal year--
(i) with respect to MA organizations,
the Secretary's estimate of the total
proportion of expenditures under this
title that are attributable to
expenditures made under this part
(including payments under part D that
are made to such organizations); or
(ii) with respect to PDP sponsors,
the Secretary's estimate of the total
proportion of expenditures under this
title that are attributable to
expenditures made to such sponsors
under part D.
(3) Agreements with federally qualified health
centers.--
(A) Payment levels and amounts.--A contract
under this section with an MA organization
shall require the organization to provide, in
any written agreement described in section
1853(a)(4) between the organization and a
federally qualified health center, for a level
and amount of payment to the federally
qualified health center for services provided
by such health center that is not less than the
level and amount of payment that the plan would
make for such services if the services had been
furnished by a entity providing similar
services that was not a federally qualified
health center.
(B) Cost-sharing.--Under the written
agreement referred to in subparagraph (A), a
federally qualified health center must accept
the payment amount referred to in such
subparagraph plus the Federal payment provided
for in section 1833(a)(3)(B) as payment in full
for services covered by the agreement, except
that such a health center may collect any
amount of cost-sharing permitted under the
contract under this section, so long as the
amounts of any deductible, coinsurance, or
copayment comply with the requirements under
section 1854(e).
(4) Requirement for minimum medical loss ratio.--If
the Secretary determines for a contract year (beginning
with 2014) that an MA plan has failed to have a medical
loss ratio of at least .85--
(A) the MA plan shall remit to the Secretary
an amount equal to the product of--
(i) the total revenue of the MA plan
under this part for the contract year;
and
(ii) the difference between .85 and
the medical loss ratio;
(B) for 3 consecutive contract years, the
Secretary shall not permit the enrollment of
new enrollees under the plan for coverage
during the second succeeding contract year; and
(C) the Secretary shall terminate the plan
contract if the plan fails to have such a
medical loss ratio for 5 consecutive contract
years.
(5) Communicating plan corrective actions against
opioids over-prescribers.--
(A) In general.--Beginning with plan years
beginning on or after January 1, 2021, a
contract under this section with an MA
organization shall require the organization to
submit to the Secretary, through the process
established under subparagraph (B), information
on the investigations, credible evidence of
suspicious activities of a provider of services
(including a prescriber) or supplier related to
fraud, and other actions taken by such plans
related to inappropriate prescribing of
opioids.
(B) Process.--Not later than January 1, 2021,
the Secretary shall, in consultation with
stakeholders, establish a process under which
MA plans and prescription drug plans shall
submit to the Secretary information described
in subparagraph (A).
(C) Regulations.--For purposes of this
paragraph, including as applied under section
1860D-12(b)(3)(D), the Secretary shall,
pursuant to rulemaking--
(i) specify a definition for the term
``inappropriate prescribing'' and a
method for determining if a provider of
services prescribes inappropriate
prescribing; and
(ii) establish the process described
in subparagraph (B) and the types of
information that shall be submitted
through such process.
(f) Prompt Payment by Medicare+Choice Organization.--
(1) Requirement.--A contract under this part shall
require a Medicare+Choice organization to provide
prompt payment (consistent with the provisions of
sections 1816(c)(2) and 1842(c)(2)) of claims submitted
for services and supplies furnished to enrollees
pursuant to the contract, if the services or supplies
are not furnished under a contract between the
organization and the provider or supplier (or in the
case of a Medicare+Choice private fee-for-service plan,
if a claim is submitted to such organization by an
enrollee).
(2) Secretary's option to bypass noncomplying
organization.--In the case of a Medicare+Choice
eligible organization which the Secretary determines,
after notice and opportunity for a hearing, has failed
to make payments of amounts in compliance with
paragraph (1), the Secretary may provide for direct
payment of the amounts owed to providers and suppliers
(or, in the case of a Medicare+Choice private fee-for-
service plan, amounts owed to the enrollees) for
covered services and supplies furnished to individuals
enrolled under this part under the contract. If the
Secretary provides for the direct payments, the
Secretary shall provide for an appropriate reduction in
the amount of payments otherwise made to the
organization under this part to reflect the amount of
the Secretary's payments (and the Secretary's costs in
making the payments).
(3) Incorporation of certain prescription drug plan
contract requirements.--The following provisions shall
apply to contracts with a Medicare Advantage
organization offering an MA-PD plan in the same manner
as they apply to contracts with a PDP sponsor offering
a prescription drug plan under part D:
(A) Prompt payment.--Section 1860D-12(b)(4).
(B) Submission of claims by pharmacies
located in or contracting with long-term care
facilities.--Section 1860D-12(b)(5).
(C) Regular update of prescription drug
pricing standard.--Section 1860D-12(b)(6).
(D) Suspension of payments pending
investigation of credible allegations of fraud
by pharmacies.--Section 1860D-12(b)(7).
(E) Provision of information related to
maximum fair prices.--Section 1860D-12(b)(8).
(F) Requirements relating to pharmacy benefit
managers.--For plan years beginning on or after
January 1, 2027, section 1860D-12(h).
(g) Intermediate Sanctions.--
(1) In general.--If the Secretary determines that a
Medicare+Choice organization with a contract under this
section--
(A) fails substantially to provide medically
necessary items and services that are required
(under law or under the contract) to be
provided to an individual covered under the
contract, if the failure has adversely affected
(or has substantial likelihood of adversely
affecting) the individual;
(B) imposes premiums on individuals enrolled
under this part in excess of the amount of the
Medicare+Choice monthly basic and supplemental
beneficiary premiums permitted under section
1854;
(C) acts to expel or to refuse to re-enroll
an individual in violation of the provisions of
this part;
(D) engages in any practice that would
reasonably be expected to have the effect of
denying or discouraging enrollment (except as
permitted by this part) by eligible individuals
with the organization whose medical condition
or history indicates a need for substantial
future medical services;
(E) misrepresents or falsifies information
that is furnished--
(i) to the Secretary under this part,
or
(ii) to an individual or to any other
entity under this part;
(F) fails to comply with the applicable
requirements of section 1852(j)(3) or
1852(k)(2)(A)(ii);
(G) employs or contracts with any individual
or entity that is excluded from participation
under this title under section 1128 or 1128A
for the provision of health care, utilization
review, medical social work, or administrative
services or employs or contracts with any
entity for the provision (directly or
indirectly) through such an excluded individual
or entity of such services;
(H) except as provided under subparagraph (C)
or (D) of section 1860D-1(b)(1), enrolls an
individual in any plan under this part without
the prior consent of the individual or the
designee of the individual;
(I) transfers an individual enrolled under
this part from one plan to another without the
prior consent of the individual or the designee
of the individual or solely for the purpose of
earning a commission;
(J) fails to comply with marketing
restrictions described in subsections (h) and
(j) of section 1851 or applicable implementing
regulations or guidance; or
(K) employs or contracts with any individual
or entity who engages in the conduct described
in subparagraphs (A) through (J) of this
paragraph;
the Secretary may provide, in addition to any other
remedies authorized by law, for any of the remedies
described in paragraph (2). The Secretary may provide,
in addition to any other remedies authorized by law,
for any of the remedies described in paragraph (2), if
the Secretary determines that any employee or agent of
such organization, or any provider or supplier who
contracts with such organization, has engaged in any
conduct described in subparagraphs (A) through (K) of
this paragraph.
(2) Remedies.--The remedies described in this
paragraph are--
(A) civil money penalties of not more than
$25,000 for each determination under paragraph
(1) or, with respect to a determination under
subparagraph (D) or (E)(i) of such paragraph,
of not more than $100,000 for each such
determination, except with respect to a
determination under subparagraph (E), an
assessment of not more than the amount claimed
by such plan or plan sponsor based upon the
misrepresentation or falsified information
involved, plus, with respect to a determination
under paragraph (1)(B), double the excess
amount charged in violation of such paragraph
(and the excess amount charged shall be
deducted from the penalty and returned to the
individual concerned), and plus, with respect
to a determination under paragraph (1)(D),
$15,000 for each individual not enrolled as a
result of the practice involved,
(B) suspension of enrollment of individuals
under this part after the date the Secretary
notifies the organization of a determination
under paragraph (1) and until the Secretary is
satisfied that the basis for such determination
has been corrected and is not likely to recur,
or
(C) suspension of payment to the organization
under this part for individuals enrolled after
the date the Secretary notifies the
organization of a determination under paragraph
(1) and until the Secretary is satisfied that
the basis for such determination has been
corrected and is not likely to recur.
(3) Other intermediate sanctions.--In the case of a
Medicare+Choice organization for which the Secretary
makes a determination under subsection (c)(2) the basis
of which is not described in paragraph (1), the
Secretary may apply the following intermediate
sanctions:
(A) Civil money penalties of not more than
$25,000 for each determination under subsection
(c)(2) if the deficiency that is the basis of
the determination has directly adversely
affected (or has the substantial likelihood of
adversely affecting) an individual covered
under the organization's contract.
(B) Civil money penalties of not more than
$10,000 for each week beginning after the
initiation of civil money penalty procedures by
the Secretary during which the deficiency that
is the basis of a determination under
subsection (c)(2) exists.
(C) Suspension of enrollment of individuals
under this part after the date the Secretary
notifies the organization of a determination
under subsection (c)(2) and until the Secretary
is satisfied that the deficiency that is the
basis for the determination has been corrected
and is not likely to recur.
(D) Civil monetary penalties of not more than
$100,000, or such higher amount as the
Secretary may establish by regulation, where
the finding under subsection (c)(2)(A) is based
on the organization's termination of its
contract under this section other than at a
time and in a manner provided for under
subsection (a).
(4) Civil money penalties.--The provisions of section
1128A (other than subsections (a) and (b)) shall apply
to a civil money penalty under paragraph (2) or (3) in
the same manner as they apply to a civil money penalty
or proceeding under section 1128A(a).
(h) Procedures for Termination.--
(1) In general.--The Secretary may terminate a
contract with a Medicare+Choice organization under this
section in accordance with formal investigation and
compliance procedures established by the Secretary
under which--
(A) the Secretary provides the organization
with the reasonable opportunity to develop and
implement a corrective action plan to correct
the deficiencies that were the basis of the
Secretary's determination under subsection
(c)(2); and
(B) the Secretary provides the organization
with reasonable notice and opportunity for
hearing (including the right to appeal an
initial decision) before terminating the
contract.
(2) Exception for imminent and serious risk to
health.--Paragraph (1) shall not apply if the Secretary
determines that a delay in termination, resulting from
compliance with the procedures specified in such
paragraph prior to termination, would pose an imminent
and serious risk to the health of individuals enrolled
under this part with the organization.
(3) Delay in contract termination authority for plans
failing to achieve minimum quality rating.--During the
period beginning on the date of the enactment of this
paragraph and through the end of plan year 2018, the
Secretary may not terminate a contract under this
section with respect to the offering of an MA plan by a
Medicare Advantage organization solely because the MA
plan has failed to achieve a minimum quality rating
under the 5-star rating system under section
1853(o)(4).
(i) Medicare+Choice Program Compatibility With Employer or
Union Group Health Plans.--
(1) Contracts with ma organizations.--To facilitate
the offering of Medicare+Choice plans under contracts
between Medicare+Choice organizations and employers,
labor organizations, or the trustees of a fund
established by one or more employers or labor
organizations (or combination thereof) to furnish
benefits to the entity's employees, former employees
(or combination thereof) or members or former members
(or combination thereof) of the labor organizations,
the Secretary may waive or modify requirements that
hinder the design of, the offering of, or the
enrollment in such Medicare+Choice plans.
(2) Employer sponsored ma plans.--To facilitate the
offering of MA plans by employers, labor organizations,
or the trustees of a fund established by one or more
employers or labor organizations (or combination
thereof) to furnish benefits to the entity's employees,
former employees (or combination thereof) or members or
former members (or combination thereof) of the labor
organizations, the Secretary may waive or modify
requirements that hinder the design of, the offering
of, or the enrollment in such MA plans. Notwithstanding
section 1851(g), an MA plan described in the previous
sentence may restrict the enrollment of individuals
under this part to individuals who are beneficiaries
and participants in such plan.
* * * * * * *
Part D--Voluntary Prescription Drug Benefit Program
* * * * * * *
Subpart 2--Prescription Drug Plans; PDP Sponsors; Financing
* * * * * * *
requirements for and contracts with prescription drug plan (pdp)
sponsors
Sec. 1860D-12. (a) General Requirements.--Each PDP sponsor of
a prescription drug plan shall meet the following requirements:
(1) Licensure.--Subject to subsection (c), the
sponsor is organized and licensed under State law as a
risk-bearing entity eligible to offer health insurance
or health benefits coverage in each State in which it
offers a prescription drug plan.
(2) Assumption of financial risk for unsubsidized
coverage.--
(A) In general.--Subject to subparagraph (B),
to the extent that the entity is at risk the
entity assumes financial risk on a prospective
basis for benefits that it offers under a
prescription drug plan and that is not covered
under section 1860D-15(b).
(B) Reinsurance permitted.--The plan sponsor
may obtain insurance or make other arrangements
for the cost of coverage provided to any
enrollee to the extent that the sponsor is at
risk for providing such coverage.
(3) Solvency for unlicensed sponsors.--In the case of
a PDP sponsor that is not described in paragraph (1)
and for which a waiver has been approved under
subsection (c), such sponsor shall meet solvency
standards established by the Secretary under subsection
(d).
(b) Contract Requirements.--
(1) In general.--The Secretary shall not permit the
enrollment under section 1860D-1 in a prescription drug
plan offered by a PDP sponsor under this part, and the
sponsor shall not be eligible for payments under
section 1860D-14 or 1860D-15, unless the Secretary has
entered into a contract under this subsection with the
sponsor with respect to the offering of such plan. Such
a contract with a sponsor may cover more than one
prescription drug plan. Such contract shall provide
that the sponsor agrees to comply with the applicable
requirements and standards of this part and the terms
and conditions of payment as provided for in this part.
(2) Limitation on entities offering fallback
prescription drug plans.--The Secretary shall not enter
into a contract with a PDP sponsor for the offering of
a prescription drug plan (other than a fallback
prescription drug plan) in a PDP region for a year if
the sponsor--
(A) submitted a bid under section 1860D-11(g)
for such year (as the first year of a contract
period under such section) to offer a fallback
prescription drug plan in any PDP region;
(B) offers a fallback prescription drug plan
in any PDP region during the year; or
(C) offered a fallback prescription drug plan
in that PDP region during the previous year.
For purposes of this paragraph, an entity shall be
treated as submitting a bid with respect to a
prescription drug plan or offering a fallback
prescription drug plan if the entity is acting as a
subcontractor of a PDP sponsor that is offering such a
plan. The previous sentence shall not apply to entities
that are subcontractors of an MA organization except
insofar as such organization is acting as a PDP sponsor
with respect to a prescription drug plan.
(3) Incorporation of certain medicare advantage
contract requirements.--Except as otherwise provided,
the following provisions of section 1857 shall apply to
contracts under this section in the same manner as they
apply to contracts under section 1857(a):
(A) Minimum enrollment.--Paragraphs (1) and
(3) of section 1857(b), except that--
(i) the Secretary may increase the
minimum number of enrollees required
under such paragraph (1) as the
Secretary determines appropriate; and
(ii) the requirement of such
paragraph (1) shall be waived during
the first contract year with respect to
an organization in a region.
(B) Contract period and effectiveness.--
Section 1857(c), except that in applying
paragraph (4)(B) of such section any reference
to payment amounts under section 1853 shall be
deemed payment amounts under section 1860D-15.
(C) Protections against fraud and beneficiary
protections.--Section 1857(d).
(D) Additional contract terms.--Section
1857(e); except that section 1857(e)(2) shall
apply as specified to PDP sponsors and payments
under this part to an MA-PD plan shall be
treated as expenditures made under part D.
Notwithstanding any other provision of law,
information provided to the Secretary under the
application of section 1857(e)(1) to contracts
under this section under the preceding
sentence--
(i) may be used for the purposes of
carrying out this part, improving
public health through research on the
utilization, safety, effectiveness,
quality, and efficiency of health care
services (as the Secretary determines
appropriate), or carrying out part E of
title XI; and
(ii) shall be made available to
Congressional support agencies (in
accordance with their obligations to
support Congress as set out in their
authorizing statutes) for the purposes
of conducting Congressional oversight,
monitoring, making recommendations, and
analysis of the program under this
title.
(E) Intermediate sanctions.--Section 1857(g)
(other than paragraph (1)(F) of such section),
except that in applying such section the
reference in section 1857(g)(1)(B) to section
1854 is deemed a reference to this part.
(F) Procedures for termination.--Section
1857(h).
(4) Prompt payment of clean claims.--
(A) Prompt payment.--
(i) In general.--Each contract
entered into with a PDP sponsor under
this part 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 by pharmacies (other
than pharmacies that dispense drugs by
mail order only or are located in, or
contract with, a long-term care
facility) under this part within the
applicable number of calendar days
after the date on which the claim is
received.
(ii) Clean claim defined.--In this
paragraph, the term ``clean claim''
means a claim that has no 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.
(iii) Date of receipt of claim.--In
this paragraph, a claim is considered
to have been received--
(I) with respect to claims
submitted electronically, on
the date on which the claim is
transferred; and
(II) with respect to claims
submitted otherwise, on the 5th
day after the postmark date of
the claim or the date specified
in the time stamp of the
transmission.
(B) Applicable number of calendar days
defined.--In this paragraph, the term
``applicable number of calendar days'' means--
(i) with respect to claims submitted
electronically, 14 days; and
(ii) with respect to claims submitted
otherwise, 30 days.
(C) Interest payment.--
(i) In general.--Subject to clause
(ii), 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, the PDP
sponsor shall pay interest to the
pharmacy that submitted the claim at a
rate equal to the weighted average of
interest on 3-month marketable Treasury
securities determined for such period,
increased by 0.1 percentage point for
the period beginning on the day after
the required payment date and ending on
the date on which payment is made (as
determined under subparagraph (D)(iv)).
Interest amounts paid under this
subparagraph shall not be counted
against the administrative costs of a
prescription drug plan or treated as
allowable risk corridor costs under
section 1860D-15(e).
(ii) Authority not to charge
interest.--The Secretary may provide
that a PDP sponsor is not charged
interest under clause (i) in the case
where there are exigent circumstances,
including natural disasters and other
unique and unexpected events, that
prevent the timely processing of
claims.
(D) Procedures involving claims.--
(i) Claim deemed to be clean.--A
claim is deemed to be a clean claim if
the PDP sponsor involved does not
provide notice to the claimant of any
deficiency in the claim--
(I) with respect to claims
submitted electronically,
within 10 days after the date
on which the claim is received;
and
(II) with respect to claims
submitted otherwise, within 15
days after the date on which
the claim is received.
(ii) Claim determined to not be a
clean claim.--
(I) In general.--If a PDP
sponsor determines that a
submitted claim is not a clean
claim, the PDP sponsor shall,
not later than the end of the
period described in clause (i),
notify the claimant of such
determination. Such
notification shall specify all
defects or improprieties in the
claim and shall list all
additional information or
documents necessary for the
proper processing and payment
of the claim.
(II) Determination after
submission of additional
information.--A claim is deemed
to be a clean claim under this
paragraph if the PDP sponsor
involved does not provide
notice to the claimant of any
defect or impropriety in the
claim within 10 days of the
date on which additional
information is received under
subclause (I).
(iii) Obligation to pay.--A claim
submitted to a PDP sponsor that is not
paid or contested by the sponsor within
the applicable number of days (as
defined in subparagraph (B)) after the
date on which the claim is received
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 such
subparagraph is considered to have been
made on the date on which--
(I) with respect to claims
paid electronically, the
payment is transferred; and
(II) with respect to claims
paid otherwise, the payment is
submitted to the United States
Postal Service or common
carrier for delivery.
(E) Electronic transfer of funds.--A PDP
sponsor shall pay all clean claims submitted
electronically by electronic transfer of funds
if the pharmacy so requests or has so requested
previously. In the case where such payment is
made electronically, remittance may be made by
the PDP sponsor electronically as well.
(F) Protecting the rights of claimants.--
(i) In general.--Nothing in this
paragraph shall be construed to
prohibit or limit a claim or action not
covered by the subject matter of this
section that any individual or
organization has against a provider or
a PDP sponsor.
(ii) Anti-retaliation.--Consistent
with applicable Federal or State law, a
PDP sponsor shall not retaliate against
an individual or provider for
exercising a right of action under this
subparagraph.
(G) Rule of construction.--A determination
under this paragraph that a claim submitted by
a pharmacy is a clean claim shall not be
construed as a positive determination regarding
eligibility for payment under this title, nor
is it an indication of government approval of,
or acquiescence regarding, the claim submitted.
The determination shall not relieve any party
of civil or criminal liability with respect to
the claim, nor does it offer a defense to any
administrative, civil, or criminal action with
respect to the claim.
(5) Submission of claims by pharmacies located in or
contracting with long-term care facilities.--Each
contract entered into with a PDP sponsor under this
part with respect to a prescription drug plan offered
by such sponsor shall provide that a pharmacy located
in, or having a contract with, a long-term care
facility shall have not less than 30 days (but not more
than 90 days) to submit claims to the sponsor for
reimbursement under the plan.
(6) Regular update of prescription drug pricing
standard.--If the PDP sponsor of a prescription drug
plan uses a standard for reimbursement of pharmacies
based on the cost of a drug, each contract entered into
with such sponsor under this part with respect to the
plan shall provide that the sponsor shall update such
standard not less frequently than once every 7 days,
beginning with an initial update on January 1 of each
year, to accurately reflect the market price of
acquiring the drug.
(7) Suspension of payments pending investigation of
credible allegations of fraud by pharmacies.--
(A) In general.--Section 1862(o)(1) shall
apply with respect to a PDP sponsor with a
contract under this part, a pharmacy, and
payments to such pharmacy under this part in
the same manner as such section applies with
respect to the Secretary, a provider of
services or supplier, and payments to such
provider of services or supplier under this
title. A PDP sponsor shall notify the Secretary
regarding the imposition of any payment
suspension pursuant to the previous sentence,
such as through the secure internet website
portal (or other successor technology)
established under section 1859(i).
(B) Rule of construction.--Nothing in this
paragraph shall be construed as limiting the
authority of a PDP sponsor to conduct
postpayment review.
(8) Provision of information related to maximum fair
prices.--Each contract entered into with a PDP sponsor
under this part with respect to a prescription drug
plan offered by such sponsor shall require the sponsor
to provide information to the Secretary as requested by
the Secretary for purposes of carrying out section
1194.
(c) Waiver of Certain Requirements To Expand Choice.--
(1) Authorizing waiver.--
(A) In general.--In the case of an entity
that seeks to offer a prescription drug plan in
a State, the Secretary shall waive the
requirement of subsection (a)(1) that the
entity be licensed in that State if the
Secretary determines, based on the application
and other evidence presented to the Secretary,
that any of the grounds for approval of the
application described in paragraph (2) have
been met.
(B) Application of regional plan waiver
rule.--In addition to the waiver available
under subparagraph (A), the provisions of
section 1858(d) shall apply to PDP sponsors
under this part in a manner similar to the
manner in which such provisions apply to MA
organizations under part C, except that no
application shall be required under paragraph
(1)(B) of such section in the case of a State
that does not provide a licensing process for
such a sponsor.
(2) Grounds for approval.--
(A) In general.--The grounds for approval
under this paragraph are--
(i) subject to subparagraph (B), the
grounds for approval described in
subparagraphs (B), (C), and (D) of
section 1855(a)(2); and
(ii) the application by a State of
any grounds other than those required
under Federal law.
(B) Special rules.--In applying subparagraph
(A)(i)--
(i) the ground of approval described
in section 1855(a)(2)(B) is deemed to
have been met if the State does not
have a licensing process in effect with
respect to the PDP sponsor; and
(ii) for plan years beginning before
January 1, 2008, if the State does have
such a licensing process in effect,
such ground for approval described in
such section is deemed to have been met
upon submission of an application
described in such section.
(3) Application of waiver procedures.--With respect
to an application for a waiver (or a waiver granted)
under paragraph (1)(A) of this subsection, the
provisions of subparagraphs (E), (F), and (G) of
section 1855(a)(2) shall apply, except that clauses (i)
and (ii) of such subparagraph (E) shall not apply in
the case of a State that does not have a licensing
process described in paragraph (2)(B)(i) in effect.
(4) References to certain provisions.--In applying
provisions of section 1855(a)(2) under paragraphs (2)
and (3) of this subsection to prescription drug plans
and PDP sponsors--
(A) any reference to a waiver application
under section 1855 shall be treated as a
reference to a waiver application under
paragraph (1)(A) of this subsection; and
(B) any reference to solvency standards shall
be treated as a reference to solvency standards
established under subsection (d) of this
section.
(d) Solvency Standards for Non-Licensed Entities.--
(1) Establishment and publication.--The Secretary, in
consultation with the National Association of Insurance
Commissioners, shall establish and publish, by not
later than January 1, 2005, financial solvency and
capital adequacy standards for entities described in
paragraph (2).
(2) Compliance with standards.--A PDP sponsor that is
not licensed by a State under subsection (a)(1) and for
which a waiver application has been approved under
subsection (c) shall meet solvency and capital adequacy
standards established under paragraph (1). The
Secretary shall establish certification procedures for
such sponsors with respect to such solvency standards
in the manner described in section 1855(c)(2).
(e) Licensure Does Not Substitute for or Constitute
Certification.--The fact that a PDP sponsor is licensed in
accordance with subsection (a)(1) or has a waiver application
approved under subsection (c) does not deem the sponsor to meet
other requirements imposed under this part for a sponsor.
(f) Periodic Review and Revision of Standards.--
(1) In general.--Subject to paragraph (2), the
Secretary may periodically review the standards
established under this section and, based on such
review, may revise such standards if the Secretary
determines such revision to be appropriate.
(2) Prohibition of midyear implementation of
significant new regulatory requirements.--The Secretary
may not implement, other than at the beginning of a
calendar year, regulations under this section that
impose new, significant regulatory requirements on a
PDP sponsor or a prescription drug plan.
(g) Prohibition of State Imposition of Premium Taxes;
Relation to State Laws.--The provisions of sections 1854(g) and
1856(b)(3) shall apply with respect to PDP sponsors and
prescription drug plans under this part in the same manner as
such sections apply to MA organizations and MA plans under part
C.
(h) Requirements Relating to Pharmacy Benefit Managers.--For
plan years beginning on or after January 1, 2027:
(1) Agreements with pharmacy benefit managers.--Each
contract entered into with a PDP sponsor under this
part with respect to a prescription drug plan offered
by such sponsor shall provide that any pharmacy benefit
manager acting on behalf of such sponsor has a written
agreement with the PDP sponsor under which the pharmacy
benefit manager, and any affiliates of such pharmacy
benefit manager, as applicable, agree to meet the
following requirements:
(A) No income other than bona fide service
fees.--
(i) In general.--The pharmacy benefit
manager and any affiliate of such
pharmacy benefit manager shall not
derive any remuneration with respect to
any services provided on behalf of any
entity or individual, in connection
with the utilization of covered part D
drugs, from any such entity or
individual other than bona fide service
fees, subject to clauses (ii) and
(iii).
(ii) Incentive payments.--For the
purposes of this subsection, an
incentive payment paid by a PDP sponsor
to a pharmacy benefit manager that is
performing services on behalf of such
sponsor shall be deemed a ``bona fide
service fee''(even if such payment does
not otherwise meet the definition of
such term under paragraph (7)(B)) if
such payment is a flat dollar amount,
is consistent with fair market value
(as specified by the Secretary), is
related to services actually performed
by the pharmacy benefit manager or
affiliate of such pharmacy benefit
manager, on behalf of the entity making
such payment, in connection with the
utilization of covered part D drugs,
and meets additional requirements, if
any, as determined appropriate by the
Secretary.
(iii) Clarification on rebates and
discounts used to lower costs for
covered part d drugs.--Rebates,
discounts, and other price concessions
received by a pharmacy benefit manager
or an affiliate of a pharmacy benefit
manager from manufacturers, even if
such price concessions are calculated
as a percentage of a drug's price,
shall not be considered a violation of
the requirements of clause (i) if they
are fully passed through to a PDP
sponsor and are compliant with all
regulatory and subregulatory
requirements related to direct and
indirect remuneration for manufacturer
rebates under this part, including in
cases where a PDP sponsor is acting as
a pharmacy benefit manager on behalf of
a prescription drug plan offered by
such PDP sponsor.
(iv) Evaluation of remuneration
arrangements.--Components of subsets of
remuneration arrangements (such as fees
or other forms of compensation paid to
or retained by the pharmacy benefit
manager or affiliate of such pharmacy
benefit manager), as determined
appropriate by the Secretary, between
pharmacy benefit managers or affiliates
of such pharmacy benefit managers, as
applicable, and other entities involved
in the dispensing or utilization of
covered part D drugs (including PDP
sponsors, manufacturers, pharmacies,
and other entities as determined
appropriate by the Secretary) shall be
subject to review by the Secretary, in
consultation with the Office of the
Inspector General of the Department of
Health and Human Services, as
determined appropriate by the
Secretary. The Secretary, in
consultation with the Office of the
Inspector General, shall review whether
remuneration under such arrangements is
consistent with fair market value (as
specified by the Secretary) through
reviews and assessments of such
remuneration, as determined
appropriate.
(v) Disgorgement.--The pharmacy
benefit manager shall disgorge any
remuneration paid to such pharmacy
benefit manager or an affiliate of such
pharmacy benefit manager in violation
of this subparagraph to the PDP
sponsor.
(vi) Additional requirements.--The
pharmacy benefit manager shall--
(I) enter into a written
agreement with any affiliate of
such pharmacy benefit manager,
under which the affiliate shall
identify and disgorge any
remuneration described in
clause (v) to the pharmacy
benefit manager; and
(II) attest, subject to any
requirements determined
appropriate by the Secretary,
that the pharmacy benefit
manager has entered into a
written agreement described in
subclause (I) with any relevant
affiliate of the pharmacy
benefit manager.
(B) Transparency regarding guarantees and
cost performance evaluations.--The pharmacy
benefit manager shall--
(i) define, interpret, and apply, in
a fully transparent and consistent
manner for purposes of calculating or
otherwise evaluating pharmacy benefit
manager performance against pricing
guarantees or similar cost performance
measurements related to rebates,
discounts, price concessions, or net
costs, terms such as--
(I) ``generic drug'', in a
manner consistent with the
definition of the term under
section 423.4 of title 42, Code
of Federal Regulations, or a
successor regulation;
(II) ``brand name drug'', in
a manner consistent with the
definition of the term under
section 423.4 of title 42, Code
of Federal Regulations, or a
successor regulation;
(III) ``specialty drug'';
(IV) ``rebate''; and
(V) ``discount'';
(ii) identify any drugs, claims, or
price concessions excluded from any
pricing guarantee or other cost
performance calculation or evaluation
in a clear and consistent manner; and
(iii) where a pricing guarantee or
other cost performance measure is based
on a pricing benchmark other than the
wholesale acquisition cost (as defined
in section 1847A(c)(6)(B)) of a drug,
calculate and provide a wholesale
acquisition cost-based equivalent to
the pricing guarantee or other cost
performance measure in the written
agreement.
(C) Provision of information.--
(i) In general.--Not later than July
1 of each year, beginning in 2027, the
pharmacy benefit manager shall submit
to the PDP sponsor, and to the
Secretary, a report, in accordance with
this subparagraph, and shall make such
report available to such sponsor at no
cost to such sponsor in a format
specified by the Secretary under
paragraph (5). Each such report shall
include, with respect to such PDP
sponsor and each plan offered by such
sponsor, the following information with
respect to the previous plan year:
(I) A list of all drugs
covered by the plan that were
dispensed including, with
respect to each such drug--
(aa) the brand name,
generic or non-
proprietary name, and
National Drug Code;
(bb) the number of
plan enrollees for whom
the drug was dispensed,
the total number of
prescription claims for
the drug (including
original prescriptions
and refills, counted as
separate claims), and
the total number of
dosage units of the
drug dispensed;
(cc) the number of
prescription claims
described in item (bb)
by each type of
dispensing channel
through which the drug
was dispensed,
including retail, mail
order, specialty
pharmacy, long term
care pharmacy, home
infusion pharmacy, or
other types of
pharmacies or
providers;
(dd) the average
wholesale acquisition
cost, listed as cost
per day's supply, cost
per dosage unit, and
cost per typical course
of treatment (as
applicable);
(ee) the average
wholesale price for the
drug, listed as cost
per day's supply, cost
per dosage unit, and
cost per typical course
of treatment (as
applicable);
(ff) the total out-
of-pocket spending by
plan enrollees on such
drug after application
of any benefits under
the plan, including
plan enrollee spending
through copayments,
coinsurance, and
deductibles;
(gg) total rebates
paid by the
manufacturer on the
drug as reported under
the Detailed DIR Report
(or any successor
report) submitted by
such sponsor to the
Centers for Medicare &
Medicaid Services;
(hh) all other direct
or indirect
remuneration on the
drug as reported under
the Detailed DIR Report
(or any successor
report) submitted by
such sponsor to the
Centers for Medicare &
Medicaid Services;
(ii) the average
pharmacy reimbursement
amount paid by the plan
for the drug in the
aggregate and
disaggregated by
dispensing channel
identified in item
(cc);
(jj) the average
National Average Drug
Acquisition Cost
(NADAC); and
(kk) total
manufacturer-derived
revenue, inclusive of
bona fide service fees,
attributable to the
drug and retained by
the pharmacy benefit
manager and any
affiliate of such
pharmacy benefit
manager.
(II) In the case of a
pharmacy benefit manager that
has an affiliate that is a
retail, mail order, or
specialty pharmacy, with
respect to drugs covered by
such plan that were dispensed,
the following information:
(aa) The percentage
of total prescriptions
that were dispensed by
pharmacies that are an
affiliate of the
pharmacy benefit
manager for each drug.
(bb) The
interquartile range of
the total combined
costs paid by the plan
and plan enrollees, per
dosage unit, per course
of treatment, per 30-
day supply, and per 90-
day supply for each
drug dispensed by
pharmacies that are not
an affiliate of the
pharmacy benefit
manager and that are
included in the
pharmacy network of
such plan.
(cc) The
interquartile range of
the total combined
costs paid by the plan
and plan enrollees, per
dosage unit, per course
of treatment, per 30-
day supply, and per 90-
day supply for each
drug dispensed by
pharmacies that are an
affiliate of the
pharmacy benefit
manager and that are
included in the
pharmacy network of
such plan.
(dd) The lowest total
combined cost paid by
the plan and plan
enrollees, per dosage
unit, per course of
treatment, per 30-day
supply, and per 90-day
supply, for each drug
that is available from
any pharmacy included
in the pharmacy network
of such plan.
(ee) The difference
between the average
acquisition cost of the
affiliate, such as a
pharmacy or other
entity that acquires
prescription drugs,
that initially acquires
the drug and the amount
reported under
subclause (I)(jj) for
each drug.
(ff) A list inclusive
of the brand name,
generic or non-
proprietary name, and
National Drug Code of
covered part D drugs
subject to an agreement
with a covered entity
under section 340B of
the Public Health
Service Act for which
the pharmacy benefit
manager or an affiliate
of the pharmacy benefit
manager had a contract
or other arrangement
with such a covered
entity in the service
area of such plan.
(III) Where a drug approved
under section 505(c) of the
Federal Food, Drug, and
Cosmetic Act (referred to in
this subclause as the ``listed
drug'') is covered by the plan,
the following information:
(aa) A list of
currently marketed
generic drugs approved
under section 505(j) of
the Federal Food, Drug,
and Cosmetic Act
pursuant to an
application that
references such listed
drug that are not
covered by the plan,
are covered on the same
formulary tier or a
formulary tier
typically associated
with higher cost-
sharing than the listed
drug, or are subject to
utilization management
that the listed drug is
not subject to.
(bb) The estimated
average beneficiary
cost-sharing under the
plan for a 30-day
supply of the listed
drug.
(cc) Where a generic
drug listed under item
(aa) is on a formulary
tier typically
associated with higher
cost-sharing than the
listed drug, the
estimated average cost-
sharing that a
beneficiary would have
paid for a 30-day
supply of each of the
generic drugs described
in item (aa), had the
plan provided coverage
for such drugs on the
same formulary tier as
the listed drug.
(dd) A written
justification for
providing more
favorable coverage of
the listed drug than
the generic drugs
described in item (aa).
(ee) The number of
currently marketed
generic drugs approved
under section 505(j) of
the Federal Food, Drug,
and Cosmetic Act
pursuant to an
application that
references such listed
drug.
(IV) Where a reference
product (as defined in section
351(i) of the Public Health
Service Act) is covered by the
plan, the following
information:
(aa) A list of
currently marketed
biosimilar biological
products licensed under
section 351(k) of the
Public Health Service
Act pursuant to an
application that refers
to such reference
product that are not
covered by the plan,
are covered on the same
formulary tier or a
formulary tier
typically associated
with higher cost-
sharing than the
reference product, or
are subject to
utilization management
that the reference
product is not subject
to.
(bb) The estimated
average beneficiary
cost-sharing under the
plan for a 30-day
supply of the reference
product.
(cc) Where a
biosimilar biological
product listed under
item (aa) is on a
formulary tier
typically associated
with higher cost-
sharing than the listed
drug, the estimated
average cost-sharing
that a beneficiary
would have paid for a
30-day supply of each
of the biosimilar
biological products
described in item (aa),
had the plan provided
coverage for such
products on the same
formulary tier as the
reference product.
(dd) A written
justification for
providing more
favorable coverage of
the reference product
than the biosimilar
biological product
described in item (aa).
(ee) The number of
currently marketed
biosimilar biological
products licensed under
section 351(k) of the
Public Health Service
Act, pursuant to an
application that refers
to such reference
product.
(V) Total gross spending on
covered part D drugs by the
plan, not net of rebates, fees,
discounts, or other direct or
indirect remuneration.
(VI) The total amount
retained by the pharmacy
benefit manager or an affiliate
of such pharmacy benefit
manager in revenue related to
utilization of covered part D
drugs under that plan,
inclusive of bona fide service
fees.
(VII) The total spending on
covered part D drugs net of
rebates, fees, discounts, or
other direct and indirect
remuneration by the plan.
(VIII) An explanation of any
benefit design parameters under
such plan that encourage plan
enrollees to fill prescriptions
at pharmacies that are an
affiliate of such pharmacy
benefit manager, such as mail
and specialty home delivery
programs, and retail and mail
auto-refill programs.
(IX) The following
information:
(aa) A list of all
brokers, consultants,
advisors, and auditors
that receive
compensation from the
pharmacy benefit
manager or an affiliate
of such pharmacy
benefit manager for
referrals, consulting,
auditing, or other
services offered to PDP
sponsors related to
pharmacy benefit
management services.
(bb) The amount of
compensation provided
by such pharmacy
benefit manager or
affiliate to each such
broker, consultant,
advisor, and auditor.
(cc) The methodology
for calculating the
amount of compensation
provided by such
pharmacy benefit
manager or affiliate,
for each such broker,
consultant, advisor,
and auditor.
(X) A list of all affiliates
of the pharmacy benefit
manager.
(XI) A summary document
submitted in a standardized
template developed by the
Secretary that includes such
information described in
subclauses (I) through (X).
(ii) Written explanation of contracts
or agreements with drug
manufacturers.--
(I) In general.--The pharmacy
benefit manager shall, not
later than 30 days after the
finalization of any contract or
agreement between such pharmacy
benefit manager or an affiliate
of such pharmacy benefit
manager and a drug manufacturer
(or subsidiary, agent, or
entity affiliated with such
drug manufacturer) that makes
rebates, discounts, payments,
or other financial incentives
related to one or more covered
part D drugs or other
prescription drugs, as
applicable, of the manufacturer
directly or indirectly
contingent upon coverage,
formulary placement, or
utilization management
conditions on any other covered
part D drugs or other
prescription drugs, as
applicable, submit to the PDP
sponsor a written explanation
of such contract or agreement.
(II) Requirements.--A written
explanation under subclause (I)
shall--
(aa) include the
manufacturer subject to
the contract or
agreement, all covered
part D drugs and other
prescription drugs, as
applicable, subject to
the contract or
agreement and the
manufacturers of such
drugs, and a high-level
description of the
terms of such contract
or agreement and how
such terms apply to
such drugs; and
(bb) be certified by
the Chief Executive
Officer, Chief
Financial Officer, or
General Counsel of such
pharmacy benefit
manager, or affiliate
of such pharmacy
benefit manager, as
applicable, or an
individual delegated
with the authority to
sign on behalf of one
of these officers, who
reports directly to the
officer.
(III) Definition of other
prescription drugs.--For
purposes of this clause, the
term ``other prescription
drugs'' means prescription
drugs covered as supplemental
benefits under this part or
prescription drugs paid outside
of this part.
(D) Audit rights.--
(i) In general.--Not less than once a
year, at the request of the PDP
sponsor, the pharmacy benefit manager
shall allow for an audit of the
pharmacy benefit manager to ensure
compliance with all terms and
conditions under the written agreement
and the accuracy of information
reported under subparagraph (C).
(ii) Auditor.--The PDP sponsor shall
have the right to select an auditor.
The pharmacy benefit manager shall not
impose any limitations on the selection
of such auditor.
(iii) Provision of information.--The
pharmacy benefit manager shall make
available to such auditor all records,
data, contracts, and other information
necessary to confirm the accuracy of
information provided under subparagraph
(C), subject to reasonable restrictions
on how such information must be
reported to prevent redisclosure of
such information.
(iv) Timing.--The pharmacy benefit
manager must provide information under
clause (iii) and other information,
data, and records relevant to the audit
to such auditor within 6 months of the
initiation of the audit and respond to
requests for additional information
from such auditor within 30 days after
the request for additional information.
(v) Information from affiliates.--The
pharmacy benefit manager shall be
responsible for providing to such
auditor information required to be
reported under subparagraph (C) that is
owned or held by an affiliate of such
pharmacy benefit manager.
(2) Enforcement.--
(A) In general.--Each PDP sponsor shall--
(i) disgorge to the Secretary any
amounts disgorged to the PDP sponsor by
a pharmacy benefit manager under
paragraph (1)(A)(v);
(ii) require, in a written agreement
with any pharmacy benefit manager
acting on behalf of such sponsor or
affiliate of such pharmacy benefit
manager, that such pharmacy benefit
manager or affiliate reimburse the PDP
sponsor for any civil money penalty
imposed on the PDP sponsor as a result
of the failure of the pharmacy benefit
manager or affiliate to meet the
requirements of paragraph (1) that are
applicable to the pharmacy benefit
manager or affiliate under the
agreement; and
(iii) require, in a written agreement
with any such pharmacy benefit manager
acting on behalf of such sponsor or
affiliate of such pharmacy benefit
manager, that such pharmacy benefit
manager or affiliate be subject to
punitive remedies for breach of
contract for failure to comply with the
requirements applicable under paragraph
(1).
(B) Reporting of alleged violations.--The
Secretary shall make available and maintain a
mechanism for manufacturers, PDP sponsors,
pharmacies, and other entities that have
contractual relationships with pharmacy benefit
managers or affiliates of such pharmacy benefit
managers to report, on a confidential basis,
alleged violations of paragraph (1)(A) or
subparagraph (C).
(C) Anti-retaliation and anti-coercion.--
Consistent with applicable Federal or State
law, a PDP sponsor shall not--
(i) retaliate against an individual
or entity for reporting an alleged
violation under subparagraph (B); or
(ii) coerce, intimidate, threaten, or
interfere with the ability of an
individual or entity to report any such
alleged violations.
(3) Certification of compliance.--
(A) In general.--Each PDP sponsor shall
furnish to the Secretary (in a time and manner
specified by the Secretary) an annual
certification of compliance with this
subsection, as well as such information as the
Secretary determines necessary to carry out
this subsection.
(B) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(4) Rule of construction.--Nothing in this subsection
shall be construed as prohibiting payments related to
reimbursement for ingredient costs to any entity that
acquires prescription drugs, such as a pharmacy or
wholesaler.
(5) Standard formats.--
(A) In general.--Not later than June 1, 2026,
the Secretary shall specify standard, machine-
readable formats for pharmacy benefit managers
to submit annual reports required under
paragraph (1)(C)(i).
(B) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(6) Confidentiality.--
(A) In general.--Information disclosed by a
pharmacy benefit manager, an affiliate of a
pharmacy benefit manager, a PDP sponsor, or a
pharmacy under this subsection that is not
otherwise publicly available or available for
purchase shall not be disclosed by the
Secretary or a PDP sponsor receiving the
information, except that the Secretary may
disclose the information for the following
purposes:
(i) As the Secretary determines
necessary to carry out this part.
(ii) To permit the Comptroller
General to review the information
provided.
(iii) To permit the Director of the
Congressional Budget Office to review
the information provided.
(iv) To permit the Executive Director
of the Medicare Payment Advisory
Commission to review the information
provided.
(v) To the Attorney General for the
purposes of conducting oversight and
enforcement under this title.
(vi) To the Inspector General of the
Department of Health and Human Services
in accordance with its authorities
under the Inspector General Act of 1978
(section 406 of title 5, United States
Code), and other applicable statutes.
(B) Restriction on use of information.--The
Secretary, the Comptroller General, the
Director of the Congressional Budget Office,
and the Executive Director of the Medicare
Payment Advisory Commission shall not report on
or disclose information disclosed pursuant to
subparagraph (A) to the public in a manner that
would identify--
(i) a specific pharmacy benefit
manager, affiliate, pharmacy,
manufacturer, wholesaler, PDP sponsor,
or plan; or
(ii) contract prices, rebates,
discounts, or other remuneration for
specific drugs in a manner that may
allow the identification of specific
contracting parties or of such specific
drugs.
(7) Definitions.--For purposes of this subsection:
(A) Affiliate.--The term ``affiliate'' means
any entity that is owned by, controlled by, or
related under a common ownership structure with
a pharmacy benefit manager or PDP sponsor, or
that acts as a contractor or agent to such
pharmacy benefit manager or PDP sponsor,
insofar as such contractor or agent performs
any of the functions described under
subparagraph (C).
(B) Bona fide service fee.--The term ``bona
fide service fee'' means a fee that is
reflective of the fair market value (as
specified by the Secretary) for a bona fide,
itemized service actually performed on behalf
of an entity, that the entity would otherwise
perform (or contract for) in the absence of the
service arrangement and that is not passed on
in whole or in part to a client or customer,
whether or not the entity takes title to the
drug. Such fee must be a flat dollar amount and
shall not be directly or indirectly based on,
or contingent upon--
(i) drug price, such as wholesale
acquisition cost or drug benchmark
price (such as average wholesale
price);
(ii) the amount of discounts,
rebates, fees, or other direct or
indirect remuneration with respect to
covered part D drugs dispensed to
enrollees in a prescription drug plan,
except as permitted pursuant to
paragraph (1)(A)(ii);
(iii) coverage or formulary placement
decisions or the volume or value of any
referrals or business generated between
the parties to the arrangement; or
(iv) any other amounts or
methodologies prohibited by the
Secretary.
(C) Pharmacy benefit manager.--The term
``pharmacy benefit manager'' means any person
or entity that, either directly or through an
intermediary, acts as a price negotiator or
group purchaser on behalf of a PDP sponsor or
prescription drug plan, or manages the
prescription drug benefits provided by such
sponsor or plan, including the processing and
payment of claims for prescription drugs, the
performance of drug utilization review, the
processing of drug prior authorization
requests, the adjudication of appeals or
grievances related to the prescription drug
benefit, contracting with network pharmacies,
controlling the cost of covered part D drugs,
or the provision of related services. Such term
includes any person or entity that carries out
one or more of the activities described in the
preceding sentence, irrespective of whether
such person or entity calls itself a ``pharmacy
benefit manager''.
* * * * * * *
Part E--Miscellaneous Provisions
* * * * * * *
SEC. 1866G. EXTENSION OF ACUTE HOSPITAL CARE AT HOME INITIATIVE.
(a) In General.--
(1) Extension.--With respect to inpatient hospital
admissions occurring during the period beginning on the
first day after the end of the emergency period
described in section 1135(g)(1)(B) and ending on
December, 31, [2024] 2029, the Secretary of Health and
Human Services shall grant waivers and flexibilities
(as described in paragraph (2)) to an individual
hospital that submits a request for such waivers and
flexibilities and meets specified criteria (as
described in paragraph (3)) in order to participate in
the Acute Hospital Care at Home initiative of the
Secretary.
(2) Acute hospital care at home waivers and
flexibilities.--For the purposes of paragraph (1), the
waivers and flexibilities described in this paragraph
are the following waivers and flexibilities that were
made available to individual hospitals under the Acute
Hospital Care at Home initiative of the Secretary
during the emergency period described in section
1135(g)(1)(B):
(A) Subject to paragraph (3)(D), waiver of
the requirements to provide 24-hour nursing
services on premises and for the immediate
availability of a registered nurse under
section 482.23(b) of title 42, Code of Federal
Regulations (or any successor regulation), and
the waivers of the physical environment and
Life Safety Code requirements under section
482.41 of title 42, Code of Federal Regulations
(or any successor regulation).
(B) Flexibility to allow a hospital to
furnish inpatient services, including routine
services, outside the hospital under
arrangements, as described in Medicare Program:
Hospital Outpatient Prospective Payment and
Ambulatory Surgical Center Payment Systems and
Quality Reporting Programs; Organ Acquisition;
Rural Emergency Hospitals: Payment Policies,
Conditions of Participation, Provider
Enrollment, Physician Self-Referral; New
Service Category for Hospital Outpatient
Department Prior Authorization Process; Overall
Hospital Quality Star Rating; COVID-19 (87 Fed.
Reg. 71748 et seq.).
(C) Waiver of the telehealth requirements
under clause (i) of section 1834(m)(4)(C), as
amended by section 4113(a) of the Health
Extenders, Improving Access to Medicare,
Medicaid, and CHIP, and Strengthening Public
Health Act of 2022, such that the originating
sites described in clause (ii) of such section
shall include the home or temporary residence
of the individual.
(D) Other waivers and flexibilities that, as
of the date of enactment of this section, were
in place for such initiative during such
emergency period.
(3) Specified criteria.--For purposes of paragraph
(1), the specified criteria for granting such waivers
and flexibilities to individual hospitals are:
(A) The hospital shall indicate to the
Secretary the criteria it would use to ensure
that hospital services be furnished only to an
individual who requires an inpatient level of
care, and shall require that a physician
document in the medical record of each such
individual that the individual meets such
criteria.
(B) The hospital and any other entities
providing services under arrangements with the
hospital shall ensure that the standard of care
to treat an individual at home is the same as
the standard of care to treat such individual
as an inpatient of the hospital.
(C) The hospital shall ensure that an
individual is only eligible for services under
paragraph (1) if the individual is a hospital
inpatient or is a patient of the hospital's
emergency department for whom the hospital
determines that an inpatient level of care is
required (as described in subparagraph (A)).
(D) The hospital shall meet all patient
safety standards determined appropriate by the
Secretary, in addition to those that otherwise
apply to the hospital, except those for which
the waivers and flexibilities under this
subsection apply.
(E) The hospital shall provide to the
Secretary, at a time, form and manner
determined by the Secretary, any data and
information the Secretary determines necessary
to do the following:
(i) Monitor the quality of care
furnished, and to the extent
practicable, ensure the safety of
individuals and analyze costs of such
care.
(ii) Undertake the study described in
subsection (b).
(F) The hospital meets such other
requirements and conditions as the Secretary
determines appropriate.
(4) Termination.--The Secretary may terminate a
hospital from participation in such initiative (and the
waivers and flexibilities applicable to such hospital)
if the Secretary determines that the hospital no longer
meets the criteria described in paragraph (3).
(b) [Study and Report] Studies and Reports.--
(1) In general.--[The Secretary] Not later than
September 30, 2024, and again not later than September
30, 2028, the Secretary shall conduct a study to--
(A) analyze, to the extent practicable, the
criteria established by hospitals under the
Acute Hospital Care at Home initiative of the
Secretary to determine which individuals may be
furnished services under such initiative; and
(B) analyze and compare, to the extent
practicable--
(i) quality of care furnished to
individuals with similar conditions and
characteristics in the inpatient
setting and through the Acute Hospital
Care at Home initiative, including
health outcomes, hospital readmission
rates, hospital mortality rates, length
of stay, infection rates, and patient
experience of care;
(ii) clinical conditions treated and
diagnosis-related groups of discharges
from the inpatient setting and under
the Acute Hospital Care at Home
initiative;
(iii) costs incurred by furnishing
care in the inpatient setting and
through the Acute Hospital Care at Home
initiative;
(iv) the quantity, mix and intensity
of such services (such as in-person
visits and virtual contacts with
patients) furnished in the Acute
Hospital Care at Home initiative and
furnished in the inpatient setting;
[and]
(v) socioeconomic information on
beneficiaries treated under the
initiative, including racial and ethnic
data, income, and whether such
beneficiaries are dually eligible for
benefits under this title and title
XIX[.]; and
(vi) in the case of the second study
conducted under this paragraph, the
quality of care, outcomes, costs,
quantity and intensity of services, and
other relevant metrics between
individuals who entered into the Acute
Hospital Care at Home initiative
directly from an emergency department
compared with individuals who entered
into the Acute Hospital Care at Home
initiative directly from an existing
inpatient stay in a hospital.
(2) [Report] Reports.--Not later than September 30,
2024, and again not later than September 30, 2028, the
Secretary of Health and Human Services shall post on a
website of the Centers for Medicare & Medicaid Services
a report [on the study conducted under paragraph (1).]
on--
(A) with respect to the first report
submitted under this paragraph, the first study
conducted under paragraph (1); and
(B) with respect to the second report
submitted under this paragraph, the second
study conducted under paragraph (1).
(3) Funding.--In addition to amounts otherwise
available, there is appropriated to the Centers for
Medicare & Medicaid Services Program Management Account
for fiscal year 2023, out of any amounts in the
Treasury not otherwise appropriated, $5,000,000, to
remain available until expended, for purposes of
carrying out this subsection.
(c) Implementation.--Notwithstanding any other provision of
law, the Secretary may implement this section by program
instruction or otherwise.
(d) Publicly Available Information.--The Secretary shall, as
feasible, make the information collected under subsections
(a)(3)(E) and (b)(1) available on the Medicare.gov internet
website (or a successor website).
* * * * * * *
payment to hospitals for inpatient hospital services
Sec. 1886. (a)(1)(A)(i) The Secretary, in determining the
amount of the payments that may be made under this title with
respect to operating costs of inpatient hospital services (as
defined in paragraph (4)) shall not recognize as reasonable (in
the efficient delivery of health services) costs for the
provision of such services by a hospital for a cost reporting
period to the extent such costs exceed the applicable
percentage (as determined under clause (ii)) of the average of
such costs for all hospitals in the same grouping as such
hospital for comparable time periods.
(ii) For purposes of clause (i), the applicable percentage
for hospital cost reporting periods beginning--
(I) on or after October 1, 1982, and before October
1, 1983, is 120 percent;
(II) on or after October 1, 1983, and before October
1, 1984, is 115 percent; and
(III) on or after October 1, 1984, is 110 percent.
(B)(i) For purposes of subparagraph (A) the Secretary shall
establish case mix indexes for all short- term hospitals, and
shall set limits for each hospital based upon the general mix
of types of medical cases with respect to which such hospital
provides services for which payment may be made under this
title.
(ii) The Secretary shall set such limits for a cost reporting
period of a hospital--
(I) by updating available data for a previous period
to the immediate preceding cost reporting period by the
estimated average rate of change of hospital costs
industry-wide, and
(II) by projecting for the cost reporting period by
the applicable percentage increase (as defined in
subsection (b)(3)(B)).
(C) The limitation established under subparagraph (A) for any
hospital shall in no event be lower than the allowable
operating costs of inpatient hospital services (as defined in
paragraph (4)) recognized under this title for such hospital
for such hospital's last cost reporting period prior to the
hospital's first cost reporting period for which this section
is in effect.
(D) Subparagraph (A) shall not apply to cost reporting
periods beginning on or after October 1, 1983.
(2) The Secretary shall provide for such exemptions from, and
exceptions and adjustments to, the limitation established under
paragraph (1)(A) as he deems appropriate, including those which
he deems necessary to take into account--
(A) the special needs of sole community hospitals, of
new hospitals, of risk based health maintenance
organizations, and of hospitals which provide atypical
services or essential community services, and to take
into account extraordinary circumstances beyond the
hospital's control, medical and paramedical education
costs, significantly fluctuating population in the
service area of the hospital, and unusual labor costs,
(B) the special needs of psychiatric hospitals and of
public or other hospitals that serve a significantly
disproportionate number of patients who have low income
or are entitled to benefits under part A of this title,
and
(C) a decrease in the inpatient hospital services
that a hospital provides and that are customarily
provided directly by similar hospitals which results in
a significant distortion in the operating costs of
inpatient hospital services.
(3) The limitation established under paragraph (1)(A) shall
not apply with respect to any hospital which--
(A) is located outside of a standard metropolitan
statistical area, and
(B)(i) has less than 50 beds, and
(ii) was in operation and had less than 50 beds on
the date of the enactment of this section.
(4) For purposes of this section, the term ``operating costs
of inpatient hospital services'' includes all routine operating
costs, ancillary service operating costs, and special care unit
operating costs with respect to inpatient hospital services as
such costs are determined on an average per admission or per
discharge basis (as determined by the Secretary), and includes
the costs of all services for which payment may be made under
this title that are provided by the hospital (or by an entity
wholly owned or operated by the hospital) to the patient during
the 3 days (or, in the case of a hospital that is not a
subsection (d) hospital, during the 1 day) immediately
preceding the date of the patient's admission if such services
are diagnostic services (including clinical diagnostic
laboratory tests) or are other services related to the
admission (as defined by the Secretary). Such term does not
include costs of approved educational activities, a return on
equity capital, other capital-related costs (as defined by the
Secretary for periods before October 1, 1987), for cost
reporting periods beginning on or after October 1, 2020, costs
related to hematopoietic stem cell acquisition for the purpose
of an allogeneic hematopoietic stem cell transplant (as
described in subsection (d)(5)(M)), or costs with respect to
administering blood clotting factors to individuals with
hemophilia. In applying the first sentence of this paragraph,
the term ``other services related to the admission'' includes
all services that are not diagnostic services (other than
ambulance and maintenance renal dialysis services) for which
payment may be made under this title that are provided by a
hospital (or an entity wholly owned or operated by the
hospital) to a patient--
(A) on the date of the patient's inpatient admission;
or
(B) during the 3 days (or, in the case of a hospital
that is not a subsection (d) hospital, during the 1
day) immediately preceding the date of such admission
unless the hospital demonstrates (in a form and manner,
and at a time, specified by the Secretary) that such
services are not related (as determined by the
Secretary) to such admission.
(b)(1) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, if the operating costs of inpatient
hospital services (as defined in subsection (a)(4)) of a
hospital (other than a subsection (d) hospital, as defined in
subsection (d)(1)(B) and other than a rehabilitation facility
described in subsection (j)(1)) for a cost reporting period
subject to this paragraph--
(A) are less than or equal to the target amount (as
defined in paragraph (3)) for that hospital for that
period, the amount of the payment with respect to such
operating costs payable under part A on a per discharge
or per admission basis (as the case may be) shall be
equal to the amount of such operating costs, plus--
(i) 15 percent of the amount by which the
target amount exceeds the amount of the
operating costs, or
(ii) 2 percent of the target amount,
whichever is less;
(B) are greater than the target amount but do not
exceed 110 percent of the target amount, the amount of
the payment with respect to those operating costs
payable under part A on a per discharge basis shall
equal the target amount; or
(C) are greater than 110 percent of the target
amount, the amount of the payment with respect to such
operating costs payable under part A on a per discharge
or per admission basis (as the case may be) shall be
equal to (i) the target amount, plus (ii) in the case
of cost reporting periods beginning on or after October
1, 1991, an additional amount equal to 50 percent of
the amount by which the operating costs exceed 110
percent of the target amount (except that such
additional amount may not exceed 10 percent of the
target amount) after any exceptions or adjustments are
made to such target amount for the cost reporting
period;
plus the amount, if any, provided under paragraph (2), except
that in no case may the amount payable under this title (other
than on the basis of a DRG prospective payment rate determined
under subsection (d)) with respect to operating costs of
inpatient hospital services exceed the maximum amount payable
with respect to such costs pursuant to subsection (a).
(2)(A) Except as provided in subparagraph (E), in addition to
the payment computed under paragraph (1), in the case of an
eligible hospital (described in subparagraph (B)) for a cost
reporting period beginning on or after October 1, 1997, the
amount of payment on a per discharge basis under paragraph (1)
shall be increased by the lesser of--
(i) 50 percent of the amount by which the operating
costs are less than the expected costs (as defined in
subparagraph (D)) for the period; or
(ii) 1 percent of the target amount for the period.
(B) For purposes of this paragraph, an ``eligible hospital''
means with respect to a cost reporting period, a hospital--
(i) that has received payments under this subsection
for at least 3 full cost reporting periods before that
cost reporting period, and
(ii) whose operating costs for the period are less
than the least of its target amount, its trended costs
(as defined in subparagraph (C)), or its expected costs
(as defined in subparagraph (D)) for the period.
(C) For purposes of subparagraph (B)(ii), the term ``trended
costs'' means for a hospital cost reporting period ending in a
fiscal year--
(i) in the case of a hospital for which its cost
reporting period ending in fiscal year 1996 was its
third or subsequent full cost reporting period for
which it receives payments under this subsection, the
lesser of the operating costs or target amount for that
hospital for its cost reporting period ending in fiscal
year 1996, or
(ii) in the case of any other hospital, the operating
costs for that hospital for its third full cost
reporting period for which it receives payments under
this subsection,
increased (in a compounded manner) for each succeeding fiscal
year (through the fiscal year involved) by the market basket
percentage increase for the fiscal year.
(D) For purposes of this paragraph, the term ``expected
costs'', with respect to the cost reporting period ending in a
fiscal year, means the lesser of the operating costs of
inpatient hospital services or target amount per discharge for
the previous cost reporting period updated by the market basket
percentage increase (as defined in paragraph (3)(B)(iii)) for
the fiscal year.
(E)(i) In the case of an eligible hospital that is a hospital
or unit that is within a class of hospital described in clause
(ii) with a 12-month cost reporting period beginning before the
enactment of this subparagraph, in determining the amount of
the increase under subparagraph (A), the Secretary shall
substitute for the percentage of the target amount applicable
under subparagraph (A)(ii)--
(I) for a cost reporting period beginning on or after
October 1, 2000, and before September 30, 2001, 1.5
percent; and
(II) for a cost reporting period beginning on or
after October 1, 2001, and before September 30, 2002, 2
percent.
(ii) For purposes of clause (i), each of the following shall
be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (iv) of such
subsection.
(3)(A) Except as provided in subparagraph (C) and succeeding
subparagraphs and in paragraph (7)(A)(ii), for purposes of this
subsection, the term ``target amount'' means, with respect to a
hospital for a particular 12-month cost reporting period--
(i) in the case of the first such reporting period
for which this subsection is in effect, the allowable
operating costs of inpatient hospital services (as
defined in subsection (a)(4)) recognized under this
title for such hospital for the preceding 12-month cost
reporting period, and
(ii) in the case of a later reporting period, the
target amount for the preceding 12-month cost reporting
period,
increased by the applicable percentage increase under
subparagraph (B) for that particular cost reporting period.
(B)(i) For purposes of subsection (d) and subsection (j) for
discharges occurring during a fiscal year, the ``applicable
percentage increase'' shall be--
(I) for fiscal year 1986, \1/2\ percent,
(II) for fiscal year 1987, 1.15 percent,
(III) for fiscal year 1988, 3.0 percent for hospitals
located in a rural area, 1.5 percent for hospitals
located in a large urban area (as defined in subsection
(d)(2)(D)), and 1.0 percent for hospitals located in
other urban areas,
(IV) for fiscal year 1989, the market basket
percentage increase minus 1.5 percentage points for
hospitals located in a rural area, the market basket
percentage increase minus 2.0 percentage points for
hospitals located in a large urban area, and the market
basket percentage increase minus 2.5 percentage points
for hospitals located in other urban areas,
(V) for fiscal year 1990, the market basket
percentage increase plus 4.22 percentage points for
hospitals located in a rural area, the market basket
percentage increase plus 0.12 percentage points for
hospitals located in a large urban area, and the market
basket percentage increase minus 0.53 percentage points
for hospitals located in other urban areas,
(VI) for fiscal year 1991, the market basket
percentage increase minus 2.0 percentage points for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.7 percentage
point for hospitals located in a rural area,
(VII) for fiscal year 1992, the market basket
percentage increase minus 1.6 percentage points for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.6 percentage
point for hospitals located in a rural area,
(VIII) for fiscal year 1993, the market basket
percentage increase minus 1.55 percentage point for
hospitals in a large urban or other urban area, and the
market basket percentage increase minus 0.55 for
hospitals located in a rural area,
(IX) for fiscal year 1994, the market basket
percentage increase minus 2.5 percentage points for
hospitals located in a large urban or other urban area,
and the market basket percentage increase minus 1.0
percentage point for hospitals located in a rural area,
(X) for fiscal year 1995, the market basket
percentage increase minus 2.5 percentage points for
hospitals located in a large urban or other urban area,
and such percentage increase for hospitals located in a
rural area as will provide for the average standardized
amount determined under subsection (d)(3)(A) for
hospitals located in a rural area being equal to such
average standardized amount for hospitals located in an
urban area (other than a large urban area),
(XI) for fiscal year 1996, the market basket
percentage increase minus 2.0 percentage points for
hospitals in all areas,
(XII) for fiscal year 1997, the market basket
percentage increase minus 0.5 percentage point for
hospitals in all areas,
(XIII) for fiscal year 1998, 0 percent,
(XIV) for fiscal year 1999, the market basket
percentage increase minus 1.9 percentage points for
hospitals in all areas,
(XV) for fiscal year 2000, the market basket
percentage increase minus 1.8 percentage points for
hospitals in all areas,
(XVI) for fiscal year 2001, the market basket
percentage increase for hospitals in all areas,
(XVII) for fiscal year 2002, the market basket
percentage increase minus 0.55 percentage points for
hospitals in all areas,
(XVIII) for fiscal year 2003, the market basket
percentage increase minus 0.55 percentage points for
hospitals in all areas,
(XIX) for each of fiscal years 2004 through 2006,
subject to clause (vii), the market basket percentage
increase for hospitals in all areas; and
(XX) for each subsequent fiscal year, subject to
clauses (viii), (ix), (xi), and (xii), the market
basket percentage increase for hospitals in all areas.
(ii) For purposes of subparagraphs (A) and (E), the
``applicable percentage increase'' for 12-month cost reporting
periods beginning during--
(I) fiscal year 1986, is 0.5 percent,
(II) fiscal year 1987, is 1.15 percent,
(III) fiscal year 1988, is the market basket
percentage increase minus 2.0 percentage points,
(IV) a subsequent fiscal year ending on or before
September 30, 1993, is the market basket percentage
increase,
(V) fiscal years 1994 through 1997, is the market
basket percentage increase minus the applicable
reduction (as defined in clause (v)(II)), or in the
case of a hospital for a fiscal year for which the
hospital's update adjustment percentage (as defined in
clause (v)(I)) is at least 10 percent, the market
basket percentage increase,
(VI) for fiscal year 1998, is 0 percent,
(VII) for fiscal years 1999 through 2002, is the
applicable update factor specified under clause (vi)
for the fiscal year, and
(VIII) subsequent fiscal years is the market basket
percentage increase.
(iii) For purposes of this subparagraph, the term ``market
basket percentage increase'' means, with respect to cost
reporting periods and discharges occurring in a fiscal year,
the percentage, estimated by the Secretary before the beginning
of the period or fiscal year, by which the cost of the mix of
goods and services (including personnel costs but excluding
nonoperating costs) comprising routine, ancillary, and special
care unit inpatient hospital services, based on an index of
appropriately weighted indicators of changes in wages and
prices which are representative of the mix of goods and
services included in such inpatient hospital services, for the
period or fiscal year will exceed the cost of such mix of goods
and services for the preceding 12-month cost reporting period
or fiscal year.
(iv) For purposes of subparagraphs (C) and (D), the
``applicable percentage increase'' is--
(I) for 12-month cost reporting periods beginning
during fiscal years 1986 through 1993, the applicable
percentage increase specified in clause (ii),
(II) for fiscal year 1994, the market basket
percentage increase minus 2.3 percentage points
(adjusted to exclude any portion of a cost reporting
period beginning during fiscal year 1993 for which the
applicable percentage increase is determined under
subparagraph (I)),
(III) for fiscal year 1995, the market basket
percentage increase minus 2.2 percentage points, and
(IV) for fiscal year 1996 and each subsequent fiscal
year, the applicable percentage increase under clause
(i).
(v) For purposes of clause (ii)(V)--
(I) a hospital's ``update adjustment percentage'' for
a fiscal year is the percentage by which the hospital's
allowable operating costs of inpatient hospital
services recognized under this title for the cost
reporting period beginning in fiscal year 1990 exceeds
the hospital's target amount (as determined under
subparagraph (A)) for such cost reporting period,
increased for each fiscal year (beginning with fiscal
year 1994) by the sum of any of the hospital's
applicable reductions under subclause (V) for previous
fiscal years; and
(II) the ``applicable reduction'' with respect to a
hospital for a fiscal year is the lesser of 1
percentage point or the percentage point difference
between 10 percent and the hospital's update adjustment
percentage for the fiscal year.
(vi) For purposes of clause (ii)(VII) for a fiscal year, if a
hospital's allowable operating costs of inpatient hospital
services recognized under this title for the most recent cost
reporting period for which information is available--
(I) is equal to, or exceeds, 110 percent of the
hospital's target amount (as determined under
subparagraph (A)) for such cost reporting period, the
applicable update factor specified under this clause is
the market basket percentage;
(II) exceeds 100 percent, but is less than 110
percent, of such target amount for the hospital, the
applicable update factor specified under this clause is
0 percent or, if greater, the market basket percentage
minus 0.25 percentage points for each percentage point
by which such allowable operating costs (expressed as a
percentage of such target amount) is less than 110
percent of such target amount;
(III) is equal to, or less than 100 percent, but
exceeds \2/3\ of such target amount for the hospital,
the applicable update factor specified under this
clause is 0 percent or, if greater, the market basket
percentage minus 2.5 percentage points; or
(IV) does not exceed \2/3\ of such target amount for
the hospital, the applicable update factor specified
under this clause is 0 percent.
(vii)(I) For purposes of clause (i)(XIX) for fiscal years
2005 and 2006, in a case of a subsection (d) hospital that does
not submit data to the Secretary in accordance with subclause
(II) with respect to such a fiscal year, the applicable
percentage increase under such clause for such fiscal year
shall be reduced by 0.4 percentage points. Such reduction shall
apply only with respect to the fiscal year involved, and the
Secretary shall not take into account such reduction in
computing the applicable percentage increase under clause
(i)(XIX) for a subsequent fiscal year.
(II) For fiscal years 2005 and 2006, each subsection (d)
hospital shall submit to the Secretary quality data (for a set
of 10 indicators established by the Secretary as of November 1,
2003) that relate to the quality of care furnished by the
hospital in inpatient settings in a form and manner, and at a
time, specified by the Secretary for purposes of this clause,
but with respect to fiscal year 2005, the Secretary shall
provide for a 30-day grace period for the submission of data by
a hospital.
(viii)(I) For purposes of clause (i) for fiscal year 2007 and
each subsequent fiscal year, in the case of a subsection (d)
hospital that does not submit, to the Secretary in accordance
with this clause, data required to be submitted on measures
selected under this clause with respect to such a fiscal year,
the applicable percentage increase under clause (i) for such
fiscal year shall be reduced by 2.0 percentage points (or,
beginning with fiscal year 2015, by one-quarter of such
applicable percentage increase (determined without regard to
clause (ix), (xi), or (xii))). Such reduction shall apply only
with respect to the fiscal year involved and the Secretary
shall not take into account such reduction in computing the
applicable percentage increase under clause (i) for a
subsequent fiscal year, and the Secretary and the Medicare
Payment Advisory Commission shall carry out the requirements
under section 5001(b) of the Deficit Reduction Act of 2005.
(II) Each subsection (d) hospital shall submit data on
measures selected under this clause to the Secretary in a form
and manner, and at a time, specified by the Secretary for
purposes of this clause. The Secretary may require hospitals to
submit data on measures that are not used for the determination
of value-based incentive payments under subsection (o).
(III) The Secretary shall expand, beyond the measures
specified under clause (vii)(II) and consistent with the
succeeding subclauses, the set of measures that the Secretary
determines to be appropriate for the measurement of the quality
of care (including medication errors) furnished by hospitals in
inpatient settings.
(IV) Effective for payments beginning with fiscal year 2007,
in expanding the number of measures under subclause (III), the
Secretary shall begin to adopt the baseline set of performance
measures as set forth in the November 2005 report by the
Institute of Medicine of the National Academy of Sciences under
section 238(b) of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003.
(V) Effective for payments for fiscal years 2008 through
2012, the Secretary shall add other measures that reflect
consensus among affected parties and, to the extent feasible
and practicable, shall include measures set forth by one or
more national consensus building entities.
(VI) For purposes of this clause and clause (vii), the
Secretary may replace any measures or indicators in appropriate
cases, such as where all hospitals are effectively in
compliance or the measures or indicators have been subsequently
shown not to represent the best clinical practice.
(VII) The Secretary shall establish procedures for making
information regarding measures submitted under this clause
available to the public. Such procedures shall ensure that a
hospital has the opportunity to review the data that are to be
made public with respect to the hospital prior to such data
being made public. The Secretary shall report quality measures
of process, structure, outcome, patients' perspectives on care,
efficiency, and costs of care that relate to services furnished
in inpatient settings in hospitals on the Internet website of
the Centers for Medicare & Medicaid Services.
(VIII) Effective for payments beginning with fiscal year
2013, with respect to quality measures for outcomes of care,
the Secretary shall provide for such risk adjustment as the
Secretary determines to be appropriate to maintain incentives
for hospitals to treat patients with severe illnesses or
conditions.
(IX)(aa) Subject to item (bb), effective for payments
beginning with fiscal year 2013, each measure specified by the
Secretary under this clause shall be endorsed by the entity
with a contract under section 1890(a).
(bb) In the case of a specified area or medical topic
determined appropriate by the Secretary for which a feasible
and practical measure has not been endorsed by the entity with
a contract under section 1890(a), the Secretary may specify a
measure that is not so endorsed as long as due consideration is
given to measures that have been endorsed or adopted by a
consensus organization identified by the Secretary.
(X) To the extent practicable, the Secretary shall, with
input from consensus organizations and other stakeholders, take
steps to ensure that the measures specified by the Secretary
under this clause are coordinated and aligned with quality
measures applicable to--
(aa) physicians under section 1848(k); and
(bb) other providers of services and suppliers under
this title.
(XI) The Secretary shall establish a process to validate
measures specified under this clause as appropriate. Such
process shall include the auditing of a number of randomly
selected hospitals sufficient to ensure validity of the
reporting program under this clause as a whole and shall
provide a hospital with an opportunity to appeal the validation
of measures reported by such hospital.
(XII)(aa) With respect to a Hospital Consumer Assessment of
Healthcare Providers and Systems survey (or a successor survey)
conducted on or after January 1, 2020, such survey may not
include questions about communication by hospital staff with an
individual about such individual's pain unless such questions
take into account, as applicable, whether an individual
experiencing pain was informed about risks associated with the
use of opioids and about non-opioid alternatives for the
treatment of pain.
(bb) The Secretary shall not include on the Hospital Compare
internet website any measures based on the questions appearing
on the Hospital Consumer Assessment of Healthcare Providers and
Systems survey in 2018 or 2019 about communication by hospital
staff with an individual about such individual's pain.
(ix)(I) For purposes of clause (i) for fiscal year 2015 and
each subsequent fiscal year, in the case of an eligible
hospital (as defined in subsection (n)(6)(B)) that is not a
meaningful EHR user (as defined in subsection (n)(3)) for an
EHR reporting period for such fiscal year, three-quarters of
the applicable percentage increase otherwise applicable under
clause (i) (determined without regard to clause (viii), (xi),
or (xii)) for such fiscal year shall be reduced by 33\1/3\
percent for fiscal year 2015, 66\2/3\ percent for fiscal year
2016, and 100 percent for fiscal year 2017 and each subsequent
fiscal year. Such reduction shall apply only with respect to
the fiscal year involved and the Secretary shall not take into
account such reduction in computing the applicable percentage
increase under clause (i) for a subsequent fiscal year.
(II) The Secretary may, on a case-by-case basis (and, with
respect to the application of subclause (I) for fiscal year
2017, for categories of subsection (d) hospitals, as
established by the Secretary and posted on the Internet website
of the Centers for Medicare & Medicaid Services prior to
December 15, 2015, an application for which must be submitted
to the Secretary by not later than April 1, 2016), exempt an
eligible hospital from the application of subclause (I) with
respect to a fiscal year if the Secretary determines, subject
to annual renewal, that requiring such hospital to be a
meaningful EHR user during such fiscal year would result in a
significant hardship, such as in the case of a hospital in a
rural area without sufficient Internet access. The Secretary
shall exempt an eligible hospital from the application of the
payment adjustment under subclause (I) with respect to a fiscal
year, subject to annual renewal, if the Secretary determines
that compliance with the requirement for being a meaningful EHR
user is not possible because the certified EHR technology used
by such hospital is decertified under a program kept or
recognized pursuant to section 3001(c)(5) of the Public Health
Service Act. In no case may a hospital be granted an exemption
under this subclause for more than 5 years.
(III) For fiscal year 2015 and each subsequent fiscal year, a
State in which hospitals are paid for services under section
1814(b)(3) shall adjust the payments to each subsection (d)
hospital in the State that is not a meaningful EHR user (as
defined in subsection (n)(3)) in a manner that is designed to
result in an aggregate reduction in payments to hospitals in
the State that is equivalent to the aggregate reduction that
would have occurred if payments had been reduced to each
subsection (d) hospital in the State in a manner comparable to
the reduction under the previous provisions of this clause. The
State shall report to the Secretary the methodology it will use
to make the payment adjustment under the previous sentence.
(IV) For purposes of this clause, the term ``EHR reporting
period'' means, with respect to a fiscal year, any period (or
periods) as specified by the Secretary.
(x)(I) The Secretary shall develop standard Internet website
reports tailored to meet the needs of various stakeholders such
as hospitals, patients, researchers, and policymakers. The
Secretary shall seek input from such stakeholders in
determining the type of information that is useful and the
formats that best facilitate the use of the information.
(II) The Secretary shall modify the Hospital Compare Internet
website to make the use and navigation of that website readily
available to individuals accessing it.
(xi)(I) For 2012 and each subsequent fiscal year, after
determining the applicable percentage increase described in
clause (i) and after application of clauses (viii) and (ix),
such percentage increase shall be reduced by the productivity
adjustment described in subclause (II).
(II) The productivity adjustment described in this subclause,
with respect to a percentage, factor, or update for a fiscal
year, year, cost reporting period, or other annual period, is a
productivity adjustment equal to the 10-year moving average of
changes in annual economy-wide private nonfarm business multi-
factor productivity (as projected by the Secretary for the 10-
year period ending with the applicable fiscal year, year, cost
reporting period, or other annual period).
(III) The application of subclause (I) may result in the
applicable percentage increase described in clause (i) being
less than 0.0 for a fiscal year, and may result in payment
rates under this section for a fiscal year being less than such
payment rates for the preceding fiscal year.
(xii) After determining the applicable percentage increase
described in clause (i), and after application of clauses
(viii), (ix), and (xi), the Secretary shall reduce such
applicable percentage increase--
(I) for each of fiscal years 2010 and 2011, by 0.25
percentage point;
(II) for each of fiscal years 2012 and 2013, by 0.1
percentage point;
(III) for fiscal year 2014, by 0.3 percentage point;
(IV) for each of fiscal years 2015 and 2016, by 0.2
percentage point; and
(V) for each of fiscal years 2017, 2018, and 2019, by
0.75 percentage point.
The application of this clause may result in the applicable
percentage increase described in clause (i) being less than 0.0
for a fiscal year, and may result in payment rates under this
section for a fiscal year being less than such payment rates
for the preceding fiscal year.
(C) In the case of a hospital that is a sole community
hospital (as defined in subsection (d)(5)(D)(iii)), subject to
subparagraphs (I) and (L), the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the applicable percentage increases
applied to such hospital under this paragraph
for cost reporting periods after the base cost
reporting period and up to and including such
first 12-month cost reporting period,
(ii) with respect to a later cost reporting period
beginning before fiscal year 1994, the target amount
for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under
subparagraph (B)(iv) for discharges occurring in the
fiscal year in which that later cost reporting period
begins,
(iii) with respect to discharges occurring in fiscal
year 1994, the target amount for the cost reporting
period beginning in fiscal year 1993 increased by the
applicable percentage increase under subparagraph
(B)(iv), or
(iv) with respect to discharges occurring in fiscal
year 1995 and each subsequent fiscal year, the target
amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(D) For cost reporting periods ending on or before September
30, 1994, and for cost reporting periods occurring on or after
October 1, 1997, and before [January 1, 2025] October 1, 2025,
in the case of a hospital that is a medicare-dependent, small
rural hospital (as defined in subsection (d)(5)(G)), subject to
subparagraph (K), the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the applicable percentage increases
applied to such hospital under this paragraph
for cost reporting periods after the base cost
reporting period and up to and including such
first 12-month cost reporting period, or
(ii) with respect to a later cost reporting period
beginning before fiscal year 1994, the target amount
for the preceding 12-month cost reporting period,
increased by the applicable percentage increase under
subparagraph (B)(iv) for discharges occurring in the
fiscal year in which that later cost reporting period
begins,
(iii) with respect to discharges occurring in fiscal
year 1994, the target amount for the cost reporting
period beginning in fiscal year 1993 increased by the
applicable percentage increase under subparagraph
(B)(iv), and
(iv) with respect to discharges occurring during
fiscal year 1998 through fiscal year [2024 and the
portion of fiscal year 2025 beginning on October 1,
2024, and ending on December 31, 2024] 2025, the target
amount for the preceding year increased by the
applicable percentage increase under subparagraph
(B)(iv).
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(E) In the case of a hospital described in clause (v) of
subsection (d)(1)(B), the term ``target amount'' means--
(i) with respect to the first 12-month cost reporting
period in which this subparagraph is applied to the
hospital--
(I) the allowable operating costs of
inpatient hospital services (as defined in
subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost
reporting period (in this subparagraph referred
to as the ``base cost reporting period'')
preceding the first cost reporting period for
which this subsection was in effect with
respect to such hospital, increased (in a
compounded manner) by--
(II) the sum of the applicable percentage
increases applied to such hospital under this
paragraph for cost reporting periods after the
base cost reporting period and up to and
including such first 12-month cost reporting
period, or
(ii) with respect to a later cost reporting period,
the target amount for the preceding 12-month cost
reporting period, increased by the applicable
percentage increase under subparagraph (B)(ii) for that
later cost reporting period.
There shall be substituted for the base cost reporting period
described in clause (i) a hospital's cost reporting period (if
any) beginning during fiscal year 1987 if such substitution
results in an increase in the target amount for the hospital.
(F)(i) In the case of a hospital (or unit described in the
matter following clause (v) of subsection (d)(1)(B)) that
received payment under this subsection for inpatient hospital
services furnished during cost reporting periods beginning
before October 1, 1990, that is within a class of hospital
described in clause (iii), and that elects (in a form and
manner determined by the Secretary) this subparagraph to apply
to the hospital, the target amount for the hospital's 12-month
cost reporting period beginning during fiscal year 1998 is
equal to the average described in clause (ii).
(ii) The average described in this clause for a hospital or
unit shall be determined by the Secretary as follows:
(I) The Secretary shall determine the allowable
operating costs for inpatient hospital services for the
hospital or unit for each of the 5 cost reporting
periods for which the Secretary has the most recent
settled cost reports as of the date of the enactment of
this subparagraph.
(II) The Secretary shall increase the amount
determined under subclause (I) for each cost reporting
period by the applicable percentage increase under
subparagraph (B)(ii) for each subsequent cost reporting
period up to the cost reporting period described in
clause (i).
(III) The Secretary shall identify among such 5 cost
reporting periods the cost reporting periods for which
the amount determined under subclause (II) is the
highest, and the lowest.
(IV) The Secretary shall compute the averages of the
amounts determined under subclause (II) for the 3 cost
reporting periods not identified under subclause (III).
(iii) For purposes of this subparagraph, each of the
following shall be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(III) Hospitals described in clause (iii) of such
subsection.
(IV) Hospitals described in clause (iv) of such
subsection.
(V) Hospitals described in clause (v) of such
subsection.
(G)(i) In the case of a qualified long-term care hospital (as
defined in clause (ii)) that elects (in a form and manner
determined by the Secretary) this subparagraph to apply to the
hospital, the target amount for the hospital's 12-month cost
reporting period beginning during fiscal year 1998 is equal to
the allowable operating costs of inpatient hospital services
(as defined in subsection (a)(4)) recognized under this title
for the hospital for the 12-month cost reporting period
beginning during fiscal year 1996, increased by the applicable
percentage increase for the cost reporting period beginning
during fiscal year 1997.
(ii) In clause (i), a ``qualified long-term care hospital''
means, with respect to a cost reporting period, a hospital
described in clause (iv) of subsection (d)(1)(B) during each of
the 2 cost reporting periods for which the Secretary has the
most recent settled cost reports as of the date of the
enactment of this subparagraph for each of which--
(I) the hospital's allowable operating costs of
inpatient hospital services recognized under this title
exceeded 115 percent of the hospital's target amount,
and
(II) the hospital would have a disproportionate
patient percentage of at least 70 percent (as
determined by the Secretary under subsection
(d)(5)(F)(vi)) if the hospital were a subsection (d)
hospital.
(H)(i) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), for a cost
reporting period beginning during fiscal years 1998 through
2002, the target amount for such a hospital or unit may not
exceed the amount as updated up to or for such cost reporting
period under clause (ii).
(ii)(I) In the case of a hospital or unit that is within a
class of hospital described in clause (iv), the Secretary shall
estimate the 75th percentile of the target amounts for such
hospitals within such class for cost reporting periods ending
during fiscal year 1996, as adjusted under clause (iii).
(II) The Secretary shall update the amount determined under
subclause (I), for each cost reporting period after the cost
reporting period described in such subclause and up to the
first cost reporting period beginning on or after October 1,
1997, by a factor equal to the market basket percentage
increase.
(III) For cost reporting periods beginning during each of
fiscal years 1999 through 2002, subject to subparagraph (J),
the Secretary shall update such amount by a factor equal to the
market basket percentage increase.
(iii) In applying clause (ii)(I) in the case of a hospital or
unit, the Secretary shall provide for an appropriate adjustment
to the labor-related portion of the amount determined under
such subparagraph to take into account differences between
average wage-related costs in the area of the hospital and the
national average of such costs within the same class of
hospital.
(iv) For purposes of this subparagraph, each of the following
shall be treated as a separate class of hospital:
(I) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(II) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(III) Hospitals described in clause (iv) of such
subsection.
(I)(i) Subject to subparagraph (L), for cost reporting
periods beginning on or after October 1, 2000, in the case of a
sole community hospital there shall be substituted for the
amount otherwise determined under subsection (d)(5)(D)(i), if
such substitution results in a greater amount of payment under
this section for the hospital--
(I) with respect to discharges occurring in fiscal
year 2001, 75 percent of the amount otherwise
applicable to the hospital under subsection
(d)(5)(D)(i) (referred to in this clause as the
``subsection (d)(5)(D)(i) amount'') and 25 percent of
the rebased target amount (as defined in clause (ii));
(II) with respect to discharges occurring in fiscal
year 2002, 50 percent of the subsection (d)(5)(D)(i)
amount and 50 percent of the rebased target amount;
(III) with respect to discharges occurring in fiscal
year 2003, 25 percent of the subsection (d)(5)(D)(i)
amount and 75 percent of the rebased target amount; and
(IV) with respect to discharges occurring after
fiscal year 2003, 100 percent of the rebased target
amount.
(ii) For purposes of this subparagraph, the ``rebased target
amount'' has the meaning given the term ``target amount'' in
subparagraph (C) except that--
(I) there shall be substituted for the base cost
reporting period the 12-month cost reporting period
beginning during fiscal year 1996;
(II) any reference in subparagraph (C)(i) to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after October 1, 2000;
and
(III) applicable increase percentage shall only be
applied under subparagraph (C)(iv) for discharges
occurring in fiscal years beginning with fiscal year
2002.
(iii) In no case shall a hospital be denied treatment as a
sole community hospital or payment (on the basis of a target
rate as such as a hospital) because data are unavailable for
any cost reporting period due to changes in ownership, changes
in fiscal intermediaries, or other extraordinary circumstances,
so long as data for at least one applicable base cost reporting
period is available.
(J) For cost reporting periods beginning during fiscal year
2001, for a hospital described in subsection (d)(1)(B)(iv)--
(i) the limiting or cap amount otherwise determined
under subparagraph (H) shall be increased by 2 percent;
and
(ii) the target amount otherwise determined under
subparagraph (A) shall be increased by 25 percent
(subject to the limiting or cap amount determined under
subparagraph (H), as increased by clause (i)).
(K)(i) With respect to discharges occurring on or after
October 1, 2006, in the case of a medicare-dependent, small
rural hospital, for purposes of applying subparagraph (D)--
(I) there shall be substituted for the base cost
reporting period described in subparagraph (D)(i) the
12-month cost reporting period beginning during fiscal
year 2002; and
(II) any reference in such subparagraph to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after October 1, 2006.
(ii) This subparagraph shall only apply to a hospital if the
substitution described in clause (i)(I) results in an increase
in the target amount under subparagraph (D) for the hospital.
(L)(i) For cost reporting periods beginning on or after
January 1, 2009, in the case of a sole community hospital there
shall be substituted for the amount otherwise determined under
subsection (d)(5)(D)(i) of this section, if such substitution
results in a greater amount of payment under this section for
the hospital, the subparagraph (L) rebased target amount.
(ii) For purposes of this subparagraph, the term
``subparagraph (L) rebased target amount'' has the meaning
given the term ``target amount'' in subparagraph (C), except
that--
(I) there shall be substituted for the base cost
reporting period the 12-month cost reporting period
beginning during fiscal year 2006;
(II) any reference in subparagraph (C)(i) to the
``first cost reporting period'' described in such
subparagraph is deemed a reference to the first cost
reporting period beginning on or after January 1, 2009;
and
(III) the applicable percentage increase shall only
be applied under subparagraph (C)(iv) for discharges
occurring on or after January 1, 2009.
(4)(A)(i) The Secretary shall provide for an exception and
adjustment to (and in the case of a hospital described in
subsection (d)(1)(B)(iii), may provide an exemption from) the
method under this subsection for determining the amount of
payment to a hospital where events beyond the hospital's
control or extraordinary circumstances, including changes in
the case mix of such hospital, create a distortion in the
increase in costs for a cost reporting period (including any
distortion in the costs for the base period against which such
increase is measured). The Secretary may provide for such other
exemptions from, and exceptions and adjustments to, such method
as the Secretary deems appropriate, including the assignment of
a new base period which is more representative, as determined
by the Secretary, of the reasonable and necessary cost of
inpatient services and including those which he deems necessary
to take into account a decrease in the inpatient hospital
services that a hospital provides and that are customarily
provided directly by similar hospitals which results in a
significant distortion in the operating costs of inpatient
hospital services. The Secretary shall announce a decision on
any request for an exemption, exception, or adjustment under
this paragraph not later than 180 days after receiving a
completed application from the intermediary for such exemption,
exception, or adjustment, and shall include in such decision a
detailed explanation of the grounds on which such request was
approved or denied.
(ii) The payment reductions under paragraph (3)(B)(ii)(V)
shall not be considered by the Secretary in making adjustments
pursuant to clause (i). In making such reductions, the
Secretary shall treat the applicable update factor described in
paragraph (3)(B)(vi) for a fiscal year as being equal to the
market basket percentage for that year.
(B) In determining under subparagraph (A) whether to assign a
new base period which is more representative of the reasonable
and necessary cost to a hospital of providing inpatient
services, the Secretary shall take into consideration--
(i) changes in applicable technologies and medical
practices, or differences in the severity of illness
among patients, that increase the hospital's costs;
(ii) whether increases in wages and wage-related
costs for hospitals located in the geographic area in
which the hospital is located exceed the average of the
increases in such costs paid by hospitals in the United
States; and
(iii) such other factors as the Secretary considers
appropriate in determining increases in the hospital's
costs of providing inpatient services.
(C) Paragraph (1) shall not apply to payment of hospitals
which is otherwise determined under paragraph (3) of section
1814(b).
(5) In the case of any hospital having any cost reporting
period of other than a 12-month period, the Secretary shall
determine the 12-month period which shall be used for purposes
of this section.
(6) In the case of any hospital which becomes subject to the
taxes under section 3111 of the Internal Revenue Code of 1954,
with respect to any or all of its employees, for part or all of
a cost reporting period, and was not subject to such taxes with
respect to any or all of its employees for all or part of the
12-month base cost reporting period referred to in subsection
(b)(3)(A)(i), the Secretary shall provide for an adjustment by
increasing the base period amount described in such subsection
for such hospital by an amount equal to the amount of such
taxes which would have been paid or accrued by such hospital
for such base period if such hospital had been subject to such
taxes for all of such base period with respect to all its
employees, minus the amount of any such taxes actually paid or
accrued for such base period.
(7)(A) Notwithstanding paragraph (1), in the case of a
hospital or unit that is within a class of hospital described
in subparagraph (B) which first receives payments under this
section on or after October 1, 1997--
(i) for each of the first 2 cost reporting periods
for which the hospital has a settled cost report, the
amount of the payment with respect to operating costs
described in paragraph (1) under part A on a per
discharge or per admission basis (as the case may be)
is equal to the lesser of--
(I) the amount of operating costs for such
respective period, or
(II) 110 percent of the national median (as
estimated by the Secretary) of the target
amount for hospitals in the same class as the
hospital for cost reporting periods ending
during fiscal year 1996, updated by the
hospital market basket increase percentage to
the fiscal year in which the hospital first
received payments under this section, as
adjusted under subparagraph (C); and
(ii) for purposes of computing the target amount for
the subsequent cost reporting period, the target amount
for the preceding cost reporting period is equal to the
amount determined under clause (i) for such preceding
period.
(B) For purposes of this paragraph, each of the following
shall be treated as a separate class of hospital:
(i) Hospitals described in clause (i) of subsection
(d)(1)(B) and psychiatric units described in the matter
following clause (v) of such subsection.
(ii) Hospitals described in clause (ii) of such
subsection and rehabilitation units described in the
matter following clause (v) of such subsection.
(iii) Hospitals described in clause (iv) of such
subsection.
(C) In applying subparagraph (A)(i)(II) in the case of a
hospital or unit, the Secretary shall provide for an
appropriate adjustment to the labor-related portion of the
amount determined under such subparagraph to take into account
differences between average wage-related costs in the area of
the hospital and the national average of such costs within the
same class of hospital.
(c)(1) The Secretary may provide, in his discretion, that
payment with respect to services provided by a hospital in a
State may be made in accordance with a hospital reimbursement
control system in a State, rather than in accordance with the
other provisions of this title, if the chief executive officer
of the State requests such treatment and if--
(A) the Secretary determines that the system, if
approved under this subsection, will apply (i) to
substantially all non- Federal acute care hospitals (as
defined by the Secretary) in the State and (ii) to the
review of at least 75 percent of all revenues or
expenses in the State for inpatient hospital services
and of revenues or expenses for inpatient hospital
services provided under the State's plan approved under
title XIX;
(B) the Secretary has been provided satisfactory
assurances as to the equitable treatment under the
system of all entities (including Federal and State
programs) that pay hospitals for inpatient hospital
services, of hospital employees, and of hospital
patients;
(C) the Secretary has been provided satisfactory
assurances that under the system, over 36-month periods
(the first such period beginning with the first month
in which this subsection applies to that system in the
State), the amount of payments made under this title
under such system will not exceed the amount of
payments which would otherwise have been made under
this title not using such system;
(D) the Secretary determines that the system will not
preclude an eligible organization (as defined in
section 1876(b)) from negotiating directly with
hospitals with respect to the organization's rate of
payment for inpatient hospital services; and
(E) the Secretary determines that the system requires
hospitals to meet the requirement of section
1866(a)(1)(G) and the system provides for the exclusion
of certain costs in accordance with section 1862(a)(14)
(except for such waivers thereof as the Secretary
provides by regulation).
The Secretary cannot deny the application of a State under this
subsection on the ground that the State's hospital
reimbursement control system is based on a payment methodology
other than on the basis of a diagnosis-related group or on the
ground that the amount of payments made under this title under
such system must be less than the amount of payments which
would otherwise have been made under this title not using such
system. If the Secretary determines that the conditions
described in subparagraph (C) are based on maintaining payment
amounts at no more than a specified percentage increase above
the payment amounts in a base period, the State has the option
of applying such test (for inpatient hospital services under
part A) on an aggregate payment basis or on the basis of the
amount of payment per inpatient discharge or admission. If the
Secretary determines that the conditions described in
subparagraph (C) are based on maintaining aggregate payment
amounts below a national average percentage increase in total
payments under part A for inpatient hospital services, the
Secretary cannot deny the application of a State under this
subsection on the ground that the State's rate of increase in
such payments for such services must be less than such national
average rate of increase.
(2) In determining under paragraph (1)(C) the amount of
payment which would otherwise have been made under this title
for a State, the Secretary may provide for appropriate
adjustment of such amount to take into account previous
reductions effected in the amount of payments made under this
title in the State due to the operation of the hospital
reimbursement control system in the State if the system has
resulted in an aggregate rate of increase in operating costs of
inpatient hospital services (as defined in subsection (a)(4))
under this title for hospitals in the State which is less than
the aggregate rate of increase in such costs under this title
for hospitals in the United States.
(3) The Secretary shall discontinue payments under a system
described in paragraph (1) if the Secretary--
(A) determines that the system no longer meets the
requirements of subparagraphs (A), (D), and (E) of
paragraph (1) and, if applicable, the requirements of
paragraph (5), or
(B) has reason to believe that the assurances
described in subparagraph (B) or (C) of paragraph (1)
(or, if applicable, in paragraph (5)) are not being (or
will not be) met.
(4) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if--
(A) the requirements of subparagraphs (A), (B), (C),
(D), and (E) of paragraph (1) have been met with
respect to the system, and
(B) with respect to that system a waiver of certain
requirements of title XVIII of the Social Security Act
has been approved on or before (and which is in effect
as of) the date of the enactment of the Social Security
Amendments of 1983, pursuant to section 402(a) of the
Social Security Amendments of 1967 or section 222(a) of
the Social Security Amendments of 1972.
With respect to a State system described in this paragraph, the
Secretary shall judge the effectiveness of such system on the
basis of its rate of increase or inflation in inpatient
hospital payments for individuals under this title, as compared
to the national rate of increase or inflation for such
payments, with the State retaining the option to have the test
applied on the basis of the aggregate payments under the State
system as compared to aggregate payments which would have been
made under the national system since October 1, 1984, to the
most recent date for which annual data are available.
(5) The Secretary shall approve the request of a State under
paragraph (1) with respect to a hospital reimbursement control
system if--
(A) the requirements of subparagraphs (A), (B), (C),
(D), and (E) of paragraph (1) have been met with
respect to the system;
(B) the Secretary determines that the system--
(i) is operated directly by the State or by
an entity designated pursuant to State law,
(ii) provides for payment of hospitals
covered under the system under a methodology
(which sets forth exceptions and adjustments,
as well as any method for changes in the
methodology) by which rates or amounts to be
paid for hospital services during a specified
period are established under the system prior
to the defined rate period, and
(iii) hospitals covered under the system will
make such reports (in lieu of cost and other
reports, identified by the Secretary, otherwise
required under this title) as the Secretary may
require in order to properly monitor assurances
provided under this subsection;
(C) the State has provided the Secretary with
satisfactory assurances that operation of the system
will not result in any change in hospital admission
practices which result in--
(i) a significant reduction in the proportion
of patients (receiving hospital services
covered under the system) who have no third-
party coverage and who are unable to pay for
hospital services,
(ii) a significant reduction in the
proportion of individuals admitted to hospitals
for inpatient hospital services for which
payment is (or is likely to be) less than the
anticipated charges for or costs of such
services,
(iii) the refusal to admit patients who would
be expected to require unusually costly or
prolonged treatment for reasons other than
those related to the appropriateness of the
care available at the hospital, or
(iv) the refusal to provide emergency
services to any person who is in need of
emergency services if the hospital provides
such services;
(D) any change by the State in the system which has
the effect of materially reducing payments to hospitals
can only take effect upon 60 days notice to the
Secretary and to the hospitals the payment to which is
likely to be materially affected by the change; and
(E) the State has provided the Secretary with
satisfactory assurances that in the development of the
system the State has consulted with local governmental
officials concerning the impact of the system on public
hospitals.
The Secretary shall respond to requests of States under this
paragraph within 60 days of the date the request is submitted
to the Secretary.
(6) If the Secretary determines that the assurances described
in paragraph (1)(C) have not been met with respect to any 36-
month period, the Secretary may reduce payments under this
title to hospitals under the system in an amount equal to the
amount by which the payment under this title under such system
for such period exceeded the amount of payments which would
otherwise have been made under this title not using such
system.
(7) In the case of a State which made a request under
paragraph (5) before December 31, 1984, for the approval of a
State hospital reimbursement control system and which request
was approved--
(A) in applying paragraphs (1)(C) and (6), a
reference to a ``36-month period'' is deemed a
reference to a ``48-month period'', and
(B) in order to allow the State the opportunity to
provide the assurances described in paragraph (1)(C)
for a 48-month period, the Secretary may not
discontinue payments under the system, under the
authority of paragraph (3)(A) because the Secretary has
reason to believe that such assurances are not being
(or will not be) met, before July 1, 1986.
(d)(1)(A) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, the amount of the payment with
respect to the operating costs of inpatient hospital services
(as defined in subsection (a)(4)) of a subsection (d) hospital
(as defined in subparagraph (B)) for inpatient hospital
discharges in a cost reporting period or in a fiscal year--
(i) beginning on or after October 1, 1983, and before
October 1, 1984, is equal to the sum of--
(I) the target percentage (as defined in
subparagraph (C)) of the hospital's target
amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined
without the application of subsection (a)), and
(II) the DRG percentage (as defined in
subparagraph (C)) of the regional adjusted DRG
prospective payment rate determined under
paragraph (2) for such discharges;
(ii) beginning on or after October 1, 1984, and
before October 1, 1987, is equal to the sum of--
(I) the target percentage (as defined in
subparagraph (C)) of the hospital's target
amount for the cost reporting period (as
defined in subsection (b)(3)(A), but determined
without the application of subsection (a)), and
(II) the DRG percentage (as defined in
subparagraph (C)) of the applicable combined
adjusted DRG prospective payment rate
determined under subparagraph (D) for such
discharges; or
(iii) beginning on or after April 1, 1988, is equal
to
(I) the national adjusted DRG prospective
payment rate determined under paragraph (3) for
such discharges, or
(II) for discharges occurring during a fiscal
year ending on or before September 30, 1996,
the sum of 85 percent of the national adjusted
DRG prospective payment rate determined under
paragraph (3) for such discharges and 15
percent of the regional adjusted DRG
prospective payment rate determined under such
paragraph, but only if the average standardized
amount (described in clause (i)(I) or clause
(ii)(I) of paragraph (3)(D)) for hospitals
within the region of, and in the same large
urban or other area (or, for discharges
occurring during a fiscal year ending on or
before September 30, 1994, the same rural,
large urban, or other urban area) as, the
hospital is greater than the average
standardized amount (described in the
respective clause) for hospitals within the
United States in that type of area for
discharges occurring during such fiscal year.
(B) As used in this section, the term ``subsection (d)
hospital'' means a hospital located in one of the fifty States
or the District of Columbia other than--
(i) a psychiatric hospital (as defined in section
1861(f)),
(ii) a rehabilitation hospital (as defined by the
Secretary),
(iii) a hospital whose inpatients are predominantly
individuals under 18 years of age,
(iv) a hospital which has an average inpatient length
of stay (as determined by the Secretary) of greater
than 25 days,
(v)(I) a hospital that the Secretary has classified,
at any time on or before December 31, 1990, (or, in the
case of a hospital that, as of the date of the
enactment of this clause, is located in a State
operating a demonstration project under section
1814(b), on or before December 31, 1991) for purposes
of applying exceptions and adjustments to payment
amounts under this subsection, as a hospital involved
extensively in treatment for or research on cancer,
(II) a hospital that was recognized as a
comprehensive cancer center or clinical cancer research
center by the National Cancer Institute of the National
Institutes of Health as of April 20, 1983, that is
located in a State which, as of December 19, 1989, was
not operating a demonstration project under section
1814(b), that applied and was denied, on or before
December 31, 1990, for classification as a hospital
involved extensively in treatment for or research on
cancer under this clause (as in effect on the day
before the date of the enactment of this subclause),
that as of the date of the enactment of this subclause,
is licensed for less than 50 acute care beds, and that
demonstrates for the 4-year period ending on December
31, 1996, that at least 50 percent of its total
discharges have a principal finding of neoplastic
disease, as defined in subparagraph (E), or
(III) a hospital that was recognized as a clinical
cancer research center by the National Cancer Institute
of the National Institutes of Health as of February 18,
1998, that has never been reimbursed for inpatient
hospital services pursuant to a reimbursement system
under a demonstration project under section 1814(b),
that is a freestanding facility organized primarily for
treatment of and research on cancer and is not a unit
of another hospital, that as of the date of the
enactment of this subclause, is licensed for 162 acute
care beds, and that demonstrates for the 4-year period
ending on June 30, 1999, that at least 50 percent of
its total discharges have a principal finding of
neoplastic disease, as defined in subparagraph (E), or
(vi) a hospital that first received payment under
this subsection in 1986 which has an average inpatient
length of stay (as determined by the Secretary) of
greater than 20 days and that has 80 percent or more of
its annual medicare inpatient discharges with a
principal diagnosis that reflects a finding of
neoplastic disease in the 12-month cost reporting
period ending in fiscal year 1997;
and, in accordance with regulations of the Secretary, does not
include a psychiatric or rehabilitation unit of the hospital
which is a distinct part of the hospital (as defined by the
Secretary). A hospital that was classified by the Secretary on
or before September 30, 1995, as a hospital described in clause
(iv) (as in effect as of such date) shall continue to be so
classified (or, in the case of a hospital described in clause
(iv)(II), as so in effect, shall be classified under clause
(vi) on and after the effective date of such clause (vi) and
for cost reporting periods beginning on or after January 1,
2015, shall not be subject to subsection (m) as of the date of
such classification) notwithstanding that it is located in the
same building as, or on the same campus as, another hospital.
(C) For purposes of this subsection, for cost reporting
periods beginning--
(i) on or after October 1, 1983, and before October
1, 1984, the ``target percentage'' is 75 percent and
the ``DRG percentage'' is 25 percent;
(ii) on or after October 1, 1984, and before October
1, 1985, the ``target percentage'' is 50 percent and
the ``DRG percentage'' is 50 percent;
(iii) on or after October 1, 1985, and before October
1, 1986, the ``target percentage'' is 45 percent and
the ``DRG percentage'' is 55 percent; and
(iv) on or after October 1, 1986, and before October
1, 1987, the ``target percentage'' is 25 percent and
the ``DRG percentage'' is 75 percent.
(D) For purposes of subparagraph (A)(ii)(II), the
``applicable combined adjusted DRG prospective payment rate''
for discharges occurring--
(i) on or after October 1, 1984, and before October
1, 1986, is a combined rate consisting of 25 percent of
the national adjusted DRG prospective payment rate, and
75 percent of the regional adjusted DRG prospective
payment rate, determined under paragraph (3) for such
discharges; and
(ii) on or after October 1, 1986, and before October
1, 1987, is a combined rate consisting of 50 percent of
the national adjusted DRG prospective payment rate, and
50 percent of the regional adjusted DRG prospective
payment rate, determined under paragraph (3) for such
discharges.
(E) For purposes of subclauses (II) and (III) of subparagraph
(B)(v) only, the term ``principal finding of neoplastic
disease'' means the condition established after study to be
chiefly responsible for occasioning the admission of a patient
to a hospital, except that only discharges with ICD-9-CM
principal diagnosis codes of 140 through 239, V58.0, V58.1,
V66.1, V66.2, or 990 will be considered to reflect such a
principal diagnosis.
(2) The Secretary shall determine a national adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1984 involving inpatient hospital services of a
subsection (d) hospital in the United States, and shall
determine a regional adjusted DRG prospective payment rate for
such discharges in each region, for which payment may be made
under part A of this title. Each such rate shall be determined
for hospitals located in urban or rural areas within the United
States or within each such region, respectively, as follows:
(A) Determining allowable individual hospital costs
for base period.--The Secretary shall determine the
allowable operating costs per discharge of inpatient
hospital services for the hospital for the most recent
cost reporting period for which data are available.
(B) Updating for fiscal year 1984.--The Secretary
shall update each amount determined under subparagraph
(A) for fiscal year 1984 by--
(i) updating for fiscal year 1983 by the
estimated average rate of change of hospital
costs industry-wide between the cost reporting
period used under such subparagraph and fiscal
year 1983 and the most recent case-mix data
available, and
(ii) projecting for fiscal year 1984 by the
applicable percentage increase (as defined in
subsection (b)(3)(B)) for fiscal year 1984.
(C) Standardizing amounts.--The Secretary shall
standardize the amount updated under subparagraph (B)
for each hospital by--
(i) excluding an estimate of indirect medical
education costs (taking into account, for
discharges occurring after September 30, 1986,
the amendments made by section 9104(a) of the
Medicare and Medicaid Budget Reconciliation
Amendments of 1985), except that the Secretary
shall not take into account any reduction in
the amount of additional payments under
paragraph (5)(B)(ii) resulting from the
amendment made by section 4621(a)(1) of the
Balanced Budget Act of 1997 or any additional
payments under such paragraph resulting from
the application of section 111 of the Medicare,
Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999, of section 302 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, or the Medicare
Prescription Drug, Improvement, and
Modernization Act of 2003,
(ii) adjusting for variations among hospitals
by area in the average hospital wage level,
(iii) adjusting for variations in case mix
among hospitals, and
(iv) for discharges occurring on or after
October 1, 1986, excluding an estimate of the
additional payments to certain hospitals to be
made under paragraph (5)(F), except that the
Secretary shall not exclude additional payments
under such paragraph made as a result of the
enactment of section 6003(c) of the Omnibus
Budget Reconciliation Act of 1989, the
enactment of section 4002(b) of the Omnibus
Budget Reconciliation Act of 1990, the
enactment of section 303 of the Medicare,
Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, or the enactment of
section 402(a)(1) of the Medicare Prescription
Drug, Improvement, and Modernization Act of
2003.
(D) Computing urban and rural averages.--The
Secretary shall compute an average of the standardized
amounts determined under subparagraph (C) for the
United States and for each region--
(i) for all subsection (d) hospitals located
in an urban area within the United States or
that region, respectively, and
(ii) for all subsection (d) hospitals located
in a rural area within the United States or
that region, respectively.
For purposes of this subsection, the term ``region''
means one of the nine census divisions, comprising the
fifty States and the District of Columbia, established
by the Bureau of the Census for statistical and
reporting purposes; the term ``urban area'' means an
area within a Metropolitan Statistical Area (as defined
by the Office of Management and Budget) or within such
similar area as the Secretary has recognized under
subsection (a) by regulation; the term ``large urban
area'' means, with respect to a fiscal year, such an
urban area which the Secretary determines (in the
publications described in subsection (e)(5) before the
fiscal year) has a population of more than 1,000,000
(as determined by the Secretary based on the most
recent available population data published by the
Bureau of the Census); and the term ``rural area''
means any area outside such an area or similar area. A
hospital located in a Metropolitan Statistical Area
shall be deemed to be located in the region in which
the largest number of the hospitals in the same
Metropolitan Statistical Area are located, or, at the
option of the Secretary, the region in which the
majority of the inpatient discharges (with respect to
which payments are made under this title) from
hospitals in the same Metropolitan Statistical Area are
made.
(E) Reducing for value of outlier payments.--The
Secretary shall reduce each of the average standardized
amounts determined under subparagraph (D) by a
proportion equal to the proportion (estimated by the
Secretary) of the amount of payments under this
subsection based on DRG prospective payment rates which
are additional payments described in paragraph (5)(A)
(relating to outlier payments).
(F) Maintaining budget neutrality.--The Secretary
shall adjust each of such average standardized amounts
as may be required under subsection (e)(1)(B) for that
fiscal year.
(G) Computing drg-specific rates for urban and rural
hospitals in the united states and in each region.--For
each discharge classified within a diagnosis-related
group, the Secretary shall establish a national DRG
prospective payment rate and shall establish a regional
DRG prospective payment rate for each region, each of
which is equal--
(i) for hospitals located in an urban area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (D),
reduced under subparagraph (E), and
adjusted under subparagraph (F)) for
hospitals located in an urban area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group; and
(ii) for hospitals located in a rural area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (D),
reduced under subparagraph (E), and
adjusted under subparagraph (F)) for
hospitals located in a rural area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group.
(H) Adjusting for different area wage levels.--The
Secretary shall adjust the proportion, (as estimated by
the Secretary from time to time) of hospitals' costs
which are attributable to wages and wage-related costs,
of the national and regional DRG prospective payment
rates computed under subparagraph (G) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the national average hospital wage
level.
(3) The Secretary shall determine a national adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in a fiscal year after fiscal year 1984 involving inpatient
hospital services of a subsection (d) hospital in the United
States, and shall determine, for fiscal years before fiscal
year 1997, a regional adjusted DRG prospective payment rate for
such discharges in each region for which payment may be made
under part A of this title. Each such rate shall be determined
for hospitals located in large urban, other urban, or rural
areas within the United States and within each such region,
respectively, as follows:
(A) Updating previous standardized amounts.--(i) For
discharges occurring in a fiscal year beginning before
October 1, 1987, the Secretary shall compute an average
standardized amount for hospitals located in an urban
area and for hospitals located in a rural area within
the United States and for hospitals located in an urban
area and for hospitals located in a rural area within
each region, equal to the respective average
standardized amount computed for the previous fiscal
year under paragraph (2)(D) or under this subparagraph,
increased for the fiscal year involved by the
applicable percentage increase under subsection
(b)(3)(B). With respect to discharges occurring on or
after October 1, 1987, the Secretary shall compute
urban and rural averages on the basis of discharge
weighting rather than hospital weighting, making
appropriate adjustments to ensure that computation on
such basis does not result in total payments under this
section that are greater or less than the total
payments that would have been made under this section
but for this sentence, and making appropriate changes
in the manner of determining the reductions under
subparagraph (C)(ii).
(ii) For discharges occurring in a fiscal year
beginning on or after October 1, 1987, and ending on or
before September 30, 1994, the Secretary shall compute
an average standardized amount for hospitals located in
a large urban area, for hospitals located in a rural
area, and for hospitals located in other urban areas,
within the United States and within each region, equal
to the respective average standardized amount computed
for the previous fiscal year under this subparagraph
increased by the applicable percentage increase under
subsection (b)(3)(B)(i) with respect to hospitals
located in the respective areas for the fiscal year
involved.
(iii) For discharges occurring in the fiscal year
beginning on October 1, 1994, the average standardized
amount for hospitals located in a rural area shall be
equal to the average standardized amount for hospitals
located in an urban area. For discharges occurring on
or after October 1, 1994, the Secretary shall adjust
the ratio of the labor portion to non-labor portion of
each average standardized amount to equal such ratio
for the national average of all standardized amounts.
(iv)(I) Subject to subclause (II), for discharges
occurring in a fiscal year beginning on or after
October 1, 1995, the Secretary shall compute an average
standardized amount for hospitals located in a large
urban area and for hospitals located in other areas
within the United States and within each region equal
to the respective average standardized amount computed
for the previous fiscal year under this subparagraph
increased by the applicable percentage increase under
subsection (b)(3)(B)(i) with respect to hospitals
located in the respective areas for the fiscal year
involved.
(II) For discharges occurring in a fiscal year
(beginning with fiscal year 2004), the Secretary shall
compute a standardized amount for hospitals located in
any area within the United States and within each
region equal to the standardized amount computed for
the previous fiscal year under this subparagraph for
hospitals located in a large urban area (or, beginning
with fiscal year 2005, for all hospitals in the
previous fiscal year) increased by the applicable
percentage increase under subsection (b)(3)(B)(i) for
the fiscal year involved.
(v) Average standardized amounts computed under this
paragraph shall be adjusted to reflect the most recent
case-mix data available.
(vi) Insofar as the Secretary determines that the
adjustments under paragraph (4)(C)(i) for a previous
fiscal year (or estimates that such adjustments for a
future fiscal year) did (or are likely to) result in a
change in aggregate payments under this subsection
during the fiscal year that are a result of changes in
the coding or classification of discharges that do not
reflect real changes in case mix, the Secretary may
adjust the average standardized amounts computed under
this paragraph for subsequent fiscal years so as to
eliminate the effect of such coding or classification
changes.
(B) Reducing for value of outlier payments.--The
Secretary shall reduce each of the average standardized
amounts determined under subparagraph (A) by a factor
equal to the proportion of payments under this
subsection (as estimated by the Secretary) based on DRG
prospective payment amounts which are additional
payments described in paragraph (5)(A) (relating to
outlier payments).
(C)(i) Maintaining budget neutrality for fiscal year
1985.--For discharges occurring in fiscal year 1985,
the Secretary shall adjust each of such average
standardized amounts as may be required under
subsection (e)(1)(B) for that fiscal year.
(ii) Reducing for savings from amendment to indirect
teaching adjustment for discharges after September 30,
1986.--For discharges occurring after September 30,
1986, the Secretary shall further reduce each of the
average standardized amounts (in a proportion which
takes into account the differing effects of the
standardization effected under paragraph (2)(C)(i)) so
as to provide for a reduction in the total of the
payments (attributable to this paragraph) made for
discharges occurring on or after October 1, 1986, of an
amount equal to the estimated reduction in the payment
amounts under paragraph (5)(B) that would have resulted
from the enactment of the amendments made by section
9104 of the Medicare and Medicaid Budget Reconciliation
Amendments of 1985 and by section 4003(a)(1) of the
Omnibus Budget Reconciliation Act of 1987 if the factor
described in clause (ii)(II) of paragraph (5)(B)
(determined without regard to amendments made by the
Omnibus Budget Reconciliation Act of 1990) were applied
for discharges occurring on or after such date instead
of the factor described in clause (ii) of that
paragraph.
(D) Computing drg-specific rates for hospitals.--For
each discharge classified within a diagnosis-related
group, the Secretary shall establish for the fiscal
year a national DRG prospective payment rate and shall
establish, for fiscal years before fiscal year 1997, a
regional DRG prospective payment rate for each region
which is equal--
(i) for fiscal years before fiscal year 2004,
for hospitals located in a large urban area in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (A),
reduced under subparagraph (B), and
adjusted or reduced under subparagraph
(C)) for the fiscal year for hospitals
located in such a large urban area in
the United States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group;
(ii) for fiscal years before fiscal year
2004, for hospitals located in other areas in
the United States or that region
(respectively), to the product of--
(I) the average standardized amount
(computed under subparagraph (A),
reduced under subparagraph (B), and
adjusted or reduced under subparagraph
(C)) for the fiscal year for hospitals
located in other areas in the United
States or that region, and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group; and
(iii) for a fiscal year beginning after
fiscal year 2003, for hospitals located in all
areas, to the product of--
(I) the applicable standardized
amount (computed under subparagraph
(A)), reduced under subparagraph (B),
and adjusted or reduced under
subparagraph (C) for the fiscal year;
and
(II) the weighting factor (determined
under paragraph (4)(B)) for that
diagnosis-related group.
(E) Adjusting for different area wage levels.--
(i) In general.--Except as provided in clause
(ii), (iii), or (iv), the Secretary shall
adjust the proportion, (as estimated by the
Secretary from time to time) of hospitals'
costs which are attributable to wages and wage-
related costs, of the DRG prospective payment
rates computed under subparagraph (D) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the
relative hospital wage level in the geographic
area of the hospital compared to the national
average hospital wage level. Not later than
October 1, 1990, and October 1, 1993 (and at
least every 12 months thereafter), the
Secretary shall update the factor under the
preceding sentence on the basis of a survey
conducted by the Secretary (and updated as
appropriate) of the wages and wage-related
costs of subsection (d) hospitals in the United
States. Not less often than once every 3 years
the Secretary (through such survey or
otherwise) shall measure the earnings and paid
hours of employment by occupational category
and shall exclude data with respect to the
wages and wage-related costs incurred in
furnishing skilled nursing facility services.
Any adjustments or updates made under this
subparagraph for a fiscal year (beginning with
fiscal year 1991) shall be made in a manner
that assures that the aggregate payments under
this subsection in the fiscal year are not
greater or less than those that would have been
made in the year without such adjustment. The
Secretary shall apply the previous sentence for
any period as if the amendments made by section
403(a)(1) of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, the
amendments made by section 10324(a)(1) of the
Patient Protection and Affordable Care Act, and
the amendments made by section 9831(a) of the
American Rescue Plan Act of 2021 had not been
enacted.
(ii) Alternative proportion to be adjusted
beginning in fiscal year 2005.--For discharges
occurring on or after October 1, 2004, the
Secretary shall substitute ``62 percent'' for
the proportion described in the first sentence
of clause (i), unless the application of this
clause would result in lower payments to a
hospital than would otherwise be made.
(iii) Floor on area wage index for hospitals
in frontier states.--
(I) In general.--Subject to subclause
(IV), for discharges occurring on or
after October 1, 2010, the area wage
index applicable under this
subparagraph to any hospital which is
located in a frontier State (as defined
in subclause (II)) may not be less than
1.00.
(II) Frontier state defined.--In this
clause, the term ``frontier State''
means a State in which at least 50
percent of the counties in the State
are frontier counties.
(III) Frontier county defined.--In
this clause, the term ``frontier
county'' means a county in which the
population per square mile is less than
6.
(IV) Limitation.--This clause shall
not apply to any hospital located in a
State that receives a non-labor related
share adjustment under paragraph
(5)(H).
(iv) Floor on area wage index for hospitals
in all-urban states.--
(I) In general.--For discharges
occurring on or after October 1, 2021,
the area wage index applicable under
this subparagraph to any hospital in an
all-urban State (as defined in
subclause (IV)) may not be less than
the minimum area wage index for the
fiscal year for hospitals in that
State, as established under subclause
(II).
(II) Minimum area wage index.--For
purposes of subclause (I), the
Secretary shall establish a minimum
area wage index for a fiscal year for
hospitals in each all-urban State using
the methodology described in section
412.64(h)(4)(vi) of title 42, Code of
Federal Regulations, as in effect for
fiscal year 2018.
(III) Waiving budget neutrality.--
Pursuant to the fifth sentence of
clause (i), this clause shall not be
applied in a budget neutral manner.
(IV) All-urban state defined.--In
this clause, the term ``all-urban
State'' means a State in which there
are no rural areas (as defined in
paragraph (2)(D)) or a State in which
there are no hospitals classified as
rural under this section.
(4)(A) The Secretary shall establish a classification of
inpatient hospital discharges by diagnosis-related groups and a
methodology for classifying specific hospital discharges within
these groups.
(B) For each such diagnosis-related group the Secretary shall
assign an appropriate weighting factor which reflects the
relative hospital resources used with respect to discharges
classified within that group compared to discharges classified
within other groups.
(C)(i) The Secretary shall adjust the classifications and
weighting factors established under subparagraphs (A) and (B),
for discharges in fiscal year 1988 and at least annually
thereafter, to reflect changes in treatment patterns,
technology (including a new medical service or technology under
paragraph (5)(K)), and other factors which may change the
relative use of hospital resources.
(ii) For discharges in fiscal year 1990, the Secretary shall
reduce the weighting factor for each diagnosis-related group by
1.22 percent.
(iii) Any such adjustment under clause (i) for discharges in
a fiscal year (beginning with fiscal year 1991) or payments
under paragraph (5)(M) (beginning with fiscal year 2021) shall
be made in a manner that assures that the aggregate payments
under this subsection for discharges in the fiscal year are not
greater or less than those that would have been made for
discharges in the year without such adjustment or payments
under paragraph (5)(M).
(iv)(I) For discharges occurring during the emergency period
described in section 1135(g)(1)(B), in the case of a discharge
of an individual diagnosed with COVID-19, the Secretary shall
increase the weighting factor that would otherwise apply to the
diagnosis-related group to which the discharge is assigned by
20 percent. The Secretary shall identify a discharge of such an
individual through the use of diagnosis codes, condition codes,
or other such means as may be necessary.
(II) Any adjustment under subclause (I) shall not be taken
into account in applying budget neutrality under clause (iii)
(III) In the case of a State for which the Secretary has
waived all or part of this section under the authority of
section 1115A, nothing in this section shall preclude such
State from implementing an adjustment similar to the adjustment
under subclause (I).
(D)(i) For discharges occurring on or after October 1, 2008,
the diagnosis-related group to be assigned under this paragraph
for a discharge described in clause (ii) shall be a diagnosis-
related group that does not result in higher payment based on
the presence of a secondary diagnosis code described in clause
(iv).
(ii) A discharge described in this clause is a discharge
which meets the following requirements:
(I) The discharge includes a condition identified by
a diagnosis code selected under clause (iv) as a
secondary diagnosis.
(II) But for clause (i), the discharge would have
been classified to a diagnosis-related group that
results in a higher payment based on the presence of a
secondary diagnosis code selected under clause (iv).
(III) At the time of admission, no code selected
under clause (iv) was present.
(iii) As part of the information required to be reported by a
hospital with respect to a discharge of an individual in order
for payment to be made under this subsection, for discharges
occurring on or after October 1, 2007, the information shall
include the secondary diagnosis of the individual at admission.
(iv) By not later than October 1, 2007, the Secretary shall
select diagnosis codes associated with at least two conditions,
each of which codes meets all of the following requirements (as
determined by the Secretary):
(I) Cases described by such code have a high cost or
high volume, or both, under this title.
(II) The code results in the assignment of a case to
a diagnosis-related group that has a higher payment
when the code is present as a secondary diagnosis.
(III) The code describes such conditions that could
reasonably have been prevented through the application
of evidence-based guidelines.
The Secretary may from time to time revise (through addition or
deletion of codes) the diagnosis codes selected under this
clause so long as there are diagnosis codes associated with at
least two conditions selected for discharges occurring during
any fiscal year.
(v) In selecting and revising diagnosis codes under clause
(iv), the Secretary shall consult with the Centers for Disease
Control and Prevention and other appropriate entities.
(vi) Any change resulting from the application of this
subparagraph shall not be taken into account in adjusting the
weighting factors under subparagraph (C)(i) or in applying
budget neutrality under subparagraph (C)(iii).
(5)(A)(i) For discharges occurring during fiscal years ending
on or before September 30, 1997, the Secretary shall provide
for an additional payment for a subsection (d) hospital for any
discharge in a diagnosis-related group, the length of stay of
which exceeds the mean length of stay for discharges within
that group by a fixed number of days, or exceeds such mean
length of stay by some fixed number of standard deviations,
whichever is the fewer number of days.
(ii) For cases which are not included in clause (i), a
subsection (d) hospital may request additional payments in any
case where charges, adjusted to cost, exceed a fixed multiple
of the applicable DRG prospective payment rate, or exceed such
other fixed dollar amount, whichever is greater, or for
discharges in fiscal years beginning on or after October 1,
1994, exceed the sum of the applicable DRG prospective payment
rate plus any amounts payable under subparagraphs (B) and (F)
plus a fixed dollar amount determined by the Secretary.
(iii) The amount of such additional payment under clauses (i)
and (ii) shall be determined by the Secretary and shall (except
as payments under clause (i) are required to be reduced to take
into account the requirements of clause (v)) approximate the
marginal cost of care beyond the cutoff point applicable under
clause (i) or (ii).
(iv) The total amount of the additional payments made under
this subparagraph for discharges in a fiscal year may not be
less than 5 percent nor more than 6 percent of the total
payments projected or estimated to be made based on DRG
prospective payment rates for discharges in that year.
(v) The Secretary shall provide that--
(I) the day outlier percentage for fiscal year 1995
shall be 75 percent of the day outlier percentage for
fiscal year 1994;
(II) the day outlier percentage for fiscal year 1996
shall be 50 percent of the day outlier percentage for
fiscal year 1994; and
(III) the day outlier percentage for fiscal year 1997
shall be 25 percent of the day outlier percentage for
fiscal year 1994.
(vi) For purposes of this subparagraph the term ``day outlier
percentage'' means, for a fiscal year, the percentage of the
total additional payments made by the Secretary under this
subparagraph for discharges in that fiscal year which are
additional payments under clause (i).
(B) The Secretary shall provide for an additional payment
amount for subsection (d) hospitals with indirect costs of
medical education, in an amount computed in the same manner as
the adjustment for such costs under regulations (in effect as
of January 1, 1983) under subsection (a)(2), except as follows:
(i) The amount of such additional payment shall be
determined by multiplying (I) the sum of the amount
determined under paragraph (1)(A)(ii)(II) (or, if
applicable, the amount determined under paragraph
(1)(A)(iii)) and, for cases qualifying for additional
payment under subparagraph (A)(i), the amount paid to
the hospital under subparagraph (A), by (II) the
indirect teaching adjustment factor described in clause
(ii).
(ii) For purposes of clause (i)(II), the indirect
teaching adjustment factor is equal to c
(((1+r) to the nth power) - 1), where ``r'' is the
ratio of the hospital's full-time equivalent interns
and residents to beds and ``n'' equals .405. Subject to
clause (ix), for discharges occurring--
(I) on or after October 1, 1988, and before
October 1, 1997, ``c'' is equal to 1.89;
(II) during fiscal year 1998, ``c'' is equal
to 1.72;
(III) during fiscal year 1999, ``c'' is equal
to 1.6;
(IV) during fiscal year 2000, ``c'' is equal
to 1.47;
(V) during fiscal year 2001, ``c'' is equal
to 1.54;
(VI) during fiscal year 2002, ``c'' is equal
to 1.6;
(VII) on or after October 1, 2002, and before
April 1, 2004, ``c'' is equal to 1.35;
(VIII) on or after April 1, 2004, and before
October 1, 2004, ``c'' is equal to 1.47;
(IX) during fiscal year 2005, ``c'' is equal
to 1.42;
(X) during fiscal year 2006, ``c'' is equal
to 1.37;
(XI) during fiscal year 2007, ``c'' is equal
to 1.32; and
(XII) on or after October 1, 2007, ``c'' is
equal to 1.35.
(iii) In determining such adjustment the Secretary
shall not distinguish between those interns and
residents who are employees of a hospital and those
interns and residents who furnish services to a
hospital but are not employees of such hospital.
(iv)(I) Effective for discharges occurring on or
after October 1, 1997, and before July 1, 2010, all the
time spent by an intern or resident in patient care
activities under an approved medical residency training
program at an entity in a nonhospital setting shall be
counted towards the determination of full-time
equivalency if the hospital incurs all, or
substantially all, of the costs for the training
program in that setting.
(II) Effective for discharges occurring on or after
July 1, 2010, all the time spent by an intern or
resident in patient care activities in a nonprovider
setting shall be counted towards the determination of
full-time equivalency if a hospital incurs the costs of
the stipends and fringe benefits of the intern or
resident during the time the intern or resident spends
in that setting. If more than one hospital incurs these
costs, either directly or through a third party, such
hospitals shall count a proportional share of the time,
as determined by written agreement between the
hospitals, that a resident spends training in that
setting.
(v) In determining the adjustment with respect to a
hospital for discharges occurring on or after October
1, 1997, the total number of full-time equivalent
interns and residents in the fields of allopathic and
osteopathic medicine in either a hospital or
nonhospital setting may not exceed the number (or, 130
percent of such number in the case of a hospital
located in a rural area) of such full-time equivalent
interns and residents in the hospital with respect to
the hospital's most recent cost reporting period ending
on or before December 31, 1996. Rules similar to the
rules of subsection (h)(4)(F)(ii) shall apply for
purposes of this clause. The provisions of subsections
(h)(4)(H)(vi), (h)(7), (h)(8), (h)(9), and (h)(10)
shall apply with respect to the first sentence of this
clause in the same manner as they apply with respect to
subsection (h)(4)(F)(i).
(vi) For purposes of clause (ii)--
(I) ``r'' may not exceed the ratio of the
number of interns and residents, subject to the
limit under clause (v), with respect to the
hospital for its most recent cost reporting
period to the hospital's available beds (as
defined by the Secretary) during that cost
reporting period, and
(II) for the hospital's cost reporting
periods beginning on or after October 1, 1997,
subject to the limits described in clauses (iv)
and (v), the total number of full-time
equivalent residents for payment purposes shall
equal the average of the actual full-time
equivalent resident count for the cost
reporting period and the preceding two cost
reporting periods.
In the case of the first cost reporting period
beginning on or after October 1, 1997, subclause (II)
shall be applied by using the average for such period
and the preceding cost reporting period.
(vii) If any cost reporting period beginning on or
after October 1, 1997, is not equal to twelve months,
the Secretary shall make appropriate modifications to
ensure that the average full-time equivalent residency
count pursuant to subclause (II) of clause (vi) is
based on the equivalent of full twelve-month cost
reporting periods.
(viii) Rules similar to the rules of paragraphs
(2)(F)(iv) and (4)(H) of subsection (h) shall apply for
purposes of clauses (v) and (vi).
(ix) For discharges occurring on or after July 1,
2005, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
redistributed to a hospital under subsection (h)(7)(B),
in computing the indirect teaching adjustment factor
under clause (ii) the adjustment shall be computed in a
manner as if ``c'' were equal to 0.66 with respect to
such resident positions.
(x) For discharges occurring on or after July 1,
2011, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
distributed to a hospital under subsection (h)(8)(B),
the indirect teaching adjustment factor shall be
computed in the same manner as provided under clause
(ii) with respect to such resident positions.
(xi)(I) The provisions of subparagraph (K) of
subsection (h)(4) shall apply under this subparagraph
in the same manner as they apply under such subsection.
(II) In determining the hospital's number of full-
time equivalent residents for purposes of this
subparagraph, all the time spent by an intern or
resident in an approved medical residency training
program in non-patient care activities, such as
didactic conferences and seminars, as such time and
activities are defined by the Secretary, that occurs in
the hospital shall be counted toward the determination
of full-time equivalency if the hospital--
(aa) is recognized as a subsection (d)
hospital;
(bb) is recognized as a subsection (d) Puerto
Rico hospital;
(cc) is reimbursed under a reimbursement
system authorized under section 1814(b)(3); or
(dd) is a provider-based hospital outpatient
department.
(III) In determining the hospital's number of full-
time equivalent residents for purposes of this
subparagraph, all the time spent by an intern or
resident in an approved medical residency training
program in research activities that are not associated
with the treatment or diagnosis of a particular
patient, as such time and activities are defined by the
Secretary, shall not be counted toward the
determination of full-time equivalency.
(xii) For discharges occurring on or after July 1,
2023, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
distributed to a hospital under subsection (h)(9), the
indirect teaching adjustment factor shall be computed
in the same manner as provided under clause (ii) with
respect to such resident positions.
(xiii) For discharges occurring on or after July 1,
2026, insofar as an additional payment amount under
this subparagraph is attributable to resident positions
distributed to a hospital under subsection (h)(10), the
indirect teaching adjustment factor shall be computed
in the same manner as provided under clause (ii) with
respect to such resident positions.
(C)(i) The Secretary shall provide for such exceptions and
adjustments to the payment amounts established under this
subsection (other than under paragraph (9)) as the Secretary
deems appropriate to take into account the special needs of
regional and national referral centers (including those
hospitals of 275 or more beds located in rural areas). A
hospital which is classified as a rural hospital may appeal to
the Secretary to be classified as a rural referral center under
this clause on the basis of criteria (established by the
Secretary) which shall allow the hospital to demonstrate that
it should be so reclassified by reason of certain of its
operating characteristics being similar to those of a typical
urban hospital located in the same census region and which
shall not require a rural osteopathic hospital to have more
than 3,000 discharges in a year in order to be classified as a
rural referral center. Such characteristics may include wages,
scope of services, service area, and the mix of medical
specialties. The Secretary shall publish the criteria not later
than August 17, 1984, for implementation by October 1, 1984. An
appeal allowed under this clause must be submitted to the
Secretary (in such form and manner as the Secretary may
prescribe) during the quarter before the first quarter of the
hospital's cost reporting period (or, in the case of a cost
reporting period beginning during October 1984, during the
first quarter of that period), and the Secretary must make a
final determination with respect to such appeal within 60 days
after the date the appeal was submitted. Any payment
adjustments necessitated by a reclassification based upon the
appeal shall be effective at the beginning of such cost
reporting period.
(ii) The Secretary shall provide, under clause (i), for the
classification of a rural hospital as a regional referral
center if the hospital has a case mix index equal to or greater
than the median case mix index for hospitals (other than
hospitals with approved teaching programs) located in an urban
area in the same region (as defined in paragraph (2)(D)), has
at least 5,000 discharges a year or, if less, the median number
of discharges in urban hospitals in the region in which the
hospital is located (or, in the case of a rural osteopathic
hospital, meets the criterion established by the Secretary
under clause (i) with respect to the annual number of
discharges for such hospitals), and meets any other criteria
established by the Secretary under clause (i).
(D)(i) For any cost reporting period beginning on or after
April 1, 1990, with respect to a subsection (d) hospital which
is a sole community hospital, payment under paragraph (1)(A)
shall be--
(I) an amount based on 100 percent of the hospital's
target amount for the cost reporting period, as defined
in subsection (b)(3)(C), or
(II) the amount determined under paragraph
(1)(A)(iii),
whichever results in greater payment to the hospital.
(ii) In the case of a sole community hospital that
experiences, in a cost reporting period compared to the
previous cost reporting period, a decrease of more than 5
percent in its total number of inpatient cases due to
circumstances beyond its control, the Secretary shall provide
for such adjustment to the payment amounts under this
subsection (other than under paragraph (9)) as may be necessary
to fully compensate the hospital for the fixed costs it incurs
in the period in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core
staff and services.
(iii) For purposes of this title, the term ``sole community
hospital'' means any hospital--
(I) that the Secretary determines is located more
than 35 road miles from another hospital,
(II) that, by reason of factors such as the time
required for an individual to travel to the nearest
alternative source of appropriate inpatient care (in
accordance with standards promulgated by the
Secretary), location, weather conditions, travel
conditions, or absence of other like hospitals (as
determined by the Secretary), is the sole source of
inpatient hospital services reasonably available to
individuals in a geographic area who are entitled to
benefits under part A, or
(III) that is located in a rural area and designated
by the Secretary as an essential access community
hospital under section 1820(i)(1) as in effect on
September 30, 1997.
(iv) The Secretary shall promulgate a standard for
determining whether a hospital meets the criteria for
classification as a sole community hospital under clause
(iii)(II) because of the time required for an individual to
travel to the nearest alternative source of appropriate
inpatient care.
(v) If the Secretary determines that, in the case of a
hospital located in a rural area and designated by the
Secretary as an essential access community hospital under
section 1820(i)(1) as in effect on September 30, 1997, the
hospital has incurred increases in reasonable costs during a
cost reporting period as a result of becoming a member of a
rural health network (as defined in section 1820(d)) in the
State in which it is located, and in incurring such increases,
the hospital will increase its costs for subsequent cost
reporting periods, the Secretary shall increase the hospital's
target amount under subsection (b)(3)(C) to account for such
incurred increases.
(E)(i) The Secretary shall estimate the amount of
reimbursement made for services described in section
1862(a)(14) with respect to which payment was made under part B
in the base reporting periods referred to in paragraph (2)(A)
and with respect to which payment is no longer being made.
(ii) The Secretary shall provide for an adjustment to the
payment for subsection (d) hospitals in each fiscal year so as
appropriately to reflect the net amount described in clause
(i).
(F)(i) Subject to subsection (r), for discharges occurring on
or after May 1, 1986, the Secretary shall provide, in
accordance with this subparagraph, for an additional payment
amount for each subsection (d) hospital which--
(I) serves a significantly disproportionate number of
low-income patients (as defined in clause (v)), or
(II) is located in an urban area, has 100 or more
beds, and can demonstrate that its net inpatient care
revenues (excluding any of such revenues attributable
to this title or State plans approved under title XIX),
during the cost reporting period in which the
discharges occur, for indigent care from State and
local government sources exceed 30 percent of its total
of such net inpatient care revenues during the period.
(ii) Subject to clause (ix), the amount of such payment for
each discharge shall be determined by multiplying (I) the sum
of the amount determined under paragraph (1)(A)(ii)(II) (or, if
applicable, the amount determined under paragraph (1)(A)(iii))
and, for cases qualifying for additional payment under
subparagraph (A)(i), the amount paid to the hospital under
subparagraph (A) for that discharge, by (II) the
disproportionate share adjustment percentage established under
clause (iii) or (iv) for the cost reporting period in which the
discharge occurs.
(iii) The disproportionate share adjustment percentage for a
cost reporting period for a hospital described in clause
(i)(II) is equal to 35 percent.
(iv) The disproportionate share adjustment percentage for a
cost reporting period for a hospital that is not described in
clause (i)(II) and that--
(I) is located in an urban area and has 100 or more
beds or is described in the second sentence of clause
(v), is equal to the percent determined in accordance
with the applicable formula described in clause (vii);
(II) is located in an urban area and has less than
100 beds, is equal to 5 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (xiii);
(III) is located in a rural area and is not described
in subclause (IV) or (V) or in the second sentence of
clause (v), is equal to 4 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (xii);
(IV) is located in a rural area, is classified as a
rural referral center under subparagraph (C), and is
classified as a sole community hospital under
subparagraph (D), is equal to 10 percent or, if
greater, the percent determined in accordance with the
applicable formula described in clause (viii) or,
subject to clause (xiv) and for discharges occurring on
or after April 1, 2001, the greater of the percentages
determined under clause (x) or (xi);
(V) is located in a rural area, is classified as a
rural referral center under subparagraph (C), and is
not classified as a sole community hospital under
subparagraph (D), is equal to the percent determined in
accordance with the applicable formula described in
clause (viii) or, subject to clause (xiv) and for
discharges occurring on or after April 1, 2001, is
equal to the percent determined in accordance with
clause (xi); or
(VI) is located in a rural area, is classified as a
sole community hospital under subparagraph (D), and is
not classified as a rural referral center under
subparagraph (C), is 10 percent or, subject to clause
(xiv) and for discharges occurring on or after April 1,
2001, is equal to the percent determined in accordance
with clause (x).
(v) In this subparagraph, a hospital ``serves a significantly
disproportionate number of low income patients'' for a cost
reporting period if the hospital has a disproportionate patient
percentage (as defined in clause (vi)) for that period which
equals, or exceeds--
(I) 15 percent, if the hospital is located in an
urban area and has 100 or more beds,
(II) 30 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in a rural area and has more than 100 beds,
or is located in a rural area and is classified as a
sole community hospital under subparagraph (D),
(III) 40 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in an urban area and has less than 100 beds,
or
(IV) 45 percent (or 15 percent, for discharges
occurring on or after April 1, 2001), if the hospital
is located in a rural area and is not described in
subclause (II).
A hospital located in a rural area and with 500 or more beds
also ``serves a significantly disproportionate number of low
income patients'' for a cost reporting period if the hospital
has a disproportionate patient percentage (as defined in clause
(vi)) for that period which equals or exceeds a percentage
specified by the Secretary.
(vi) In this subparagraph, the term ``disproportionate
patient percentage'' means, with respect to a cost reporting
period of a hospital, the sum of--
(I) the fraction (expressed as a percentage), the
numerator of which is the number of such hospital's
patient days for such period which were made up of
patients who (for such days) were entitled to benefits
under part A of this title and were entitled to
supplementary security income benefits (excluding any
State supplementation) under title XVI of this Act, and
the denominator of which is the number of such
hospital's patient days for such fiscal year which were
made up of patients who (for such days) were entitled
to benefits under part A of this title, and
(II) the fraction (expressed as a percentage), the
numerator of which is the number of the hospital's
patient days for such period which consist of patients
who (for such days) were eligible for medical
assistance under a State plan approved under title XIX,
but who were not entitled to benefits under part A of
this title, and the denominator of which is the total
number of the hospital's patient days for such period.
In determining under subclause (II) the number of the
hospital's patient days for such period which consist of
patients who (for such days) were eligible for medical
assistance under a State plan approved under title XIX, the
Secretary may, to the extent and for the period the Secretary
determines appropriate, include patient days of patients not so
eligible but who are regarded as such because they receive
benefits under a demonstration project approved under title XI.
(vii) The formula used to determine the disproportionate
share adjustment percentage for a cost reporting period for a
hospital described in clause (iv)(I) is--
(I) in the case of such a hospital with a
disproportionate patient percentage (as defined in
clause (vi)) greater than 20.2--
(a) for discharges occurring on or after
April 1, 1990, and on or before December 31,
1990, (P-20.2)(.65) + 5.62,
(b) for discharges occurring on or after
January 1, 1991, and on or before September 30,
1993, (P-20.2)(.7) + 5.62,
(c) for discharges occurring on or after
October 1, 1993, and on or before September 30,
1994, (P-20.2)(.8) + 5.88, and
(d) for discharges occurring on or after
October 1, 1994, (P-20.2)(.825) + 5.88; or
(II) in the case of any other such hospital--
(a) for discharges occurring on or after
April 1, 1990, and on or before December 31,
1990, (P-15)(.6) + 2.5,
(b) for discharges occurring on or after
January 1, 1991, and on or before September 30,
1993, (P-15)(.6) + 2.5,
(c) for discharges occurring on or after
October 1, 1993, (P-15)(.65) + 2.5,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(viii) Subject to clause (xiv), the formula used to determine
the disproportionate share adjustment percentage for a cost
reporting period for a hospital described in clause (iv)(IV) or
(iv)(V) is the percentage determined in accordance with the
following formula:(P-30)(.6) + 4.0, where ``P'' is the
hospital's disproportionate patient percentage (as defined in
clause (vi)).
(ix) In the case of discharges occurring--
(I) during fiscal year 1998, the additional payment
amount otherwise determined under clause (ii) shall be
reduced by 1 percent;
(II) during fiscal year 1999, such additional payment
amount shall be reduced by 2 percent;
(III) during fiscal years 2000 and 2001, such
additional payment amount shall be reduced by 3 percent
and 2 percent, respectively;
(IV) during fiscal year 2002, such additional payment
amount shall be reduced by 3 percent; and
(V) during fiscal year 2003 and each subsequent
fiscal year, such additional payment amount shall be
reduced by 0 percent.
(x) Subject to clause (xiv), for purposes of clause (iv)(VI)
(relating to sole community hospitals), in the case of a
hospital for a cost reporting period with a disproportionate
patient percentage (as defined in clause (vi)) that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5;
(II) is equal to or exceeds 19.3, but is less than
30.0, such adjustment percentage is equal to 5.25
percent; or
(III) is equal to or exceeds 30, such adjustment
percentage is equal to 10 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xi) Subject to clause (xiv), for purposes of clause (iv)(V)
(relating to rural referral centers), in the case of a hospital
for a cost reporting period with a disproportionate patient
percentage (as defined in clause (vi)) that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5;
(II) is equal to or exceeds 19.3, but is less than
30.0, such adjustment percentage is equal to 5.25
percent; or
(III) is equal to or exceeds 30, such adjustment
percentage is determined in accordance with the
following formula: (P-30)(.6) + 5.25,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xii) Subject to clause (xiv), for purposes of clause
(iv)(III) (relating to small rural hospitals generally), in the
case of a hospital for a cost reporting period with a
disproportionate patient percentage (as defined in clause (vi))
that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5; or
(II) is equal to or exceeds 19.3, such adjustment
percentage is equal to 5.25 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xiii) Subject to clause (xiv), for purposes of clause
(iv)(II) (relating to urban hospitals with less than 100 beds),
in the case of a hospital for a cost reporting period with a
disproportionate patient percentage (as defined in clause (vi))
that--
(I) is less than 19.3, the disproportionate share
adjustment percentage is determined in accordance with
the following formula: (P-15)(.65) + 2.5; or
(II) is equal to or exceeds 19.3, such adjustment
percentage is equal to 5.25 percent,
where ``P'' is the hospital's disproportionate patient
percentage (as defined in clause (vi)).
(xiv)(I) In the case of discharges occurring on or after
April 1, 2004, subject to subclause (II), there shall be
substituted for the disproportionate share adjustment
percentage otherwise determined under clause (iv) (other than
subclause (I)) or under clause (viii), (x), (xi), (xii), or
(xiii), the disproportionate share adjustment percentage
determined under clause (vii) (relating to large, urban
hospitals).
(II) Under subclause (I), the disproportionate share
adjustment percentage shall not exceed 12 percent for a
hospital that is not classified as a rural referral center
under subparagraph (C) or, in the case of discharges occurring
on or after October 1, 2006, as a medicare-dependent, small
rural hospital under subparagraph (G)(iv).
(G)(i) For any cost reporting period beginning on or after
April 1, 1990, and before October 1, 1994, or discharges
occurring on or after October 1, 1997, and before [January 1,
2025] October 1, 2025, in the case of a subsection (d) hospital
which is a medicare-dependent, small rural hospital, payment
under paragraph (1)(A) shall be equal to the sum of the amount
determined under clause (ii) and the amount determined under
paragraph (1)(A)(iii).
(ii) The amount determined under this clause is--
(I) for discharges occurring during the 36-month
period beginning with the first day of the cost
reporting period that begins on or after April 1, 1990,
the amount by which the hospital's target amount for
the cost reporting period (as defined in subsection
(b)(3)(D)) exceeds the amount determined under
paragraph (1)(A)(iii); and
(II) for discharges occurring during any subsequent
cost reporting period (or portion thereof) and before
October 1, 1994, or discharges occurring on or after
October 1, 1997, and before [January 1, 2025] October
1, 2025, 50 percent (or 75 percent in the case of
discharges occurring on or after October 1, 2006) of
the amount by which the hospital's target amount for
the cost reporting period or for discharges in the
fiscal year (as defined in subsection (b)(3)(D))
exceeds the amount determined under paragraph
(1)(A)(iii).
(iii) In the case of a medicare dependent, small rural
hospital that experiences, in a cost reporting period compared
to the previous cost reporting period, a decrease of more than
5 percent in its total number of inpatient cases due to
circumstances beyond its control, the Secretary shall provide
for such adjustment to the payment amounts under this
subsection (other than under paragraph (9)) as may be necessary
to fully compensate the hospital for the fixed costs it incurs
in the period in providing inpatient hospital services,
including the reasonable cost of maintaining necessary core
staff and services.
(iv) The term ``medicare-dependent, small rural hospital''
means, with respect to any cost reporting period to which
clause (i) applies, any hospital--
(I) that is located in--
(aa) a rural area; or
(bb) a State with no rural area (as defined
in paragraph (2)(D)) and satisfies any of the
criteria in subclause (I), (II), or (III) of
paragraph (8)(E)(ii),
(II) that has not more than 100 beds,
(III) that is not classified as a sole community
hospital under subparagraph (D), and
(IV) for which not less than 60 percent of its
inpatient days or discharges during the cost reporting
period beginning in fiscal year 1987, or two of the
three most recently audited cost reporting periods for
which the Secretary has a settled cost report, were
attributable to inpatients entitled to benefits under
part A.
Subclause (I)(bb) shall apply for purposes of payment under
clause (ii) only for discharges of a hospital occurring on or
after the effective date of a determination of medicare-
dependent small rural hospital status made by the Secretary
with respect to the hospital after the date of the enactment of
this sentence. For purposes of applying subclause (II) of
paragraph (8)(E)(ii) under subclause (I)(bb), such subclause
(II) shall be applied by inserting ``as of January 1, 2018,''
after ``such State'' each place it appears.
(H) The Secretary may provide for such adjustments to the
payment amounts under this subsection as the Secretary deems
appropriate to take into account the unique circumstances of
hospitals located in Alaska and Hawaii.
(I)(i) The Secretary shall provide by regulation for such
other exceptions and adjustments to such payment amounts under
this subsection as the Secretary deems appropriate.
(ii) In making adjustments under clause (i) for transfer
cases (as defined by the Secretary) in a fiscal year, not
taking in account the effect of subparagraph (J), the Secretary
may make adjustments to each of the average standardized
amounts determined under paragraph (3) to assure that the
aggregate payments made under this subsection for such fiscal
year are not greater or lesser than those that would have
otherwise been made in such fiscal year.
(J)(i) The Secretary shall treat the term ``transfer case''
(as defined in subparagraph (I)(ii)) as including the case of a
qualified discharge (as defined in clause (ii)), which is
classified within a diagnosis-related group described in clause
(iii), and which occurs on or after October 1, 1998. In the
case of a qualified discharge for which a substantial portion
of the costs of care are incurred in the early days of the
inpatient stay (as defined by the Secretary), in no case may
the payment amount otherwise provided under this subsection
exceed an amount equal to the sum of--
(I) 50 percent of the amount of payment under this
subsection for transfer cases (as established under
subparagraph (I)(i)), and
(II) 50 percent of the amount of payment which would
have been made under this subsection with respect to
the qualified discharge if no transfer were involved.
(ii) For purposes of clause (i), subject to clause (iii), the
term ``qualified discharge'' means a discharge classified with
a diagnosis-related group (described in clause (iii)) of an
individual from a subsection (d) hospital, if upon such
discharge the individual--
(I) is admitted as an inpatient to a hospital or
hospital unit that is not a subsection (d) hospital for
the provision of inpatient hospital services;
(II) is admitted to a skilled nursing facility;
(III) is provided home health services from a home
health agency, if such services relate to the condition
or diagnosis for which such individual received
inpatient hospital services from the subsection (d)
hospital, and if such services are provided within an
appropriate period (as determined by the Secretary);
(IV) for discharges occurring on or after October 1,
2018, is provided hospice care by a hospice program; or
(V) for discharges occurring on or after October 1,
2000, the individual receives post discharge services
described in clause (iv)(I).
(iii) Subject to clause (iv), a diagnosis-related group
described in this clause is--
(I) 1 of 10 diagnosis-related groups selected by the
Secretary based upon a high volume of discharges
classified within such groups and a disproportionate
use of post discharge services described in clause
(ii); and
(II) a diagnosis-related group specified by the
Secretary under clause (iv)(II).
(iv) The Secretary shall include in the proposed rule
published under subsection (e)(5)(A) for fiscal year 2001, a
description of the effect of this subparagraph. The Secretary
shall include in the proposed rule published for fiscal year
2019, a description of the effect of clause (ii)(IV). The
Secretary may include in the proposed rule (and in the final
rule published under paragraph (6)) for fiscal year 2001 or a
subsequent fiscal year, a description of--
(I) post-discharge services not described in
subclauses (I), (II), (III), and, in the case of
proposed and final rules for fiscal year 2019 and
subsequent fiscal years, (IV) of clause (ii), the
receipt of which results in a qualified discharge; and
(II) diagnosis-related groups described in clause
(iii)(I) in addition to the 10 selected under such
clause.
(K)(i) Effective for discharges beginning on or after October
1, 2001, the Secretary shall establish a mechanism to recognize
the costs of new medical services and technologies under the
payment system established under this subsection. Such
mechanism shall be established after notice and opportunity for
public comment (in the publications required by subsection
(e)(5) for a fiscal year or otherwise). Such mechanism shall be
modified to meet the requirements of clause (viii).
(ii) The mechanism established pursuant to clause (i) shall--
(I) apply to a new medical service or technology if,
based on the estimated costs incurred with respect to
discharges involving such service or technology, the
DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate
(applying a threshold specified by the Secretary that
is the lesser of 75 percent of the standardized amount
(increased to reflect the difference between cost and
charges) or 75 percent of one standard deviation for
the diagnosis-related group involved);
(II) provide for the collection of data with respect
to the costs of a new medical service or technology
described in subclause (I) for a period of not less
than two years and not more than three years beginning
on the date on which an inpatient hospital code is
issued with respect to the service or technology;
(III) provide for additional payment to be made under
this subsection with respect to discharges involving a
new medical service or technology described in
subclause (I) that occur during the period described in
subclause (II) in an amount that adequately reflects
the estimated average cost of such service or
technology; and
(IV) provide that discharges involving such a service
or technology that occur after the close of the period
described in subclause (II) will be classified within a
new or existing diagnosis-related group with a
weighting factor under paragraph (4)(B) that is derived
from cost data collected with respect to discharges
occurring during such period.
(iii) For purposes of clause (ii)(II), the term ``inpatient
hospital code'' means any code that is used with respect to
inpatient hospital services for which payment may be made under
this subsection and includes an alphanumeric code issued under
the International Classification of Diseases, 9th Revision,
Clinical Modification (``ICD-9-CM'') and its subsequent
revisions.
(iv) For purposes of clause (ii)(III), the term ``additional
payment'' means, with respect to a discharge for a new medical
service or technology described in clause (ii)(I), an amount
that exceeds the prospective payment rate otherwise applicable
under this subsection to discharges involving such service or
technology that would be made but for this subparagraph.
(v) The requirement under clause (ii)(III) for an additional
payment may be satisfied by means of a new-technology group
(described in subparagraph (L)), an add-on payment, a payment
adjustment, or any other similar mechanism for increasing the
amount otherwise payable with respect to a discharge under this
subsection. The Secretary may not establish a separate fee
schedule for such additional payment for such services and
technologies, by utilizing a methodology established under
subsection (a) or (h) of section 1834 to determine the amount
of such additional payment, or by other similar mechanisms or
methodologies.
(vi) For purposes of this subparagraph and subparagraph (L),
a medical service or technology will be considered a ``new
medical service or technology'' if the service or technology
meets criteria established by the Secretary after notice and an
opportunity for public comment.
(vii) Under the mechanism under this subparagraph, the
Secretary shall provide for the addition of new diagnosis and
procedure codes in April 1 of each year, but the addition of
such codes shall not require the Secretary to adjust the
payment (or diagnosis-related group classification) under this
subsection until the fiscal year that begins after such date.
(viii) The mechanism established pursuant to clause (i) shall
be adjusted to provide, before publication of a proposed rule,
for public input regarding whether a new service or technology
represents an advance in medical technology that substantially
improves the diagnosis or treatment of individuals entitled to
benefits under part A as follows:
(I) The Secretary shall make public and periodically
update a list of all the services and technologies for
which an application for additional payment under this
subparagraph is pending.
(II) The Secretary shall accept comments,
recommendations, and data from the public regarding
whether the service or technology represents a
substantial improvement.
(III) The Secretary shall provide for a meeting at
which organizations representing hospitals, physicians,
such individuals, manufacturers, and any other
interested party may present comments, recommendations,
and data to the clinical staff of the Centers for
Medicare & Medicaid Services before publication of a
notice of proposed rulemaking regarding whether service
or technology represents a substantial improvement.
(ix) Before establishing any add-on payment under this
subparagraph with respect to a new technology, the Secretary
shall seek to identify one or more diagnosis-related groups
associated with such technology, based on similar clinical or
anatomical characteristics and the cost of the technology.
Within such groups the Secretary shall assign an eligible new
technology into a diagnosis-related group where the average
costs of care most closely approximate the costs of care of
using the new technology. No add-on payment under this
subparagraph shall be made with respect to such new technology
and this clause shall not affect the application of paragraph
(4)(C)(iii).
(L)(i) In establishing the mechanism under subparagraph (K),
the Secretary may establish new-technology groups into which a
new medical service or technology will be classified if, based
on the estimated average costs incurred with respect to
discharges involving such service or technology, the DRG
prospective payment rate otherwise applicable to such
discharges under this subsection is inadequate.
(ii) Such groups--
(I) shall not be based on the costs associated with a
specific new medical service or technology; but
(II) shall, in combination with the applicable
standardized amounts and the weighting factors assigned
to such groups under paragraph (4)(B), reflect such
cost cohorts as the Secretary determines are
appropriate for all new medical services and
technologies that are likely to be provided as
inpatient hospital services in a fiscal year.
(iii) The methodology for classifying specific hospital
discharges within a diagnosis-related group under paragraph
(4)(A) or a new-technology group shall provide that a specific
hospital discharge may not be classified within both a
diagnosis-related group and a new-technology group.
(M)(i) For cost reporting periods beginning on or after
October 1, 2020, in the case of a subsection (d) hospital that
furnishes an allogeneic hematopoietic stem cell transplant to
an individual during such a period, payment to such hospital
for hematopoietic stem cell acquisition shall be made on a
reasonable cost basis. The items included in such hematopoietic
stem cell acquisition shall be specified by the Secretary
through rulemaking.
(ii) For purposes of this subparagraph, the term ``allogeneic
hematopoietic stem cell transplant'' means, with respect to an
individual, the intravenous infusion of hematopoietic cells
derived from bone marrow, peripheral blood stem cells, or cord
blood, but not including embryonic stem cells, of a donor to an
individual that are or may be used to restore hematopoietic
function in such individual having an inherited or acquired
deficiency or defect.
(6) The Secretary shall provide for publication in the
Federal Register, on or before the August 1 before each fiscal
year (beginning with fiscal year 1984), of a description of the
methodology and data used in computing the adjusted DRG
prospective payment rates under this subsection, including any
adjustments required under subsection (e)(1)(B).
(7) There shall be no administrative or judicial review under
section 1878 or otherwise of--
(A) the determination of the requirement, or the
proportional amount, of any adjustment effected
pursuant to subsection (e)(1) or the determination of
the applicable percentage increase under paragraph
(12)(A)(ii),
(B) the establishment of diagnosis-related groups, of
the methodology for the classification of discharges
within such groups, and of the appropriate weighting
factors thereof under paragraph (4), including the
selection and revision of codes under paragraph (4)(D),
and
(C) the determination of whether services provided
prior to a patient's inpatient admission are related to
the admission (as described in subsection (a)(4)).
(8)(A) In the case of any hospital which is located in an
area which is, at any time after April 20, 1983, reclassified
from an urban to a rural area, payments to such hospital for
the first two cost reporting periods for which such
reclassification is effective shall be made as follows:
(i) For the first such cost reporting period, payment
shall be equal to the amount payable to such hospital
for such reporting period on the basis of the rural
classification, plus an amount equal to two-thirds of
the amount (if any) by which--
(I) the amount which would have been payable
to such hospital for such reporting period on
the basis of an urban classification, exceeds
(II) the amount payable to such hospital for
such reporting period on the basis of the rural
classification.
(ii) For the second such cost reporting period,
payment shall be equal to the amount payable to such
hospital for such reporting period on the basis of the
rural classification, plus an amount equal to one-third
of the amount (if any) by which--
(I) the amount which would have been payable
to such hospital for such reporting period on
the basis of an urban classification, exceeds
(II) the amount payable to such hospital for
such reporting period on the basis of the rural
classification.
(B)(i) For purposes of this subsection, the Secretary shall
treat a hospital located in a rural county adjacent to one or
more urban areas as being located in the urban metropolitan
statistical area to which the greatest number of workers in the
county commute, if the rural county would otherwise be
considered part of an urban area, under the standards for
designating Metropolitan Statistical Areas (and for designating
New England County Metropolitan Areas) described in clause
(ii), if the commuting rates used in determining outlying
counties (or, for New England, similar recognized areas) were
determined on the basis of the aggregate number of resident
workers who commute to (and, if applicable under the standards,
from) the central county or counties of all contiguous
Metropolitan Statistical Areas (or New England County
Metropolitan Areas).
(ii) The standards described in this clause for cost
reporting periods beginning in a fiscal year--
(I) before fiscal year 2003, are the standards
published in the Federal Register on January 3, 1980,
or, at the election of the hospital with respect to
fiscal years 2001 and 2002, standards so published on
March 30, 1990; and
(II) after fiscal year 2002, are the standards
published in the Federal Register by the Director of
the Office of Management and Budget based on the most
recent available decennial population data.
Subparagraphs (C) and (D) shall not apply with respect to the
application of subclause (I).
(C)(i) If the application of subparagraph (B) or a decision
of the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10), by treating hospitals located
in a rural county or counties as being located in an urban
area, or by treating hospitals located in one urban area as
being located in another urban area--
(I) reduces the wage index for that urban area (as
applied under this subsection) by 1 percentage point or
less, the Secretary, in calculating such wage index
under this subsection, shall exclude those hospitals so
treated, or
(II) reduces the wage index for that urban area by
more than 1 percentage point (as applied under this
subsection), the Secretary shall calculate and apply
such wage index under this subsection separately to
hospitals located in such urban area (excluding all the
hospitals so treated) and to the hospitals so treated
(as if such hospitals were located in such urban area).
(ii) If the application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10), by treating hospitals located
in a rural county or counties as not being located in the rural
area in a State, reduces the wage index for that rural area (as
applied under this subsection), the Secretary shall calculate
and apply such wage index under this subsection as if the
hospitals so treated had not been excluded from calculation of
the wage index for that rural area.
(iii) The application of subparagraph (B) or a decision of
the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10) may not result in the reduction
of any county's wage index to a level below the wage index for
rural areas in the State in which the county is located.
(iv) The application of subparagraph (B) or a decision of the
Medicare Geographic Classification Review Board or of the
Secretary under paragraph (10) may not result in a reduction in
an urban area's wage index if--
(I) the urban area has a wage index below the wage
index for rural areas in the State in which it is
located; or
(II) the urban area is located in a State that is
composed of a single urban area.
(v) This subparagraph shall apply with respect to discharges
occurring in a fiscal year only if the Secretary uses a method
for making adjustments to the DRG prospective payment rate for
area differences in hospital wage levels under paragraph (3)(E)
for the fiscal year that is based on the use of Metropolitan
Statistical Area classifications.
(D) The Secretary shall make a proportional adjustment in the
standardized amounts determined under paragraph (3) to assure
that the provisions of subparagraphs (B) and (C) or a decision
of the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10) do not result in aggregate
payments under this section that are greater or less than those
that would otherwise be made.
(E)(i) For purposes of this subsection, not later than 60
days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital
described in clause (ii), the Secretary shall treat the
hospital as being located in the rural area (as defined in
paragraph (2)(D)) of the State in which the hospital is
located.
(ii) For purposes of clause (i), a subsection (d) hospital
described in this clause is a subsection (d) hospital that is
located in an urban area (as defined in paragraph (2)(D)) and
satisfies any of the following criteria:
(I) The hospital is located in a rural census tract
of a metropolitan statistical area (as determined under
the most recent modification of the Goldsmith
Modification, originally published in the Federal
Register on February 27, 1992 (57 Fed. Reg. 6725)).
(II) The hospital is located in an area designated by
any law or regulation of such State as a rural area (or
is designated by such State as a rural hospital).
(III) The hospital would qualify as a rural,
regional, or national referral center under paragraph
(5)(C) or as a sole community hospital under paragraph
(5)(D) if the hospital were located in a rural area.
(IV) The hospital meets such other criteria as the
Secretary may specify.
(9)(A) Notwithstanding section 1814(b) but subject to the
provisions of section 1813, the amount of the payment with
respect to the operating costs of inpatient hospital services
of a subsection (d) Puerto Rico hospital for inpatient hospital
discharges is equal to the sum of--
(i) the applicable Puerto Rico percentage (specified
in subparagraph (E)) of the Puerto Rico adjusted DRG
prospective payment rate (determined under subparagraph
(B) or (C)) for such discharges,
(ii) the applicable Federal percentage (specified in
subparagraph (E)) of--
(I) for discharges beginning in a fiscal year
beginning on or after October 1, 1997, and
before October 1, 2003, the discharge-weighted
average of--
(aa) the national adjusted DRG
prospective payment rate (determined
under paragraph (3)(D)) for hospitals
located in a large urban area,
(bb) such rate for hospitals located
in other urban areas, and
(cc) such rate for hospitals located
in a rural area,
for such discharges, adjusted in the manner
provided in paragraph (3)(E) for different area
wage levels; and
(II) for discharges in a fiscal year
beginning on or after October 1, 2003, the
national DRG prospective payment rate
determined under paragraph (3)(D)(iii) for
hospitals located in any area for such
discharges, adjusted in the manner provided in
paragraph (3)(E) for different area wage
levels.
As used in this section, the term ``subsection (d) Puerto Rico
hospital'' means a hospital that is located in Puerto Rico and
that would be a subsection (d) hospital (as defined in
paragraph (1)(B)) if it were located in one of the 50 States.
(B) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
in fiscal year 1988 involving inpatient hospital services of a
subsection (d) Puerto Rico hospital for which payment may be
made under part A of this title. Such rate shall be determined
for such hospitals located in urban or rural areas within
Puerto Rico, as follows:
(i) The Secretary shall determine the target amount
(as defined in subsection (b)(3)(A)) for the hospital
for the cost reporting period beginning in fiscal year
1987 and increase such amount by prorating the
applicable percentage increase (as defined in
subsection (b)(3)(B)) to update the amount to the
midpoint in fiscal year 1988.
(ii) The Secretary shall standardize the amount
determined under clause (i) for each hospital by--
(I) excluding an estimate of indirect medical
education costs,
(II) adjusting for variations among hospitals
by area in the average hospital wage level,
(III) adjusting for variations in case mix
among hospitals, and
(IV) excluding an estimate of the additional
payments to certain subsection (d) Puerto Rico
hospitals to be made under subparagraph
(D)(iii) (relating to disproportionate share
payments).
(iii) The Secretary shall compute a discharge
weighted average of the standardized amounts determined
under clause (ii) for all hospitals located in an urban
area and for all hospitals located in a rural area (as
such terms are defined in paragraph (2)(D)).
(iv) The Secretary shall reduce the average
standardized amount by a proportion equal to the
proportion (estimated by the Secretary) of the amount
of payments under this paragraph which are additional
payments described in subparagraph (D)(i) (relating to
outlier payments).
(v) For each discharge classified within a diagnosis-
related group for hospitals located in an urban or
rural area, respectively, the Secretary shall establish
a Puerto Rico DRG prospective payment rate equal to the
product of--
(I) the average standardized amount (computed
under clause (iii) and reduced under clause
(iv)) for hospitals located in an urban or
rural area, respectively, and
(II) the weighting factor (determined under
paragraph (4)(B)) for that diagnosis-related
group.
(vi) The Secretary shall adjust the proportion (as
estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and
wage-related costs, of the Puerto Rico DRG prospective
payment rate computed under clause (v) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the Puerto Rican average hospital
wage level.
(C) The Secretary shall determine a Puerto Rico adjusted DRG
prospective payment rate, for each inpatient hospital discharge
after fiscal year 1988 involving inpatient hospital services of
a subsection (d) Puerto Rico hospital for which payment may be
made under part A of this title. Such rate shall be determined
for hospitals located in urban or rural areas within Puerto
Rico as follows:
(i)(I) For discharges in a fiscal year after fiscal
year 1988 and before fiscal year 2004, the Secretary
shall compute an average standardized amount for
hospitals located in an urban area and for hospitals
located in a rural area equal to the respective average
standardized amount computed for the previous fiscal
year under subparagraph (B)(iii) or under this clause,
increased for fiscal year 1989 by the applicable
percentage increase under subsection (b)(3)(B), and
adjusted for subsequent fiscal years in accordance with
the final determination of the Secretary under
subsection (e)(4), and adjusted to reflect the most
recent case-mix data available.
(II) For discharges occurring in a fiscal year
(beginning with fiscal year 2004), the Secretary shall
compute an average standardized amount for hospitals
located in any area of Puerto Rico that is equal to the
average standardized amount computed under subclause
(I) for fiscal year 2003 for hospitals in a large urban
area (or, beginning with fiscal year 2005, for all
hospitals in the previous fiscal year) increased by the
applicable percentage increase under subsection
(b)(3)(B) for the fiscal year involved.
(ii) The Secretary shall reduce each of the average
standardized amounts (or for fiscal year 2004 and
thereafter, the average standardized amount) by a
proportion equal to the proportion (estimated by the
Secretary) of the amount of payments under this
paragraph which are additional payments described in
subparagraph (D)(i) (relating to outlier payments).
(iii) For each discharge classified within a
diagnosis-related group for hospitals located in an
urban or rural area, respectively, the Secretary shall
establish a Puerto Rico DRG prospective payment rate
equal to the product of--
(I) the average standardized amount (computed
under clause (i) and reduced under clause
(ii)), and
(II) the weighting factor (determined under
paragraph (4)(B)) for that diagnosis-related
group.
(iv)(I) The Secretary shall adjust the proportion (as
estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and
wage-related costs, of the Puerto Rico DRG prospective
payment rate computed under clause (iii) for area
differences in hospital wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
hospital compared to the Puerto Rico average hospital
wage level. The second and third sentences of paragraph
(3)(E)(i) shall apply to subsection (d) Puerto Rico
hospitals under this clause in the same manner as they
apply to subsection (d) hospitals under such paragraph
and, for purposes of this clause, any reference in such
paragraph to a subsection (d) hospital is deemed a
reference to a subsection (d) Puerto Rico hospital.
(II) For discharges occurring on or after October 1,
2004, the Secretary shall substitute ``62 percent'' for
the proportion described in the first sentence of
clause (i), unless the application of this subclause
would result in lower payments to a hospital than would
otherwise be made.
(D) The following provisions of paragraph (5) shall apply to
subsection (d) Puerto Rico hospitals receiving payment under
this paragraph in the same manner and to the extent as they
apply to subsection (d) hospitals receiving payment under this
subsection:
(i) Subparagraph (A) (relating to outlier payments).
(ii) Subparagraph (B) (relating to payments for
indirect medical education costs), except that for this
purpose the sum of the amount determined under
subparagraph (A) of this paragraph and the amount paid
to the hospital under clause (i) of this subparagraph
shall be substituted for the sum referred to in
paragraph (5)(B)(i)(I).
(iii) Subparagraph (F) (relating to disproportionate
share payments), except that for this purpose the sum
described in clause (ii) of this subparagraph shall be
substituted for the sum referred to in paragraph
(5)(F)(ii)(I).
(iv) Subparagraph (H) (relating to exceptions and
adjustments).
(E) For purposes of subparagraph (A), for discharges
occurring--
(i) on or after October 1, 1987, and before October
1, 1997, the applicable Puerto Rico percentage is 75
percent and the applicable Federal percentage is 25
percent;
(ii) on or after October 1, 1997, and before April 1,
2004, the applicable Puerto Rico percentage is 50
percent and the applicable Federal percentage is 50
percent;
(iii) on or after April 1, 2004, and before October
1, 2004, the applicable Puerto Rico percentage is 37.5
percent and the applicable Federal percentage is 62.5
percent;
(iv) on or after October 1, 2004, and before January
1, 2016, the applicable Puerto Rico percentage is 25
percent and the applicable Federal percentage is 75
percent; and
(v) on or after January 1, 2016, the applicable
Puerto Rico percentage is 0 percent and the applicable
Federal percentage is 100 percent.
(10)(A) There is hereby established the Medicare Geographic
Classification Review Board (hereinafter in this paragraph
referred to as the ``Board'').
(B)(i) The Board shall be composed of 5 members appointed by
the Secretary without regard to the provisions of title 5,
United States Code, governing appointments in the competitive
service. Two of such members shall be representative of
subsection (d) hospitals located in a rural area under
paragraph (2)(D). At least 1 member shall be knowledgeable in
the field of analyzing costs with respect to the provision of
inpatient hospital services.
(ii) The Secretary shall make initial appointments to the
Board as provided in this paragraph within 180 days after the
date of the enactment of this paragraph.
(C)(i) The Board shall consider the application of any
subsection (d) hospital requesting that the Secretary change
the hospital's geographic classification for purposes of
determining for a fiscal year--
(I) the hospital's average standardized amount under
paragraph (2)(D), or
(II) the factor used to adjust the DRG prospective
payment rate for area differences in hospital wage
levels that applies to such hospital under paragraph
(3)(E).
(ii) A hospital requesting a change in geographic
classification under clause (i) for a fiscal year shall submit
its application to the Board not later than the first day of
the 13-month period ending on September 30 of the preceding
fiscal year.
(iii)(I) The Board shall render a decision on an application
submitted under clause (i) not later than 180 days after the
deadline referred to in clause (ii).
(II) Appeal of decisions of the Board shall be subject to the
provisions of section 557b of title 5, United States Code. The
Secretary shall issue a decision on such an appeal not later
than 90 days after the date on which the appeal is filed. The
decision of the Secretary shall be final and shall not be
subject to judicial review.
(D)(i) The Secretary shall publish guidelines to be utilized
by the Board in rendering decisions on applications submitted
under this paragraph, and shall include in such guidelines the
following:
(I) Guidelines for comparing wages, taking into
account (to the extent the Secretary determines
appropriate) occupational mix, in the area in which the
hospital is classified and the area in which the
hospital is applying to be classified.
(II) Guidelines for determining whether the county in
which the hospital is located should be treated as
being a part of a particular Metropolitan Statistical
Area.
(III) Guidelines for considering information provided
by an applicant with respect to the effects of the
hospital's geographic classification on access to
inpatient hospital services by medicare beneficiaries.
(IV) Guidelines for considering the appropriateness
of the criteria used to define New England County
Metropolitan Areas.
(ii) Notwithstanding clause (i), if the Secretary uses a
method for making adjustments to the DRG prospective payment
rate for area differences in hospital wage levels under
paragraph (3)(E) that is not based on the use of Metropolitan
Statistical Area classifications, the Secretary may revise the
guidelines published under clause (i) to the extent such
guidelines are used to determine the appropriateness of the
geographic area in which the hospital is determined to be
located for purposes of making such adjustments.
(iii) Under the guidelines published by the Secretary under
clause (i), in the case of a hospital which has ever been
classified by the Secretary as a rural referral center under
paragraph (5)(C), the Board may not reject the application of
the hospital under this paragraph on the basis of any
comparison between the average hourly wage of the hospital and
the average hourly wage of hospitals in the area in which it is
located.
(iv) The Secretary shall publish the guidelines described in
clause (i) by July 1, 1990.
(v) Any decision of the Board to reclassify a subsection (d)
hospital for purposes of the adjustment factor described in
subparagraph (C)(i)(II) for fiscal year 2001 or any fiscal year
thereafter shall be effective for a period of 3 fiscal years,
except that the Secretary shall establish procedures under
which a subsection (d) hospital may elect to terminate such
reclassification before the end of such period.
(vi) Such guidelines shall provide that, in making decisions
on applications for reclassification for the purposes described
in clause (v) for fiscal year 2003 and any succeeding fiscal
year, the Board shall base any comparison of the average hourly
wage for the hospital with the average hourly wage for
hospitals in an area on--
(I) an average of the average hourly wage amount for
the hospital from the most recently published hospital
wage survey data of the Secretary (as of the date on
which the hospital applies for reclassification) and
such amount from each of the two immediately preceding
surveys; and
(II) an average of the average hourly wage amount for
hospitals in such area from the most recently published
hospital wage survey data of the Secretary (as of the
date on which the hospital applies for
reclassification) and such amount from each of the two
immediately preceding surveys.
(E)(i) The Board shall have full power and authority to make
rules and establish procedures, not inconsistent with the
provisions of this title or regulations of the Secretary, which
are necessary or appropriate to carry out the provisions of
this paragraph. In the course of any hearing the Board may
administer oaths and affirmations. The provisions of
subsections (d) and (e) of section 205 with respect to subpenas
shall apply to the Board to the same extent as such provisions
apply to the Secretary with respect to title II.
(ii) The Board is authorized to engage such technical
assistance and to receive such information as may be required
to carry out its functions, and the Secretary shall, in
addition, make available to the Board such secretarial,
clerical, and other assistance as the Board may require to
carry out its functions.
(F)(i) Each member of the Board who is not an officer or
employee of the Federal Government shall be compensated at a
rate equal to the daily equivalent of the annual rate of basic
pay prescribed for grade GS-18 of the General Schedule under
section 5332 of title 5, United States Code, for each day
(including travel time) during which such member is engaged in
the performance of the duties of the Board. Each member of the
Board who is an officer or employee of the United States shall
serve without compensation in addition to that received for
service as an officer or employee of the United States.
(ii) Members of the Board shall be allowed travel expenses,
including per diem in lieu of subsistence, at rates authorized
for employees of agencies under subchapter I of chapter 57 of
title 5, United States Code, while away from their homes or
regular places of business in the performance of services for
the Board.
(11) Additional payments for managed care
enrollees.--
(A) In general.--For portions of cost
reporting periods occurring on or after January
1, 1998, the Secretary shall provide for an
additional payment amount for each applicable
discharge of any subsection (d) hospital that
has an approved medical residency training
program.
(B) Applicable discharge.--For purposes of
this paragraph, the term ``applicable
discharge'' means the discharge of any
individual who is enrolled under a risk-sharing
contract with an eligible organization under
section 1876 and who is entitled to benefits
under part A or any individual who is enrolled
with a Medicare+Choice organization under part
C.
(C) Determination of amount.--The amount of
the payment under this paragraph with respect
to any applicable discharge shall be equal to
the applicable percentage (as defined in
subsection (h)(3)(D)(ii)) of the estimated
average per discharge amount that would
otherwise have been paid under paragraph (5)(B)
if the individuals had not been enrolled as
described in subparagraph (B).
(D) Special rule for hospitals under
reimbursement system.--The Secretary shall
establish rules for the application of this
paragraph to a hospital reimbursed under a
reimbursement system authorized under section
1814(b)(3) in the same manner as it would apply
to the hospital if it were not reimbursed under
such section.
(12) Payment adjustment for low-volume hospitals.--
(A) In general.--In addition to any payments
calculated under this section for a subsection
(d) hospital, for discharges occurring during a
fiscal year (beginning with fiscal year 2005),
the Secretary shall provide for an additional
payment amount to each low-volume hospital (as
defined in subparagraph (C)(i)) for discharges
occurring during that fiscal year that is equal
to the applicable percentage increase
(determined under subparagraph (B) or (D) for
the hospital involved) in the amount paid to
such hospital under this section for such
discharges (determined without regard to this
paragraph).
(B) Applicable percentage increase.--For
discharges occurring in fiscal years 2005
through 2010 and for discharges occurring
[during the portion of fiscal year 2025
beginning on January 1, 2025, and ending on
September 30, 2025, and] in fiscal year 2026
and subsequent fiscal years, the Secretary
shall determine an applicable percentage
increase for purposes of subparagraph (A) as
follows:
(i) The Secretary shall determine the
empirical relationship for subsection
(d) hospitals between the standardized
cost-per-case for such hospitals and
the total number of discharges of such
hospitals and the amount of the
additional incremental costs (if any)
that are associated with such number of
discharges.
(ii) The applicable percentage
increase shall be determined based upon
such relationship in a manner that
reflects, based upon the number of such
discharges for a subsection (d)
hospital, such additional incremental
costs.
(iii) In no case shall the applicable
percentage increase exceed 25 percent.
(C) Definitions.--
(i) Low-volume hospital.--For
purposes of this paragraph, the term
``low-volume hospital'' means, for a
fiscal year [or portion of a fiscal
year], a subsection (d) hospital (as
defined in paragraph (1)(B)) that the
Secretary determines is located more
than 25 road miles (or, with respect to
fiscal years 2011 through [2024 and the
portion of fiscal year 2025 beginning
on October 1, 2024, and ending on
December 31, 2024] 2025, 15 road miles)
from another subsection (d) hospital
and has--
(I) with respect to each of
fiscal years 2005 through 2010,
less than 800 discharges during
the fiscal year;
(II) with respect to each of
fiscal years 2011 through 2018,
less than 1,600 discharges of
individuals entitled to, or
enrolled for, benefits under
part A during the fiscal year
or portion of fiscal year;
(III) with respect to each of
fiscal years 2019 through [2024
and the portion of fiscal year
2025 beginning on October 1,
2024, and ending on December
31, 2024] 2025, less than 3,800
discharges during the fiscal
year; and
(IV) with respect to [the
portion of fiscal year 2025
beginning on January 1, 2025,
and ending on September 30,
2025, and] fiscal year 2026 and
each subsequent fiscal year,
less than 800 discharges during
the fiscal year.
(ii) Discharge.--For purposes of
subparagraphs (B) and (D) and clause
(i), the term ``discharge'' means an
inpatient acute care discharge of an
individual regardless (except as
provided in clause (i)(II) and
subparagraph (D)(i)) of whether the
individual is entitled to benefits
under part A.
(iii) Treatment of indian health service and
non-indian health service facilities.--For
purposes of determining whether--
(I) a subsection (d) hospital of the
Indian Health Service (whether operated
by such Service or by an Indian tribe
or tribal organization (as those terms
are defined in section 4 of the Indian
Health Care Improvement Act)), or
(II) a subsection (d) hospital other
than a hospital of the Indian Health
Service meets the mileage criterion
under clause (i) with respect to fiscal
year 2011 or a succeeding fiscal year,
the Secretary shall apply the policy
described in the regulation at part
412.101(e) of title 42, Code of Federal
Regulations (as in effect on the date
of enactment of this clause).
(D) Temporary applicable percentage
increase.--For discharges occurring in fiscal
years 2011 through [2024 or during the portion
of fiscal year 2025 beginning on October 1,
2024, and ending on December 31, 2024] 2025,
the Secretary shall determine an applicable
percentage increase for purposes of
subparagraph (A) using a continuous linear
sliding scale ranging from 25 percent for low-
volume hospitals--
(i) with respect to each of fiscal
years 2011 through 2018, with 200 or
fewer discharges of individuals
entitled to, or enrolled for, benefits
under part A in the fiscal year or the
portion of fiscal year to 0 percent for
low-volume hospitals with greater than
1,600 discharges of such individuals in
the fiscal yearor portion of fiscal
year; and
(ii) with respect to each of fiscal
years 2019 through [2024 and the
portion of fiscal year 2025 beginning
on October 1, 2024, and ending on
December 31, 2024] 2025, with 500 or
fewer discharges in the fiscal year to
0 percent for low-volume hospitals with
greater than 3,800 discharges in the
fiscal year.
(13)(A) In order to recognize commuting patterns among
geographic areas, the Secretary shall establish a process
through application or otherwise for an increase of the wage
index applied under paragraph (3)(E) for subsection (d)
hospitals located in a qualifying county described in
subparagraph (B) in the amount computed under subparagraph (D)
based on out-migration of hospital employees who reside in that
county to any higher wage index area.
(B) The Secretary shall establish criteria for a qualifying
county under this subparagraph based on the out-migration
referred to in subparagraph (A) and differences in the area
wage indices. Under such criteria the Secretary shall,
utilizing such data as the Secretary determines to be
appropriate, establish--
(i) a threshold percentage, established by the
Secretary, of the weighted average of the area wage
index or indices for the higher wage index areas
involved;
(ii) a threshold (of not less than 10 percent) for
minimum out-migration to a higher wage index area or
areas; and
(iii) a requirement that the average hourly wage of
the hospitals in the qualifying county equals or
exceeds the average hourly wage of all the hospitals in
the area in which the qualifying county is located.
(C) For purposes of this paragraph, the term ``higher wage
index area'' means, with respect to a county, an area with a
wage index that exceeds that of the county.
(D) The increase in the wage index under subparagraph (A) for
a qualifying county shall be equal to the percentage of the
hospital employees residing in the qualifying county who are
employed in any higher wage index area multiplied by the sum of
the products, for each higher wage index area of--
(i) the difference between--
(I) the wage index for such higher wage index
area, and
(II) the wage index of the qualifying county;
and
(ii) the number of hospital employees residing in the
qualifying county who are employed in such higher wage
index area divided by the total number of hospital
employees residing in the qualifying county who are
employed in any higher wage index area.
(E) The process under this paragraph may be based upon the
process used by the Medicare Geographic Classification Review
Board under paragraph (10). As the Secretary determines to be
appropriate to carry out such process, the Secretary may
require hospitals (including subsection (d) hospitals and other
hospitals) and critical access hospitals, as required under
section 1866(a)(1)(T), to submit data regarding the location of
residence, or the Secretary may use data from other sources.
(F) A wage index increase under this paragraph shall be
effective for a period of 3 fiscal years, except that the
Secretary shall establish procedures under which a subsection
(d) hospital may elect to waive the application of such wage
index increase.
(G) A hospital in a county that has a wage index increase
under this paragraph for a period and that has not waived the
application of such an increase under subparagraph (F) is not
eligible for reclassification under paragraph (8) or (10)
during that period.
(H) Any increase in a wage index under this paragraph for a
county shall not be taken into account for purposes of--
(i) computing the wage index for portions of the wage
index area (not including the county) in which the
county is located; or
(ii) applying any budget neutrality adjustment with
respect to such index under paragraph (8)(D).
(I) The thresholds described in subparagraph (B), data on
hospital employees used under this paragraph, and any
determination of the Secretary under the process described in
subparagraph (E) shall be final and shall not be subject to
judicial review.
(e)(1)(A) For cost reporting periods of hospitals beginning
in fiscal year 1984 or fiscal year 1985, the Secretary shall
provide for such proportional adjustment in the applicable
percentage increase (otherwise applicable to the periods under
subsection (b)(3)(B)) as may be necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsection (d)(1)(A)(i)(I) for that fiscal year
for operating costs of inpatient hospital services of
hospitals (excluding payments made under section
1866(a)(1)(F)),
are not greater or less than--
(ii) the target percentage (as defined in subsection
(d)(1)(C)) of the payment amounts which would have been
payable for such services for those same hospitals for
that fiscal year under this section under the law as in
effect before the date of the enactment of the Social
Security Amendments of 1983 (excluding payments made
under section 1866(a)(1)(F));
except that the adjustment made under this subparagraph shall
apply only to subsection (d) hospitals and shall not apply for
purposes of making computations under subsection (d)(2)(B)(ii)
or subsection (d)(3)(A).
(B) For discharges occurring in fiscal year 1984 or fiscal
year 1985, the Secretary shall provide under subsections
(d)(2)(F) and (d)(3)(C) for such equal proportional adjustment
in each of the average standardized amounts otherwise computed
for that fiscal year as may be necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsection (d)(1)(A)(i)(II) and (d)(5) for that
fiscal year for operating costs of inpatient hospital
services of hospitals (excluding payments made under
section 1866(a)(1)(F)),
are not greater or less than--
(ii) the DRG percentage (as defined in subsection
(d)(1)(C)) of the payment amounts which would have been
payable for such services for those same hospitals for
that fiscal year under this section under the law as in
effect before the date of the enactment of the Social
Security Amendments of 1983 (excluding payments made
under section 1866(a)(1)(F)).
(C) For discharges occurring in fiscal year 1988, the
Secretary shall provide for such equal proportional adjustment
in each of the average standardized amounts otherwise computed
under subsection (d)(3) for that fiscal year as may be
necessary to assure that--
(i) the aggregate payment amounts otherwise provided
under subsections (d)(1)(A)(iii), (d)(5), and (d)(9)
for that fiscal year for operating costs of inpatient
hospital services of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals,
are not greater or less than--
(ii) the payment amounts that would have been payable
for such services for those same hospitals for that
fiscal year but for the enactment of the amendments
made by section 9304 of the Omnibus Budget
Reconciliation Act of 1986.
(4)(A) Taking into consideration the recommendations of the
Commission, the Secretary shall recommend for each fiscal year
(beginning with fiscal year 1988) an appropriate change factor
for inpatient hospital services for discharges in that fiscal
year which will take into account amounts necessary for the
efficient and effective delivery of medically appropriate and
necessary care of high quality. The appropriate change factor
may be different for all large urban subsection (d) hospitals,
other urban subsection (d) hospitals, urban subsection (d)
Puerto Rico hospitals, rural subsection (d) hospitals, and
rural subsection (d) Puerto Rico hospitals, and all other
hospitals and units not paid under subsection (d), and may vary
among such other hospitals and units.
(B) In addition to the recommendation made under subparagraph
(A), the Secretary shall, taking into consideration the
recommendations of the Commission under paragraph (2)(B),
recommend for each fiscal year (beginning with fiscal year
1992) other appropriate changes in each existing reimbursement
policy under this title under which payments to an institution
are based upon prospectively determined rates.
(5) The Secretary shall cause to have published in the
Federal Register, not later than--
(A) the April 1 before each fiscal year (beginning
with fiscal year 1986), the Secretary's proposed
recommendations under paragraph (4) for that fiscal
year for public comment, and
(B) the August 1 before such fiscal year after such
consideration of public comment on the proposal as is
feasible in the time available, the Secretary's final
recommendations under such paragraph for that year.
The Secretary shall include in the publication referred to in
subparagraph (A) for a fiscal year the report of the
Commission's recommendations submitted under paragraph (3) for
that fiscal year. To the extent that the Secretary's
recommendations under paragraph (4) differ from the
Commission's recommendations for that fiscal year, the
Secretary shall include in the publication referred to in
subparagraph (A) an explanation of the Secretary's grounds for
not following the Commission's recommendations.
(f)(1)(A) The Secretary shall maintain a system for the
reporting of costs of hospitals receiving payments computed
under subsection (d).
(B)(i) Subject to clause (ii), the Secretary shall place into
effect a standardized electronic cost reporting format for
hospitals under this title.
(ii) The Secretary may delay or waive the implementation of
such format in particular instances where such implementation
would result in financial hardship (in particular with respect
to hospitals with a small percentage of inpatients entitled to
benefits under this title).
(2) If the Secretary determines, based upon information
supplied by a quality improvement organization under part B of
title XI, that a hospital, in order to circumvent the payment
method established under subsection (b) or (d) of this section,
has taken an action that results in the admission of
individuals entitled to benefits under part A unnecessarily,
unnecessary multiple admissions of the same such individuals,
or other inappropriate medical or other practices with respect
to such individuals, the Secretary may--
(A) deny payment (in whole or in part) under part A
with respect to inpatient hospital services provided
with respect to such an unnecessary admission (or
subsequent admission of the same individual), or
(B) require the hospital to take other corrective
action necessary to prevent or correct the
inappropriate practice.
(3) The provisions of subsections (c) through (g) of section
1128 shall apply to determinations made under paragraph (2) in
the same manner as they apply to exclusions effected under
section 1128(b)(13).
(g)(1)(A) Notwithstanding section 1861(v), instead of any
amounts that are otherwise payable under this title with
respect to the reasonable costs of subsection (d) hospitals and
subsection (d) Puerto Rico hospitals for capital-related costs
of inpatient hospital services, the Secretary shall, for
hospital cost reporting periods beginning on or after October
1, 1991, provide for payments for such costs in accordance with
a prospective payment system established by the Secretary.
Aggregate payments made under subsection (d) and this
subsection during fiscal years 1992 through 1995 shall be
reduced in a manner that results in a reduction (as estimated
by the Secretary) in the amount of such payments equal to a 10
percent reduction in the amount of payments attributable to
capital-related costs that would otherwise have been made
during such fiscal year had the amount of such payments been
based on reasonable costs (as defined in section 1861(v)). For
discharges occurring after September 30, 1993, the Secretary
shall reduce by 7.4 percent the unadjusted standard Federal
capital payment rate (as described in 42 CFR 412.308(c), as in
effect on the date of the enactment of the Omnibus Budget
Reconciliation Act of 1993) and shall (for hospital cost
reporting periods beginning on or after October 1, 1993)
redetermine which payment methodology is applied to the
hospital under such system to take into account such reduction.
In addition to the reduction described in the preceding
sentence, for discharges occurring on or after October 1, 1997,
the Secretary shall apply the budget neutrality adjustment
factor used to determine the Federal capital payment rate in
effect on September 30, 1995 (as described in section 412.352
of title 42 of the Code of Federal Regulations), to (i) the
unadjusted standard Federal capital payment rate (as described
in section 412.308(c) of that title, as in effect on September
30, 1997), and (ii) the unadjusted hospital-specific rate (as
described in section 412.328(e)(1) of that title, as in effect
on September 30, 1997), and, for discharges occurring on or
after October 1, 1997, and before October 1, 2002, reduce the
rates described in clauses (i) and (ii) by 2.1 percent.
(B) Such system--
(i) shall provide for (I) a payment on a per
discharge basis, and (II) an appropriate weighting of
such payment amount as relates to the classification of
the discharge;
(ii) may provide for an adjustment to take into
account variations in the relative costs of capital and
construction for the different types of facilities or
areas in which they are located;
(iii) may provide for such exceptions (including
appropriate exceptions to reflect capital obligations)
as the Secretary determines to be appropriate, and
(iv) may provide for suitable adjustment to reflect
hospital occupancy rate.
(C) In this paragraph, the term ``capital-related costs'' has
the meaning given such term by the Secretary under subsection
(a)(4) as of September 30, 1987, and does not include a return
on equity capital.
(2)(A) The Secretary shall provide that the amount which is
allowable, with respect to reasonable costs of inpatient
hospital services for which payment may be made under this
title, for a return on equity capital for hospitals shall, for
cost reporting periods beginning on or after the date of the
enactment of this subsection, be equal to amounts otherwise
allowable under regulations in effect on March 1, 1983, except
that the rate of return to be recognized shall be equal to the
applicable percentage (described in subparagraph (B)) of the
average of the rates of interest, for each of the months any
part of which is included in the reporting period, on
obligations issued for purchase by the Federal Hospital
Insurance Trust Fund.
(B) In this paragraph, the ``applicable percentage'' is--
(i) 75 percent, for cost reporting periods beginning
during fiscal year 1987,
(ii) 50 percent, for cost reporting periods beginning
during fiscal year 1988,
(iii) 25 percent, for cost reporting periods
beginning during fiscal year 1989, and
(iv) 0 percent, for cost reporting periods beginning
on or after October 1, 1989.
(3)(A) Except as provided in subparagraph (B), in determining
the amount of the payments that may be made under this title
with respect to all the capital-related costs of inpatient
hospital services of a subsection (d) hospital and a subsection
(d) Puerto Rico hospital, the Secretary shall reduce the
amounts of such payments otherwise established under this title
by--
(i) 3.5 percent for payments attributable to portions
of cost reporting periods occurring during fiscal year
1987,
(ii) 7 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during fiscal year 1988 on or after
October 1, 1987, and before January 1, 1988,
(iii) 12 percent for payments attributable to
portions of cost reporting periods or discharges (as
the case may be) in fiscal year 1988, occurring on or
after January 1, 1988,
(iv) 15 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during fiscal year 1989, and
(v) 15 percent for payments attributable to portions
of cost reporting periods or discharges (as the case
may be) occurring during the period beginning January
1, 1990, and ending September 30, 1991.
(B) Subparagraph (A) shall not apply to payments with respect
to the capital-related costs of any hospital that is a sole
community hospital (as defined in subsection (d)(5)(D)(iii)) or
a critical access hospital (as defined in section 1861(mm)(1)).
(4) In determining the amount of the payments that are
attributable to portions of cost reporting periods occurring
during fiscal years 1998 through 2002 and that may be made
under this title with respect to capital-related costs of
inpatient hospital services of a hospital which is described in
clause (i), (ii), or (iv) of subsection (d)(1)(B) or a unit
described in the matter after clause (v) of such subsection,
the Secretary shall reduce the amounts of such payments
otherwise determined under this title by 15 percent.
(h) Payments for Direct Graduate Medical Education Costs.--
(1) Substitution of special payment rules.--
Notwithstanding section 1861(v), instead of any amounts
that are otherwise payable under this title with
respect to the reasonable costs of hospitals for direct
graduate medical education costs, the Secretary shall
provide for payments for such costs in accordance with
paragraph (3) of this subsection. In providing for such
payments, the Secretary shall provide for an allocation
of such payments between part A and part B (and the
trust funds established under the respective parts) as
reasonably reflects the proportion of direct graduate
medical education costs of hospitals associated with
the provision of services under each respective part.
(2) Determination of hospital-specific approved fte
resident amounts.--The Secretary shall determine, for
each hospital with an approved medical residency
training program, an approved FTE resident amount for
each cost reporting period beginning on or after July
1, 1985, as follows:
(A) Determining allowable average cost per
fte resident in a hospital's base period.--The
Secretary shall determine, for the hospital's
cost reporting period that began during fiscal
year 1984, the average amount recognized as
reasonable under this title for direct graduate
medical education costs of the hospital for
each full-time-equivalent resident.
(B) Updating to the first cost reporting
period.--
(i) In general.--The Secretary shall
update each average amount determined
under subparagraph (A) by the
percentage increase in the consumer
price index during the 12-month cost
reporting period described in such
subparagraph.
(ii) Exception.--The Secretary shall
not perform an update under clause (i)
in the case of a hospital if the
hospital's reporting period, described
in subparagraph (A), began on or after
July 1, 1984, and before October 1,
1984.
(C) Amount for first cost reporting period.--
For the first cost reporting period of the
hospital beginning on or after July 1, 1985,
the approved FTE resident amount for the
hospital is equal to the amount determined
under subparagraph (B) increased by 1 percent.
(D) Amount for subsequent cost reporting
periods.--
(i) In general.--Except as provided
in a subsequent clause, for each
subsequent cost reporting period, the
approved FTE resident amount for the
hospital is equal to the approved FTE
resident amount determined under this
paragraph for the previous cost
reporting period updated, through the
midpoint of the period, by projecting
the estimated percentage change in the
consumer price index during the 12-
month period ending at that midpoint,
with appropriate adjustments to reflect
previous under-or over-estimations
under this subparagraph in the
projected percentage change in the
consumer price index.
(ii) Freeze in update for fiscal
years 1994 and 1995.--For cost
reporting periods beginning during
fiscal year 1994 or fiscal year 1995,
the approved FTE resident amount for a
hospital shall not be updated under
clause (i) for a resident who is not a
primary care resident (as defined in
paragraph (5)(H)) or a resident
enrolled in an approved medical
residency training program in
obstetrics and gynecology.
(iii) Floor for locality adjusted
national average per resident amount.--
The approved FTE resident amount for a
hospital for the cost reporting period
beginning during fiscal year 2001 shall
not be less than 70 percent, and for
the cost reporting period beginning
during fiscal year 2002 shall not be
less than 85 percent, of the locality
adjusted national average per resident
amount computed under subparagraph (E)
for the hospital and period.
(iv) Adjustment in rate of increase
for hospitals with fte approved amount
above 140 percent of locality adjusted
national average per resident amount.--
(I) Freeze for fiscal years
2001 and 2002 and 2004 through
2013.--For a cost reporting
period beginning during fiscal
year 2001 or fiscal year 2002
or during the period beginning
with fiscal year 2004 and
ending with fiscal year 2013,
if the approved FTE resident
amount for a hospital for the
preceding cost reporting period
exceeds 140 percent of the
locality adjusted national
average per resident amount
computed under subparagraph (E)
for that hospital and period,
subject to subclause (III), the
approved FTE resident amount
for the period involved shall
be the same as the approved FTE
resident amount for the
hospital for such preceding
cost reporting period.
(II) 2 percent decrease in
update for fiscal years 2003,
2004, and 2005.--For the cost
reporting period beginning
during fiscal year 2003, if the
approved FTE resident amount
for a hospital for the
preceding cost reporting period
exceeds 140 percent of the
locality adjusted national
average per resident amount
computed under subparagraph (E)
for that hospital and preceding
period, the approved FTE
resident amount for the period
involved shall be updated in
the manner described in
subparagraph (D)(i) except
that, subject to subclause
(III), the consumer price index
applied for a 12-month period
shall be reduced (but not below
zero) by 2 percentage points.
(III) No adjustment below 140
percent.--In no case shall
subclause (I) or (II) reduce an
approved FTE resident amount
for a hospital for a cost
reporting period below 140
percent of the locality
adjusted national average per
resident amount computed under
subparagraph (E) for such
hospital and period.
(E) Determination of locality adjusted
national average per resident amount.--The
Secretary shall determine a locality adjusted
national average per resident amount with
respect to a cost reporting period of a
hospital beginning during a fiscal year as
follows:
(i) Determining hospital single per
resident amount.--The Secretary shall
compute for each hospital operating an
approved graduate medical education
program a single per resident amount
equal to the average (weighted by
number of full-time equivalent
residents, as determined under
paragraph (4)) of the primary care per
resident amount and the non-primary
care per resident amount computed under
paragraph (2) for cost reporting
periods ending during fiscal year 1997.
(ii) Standardizing per resident
amounts.--The Secretary shall compute a
standardized per resident amount for
each such hospital by dividing the
single per resident amount computed
under clause (i) by an average of the 3
geographic index values (weighted by
the national average weight for each of
the work, practice expense, and
malpractice components) as applied
under section 1848(e) for 1999 for the
fee schedule area in which the hospital
is located.
(iii) Computing of weighted
average.--The Secretary shall compute
the average of the standardized per
resident amounts computed under clause
(ii) for such hospitals, with the
amount for each hospital weighted by
the average number of full-time
equivalent residents at such hospital
(as determined under paragraph (4)).
(iv) Computing national average per
resident amount.--The Secretary shall
compute the national average per
resident amount, for a hospital's cost
reporting period that begins during
fiscal year 2001, equal to the weighted
average computed under clause (iii)
increased by the estimated percentage
increase in the consumer price index
for all urban consumers during the
period beginning with the month that
represents the midpoint of the cost
reporting periods described in clause
(i) and ending with the midpoint of the
hospital's cost reporting period that
begins during fiscal year 2001.
(v) Adjusting for locality.--The
Secretary shall compute the product
of--
(I) the national average per
resident amount computed under
clause (iv) for the hospital,
and
(II) the geographic index
value average (described and
applied under clause (ii)) for
the fee schedule area in which
the hospital is located.
(vi) Computing locality adjusted
amount.--The locality adjusted national
per resident amount for a hospital
for--
(I) the cost reporting period
beginning during fiscal year
2001 is the product computed
under clause (v); or
(II) each subsequent cost
reporting period is equal to
the locality adjusted national
per resident amount for the
hospital for the previous cost
reporting period (as determined
under this clause) updated,
through the midpoint of the
period, by projecting the
estimated percentage change in
the consumer price index for
all urban consumers during the
12-month period ending at that
midpoint.
(F) Treatment of certain hospitals.--(i) In
the case of a hospital that did not have an
approved medical residency training program or
was not participating in the program under this
title for a cost reporting period beginning
during fiscal year 1984, the Secretary shall,
for the first such period for which it has such
a residency training program and is
participating under this title, provide for
such approved FTE resident amount as the
Secretary determines to be appropriate, based
on approved FTE resident amounts for comparable
programs.
(ii) In applying this subparagraph in the
case of a hospital that trains residents and
has not entered into a GME affiliation
agreement (as defined by the Secretary for
purposes of paragraph (4)(H)(ii)), on or after
the date of the enactment of this clause, the
Secretary shall not establish an FTE resident
amount until such time as the Secretary
determines that the hospital has trained at
least 1.0 full-time-equivalent resident in an
approved medical residency training program in
a cost reporting period.
(iii) In applying this subparagraph for cost
reporting periods beginning on or after the
date of enactment of this clause, in the case
of a hospital that, as of such date of
enactment, has an approved FTE resident amount
based on the training in an approved medical
residency program or programs of--
(I) less than 1.0 full-time-
equivalent resident in any cost
reporting period beginning before
October 1, 1997, as determined by the
Secretary; or
(II) no more than 3.0 full-time-
equivalent residents in any cost
reporting period beginning on or after
October 1, 1997, and before the date of
the enactment of this clause, as
determined by the Secretary,
in lieu of such FTE resident amount the
Secretary shall, in accordance with the
methodology described in section 413.77(e) of
title 42 of the Code of Federal Regulations (or
any successor regulation), establish a new FTE
resident amount if the hospital trains at least
1.0 full-time-equivalent resident (in the case
of a hospital described in subclause (I)) or
more than 3.0 full-time-equivalent residents
(in the case of a hospital described in
subclause (II)) in a cost reporting period
beginning on or after such date of enactment
and before the date that is 5 years after such
date of enactment.
(iv) For purposes of carrying out this
subparagraph for cost reporting periods
beginning on or after the date of the enactment
of this clause, a hospital shall report full-
time-equivalent residents on its cost report
for a cost reporting period if the hospital
trains at least 1.0 full-time-equivalent
residents in an approved medical residency
training program or programs in such period.
(v) As appropriate, the Secretary may
consider information from any cost reporting
period necessary to establish a new FTE
resident amount as described in clause (iii).
(3) Hospital payment amount per resident.--
(A) In general.--The payment amount, for a
hospital cost reporting period beginning on or
after July 1, 1985, is equal to the product
of--
(i) the aggregate approved amount (as
defined in subparagraph (B)) for that
period, and
(ii) the hospital's medicare patient
load (as defined in subparagraph (C))
for that period.
(B) Aggregate approved amount.--As used in
subparagraph (A), the term ``aggregate approved
amount'' means, for a hospital cost reporting
period, the product of--
(i) the hospital's approved FTE
resident amount (determined under
paragraph (2)) for that period, and
(ii) the weighted average number of
full-time-equivalent residents (as
determined under paragraph (4)) in the
hospital's approved medical residency
training programs in that period.
The Secretary shall reduce the aggregate approved
amount to the extent payment is made under subsection
(k) for residents included in the hospital's count of
full-time equivalent residents.
(C) Medicare patient load.--As used in
subparagraph (A), the term ``medicare patient
load'' means, with respect to a hospital's cost
reporting period, the fraction of the total
number of inpatient-bed-days (as established by
the Secretary) during the period which are
attributable to patients with respect to whom
payment may be made under part A.
(D) Payment for managed care enrollees.--
(i) In general.--For portions of cost
reporting periods occurring on or after
January 1, 1998, the Secretary shall
provide for an additional payment
amount under this subsection for
services furnished to individuals who
are enrolled under a risk-sharing
contract with an eligible organization
under section 1876 and who are entitled
to part A or with a Medicare+Choice
organization under part C. The amount
of such a payment shall equal, subject
to clause (iii), the applicable
percentage of the product of--
(I) the aggregate approved
amount (as defined in
subparagraph (B)) for that
period; and
(II) the fraction of the
total number of inpatient-bed
days (as established by the
Secretary) during the period
which are attributable to such
enrolled individuals.
(ii) Applicable percentage.--For
purposes of clause (i), the applicable
percentage is--
(I) 20 percent in 1998,
(II) 40 percent in 1999,
(III) 60 percent in 2000,
(IV) 80 percent in 2001, and
(V) 100 percent in 2002 and
subsequent years.
(iii) Proportional reduction for
nursing and allied health education.--
The Secretary shall estimate a
proportional adjustment in payments to
all hospitals determined under clauses
(i) and (ii) for portions of cost
reporting periods beginning in a year
(beginning with 2000) such that the
proportional adjustment reduces
payments in an amount for such year
equal to the total additional payment
amounts for nursing and allied health
education determined under subsection
(l) for portions of cost reporting
periods occurring in that year. In
applying the preceding sentence for
each of 2010 through 2019, the
Secretary shall not take into account
any increase in the total amount of
such additional payment amounts for
such nursing and allied health
education for portions of cost
reporting periods occurring in the year
pursuant to the application of
paragraph (2)(B)(ii) of such
subsection.
(iv) Special rule for hospitals under
reimbursement system.--The Secretary
shall establish rules for the
application of this subparagraph to a
hospital reimbursed under a
reimbursement system authorized under
section 1814(b)(3) in the same manner
as it would apply to the hospital if it
were not reimbursed under such section.
(4) Determination of full-time-equivalent
residents.--
(A) Rules.--The Secretary shall establish
rules consistent with this paragraph for the
computation of the number of full-time-
equivalent residents in an approved medical
residency training program.
(B) Adjustment for part-year or part-time
residents.--Such rules shall take into account
individuals who serve as residents for only a
portion of a period with a hospital or
simultaneously with more than one hospital.
(C) Weighting factors for certain
residents.--Subject to subparagraph (D), such
rules shall provide, in calculating the number
of full-time-equivalent residents in an
approved residency program--
(i) before July 1, 1986, for each
resident the weighting factor is 1.00,
(ii) on or after July 1, 1986, for a
resident who is in the resident's
initial residency period (as defined in
paragraph (5)(F)), the weighting factor
is 1.00,
(iii) on or after July 1, 1986, and
before July 1, 1987, for a resident who
is not in the resident's initial
residency period (as defined in
paragraph (5)(F)), the weighting factor
is .75, and
(iv) on or after July 1, 1987, for a
resident who is not in the resident's
initial residency period (as defined in
paragraph (5)(F)), the weighting factor
is .50.
(D) Foreign medical graduates required to
pass fmgems examination.--
(i) In general.--Except as provided
in clause (ii), such rules shall
provide that, in the case of an
individual who is a foreign medical
graduate (as defined in paragraph
(5)(D)), the individual shall not be
counted as a resident on or after July
1, 1986, unless--
(I) the individual has passed
the FMGEMS examination (as
defined in paragraph (5)(E)),
or
(II) the individual has
previously received
certification from, or has
previously passed the
examination of, the Educational
Commission for Foreign Medical
Graduates.
(ii) Transition for current fmgs.--On
or after July 1, 1986, but before July
1, 1987, in the case of a foreign
medical graduate who--
(I) has served as a resident
before July 1, 1986, and is
serving as a resident after
that date, but
(II) has not passed the
FMGEMS examination or a
previous examination of the
Educational Commission for
Foreign Medical Graduates
before July 1, 1986,
the individual shall be counted as a
resident at a rate equal to one-half of
the rate at which the individual would
otherwise be counted.
(E) Counting time spent in outpatient
settings.--Subject to subparagraphs (J) and
(K), such rules shall provide that only time
spent in activities relating to patient care
shall be counted and that--
(i) effective for cost reporting
periods beginning before July 1, 2010,
all the time;
(ii) effective for cost reporting
periods beginning on or after July 1,
2010, all the time so spent by a
resident shall be counted towards the
determination of full-time equivalency,
without regard to the setting in which
the activities are performed, if a
hospital incurs the costs of the
stipends and fringe benefits of the
resident during the time the resident
spends in that setting. If more than
one hospital incurs these costs, either
directly or through a third party, such
hospitals shall count a proportional
share of the time, as determined by
written agreement between the
hospitals, that a resident spends
training in that setting.
so spent by a resident under an approved
medical residency training program shall be
counted towards the determination of full-time
equivalency, without regard to the setting in
which the activities are performed, if the
hospital incurs all, or substantially all, of
the costs for the training program in that
setting.
Any hospital claiming under this subparagraph
for time spent in a nonprovider setting shall
maintain and make available to the Secretary
records regarding the amount of such time and
such amount in comparison with amounts of such
time in such base year as the Secretary shall
specify.
(F) Limitation on number of residents in
allopathic and osteopathic medicine.--
(i) In general.--Such rules shall
provide that for purposes of a cost
reporting period beginning on or after
October 1, 1997, subject to paragraphs
(7), (8), (9), and (10), the total
number of full-time equivalent
residents before application of
weighting factors (as determined under
this paragraph) with respect to a
hospital's approved medical residency
training program in the fields of
allopathic medicine and osteopathic
medicine may not exceed the number (or,
130 percent of such number in the case
of a hospital located in a rural area)
of such full-time equivalent residents
for the hospital's most recent cost
reporting period ending on or before
December 31, 1996.
(ii) Counting primary care residents
on certain approved leaves of absence
in base year fte count.--
(I) In general.--In
determining the number of such
full-time equivalent residents
for a hospital's most recent
cost reporting period ending on
or before December 31, 1996,
for purposes of clause (i), the
Secretary shall count an
individual to the extent that
the individual would have been
counted as a primary care
resident for such period but
for the fact that the
individual, as determined by
the Secretary, was on maternity
or disability leave or a
similar approved leave of
absence.
(II) Limitation to 3 fte
residents for any hospital.--
The total number of individuals
counted under subclause (I) for
a hospital may not exceed 3
full-time equivalent residents.
(G) Counting interns and residents for fy
1998 and subsequent years.--
(i) In general.--For cost reporting
periods beginning during fiscal years
beginning on or after October 1, 1997,
subject to the limit described in
subparagraph (F), the total number of
full-time equivalent residents for
determining a hospital's graduate
medical education payment shall equal
the average of the actual full-time
equivalent resident counts for the cost
reporting period and the preceding two
cost reporting periods.
(ii) Adjustment for short periods.--
If any cost reporting period beginning
on or after October 1, 1997, is not
equal to twelve months, the Secretary
shall make appropriate modifications to
ensure that the average full-time
equivalent resident counts pursuant to
clause (i) are based on the equivalent
of full twelve-month cost reporting
periods.
(iii) Transition rule for 1998.--In
the case of a hospital's first cost
reporting period beginning on or after
October 1, 1997, clause (i) shall be
applied by using the average for such
period and the preceding cost reporting
period.
(H) Special rules for application of
subparagraphs (f) and (g).--
(i) New facilities.--(I) The
Secretary shall, consistent with the
principles of subparagraphs (F) and (G)
and subject to paragraphs (7), (8),
(9), and (10), prescribe rules for the
application of such subparagraphs in
the case of medical residency training
programs established on or after
January 1, 1995. In promulgating such
rules for purposes of subparagraph (F),
the Secretary shall give special
consideration to facilities that meet
the needs of underserved rural areas.
(II) In applying this clause in the
case of a hospital that, on or after
the date of the enactment of this
subclause, begins training residents in
a new approved medical residency
training program or programs (as
defined by the Secretary), the
Secretary shall not determine a
limitation applicable to the hospital
under subparagraph (F) until such time
as the Secretary determines that the
hospital has trained at least 1.0 full-
time-equivalent resident in such new
approved medical residency training
program or programs in a cost reporting
period.
(III) In applying this clause in the
case of a hospital that, as of the date
of the enactment of this subclause, has
a limitation under subparagraph (F),
based on a cost reporting period
beginning before October 1, 1997, of
less than 1.0 full-time-equivalent
resident, the Secretary shall adjust
the limitation in the manner applicable
to a new approved medical residency
training program if the Secretary
determines the hospital begins training
at least 1.0 full-time-equivalent
residents in a program year beginning
on or after such date of enactment and
before the date that is 5 years after
such date of enactment.
(IV) In applying this clause in the
case of a hospital that, as of the date
of the enactment of this subclause, has
a limitation under subparagraph (F),
based on a cost reporting period
beginning on or after October 1, 1997,
and before such date of enactment, of
no more than 3.0 full-time-equivalent
residents, the Secretary shall adjust
the limitation in the manner applicable
to a new approved medical residency
training program if the Secretary
determines the hospital begins training
more than 3.0 full-time-equivalent
residents in a program year beginning
on or after such date of enactment and
before the date that is 5 years after
such date of enactment.
(V) An adjustment to the limitation
applicable to a hospital made pursuant
to subclause (III) or (IV) shall be
made in a manner consistent with the
methodology, as appropriate, in section
413.79(e) of title 42, Code of Federal
Regulations (or any successor
regulation). As appropriate, the
Secretary may consider information from
any cost reporting periods necessary to
make such an adjustment to the
limitation.
(ii) Aggregation.--The Secretary may
prescribe rules which allow
institutions which are members of the
same affiliated group (as defined by
the Secretary) to elect to apply the
limitation of subparagraph (F) on an
aggregate basis.
(iii) Data collection.--The Secretary
may require any entity that operates a
medical residency training program and
to which subparagraphs (F) and (G)
apply to submit to the Secretary such
additional information as the Secretary
considers necessary to carry out such
subparagraphs.
(iv) Training programs in rural
areas.--
(I) Cost reporting periods
beginning before October 1,
2022.--For cost reporting
periods beginning before
October 1, 2022, in the case of
a hospital that is not located
in a rural area but establishes
separately accredited approved
medical residency training
programs (or rural tracks) in a
rural area or has an accredited
training program with an
integrated rural track, the
Secretary shall adjust the
limitation under subparagraph
(F) in an appropriate manner
insofar as it applies to such
programs in such rural areas in
order to encourage the training
of physicians in rural areas.
(II) Cost reporting periods
beginning on or after october
1, 2022.--For cost reporting
periods beginning on or after
October 1, 2022, in the case of
a hospital not located in a
rural area that established or
establishes a medical residency
training program (or rural
tracks) in a rural area or
establishes an accredited
program where greater than 50
percent of the program occurs
in a rural area, the Secretary
shall consistent with the
principles of subparagraphs (F)
and (G) and subject to
paragraphs (7) and (8),
prescribe rules for the
application of such
subparagraphs with respect to
such a program and, in
accordance with such rules,
adjust in an appropriate manner
the limitation under
subparagraph (F) for such
hospital and each such hospital
located in a rural area that
participates in such a
training.
(v) Special provider agreement.--If
an entity enters into a provider
agreement pursuant to section 1866(a)
to provide hospital services on the
same physical site previously used by
Medicare Provider No. 05-0578--
(I) the limitation on the
number of total full time
equivalent residents under
subparagraph (F) and clauses
(v) and (vi)(I) of subsection
(d)(5)(B) applicable to such
provider shall be equal to the
limitation applicable under
such provisions to Provider No.
05-0578 for its cost reporting
period ending on June 30, 2006;
and
(II) the provisions of
subparagraph (G) and subsection
(d)(5)(B)(vi)(II) shall not be
applicable to such provider for
the first three cost reporting
years in which such provider
trains residents under any
approved medical residency
training program.
(vi) Redistribution of residency
slots after a hospital closes.--
(I) In general.--Subject to
the succeeding provisions of
this clause, the Secretary
shall, by regulation, establish
a process under which, in the
case where a hospital (other
than a hospital described in
clause (v)) with an approved
medical residency program
closes on or after a date that
is 2 years before the date of
enactment of this clause, the
Secretary shall increase the
otherwise applicable resident
limit under this paragraph for
other hospitals in accordance
with this clause.
(II) Priority for hospitals
in certain areas.--Subject to
the succeeding provisions of
this clause, in determining for
which hospitals the increase in
the otherwise applicable
resident limit is provided
under such process, the
Secretary shall distribute the
increase to hospitals in the
following priority order (with
preference given within each
category to hospitals that are
members of the same affiliated
group (as defined by the
Secretary under clause (ii)) as
the closed hospital):
(aa) First, to
hospitals located in
the same core-based
statistical area as, or
a core-based
statistical area
contiguous to, the
hospital that closed.
(bb) Second, to
hospitals located in
the same State as the
hospital that closed.
(cc) Third, to
hospitals located in
the same region of the
country as the hospital
that closed.
(dd) Fourth, only if
the Secretary is not
able to distribute the
increase to hospitals
described in item (cc),
to qualifying hospitals
in accordance with the
provisions of paragraph
(8).
(III) Requirement hospital
likely to fill position within
certain time period.--The
Secretary may only increase the
otherwise applicable resident
limit of a hospital under such
process if the Secretary
determines the hospital has
demonstrated a likelihood of
filling the positions made
available under this clause
within 3 years.
(IV) Limitation.--The
aggregate number of increases
in the otherwise applicable
resident limits for hospitals
under this clause shall be
equal to the number of resident
positions in the approved
medical residency programs that
closed on or after the date
described in subclause (I).
(V) Administration.--Chapter
35 of title 44, United States
Code, shall not apply to the
implementation of this clause.
(J) Treatment of certain nonprovider and
didactic activities.--Such rules shall provide
that all time spent by an intern or resident in
an approved medical residency training program
in a nonprovider setting that is primarily
engaged in furnishing patient care (as defined
in paragraph (5)(K)) in non-patient care
activities, such as didactic conferences and
seminars, but not including research not
associated with the treatment or diagnosis of a
particular patient, as such time and activities
are defined by the Secretary, shall be counted
toward the determination of full-time
equivalency.
(K) Treatment of certain other activities.--
In determining the hospital's number of full-
time equivalent residents for purposes of this
subsection, all the time that is spent by an
intern or resident in an approved medical
residency training program on vacation, sick
leave, or other approved leave, as such time is
defined by the Secretary, and that does not
prolong the total time the resident is
participating in the approved program beyond
the normal duration of the program shall be
counted toward the determination of full-time
equivalency.
(5) Definitions and special rules.--As used in this
subsection:
(A) Approved medical residency training
program.--The term ``approved medical residency
training program'' means a residency or other
postgraduate medical training program
participation in which may be counted toward
certification in a specialty or subspecialty
and includes formal postgraduate training
programs in geriatric medicine approved by the
Secretary.
(B) Consumer price index.--The term
``consumer price index'' refers to the Consumer
Price Index for All Urban Consumers (United
States city average), as published by the
Secretary of Commerce.
(C) Direct graduate medical education
costs.--The term ``direct graduate medical
education costs'' means direct costs of
approved educational activities for approved
medical residency training programs.
(D) Foreign medical graduate.--The term
``foreign medical graduate'' means a resident
who is not a graduate of--
(i) a school of medicine accredited
by the Liaison Committee on Medical
Education of the American Medical
Association and the Association of
American Medical Colleges (or approved
by such Committee as meeting the
standards necessary for such
accreditation),
(ii) a school of osteopathy
accredited by the American Osteopathic
Association, or approved by such
Association as meeting the standards
necessary for such accreditation, or
(iii) a school of dentistry or
podiatry which is accredited (or meets
the standards for accreditation) by an
organization recognized by the
Secretary for such purpose.
(E) FMGEMS examination.--The term ``FMGEMS
examination'' means parts I and II of the
Foreign Medical Graduate Examination in the
Medical Sciences or any successor examination
recognized by the Secretary for this purpose.
(F) Initial residency period.--The term
``initial residency period'' means the period
of board eligibility, except that--
(i) except as provided in clause
(ii), in no case shall the initial
period of residency exceed an aggregate
period of formal training of more than
five years for any individual, and
(ii) a period, of not more than two
years, during which an individual is in
a geriatric residency or fellowship
program or a preventive medicine
residency or fellowship program which
meets such criteria as the Secretary
may establish, shall be treated as part
of the initial residency period, but
shall not be counted against any
limitation on the initial residency
period.
Subject to subparagraph (G)(v), the initial
residency period shall be determined, with
respect to a resident, as of the time the
resident enters the residency training program.
(G) Period of board eligibility.--
(i) General rule.--Subject to clauses
(ii), (iii), (iv), and (v), the term
``period of board eligibility'' means,
for a resident, the minimum number of
years of formal training necessary to
satisfy the requirements for initial
board eligibility in the particular
specialty for which the resident is
training.
(ii) Application of 1985-1986
directory.--Except as provided in
clause (iii), the period of board
eligibility shall be such period
specified in the 1985-1986 Directory of
Residency Training Programs published
by the Accreditation Council on
Graduate Medical Education.
(iii) Changes in period of board
eligibility.--On or after July 1, 1989,
if the Accreditation Council on
Graduate Medical Education, in its
Directory of Residency Training
Programs--
(I) increases the minimum
number of years of formal
training necessary to satisfy
the requirements for a
specialty, above the period
specified in its 1985-1986
Directory, the Secretary may
increase the period of board
eligibility for that specialty,
but not to exceed the period of
board eligibility specified in
that later Directory, or
(II) decreases the minimum
number of years of formal
training necessary to satisfy
the requirements for a
specialty, below the period
specified in its 1985-1986
Directory, the Secretary may
decrease the period of board
eligibility for that specialty,
but not below the period of
board eligibility specified in
that later Directory.
(iv) Special rule for certain primary
care combined residency programs.--(I)
In the case of a resident enrolled in a
combined medical residency training
program in which all of the individual
programs (that are combined) are for
training a primary care resident (as
defined in subparagraph (H)), the
period of board eligibility shall be
the minimum number of years of formal
training required to satisfy the
requirements for initial board
eligibility in the longest of the
individual programs plus one additional
year.
(II) A resident enrolled in a
combined medical residency training
program that includes an obstetrics and
gynecology program shall qualify for
the period of board eligibility under
subclause (I) if the other programs
such resident combines with such
obstetrics and gynecology program are
for training a primary care resident.
(v) Child neurology training
programs.--In the case of a resident
enrolled in a child neurology residency
training program, the period of board
eligibility and the initial residency
period shall be the period of board
eligibility for pediatrics plus 2
years.
(H) Primary care resident.--The term
``primary care resident'' means a resident
enrolled in an approved medical residency
training program in family medicine, general
internal medicine, general pediatrics,
preventive medicine, geriatric medicine, or
osteopathic general practice.
(I) Resident.--The term ``resident'' includes
an intern or other participant in an approved
medical residency training program.
(J) Adjustments for certain family practice
residency programs.--
(i) In general.--In the case of an
approved medical residency training
program (meeting the requirements of
clause (ii)) of a hospital which
received funds from the United States,
a State, or a political subdivision of
a State or an instrumentality of such a
State or political subdivision (other
than payments under this title or a
State plan under title XIX) for the
program during the cost reporting
period that began during fiscal year
1984, the Secretary shall--
(I) provide for an average
amount under paragraph (2)(A)
that takes into account the
Secretary's estimate of the
amount that would have been
recognized as reasonable under
this title if the hospital had
not received such funds, and
(II) reduce the payment
amount otherwise provided under
this subsection in an amount
equal to the proportion of such
program funds received during
the cost reporting period
involved that is allocable to
this title.
(ii) Additional requirements.--A
hospital's approved medical residency
program meets the requirements of this
clause if--
(I) the program is limited to
training for family and
community medicine;
(II) the program is the only
approved medical residency
program of the hospital; and
(III) the average amount
determined under paragraph
(2)(A) for the hospital (as
determined without regard to
the increase in such amount
described in clause (i)(I))
does not exceed $10,000.
(K) Nonprovider setting that is primarily
engaged in furnishing patient care.--The term
``nonprovider setting that is primarily engaged
in furnishing patient care'' means a
nonprovider setting in which the primary
activity is the care and treatment of patients,
as defined by the Secretary.
(6) Incentive payment under plans for voluntary
reduction in number of residents.--
(A) In general.--In the case of a voluntary
residency reduction plan for which an
application is approved under subparagraph (B),
subject to subparagraph (F), each hospital
which is part of the qualifying entity
submitting the plan shall be paid an applicable
hold harmless percentage (as specified in
subparagraph (E)) of the sum of--
(i) the amount (if any) by which--
(I) the amount of payment
which would have been made
under this subsection if there
had been a 5-percent reduction
in the number of full-time
equivalent residents in the
approved medical education
training programs of the
hospital as of June 30, 1997,
exceeds
(II) the amount of payment
which is made under this
subsection, taking into account
the reduction in such number
effected under the reduction
plan; and
(ii) the amount of the reduction in
payment under subsection (d)(5)(B) for
the hospital that is attributable to
the reduction in number of residents
effected under the plan below 95
percent of the number of full-time
equivalent residents in such programs
of the hospital as of June 30, 1997.
The determination of the amounts under clauses
(i) and (ii) for any year shall be made on the
basis of the provisions of this title in effect
on the application deadline date for the first
calendar year to which the reduction plan
applies.
(B) Approval of plan applications.--The
Secretary may not approve the application of an
qualifying entity unless--
(i) the application is submitted in a
form and manner specified by the
Secretary and by not later than
November 1, 1999,
(ii) the application provides for the
operation of a plan for the reduction
in the number of full-time equivalent
residents in the approved medical
residency training programs of the
entity consistent with the requirements
of subparagraph (D);
(iii) the entity elects in the
application the period of residency
training years (not greater than 5)
over which the reduction will occur;
(iv) the entity will not reduce the
proportion of its residents in primary
care (to the total number of residents)
below such proportion as in effect as
of the applicable time described in
subparagraph (D)(v); and
(v) the Secretary determines that the
application and the entity and such
plan meet such other requirements as
the Secretary specifies in regulations.
(C) Qualifying entity.--For purposes of this
paragraph, any of the following may be a
qualifying entity:
(i) Individual hospitals operating
one or more approved medical residency
training programs.
(ii) Two or more hospitals that
operate such programs and apply for
treatment under this paragraph as a
single qualifying entity.
(iii) A qualifying consortium (as
described in section 4628 of the
Balanced Budget Act of 1997).
(D) Residency reduction requirements.--
(i) Individual hospital applicants.--
In the case of a qualifying entity
described in subparagraph (C)(i), the
number of full-time equivalent
residents in all the approved medical
residency training programs operated by
or through the entity shall be reduced
as follows:
(I) If the base number of
residents exceeds 750
residents, by a number equal to
at least 20 percent of such
base number.
(II) Subject to subclause
(IV), if the base number of
residents exceeds 600 but is
less than 750 residents, by 150
residents.
(III) Subject to subclause
(IV), if the base number of
residents does not exceed 600
residents, by a number equal to
at least 25 percent of such
base number.
(IV) In the case of a
qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
(ii) Joint applicants.--In the case
of a qualifying entity described in
subparagraph (C)(ii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
as follows:
(I) Subject to subclause
(II), by a number equal to at
least 25 percent of the base
number.
(II) In the case of such a
qualifying entity which is
described in clause (v) and
which elects treatment under
this subclause, by a number
equal to at least 20 percent of
the base number.
(iii) Consortia.--In the case of a
qualifying entity described in
subparagraph (C)(iii), the number of
full-time equivalent residents in the
aggregate for all the approved medical
residency training programs operated by
or through the entity shall be reduced
by a number equal to at least 20
percent of the base number.
(iv) Manner of reduction.--The
reductions specified under the
preceding provisions of this
subparagraph for a qualifying entity
shall be below the base number of
residents for that entity and shall be
fully effective not later than the 5th
residency training year in which the
application under subparagraph (B) is
effective.
(v) Entities providing assurance of
increase in primary care residents.--An
entity is described in this clause if--
(I) the base number of
residents for the entity is
less than 750 or the entity is
described in subparagraph
(C)(ii); and
(II) the entity represents in
its application under
subparagraph (B) that it will
increase the number of full-
time equivalent residents in
primary care by at least 20
percent (from such number
included in the base number of
residents) by not later than
the 5th residency training year
in which the application under
subparagraph (B) is effective.
If a qualifying entity fails to comply
with the representation described in
subclause (II) by the end of such 5th
residency training year, the entity
shall be subject to repayment of all
amounts paid under this paragraph, in
accordance with procedures established
to carry out subparagraph (F).
(vi) Base number of residents
defined.--For purposes of this
paragraph, the term ``base number of
residents'' means, with respect to a
qualifying entity (or its participating
hospitals) operating approved medical
residency training programs, the number
of full-time equivalent residents in
such programs (before application of
weighting factors) of the entity as of
the most recent residency training year
ending before June 30, 1997, or, if
less, for any subsequent residency
training year that ends before the date
the entity makes application under this
paragraph.
(E) Applicable hold harmless percentage.--For
purposes of subparagraph (A), the ``applicable
hold harmless percentage'' for the--
(i) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
(ii) third such year, 75 percent,
(iii) fourth such year, 50 percent,
and
(iv) fifth such year, 25 percent.
(F) Penalty for noncompliance.--
(i) In general.--No payment may be
made under this paragraph to a hospital
for a residency training year if the
hospital has failed to reduce the
number of full-time equivalent
residents (in the manner required under
subparagraph (D)) to the number agreed
to by the Secretary and the qualifying
entity in approving the application
under this paragraph with respect to
such year.
(ii) Increase in number of residents
in subsequent years.--If payments are
made under this paragraph to a
hospital, and if the hospital increases
the number of full-time equivalent
residents above the number of such
residents permitted under the reduction
plan as of the completion of the plan,
then, as specified by the Secretary,
the entity is liable for repayment to
the Secretary of the total amounts paid
under this paragraph to the entity.
(G) Treatment of rotating residents.--In
applying this paragraph, the Secretary shall
establish rules regarding the counting of
residents who are assigned to institutions the
medical residency training programs in which
are not covered under approved applications
under this paragraph.
(7) Redistribution of unused resident positions.--
(A) Reduction in limit based on unused
positions.--
(i) Programs subject to reduction.--
(I) In general.--Except as
provided in subclause (II), if
a hospital's reference resident
level (specified in clause
(ii)) is less than the
otherwise applicable resident
limit (as defined in
subparagraph (C)(ii)),
effective for portions of cost
reporting periods occurring on
or after July 1, 2005, the
otherwise applicable resident
limit shall be reduced by 75
percent of the difference
between such otherwise
applicable resident limit and
such reference resident level.
(II) Exception for small
rural hospitals.--This
subparagraph shall not apply to
a hospital located in a rural
area (as defined in subsection
(d)(2)(D)(ii)) with fewer than
250 acute care inpatient beds.
(ii) Reference resident level.--
(I) In general.--Except as
otherwise provided in
subclauses (II) and (III), the
reference resident level
specified in this clause for a
hospital is the resident level
for the most recent cost
reporting period of the
hospital ending on or before
September 30, 2002, for which a
cost report has been settled
(or, if not, submitted (subject
to audit)), as determined by
the Secretary.
(II) Use of most recent
accounting period to recognize
expansion of existing
programs.--If a hospital
submits a timely request to
increase its resident level due
to an expansion of an existing
residency training program that
is not reflected on the most
recent settled cost report,
after audit and subject to the
discretion of the Secretary,
the reference resident level
for such hospital is the
resident level for the cost
reporting period that includes
July 1, 2003, as determined by
the Secretary.
(III) Expansions under newly
approved programs.--Upon the
timely request of a hospital,
the Secretary shall adjust the
reference resident level
specified under subclause (I)
or (II) to include the number
of medical residents that were
approved in an application for
a medical residency training
program that was approved by an
appropriate accrediting
organization (as determined by
the Secretary) before January
1, 2002, but which was not in
operation during the cost
reporting period used under
subclause (I) or (II), as the
case may be, as determined by
the Secretary.
(iii) Affiliation.--The provisions of
clause (i) shall be applied to
hospitals which are members of the same
affiliated group (as defined by the
Secretary under paragraph (4)(H)(ii))
as of July 1, 2003.
(B) Redistribution.--
(i) In general.--The Secretary is
authorized to increase the otherwise
applicable resident limit for each
qualifying hospital that submits a
timely application under this
subparagraph by such number as the
Secretary may approve for portions of
cost reporting periods occurring on or
after July 1, 2005. The aggregate
number of increases in the otherwise
applicable resident limits under this
subparagraph may not exceed the
Secretary's estimate of the aggregate
reduction in such limits attributable
to subparagraph (A).
(ii) Considerations in
redistribution.--In determining for
which hospitals the increase in the
otherwise applicable resident limit is
provided under clause (i), the
Secretary shall take into account the
demonstrated likelihood of the hospital
filling the positions within the first
3 cost reporting periods beginning on
or after July 1, 2005, made available
under this subparagraph, as determined
by the Secretary.
(iii) Priority for rural and small
urban areas.--In determining for which
hospitals and residency training
programs an increase in the otherwise
applicable resident limit is provided
under clause (i), the Secretary shall
distribute the increase to programs of
hospitals located in the following
priority order:
(I) First, to hospitals
located in rural areas (as
defined in subsection
(d)(2)(D)(ii)).
(II) Second, to hospitals
located in urban areas that are
not large urban areas (as
defined for purposes of
subsection (d)).
(III) Third, to other
hospitals in a State if the
residency training program
involved is in a specialty for
which there are not other
residency training programs in
the State.
Increases of residency limits within
the same priority category under this
clause shall be determined by the
Secretary.
(iv) Limitation.--In no case shall
more than 25 full-time equivalent
additional residency positions be made
available under this subparagraph with
respect to any hospital.
(v) Application of locality adjusted
national average per resident amount.--
With respect to additional residency
positions in a hospital attributable to
the increase provided under this
subparagraph, notwithstanding any other
provision of this subsection, the
approved FTE resident amount is deemed
to be equal to the locality adjusted
national average per resident amount
computed under paragraph (4)(E) for
that hospital.
(vi) Construction.--Nothing in this
subparagraph shall be construed as
permitting the redistribution of
reductions in residency positions
attributable to voluntary reduction
programs under paragraph (6), under a
demonstration project approved as of
October 31, 2003, under the authority
of section 402 of Public Law 90-248, or
as affecting the ability of a hospital
to establish new medical residency
training programs under paragraph
(4)(H).
(C) Resident level and limit defined.--In
this paragraph:
(i) Resident level.--The term
``resident level'' means, with respect
to a hospital, the total number of
full-time equivalent residents, before
the application of weighting factors
(as determined under paragraph (4)), in
the fields of allopathic and
osteopathic medicine for the hospital.
(ii) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph.
(D) Adjustment based on settled cost
report.--In the case of a hospital with a dual
accredited osteopathic and allopathic family
practice program for which--
(i) the otherwise applicable resident
limit was reduced under subparagraph
(A)(i)(I); and
(ii) such reduction was based on a
reference resident level that was
determined using a cost report and
where a revised or corrected notice of
program reimbursement was issued for
such cost report between September 1,
2006 and September 15, 2006, whether as
a result of an appeal or otherwise, and
the reference resident level under such
settled cost report is higher than the
level used for the reduction under
subparagraph (A)(i)(I);
the Secretary shall apply subparagraph
(A)(i)(I) using the higher resident reference
level and make any necessary adjustments to
such reduction. Any such necessary adjustments
shall be effective for portions of cost
reporting periods occurring on or after July 1,
2005.
(E) Judicial review.--There shall be no
administrative or judicial review under section
1869, 1878, or otherwise, with respect to
determinations made under this paragraph,
paragraph (8), paragraph (10), clause (i),
(ii), (iii), or (v) of paragraph (2)(F), or
clause (i) or (vi) of paragraph (4)(H).
(8) Distribution of additional residency positions.--
(A) Reductions in limit based on unused
positions.--
(i) In general.--Except as provided
in clause (ii), if a hospital's
reference resident level (as defined in
subparagraph (H)(i)) is less than the
otherwise applicable resident limit (as
defined in subparagraph (H)(iii)),
effective for portions of cost
reporting periods occurring on or after
July 1, 2011, the otherwise applicable
resident limit shall be reduced by 65
percent of the difference between such
otherwise applicable resident limit and
such reference resident level.
(ii) Exceptions.--This subparagraph
shall not apply to--
(I) a hospital located in a
rural area (as defined in
subsection (d)(2)(D)(ii)) with
fewer than 250 acute care
inpatient beds;
(II) a hospital that was part
of a qualifying entity which
had a voluntary residency
reduction plan approved under
paragraph (6)(B) or under the
authority of section 402 of
Public Law 90-248, if the
hospital demonstrates to the
Secretary that it has a
specified plan in place for
filling the unused positions by
not later than 2 years after
the date of enactment of this
paragraph; or
(III) a hospital described in
paragraph (4)(H)(v).
(B) Distribution.--
(i) In general.--The Secretary shall
increase the otherwise applicable
resident limit for each qualifying
hospital that submits an application
under this subparagraph by such number
as the Secretary may approve for
portions of cost reporting periods
occurring on or after July 1, 2011. The
aggregate number of increases in the
otherwise applicable resident limit
under this subparagraph shall be equal
to the aggregate reduction in such
limits attributable to subparagraph (A)
(as estimated by the Secretary).
(ii) Requirements.--Subject to clause
(iii), a hospital that receives an
increase in the otherwise applicable
resident limit under this subparagraph
shall ensure, during the 5-year period
beginning on the date of such increase,
that--
(I) the number of full-time
equivalent primary care
residents, as defined in
paragraph (5)(H) (as determined
by the Secretary), excluding
any additional positions under
subclause (II), is not less
than the average number of
full-time equivalent primary
care residents (as so
determined) during the 3 most
recent cost reporting periods
ending prior to the date of
enactment of this paragraph;
and
(II) not less than 75 percent
of the positions attributable
to such increase are in a
primary care or general surgery
residency (as determined by the
Secretary).
The Secretary may determine whether a
hospital has met the requirements under
this clause during such 5-year period
in such manner and at such time as the
Secretary determines appropriate,
including at the end of such 5-year
period.
(iii) Redistribution of positions if
hospital no longer meets certain
requirements.--In the case where the
Secretary determines that a hospital
described in clause (ii) does not meet
either of the requirements under
subclause (I) or (II) of such clause,
the Secretary shall--
(I) reduce the otherwise
applicable resident limit of
the hospital by the amount by
which such limit was increased
under this paragraph; and
(II) provide for the
distribution of positions
attributable to such reduction
in accordance with the
requirements of this paragraph.
(C) Considerations in redistribution.--In
determining for which hospitals the increase in
the otherwise applicable resident limit is
provided under subparagraph (B), the Secretary
shall take into account--
(i) the demonstration likelihood of
the hospital filling the positions made
available under this paragraph within
the first 3 cost reporting periods
beginning on or after July 1, 2011, as
determined by the Secretary; and
(ii) whether the hospital has an
accredited rural training track (as
described in paragraph (4)(H)(iv)).
(D) Priority for certain areas.--In
determining for which hospitals the increase in
the otherwise applicable resident limit is
provided under subparagraph (B), subject to
subparagraph (E), the Secretary shall
distribute the increase to hospitals based on
the following factors:
(i) Whether the hospital is located
in a State with a resident-to-
population ratio in the lowest quartile
(as determined by the Secretary).
(ii) Whether the hospital is located
in a State, a territory of the United
States, or the District of Columbia
that is among the top 10 States,
territories, or Districts in terms of
the ratio of--
(I) the total population of
the State, territory, or
District living in an area
designated (under such section
332(a)(1)(A)) as a health
professional shortage area (as
of the date of enactment of
this paragraph); to
(II) the total population of
the State, territory, or
District (as determined by the
Secretary based on the most
recent available population
data published by the Bureau of
the Census).
(iii) Whether the hospital is located
in a rural area (as defined in
subsection (d)(2)(D)(ii)).
(E) Reservation of positions for certain
hospitals.--
(i) In general.--Subject to clause
(ii), the Secretary shall reserve the
positions available for distribution
under this paragraph as follows:
(I) 70 percent of such
positions for distribution to
hospitals described in clause
(i) of subparagraph (D).
(II) 30 percent of such
positions for distribution to
hospitals described in clause
(ii) and (iii) of such
subparagraph.
(ii) Exception if positions not
redistributed by july 1, 2011.--In the
case where the Secretary does not
distribute positions to hospitals in
accordance with clause (i) by July 1,
2011, the Secretary shall distribute
such positions to other hospitals in
accordance with the considerations
described in subparagraph (C) and the
priority described in subparagraph (D).
(F) Limitation.--A hospital may not receive
more than 75 full-time equivalent additional
residency positions under this paragraph.
(G) Application of per resident amounts for
primary care and nonprimary care.--With respect
to additional residency positions in a hospital
attributable to the increase provided under
this paragraph, the approved FTE per resident
amounts are deemed to be equal to the hospital
per resident amounts for primary care and
nonprimary care computed under paragraph (2)(D)
for that hospital.
(H) Definitions.--In this paragraph:
(i) Reference resident level.--The
term ``reference resident level''
means, with respect to a hospital, the
highest resident level for any of the 3
most recent cost reporting periods
(ending before the date of the
enactment of this paragraph) of the
hospital for which a cost report has
been settled (or, if not, submitted
(subject to audit)), as determined by
the Secretary.
(ii) Resident level.--The term
``resident level'' has the meaning
given such term in paragraph (7)(C)(i).
(iii) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph but taking into account
paragraph (7)(A).
(I) Affiliation.--The provisions of this
paragraph shall be applied to hospitals which
are members of the same affiliated group (as
defined by the Secretary under paragraph
(4)(H)(ii)) and the reference resident level
for each such hospital shall be the reference
resident level with respect to the cost
reporting period that results in the smallest
difference between the reference resident level
and the otherwise applicable resident limit.
(9) Distribution of additional residency positions.--
(A) Additional residency positions.--
(i) In general.--For fiscal year
2023, and for each succeeding fiscal
year until the aggregate number of
full-time equivalent residency
positions distributed under this
paragraph is equal to the aggregate
number of such positions made available
(as specified in clause (ii)(I)), the
Secretary shall, subject to the
succeeding provisions of this
paragraph, increase the otherwise
applicable resident limit for each
qualifying hospital (as defined in
subparagraph (F)) that submits a timely
application under this subparagraph by
such number as the Secretary may
approve effective beginning July 1 of
the fiscal year of the increase.
(ii) Number available for
distribution.--
(I) Total number available.--
The aggregate number of such
positions made available under
this paragraph shall be equal
to 1,000.
(II) Annual limit.--The
aggregate number of such
positions so made available
shall not exceed 200 for a
fiscal year.
(iii) Process for distributing
positions.--
(I) Rounds of applications.--
The Secretary shall initiate a
separate round of applications
for an increase under clause
(i) for each fiscal year for
which such an increase is to be
provided.
(II) Timing.--The Secretary
shall notify hospitals of the
number of positions distributed
to the hospital under this
paragraph as a result of an
increase in the otherwise
applicable resident limit by
January 31 of the fiscal year
of the increase. Such increase
shall be effective beginning
July 1 of such fiscal year.
(B) Distribution.--For purposes of providing
an increase in the otherwise applicable
resident limit under subparagraph (A), the
following shall apply:
(i) Considerations in distribution.--
In determining for which qualifying
hospitals such an increase is provided
under subparagraph (A), the Secretary
shall take into account the
demonstrated likelihood of the hospital
filling the positions made available
under this paragraph within the first 5
training years beginning after the date
the increase would be effective, as
determined by the Secretary.
(ii) Minimum distribution for certain
categories of hospitals.--With respect
to the aggregate number of such
positions available for distribution
under this paragraph, the Secretary
shall distribute not less than 10
percent of such aggregate number to
each of the following categories of
hospitals:
(I) Hospitals that are
located in a rural area (as
defined in section
1886(d)(2)(D)) or are treated
as being located in a rural
area pursuant to section
1886(d)(8)(E).
(II) Hospitals in which the
reference resident level of the
hospital (as specified in
subparagraph (F)(iii)) is
greater than the otherwise
applicable resident limit.
(III) Hospitals in States
with--
(aa) new medical
schools that received
``Candidate School''
status from the Liaison
Committee on Medical
Education or that
received ``Pre-
Accreditation'' status
from the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation on or
after January 1, 2000,
and that have achieved
or continue to progress
toward ``Full
Accreditation'' status
(as such term is
defined by the Liaison
Committee on Medical
Education) or toward
``Accreditation''
status (as such term is
defined by the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation); or
(bb) additional
locations and branch
campuses established on
or after January 1,
2000, by medical
schools with ``Full
Accreditation'' status
(as such term is
defined by the Liaison
Committee on Medical
Education) or
``Accreditation''
status (as such term is
defined by the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation).
(IV) Hospitals that serve
areas designated as health
professional shortage areas
under section 332(a)(1)(A) of
the Public Health Service Act,
as determined by the Secretary.
(C) Limitations.--
(i) In general.--A hospital may not
receive more than 25 additional full-
time equivalent residency positions
under this paragraph.
(ii) Prohibition on distribution to
hospitals without an increase
agreement.--No increase in the
otherwise applicable resident limit of
a hospital may be made under this
paragraph unless such hospital agrees
to increase the total number of full-
time equivalent residency positions
under the approved medical residency
training program of such hospital by
the number of such positions made
available by such increase under this
paragraph.
(D) Application of per resident amounts for
primary care and nonprimary care.--With respect
to additional residency positions in a hospital
attributable to the increase provided under
this paragraph, the approved FTE per resident
amounts are deemed to be equal to the hospital
per resident amounts for primary care and
nonprimary care computed under paragraph (2)(D)
for that hospital.
(E) Permitting facilities to apply
aggregation rules.--The Secretary shall permit
hospitals receiving additional residency
positions attributable to the increase provided
under this paragraph to, beginning in the fifth
year after the effective date of such increase,
apply such positions to the limitation amount
under paragraph (4)(F) that may be aggregated
pursuant to paragraph (4)(H) among members of
the same affiliated group.
(F) Definitions.--In this paragraph:
(i) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph but taking into account
paragraphs (7)(A), (7)(B), (8)(A), and
(8)(B).
(ii) Qualifying hospital.--The term
``qualifying hospital'' means a
hospital described in any of subclauses
(I) through (IV) of subparagraph
(B)(ii).
(iii) Reference resident level.--The
term ``reference resident level''
means, with respect to a hospital, the
resident level for the most recent cost
reporting period of the hospital ending
on or before the date of enactment of
this paragraph, for which a cost report
has been settled (or, if not, submitted
(subject to audit)), as determined by
the Secretary.
(iv) Resident level.--The term
``resident level'' has the meaning
given such term in paragraph (7)(C)(i).
(10) Distribution of additional residency positions
in psychiatry and psychiatry subspecialties.--
(A) Additional residency positions.--
(i) In general.--For fiscal year
2026, the Secretary shall, subject to
the succeeding provisions of this
paragraph, increase the otherwise
applicable resident limit for each
qualifying hospital (as defined in
subparagraph (F)) that submits a timely
application under this subparagraph by
such number as the Secretary may
approve effective beginning July 1 of
the fiscal year of the increase.
(ii) Number available for
distribution.--The aggregate number of
such positions made available under
this paragraph shall be equal to 200.
(iii) Distribution for psychiatry or
psychiatry subspecialty residencies.--
At least 100 of the positions made
available under this paragraph shall be
distributed for a psychiatry or
psychiatry subspecialty residency (as
defined in subparagraph (F)).
(iv) Timing.--The Secretary shall
notify hospitals of the number of
positions distributed to the hospital
under this paragraph as a result of an
increase in the otherwise applicable
resident limit by January 31 of the
fiscal year of the increase. Such
increase shall be effective beginning
July 1 of such fiscal year.
(B) Distribution.--For purposes of providing
an increase in the otherwise applicable
resident limit under subparagraph (A), the
following shall apply:
(i) Considerations in distribution.--
In determining for which qualifying
hospitals such an increase is provided
under subparagraph (A), the Secretary
shall take into account the
demonstrated likelihood of the hospital
filling the positions made available
under this paragraph within the first 5
training years beginning after the date
the increase would be effective, as
determined by the Secretary.
(ii) Minimum distribution for certain
categories of hospitals.--With respect
to the aggregate number of such
positions available for distribution
under this paragraph, the Secretary
shall distribute not less than 10
percent of such aggregate number to
each of the following categories of
hospitals:
(I) Hospitals that are
located in a rural area (as
defined in section
1886(d)(2)(D)) or are treated
as being located in a rural
area pursuant to section
1886(d)(8)(E).
(II) Hospitals in which the
reference resident level of the
hospital (as specified in
subparagraph (F)(iii)) is
greater than the otherwise
applicable resident limit.
(III) Hospitals in States
with--
(aa) new medical
schools that received
``Candidate School''
status from the Liaison
Committee on Medical
Education or that
received ``Pre-
Accreditation'' status
from the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation on or
after January 1, 2000,
and that have achieved
or continue to progress
toward ``Full
Accreditation'' status
(as such term is
defined by the Liaison
Committee on Medical
Education) or toward
``Accreditation''
status (as such term is
defined by the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation); or
(bb) additional
locations and branch
campuses established on
or after January 1,
2000, by medical
schools with ``Full
Accreditation'' status
(as such term is
defined by the Liaison
Committee on Medical
Education) or
``Accreditation''
status (as such term is
defined by the American
Osteopathic Association
Commission on
Osteopathic College
Accreditation).
(IV) Hospitals that serve
areas designated as health
professional shortage areas
under section 332(a)(1)(A) of
the Public Health Service Act,
as determined by the Secretary.
(iii) Pro rata application.--The
Secretary shall ensure that each
qualifying hospital that submits a
timely application under subparagraph
(A) receives at least 1 (or a fraction
of 1) of the positions made available
under this paragraph before any
qualifying hospital receives more than
1 of such positions.
(C) Requirements.--
(i) Limitation.--A hospital may not
receive more than 10 additional full-
time equivalent residency positions
under this paragraph.
(ii) Prohibition on distribution to
hospitals without an increase
agreement.--No increase in the
otherwise applicable resident limit of
a hospital may be made under this
paragraph unless such hospital agrees
to increase the total number of full-
time equivalent residency positions
under the approved medical residency
training program of such hospital by
the number of such positions made
available by such increase under this
paragraph.
(iii) Requirement for hospitals to
expand programs.--If a hospital that
receives an increase in the otherwise
applicable resident limit under this
paragraph would be eligible for an
adjustment to the otherwise applicable
resident limit for participation in a
new medical residency training program
under section 413.79(e)(3) of title 42,
Code of Federal Regulations (or any
successor regulation), the hospital
shall ensure that any positions made
available under this paragraph are used
to expand an existing program of the
hospital, and not for participation in
a new medical residency training
program.
(D) Application of per resident amounts for
nonprimary care.--With respect to additional
residency positions in a hospital attributable
to the increase provided under this paragraph,
the approved FTE per resident amounts are
deemed to be equal to the hospital per resident
amounts for nonprimary care computed under
paragraph (2)(D) for that hospital.
(E) Permitting facilities to apply
aggregation rules.--The Secretary shall permit
hospitals receiving additional residency
positions attributable to the increase provided
under this paragraph to, beginning in the fifth
year after the effective date of such increase,
apply such positions to the limitation amount
under paragraph (4)(F) that may be aggregated
pursuant to paragraph (4)(H) among members of
the same affiliated group.
(F) Definitions.--In this paragraph:
(i) Otherwise applicable resident
limit.--The term ``otherwise applicable
resident limit'' means, with respect to
a hospital, the limit otherwise
applicable under subparagraphs (F)(i)
and (H) of paragraph (4) on the
resident level for the hospital
determined without regard to this
paragraph but taking into account
paragraphs (7)(A), (7)(B), (8)(A),
(8)(B), and (9)(A).
(ii) Psychiatry or psychiatry
subspecialty residency.--The term
``psychiatry or psychiatry subspecialty
residency'' means a residency in
psychiatry as accredited by the
Accreditation Council for Graduate
Medical Education for the purpose of
preventing, diagnosing, and treating
mental health disorders.
(iii) Qualifying hospital.--The term
``qualifying hospital'' means a
hospital described in any of subclauses
(I) through (IV) of subparagraph
(B)(ii).
(iv) Reference resident level.--The
term ``reference resident level''
means, with respect to a hospital, the
resident level for the most recent cost
reporting period of the hospital ending
on or before the date of enactment of
this paragraph, for which a cost report
has been settled (or, if not, submitted
(subject to audit)), as determined by
the Secretary.
(v) Resident level.--The term
``resident level'' has the meaning
given such term in paragraph (7)(C)(i).
(i) Avoiding Duplicative Payments to Hospitals Participating
in Rural Demonstration Programs.--The Secretary shall reduce
any payment amounts otherwise determined under this section to
the extent necessary to avoid duplication of any payment made
under section 4005(e) of the Omnibus Budget Reconciliation Act
of 1987.
(j) Prospective Payment for Inpatient Rehabilitation
Services.--
(1) Payment during transition period.--
(A) In general.--Notwithstanding section
1814(b), but subject to the provisions of
section 1813, the amount of the payment with
respect to the operating and capital costs of
inpatient hospital services of a rehabilitation
hospital or a rehabilitation unit (in this
subsection referred to as a ``rehabilitation
facility''), other than a facility making an
election under subparagraph (F) in a cost
reporting period beginning on or after October
1, 2000, and before October 1, 2002, is equal
to the sum of--
(i) the TEFRA percentage (as defined
in subparagraph (C)) of the amount that
would have been paid under part A with
respect to such costs if this
subsection did not apply, and
(ii) the prospective payment
percentage (as defined in subparagraph
(C)) of the product of (I) the per unit
payment rate established under this
subsection for the fiscal year in which
the payment unit of service occurs, and
(II) the number of such payment units
occurring in the cost reporting period.
(B) Fully implemented system.--
Notwithstanding section 1814(b), but subject to
the provisions of section 1813, the amount of
the payment with respect to the operating and
capital costs of inpatient hospital services of
a rehabilitation facility for a payment unit in
a cost reporting period beginning on or after
October 1, 2002, or, in the case of a facility
making an election under subparagraph (F), for
any cost reporting period described in such
subparagraph, is equal to the per unit payment
rate established under this subsection for the
fiscal year in which the payment unit of
service occurs.
(C) TEFRA and prospective payment percentages
specified.--For purposes of subparagraph (A),
for a cost reporting period beginning--
(i) on or after October 1, 2000, and
before October 1, 2001, the ``TEFRA
percentage'' is 66\2/3\ percent and the
``prospective payment percentage'' is
33\1/3\ percent; and
(ii) on or after October 1, 2001, and
before October 1, 2002, the ``TEFRA
percentage'' is 33\1/3\ percent and the
``prospective payment percentage'' is
66\2/3\ percent.
(D) Payment unit.--For purposes of this
subsection, the term ``payment unit'' means a
discharge.
(E) Construction relating to transfer
authority.--Nothing in this subsection shall be
construed as preventing the Secretary from
providing for an adjustment to payments to take
into account the early transfer of a patient
from a rehabilitation facility to another site
of care.
(F) Election to apply full prospective
payment system.--A rehabilitation facility may
elect, not later than 30 days before its first
cost reporting period for which the payment
methodology under this subsection applies to
the facility, to have payment made to the
facility under this subsection under the
provisions of subparagraph (B) (rather than
subparagraph (A)) for each cost reporting
period to which such payment methodology
applies.
(2) Patient case mix groups.--
(A) Establishment.--The Secretary shall
establish--
(i) classes of patient discharges of
rehabilitation facilities by
functional-related groups (each in this
subsection referred to as a ``case mix
group''), based on impairment, age,
comorbidities, and functional
capability of the patient and such
other factors as the Secretary deems
appropriate to improve the explanatory
power of functional independence
measure-function related groups; and
(ii) a method of classifying specific
patients in rehabilitation facilities
within these groups.
(B) Weighting factors.--For each case mix
group the Secretary shall assign an appropriate
weighting which reflects the relative facility
resources used with respect to patients
classified within that group compared to
patients classified within other groups.
(C) Adjustments for case mix.--
(i) In general.--The Secretary shall
from time to time adjust the
classifications and weighting factors
established under this paragraph as
appropriate to reflect changes in
treatment patterns, technology, case
mix, number of payment units for which
payment is made under this title, and
other factors which may affect the
relative use of resources. Such
adjustments shall be made in a manner
so that changes in aggregate payments
under the classification system are a
result of real changes and are not a
result of changes in coding that are
unrelated to real changes in case mix.
(ii) Adjustment.--Insofar as the
Secretary determines that such
adjustments for a previous fiscal year
(or estimates that such adjustments for
a future fiscal year) did (or are
likely to) result in a change in
aggregate payments under the
classification system during the fiscal
year that are a result of changes in
the coding or classification of
patients that do not reflect real
changes in case mix, the Secretary
shall adjust the per payment unit
payment rate for subsequent years so as
to eliminate the effect of such coding
or classification changes.
(D) Data collection.--The Secretary is
authorized to require rehabilitation facilities
that provide inpatient hospital services to
submit such data as the Secretary deems
necessary to establish and administer the
prospective payment system under this
subsection.
(3) Payment rate.--
(A) In general.--The Secretary shall
determine a prospective payment rate for each
payment unit for which such rehabilitation
facility is entitled to receive payment under
this title. Subject to subparagraph (B), such
rate for payment units occurring during a
fiscal year shall be based on the average
payment per payment unit under this title for
inpatient operating and capital costs of
rehabilitation facilities using the most recent
data available (as estimated by the Secretary
as of the date of establishment of the system)
adjusted--
(i) by updating such per-payment-unit
amount to the fiscal year involved by
the weighted average of the applicable
percentage increases provided under
subsection (b)(3)(B)(ii) (for cost
reporting periods beginning during the
fiscal year) covering the period from
the midpoint of the period for such
data through the midpoint of fiscal
year 2000 and by an increase factor
(described in subparagraph (C))
specified by the Secretary for
subsequent fiscal years up to the
fiscal year involved;
(ii) by reducing such rates by a
factor equal to the proportion of
payments under this subsection (as
estimated by the Secretary) based on
prospective payment amounts which are
additional payments described in
paragraph (4) (relating to outlier and
related payments);
(iii) for variations among
rehabilitation facilities by area under
paragraph (6);
(iv) by the weighting factors
established under paragraph (2)(B); and
(v) by such other factors as the
Secretary determines are necessary to
properly reflect variations in
necessary costs of treatment among
rehabilitation facilities.
(B) Budget neutral rates.--The Secretary
shall establish the prospective payment amounts
under this subsection for payment units during
fiscal years 2001 and 2002 at levels such that,
in the Secretary's estimation, the amount of
total payments under this subsection for such
fiscal years (including any payment adjustments
pursuant to paragraphs (4) and (6) but not
taking into account any payment adjustment
resulting from an election permitted under
paragraph (1)(F)) shall be equal to 98 percent
for fiscal year 2001 and 100 percent for fiscal
year 2002 of the amount of payments that would
have been made under this title during the
fiscal years for operating and capital costs of
rehabilitation facilities had this subsection
not been enacted. In establishing such payment
amounts, the Secretary shall consider the
effects of the prospective payment system
established under this subsection on the total
number of payment units from rehabilitation
facilities and other factors described in
subparagraph (A).
(C) Increase factor.--
(i) In general.--For purposes of this
subsection for payment units in each
fiscal year (beginning with fiscal year
2001), the Secretary shall establish an
increase factor subject to clauses (ii)
and (iii). Such factor shall be based
on an appropriate percentage increase
in a market basket of goods and
services comprising services for which
payment is made under this subsection,
which may be the market basket
percentage increase described in
subsection (b)(3)(B)(iii). The increase
factor to be applied under this
subparagraph for each of fiscal years
2008 and 2009 shall be 0 percent.
(ii) Productivity and other
adjustment.--Subject to clause (iii),
after establishing the increase factor
described in clause (i) for a fiscal
year, the Secretary shall reduce such
increase factor--
(I) for fiscal year 2012 and
each subsequent fiscal year, by
the productivity adjustment
described in section
1886(b)(3)(B)(xi)(II); and
(II) for each of fiscal years
2010 through 2019, by the other
adjustment described in
subparagraph (D).
The application of this clause may
result in the increase factor under
this subparagraph being less than 0.0
for a fiscal year, and may result in
payment rates under this subsection for
a fiscal year being less than such
payment rates for the preceding fiscal
year.
(iii) Special rule for fiscal year
2018.--The increase factor to be
applied under this subparagraph for
fiscal year 2018, after the application
of clause (ii), shall be 1 percent.
(D) Other adjustment.--For purposes of
subparagraph (C)(ii)(II), the other adjustment
described in this subparagraph is--
(i) for each of fiscal years 2010 and
2011, 0.25 percentage point;
(ii) for each of fiscal years 2012
and 2013, 0.1 percentage point;
(iii) for fiscal year 2014, 0.3
percentage point;
(iv) for each of fiscal years 2015
and 2016, 0.2 percentage point; and
(v) for each of fiscal years 2017,
2018, and 2019, 0.75 percentage point.
(4) Outlier and special payments.--
(A) Outliers.--
(i) In general.--The Secretary may
provide for an additional payment to a
rehabilitation facility for patients in
a case mix group, based upon the
patient being classified as an outlier
based on an unusual length of stay,
costs, or other factors specified by
the Secretary.
(ii) Payment based on marginal cost
of care.--The amount of such additional
payment under clause (i) shall be
determined by the Secretary and shall
approximate the marginal cost of care
beyond the cutoff point applicable
under clause (i).
(iii) Total payments.--The total
amount of the additional payments made
under this subparagraph for payment
units in a fiscal year may not exceed 5
percent of the total payments projected
or estimated to be made based on
prospective payment rates for payment
units in that year.
(B) Adjustment.--The Secretary may provide
for such adjustments to the payment amounts
under this subsection as the Secretary deems
appropriate to take into account the unique
circumstances of rehabilitation facilities
located in Alaska and Hawaii.
(5) Publication.--The Secretary shall provide for
publication in the Federal Register, on or before
August 1 before each fiscal year (beginning with fiscal
year 2001), of the classification and weighting factors
for case mix groups under paragraph (2) for such fiscal
year and a description of the methodology and data used
in computing the prospective payment rates under this
subsection for that fiscal year.
(6) Area wage adjustment.--The Secretary shall adjust
the proportion (as estimated by the Secretary from time
to time) of rehabilitation facilities' costs which are
attributable to wages and wage-related costs, of the
prospective payment rates computed under paragraph (3)
for area differences in wage levels by a factor
(established by the Secretary) reflecting the relative
hospital wage level in the geographic area of the
rehabilitation facility compared to the national
average wage level for such facilities. Not later than
October 1, 2001 (and at least every 36 months
thereafter), the Secretary shall update the factor
under the preceding sentence on the basis of
information available to the Secretary (and updated as
appropriate) of the wages and wage-related costs
incurred in furnishing rehabilitation services. Any
adjustments or updates made under this paragraph for a
fiscal year shall be made in a manner that assures that
the aggregated payments under this subsection in the
fiscal year are not greater or less than those that
would have been made in the year without such
adjustment.
(7) Quality reporting.--
(A) Reduction in update for failure to
report.--
(i) In general.--For purposes of
fiscal year 2014 and each subsequent
fiscal year, in the case of a
rehabilitation facility that does not
submit data to the Secretary in
accordance with subparagraphs (C) and
(F) with respect to such a fiscal year,
after determining the increase factor
described in paragraph (3)(C), and
after application of subparagraphs
(C)(iii) and (D) of paragraph (3), the
Secretary shall reduce such increase
factor for payments for discharges
occurring during such fiscal year by 2
percentage points.
(ii) Special rule.--The application
of this subparagraph may result in the
increase factor described in paragraph
(3)(C) being less than 0.0 for a fiscal
year, and may result in payment rates
under this subsection for a fiscal year
being less than such payment rates for
the preceding fiscal year.
(B) Noncumulative application.--Any reduction
under subparagraph (A) shall apply only with
respect to the fiscal year involved and the
Secretary shall not take into account such
reduction in computing the payment amount under
this subsection for a subsequent fiscal year.
(C) Submission of quality data.--Subject to
subparagraph (G), for fiscal year 2014 and each
subsequent fiscal year, each rehabilitation
facility shall submit to the Secretary data on
quality measures specified under subparagraph
(D). Such data shall be submitted in a form and
manner, and at a time, specified by the
Secretary for purposes of this subparagraph.
(D) Quality measures.--
(i) In general.--Subject to clause
(ii), any measure specified by the
Secretary under this subparagraph must
have been endorsed by the entity with a
contract under section 1890(a).
(ii) Exception.--In the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a), the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.
(iii) Time frame.--Not later than
October 1, 2012, the Secretary shall
publish the measures selected under
this subparagraph that will be
applicable with respect to fiscal year
2014.
(E) Public availability of data
submitted.--.--
(i) In general.--The Secretary shall
establish procedures for making data
submitted under subparagraph (C) and
subparagraph (F)(i) available to the
public. Such procedures shall ensure
that a rehabilitation facility has the
opportunity to review the data that is
to be made public with respect to the
facility prior to such data being made
public. The Secretary shall report
quality measures that relate to
services furnished in inpatient
settings in rehabilitation facilities
on the Internet website of the Centers
for Medicare & Medicaid Services.
(ii) Public recognition of
rehabilitation innovation centers.--
Beginning not later than 18 months
after the date of the enactment of this
clause, the Secretary shall make
publicly available on such Internet
website, in addition to the information
required to be reported on such website
under clause (i), a list of all
rehabilitation innovation centers, and
shall update such list on such website
not less frequently than biennially.
(iii) Rehabilitation innovation
centers defined.--For purposes of
clause (ii), the term ``rehabilitation
innovation centers'' means a
rehabilitation facility that, as of the
applicable date (as defined in clause
(v)), is a rehabilitation facility
described in clause (iv).
(iv) Rehabilitation facility
described.--
(I) In general.--Subject to
subclause (II), a
rehabilitation facility
described in this clause is a
rehabilitation facility that--
(aa) is classified as
a rehabilitation
facility under the IRF
Rate Setting File for
the Inpatient
Rehabilitation Facility
Prospective Payment
System for Federal
Fiscal Year 2019 (83
Fed. Reg. 38514), or
any successor
regulations that
contain such
information;
(bb) holds at least
one Federal
rehabilitation research
and training
designation for
research projects on
traumatic brain injury
or spinal cord injury
from the National
Institute on
Disability, Independent
Living, and
Rehabilitation Research
at the Department of
Health and Human
Services, based on such
data submitted to the
Secretary by a
facility, in a form,
manner, and time frame
specified by the
Secretary;
(cc) submits to the
Secretary a description
of the clinical
research enterprise of
the facility and a
summary of research
activities of the
facility that are
supported by Federal
agencies;
(dd) has a minimum
Medicare estimated
average weight per
discharge of 1.20 for
the most recent fiscal
year for which such
information is
available according to
the IRF Rate Setting
File described in item
(aa), or any successor
regulations that
contain such
information; and
(ee) has a minimum
teaching status of
0.075 for the most
recent fiscal year for
which such information
is available according
to the IRF Rate Setting
File described in item
(aa), or any successor
regulations that
contain such
information.
(II) Waiver.--The Secretary
may, as determined appropriate,
waive any of the requirements
under items (aa) through (ee)
of subclause (I).
(v) Applicable date defined.--For
purposes of clauses (iii) and (iv), the
term ``applicable date'' means--
(I) with respect to the
initial publication of a list
under clause (ii), the date of
the enactment of such clause;
and
(II) with respect to the
publication of an updated list
under clause (ii), a date
specified by the Secretary that
is not more than one year prior
to the date of such
publication.
(vi) Implementation.--Notwithstanding
any other provision of law the
Secretary may implement clauses (ii)
through (v) by program instruction or
otherwise.
(vii) Nonapplication of paperwork
reduction act.--Chapter 35 of title 44,
United States Code, shall not apply to
data collected under clauses (ii)
through (v).
(F) Submission of additional data.--
(i) In general.--For the fiscal year
beginning on the specified application
date (as defined in subsection
(a)(2)(E) of section 1899B), as
applicable with respect to inpatient
rehabilitation facilities and quality
measures under subsection (c)(1) of
such section and measures under
subsection (d)(1) of such section, and
each subsequent fiscal year, in
addition to such data on the quality
measures described in subparagraph (C),
each rehabilitation facility shall
submit to the Secretary data on the
quality measures under such subsection
(c)(1) and any necessary data specified
by the Secretary under such subsection
(d)(1).
(ii) Standardized patient assessment
data.--For fiscal year 2019 and each
subsequent fiscal year, in addition to
such data described in clause (i), each
rehabilitation facility shall submit to
the Secretary standardized patient
assessment data required under
subsection (b)(1) of section 1899B.
(iii) Submission.--Such data shall be
submitted in the form and manner, and
at the time, specified by the Secretary
for purposes of this subparagraph.
(G) Non-duplication.--To the extent data
submitted under subparagraph (F) duplicates
other data required to be submitted under
subparagraph (C), the submission of such data
under subparagraph (F) shall be in lieu of the
submission of such data under subparagraph (C).
The previous sentence shall not apply insofar
as the Secretary determines it is necessary to
avoid a delay in the implementation of section
1899B, taking into account the different
specified application dates under subsection
(a)(2)(E) of such section.
(8) Limitation on review.--There shall be no
administrative or judicial review under section 1869,
1878, or otherwise of the establishment of--
(A) case mix groups, of the methodology for
the classification of patients within such
groups, and of the appropriate weighting
factors thereof under paragraph (2),
(B) the prospective payment rates under
paragraph (3),
(C) outlier and special payments under
paragraph (4), and
(D) area wage adjustments under paragraph
(6).
(k) Payment to Nonhospital Providers.--
(1) In general.--For cost reporting periods beginning
on or after October 1, 1997, the Secretary may
establish rules for payment to qualified nonhospital
providers for their direct costs of medical education,
if those costs are incurred in the operation of an
approved medical residency training program described
in subsection (h). Such rules shall specify the
amounts, form, and manner in which such payments will
be made and the portion of such payments that will be
made from each of the trust funds under this title.
(2) Qualified nonhospital providers.--For purposes of
this subsection, the term ``qualified nonhospital
providers'' means--
(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
(B) a rural health clinic, as defined in
section 1861(aa)(2);
(C) Medicare+Choice organizations; and
(D) such other providers (other than
hospitals) as the Secretary determines to be
appropriate.
(l) Payment for Nursing and Allied Health Education for
Managed Care Enrollees.--
(1) In general.--For portions of cost reporting
periods occurring in a year (beginning with 2000), the
Secretary shall provide for an additional payment
amount for any hospital that receives payments for the
costs of approved educational activities for nurse and
allied health professional training under section
1861(v)(1).
(2) Payment amount.--The additional payment amount
under this subsection for each hospital for portions of
cost reporting periods occurring in a year shall be an
amount specified by the Secretary in a manner
consistent with the following:
(A) Determination of managed care enrollee
payment ratio for graduate medical education
payments.--The Secretary shall estimate the
ratio of payments for all hospitals for
portions of cost reporting periods occurring in
the year under subsection (h)(3)(D) to total
direct graduate medical education payments
estimated for such portions of periods under
subsection (h)(3).
(B) Application to fee-for-service nursing
and allied health education payments.--
(i) In general.--Subject to clause
(ii), such ratio shall be applied to
the Secretary's estimate of total
payments for nursing and allied health
education determined under section
1861(v) for portions of cost reporting
periods occurring in the year to
determine a total amount of additional
payments for nursing and allied health
education to be distributed to
hospitals under this subsection for
portions of cost reporting periods
occurring in the year; except that in
no case shall such total amount exceed
$60,000,000 in any year.
(ii) Exception to annual limitation
for each of 2010 through 2019.--For
each of 2010 through 2019, the
limitation under clause (i) on the
total amount of additional payments for
nursing and allied health education to
be distributed to hospitals under this
subsection for portions of cost
reporting periods occurring in the year
shall not apply to such payments made
in such year to those hospitals that,
as of the date of the enactment of this
clause, are operating a school of
nursing, a school of allied health, or
a school of nursing and allied health.
(C) Application to hospital.--The amount of
payment under this subsection to a hospital for
portions of cost reporting periods occurring in
a year is equal to the total amount of payments
determined under subparagraph (B) for the year
multiplied by the ratio of--
(i) the product of (I) the
Secretary's estimate of the ratio of
the amount of payments made under
section 1861(v) to the hospital for
nursing and allied health education
activities for the hospital's cost
reporting period ending in the second
preceding fiscal year, to the
hospital's total inpatient days for
such period, and (II) the total number
of inpatient days (as established by
the Secretary) for such period which
are attributable to services furnished
to individuals who are enrolled under a
risk sharing contract with an eligible
organization under section 1876 and who
are entitled to benefits under part A
or who are enrolled with a
Medicare+Choice organization under part
C; to
(ii) the sum of the products
determined under clause (i) for such
cost reporting periods.
(m) Prospective Payment for Long-Term Care Hospitals.--
(1) Reference to establishment and implementation of
system.--For provisions related to the establishment
and implementation of a prospective payment system for
payments under this title for inpatient hospital
services furnished by a long-term care hospital
described in subsection (d)(1)(B)(iv), see section 123
of the Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999 and section 307(b) of the
Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000.
(2) Update for rate year 2008.--In implementing the
system described in paragraph (1) for discharges
occurring during the rate year ending in 2008 for a
hospital, the base rate for such discharges for the
hospital shall be the same as the base rate for
discharges for the hospital occurring during the rate
year ending in 2007.
(3) Implementation for rate year 2010 and subsequent
years.--
(A) In general.--Subject to subparagraph (C),
in implementing the system described in
paragraph (1) for rate year 2010 and each
subsequent rate year, any annual update to a
standard Federal rate for discharges for the
hospital during the rate year, shall be
reduced--
(i) for rate year 2012 and each
subsequent rate year, by the
productivity adjustment described in
section 1886(b)(3)(B)(xi)(II); and
(ii) for each of rate years 2010
through 2019, by the other adjustment
described in paragraph (4).
(B) Special rule.--The application of this
paragraph may result in such annual update
being less than 0.0 for a rate year, and may
result in payment rates under the system
described in paragraph (1) for a rate year
being less than such payment rates for the
preceding rate year.
(C) Additional special rule.--For fiscal year
2018, the annual update under subparagraph (A)
for the fiscal year, after application of
clauses (i) and (ii) of subparagraph (A), shall
be 1 percent.
(4) Other adjustment.--For purposes of paragraph
(3)(A)(ii), the other adjustment described in this
paragraph is--
(A) for rate year 2010, 0.25 percentage
point;
(B) for rate year 2011, 0.50 percentage
point;
(C) for each of the rate years beginning in
2012 and 2013, 0.1 percentage point;
(D) for rate year 2014, 0.3 percentage point;
(E) for each of rate years 2015 and 2016, 0.2
percentage point; and
(F) for each of rate years 2017, 2018, and
2019, 0.75 percentage point.
(5) Quality reporting.--
(A) Reduction in update for failure to
report.--
(i) In general.--Under the system
described in paragraph (1), for rate
year 2014 and each subsequent rate
year, in the case of a long-term care
hospital that does not submit data to
the Secretary in accordance with
subparagraphs (C) and (F) with respect
to such a rate year, any annual update
to a standard Federal rate for
discharges for the hospital during the
rate year, and after application of
paragraph (3), shall be reduced by 2
percentage points.
(ii) Special rule.--The application
of this subparagraph may result in such
annual update being less than 0.0 for a
rate year, and may result in payment
rates under the system described in
paragraph (1) for a rate year being
less than such payment rates for the
preceding rate year.
(B) Noncumulative application.--Any reduction
under subparagraph (A) shall apply only with
respect to the rate year involved and the
Secretary shall not take into account such
reduction in computing the payment amount under
the system described in paragraph (1) for a
subsequent rate year.
(C) Submission of quality data.--Subject to
subparagraph (G), for rate year 2014 and each
subsequent rate year, each long-term care
hospital shall submit to the Secretary data on
quality measures specified under subparagraph
(D). Such data shall be submitted in a form and
manner, and at a time, specified by the
Secretary for purposes of this subparagraph.
(D) Quality measures.--
(i) In general.--Subject to clause
(ii), any measure specified by the
Secretary under this subparagraph must
have been endorsed by the entity with a
contract under section 1890(a).
(ii) Exception.--In the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a), the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.
(iii) Time frame.--Not later than
October 1, 2012, the Secretary shall
publish the measures selected under
this subparagraph that will be
applicable with respect to rate year
2014.
(iv) Additional quality measures.--
Not later than October 1, 2015, the
Secretary shall establish a functional
status quality measure for change in
mobility among inpatients requiring
ventilator support.
(E) Public availability of data submitted.--
The Secretary shall establish procedures for
making data submitted under subparagraph (C)
and subparagraph (F)(i) available to the
public. Such procedures shall ensure that a
long-term care hospital has the opportunity to
review the data that is to be made public with
respect to the hospital prior to such data
being made public. The Secretary shall report
quality measures that relate to services
furnished in inpatient settings in long-term
care hospitals on the Internet website of the
Centers for Medicare & Medicaid Services.
(F) Submission of additional data.--
(i) In general.--For the rate year
beginning on the specified application
date (as defined in subsection
(a)(2)(E) of section 1899B), as
applicable with respect to long-term
care hospitals and quality measures
under subsection (c)(1) of such section
and measures under subsection (d)(1) of
such section, and each subsequent rate
year, in addition to the data on the
quality measures described in
subparagraph (C), each long-term care
hospital (other than a hospital
classified under subsection
(d)(1)(B)(vi)) shall submit to the
Secretary data on the quality measures
under such subsection (c)(1) and any
necessary data specified by the
Secretary under such subsection (d)(1).
(ii) Standardized patient assessment
data.--For rate year 2019 and each
subsequent rate year, in addition to
such data described in clause (i), each
long-term care hospital (other than a
hospital classified under subsection
(d)(1)(B)(vi)) shall submit to the
Secretary standardized patient
assessment data required under
subsection (b)(1) of section 1899B.
(iii) Submission.--Such data shall be
submitted in the form and manner, and
at the time, specified by the Secretary
for purposes of this subparagraph.
(G) Non-duplication.--To the extent data
submitted under subparagraph (F) duplicates
other data required to be submitted under
subparagraph (C), the submission of such data
under subparagraph (F) shall be in lieu of the
submission of such data under subparagraph (C).
The previous sentence shall not apply insofar
as the Secretary determines it is necessary to
avoid a delay in the implementation of section
1899B, taking into account the different
specified application dates under subsection
(a)(2)(E) of such section.
(6) Application of site neutral ipps payment rate in
certain cases.--
(A) General application of site neutral ipps
payment amount for discharges failing to meet
applicable criteria.--
(i) In general.--For a discharge in
cost reporting periods beginning on or
after October 1, 2015, except as
provided in clause (ii) and
subparagraphs (C), (E), (F), and (G),
payment under this title to a long-term
care hospital for inpatient hospital
services shall be made at the
applicable site neutral payment rate
(as defined in subparagraph (B)).
(ii) Exception for certain discharges
meeting criteria.--Clause (i) shall not
apply (and payment shall be made to a
long-term care hospital without regard
to this paragraph) for a discharge if--
(I) the discharge meets the
ICU criterion under clause
(iii) or the ventilator
criterion under clause (iv);
and
(II) the discharge does not
have a principal diagnosis
relating to a psychiatric
diagnosis or to rehabilitation.
(iii) Intensive care unit (icu)
criterion.--
(I) In general.--The
criterion specified in this
clause (in this paragraph
referred to as the ``ICU
criterion''), for a discharge
from a long-term care hospital,
is that the stay in the long-
term care hospital ending with
such discharge was immediately
preceded by a discharge from a
stay in a subsection (d)
hospital that included at least
3 days in an intensive care
unit (ICU), as determined by
the Secretary.
(II) Determining icu days.--
In determining intensive care
unit days under subclause (I),
the Secretary shall use data
from revenue center codes 020x
or 021x (or such successor
codes as the Secretary may
establish).
(iv) Ventilator criterion.--The
criterion specified in this clause (in
this paragraph referred to as the
``ventilator criterion''), for a
discharge from a long-term care
hospital, is that--
(I) the stay in the long-term
care hospital ending with such
discharge was immediately
preceded by a discharge from a
stay in a subsection (d)
hospital; and
(II) the individual
discharged was assigned to a
Medicare-Severity-Long-Term-
Care-Diagnosis-Related-Group
(MS-LTC-DRG) based on the
receipt of ventilator services
of at least 96 hours.
(B) Applicable site neutral payment rate
defined.--
(i) In general.--In this paragraph,
the term ``applicable site neutral
payment rate'' means--
(I) for discharges in cost
reporting periods beginning
during fiscal years 2016
through 2019, the blended
payment rate specified in
clause (iii); and
(II) for discharges in cost
reporting periods beginning
during fiscal year 2020 or a
subsequent fiscal year, the
site neutral payment rate (as
defined in clause (ii)).
(ii) Site neutral payment rate
defined.--Subject to clause (iv), in
this paragraph, the term ``site neutral
payment rate'' means the lower of--
(I) the IPPS comparable per
diem amount determined under
paragraph (d)(4) of section
412.529 of title 42, Code of
Federal Regulations, including
any applicable outlier payments
under section 412.525 of such
title; or
(II) 100 percent of the
estimated cost for the services
involved.
(iii) Blended payment rate.--The
blended payment rate specified in this
clause, for a long-term care hospital
for inpatient hospital services for a
discharge, is comprised of--
(I) half of the site neutral
payment rate (as defined in
clause (ii)) for the discharge;
and
(II) half of the payment rate
that would otherwise be
applicable to such discharge
without regard to this
paragraph, as determined by the
Secretary.
(iv) Adjustment.--For each of fiscal
years 2018 through 2026, the amount
that would otherwise apply under clause
(ii)(I) for the year (determined
without regard to this clause) shall be
reduced by 4.6 percent.
(C) Limiting payment for all hospital
discharges to site neutral payment rate for
hospitals failing to meet applicable ltch
discharge thresholds.--
(i) Notice of ltch discharge payment
percentage.--For cost reporting periods
beginning during or after fiscal year
2016, the Secretary shall inform each
long-term care hospital of its LTCH
discharge payment percentage (as
defined in clause (iv)) for such
period.
(ii) Limitation.--For cost reporting
periods beginning during or after
fiscal year 2020, if the Secretary
determines for a long-term care
hospital that its LTCH discharge
payment percentage for the period is
not at least 50 percent--
(I) the Secretary shall
inform the hospital of such
fact; and
(II) subject to clause (iii),
for all discharges in the
hospital in each succeeding
cost reporting period, the
payment amount under this
subsection shall be the payment
amount that would apply under
subsection (d) for the
discharge if the hospital were
a subsection (d) hospital.
(iii) Process for reinstatement.--The
Secretary shall establish a process
whereby a long-term care hospital may
seek to and have the provisions of
subclause (II) of clause (ii)
discontinued with respect to that
hospital.
(iv) LTCH discharge payment
percentage.--In this subparagraph, the
term ``LTCH discharge payment
percentage'' means, with respect to a
long-term care hospital for a cost
reporting period beginning during or
after fiscal year 2020, the ratio
(expressed as a percentage) of--
(I) the number of Medicare
fee-for-service discharges for
such hospital and period for
which payment is not made at
the site neutral payment rate,
to
(II) the total number of
Medicare fee-for-service
discharges for such hospital
and period.
(D) Inclusion of subsection (d) puerto rico
hospitals.--In this paragraph, any reference in
this paragraph to a subsection (d) hospital
shall be deemed to include a reference to a
subsection (d) Puerto Rico hospital.
(E) Temporary exception for certain severe
wound discharges from certain long-term care
hospitals.--
(i) In general.--In the case of a
discharge occurring prior to January 1,
2017, subparagraph (A)(i) shall not
apply (and payment shall be made to a
long-term care hospital without regard
to this paragraph) if such discharge--
(I) is from a long-term care
hospital that is--
(aa) identified by
the last sentence of
subsection (d)(1)(B);
and
(bb) located in a
rural area (as defined
in subsection
(d)(2)(D)) or treated
as being so located
pursuant to subsection
(d)(8)(E); and
(II) the individual
discharged has a severe wound.
(ii) Severe wound defined.--In this
subparagraph, the term ``severe wound''
means a stage 3 wound, stage 4 wound,
unstageable wound, non-healing surgical
wound, infected wound, fistula,
osteomyelitis, or wound with morbid
obesity, as identified in the claim
from the long-term care hospital.
(F) Temporary exception for certain spinal
cord specialty hospitals.--For discharges in
cost reporting periods beginning during fiscal
years 2018 and 2019, subparagraph (A)(i) shall
not apply (and payment shall be made to a long-
term care hospital without regard to this
paragraph) if such discharge is from a long-
term care hospital that meets each of the
following requirements:
(i) Not-for-profit.--The long-term
care hospital was a not-for-profit
long-term care hospital on June 1,
2014, as determined by cost report
data.
(ii) Primarily providing treatment
for catastrophic spinal cord or
acquired brain injuries or other
paralyzing neuromuscular conditions.--
Of the discharges in calendar year 2013
from the long-term care hospital for
which payment was made under this
section, at least 50 percent were
classified under MS-LTCH-DRGs 28, 29,
52, 57, 551, 573, and 963.
(iii) Significant out-of-state
admissions.--
(I) In general.--The long-
term care hospital discharged
inpatients (including both
individuals entitled to, or
enrolled for, benefits under
this title and individuals not
so entitled or enrolled) during
fiscal year 2014 who had been
admitted from at least 20 of
the 50 States, determined by
the States of residency of such
inpatients and based on such
data submitted by the hospital
to the Secretary as the
Secretary may require.
(II) Implementation.--
Notwithstanding any other
provision of law, the Secretary
may implement subclause (I) by
program instruction or
otherwise.
(III) Non-application of
paperwork reduction act.--
Chapter 35 of title 44, United
States Code, shall not apply to
data collected under this
clause.
(G) Additional temporary exception for
certain severe wound discharges from certain
long-term care hospitals.--
(i) In general.--For a discharge
occurring in a cost reporting period
beginning during fiscal year 2018,
subparagraph (A)(i) shall not apply
(and payment shall be made to a long-
term care hospital without regard to
this paragraph) if such discharge--
(I) is from a long-term care
hospital identified by the last
sentence of subsection
(d)(1)(B);
(II) is classified under MS-
LTCH-DRG 602, 603, 539, or 540;
and
(III) is with respect to an
individual treated by a long-
term care hospital for a severe
wound.
(ii) Severe wound defined.--In this
subparagraph, the term ``severe wound''
means a wound which is a stage 3 wound,
stage 4 wound, unstageable wound, non-
healing surgical wound, or fistula as
identified in the claim from the long-
term care hospital.
(iii) Wound defined.--In this
subparagraph, the term ``wound'' means
an injury involving division of tissue
or rupture of the integument or mucous
membrane with exposure to the external
environment.
(7) Treatment of high cost outlier payments.--
(A) Adjustment to the standard federal
payment rate for estimated high cost outlier
payments.--Under the system described in
paragraph (1), for fiscal years beginning on or
after October 1, 2017, the Secretary shall
reduce the standard Federal payment rate as if
the estimated aggregate amount of high cost
outlier payments for standard Federal payment
rate discharges for each such fiscal year would
be equal to 8 percent of estimated aggregate
payments for standard Federal payment rate
discharges for each such fiscal year.
(B) Limitation on high cost outlier payment
amounts.--Notwithstanding subparagraph (A), the
Secretary shall set the fixed loss amount for
high cost outlier payments such that the
estimated aggregate amount of high cost outlier
payments made for standard Federal payment rate
discharges for fiscal years beginning on or
after October 1, 2017, shall be equal to
99.6875 percent of 8 percent of estimated
aggregate payments for standard Federal payment
rate discharges for each such fiscal year.
(C) Waiver of budget neutrality.--Any
reduction in payments resulting from the
application of subparagraph (B) shall not be
taken into account in applying any budget
neutrality provision under such system.
(D) No effect on site neutral high cost
outlier payment rate.--This paragraph shall not
apply with respect to the computation of the
applicable site neutral payment rate under
paragraph (6).
(n) Incentives for Adoption and Meaningful Use of Certified
EHR Technology.--
(1) In general.--Subject to the succeeding provisions
of this subsection, with respect to inpatient hospital
services furnished by an eligible hospital during a
payment year (as defined in paragraph (2)(G)), if the
eligible hospital is a meaningful EHR user (as
determined under paragraph (3)) for the EHR reporting
period with respect to such year, in addition to the
amount otherwise paid under this section, there also
shall be paid to the eligible hospital, from the
Federal Hospital Insurance Trust Fund established under
section 1817, an amount equal to the applicable amount
specified in paragraph (2)(A) for the hospital for such
payment year.
(2) Payment amount.--
(A) In general.--Subject to the succeeding
subparagraphs of this paragraph, the applicable
amount specified in this subparagraph for an
eligible hospital for a payment year is equal
to the product of the following:
(i) Initial amount.--The sum of--
(I) the base amount specified
in subparagraph (B); plus
(II) the discharge related
amount specified in
subparagraph (C) for a 12-month
period selected by the
Secretary with respect to such
payment year.
(ii) Medicare share.--The Medicare
share as specified in subparagraph (D)
for the eligible hospital for a period
selected by the Secretary with respect
to such payment year.
(iii) Transition factor.--The
transition factor specified in
subparagraph (E) for the eligible
hospital for the payment year.
(B) Base amount.--The base amount specified
in this subparagraph is $2,000,000.
(C) Discharge related amount.--The discharge
related amount specified in this subparagraph
for a 12-month period selected by the Secretary
shall be determined as the sum of the amount,
estimated based upon total discharges for the
eligible hospital (regardless of any source of
payment) for the period, for each discharge up
to the 23,000th discharge as follows:
(i) For the first through 1,149th
discharge, $0.
(ii) For the 1,150th through the
23,000th discharge, $200.
(iii) For any discharge greater than
the 23,000th, $0.
(D) Medicare share.--The Medicare share
specified under this subparagraph for an
eligible hospital for a period selected by the
Secretary for a payment year is equal to the
fraction--
(i) the numerator of which is the sum
(for such period and with respect to
the eligible hospital) of--
(I) the estimated number of
inpatient-bed-days (as
established by the Secretary)
which are attributable to
individuals with respect to
whom payment may be made under
part A; and
(II) the estimated number of
inpatient-bed-days (as so
established) which are
attributable to individuals who
are enrolled with a Medicare
Advantage organization under
part C; and
(ii) the denominator of which is the
product of--
(I) the estimated total
number of inpatient-bed-days
with respect to the eligible
hospital during such period;
and
(II) the estimated total
amount of the eligible
hospital's charges during such
period, not including any
charges that are attributable
to charity care (as such term
is used for purposes of
hospital cost reporting under
this title), divided by the
estimated total amount of the
hospital's charges during such
period.
Insofar as the Secretary determines that data
are not available on charity care necessary to
calculate the portion of the formula specified
in clause (ii)(II), the Secretary shall use
data on uncompensated care and may adjust such
data so as to be an appropriate proxy for
charity care including a downward adjustment to
eliminate bad debt data from uncompensated care
data. In the absence of the data necessary,
with respect to a hospital, for the Secretary
to compute the amount described in clause
(ii)(II), the amount under such clause shall be
deemed to be 1. In the absence of data, with
respect to a hospital, necessary to compute the
amount described in clause (i)(II), the amount
under such clause shall be deemed to be 0.
(E) Transition factor specified.--
(i) In general.--Subject to clause
(ii), the transition factor specified
in this subparagraph for an eligible
hospital for a payment year is as
follows:
(I) For the first payment
year for such hospital, 1.
(II) For the second payment
year for such hospital, \3/4\.
(III) For the third payment
year for such hospital, \1/2\.
(IV) For the fourth payment
year for such hospital, \1/4\.
(V) For any succeeding
payment year for such hospital,
0.
(ii) Phase down for eligible
hospitals first adopting ehr after
2013.--If the first payment year for an
eligible hospital is after 2013, then
the transition factor specified in this
subparagraph for a payment year for
such hospital is the same as the amount
specified in clause (i) for such
payment year for an eligible hospital
for which the first payment year is
2013. If the first payment year for an
eligible hospital is after 2015 then
the transition factor specified in this
subparagraph for such hospital and for
such year and any subsequent year shall
be 0.
(F) Form of payment.--The payment under this
subsection for a payment year may be in the
form of a single consolidated payment or in the
form of such periodic installments as the
Secretary may specify.
(G) Payment year defined.--
(i) In general.--For purposes of this
subsection, the term ``payment year''
means a fiscal year beginning with
fiscal year 2011.
(ii) First, second, etc. payment
year.--The term ``first payment year''
means, with respect to inpatient
hospital services furnished by an
eligible hospital, the first fiscal
year for which an incentive payment is
made for such services under this
subsection. The terms ``second payment
year'', ``third payment year'', and
``fourth payment year'' mean, with
respect to an eligible hospital, each
successive year immediately following
the first payment year for that
hospital.
(3) Meaningful ehr user.--
(A) In general.--For purposes of paragraph
(1), an eligible hospital shall be treated as a
meaningful EHR user for an EHR reporting period
for a payment year (or, for purposes of
subsection (b)(3)(B)(ix), for an EHR reporting
period under such subsection for a fiscal year)
if each of the following requirements are met:
(i) Meaningful use of certified ehr
technology.--The eligible hospital
demonstrates to the satisfaction of the
Secretary, in accordance with
subparagraph (C)(i), that during such
period the hospital is using certified
EHR technology in a meaningful manner.
(ii) Information exchange.--The
eligible hospital demonstrates to the
satisfaction of the Secretary, in
accordance with subparagraph (C)(i),
that during such period such certified
EHR technology is connected in a manner
that provides, in accordance with law
and standards applicable to the
exchange of information, for the
electronic exchange of health
information to improve the quality of
health care, such as promoting care
coordination, and the hospital
demonstrates (through a process
specified by the Secretary, such as the
use of an attestation) that the
hospital has not knowingly and
willfully taken action (such as to
disable functionality) to limit or
restrict the compatibility or
interoperability of the certified EHR
technology.
(iii) Reporting on measures using
ehr.--Subject to subparagraph (B)(ii)
and using such certified EHR
technology, the eligible hospital
submits information for such period, in
a form and manner specified by the
Secretary, on such clinical quality
measures and such other measures as
selected by the Secretary under
subparagraph (B)(i).
The Secretary shall seek to improve the use of
electronic health records and health care
quality over time.
(B) Reporting on measures.--
(i) Selection.--The Secretary shall
select measures for purposes of
subparagraph (A)(iii) but only
consistent with the following:
(I) The Secretary shall
provide preference to clinical
quality measures that have been
selected for purposes of
applying subsection
(b)(3)(B)(viii) or that have
been endorsed by the entity
with a contract with the
Secretary under section
1890(a).
(II) Prior to any measure
(other than a clinical quality
measure that has been selected
for purposes of applying
subsection (b)(3)(B)(viii))
being selected under this
subparagraph, the Secretary
shall publish in the Federal
Register such measure and
provide for a period of public
comment on such measure.
(ii) Limitations.--The Secretary may
not require the electronic reporting of
information on clinical quality
measures under subparagraph (A)(iii)
unless the Secretary has the capacity
to accept the information
electronically, which may be on a pilot
basis.
(iii) Coordination of reporting of
information.--In selecting such
measures, and in establishing the form
and manner for reporting measures under
subparagraph (A)(iii), the Secretary
shall seek to avoid redundant or
duplicative reporting with reporting
otherwise required, including reporting
under subsection (b)(3)(B)(viii).
(C) Demonstration of meaningful use of
certified ehr technology and information
exchange.--
(i) In general.--An eligible hospital
may satisfy the demonstration
requirement of clauses (i) and (ii) of
subparagraph (A) through means
specified by the Secretary, which may
include--
(I) an attestation;
(II) the submission of claims
with appropriate coding (such
as a code indicating that
inpatient care was documented
using certified EHR
technology);
(III) a survey response;
(IV) reporting under
subparagraph (A)(iii); and
(V) other means specified by
the Secretary.
(ii) Use of part d data.--
Notwithstanding sections 1860D-
15(d)(2)(B) and 1860D-15(f)(2), the
Secretary may use data regarding drug
claims submitted for purposes of
section 1860D-15 that are necessary for
purposes of subparagraph (A).
(4) Application.--
(A) Limitations on review.--There shall be no
administrative or judicial review under section
1869, section 1878, or otherwise, of--
(i) the methodology and standards for
determining payment amounts under this
subsection and payment adjustments
under subsection (b)(3)(B)(ix),
including selection of periods under
paragraph (2) for determining, and
making estimates or using proxies of,
discharges under paragraph (2)(C) and
inpatient-bed-days, hospital charges,
charity charges, and Medicare share
under paragraph (2)(D);
(ii) the methodology and standards
for determining a meaningful EHR user
under paragraph (3), including
selection of measures under paragraph
(3)(B), specification of the means of
demonstrating meaningful EHR use under
paragraph (3)(C), and the hardship
exception under subsection
(b)(3)(B)(ix)(II); and
(iii) the specification of EHR
reporting periods under paragraph
(6)(B) and the selection of the form of
payment under paragraph (2)(F).
(B) Posting on website.--The Secretary shall
post on the Internet website of the Centers for
Medicare & Medicaid Services, in an easily
understandable format, a list of the names of
the eligible hospitals that are meaningful EHR
users under this subsection or subsection
(b)(3)(B)(ix) (and a list of the names of
critical access hospitals to which paragraph
(3) or (4) of section 1814(l) applies), and
other relevant data as determined appropriate
by the Secretary. The Secretary shall ensure
that an eligible hospital (or critical access
hospital) has the opportunity to review the
other relevant data that are to be made public
with respect to the hospital (or critical
access hospital) prior to such data being made
public.
(5) Certified ehr technology defined.--The term
``certified EHR technology'' has the meaning given such
term in section 1848(o)(4).
(6) Definitions.--For purposes of this subsection:
(A) EHR reporting period.--The term ``EHR
reporting period'' means, with respect to a
payment year, any period (or periods) as
specified by the Secretary.
(B) Eligible hospital.--The term ``eligible
hospital'' means a hospital that is a
subsection (d) hospital or a subsection (d)
Puerto Rico hospital.
(o) Hospital Value-Based Purchasing Program.--
(1) Establishment.--
(A) In general.--Subject to the succeeding
provisions of this subsection, the Secretary
shall establish a hospital value-based
purchasing program (in this subsection referred
to as the ``Program'') under which value-based
incentive payments are made in a fiscal year to
hospitals that meet the performance standards
under paragraph (3) for the performance period
for such fiscal year (as established under
paragraph (4)).
(B) Program to begin in fiscal year 2013.--
The Program shall apply to payments for
discharges occurring on or after October 1,
2012.
(C) Applicability of program to hospitals.--
(i) In general.--For purposes of this
subsection, subject to clause (ii), the
term ``hospital'' means a subsection
(d) hospital (as defined in subsection
(d)(1)(B)).
(ii) Exclusions.--The term
``hospital'' shall not include, with
respect to a fiscal year, a hospital--
(I) that is subject to the
payment reduction under
subsection (b)(3)(B)(viii)(I)
for such fiscal year;
(II) for which, during the
performance period for such
fiscal year, the Secretary has
cited deficiencies that pose
immediate jeopardy to the
health or safety of patients;
(III) for which there are not
a minimum number (as determined
by the Secretary) of measures
that apply to the hospital for
the performance period for such
fiscal year; or
(IV) for which there are not
a minimum number (as determined
by the Secretary) of cases for
the measures that apply to the
hospital for the performance
period for such fiscal year.
(iii) Independent analysis.--For
purposes of determining the minimum
numbers under subclauses (III) and (IV)
of clause (ii), the Secretary shall
have conducted an independent analysis
of what numbers are appropriate.
(iv) Exemption.--In the case of a
hospital that is paid under section
1814(b)(3), the Secretary may exempt
such hospital from the application of
this subsection if the State which is
paid under such section submits an
annual report to the Secretary
describing how a similar program in the
State for a participating hospital or
hospitals achieves or surpasses the
measured results in terms of patient
health outcomes and cost savings
established under this subsection.
(2) Measures.--
(A) In general.--The Secretary shall select
measures, other than measures of readmissions,
for purposes of the Program. Such measures
shall be selected from the measures specified
under subsection (b)(3)(B)(viii).
(B) Requirements.--
(i) For fiscal year 2013.--For value-
based incentive payments made with
respect to discharges occurring during
fiscal year 2013, the Secretary shall
ensure the following:
(I) Conditions or
procedures.--Measures are
selected under subparagraph (A)
that cover at least the
following 5 specific conditions
or procedures:
(aa) Acute myocardial
infarction (AMI).
(bb) Heart failure.
(cc) Pneumonia.
(dd) Surgeries, as
measured by the
Surgical Care
Improvement Project
(formerly referred to
as ``Surgical Infection
Prevention'' for
discharges occurring
before July 2006).
(ee) Healthcare-
associated infections,
as measured by the
prevention metrics and
targets established in
the HHS Action Plan to
Prevent Healthcare-
Associated Infections
(or any successor plan)
of the Department of
Health and Human
Services.
(II) HCAHPS.--Measures
selected under subparagraph (A)
shall be related to the
Hospital Consumer Assessment of
Healthcare Providers and
Systems survey (HCAHPS).
(ii) Inclusion of efficiency
measures.--For value-based incentive
payments made with respect to
discharges occurring during fiscal year
2014 or a subsequent fiscal year, the
Secretary shall ensure that measures
selected under subparagraph (A) include
efficiency measures, including measures
of ``Medicare spending per
beneficiary''. Such measures shall be
adjusted for factors such as age, sex,
race, severity of illness, and other
factors that the Secretary determines
appropriate.
(iii) HCAHPS pain questions.--The
Secretary may not include under
subparagraph (A) a measure that is
based on the questions appearing on the
Hospital Consumer Assessment of
Healthcare Providers and Systems survey
in 2018 or 2019 about communication by
hospital staff with an individual about
the individual's pain.
(C) Limitations.--
(i) Time requirement for prior
reporting and notice.--The Secretary
may not select a measure under
subparagraph (A) for use under the
Program with respect to a performance
period for a fiscal year (as
established under paragraph (4)) unless
such measure has been specified under
subsection (b)(3)(B)(viii) and included
on the Hospital Compare Internet
website for at least 1 year prior to
the beginning of such performance
period.
(ii) Measure not applicable unless
hospital furnishes services appropriate
to the measure.--A measure selected
under subparagraph (A) shall not apply
to a hospital if such hospital does not
furnish services appropriate to such
measure.
(D) Replacing measures.--Subclause (VI) of
subsection (b)(3)(B)(viii) shall apply to
measures selected under subparagraph (A) in the
same manner as such subclause applies to
measures selected under such subsection.
(3) Performance standards.--
(A) Establishment.--The Secretary shall
establish performance standards with respect to
measures selected under paragraph (2) for a
performance period for a fiscal year (as
established under paragraph (4)).
(B) Achievement and improvement.--The
performance standards established under
subparagraph (A) shall include levels of
achievement and improvement.
(C) Timing.--The Secretary shall establish
and announce the performance standards under
subparagraph (A) not later than 60 days prior
to the beginning of the performance period for
the fiscal year involved.
(D) Considerations in establishing
standards.--In establishing performance
standards with respect to measures under this
paragraph, the Secretary shall take into
account appropriate factors, such as--
(i) practical experience with the
measures involved, including whether a
significant proportion of hospitals
failed to meet the performance standard
during previous performance periods;
(ii) historical performance
standards;
(iii) improvement rates; and
(iv) the opportunity for continued
improvement.
(4) Performance period.--For purposes of the Program,
the Secretary shall establish the performance period
for a fiscal year. Such performance period shall begin
and end prior to the beginning of such fiscal year.
(5) Hospital performance score.--
(A) In general.--Subject to subparagraph (B),
the Secretary shall develop a methodology for
assessing the total performance of each
hospital based on performance standards with
respect to the measures selected under
paragraph (2) for a performance period (as
established under paragraph (4)). Using such
methodology, the Secretary shall provide for an
assessment (in this subsection referred to as
the ``hospital performance score'') for each
hospital for each performance period.
(B) Application.--
(i) Appropriate distribution.--The
Secretary shall ensure that the
application of the methodology
developed under subparagraph (A)
results in an appropriate distribution
of value-based incentive payments under
paragraph (6) among hospitals achieving
different levels of hospital
performance scores, with hospitals
achieving the highest hospital
performance scores receiving the
largest value-based incentive payments.
(ii) Higher of achievement or
improvement.--The methodology developed
under subparagraph (A) shall provide
that the hospital performance score is
determined using the higher of its
achievement or improvement score for
each measure.
(iii) Weights.--The methodology
developed under subparagraph (A) shall
provide for the assignment of weights
for categories of measures as the
Secretary determines appropriate.
(iv) No minimum performance
standard.--The Secretary shall not set
a minimum performance standard in
determining the hospital performance
score for any hospital.
(v) Reflection of measures applicable
to the hospital.--The hospital
performance score for a hospital shall
reflect the measures that apply to the
hospital.
(6) Calculation of value-based incentive payments.--
(A) In general.--In the case of a hospital
that the Secretary determines meets (or
exceeds) the performance standards under
paragraph (3) for the performance period for a
fiscal year (as established under paragraph
(4)), the Secretary shall increase the base
operating DRG payment amount (as defined in
paragraph (7)(D)), as determined after
application of paragraph (7)(B)(i), for a
hospital for each discharge occurring in such
fiscal year by the value-based incentive
payment amount.
(B) Value-based incentive payment amount.--
The value-based incentive payment amount for
each discharge of a hospital in a fiscal year
shall be equal to the product of--
(i) the base operating DRG payment
amount (as defined in paragraph (7)(D))
for the discharge for the hospital for
such fiscal year; and
(ii) the value-based incentive
payment percentage specified under
subparagraph (C) for the hospital for
such fiscal year.
(C) Value-based incentive payment
percentage.--
(i) In general.--The Secretary shall
specify a value-based incentive payment
percentage for a hospital for a fiscal
year.
(ii) Requirements.--In specifying the
value-based incentive payment
percentage for each hospital for a
fiscal year under clause (i), the
Secretary shall ensure that--
(I) such percentage is based
on the hospital performance
score of the hospital under
paragraph (5); and
(II) the total amount of
value-based incentive payments
under this paragraph to all
hospitals in such fiscal year
is equal to the total amount
available for value-based
incentive payments for such
fiscal year under paragraph
(7)(A), as estimated by the
Secretary.
(7) Funding for value-based incentive payments.--
(A) Amount.--The total amount available for
value-based incentive payments under paragraph
(6) for all hospitals for a fiscal year shall
be equal to the total amount of reduced
payments for all hospitals under subparagraph
(B) for such fiscal year, as estimated by the
Secretary.
(B) Adjustment to payments.--
(i) In general.--The Secretary shall
reduce the base operating DRG payment
amount (as defined in subparagraph (D))
for a hospital for each discharge in a
fiscal year (beginning with fiscal year
2013) by an amount equal to the
applicable percent (as defined in
subparagraph (C)) of the base operating
DRG payment amount for the discharge
for the hospital for such fiscal year.
The Secretary shall make such
reductions for all hospitals in the
fiscal year involved, regardless of
whether or not the hospital has been
determined by the Secretary to have
earned a value-based incentive payment
under paragraph (6) for such fiscal
year.
(ii) No effect on other payments.--
Payments described in items (aa) and
(bb) of subparagraph (D)(i)(II) for a
hospital shall be determined as if this
subsection had not been enacted.
(C) Applicable percent defined.--For purposes
of subparagraph (B), the term ``applicable
percent'' means--
(i) with respect to fiscal year 2013,
1.0 percent;
(ii) with respect to fiscal year
2014, 1.25 percent;
(iii) with respect to fiscal year
2015, 1.5 percent;
(iv) with respect to fiscal year
2016, 1.75 percent; and
(v) with respect to fiscal year 2017
and succeeding fiscal years, 2 percent.
(D) Base operating drg payment amount
defined.--
(i) In general.--Except as provided
in clause (ii), in this subsection, the
term ``base operating DRG payment
amount'' means, with respect to a
hospital for a fiscal year--
(I) the payment amount that
would otherwise be made under
subsection (d) (determined
without regard to subsection
(q)) for a discharge if this
subsection did not apply;
reduced by
(II) any portion of such
payment amount that is
attributable to--
(aa) payments under
paragraphs (5)(A),
(5)(B), (5)(F), and
(12) of subsection (d);
and
(bb) such other
payments under
subsection (d)
determined appropriate
by the Secretary.
(ii) Special rules for certain
hospitals.--
(I) Sole community hospitals
and medicare-dependent, small
rural hospitals.--In the case
of a medicare-dependent, small
rural hospital (with respect to
discharges occurring during
fiscal year 2012 and 2013) or a
sole community hospital, in
applying subparagraph (A)(i),
the payment amount that would
otherwise be made under
subsection (d) shall be
determined without regard to
subparagraphs (I) and (L) of
subsection (b)(3) and
subparagraphs (D) and (G) of
subsection (d)(5).
(II) Hospitals paid under
section 1814.--In the case of a
hospital that is paid under
section 1814(b)(3), the term
``base operating DRG payment
amount'' means the payment
amount under such section.
(8) Announcement of net result of adjustments.--Under
the Program, the Secretary shall, not later than 60
days prior to the fiscal year involved, inform each
hospital of the adjustments to payments to the hospital
for discharges occurring in such fiscal year under
paragraphs (6) and (7)(B)(i).
(9) No effect in subsequent fiscal years.--The value-
based incentive payment under paragraph (6) and the
payment reduction under paragraph (7)(B)(i) shall each
apply only with respect to the fiscal year involved,
and the Secretary shall not take into account such
value-based incentive payment or payment reduction in
making payments to a hospital under this section in a
subsequent fiscal year.
(10) Public reporting.--
(A) Hospital specific information.--
(i) In general.--The Secretary shall
make information available to the
public regarding the performance of
individual hospitals under the Program,
including--
(I) the performance of the
hospital with respect to each
measure that applies to the
hospital;
(II) the performance of the
hospital with respect to each
condition or procedure; and
(III) the hospital
performance score assessing the
total performance of the
hospital.
(ii) Opportunity to review and submit
corrections.--The Secretary shall
ensure that a hospital has the
opportunity to review, and submit
corrections for, the information to be
made public with respect to the
hospital under clause (i) prior to such
information being made public.
(iii) Website.--Such information
shall be posted on the Hospital Compare
Internet website in an easily
understandable format.
(B) Aggregate information.--The Secretary
shall periodically post on the Hospital Compare
Internet website aggregate information on the
Program, including--
(i) the number of hospitals receiving
value-based incentive payments under
paragraph (6) and the range and total
amount of such value-based incentive
payments; and
(ii) the number of hospitals
receiving less than the maximum value-
based incentive payment available to
the hospital for the fiscal year
involved and the range and amount of
such payments.
(11) Implementation.--
(A) Appeals.--The Secretary shall establish a
process by which hospitals may appeal the
calculation of a hospital's performance
assessment with respect to the performance
standards established under paragraph (3)(A)
and the hospital performance score under
paragraph (5). The Secretary shall ensure that
such process provides for resolution of such
appeals in a timely manner.
(B) Limitation on review.--Except as provided
in subparagraph (A), there shall be no
administrative or judicial review under section
1869, section 1878, or otherwise of the
following:
(i) The methodology used to determine
the amount of the value-based incentive
payment under paragraph (6) and the
determination of such amount.
(ii) The determination of the amount
of funding available for such value-
based incentive payments under
paragraph (7)(A) and the payment
reduction under paragraph (7)(B)(i).
(iii) The establishment of the
performance standards under paragraph
(3) and the performance period under
paragraph (4).
(iv) The measures specified under
subsection (b)(3)(B)(viii) and the
measures selected under paragraph (2).
(v) The methodology developed under
paragraph (5) that is used to calculate
hospital performance scores and the
calculation of such scores.
(vi) The validation methodology
specified in subsection
(b)(3)(B)(viii)(XI).
(C) Consultation with small hospitals.--The
Secretary shall consult with small rural and
urban hospitals on the application of the
Program to such hospitals.
(12) Promulgation of regulations.--The Secretary
shall promulgate regulations to carry out the Program,
including the selection of measures under paragraph
(2), the methodology developed under paragraph (5) that
is used to calculate hospital performance scores, and
the methodology used to determine the amount of value-
based incentive payments under paragraph (6).
(p) Adjustment to Hospital Payments for Hospital Acquired
Conditions.--
(1) In general.--In order to provide an incentive for
applicable hospitals to reduce hospital acquired
conditions under this title, with respect to discharges
from an applicable hospital occurring during fiscal
year 2015 or a subsequent fiscal year, the amount of
payment under this section or section 1814(b)(3), as
applicable, for such discharges during the fiscal year
shall be equal to 99 percent of the amount of payment
that would otherwise apply to such discharges under
this section or section 1814(b)(3) (determined after
the application of subsections (o) and (q) and section
1814(l)(4) but without regard to this subsection).
(2) Applicable hospitals.--
(A) In general.--For purposes of this
subsection, the term ``applicable hospital''
means a subsection (d) hospital that meets the
criteria described in subparagraph (B).
(B) Criteria described.--
(i) In general.--The criteria
described in this subparagraph, with
respect to a subsection (d) hospital,
is that the subsection (d) hospital is
in the top quartile of all subsection
(d) hospitals, relative to the national
average, of hospital acquired
conditions during the applicable
period, as determined by the Secretary.
(ii) Risk adjustment.--In carrying
out clause (i), the Secretary shall
establish and apply an appropriate risk
adjustment methodology.
(C) Exemption.--In the case of a hospital
that is paid under section 1814(b)(3), the
Secretary may exempt such hospital from the
application of this subsection if the State
which is paid under such section submits an
annual report to the Secretary describing how a
similar program in the State for a
participating hospital or hospitals achieves or
surpasses the measured results in terms of
patient health outcomes and cost savings
established under this subsection.
(3) Hospital acquired conditions.--For purposes of
this subsection, the term ``hospital acquired
condition'' means a condition identified for purposes
of subsection (d)(4)(D)(iv) and any other condition
determined appropriate by the Secretary that an
individual acquires during a stay in an applicable
hospital, as determined by the Secretary.
(4) Applicable period.--In this subsection, the term
``applicable period'' means, with respect to a fiscal
year, a period specified by the Secretary.
(5) Reporting to hospitals.--Prior to fiscal year
2015 and each subsequent fiscal year, the Secretary
shall provide confidential reports to applicable
hospitals with respect to hospital acquired conditions
of the applicable hospital during the applicable
period.
(6) Reporting hospital specific information.--
(A) In general.--The Secretary shall make
information available to the public regarding
hospital acquired conditions of each applicable
hospital.
(B) Opportunity to review and submit
corrections.--The Secretary shall ensure that
an applicable hospital has the opportunity to
review, and submit corrections for, the
information to be made public with respect to
the hospital under subparagraph (A) prior to
such information being made public.
(C) Website.--Such information shall be
posted on the Hospital Compare Internet website
in an easily understandable format.
(7) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the following:
(A) The criteria described in paragraph
(2)(A).
(B) The specification of hospital acquired
conditions under paragraph (3).
(C) The specification of the applicable
period under paragraph (4).
(D) The provision of reports to applicable
hospitals under paragraph (5) and the
information made available to the public under
paragraph (6).
(q) Hospital Readmissions Reduction Program.--
(1) In general.--With respect to payment for
discharges from an applicable hospital (as defined in
paragraph (5)(C)) occurring during a fiscal year
beginning on or after October 1, 2012, in order to
account for excess readmissions in the hospital, the
Secretary shall make payments (in addition to the
payments described in paragraph (2)(A)(ii)) for such a
discharge to such hospital under subsection (d) (or
section 1814(b)(3), as the case may be) in an amount
equal to the product of--
(A) the base operating DRG payment amount (as
defined in paragraph (2)) for the discharge;
and
(B) the adjustment factor (described in
paragraph (3)(A)) for the hospital for the
fiscal year.
(2) Base operating drg payment amount defined.--
(A) In general.--Except as provided in
subparagraph (B), in this subsection, the term
``base operating DRG payment amount'' means,
with respect to a hospital for a fiscal year--
(i) the payment amount that would
otherwise be made under subsection (d)
(determined without regard to
subsection (o)) for a discharge if this
subsection did not apply; reduced by
(ii) any portion of such payment
amount that is attributable to payments
under paragraphs (5)(A), (5)(B),
(5)(F), and (12) of subsection (d).
(B) Special rules for certain hospitals.--
(i) Sole community hospitals and
medicare-dependent, small rural
hospitals.--In the case of a medicare-
dependent, small rural hospital (with
respect to discharges occurring during
fiscal years 2012 and 2013) or a sole
community hospital, in applying
subparagraph (A)(i), the payment amount
that would otherwise be made under
subsection (d) shall be determined
without regard to subparagraphs (I) and
(L) of subsection (b)(3) and
subparagraphs (D) and (G) of subsection
(d)(5).
(ii) Hospitals paid under section
1814.--In the case of a hospital that
is paid under section 1814(b)(3), the
Secretary may exempt such hospitals
provided that States paid under such
section submit an annual report to the
Secretary describing how a similar
program in the State for a
participating hospital or hospitals
achieves or surpasses the measured
results in terms of patient health
outcomes and cost savings established
herein with respect to this section.
(3) Adjustment factor.--
(A) In general.--For purposes of paragraph
(1), subject to subparagraph (D), the
adjustment factor under this paragraph for an
applicable hospital for a fiscal year is equal
to the greater of--
(i) the ratio described in
subparagraph (B) for the hospital for
the applicable period (as defined in
paragraph (5)(D)) for such fiscal year;
or
(ii) the floor adjustment factor
specified in subparagraph (C).
(B) Ratio.--The ratio described in this
subparagraph for a hospital for an applicable
period is equal to 1 minus the ratio of--
(i) the aggregate payments for excess
readmissions (as defined in paragraph
(4)(A)) with respect to an applicable
hospital for the applicable period; and
(ii) the aggregate payments for all
discharges (as defined in paragraph
(4)(B)) with respect to such applicable
hospital for such applicable period.
(C) Floor adjustment factor.--For purposes of
subparagraph (A), the floor adjustment factor
specified in this subparagraph for--
(i) fiscal year 2013 is 0.99;
(ii) fiscal year 2014 is 0.98; or
(iii) fiscal year 2015 and subsequent
fiscal years is 0.97.
(D) Transitional adjustment for dual
eligibles.--
(i) In general.--In determining a
hospital's adjustment factor under this
paragraph for purposes of making
payments for discharges occurring
during and after fiscal year 2019, and
before the application of clause (i) of
subparagraph (E), the Secretary shall
assign hospitals to groups (as defined
by the Secretary under clause (ii)) and
apply the applicable provisions of this
subsection using a methodology in a
manner that allows for separate
comparison of hospitals within each
such group, as determined by the
Secretary.
(ii) Defining groups.--For purposes
of this subparagraph, the Secretary
shall define groups of hospitals, based
on their overall proportion, of the
inpatients who are entitled to, or
enrolled for, benefits under part A,
and who are full-benefit dual eligible
individuals (as defined in section
1935(c)(6)). In defining groups, the
Secretary shall consult the Medicare
Payment Advisory Commission and may
consider the analysis done by such
Commission in preparing the portion of
its report submitted to Congress in
June 2013 relating to readmissions.
(iii) Minimizing reporting burden on
hospitals.--In carrying out this
subparagraph, the Secretary shall not
impose any additional reporting
requirements on hospitals.
(iv) Budget neutral design
methodology.--The Secretary shall
design the methodology to implement
this subparagraph so that the estimated
total amount of reductions in payments
under this subsection equals the
estimated total amount of reductions in
payments that would otherwise occur
under this subsection if this
subparagraph did not apply.
(E) Changes in risk adjustment.--
(i) Consideration of recommendations
in impact reports.--The Secretary may
take into account the studies conducted
and the recommendations made by the
Secretary under section 2(d)(1) of the
IMPACT Act of 2014 (Public Law 113-185;
42 U.S.C. 1395lll note) with respect to
the application under this subsection
of risk adjustment methodologies.
Nothing in this clause shall be
construed as precluding consideration
of the use of groupings of hospitals.
(ii) Consideration of exclusion of
patient cases based on v or other
appropriate codes.--In promulgating
regulations to carry out this
subsection with respect to discharges
occurring after fiscal year 2018, the
Secretary may consider the use of V or
other ICD-related codes for removal of
a readmission. The Secretary may
consider modifying measures under this
subsection to incorporate V or other
ICD-related codes at the same time as
other changes are being made under this
subparagraph.
(iii) Removal of certain
readmissions.--In promulgating
regulations to carry out this
subsection, with respect to discharges
occurring after fiscal year 2018, the
Secretary may consider removal as a
readmission of an admission that is
classified within one or more of the
following: transplants, end-stage renal
disease, burns, trauma, psychosis, or
substance abuse. The Secretary may
consider modifying measures under this
subsection to remove readmissions at
the same time as other changes are
being made under this subparagraph.
(4) Aggregate payments, excess readmission ratio
defined.--For purposes of this subsection:
(A) Aggregate payments for excess
readmissions.--The term ``aggregate payments
for excess readmissions'' means, for a hospital
for an applicable period, the sum, for
applicable conditions (as defined in paragraph
(5)(A)), of the product, for each applicable
condition, of--
(i) the base operating DRG payment
amount for such hospital for such
applicable period for such condition;
(ii) the number of admissions for
such condition for such hospital for
such applicable period; and
(iii) the excess readmissions ratio
(as defined in subparagraph (C)) for
such hospital for such applicable
period minus 1.
(B) Aggregate payments for all discharges.--
The term ``aggregate payments for all
discharges'' means, for a hospital for an
applicable period, the sum of the base
operating DRG payment amounts for all
discharges for all conditions from such
hospital for such applicable period.
(C) Excess readmission ratio.--
(i) In general.--Subject to clause
(ii), the term ``excess readmissions
ratio'' means, with respect to an
applicable condition for a hospital for
an applicable period, the ratio (but
not less than 1.0) of--
(I) the risk adjusted
readmissions based on actual
readmissions, as determined
consistent with a readmission
measure methodology that has
been endorsed under paragraph
(5)(A)(ii)(I), for an
applicable hospital for such
condition with respect to such
applicable period; to
(II) the risk adjusted
expected readmissions (as
determined consistent with such
a methodology) for such
hospital for such condition
with respect to such applicable
period.
(ii) Exclusion of certain
readmissions.--For purposes of clause
(i), with respect to a hospital, excess
readmissions shall not include
readmissions for an applicable
condition for which there are fewer
than a minimum number (as determined by
the Secretary) of discharges for such
applicable condition for the applicable
period and such hospital.
(5) Definitions.--For purposes of this subsection:
(A) Applicable condition.--The term
``applicable condition'' means, subject to
subparagraph (B), a condition or procedure
selected by the Secretary among conditions and
procedures for which--
(i) readmissions (as defined in
subparagraph (E)) that represent
conditions or procedures that are high
volume or high expenditures under this
title (or other criteria specified by
the Secretary); and
(ii) measures of such readmissions--
(I) have been endorsed by the
entity with a contract under
section 1890(a); and
(II) such endorsed measures
have exclusions for
readmissions that are unrelated
to the prior discharge (such as
a planned readmission or
transfer to another applicable
hospital).
(B) Expansion of applicable conditions.--
Beginning with fiscal year 2015, the Secretary
shall, to the extent practicable, expand the
applicable conditions beyond the 3 conditions
for which measures have been endorsed as
described in subparagraph (A)(ii)(I) as of the
date of the enactment of this subsection to the
additional 4 conditions that have been
identified by the Medicare Payment Advisory
Commission in its report to Congress in June
2007 and to other conditions and procedures as
determined appropriate by the Secretary. In
expanding such applicable conditions, the
Secretary shall seek the endorsement described
in subparagraph (A)(ii)(I) but may apply such
measures without such an endorsement in the
case of a specified area or medical topic
determined appropriate by the Secretary for
which a feasible and practical measure has not
been endorsed by the entity with a contract
under section 1890(a) as long as due
consideration is given to measures that have
been endorsed or adopted by a consensus
organization identified by the Secretary.
(C) Applicable hospital.--The term
``applicable hospital'' means a subsection (d)
hospital or a hospital that is paid under
section 1814(b)(3), as the case may be.
(D) Applicable period.--The term ``applicable
period'' means, with respect to a fiscal year,
such period as the Secretary shall specify.
(E) Readmission.--The term ``readmission''
means, in the case of an individual who is
discharged from an applicable hospital, the
admission of the individual to the same or
another applicable hospital within a time
period specified by the Secretary from the date
of such discharge. Insofar as the discharge
relates to an applicable condition for which
there is an endorsed measure described in
subparagraph (A)(ii)(I), such time period (such
as 30 days) shall be consistent with the time
period specified for such measure.
(6) Reporting hospital specific information.--
(A) In general.--The Secretary shall make
information available to the public regarding
readmission rates of each subsection (d)
hospital under the program.
(B) Opportunity to review and submit
corrections.--The Secretary shall ensure that a
subsection (d) hospital has the opportunity to
review, and submit corrections for, the
information to be made public with respect to
the hospital under subparagraph (A) prior to
such information being made public.
(C) Website.--Such information shall be
posted on the Hospital Compare Internet website
in an easily understandable format.
(7) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the following:
(A) The determination of base operating DRG
payment amounts.
(B) The methodology for determining the
adjustment factor under paragraph (3),
including excess readmissions ratio under
paragraph (4)(C), aggregate payments for excess
readmissions under paragraph (4)(A), and
aggregate payments for all discharges under
paragraph (4)(B), and applicable periods and
applicable conditions under paragraph (5).
(C) The measures of readmissions as described
in paragraph (5)(A)(ii).
(8) Readmission rates for all patients.--
(A) Calculation of readmission.--The
Secretary shall calculate readmission rates for
all patients (as defined in subparagraph (D))
for a specified hospital (as defined in
subparagraph (D)(ii)) for an applicable
condition (as defined in paragraph (5)(B)) and
other conditions deemed appropriate by the
Secretary for an applicable period (as defined
in paragraph (5)(D)) in the same manner as used
to calculate such readmission rates for
hospitals with respect to this title and posted
on the CMS Hospital Compare website.
(B) Posting of hospital specific all patient
readmission rates.--The Secretary shall make
information on all patient readmission rates
calculated under subparagraph (A) available on
the CMS Hospital Compare website in a form and
manner determined appropriate by the Secretary.
The Secretary may also make other information
determined appropriate by the Secretary
available on such website.
(C) Hospital submission of all patient
data.--
(i) Except as provided for in clause
(ii), each specified hospital (as
defined in subparagraph (D)(ii)) shall
submit to the Secretary, in a form,
manner and time specified by the
Secretary, data and information
determined necessary by the Secretary
for the Secretary to calculate the all
patient readmission rates described in
subparagraph (A).
(ii) Instead of a specified hospital
submitting to the Secretary the data
and information described in clause
(i), such data and information may be
submitted to the Secretary, on behalf
of such a specified hospital, by a
state or an entity determined
appropriate by the Secretary.
(D) Definitions.--For purposes of this
paragraph:
(i) The term ``all patients'' means
patients who are treated on an
inpatient basis and discharged from a
specified hospital (as defined in
clause (ii)).
(ii) The term ``specified hospital''
means a subsection (d) hospital,
hospitals described in clauses (i)
through (v) of subsection (d)(1)(B)
and, as determined feasible and
appropriate by the Secretary, other
hospitals not otherwise described in
this subparagraph.
(r) Adjustments to Medicare DSH Payments.--
(1) Empirically justified dsh payments.--For fiscal
year 2014 and each subsequent fiscal year, instead of
the amount of disproportionate share hospital payment
that would otherwise be made under subsection (d)(5)(F)
to a subsection (d) hospital for the fiscal year, the
Secretary shall pay to the subsection (d) hospital 25
percent of such amount (which represents the
empirically justified amount for such payment, as
determined by the Medicare Payment Advisory Commission
in its March 2007 Report to the Congress).
(2) Additional payment.--In addition to the payment
made to a subsection (d) hospital under paragraph (1),
for fiscal year 2014 and each subsequent fiscal year,
the Secretary shall pay to such subsection (d)
hospitals an additional amount equal to the product of
the following factors:
(A) Factor one.--A factor equal to the
difference between--
(i) the aggregate amount of payments
that would be made to subsection (d)
hospitals under subsection (d)(5)(F) if
this subsection did not apply for such
fiscal year (as estimated by the
Secretary); and
(ii) the aggregate amount of payments
that are made to subsection (d)
hospitals under paragraph (1) for such
fiscal year (as so estimated).
(B) Factor two.--
(i) Fiscal years 2014, 2015, 2016,
and 2017.--For each of fiscal years
2014, 2015, 2016, and 2017, a factor
equal to 1 minus the percent change in
the percent of individuals under the
age of 65 who are uninsured, as
determined by comparing the percent of
such individuals--
(I) who are uninsured in
2013, the last year before
coverage expansion under the
Patient Protection and
Affordable Care Act (as
calculated by the Secretary
based on the most recent
estimates available from the
Director of the Congressional
Budget Office before a vote in
either House on the Health Care
and Education Reconciliation
Act of 2010 that, if determined
in the affirmative, would clear
such Act for enrollment); and
(II) who are uninsured in the
most recent period for which
data is available (as so
calculated),
minus 0.1 percentage points for fiscal
year 2014 and minus 0.2 percentage
points for each of fiscal years 2015,
2016, and 2017.
(ii) 2018 and subsequent years.--For
fiscal year 2018 and each subsequent
fiscal year, a factor equal to 1 minus
the percent change in the percent of
individuals who are uninsured, as
determined by comparing the percent of
individuals--
(I) who are uninsured in 2013
(as estimated by the Secretary,
based on data from the Census
Bureau or other sources the
Secretary determines
appropriate, and certified by
the Chief Actuary of the
Centers for Medicare & Medicaid
Services); and
(II) who are uninsured in the
most recent period for which
data is available (as so
estimated and certified),
minus 0.2 percentage points for each of
fiscal years 2018 and 2019.
(C) Factor three.--A factor equal to the
percent, for each subsection (d) hospital, that
represents the quotient of--
(i) the amount of uncompensated care
for such hospital for a period selected
by the Secretary (as estimated by the
Secretary, based on appropriate data
(including, in the case where the
Secretary determines that alternative
data is available which is a better
proxy for the costs of subsection (d)
hospitals for treating the uninsured,
the use of such alternative data)); and
(ii) the aggregate amount of
uncompensated care for all subsection
(d) hospitals that receive a payment
under this subsection for such period
(as so estimated, based on such data).
(3) Limitations on review.--There shall be no
administrative or judicial review under section 1869,
section 1878, or otherwise of the following:
(A) Any estimate of the Secretary for
purposes of determining the factors described
in paragraph (2).
(B) Any period selected by the Secretary for
such purposes.
(s) Prospective Payment for Psychiatric Hospitals.--
(1) Reference to establishment and implementation of
system.--For provisions related to the establishment
and implementation of a prospective payment system for
payments under this title for inpatient hospital
services furnished by psychiatric hospitals (as
described in clause (i) of subsection (d)(1)(B)) and
psychiatric units (as described in the matter following
clause (v) of such subsection), see section 124 of the
Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999.
(2) Implementation for rate year beginning in 2010
and subsequent rate years.--
(A) In general.--In implementing the system
described in paragraph (1) for the rate year
beginning in 2010 and any subsequent rate year,
any update to a base rate for days during the
rate year for a psychiatric hospital or unit,
respectively, shall be reduced--
(i) for the rate year beginning in
2012 and each subsequent rate year, by
the productivity adjustment described
in section 1886(b)(3)(B)(xi)(II); and
(ii) for each of the rate years
beginning in 2010 through 2019, by the
other adjustment described in paragraph
(3).
(B) Special rule.--The application of this
paragraph may result in such update being less
than 0.0 for a rate year, and may result in
payment rates under the system described in
paragraph (1) for a rate year being less than
such payment rates for the preceding rate year.
(3) Other adjustment.--For purposes of paragraph
(2)(A)(ii), the other adjustment described in this
paragraph is--
(A) for each of the rate years beginning in
2010 and 2011, 0.25 percentage point;
(B) for each of the rate years beginning in
2012 and 2013, 0.1 percentage point;
(C) for the rate year beginning in 2014, 0.3
percentage point;
(D) for each of the rate years beginning in
2015 and 2016, 0.2 percentage point; and
(E) for each of the rate years beginning in
2017, 2018, and 2019, 0.75 percentage point.
(4) Quality reporting.--
(A) Reduction in update for failure to
report.--
(i) In general.--Under the system
described in paragraph (1), for rate
year 2014 and each subsequent rate
year, in the case of a psychiatric
hospital or psychiatric unit that does
not submit data to the Secretary in
accordance with subparagraphs (C) and
(E) with respect to such a rate year,
any annual update to a standard Federal
rate for discharges for the hospital
during the rate year, and after
application of paragraph (2), shall be
reduced by 2 percentage points.
(ii) Special rule.--The application
of this subparagraph may result in such
annual update being less than 0.0 for a
rate year, and may result in payment
rates under the system described in
paragraph (1) for a rate year being
less than such payment rates for the
preceding rate year.
(B) Noncumulative application.--Any reduction
under subparagraph (A) shall apply only with
respect to the rate year involved and the
Secretary shall not take into account such
reduction in computing the payment amount under
the system described in paragraph (1) for a
subsequent rate year.
(C) Submission of quality data.--For rate
year 2014 and each subsequent rate year, each
psychiatric hospital and psychiatric unit shall
submit to the Secretary data on quality
measures specified under subparagraph (D). Such
data shall be submitted in a form and manner,
and at a time, specified by the Secretary for
purposes of this subparagraph.
(D) Quality measures.--
(i) In general.--Subject to clause
(ii), any measure specified by the
Secretary under this subparagraph must
have been endorsed by the entity with a
contract under section 1890(a).
(ii) Exception.--In the case of a
specified area or medical topic
determined appropriate by the Secretary
for which a feasible and practical
measure has not been endorsed by the
entity with a contract under section
1890(a), the Secretary may specify a
measure that is not so endorsed as long
as due consideration is given to
measures that have been endorsed or
adopted by a consensus organization
identified by the Secretary.
(iii) Time frame.--Not later than
October 1, 2012, the Secretary shall
publish the measures selected under
this subparagraph that will be
applicable with respect to rate year
2014.
(iv) Patients' perspective on care.--
Not later than for rate year 2031, the
quality measures specified under this
subparagraph shall include a quality
measure of patients' perspective on
care.
(E) Standardized patient assessment data.--
(i) In general.--For rate year 2028
and each subsequent rate year, in
addition to such data on the quality
measures described in subparagraph (C),
each psychiatric hospital and
psychiatric unit shall submit to the
Secretary, through the use of a
standardized assessment instrument
implemented under clause (iii), the
standardized patient assessment data
described in clause (ii). Such data
shall be submitted with respect to
admission and discharge of an
individual (and may be submitted more
frequently as the Secretary determines
appropriate).
(ii) Standardized patient assessment
data described.--For purposes of clause
(i), the standardized patient
assessment data described in this
clause, with respect to a psychiatric
hospital or psychiatric unit, is data
with respect to the following
categories:
(I) Functional status, such
as mobility and self-care at
admission to a psychiatric
hospital or unit and before
discharge from a psychiatric
hospital or unit.
(II) Cognitive function, such
as ability to express ideas and
to understand, and mental
status, such as depression and
dementia.
(III) Special services,
treatments, and interventions
for psychiatric conditions.
(IV) Medical conditions and
co-morbidities, such as
diabetes, congestive heart
failure, and pressure ulcers.
(V) Impairments, such as
incontinence and an impaired
ability to hear, see, or
swallow.
(VI) Other categories as
determined appropriate by the
Secretary.
(iii) Standardized assessment
instrument.--
(I) In general.--For purposes
of clause (i), the Secretary
shall implement a standardized
assessment instrument that
provides for the submission of
standardized patient assessment
data under this title with
respect to psychiatric
hospitals and psychiatric units
which enables comparison of
such assessment data across all
such hospitals and units to
which such data are applicable.
(II) Funding.--The Secretary
shall provide for the transfer,
from the Federal Hospital
Insurance Trust Fund under
section 1817 to the Centers for
Medicare & Medicaid Services
Program Management Account, of
$10,000,000 for purposes of
carrying out subclause (I).
(F) Public availability of data submitted.--
The Secretary shall establish procedures for
making data submitted under subparagraphs (C)
and (F) available to the public. Such
procedures shall ensure that a psychiatric
hospital and a psychiatric unit has the
opportunity to review the data that is to be
made public with respect to the hospital or
unit prior to such data being made public. The
Secretary shall report quality measures that
relate to services furnished in inpatient
settings in psychiatric hospitals and
psychiatric units on the Internet website of
the Centers for Medicare & Medicaid Services.
(5) Additional data and information.--
(A) In general.--The Secretary shall collect
data and information as the Secretary
determines appropriate to revise payments under
the system described in paragraph (1) for
psychiatric hospitals and psychiatric units
pursuant to subparagraph (D) and for other
purposes as determined appropriate by the
Secretary. The Secretary shall begin to collect
such data by not later than October 1, 2023.
(B) Data and information.--The data and
information to be collected under subparagraph
(A) may include--
(i) charges, including those related
to ancillary services;
(ii) the required intensity of
behavioral monitoring, such as
cognitive deficit, suicide ideations,
violent behavior, and need for physical
restraint; and
(iii) interventions, such as
detoxification services for substance
abuse, dependence on respirator, total
parenteral nutritional support,
dependence on renal dialysis, and burn
care.
(C) Method of collection.--The Secretary may
collect the additional data and information
under subparagraph (A) on cost reports, on
claims, or otherwise.
(D) Revisions to payment rates.--
(i) In general.--Notwithstanding the
preceding paragraphs of this subsection
or section 124 of the Medicare,
Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999, for rate year
2025 (and for any subsequent rate year,
if determined appropriate by the
Secretary), the Secretary shall, by
regulation, implement revisions to the
methodology for determining the payment
rates under the system described in
paragraph (1) for psychiatric hospitals
and psychiatric units, as the Secretary
determines to be appropriate. Such
revisions may be based on a review of
data and information collected under
subparagraph (A).
(ii) Review.--The Secretary may make
revisions to the diagnosis-related
group classifications, in accordance
with subsection (d)(4)(C), to reflect
nursing and staff resource use and
costs involved in furnishing services
at such hospitals and units, including
considerations for patient complexity
and prior admission to an inpatient
psychiatric facility, which may be
based on review of data and information
collected under subparagraph (A), as
the Secretary determines to be
appropriate.
(iii) Budget neutrality.--Revisions
in payment implemented pursuant to
clause (i) for a rate year shall result
in the same estimated amount of
aggregate expenditures under this title
for psychiatric hospitals and
psychiatric units furnished in the rate
year as would have been made under this
title for such care in such rate year
if such revisions had not been
implemented.
(6) Additional considerations for diagnosis-related
group classifications.--
(A) In general.--Notwithstanding the
preceding paragraphs of this subsection (other
than paragraph (5)) or section 124 of the
Medicare, Medicaid, and SCHIP Balanced Budget
Refinement Act of 1999, beginning not later
than rate year 2031, in addition to any
revisions pursuant to paragraph (5), the
Secretary shall, by regulation, implement
revisions to the methodology for determining
the payment rates under the system described in
paragraph (1) for psychiatric hospitals and
psychiatric units, as the Secretary determines
to be appropriate, to take into account the
patient assessment data described in paragraph
(4)(E)(ii).
(B) Budget neutrality.--Revisions in payment
implemented pursuant to subparagraph (A) for a
rate year shall result in the same estimated
amount of aggregate expenditures under this
title for psychiatric hospitals and psychiatric
units furnished in the rate year as would have
been made under this title for such care in
such rate year if such revisions had not been
implemented.
(t) Relating Similar Inpatient and Outpatient Hospital
Services.--
(1) Development of hcpcs version of ms-drg codes.--
Not later than January 1, 2018, the Secretary shall
develop HCPCS versions for MS-DRGs that are similar to
the ICD-10-PCS for such MS-DRGs such that, to the
extent possible, the MS-DRG assignment shall be similar
for a claim coded with the HCPCS version as an
identical claim coded with a ICD-10-PCS code.
(2) Coverage of surgical ms-drgs.--In carrying out
paragraph (1), the Secretary shall develop HCPCS
versions of MS-DRG codes for not fewer than 10 surgical
MS-DRGs.
(3) Publication and dissemination of the hcpcs
versions of ms-drgs.--
(A) In general.--The Secretary shall develop
a HCPCS MS-DRG definitions manual and software
that is similar to the definitions manual and
software for ICD-10-PCS codes for such MS-DRGs.
The Secretary shall post the HCPCS MS-DRG
definitions manual and software on the Internet
website of the Centers for Medicare & Medicaid
Services. The HCPCS MS-DRG definitions manual
and software shall be in the public domain and
available for use and redistribution without
charge.
(B) Use of previous analysis done by
medpac.--In developing the HCPCS MS-DRG
definitions manual and software under
subparagraph (A), the Secretary shall consult
with the Medicare Payment Advisory Commission
and shall consider the analysis done by such
Commission in translating outpatient surgical
claims into inpatient surgical MS-DRGs in
preparing chapter 7 (relating to hospital
short-stay policy issues) of its ``Medicare and
the Health Care Delivery System'' report
submitted to Congress in June 2015.
(4) Definition and reference.--In this subsection:
(A) HCPCS.--The term ``HCPCS'' means, with
respect to hospital items and services, the
code under the Healthcare Common Procedure
Coding System (HCPCS) (or a successor code) for
such items and services.
(B) ICD-10-pcs.--The term ``ICD-10-PCS''
means the International Classification of
Diseases, 10th Revision, Procedure Coding
System, and includes any subsequent revision of
such International Classification of Diseases,
Procedure Coding System.
* * * * * * *
----------
SECTION 13501 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1993
SEC. 13501. PAYMENTS FOR PPS HOSPITALS.
(a) [Omitted amendatory text]
(b) [Omitted amendatory text]
(c) [Omitted amendatory text]
(d) Extension for Regional Referral Center.--
(1) Extension of classification through fiscal year
1994.--Any hospital that is classified as a regional
referral center under section 1886(d)(5)(C) of the
Social Security Act as of September 30, 1992, shall
continue to be so classified for cost reporting periods
beginning during fiscal year 1993 or fiscal year 1994,
unless the area in which the hospital is located is
redesignated as a Metropolitan Statistical Area by the
Office of Management and Budget for such a fiscal year.
(2) Permitting hospitals to decline
reclassification.--If any hospital fails to qualify as
a rural referral center under section 1886(d)(5)(C) of
the Social Security Act as a result of a decision by
the Medicare Geographic Classification Review Board
under section 1886(d)(10) of such Act to reclassify the
hospital as being located in an urban area for fiscal
year 1993 or fiscal year 1994, the Secretary of Health
and Human Services shall--
(A) notify such hospital of such failure to
qualify,
(B) provide an opportunity for such hospital
to decline such reclassification, and
(C) if the hospital--
(i) declines such reclassification,
administer the Social Security Act
(other than section 1886(d)(8)(D)) for
such fiscal year as if the decision by
the Review Board had not occurred, or
(ii) fails to decline such
reclassification, administer the Social
Security Act without regard to
paragraph(1).
(3) Requiring lump-sum retroactive payment for
hospitals losing classification.--
(A) In general.--In the case of a hospital
described in paragraph (1), the Secretary of
Health and Human Services shall make a lump-sum
payment to the hospital equal to the difference
between the aggregate payment made to the
hospital under section 1886 of such Act
(excluding outlier payments under subsection
(d)(5)(A) of such section) during the period of
applicability described in subparagraph (B) and
the aggregate payment that would have been made
to the hospital under such section if, during
the period of applicability, the hospital was
classified a regional referral center under
section 1886(d)(5)(C) of such Act.
(B) Period of applicability.--In subparagraph
(A), the ``period of applicability'' is the
period that begins on October 1, 1992, and ends
on the date of the enactment of this Act.
(e) Extension for Medicare-Dependent, Small Rural
Hospitals.--
(1) Extension of additional payments.--[Omitted--
Amend other Act]
(2) Permitting hospitals to decline
reclassification.--If any hospital fails to qualify as
a medicare-dependent, small rural hospital under
section 1886(d)(5)(G)(i) of the Social Security Act as
a result of a decision by the Medicare Geographic
Classification Review Board under section 1886(d)(10)
of such Act to reclassify the hospital as being located
in an urban area for fiscal year 1993, fiscal year
1994, fiscal year 1998, fiscal year 1999, fiscal year
2000 through fiscal year [2024, or the portion of
fiscal year 2025 beginning on October 1, 2024, and
ending on December 31, 2024] 2025, the Secretary of
Health and Human Services shall--
(A) notify such hospital of such failure to
qualify,
(B) provide an opportunity for such hospital
to decline such reclassification, and
(C) if the hospital declines such
reclassification, administer the Social
Security Act (other than section 1886(d)(8)(D))
for such fiscal year as if the decision by the
Review Board had not occurred.
(3) Requiring lump-sum retroactive payment.--
(A) In general.--In the case of a hospital
treated as a medicare-dependent, small rural
hospital under section 1886(d)(5)(G) of the
Social Security Act, the Secretary of Health
and Human Services shall make a lump-sum
payment to the hospital equal to the difference
between the aggregate payment made to the
hospital under section 1886 of such Act
(excluding outlier payments under subsection
(d)(5)(A) of such section) during the period of
applicability described in subparagraph (B) and
the aggregate payment that would have been made
to the hospital under such section if, during
the period of applicability, section
1886(d)(5)(G) of such Act had been applied as
if the amendments made by paragraph (1) had
been in effect.
(B) Period of applicability.--In subparagraph
(A), the ``period of applicability'' is, with
respect to a hospital, the period that begins
on the first day of the hospital's first 12-
month cost reporting period that begins after
April 1, 1992, and ends on the date of the
enactment of this Act.
* * * * * * *
VII. SUPPLEMENTAL VIEWS
H.R. 8261, the Preserving Telehealth, Hospital, and
Ambulance Access Act (Schweikert, R-AZ, Thompson, D-CA),
extends the Medicare telehealth policies enacted in the
Consolidated Appropriations Act, 2023, that approved telehealth
services outside of rural areas, for an additional two years
(through December 31, 2026). Provisions include: allowing
telehealth services to be furnished in any geographic area and
in any originating site setting (including the patient's home);
allowing certain services to be furnished via audio-only
telecommunications systems; allowing physical therapists,
occupational therapists, speech-language pathologists, and
audiologists to furnish telehealth services; and allowing the
hospice face-to-face encounter to be performed via telehealth,
but not from physicians/nurse practitioners furnishing services
in areas subject to an enrollment/licensure moratorium or
subject to a provisional period of enhanced oversight for new
providers. Additionally, the provider must be enrolled in
Medicare. The provision also requires two years after the date
of enactment a modifier on the hospice claim to identify
encounters performed via telehealth. H.R. 8261 also includes a
policy delaying for two years (until January 1, 2027) the in-
person visit requirements for mental health telehealth
services, including when Rural Health Centers (RHCs) and
Federally Qualified Health Centers (FQHCs) furnish the
services.
For individuals with limited English proficiency (LEP),
within one year of enactment, this bill requires the Secretary
to consult with stakeholders and issue guidance on best
practices for: working with interpreters; providing accessible
instructions on how to access telehealth platforms; improving
access to digital patient portals; integrating video platforms
that enable multi-person video calls furnished via a
telecommunications platform; and disseminating patient
materials and communications, including text message
appointment reminders and prescriptions.
This bill also extends the Acute Hospital Care at Home
(AHCaH) initiative, enacted in the Consolidated Appropriations
Act, 2023, for five additional years, through December 31,
2029. When Congress initially extended the AHCaH initiative, it
required the Secretary to issue a report on safety, quality,
and equity data from the program by September 30, 2024. The
Committee did not have the results of this report at the time
of this mark-up. The current extenders policy also requires a
report to be delivered no later than September 30, 2028.
Additionally, this bill further extends for nine months
(through the end of FY 2025): the current definition of a low-
volume hospital (fewer than 3,800 total discharges and location
more than 15 road miles from the nearest inpatient hospital);
enhanced payments to Medicare-dependent hospitals (small, rural
hospitals); and the add-on payments for ground ambulance
services, all of which were previously extended in the
Consolidated Appropriations Act, 2023. The bill also requires
the Comptroller General to submit a report to Congress
evaluating the capabilities and limitations of wearable medical
devices used to support clinical decision-making. Moreover, in
response to recommendations from the Department of Health and
Human Services (HHS) Office of the Inspector General (OIG) and
the Medicare Payment Advisory Commission (MedPAC), this bill
includes modest program integrity provisions to increase
oversight of durable medical equipment ordered by a physician/
practitioner who does not appear to have any relationship with
the patient. While MedPAC recommended increasing anti-fraud
protections for both DME and labs, this bill only requires
increased protections for DME. For diagnostic laboratory tests,
it instead requires HHS OIG to report on how and if additional
oversight tools are necessary.
Finally, the bill delays by one year pending payment
rebasing and data reporting periods for the Clinical Laboratory
Fee Schedule under the Protecting Access to Medicare Act and
extends, by one year, the change to the annual updates to the
hospice aggregate cap made in the Improving Medicare Post-Acute
Care Transformation Act (IMPACT Act) of 2014, applying the
hospice payment update percentage rather than the Consumer
Price Index for Urban Consumers (CPI-U) to the hospice
aggregate cap through 2034. The bill also includes the
provisions from H.R. 5385, the Medicare PBM Accountability Act,
introduced by Rep. Landsman (D-OH) and Rep. Harshbarger (R-TN),
that requires additional transparency requirements for pharmacy
benefit managers (PBMs) participating in the Medicare Part D
program and prevents PBMs from structuring rebates based on the
drug volume or cost but instead based on bona fide service
fees. To note, the trend in PBMs is to use more administrative
fees rather than volume-based rebates.
Telehealth expansion. Telehealth, or virtual care, refers
to the exchange of medical information from one site to another
by means of electronic communications to improve a patient's
clinical health status.\1\ During the COVID-19 pandemic,
telehealth emerged as an alternative to certain in-person
services at a time when the rampant spread of COVID-19 in some
settings made certain health services high-risk or unsafe to
deliver. Congress and CMS expanded the use of telehealth for
the duration of the public health emergency (PHE), which
Congress extended several times, in some cases with permanent
changes. In 2021, Congress passed the American Rescue Plan Act
(ARPA), which codified allowing behavioral telehealth care to
be provided in homes.\2\ It also established grants for rural
areas and behavioral health to increase telehealth capacity.
Congress again temporarily extended Medicare telehealth
flexibilities in 2022 and 2023. While most provisions are now
set to expire at the end of 2024, Congress made additional
permanent changes to Medicare's coverage of telehealth,
including:\3\
---------------------------------------------------------------------------
\1\https://www.medpac.gov/wp-content/uploads/import_data/
scrape_files/docs/default-source/reports/mar18_medpac_ch16_sec.pdf.
\2\The American Rescue Plan Act of 2021, 42 U.S.C. Sec. 290aa
(2021).
\3\https://telehealth.hhs.gov/providers/telehealth-policy/policy-
changes-after-the-covid-19-public-health-emergency.
---------------------------------------------------------------------------
FQHCs and RHCs can serve as a distant site
provider for behavioral/mental telehealth services;
Medicare patients can receive telehealth
services for behavioral/mental health care in their
homes;
There are no geographic restrictions for
originating site for behavioral/mental telehealth
services;
Behavioral/mental telehealth services can be
delivered using audio-only communication platforms; and
Rural Emergency Hospitals (REHs) are
eligible originating sites for telehealth.
Patient safety and program integrity. Researchers caution
that the process of expanding access and the convenience of
telehealth could harm the quality of patient care or increase
utilization, promote unnecessary use, and expose individuals to
greater risk of fraud.\4\ Significant program integrity and
health equity concerns remain, with MedPAC noting challenges to
assessing quality, access, and costs, given the time lag in
claims data; the Commission reiterated that decisions about
making Medicare telehealth expansions permanent should be based
on data without the pandemic's acute impacts.\5\ HHS OIG has
found relatively high rates of inappropriate Medicare claims
for telehealth services.\6\\7\
---------------------------------------------------------------------------
\4\https://www.medpac.gov/wp-content/uploads/2023/06/
Jun23_Ch7_MedPAC_Report_To_Congress_SEC.pdf.
\5\Id.
\6\https://oig.hhs.gov/documents/root/230/
2020HealthCareTakedown_FactSheet_9dtIhW4.pdf.
\7\Telehealth: Potential Program Integrity Issues (Technical
Assistance as Requested), U.S. Department of Health and Human Services,
Office of Inspector General (February 2021).
---------------------------------------------------------------------------
Telehealth companies have facilitated several high-profile
Medicare fraud schemes in recent years. For example, in 2019,
criminal charges were filed against 35 defendants associated
with dozens of telemedicine companies and cancer genetic
testing laboratories that submitted more than $1.7 billion in
claims to the Medicare program. In 2022, criminal charges were
filed against 36 defendants involved in fraudulent
telemedicine, cardiovascular and cancer genetic testing, and
durable medical equipment schemes that resulted in $1.2 billion
in Medicare overpayments. Often telemarketers and telemedicine
companies were used to obtain Medicare beneficiary information
and then pay kickbacks to physicians/practitioners to order
medically unnecessary tests and equipment. HHS OIG has noted
that a common characteristic of such schemes is that the
ordering physician/practitioner typically does not interact
with or otherwise treat the beneficiary prior to ordering the
medically unnecessary items and services. Some researchers have
asserted that certain types of telehealth services can expand
access to care, make care more convenient, improve the quality
of care, reduce costs, substitute for in-person visits, and
reduce the use of high-cost care, such as hospitalizations and
emergency department visits.\8\
---------------------------------------------------------------------------
\8\https://www.medpac.gov/wp-content/uploads/import_data/
scrape_files/docs/default-source/reports/mar18_medpac_ch16_sec.pdf.
---------------------------------------------------------------------------
Hospice face-to-face waiver. During the COVID-19 PHE, the
Secretary used emergency waiver authority to allow hospices to
provide visits virtually, and Congress enacted legislation so
that the required hospice face-to-face encounter could be
performed via telehealth.\9\ This flexibility was intended to
help providers rapidly respond to people impacted by COVID-19.
Following the end of the COVID-19 PHE, the Secretary did not
continue to allow hospices to provide nursing, social worker,
and other visits virtually. Congress, through the Consolidated
Appropriations Act, 2023, continued to allow the required face-
to-face encounter to be conducted virtually through the end of
2024. The face-to-face encounter requirement was originally
enacted in the Affordable Care Act more than 10 years ago in
response to a MedPAC recommendation and program integrity
concerns related to physicians and nurse practitioners signing
off on continued hospice eligibility without seeing the
patient.\10\ As a result, a face-to-face encounter is required
for hospice recertifications starting after the patient has
been receiving hospice for six months and continuing every 60
days thereafter. Still, there are continued reports of hospices
signing up patients for hospice without their
knowledge.\11\}\12\ The ability to complete the
face-to-face encounter through telehealth makes it easier for
those actors seeking to defraud the Medicare program to
continue to operate. This face-to-face requirement is the only
requirement in hospice that a physician ever see a patient. Of
note, there are no enrollment moratoria in place at this time
and it is unclear whether any state licensure moratoria are in
place, except for the existing licensure moratorium in
California.
---------------------------------------------------------------------------
\9\https://www.cms.gov/files/document/hospice-cms-flexibilities-
fight-covid-19.pdf.
\10\https://www.medpac.gov/wp-content/uploads/import_data/
scrape_files/docs/default-source/reports/Mar09_Ch06.pdf.
\11\https://abc13.com/hospice-care-scam-fbi-warning-lifesaving-
medical-how-to-prevent-fraud/14742000/.
\12\https://www.propublica.org/article/medicare-california-hospice-
care-fraud-southwest.
---------------------------------------------------------------------------
Health equity considerations. Telehealth can fill some of
the infrastructural gaps medically underserved areas face
relating to workforce shortages and lack of public
transportation to a physician office or hospital. Still, as
noted in the Ways and Means Committee's 2020 health equity
report, Left Out: Barriers to Health Equity for Rural and
Underserved Communities, ``In many areas, the absence of
reliable broadband service makes it impossible for residents to
rely on telehealth as a viable form of health care, emphasizing
the interplay between health system and environmental factors
in many of these communities.''\13\ Virtual care often requires
broadband that is strong enough to host a stable video call, in
addition to proper devices and software.\14\ According to a
2019 Pew study, 44 percent of Americans who make less than
$30,000 a year lack broadband access and 29 percent of them do
not own a smartphone.\15\ In fact, about 39 percent of the
population in rural areas and about 10 percent of the total
U.S. population lack access to broadband.\16\
---------------------------------------------------------------------------
\13\Bipartisan Rural and Underserved Communities Health Task Force,
Summary of Responses to November 2019 Request for Information (RFI),
Committee on Ways and Means (July 2020), https://democrats-
waysandmeans.house.gov/sites/evo-subsites/democrats-
waysandmeans.house.gov/files/documents/RUT%20RFI%20Summary.pdf.
\14\Rebecca Heilweil, 6 things to know about telehealth, Vox (Apr.
8, 2020), https://www.vox.com/recode/2020/4/8/21212432/telemedicine-
how-to-video-chat-doctors.
\15\Emily A. Vogels, Digital divide persists even as Americans with
lower incomes make gains in tech adoption, Pew Research Center (June
22, 2021), https://www.pewresearch.org/fact-tank/2019/05/07/digital-
divide-persists-even-as-lower-income-americans-make-gains-in-tech-
adoption/.
\16\Darrell M. West & Jack Karsten, Rural and urban America divided
by broadband access, The Brookings Institute (July 18, 2016), https://
www.brookings.edu/articles/rural-and-urban-america-divided-by-
broadband-access/.
---------------------------------------------------------------------------
For beneficiaries, the rapid growth in telehealth services
could further affect the availability of in-person care, even
in areas not considered underserved or remote. While the use of
audio-only visits can reduce access barriers for beneficiaries
with limited broadband access or video capabilities, it could
also create a two-tiered system of telehealth care delivery
where affluent beneficiaries receive video and in-person visits
while low-income beneficiaries receive audio-only visits.
Neither provider consolidation nor the practical reality of
clinicians having choices of practice sites should be the
determining factor in whether a patient has access to in-person
care. Similarly, safeguarding against ableism and ageism in the
design and delivery of telehealth services is as critical as
ensuring language accessibility for all forms of virtual care.
English language proficiency. Communication and language
barriers are a key challenge in delivering health care in both
rural and urban underserved communities. These barriers are
associated with patients having poorer care and clinical
outcomes and longer hospital stays with high readmission rates
and increased rates of medical errors.\17\ The U.S. Census
Bureau's 2021 American Community Survey indicates that 21.5
percent of people in the U.S. speak a language other than
English at home. Of those, 8.2 percent speak English less than
very well and, therefore, meet the definition of limited
English proficient.\18\ Entities that receive federal financial
assistance, such as Medicare Parts A, C, and D, must take
reasonable steps to provide meaningful access to their programs
by persons with LEP.\19\
---------------------------------------------------------------------------
\17\https://www.pewresearch.org/social-trends/2018/05/22/what-
unites-and-divides-urban-suburban-and-rural-communities/.
\18\https://www.census.gov/acs/www/about/why-we-ask-each-question/
language/.
\19\https://www.hhs.gov/civil-rights/index.html.
---------------------------------------------------------------------------
In 2023, HHS issued a Language Access Plan that the HHS
Language Access Steering Committee updated for the first time
in 10 years.\20\ The updated HHS Language Access Plan sets
forth practical guidance, best practices, and action steps for
HHS Operating and Staff Divisions to develop their own, agency-
specific language access plans.\21\ In response to the HHS
Language Access Plan, CMS developed a Language Access Plan
guide that identifies ways that providers can assess their
programs and develop plans to ensure persons with LEP have
meaningful access to their programs.\22\ Additionally, HHS
recently issued a final rule that specifically addresses
nondiscrimination in telehealth services and clarifies that
recipients of federal financial assistance, HHS-administered
health programs and activities, and state and federally
facilitated marketplaces must not discriminate in their
delivery of health programs and activities provided through
telehealth services, ensuring that such services are accessible
to individuals with disabilities and providing meaningful
program access to people with LEP.\23\ While the provision in
H.R. 8261 builds in many of these important activities already
underway, it does not provide necessary implementation funding
to HHS.
---------------------------------------------------------------------------
\20\https://www.hhs.gov/sites/default/files/language-access-plan-
2023.pdf.
\21\https://www.hhs.gov/civil-rights/for-individuals/special-
topics/limited-english-proficiency/index.html.
\22\https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/
Language-Access-Plan-508.pdf.
\23\https://www.hhs.gov/civil-rights/for-individuals/section-1557/
1557-fact-sheet/index.html.
---------------------------------------------------------------------------
Acute Hospital Care at Home. In November 2020, CMS launched
the AHCaH initiative, which allows certain Medicare-certified
hospitals to provide inpatient-level care in the home
setting.\24\ Approved hospitals receive full payment under the
inpatient prospective payment system (IPPS) through Medicare
Severity-Diagnosis Related Groups (MS-DRG), as well as
applicable add-on payments.\25\ In December 2022, Congress
enacted the Consolidated Appropriations Act, 2023, which
extended flexibilities granted under the AHCaH waiver program
through December 31, 2024.\26\ The law also required hospitals
to submit additional data the Secretary determines necessary to
monitor quality of care, safety, and cost. CMS must release a
report analyzing AHCaH utilization, quality, outcomes, and cost
by September 30, 2024, which is vital in helping Congress
determine the extent to which this model is beneficial for
patients and the Medicare Trust Funds.
---------------------------------------------------------------------------
\24\https://www.cms.gov/newsroom/fact-sheets/acute-hospital-care-
home-data-release-fact-sheet.
\25\https://files.asprtracie.hhs.gov/documents/aspr-tracie-acute-
care-delivery-at-home-tip-sheet-.pdf.
\26\The Consolidated Appropriates Act, 2023, 42 U.S.C.
Sec. 1395(cc-7) (2023).
---------------------------------------------------------------------------
Broadly, the goal of the initiative is to treat acutely ill
older adults in their homes, while improving outcomes,
enhancing the patient experience, and reducing costs.
Researchers have found that hospital-at-home programs in other
countries are associated with reductions in mortality,
readmission rates, and costs; these studies have also found
increases in patient and caregiver satisfaction. Early pilot
studies in the U.S. show similar increases in patient
satisfaction and decreases in cost without changes in
readmission rates; however, evaluations of U.S.-based programs
are limited and inconclusive--and quality, cost, and equity
concerns remain. Patients also often refuse participating when
eligible, and the model relies on family members to serve as
caregivers as de facto nurse aides by providing basic patient
care, such as delivering meals and helping with
hygiene.\27\}\28\
---------------------------------------------------------------------------
\27\https://www.npr.org/sections/health-shots/2023/07/18/
1188058399/hospital-at-home-caregivers-family-stress.
\28\https://www.thevbpblog.com/home-health-series-the-challenges-
to-widespread-implementation-of-hospital-at-home-programs/.
---------------------------------------------------------------------------
Each AHCaH program is designed differently and can treat
different populations depending on the parameters the program
established. It is difficult to ascertain from current data
whether AHCaH improves care for Medicare beneficiaries on a
wide-scale basis because of the differences in programs and the
small number of beneficiaries that have been treated in this
program. The Secretary's coming mandated report will provide
important feedback to help determine what data gaps exist and
what, if any, additional information needs to be collected to
better and more fully analyze the AHCaH's value for Medicare
beneficiaries.
Richard E. Neal.
SUPPLEMENTAL VIEWS
Thank you, Mr. Chairman, and thank you to my colleague Mr.
Schweikert for working with me over the years on the subject
before us today. As my colleagues know, I've been working on
telehealth for over two decades. I am a big believer in its
ability to save money, time, and lives.
And four years ago, when the COVID pandemic hit, we got an
up-close and personal demonstration of the vital role
telehealth can play in our health care system. Purely by
coincidence, I first proposed in 2019 that Congress should
expand telehealth coverage in Medicare during emergencies.
At the time, I was thinking about wildfires--about doctors
forced to evacuate their offices, patients forced to leave
their homes. But then the pandemic struck, and I was proud that
Congress acted quickly and in a bipartisan fashion to expand
telehealth coverage for seniors on Medicare. It just made too
much sense. Four years later, and telehealth has been a boon--
in some cases, a literal lifesaver--for seniors in every single
one of our districts. I hear about this all the time at home.
It's not just that telehealth can deliver care to people
who otherwise would not get it, or save money by preventing
more expensive care down the road. It's also that telehealth
saves time--for families, caregivers, parents. The legislation
before us will extend telehealth flexibilities for seniors on
Medicare for a further two years.
And while I am of the view that telehealth ought to be a
permanent part of the Medicare program, I recognize the merit
to additional study and consideration of telehealth utilization
and guardrails. We have an obligation to be responsible
stewards of taxpayer dollars, and there are ways this Committee
can work to ensure that Medicare pays for telehealth in high-
value settings, avoids unnecessary utilization, and has robust
anti-fraud and anti-abuse measures in place.
I know, as one example, that there are particular concerns
about fraud with respect to the hospice re-certification
provision. My wife was a hospice nurse for many years, and I
certainly want to make sure the hospice benefit is not being
abused the way it has been in the past. And I look forward to
working with my colleagues on both sides of the aisle to that
end.
In the meantime, this legislation gives patients and
providers two years of certainty and ensures that seniors can
continue to visit their providers remotely as they have done
over the past four years. It continues telehealth access at
federally qualified health centers and rural health clinics,
allows certain reimbursement for audio-only services and it
removes geographic restrictions on where patients and providers
must be located.
This legislation largely reflects the structure of
legislation I have with Mr. Schweikert, the CONNECT for Health
Act, which would make many of these same policy changes
permanent.
And I look forward to supporting it today.
Mike Thompson.
[all]